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tv   Bloomberg Markets  Bloomberg  January 26, 2016 3:00pm-4:01pm EST

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from bloomberg world headquarters in new york, good afternoon. here is what we are watching at this hour. stocks are in rally, -- rally mode, pumped up by energy. the dow is heading for its biggest gain of the year, flirting with a 300 point rise as fears from a global meltdown are easing at least for today. aig making a pitch as it fights pressure from activists like carl icahn, signaling more domestic chairs and planning to return $25 billion to shareholders. will critics by it? we will ask hank greenberg. the world's most valuable company by market cap recording their results in just about 90 about 90or stop --
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minutes. 30 -- dropping as much as as much as 13% since the last earnings. we are about one hour away from the close of trade. i want to head to the markets we have the latest on this rally now driven by oil. ramy: it always has been driven by oil. we are still very much into the green, looking at what is happening with the doubt of by 1.6%. is the 13th out of 16 sessions it is seeing triple digit gains this year. the s&p 500 is up and the nasdaq is up but we are clearly seen a turnaround after the selloff we did see on monday. consumer confidence came in better than expected and, as we were talking about or -- earlier , oil is on the ball. oil is up but off its session
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highs, off by 3.4%. there trading at above annual $31 and $.39. dive into my bloomberg terminal. want to show you some interesting correlations happening as well as wti crude. you can follow the white line and the green line, which is wti crude. they are all following each other. they just cannot get away from each other, basically all moving as one. it is getting a new high and let's go back into my bloomberg terminal. i want to show you the -- thising correlation one little blue dot here. notice how this looks like a mountain building up here.
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this is the biggest correlation we have seen as well as the price of oil, now at .42, the biggest in a year. david: thank you very much. thes get a check on bloomberg first word news with mark crumpton at the news desk. mark: a man charged in alleged has been found incompetent to stand trial. he told an informant he wanted to detonate a backpack bomb on a key west beach. he was arrested in july after accepting an inner device from an informant. hassan romney gave the pope a rug in the meeting and ask for his prayers. the vatican said iran has an important role to play in fighting terrorism.
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in el salvador are being urged not to have children for two years because of the zica epidemic. government in central and south america are fighting the disease. more than a million brazilians have been infected and nearly 4000 infants have been born with deformities. urgingal task force is screening all adults, including pregnant women and new mothers for depression during routine health exams. it is the first time the government advisory group has recommended screening for maternal mental illness. nearly 7% of u.s. adults experience a depressive episode each year. character actor a pagoda has died. he was best known for playing phil fish in barney miller. fans of the godfather remember soldier.e doomed mafia
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a pagoda was 94 years old. news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. back to you. : markets are rallying but they are volatile. the dow is experiencing its 14th triple digit moves in 16 sessions this year. this comes as the fed meets for its january gathering. its latest policy statement is due tomorrow. earlier, i spoke with mohamed el-erian who is out with a new book. the key issues for policymakers to realize is the road we are on right now is going to and. banks are no longer
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going to be able to borrow growth from the future and are no longer going to borrow financially from the future. either we produce that through a better policy response or we have to give it all back. tries tobook really defending what are we -- and why is it ending? it has run its course. mohamed: we are seeing markets become more volatile. we see economies responds less and we are getting less growth out of the system. movements tocal come more extreme. wherever you look, the 10 -- the pensions are there and these are pensions with a regime that is ending. it is hard to say when it is going to end, but it is clear one we would have tipped way or another and that has massive implications for how you position yourself. you think the fed
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is going to say tomorrow? i think the fed will not do anything. it will neither continue to raise rates, nor will it panic. second, i think it will mention the market volatility and mention the weakening of global conditions, but it will not make a big fuss. it will say we don't have any evidence that is contaminating us, but we are keeping a close eye on it. did.ll not do what the ecb it will not try to signal it will loosen policies. betty: why not? will they lose credibility? they don't want to be -- to bed: they don't want forced by the market to change their policy stance. that was unusual in the last year and i suspect you will get a sense now that the hawks remain hawks and the doves become more dovish.
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betty: do you think anyone has remorse on the fed board right now? mohamed: i think some do. i think the markets have remorse. the markets welcomed the first hike and it was fine for it you days. now you are getting more people in the marketplace asking the question economists are asking ?- was it a mistake it's interesting to see how the market view is shifting. i think we should expect more volatility because we are coming from a very artificial regime, but the markets don't like this volatility. they act in atty: benign way when it happened, but look at where we are now. do you think we are headed for a recession? mohamed: i put that at 30% a few months ago when we talked. people reacted quite a hit. 70% as we do not.
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actuallyhis year, it's quite hard to get a recession unless we get a major -- a major global disturbance. think a massive policy mistake out of china or a massive market accident because it turns out some people had way too much leverage on and are forced to sell. so far, the probability is not dominant. i think you get a high probability, the gig is up to 30% next year and then we get closer to the t junction where major decisions have to be made. betty: what factors into your 30% probability? mohamed: the first thing is we have not motive growth so far. the longer you fail to promote growth, the higher the chance of secular stagnation. your sister adjusts to lower
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capacity and lower potential. and we have prices that are decoupled from fundamentals. it will be hard to retain that. the third issue is the virgin central banks. the only thing that is adjusting its currency markets. long enougharound to realize that when currencies move a lot, they tend to break something and it is hard to predict what they are breaking right now. let the currency markets carry everything. if we do, there's a risk they will break something. view: that was bloomberg columnist mohamed el-erian with his new book, "the only game in town." much more ahead in the next 20 minutes. what impact will iphone sales have on the wireless carriers? recording gains in
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subscribers. at&t will open its book. and at the bottom of the hour, we will speak with former aig chairman and ceo, hank greenberg. to reaction to the plan return $25 billion to shareholders as he is facing pressure to break up aig. trade, upook at the the most since friday, but coming off highs of the session. ♪
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betty: good afternoon and welcome back to bloomberg markets. where the markets are trading now a little more than 45 minutes before the closing
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bell. the s&p coming off its high of the session, but we were led hereby energy. that correlation hitting some new highs. well, just offas by 230 five points. we were almost off by 300 points and the nasdaq, we'll get apple earnings after the close, the tech heavy nasdaq up almost 1%. as some oflook biggest stories in the news right now. meredith corporation is close to walking away from his pursuit of media general. the move would allow next are to acquire the tv broadcaster that, after months of negotiation. they are close to agreeing to a termination package that would include a $60 million breakup fee and no extra cash. procter & gamble reporting earnings that beat estimates.
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second-quarter results were help i hire product prices. tng is trying to improve margins. and twitter has a new chief leslieng officer, berlin, senior vice president of digital partnership at amx. her appointment comes after twitter lost four members of their executive leadership team over the weekend, including its product and engineering chief. bloomberg business flash update. apple and at&t are set to report their earnings after the bell. so far, at&t has outperformed the market with a stock of 3%. it is now facing very aggressive pricing plans by its competitors. has been seeing a slump in
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its share. analysts worry they will hit peak iphone. here with all that is facing these companies is our senior analyst from bloomberg intelligence. peak iphone sales, are we there? is hard to say. apple is very good about pulling rabbits out of their hat. betty: they do need one. guest: the iphone 6 was a fabulous hit, the first large-screen iphone to hit the market. there was huge pent-up demand and that company, despite its size grew, sales in certain quarters were 30% year on year. facing thoseand tough comps and i think we are starting to feel that. that's why there's a lot of noise around a quarter and people are concerned they may have missed the iphone numbers
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on the success. the iphone 6 was a tough act to follow. as was a decent upgrade. but to get people in the store to say i've got to have it -- this is the situation successful companies find themselves -- they become a big some of their own success. get people toook stop hitting me sell orders on apple? john: that is what i am listening for. what is next? let's assume the iphone is that peak sales. you have to assume at some point that they need to get the encore going. it's not going to be a single thing. i have the feeling it's going to be a confederation of products.
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it will be contributions from apple music, apple pay, car play, all of these things together i think have the potential longer-term. i think together some of they can help pick up some of the slack. betty: i'm not hearing great things about apple pay. apple watch may be a little better. we just don't know. john: here's what i think apple needs to do -- they are moving from music into video. apple needs to make that move a little more aggressively than they have. i'm hoping to hear something on that. at&t, they are finishing up their merger with directv. what do we watch for? the date on to hear
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mexico. the smartest move was moving down into mexico. it's a high growth market and doesn't have a very rich demographic, but it has a growing middle class and they can build the pan north american network. there are strong ties to mexico when you think about the demographic of the u.s. and at&t is really going after that, bundling with pay-tv. have all thehey outts to execute and stand from the carriers on the video front. the largest pay-tv provider in the u.s., have strong leverage with content providers and they have diversified into mexico where they will probably pursue bundling as well. directv has a pretty big latin america -- why not leverage it?
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much more ahead on bloomberg markets, including a look at the options market and how it's taking it all in today. ♪
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betty: welcome back to bloomberg markets. stocks are bouncing back today as you can see, the dow jumping as much as 300 points, rallying after the big selloff yesterday. volatility is here. we've got more on the options market and how it is handling all this action. joining me is kevin kelly, chief investment officer at recon capital. markets are up on rising oil, but they are sort of pooh-poohing on what happened on
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the shanghai composite. i wonder what you are looking at to determine your own market sentiment. kevin: it is purely dependent on oil. the impact of the stronger dollar has an impact on oil as well as china, so one of the reasons why management hasn't said anything, we don't know who is going to survive this. is tradingeverything on unsystematic risk. we even saw google flag today. companies are coming out with earnings, so that is what we are looking at an you can tell the market is uncertain because the vix is above 20. below 23.ver it is as we look at the fed funds future pricing and at 0% a -- ratef a race rise
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rise, what impact might that have on volatility? you have seen the new government -- the new governors come on and they tend to be hawks. everyone expects march could be the earliest and they want to see guidance coming out for march. what is important about the vix is it hasn't gone below 20. we are still trying to figure out how we are going to grow in this post qe environment. it's not a big deal but we have not in below 20 all year. we could go precipitously higher given the uncertainty. let's talk about amazon. the retailer talking about amazon growth in its prime users up 35%. tell me more. kevin: a research report said it
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may have grown year-over-year to 54 million users and that is important because prime users $1100, so thate is a key component. people toushing become prime members, so it's a big push to get everyone in the ecosystem because it is a convenience economy. ramy: and they hook you with that free one year subscription and then they keep u.n.. kevin: what is interesting about amazon is the growth in their amazon web services. a cloud computing company that happens to have an e-commerce site. is going.w fast this ramy: let's get to your trades. kevin: this is completely and
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earnings play. sell the 560 put in use the proceeds to buy the 600 call that expires friday. it's a great way to participate and you have to buy it lower. it is a great options trade. ramy: we will leave it there. thank you so much. ahead, the ceo of aig is launching his response to carl icahn and other activists. his plan to turn $25 billion to shareholders and wind down legacy assets isn't going to be enough. we have the former chairman and ceo of aig, hank greenberg, on with us next. ♪
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betty: you are watching "bloomberg markets. i'm betty liu. let's start with a check of the
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headlines. mark crumpton has more from our news desk. been another snow day for federal government workers in washington, d.c. offices were closed again while the city digs out from the weekend blizzard. air travel is slowly getting back to normal. more than 2500 flights were yesterday, delayed but that is still a lot fewer than the previous two days. southern california officials have issued a message in vietnamese as they hunt for three escaped inmates. it is believed two of the men belonged to vietnamese gangs. police fear family, friends, and/or gang members are hiding the inmates. they have been on the run since breaking out of an orange county prison on friday. authorities say a white police officer charged with the fatal shooting of a mentally ill, unarmed black man has resigned. the police department says officer robert olson stepped down on monday. he was indicted last week on charges of felony murder in the death of anthony hill. while responding
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to a call of a man behaving erratically outside an apartment complex. with the iowa caucuses less than a week away, donald trump has gotten a major endorsement from the evangelical community. trump is running against several candidates with deep cries to christian voters. the endorser has compared thep's style to his father, reverend dr. martin luther king jr., and jesus. global news 24 hours a day, powered by our 2400 journalists and more than 150 news bureaus around the world trade iamb mark crumpton. betty: we have less than 30 minutes until the close of trade, the closing bell on this day when we have seen some pretty big games here. abigail? abigail: very exciting, we are less than an hour away from what some are calling the most anticipated earnings report
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ever. of course, i'm talking about apple and the company's december quarter. the stock is been volatile over the last few days, trading up and down through the $100 level as investors braced to see whether or not investor analyst concerns around week iphone demand and modeling negative growth for the march quarter for the first time ever will prove to be correct. think these bearish concerns are priced in on the stock, they dropped over the last three months but was some analysts cautious over the near-term, positive over the long term it seems anything is possible. biotech, the sector's like of participation in the big rally. the nasdaq how technology index remains firmly in a bear market, below the support of last year's lows that mesa just the selling will continue not just in biotech, but the nasdaq overall. weighing on the biotech index and the top point to drag on the nasdaq itself is general on, stock down 4% this week after it
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was downgraded from cell to neutral at chardon on patent infringement concerns. the stock is down more than 15% over the last three months. the movement this week is fitting to that trading action. the one highflying stock is cooling off. betty: thank you, abigail doolittle at the nasdaq. aig unveiled its new strategy plan this morning. it will sell its broker dealer network conducted an ipo of its mortgage insurance unit and more aggressively cut costs while returning $25 billion to shareholders in the next two years. earlier i caught up with the ceo peter hancock of the -- on the floor of the new york stock exchange. >> but we will do over the next two years to make this company more focused, more profitable, and return $25 billion to shareholders. that is speaking to all of our stakeholders. i'm sure we will not satisfy all of them, that we need to deliver a sustainable franchise if we're
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going to make the right decisions, trading off long-term versus short-term urgency to deliver results. betty: joining me now is someone who has a skin in the game in aig, shareholder but the former therman and ceo, now chairman and ceo of cb star. what did you think of the plan? >> i agree with peter about breaking it up into three companies. i think that is a mistake. you say it's too big to manage. it's a fraction of what aig was. betty: smaller than the company you were in. the size is not the problem. hank: the size is not the problem. it sold off some of its best .ssets is not as deep in the foreign
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field as it used to be. countries.73 not just there, but doing business and growing, it's nothing like that now. they have lost many people, some voluntarily and some they have been shrinking the size of the company. betty: right. as you say, it's a smaller company than it was before and they have gone through some pretty big turmoil they are climbing out of. but they are underperforming, particularly underperforming against their peers. you say today's plan went far enough. of howt's a question they will implement it and whether or not they can execute. all of that remains to be seen. they have raised reserves. i discussed this with people. betty: did you discuss this with peter before today?
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hank: no, today. reserveseased loss going back many years, and then toect 2017 they will be able show a redundancy in the reserves. how do you know that in 2017? this is 2016. unless you overcompensated, so you can take down reserves by showing that it looks better than it really is. i think that's confusing. betty: would you have done anything different than? you only increase reserves if you need to increase reserves . these are long tail reserves, always a little volatility in that, but going back and now increasing, what are they doing in between? were the auditors looking at the reserves?
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why would you have to wait so many years to find out? betty: that does not make much sense. hank: not to me. now you are increasing reserves but you are saying in advance that we will be redundant in 2017. betty: how do you know? hank: how do you know that? you have some kind of a magic thing you are looking at? betty: so in your view, he has some more explaining to do. peter before -- about this plan beforehand? very briefly. fly.poke on the phone brie betty: do you agree with some of the moves today, like selling part of the -- hank: i don't think it does very much.'t do very
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look, it's not the same company. it has -- it is a much smaller company. the largest insurance company in history, and the most successful. betty: some of the critics have said that you should separate the life and the pnc, and part of it has to do with the systemically important designation on aig. why not get rid of that the way that life is, for instance? hank: metlife is a different company. i think that's a mistake, for several reasons. businessth classes of gives you a better balance, one supports the other, one is a little soft, the other is probably not. betty: that is what hancock says too. in any event, is seems to
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me that aig should be contesting the designation. betty: how should they contest that? hank: i assume there's a regulation or law. you challenge it. betty: go to court? hank: if you have to. we did that. betty: i know that. and you would fight that. peter mentioned that, the whole diversification is. that is a good buffer for aig. our business is absorbing the risk of our times and managing them. to manage those risks we need to use diversification. diversification is critical. to break up the company you would lose between $5 billion and $10 billion, and that is in
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the eyes of the agencies. betty: is it the tax assets you're talking about? hank: no, risk diversification. from a tax perspective, that's a further reason why the company would be expensive. betty: in your view, is peter the right person for aig? hank: he will have to prove he is. until he does, there's a question mark. betty: it sounds like there is a question mark to you. i would like to see aig regain some of the strength and stretcher -- stature it had. nothing like it was in the foreign field and it's very hard to rebuild that. betty: have you talked to carl icahn at all? hank: no. agree and you 100% don't
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with what he's outlined for the company. hank: i do not believe it makes sense. as a manager of a company, this makes no sense. betty: would you have any interest of coming back to in any capacity? hank: no. i'm busy doing what i'm doing, building a company that is doing quite well. building star companies in the insurance field. we are doing quite well. betty: how much time would you give peter to prove himself? hank: it's not up to me. betty: but you are a shareholder. hank: the market will decide that. i don't know what the board thinks, i have no idea what the board thanks. betty: peter mentioned that people are calling him all the time, and they want to pick some of the assets up of aig. he wants to make sure if he's going to sell assets of the company, that it is the right time and it's the right price. he also mentioned today there are no sacred cows either.
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hank: so which is it? are you'm curious, interested in any of the assets of aig? hank: no. betty: so you have not been one of the ones to call him? hank: no. we are building the star companies and we are doing quite well. i'm just back from latin america. we're going to be expanding there. argentina is a changed company. betty: what do you think of china? --k: i'm not betty: are you worried? hank: no. betty: why not? hank: there's no questioning that there is a slowdown of manufacturing in china. china knows it has to become more of a consumer in the services market, and they're working on that. the consumer side has grown from the 30's to 50%, and that's good.
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i would not get excited. it took us a long time to learn how we are doing. betty: why do you think the chinese -- you know the government very well, government officials. you know them at the highest level, you have done business in china for decades. why do you think they got the messaging so wrong in the last few months? hank: i think they got excited over the fact that things have slowed down economically, and there is a selling in the market, and they just got carried away. betty: do you think they will get it right? hank: they will get it right. betty: your businesses in china, are they doing fine? hank: our insurance business is growing. not unexpected. betty: it is a big population. hank: you and i were just looking at that video and the story about trump and his
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continuing rise. you said to me, what is going on here? i know you support jeb bush. what do you make of this race right now? it's really confusing. did a great job as governor and i think he's qualified to be president of the united states. he's got experience. he understands the world. betty: governing experience? that yeah, he has done well. my ideal team would be him as ohiodent and kasich from as vice president. in the kind of world we are in today, it's not a pleasant world. a lot of problems in the world. experiencemeone with that will attract the best people and government. he will take more than two people. will take more than two
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people. you have to have a leader that will attract these people. you have to be sure that happens. betty: at this point -- she's running in the single digits. hank: i understand that. what, in polls? they are not votes. betty: so you believe things could change? hank: anything could happen. betty: you also donated to a super pac. stillg now how the pulsar -- pollsa re still -- polls are still, would you still have done that? [indiscernible] hank, great to see you. thanks for stopping by. the former chairman and ceo of aig. still ahead, stocks are rallying. today as we head to the close we are back up near our high of the session. energy once again leading the pack, including financial and
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betty: oh come back to "bloomberg markets." i'm betty liu. tomorrow we will get a statement, the first meeting since that december 16 rate rise. joe weisenthal is here with me. what is the word? funny, because we have all the market volatility to start the year, since about the isnomy, when everybody asking, did the fed make a mistake, did they go through early, should they have waited until the size of inflation were more clear. it would be interesting to see -- tomorrow there's no press conference, there are no dots.
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in the confines of the statement, what will they try to express? will they try to express some concern over the state of the economy? the flip side is they do not want to add to the concerned. this is an interesting meeting. obviously nobody thinks they're going to move rates. betty: zero people think that. mohamed el-erian said you might see more hints of divergence, like the hawks, perhaps, voicing their opinions a little bit more. will see possible we that. that will be interesting and probably concern the markets if there's any suggestion that janet yellen -- right always been divergences but once she decides she wants to raise rates, she has the whole committee on board, markets like to see that. betty: definitely. thank you. joe weisenthal, cohost of "what did you miss". will also have complete
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coverage of the apple results that come out after the bell. much more ahead on "bloomberg markets." the close of trade moments away. ♪
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betty: welcome back to "bloomberg markets." markets close in eight minutes' time. we are trying to get back up to our highs of the session. where we are at right now, s&p 500 up 1.3% rate of the tao of the most, by 1.6%. from talking about a turn monday to sell a because of consumer confidence that came in at 10:00 this morning at a three month high, and oil rising above the $31 mark. let's look at some gamers based on earnings that came out today. right now for example, 3m is up by 5%.
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fourth order profit beat estimates there. 4.6% there,hnson up also beating fourth-quarter profit estimates, and procter & gamble also beat estimates, $.98 onr share versus average. procter & gamble up by 2.5%. let's take a look at basically what has been a broad rally across the board, energy has been the biggest gainer, 3.6% followed by telecoms up by about 2% there. let's take a quick look at what ashappening, the wti crude well as gold. up on the day 3.2%, off session highs. gold is on a two-day rally, up by 1.5%. betty: thank you so much. volatility wehe have been seeing so far this
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year, how much is it going to have of an impact? the bank cut its s&p forecast by 9.1%. that's what i'm trying to say. bloomberg stocks reporter oliver renick joining us now. and earnings recession here. oliver: that is where we're at with earnings. so far it looks like things will end the quarter down. a lot of the other things we have talked before, concerns about growth in china, rising credit spreads in the high-yield market, some of the other technicals we have discussed, what jpmorgan-- calls a feedback in volatility, where stocks get jumpy. people start to look back at their numbers and think, why is this happening? days like last week, we had a pretty bad day.
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people start to ask questions about what is going on underneath the surface. betty: isn't that also because of a lack of liquidity? it,er: that is part of stocks are oftentimes easiest to sell, in particular the big stocks. if you have a weakness in other asset classes and you are seeing red, you can make up some cash. seem likehis cuts they're coming from a bit of the fundamental standpoint. the earnings, our earnings really the big driver here? oliver: for the day-to-day stuff, it does not really seem like that and we're working on a story right now, looking at the moves for companies that beat on revenue and earnings and those that lose on revenue and profits, and moves are pretty similar. basically you are right, earnings are not the big driver ran now. you do have macro headwinds. it's causing a votto -- lot of
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peope tle to revisit why they ae doing things. taking downare their estimates, as we just saw there. jpmorgan is at 2000? oliver: down from 2200 to 2000. not very frequently do you see that many revisions in the first couple weeks of the year. going by their standards, it's not looking super bullish. betty: that by no means. oliver, thank you so much. that is it for "bloomberg markets." "what'd you miss" is next. the dow headed for its best day of the year.. ♪
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we are moments away from the closing bell. i'm scarlet fu. >> i'm alix steel.
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>> i'm joe weisenthal. >> u.s. stocks advancing with commodities as investors focus on corporate earnings and the start of the fed's first policy meeting of 2016. joe: the question is, "what'd you miss?" iphone sales finally nearing a peek? -- peak? we'll find out how strong global demand is. alix: the apple watch. later we look at the major market impact. scarlet: we begin with the u.s. market close, which shrugged off another rally in chinese equities. maybe we are seeing a decoupling between shanghai and the united states. yesterday's laggards turned into today's leaders. joe: the shanghai market got absolutely destroyedt


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