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tv   Whatd You Miss  Bloomberg  February 17, 2016 4:00pm-5:01pm EST

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today. ♪ u.s. stocks seeing another huge rally. s&p up for a third straight day. the dow jones rising 250 points. what'd you miss? alix: it's time to buy oil. prices is below $30 are unsustainable. joe: interpreting the yield curve. what it means for the fed rate hike timeline. alix: walmart in trouble. closing the most stores in two decades. we breakdown numbers ahead of earnings tomorrow. we will start with the market minutes. another unbelievable rally. this is the third day the s&p has gained 1%. that has not happened since october 2011. joe: three straight 1% gains.
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last we solve this, 1990. extraordinarytely run we have been on. alix: if you take a look at what wasmoving, what was hated loved again. amazon seeing a rally. big banks seeing a rally. those that got hated get some love. basically everything rallying across the board. alix: well cut my eye were the minors. this is the best four-day rally they have seen since 2008. huge a there is that factor going on when it comes to the minors.
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we: if you look at yield talk about that yesterday, how huge they have seen in the last few days. this week we have seen yields rise across the board. continually years of 1.81. it took quite a story there. on the currency front today unbelievable move in the mexican peso. 5% rally at one point. bank of mexico coming out with 50 basis point rate hike. no one saw it coming. slammed,been getting making a big comeback on the flip side. an interesting day in market currency. alix: one more look at stocks. i was curious, is it due to short covering? there is an index that track
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short interest across all stocks in the united states but only updates twice a month. storied interest was 4.27% around the highs we haven't seen since 2009. it wouldn't have been out of ordinary to see a short interest that high. people are just pounding those. absolutely it makes sense that is part of the snap back. alix: the third light has to be about oil prices. you had iran saying we support russia and saudi arabia freezing production. no word on if they want to participate in freezing that. that was enough to prompt a rally in oil. the oil rally with copper and gold, typically they are ok. gold was rallying on that.
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that is interesting. i miss that about gold. now what sick a deep dive into the bloomberg. i was looking at what was going on in oil. why we are seeing such big swings. long positions versus short positions. in theory when you have a jump in long positions, you see short positions, off a little bit when you have a big surge in long's shorts don't do a lot. when you have shorts moving higher, they tend to move inversely. we are not saying that. long positions in short positions rise. curry pointed this out yesterday as part of the reason why he sees oil over the next
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6-9 months. the market is so divided it is not surprising. dive into the bloomberg because one of the big questions is is the u.s. sliding into recession? some data is not so great. some looks fine. applications,ase this data point comes out every week. it is very noisy. it bounces a lot. when you smooth it out and look at the year-over-year change it looks good. 25% from this basis of a year ago. you have to figure people are worried about rising rates, and about housing market we would see deterioration. here is a number when smoothed is looking solid.
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not looking like some big sign of a down term -- downturn. you can see all these charts in more on twitter. alix: i want to bring in our guest, thank you for joining us. fed,minutes from the policies -- more downside risk. guests: i thought it was consistent. they are watching the negative economic news. in particular the tightening of financial positions. they are factoring this into their outlook. they don't have a lot of ammunition. this gives them a bit of a downside bias. the way things were categorized and characterized, this is a fed that is waiting for clarity but
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not necessarily on perm ahold. they don't want to backslide .nto the situation they were in they don't want the calendar of session to reemerge. rather we are on a very shallow tightening bias. great pains to keep that message consistent. alix: what do you make of the big rallies we have seen when it seems like nothing has changed from the fed rhetoric? guest: today you have a day with a huge rally in the market and stocks on a commentary from the fed that is cautious about the global situation. joe: most happen before the fed. guest: true. even some of that. wants between market that
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to continue to have that openness about what is going to happen with rates. they want to have some kind of confirmation the fed is on par with where the market thinks the fed is going to be going in terms of the rate cycle. but what is happening now is a refocusing to a certain degree on what's happening here. a lot of the selling that happened so far this year was broad-based across all these markets around the world. alix: you had a chart that talked about this. guest: we do. showing the correlation between u.s. stocks and the brazilian stocks. city's economic surprise index. you have this high correlation
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between u.s. stocks which traditionally correlated .25 but they have been close to 1. what has happened in the past week is that comes down. you see that go to a nor -- more normal level. bige folks are saying this risk off move. let's focus on the u.s.. joe: i want to go back to the fed. that looms over everything. this huge divergence, even the commentary that yellen gave, she didn't walk back that much. a memo,doubt unemployment has hit a . the stock market is up 2.2%. the dollar has weakened. wherebe get into position
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it is march and it is like the fed has retained its credibility because all the data is consistent with raising and the market is on this path where no hikes until december. guest: i don't think that will happen as soon as the march meeting. they may be trending back in a positive direction that we need to see rate increases starting to creep back onto the calendar. we are not seeing it. march is out of the picture. will we get into the second quarter there may be the collective reassessment where folks say the u.s. economy is not doing too badly. throughumers muddling consumer spending is decent. job gains are holding and that means it will continue on this gradual rate tightening path. in fed acknowledged as much
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the minutes. gdp looked lousy but the job gains were solid and that is a key reason why they are not abandoning their outlook. they may be suspended the risk assessment but they didn't go back and shift towards a negative outlook. joe: thank you for joining us. alix: coming up is the time to -- coming up, is now the time to buy oil? ♪
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>> 20 people were killed in 60 a car bomb exploded
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in the turkish capital. the attack targeted military vehicles and was well planned. an investigation is underway. it happened during rush-hour. donald trump continues to surge in national polls. he has double the support of his closest rival. 39% of republican support trump compared with 19% for marco rubio and 18% for ted cruz. things are closer among the democrats. hillary clinton leads bernie sanders i-44-40 2%. president obama and michelle obama will be among those paying respect to antonin scalia a friday. his body will lie in repose at the spring court. the obama's will not attend the funeral but vice president joe biden and his wife will. in.january figures are on record hasnth
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reached nine in a row. officials blame it on man-made climate change with an assistance from el niño. dayal news 24 hours a powered by our journalists around the world. it's time to buy oil. that is according to our next guest, professor of king's college in london. oil prices down 40% in the last year. great to get your perspective. a contrary and call right now. what makes you want to buy oil? guest: we've seen the saudi's blinking. it looks as if finally they have given into the realities of the market and they are going to start reducing production. they have got to blink a few more times before we get a
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stable market but i think the fact that policy has changed and they are trying to drive the u.s. shall business out of life is very important. i think we passed the bottom and then it is time for individuals and companies to look at the underpriced assets on the market. joe: the counterpoint is that saudi, russia, they are not the producers. the u.s. is still gushing oil. oil prices, if they were to rise it could switch on quickly, bringing more oil to market. other countries, it is about their production. it about them that changes the equation? themselvessaudi's have decided to draw a line
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under the policy. it looks as if there has been a change of approach within the saudi government and this is the first step. tohink they will go further take up production. ideally with people joining them. we will be lucky to see it at 50 but once you have seen the floor it is possible to see things moving up over the next few months. alix: you wrote in a blog early in february before this potential freeze pack came up that you would suggest buying oil. what gave you the confidence and then? the pressure the saudi's were coming under from other opec member states, and the
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realization they were not driving the u.s. shale industry out of business. they tried to do that. they recognize the reality of the situation. now they are moving back to a more sensible approach. alix: you thought that even before that freeze came up? they will roll over here? >> i did think that. i have been writing that for the last few weeks. anybodyhink that listening to this should draw distinction between oil and gas. the gas price for different reasons is going to go down but the oil price looks as if there is a flaw. we have touched the floor. i don't think it will go through the roof but it will go up for another $15 this year. joe: the saudi's have change their perspective on things. -- when theyt
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first started floating the notion they would do an ipo of the state-owned oil producer that was seen by many as negative throwing in the towel. being skeptical about the future value of oil. they would monetize a big chunk of their future revenues in an an ipo process. are they signaling they don't think the oil is doomed? have they change their thinking? guest: i haven't seen any new announcement. i think they have realized that their own oil industry has a lot of problems and they need to have foreign investors. they need new technology to get the reserves, find the reserves and develop them. they have had a number of disappointments. they haven't been able to cut back subsidies as they hoped. i think they are in the process of transition believing they
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could dominate the world market to realizing they are part of a bigger story. i would be surprised if they didn't go ahead with some sale of some part. alix: if you look at the industry on what to buy or from perspective with your experience, how do you value assets right now in this oil price environment? guest: it's difficult. the companies are struggling to do that in the right way. i think the sensible thing is to make sure that you are viable at as low a price as possible. exxon said they are totally viable at 40. other companies are working hard to get to that level. most of them can. we have seen great cuffs and costs. we've seen restructuring of companies in the shell side of
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the business and the conventional industry across the world. they are all trying to do that. we would be wise to continue because i believe we are going back to 100. we might go up. we might be more stable. it is going to be quite a challenge for the company. joe: although you think oil has found a bottom, you don't think natural gas has. what is your view of commodities in general? guest: i wouldn't like to talk about all the commodities. i don't know them well enough. agegy is moving into an thought of as scarce to an age where technology has given us multiple sources of energy. we are moving into an age of plenty. that is still going to be a great industry, a big industry but it does mean companies at the high-end of the cost that
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have extensive projects are going to have problems. alix: d phil feel $30 oil is reflected in company valuations? guest: i think the market has over solved the industry. that is why i think individuals and some companies who have resources will be looking around for what to buy while these low prices are still there. on their assumption there is going to be some increase over time. joe: all right. thank you for joining us. that's forg up, why the devaluation are cooling off. we have a chart you can't miss coming up next. and a stock moving in late trading is devon energy. the company announcing a stock offering of 55 million shares. the proceeds will help liquidity cut debt and fund capital.
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alix: the real world car when it comes to -- is iran. he weighed in on the pressure freeze agreement yesterday. >> russia was producing the highest. that is still leaving a substantial year-over-year growth for 2000 exchange. that is a deviation from our outlook. when you think about saudi arabia they were at 10.2. you have producers sitting on their highs when they made these announcements. real wild card is
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what happens with iran. alix: iran being the key. the -- saudis cannot be at blame. the buck has moved way ron. we are willing to freeze. opec politics. alix: it takes the idea of more incremental barrels from iran over the next two years, that would be supportive. take it off the table. joe: speaking of saudi arabia, we were talking about the speculators betting that saudi arabia was going to be forced to reasons,or budgetary there was a huge bet if you go inside the bloomberg now. you can see the chart which shows the dramatic turn we have seen. in white line is saudi rail
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early january. third, but they have come off and hit their lowest level of the year. we've seen the oil rebound with the sign that saudi arabia is going to start to take some acti for their take. perhaps some of the other signals. it is way higher than it was for a lot of last year. alix: they are trying to curb the speculation anyway. technically -- joe: they had to tell them to stop placing bets. alix: coming up, a crazy day in latin america. mexico's apprising the world with a rate hike.
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>> apple will -- the federal judge told apple to give the fbi technical assistance to recover information from the phone use by one of the san bernardino attackers. tim cook says the government wants the company to undermine decades of security advancement to protect its customers. president obama will sign legislation hitting north korea with more sanctions. congress approved the bill on friday. thewhite house has said president has not committed to signing it.
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pope francis held an open-air mass across the border in mexico. he gave a blessing and honor of refugees. pope francis visited a mexican prison he told hundreds of inmates they should look to the future the possibility their lives can change. piracy is on the decline on the high seas in africa and it may have to do with the price of oil. attacks on maritime vessels transported oil across the gulf of guinea fell by a third in 2016 compared to a year earlier. that is global news. alix: let's get a recap on how u.s. markets close. and unbelievable three days. points ins gain 800 the past three trading days. the nasdaq, we were talking
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about a bear market it week ago. we are 8% away from bear market levels. joe: it's incredible. days,ree consecutive it is remarkable the s&p is down less than 6% for the year for all the talk of panic and different things. the idea that if you were shorting these guys, maybe we will see if it is sustainable. joe: relief is the operative word. last week sentiment got so negative people are just finding every reason to sell. this week it feels more like what jeff curry was saying.
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the world is not quite over yet. alix: mexico's central bank hiked 50 basis points in a surprise meeting today. since 2011. catherine, what was the trigger for this? the bank of mexico tends to move with the fed. >> when you hate emerging markets, sentiment is very poor. it is very liquid. it is easy. killing the pace which is the worst performance year to date. but rather, this dynamic of being a proxy for risk. that has been what has been concerning for the central bank.
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this will eventually cause pass through inflation. they are concerned about the collapse in oil prices as many countries are. they are concerned about panic's. hedged as it was this year. oil had to roll off. -- mexico had to do something. this was a multipronged unprecedented approach paid this was shocked therapy. what was interesting, i have brazil versus mexico. you get sete brasil is in better shape but but the markets tend to agree with you. is surprising to me. joe: we saw s&p downgrading brazil. is there any insight?
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guest: these names are on divergent paths. ministry of finance curbed spending siding panamax. they are not cutting spending. there is no physical consolidation insight. s&p noted that and said trends are poor and will continue as much. brazil iso note trading in terms of spreads to argentina. >> what does that tell you? >> brazil is deteriorating. in the processw of reconciliation is going in a different direction. guest: i want to talk about columbia. weeks ago i had the chance to speak to columbia's finance minister and let's listen to what he had to say about the
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country's borrowing. >> we're looking and exploring all possibilities including the euro market and the japanese market. japanese banks have approached us. saying they have the liquidity. .e have no rush we like to see where we can get the best deal. it's only $1.5 billion. that is all we need from the bond market. abouthow do you see finances right now and how do you see global markets? do you think they are receptive to a country like columbia? do you see a market that is like that? guest: they have played a damaging role in public finances. the same story in many of these countries that have faced tons of trade shocks. i would describe it as poor at
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this point. that was because of a lack of fiscal reform. that was inspected in large postponed for the market disappointment to focus on this .ccord that is with the government is prioritizing and putting the fiscal on the back burner. they came back after the outlook negative and said we are going to do it. alix: you mentioned earlier brazil may be looking more like argentina but my question has to do with venezuela. if you come inside the bloomberg i have traded versus greece over the last five years. you can see they are trading close near the levels greece was
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before a default it on debt. do you see a venezuelan default in the cards? >> markets are pricing in a default. the cards are stacked against venezuela. i don't see a change in policy making. i don't think any measure that he is willing to implement will be sufficient to make the argument they need to make. it is declining. it is a difficult situation. have scarcity. you have price control. you have zero investment in the economy and the heavy hand of government. servicing, at debt if you look at expected oil cover overou need to
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30 billion and cover capital outflows. a bond paymentbe coming out january 26. the next redemption will be in october and november. we do have interesting things. there is a chance for a default. i think it could be a real hit to the market. what is the in game? -- joe: what is the in game? overall debt you can look at. huge payments coming due. you were talking about servicing there. point, iget to that think it would classify that
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definition. you see the third year of recession. hyperinflation on top of it. i think you will -- venezuela is going to be a de facto failed state. it could have repercussions in the emerging world. alix: so it is not over yet. joe: yeah. if things get worse things can get better. we did see a large when for the opposition. worse, which is the real raise and are in such decay you can see a light in the end of the tunnel. coming up, is the u.s.
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recession bound? we have a model that answers this question. ♪
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alix: it's time for the bloomberg business flash. berkshire hathaway making a bigger bet. the warren buffett holding company's stake in the oil refinery tops $6 billion. the investment climbed to 75 million shares. -- dungeyone g is a is the new head of abc, the first african-american in charge
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of a major network. she helped develop shows like scandal and desperate housewives. paul lee is stepping down a viewers.oss of a disturbance in the force for disney over at the box office. ticket sales are fading fast. the film will fall well short of the all-time box office leaders like titanic in avatar. the force awakens has made an hundred $16 million in u.s. theaters and $2 billion globally. that is your bloomberg business flash. the the 3-d yield curve chart alex was looking at, you can see the way the yield curve has flattened and changed over time. it has gotten flatter great
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everyone is talking about the yield curve. longer yield has come down a lot. flattening with an inverted curve has met recession. what are people interpreting these days? >> the new york fed has this fancy pricing model and they try .o decompose treasury yields what is the expected path of the fed policy interest rate and what is the rest? it is like jeremy stein said. it is term premiums. what's interesting about the rally in u.s. treasuries we see in the declines since the start of the year is it has been a lot of decrease in term premiums which captures the risk premium in the treasury market. but also the expected path of short-term fed interest rates have come down quite a bit as
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yields have dropped. that is something we haven't seen on this order of magnitude. joe: breakdown this chart rebuttal be looking at? the changes in the term premium. the risk neutral yield that it is supposed to gauge. the fact that that has come down for us in addition suggests it was more about more than just a flight to quality. it was also this repricing of expectations for the u.s. itself and growth prospects in the u.s.. the fed has that. joe: we have seen the bounce back from the extreme of last week, last wednesday and thursday were everybody was panicking. .e have seen 10 year yields
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howard extreme were things getting? scarlet: some of the metrics -- guest: some of the metrics were incredible. it was close to the lowest in the history of the data which goes back 55-60 years. that was indicative of extreme stress. if you take the difference between the 10 year premium and the one-year premium, that again is so flat and inverted for the first time in a long time. view that's been this we cannot trust the yield curve, we can't trust the spread between short and long-term deal because of what the fed is doing. that it is distorting and some have put out this notion if you adjust for these things the yield curve in a more natural state would be inverted.
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to these arguments resonate? guest: there is something to be said that the way it used to work the yield curve inverted. that requires long-term interest rates to fall below short-term interest rates. when you are near zero it is hard to get them down that far. are not going to get that recession signal. there is a debate over how to adjust statistics involved. i think there is something to be said for the fact markets have priced in higher recession probability than they were at the beginning a few months ago. joe: thank you for joining us. guest: thank you. alix: walmart is said to report earnings tomorrow. we will look into the numbers that show it's slowing growth story.
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alix: walmart might be in trouble. the company announcing a plan to shatter 250 stores. the most in two decades. the stock is falling. sales are slowing. earnings on thursday, we want to see what numbers are saying. let's go to stocks. they have made a comeback so far this year. yearu look over the past on a normalized basis is -- it has trailed the smp and other rivals like target. company's disappearing revenue, you see here year-over-year growth is slowing drastically going in the wrong direction. estimates are revenue growth
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will be flat. walmart sales worldwide have been slowing and profits are inspected to fall 12% in 2016. you have higher labor costs and e-commerce. growth sales were up 10% fourth quarter of 2016. the lowest since warmer begin breaking out its e-commerce sales. international business accounts company's $500 billion in revenue and it has been struggling. the one bright spot, mexico. they have more stores in mexico than anywhere else in the world aside for the u.s.. the company is the center of the u.s. federal probe on bribery accusations but as that comes down the hope is earnings will
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bounce and follow sales. .ales grew 6% last year that is the most since 2006. we will follow earnings when it comes out thursday morning before the opening bell. joining us now, shannon pettypiece. she walked us through the numbers. water analysts going to be focusing on? expectations are pretty low right now. expectations are low. if they can come in lower than expected in the u.s., i think you're going to see positives. if they can't it is going to reignite doubts and concerns there were last year that investors seem to be getting over this year with talk of a possible recession. we know the process is going to be bad this year.
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they have had higher cost from labor. they haven't spending online. fastersales can go that's going to help offset costs. those are key things to watch for. alix: we were supposed to have this nice bounce back because that would be a prime area. you save of the gas pump, you spend at walmart. >> exactly. there have been mixed results. retail has not been a big winner for them. there is a lot of experiences. health care, housing. even if they have more and they are spending is not going to traditional retail. >> let's talk about the e-commerce business. it is always something coming for walmart. where are they with that and
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what do analysts want to see? >> as you pointed out, it has been slowing. part of that is a law of large numbers. they are growing at double digits. that's going to be one to watch. they have been investing so much. you guys have been on the so long, spending so much money and now it's only 10%. investors are going to want to hold someone accountable. alix: what does that mean? guest: head of online, or have the ceo reevaluated. i don't think he's going to go anywhere or the board is going to change but there could be some changes. alix: coming up, what you need
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to know to gear up for tomorrow's training -- trading, next. ♪
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alix: don't mess this duke energy earnings reporting tomorrow. it is going to be about their revised earnings guidance. they have brazil overhang there. we want to hear about that an asset sale plans. joe: don't miss good economic data to watch jobless claims. they have been low. we will be watching that. and, business outlook. pretty dismal. butee if we get anything
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trying to get some sense of the rebound in manufacturing the may look there. alix: thank you for watching. see you tomorrow. joe: have a great evening. ♪
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john: i'm john heilemann. mark: and i'm mark halperin. "with all due respect" to chris christie-- he's baa-aack. ♪ john: hey chris christie, if you are still listening, we love you man. i am in south carolina, where my friend mark is in charleston. the races become the political equivalent of a ufc match, without the role of hitting below the belt. our poll of republican voters half of the precious may explain why.


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