tv Bloomberg Markets Bloomberg February 12, 2016 3:00pm-4:01pm EST
scarlet: from bloomberg world headquarters here in new york, good afternoon. here is what we're watching at this hour. investors are writing out this week's storm in the markets, dow a 300 point gain. oil is also on an amazing rebound, of the most in three weeks as opec seems willing to engage with other producers. we talked to a former oil ceo was also a former ambassador to syria. ken feinberg tells me about his latest job with ball flight income and why wall street bonuses should be changed. we are one hour away from the close of trade on this really
rocky trading week. i want to head to the markets desk. if we keep this up, we are going to close at a higher session -- at the highs of the session. said, as wehat close out this whole entire week, i want to wait out what has been happening over the past five days. weyou can see, the greens see today are not greens for the week. nasdaq 500 is down, the is down by 7/10 of a percent. is happening what with commodities. taking a look at what is happening with wti crude. shares rising in tandem with nymex crude, at about session highs. this isn't biggest jump since 2009. $26 anow trading about
barrel. let's take a look at what is happening with the majors right now as we speak. basically we are seeing those session highs. 35 points. oup the nasdaq up by about 1.5%. taking a breather after we saw the last five down days in a row. we will see of traders can hold -- with anwithin hour or so left. we are on that contract. we want to show you how broadly this rally has been great according to the imac function function, utilities are the only sector down. financials are doing a major turnaround. yesterday they were the biggest laggards, today they are the biggest winner in betty. betty: what about key investment areas? one of those has been oil.
looking over the past week or so, we can see that we are down by about 9.8%. is snapping its six-game losing streak since we saw since february 3. you can see that we saw a seven dollars spread, as high as $33, talkings $26 and we are about chinese growth as we have the whole entire year. let's take a look at what is happening with gold. it is now on track for its best weeks is 2008. or so it is11 days now up by 10%. let's also take a look at what is happening with the u.s. 10 six yield spread breaking a date losing streak. there he quickly, before i send
it back to you, let's take a look at what is happening with the u.s. dollar as well as the japanese yen, and how that has been affected. the u.s. dollar is rising for the first time, but for the week it is down by 3.1%. the dollar has been falling for the past four days, but it is tenths of a percent today. betty: thank you. let's go to our first wordnews. mark: former florida governor jeb bush is drawing largest expected crowds. meanwhile, john gazing is making a three-day swing through the state. his campaign has taken to the airways with two new tv ad. the against praising support of kim langone. the billionaire cofounder of home depot is throwing his money behind casey after christie's decision to drop out of the race.
that is north korea with more stringent sanctions for refusing to stop its nuclear weapons program. and republicans joined together to overwhelmingly approve the bill. the votes come less than a week pyongyang launched a rocket sending a satellite into space. the senate passed the legislation earlier this week. the white house says the president will sign it. it only will give three point $3 million in humanitarian aid into syria. distributed through the world food program and well distributed lagoons, rice, flour, sugar, and vegetable oil. remaining major republican candidates will be on stage for saturday's debate. carolina,s in south participants include jeb bush, marco rubio, ted cruz, donald
trump, john kasich, and dr. ben carson. news 24 hours a day powered by our 2400 journalists and more 150 news bureaus around the world. i am mark crumpton. betty: thank you. more on the markets. mark cuban is weighing in on all this volatility. from the nba all-star tech conference, he talked about the impact of the recent selloff on investors and traders. mark: i think we are going through a market structure correction, where we do not understand how all the markets and all the different asset classes are correlated. we are seeing so much on rhythmic trading driving one class versus another, that it is not just about fundamentals anymore. traders do not understand what is going on, and they going to castrate it is not a surprise what is happening. is thejoining us now
director of u.s. equity and derivatives energy at ubs securities. would you agree with that basic premise, that mark cuban was just talking about, about how much volatility has really changed the way people see these markets? structuralhad a change and volatility. after many years of low volatility, last august changed the landscape, and that is not unexpected given the that that that is making this historic shift in monetary policy. we would agree that this streets volatility has rattled investors somewhat. but the thing that people tend to miss is that volatility works both ways. it can work to the upside, as we are seeing today, as well as to the downside. betty: as you have lowered your estimates, right? for 60%e still looking to 70% higher than here, because the glide path of the economy is likely to be a little slower than this 2.5 that we were
expecting originally. we are essentially being realistic. thinkaving been said, we there has been some major inflection points in the last 48 hours. seemtially, you can't going to jobless claims, which is a very important series. you saw good retail sales this morning. that continues to reinforce the story that recession is off the table. at the same time, we have seen some major players, be they executives, be they banks themselves, sovereign wealth funds, buying into financials both in the u.s. and in europe. that is a very powerful message greg betty: i am glad you mentioned the financials. the rallybeen leading today, but they have been leading us down. are they now a huge opportunity, that you better get into now? >> we believe they are. essentially, what you have is
obviously the unsettled nature of what is going on, europe essentially tracked down valuations on u.s. banks to the point where you are not far away from trough evaluations. curve has noteld flattened to a degree where it will be terribly onerous. high-heelede energy exposure, which is something that people are continuously worried about, they have made the case that it is manageable and it is contained. so we go good about financials. betty: all across the board? >> very much if, because the other aspect of it is that we would expect to see the capital askets begin to open up things stabilize. that has certainly been an issue over the last month or so. therel markets close when is more volatility. but we think the other thing that is going to help volatility is the macro picture. what we have also find out --
found out in the last 230 six hours is that the bank of japan, and even the uae, speaking for opec, can talk markets into a greater sense of calm app. we would not be surprised if the bank of japan decided to intervene in the next two days, when the trading desks are short staffed. betty: they have not been happy how the currency has traded since they went negative. a and they were less that was policy error. the japanese investor psychology is much more tied into the bond markets and the u.s. psychology. we have seen, for the past 25 years, when there is a feeling that the economy could let back into recession, which this may have been a signal, money comes back to japan. that is what is happening now. but we think they have plenty of firepower to moderate things. betty: what do you think, if we do close of the high of the
session today, what does that set us up for next week? absolutely it sets us up for something next week. at halloween here has unfolded, the fact that people are willing to close stocks at the high today, in front of a three-day weekend, when china comes back after we trough on monday is a positive signal for us. betty: thank you. we have just crossed 300 points on the dow. it looks like we might close at a high of the session. we still have 50 minutes left. great to see you. executive director of derivatives strategy at ubs security. much more ahead. john bolton at carl icahn's seats on thee board, but the pressure still continues on peter can cut -- peter hancock. the cease-fire reached
♪ betty: good afternoon and welcome back to bloomberg markets. let's check in on where the markets are trading right now. first, a look at the s&p. andou know, it financials materials have been big gainers. are here towards the closing bell. also take a look at the dow, where jpmorgan, and other financials are powering the index higher.
over 300 points. is gainingaq, it 1.6%. lots of focus on the tech shares. now, we look at the biggest business stories in the news. it is way too early to be discussing negative interest rates, according to new york senate president who says bringing down borrowing costs below zero is a conversation that his extraordinarily premature. concerns of a global economic outlook have hammered in the recent weeks. john paulson is diving back into troubled debt. the hedge fund manager is seeking to raise 1.5 billion dollars for a private equity fund that will invest in companies going to through bankruptcy and restructuring. less liquids on forms. a toll at black
rock. fund dropped in january, according to the investor update obtained by bloomberg. they have declined to comment. that is your bloomberg business flash update. after souring hedge fund investments, aig shifted part of million dollar hedge fund portfolio into investment-grade bond and commercial mortgages. that is seen as an accord is struck with active investors who want to shrink this company. former aig chairman told me over the phone today that appointing john paul's london and carl icahn's ally to the board was leading a fox in the henhouse. now, our reporter for insurance companies. basically what he said that is hancock avoided a
proxy fight, but at what cost? >> there are two sides to the coin here. one side is that analyst are saying that maybe letting the it a little bit will let him see what is going on. betty: it is a complicated company. >> it is. maybe letting the amendment or amendments will have them say this is more complicated than we thought, we should tone down our demands. on the other hit with there's nothing here that is protecting peter's job. the pressure is really on to make sure that he performs, and he said in the morning conference call today on earnings that he is welcoming the increased pressure. he did acknowledge that. he welcomesnder if the morsi is facing the reality that they are there to stay, and they had launched a proxy fight to break this company up.
strategy,ined a big nine module, give us time to turn around these modules, and if they do not work, we will look at a sale. this also gives them better prices for anything they myself. betty: are they hearing from carl icahn or hank paulson from this? are they going to advocate for a breakup of aig even if they are on the board? >> they may. it is very interesting, the man that is on the board, he has done is a bunch of times before. with that said, aig is really complicated -- the biggest a reason for this breakup is to get them under the dangers for financial institutions. they have tried to sell hundreds of billions of dollars worth of assets, but they have not
applied yet. week, the last verdict is still out. if the government does not rescind the tag, then they said a lifeuld selloff insurance unit in the u.s., with $240 billion worth of assets. but none of this has happened yet. we cannot tell if they can get on to the government threshold. was a really tough quarter for aig. they lost a lot of money on onigion invest -- alternative investments. they decided to shift their have earned allocation to commercial mortgages and investment-grade bonds. that is out of the water. they also took a large portion of on georgia reserves. slate.ly clears a blank
betty: thank you so much. bloomberg news insurance companies reporter on aig. still ahead, oil rebounding from a 12 year low today. one industry insider to just the rally will be short-lived. how much more is opec to blame? they're down now of over 300 points. -- as i've dow is now up over 300 points. ♪
good friday to you. right now we are at session highs. the dow and the s&p breaking a five-day losing streak. this is after chair yellen was speaking for the past two days. today, there is a turnaround, can you explain that for me? >> this is a shock to everyone. especially watching the order flow yesterday that was out, the public was coming in buying protection. there are two things that is market doesn't like. uncertainty and confusion. that is what the market got out of her testimony. we had to the rally for the end of the day, and especially with what we saw coming out of asia, we would've thought that today would have been in a down day. but you find the oil rally. ramy: i wonder if this will continue into next week. what do you think might be happening as we head into next week? >> more volatility.
i would say we are going to trade between 22 and 30 and the next. -- in the vix. there is so much macro news coming out. expect more volatility. i think in the long run we may have hit a temporary bottom, so we can get momentum to the upside. i would not be surprised if we retest those lows in the coming weeks. ramy: i wanted to what you're focusing on today, viacom. a lot of negative things have been happening with the succession of poo program in pl. what do you think is most attractive to yourself and other traders we are watching? >> the dividend yield right now is almost 4%.
when the stock got absolutely supporterd it has a on the options level. i will sell the march 30 2.5 put spread. i could lose a dollar and a quarter, i could make a dollar and a quarter. if the stock just back off a little bit, at 31 and a quarter or so, which is the break even at the straight i want to belong on the stock anyway. i will look at this as a stock replacement, even though the upside is limited. licethink we did put in a bottom, which will signify a really nice of her area. ramy: thank you. i have time for a little bit more. i want to talk to you about what is happening with cherry yellen, and about those interest rates, potentially negative. you think they will talk about it?
fed chair dudley thought it might not be exactly the time to do that. what do you think? > what is right timing wise? i they looking to appease the markets or to healthy economy that helps the economy. will happen, no. do i think is on the table, absolutely. we need to get banks to lend out money. get what interest they can. the rationale behind it makes sense. i do not think it will happen. ramy: thank you. have a great weekend. more bloomberg markets next. do not go away. ♪
pope francis has landed in cuba for the first ever people meeting with the head of the russian orthodox church. the pontiff was greeted at the airport in havana by russian leader raul castro. the meeting will happen before the pope heads to a five-day meeting with mexico. they hope this meeting will help relations with other orthodox churches. has signed an agreement with cuba to restore air travel between the two countries. foragreement set to allow .0 flights the house panel wants to hear from michigan's governor about the water crisis in flint. he has been invited to appear
before the house oversight committee. he has come under heavy criticism for the crisis since was switched to the flint river to say money. surfers are writing huge waves in california at a huge wave competition. the start was delayed briefly due to fog. global news 24 hours a day, powered by our 2400 journalists 150 news girls around the world. 30 minutes away close.e
let's check in with abigail to doolittle. let's see where we finished. one of the point drive, we're looking at facebook. this is the fifth largest weighting of the nasdaq. they will not be able to offer its sites in india under the free basic services that the company has been pushing. rbc capital is highlighting facebook as one stock that should be thought on the difference between its fundamental and the stock price. an old-fashioned buying opportunity . gilead sciences of more than 5%. the second-biggest point is to the mastec this week as investors continued to digest quarter.nies fourth
gilead is down sharply year today. the selling may have further to go. betty: thank you. oil prices got some much needed relief today, rebounding from the lowest levels in more than 12 years. there has been speculation that opec countries might agree to production cuts, but the likelihood of that happening is very low. during his now from houston is edward, the former u.s. ambassador to syria and israel, also the former chairman. before i get to what is going on in the oil market in the given your background and your work in syria, i had as you what you make of this truth between syria
and the u.s., russia, and others. a humanitarian disaster of epic proportions. what has happened in the last week is a very slight glimmer of hope that the international community and the parties on the ground in the area maybe gravitating towards some what i would call a truce, leading to a cease-fire, of the various parties. it is not a done deal. they are very conflicting agendas. the russians, the iranians, the sec and regime -- a syrian very manyere are different voices involved. but the good news is that they aem to be groping forward to temporary truce that might lead to a cease-fire. , thent is accomplished this geneva three initiative may
proceed where the opposing parties begin to sit around a large table, involving the u.s., and thefrance, britain, iranians. it is still very problematic. betty: should the president be leaning harder on russia? >> i think so. i think that vladimir putin is playing a we can't very skillfully that russia has become virtually the powerbroker of what happens on the ground in syria today. have any, we will amplified voice in these geneva three discussions. but we think the united states really has to step up to the plate and use our influence in a very intelligent way. but really to put it to the russians that they are air campaign is causing untold damage and humanitarian casualties, and forcing
political issues. betty: hundreds of thousands, almost 500,000 is the estimate of lives lost from the war. i want to go to the comeback we have seen today, i almost an 11% gain in oil prices and what has changed in the last 24 hours to make these prices jump up? the oil market, it is like looking at an ekg. [laughter] betty: it could give you a heart attack. [laughter] energy stocks,ng you have to hold an ironclad stomach to go through this. fromt got back from a trip saudi arabia and qatar, and i talked to key energy producers as people involved in this sector. and it is my lunch that saudi arabia especially, they are going to keep to maintaining the
asiat share, especially in . even though they are getting more lobbying from other members to try to control the price of oil so that it does not continue its steep decline and can stabilize at better levels. going tohat we are see, the prognosis i came away with, the bottom line was that the opec and saudi arabia was going to continue their policy of market share, but that they thesee some readjustment in oil demand and supply equation for the end of this year, and certainly in 2017 am aware there will be some readjustment, and we will see increases in the price of oil. we are not going to see $85, $100 oil, but the prognoses are $50, $60 oil.
prophesying this, but doesn't mind telling you is the assessment i come back with. betty: what is this based on? is it based on the inventory situation, somebody cutting first? are taking the long view, like anyone looking at this. they are looking at the fundamentals of the eye and demand in countries like india, china, and asia. they're looking at what he low price of oil has done to the american shale producers, especially. some companies are going to go on business, and it may be some production, or some supply imitations there. not sure, because a lot of these shield companies have to keep producing to pay their debt. but what we are seeing is that in a global context, what they are beginning to see this some on production that
will be acquainted with some increases in demand as we go into 2016 and 17. perhapsthe estimate, some readjustment of supply and demand for a higher price of oil around the 50's dollar level or the $60 level. betty: thank you for joining me. edward, the former u.s. ambassador to syria and israel, also the former chairman of occidental petroleum. much more ahead in the next 20 minutes. we are talking banking compensation, back in the forefront. kenneth feinberg talks about wall street pay. we have seen all over 25 straight days of volatility in the s&p, swings of 25 points or more. what that means in this wild week of trading. ♪
♪ good afternoon and welcome back to bloomberg markets. it is time for the bloomberg is flash. the debte plans to pay to do next month, and is the usend largest that will cash and other forms of liquidity that may include is credit line. plummeted energy after a report of potential restructuring. they have no plans to file for bankruptcy. oil rig closures around the country. the rig count now stands at 439 after they idled 28 this week.
more than 1000 rates have been taken out of commission over the last year and a half. marks two report straight months of decline. it has been an ugly start is your global markets, u.s. retailers seem to be taking the volatility in stride. sales got off to a decrease to 2/10 of ambing percentage point in december. this is a good sign for third-quarter growth, and policymakers that are criticized for raising rates last month. that is your bloomberg business flash. a rough road for volkswagen as they continue to figure out how to compensate the diesel owners in the u.s.. the details will be left to kenneth feinberg, known for the negotiations in the bp oil spill.
designed thet protocol, because it is premature to do so. betty: what about -- as you said, it is still to be determined in terms of compensation, but what could the compensation look like? >> it is what you read in the newspapers. it could be a fix of the automobile, or a buyback of the automobile, or replacement of the automobile. they are all options. betty: or cash. >> and some cash. but it is depending on what is finally worked out, and that will take some time. but when it is finally worked out, we will forward. betty: is it more complicated, because it does not involve death? this is not an emotional project , as it has been for you in years past. >> there is no death, no physical injury, it is an automobile problem. that makes it less emotional, and -- betty: more complicated?
>> let's complicated, anyway. betty: there have been talks bout a complicated fund, takata. then we have the flint, michigan water crisis now there's a public outcry that there compensation funds. what do you say? -- in the case of flint, you have been reading the newspapers like i have. let me raise a couple of challenges. i think it is very credible to talk about a conservation -- compensation fund for flint. but where is the money coming from? if you have a compensation fund, you have to have a source of funds. as you know, it was public money. with bp, it was bp money.
with g.m., it was gm money. the number one question with , what is theund source of the fund? betty: why wouldn't it be public money? >> you get into this question of whether or not there is any legal liability. i'm reading that there may be a state of michigan, or the city of flint may have immunity from suit. they are a public entity. thecials who are allegedly ones who failed to protect the citizens of flint, do they have immunity? or is the negligence so gross, and so reckless, alleged, that there is no immunity? questionsall legal that have to be worked out. and then who is eligible? and what is the amount of funds, for what purpose? saw the bailout, the compensation packages for those
companies that were bailed out. now we are at it again in a way. particularly in europe, where compensation is being frozen, banker pay is being questioned, because these banks are under pressure again here. what do you think of the compensation at this bank? have they gotten any better? >> no. again, i have long gone from my position that, but i'm just reading what you are saying. i do not think it has gotten any better, but i do not think you will see again, and united effort byany legislatures, by congress, to reign in this. >> but the proper way to you bankers is what? >> the pressure from the regulators, and from the marketplace. shareholder rights.
saying we have to do something about this because there is a growing and that animosity, political pressure, that if we do not narrow the gap between the very well-off, and the less well off, there will be some sort of tax on page. there will be administrative regulation by the sec or the federal reserve, or the fdic. sheila bair did a wonderful job warning about pay. we will see more and more of that. that is the pressure. betty: should the bonus structure be taken away? >> i think the bonus structure, if it is going to remain, ought to be based on long-term company improvement, shareholder value, not personal, individual bonuses. betty: that was my interview with kenneth feinberg, the
bloombergcome back to markets. we're coming back up to our highs of the session. mark closing in less than 10 minutes time. ramy inocencio has more at the markets desk. ramy: we are seeing the rally holding onto to the greens we had been talking about. right now, all stocks are higher, and 90% of s&p docs are higher. financials,g led by and is interesting with a day makes, because it suited worth
biggest loser. today they are the biggest gainer. but the question i want to pose is, is this just a blip of green in a sea of red? this is the seasonality function. i want to direct your attention to this square right here. this is for your. we're still on track for a negative february. you see these six lots of green. this has been a six year winning streak for february. seven not been since years or so that we are seeing a negative february. let's take a look at the banking sector. the s&p 500 banking index is down by nearly 19%. this is the biggest losing sector on the s&p year to date. that of course has been weighing what has been happening with equities.
you can see in the past one year of the s&p, down 11%. is down 1%, and the nasdaq is also down 11%. the nasdaq is down about 40% in this one year. 14% in this one year. we are hovering at the 29th euro more and we are on track but meet just for today, fourth biggest jump in 2009. yesterday we saw it all as much as $26 and change or so. let's he was having with gold and the safe haven there. expect, it is going the other way and equities are falling. interesting but today we are seeing the worst day of the month as equities are rallying. still we are in bull market territory.
gold getting bitten while people -- people getting bitten by the goldbach. betty bug. sb has been seeing some record volatility. we have a look at how much the index has been swinging. seen 20 pointave swings either direction. >> you could go back to the , ond trading day of 2016 the high to low of the day, you get moves of more than 20 points. 27 days and a row. streaktches the longest in 1992.
there was also one of 2008, the height of the financial crisis. you have to put it in perspective, because obviously the s&p 500 has moved a long way in the bull market that began in 2009. if you go back to the previous streak you were talking about, it does show you that this year is a whole lot different than last year, if you go back to february through august. the s&p 500 did not go much of anywhere. betty: there's a second chart that shows consumer sentiment. chief equitye strategist trying to figure out what is the movement from here. recovery, and as he focuses on the consumer element of what is there. consumer goods that are holding when production is falling off.
-- joe weisenthal is off today. ♪ [applause] u.s. stocks closing higher fivefriday, helping a days live that dragged equities into a bear market. scarlet: finding opportunity amid volatility. nearly 20 years of flat gains and financials. plus, how low can they rates ago. u.s. are real possibilities. alix: how problematic are european banks? we talked to our guest. ♪ scarlet: we begin with our market minutes. still looking at two weeks of decline, let's not get right away with today's rally. the biggest gain in two weeks. that is not saying a