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tv   Bloomberg Markets  Bloomberg  February 22, 2016 12:00pm-2:01pm EST

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>> good afternoon, i'm scarlet fu. alix: and i'm alix steel. here's what we're watching at this hour. scarlet: before fueling the advance, prices have increased 7%. alix steel: hsbc may be relocating hundreds of investigators to paris, but the bank has a slew of other problems on its plate. scarlet: a hedge fund manager publicly by -- backing john kasich in his bid for the white house. who else is big money lining up behind? first we want to head open to the -- head over to the market desk, where julie hyman has been keeping track of things. julie: much like last week, the movement is still on relatively low volume below the 20 day average. a rally nonetheless, and a
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pretty substantial one. major averages are all up, as scarlet says. that also means that for the month of february, stocks are exclusion ofthe the nasdaq, the dow, the s&p, take a look at the bloomberg. this is a seasonal heat map. this is january, obviously, the losing month. breaking the monthly losing streak for the s&p 500. we will see if it lasts. year to date it is still lower. it looks like we are seeing the low here, coming just two weeks ago with a bounce since then. of course it's always possible that we will make new lows, but nonetheless that's the bounce from a couple of weeks ago. alix: it did not seem to be a particular headline fueling that, but it nonetheless rallied
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with stocks. julie: it is one of those mistry moves. year-to-date the chart looks quite similar to what we saw for stocks. this bounce happening quite a few weeks ago, the bottom, we will see if it's permanent, being put in couple of weeks ago. to check back in on the correlation between stocks and oil on the bloomberg. it looks like it has come down quite a bit. 0.7 is historically a high correlation. to give you a look at what i'm talking about, let's take this chart back one year and here you will see that the correlation is substantially higher than it has been. the rally that we are seeing, is not just in oil and in the commodities complex, metals are seeing a bounce as well. zinc, alluminum, getting a bounce today. againsk on happening once
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in the markets, gold, not seeing the strength that we are seeing across other commodities today. thank you so much. mark crumpton has the first word news from our word desk. and: the united states russia have reached a cease-fire on the syrian civil war. it does not include attacks on islamic fronts and the terror groups linked to al qaeda. an announcement is expected after president obama and vladimir putin see by phone. david cameron warns that there will not be a second chance on staying in the european union. the referendum is set for june 23. he made his pitch to stay before members of parliament. >> this is a straight democratic decision. staying in or leaving and no that.ment can ignore having another renegotiation with a second referendum is not
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on the ballot. >> mr. cameron is at odds with johnson, who has come out against staying in the eu. hedge fund founder stanley [indiscernible] backing john kasich. michigan, california, new york, pennsylvania, they can give him a path of the nomination. he says that the idea that senator marco rubio is the most electable republican is misguided. of themiller is one investors with the best track records of the past three decades. rubio, he's a seeking an immediate benefit from the exit of jeb bush, a cash infusion from the jeb bush donors. political reports comparing him trumpry potter and donald to the evil wizard, bold amort. the president and the first lady
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entertained a special guest at the white house, a one hundred six-year-old woman. she was so excited to meet the first couple, she started dancing. she said that one of her dreams was to meet the obama's. she said that she was invited to the white house for black history month celebrations. global news, 20 four hours per day, power by our 2400 journalists and 100 50 news bureaus around the world. i'm mark crumpton. back to you. alix: we do have some breaking news concerning verizon, buying far -- fiber-optic networks from carl icahn's xo communications, leasing spectrum around 1.8 ilion dollars. having the deal is option to buy the unit that controls the airways by the end of 2018. of course, that is where the battleground bill be for these cable providers and those airwaves. telekom. there you go, there's the word, for those companies. scarlet: if you look at the
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verizon share price, it's not moving that much. higher on the day from equities, but the shares have really not budged following the announcement of that acquisition. come inside the bloomberg terminal here. this is the profile for verizon. the latest purchase year of $1.8 billion in cash came about one month after their last purchase, january 25. before that they had made a couple of other purchases as well from millennial media inside the bloomberg terminal, showing the latest acquisitions. certainly not the largest. of course the largest would be the $130 billion stockholm partnership. get 10% of their revenue from enterprise businesses and this deal will help them to bridge the gap between mobile and landline networks. that's all part of that strategy. scarlet: good stuff.
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when it comes to broad end inflation, there's a big disconnect between what investors are expecting and what the data is showing us. if you look at the five year , that's a white line as opposed to the actual trend of underlining core economic cost. you can see how they are pretty much out of sync. joining us with more is jim, chief investment strategist at wells capital management, with $350 billion in assets under management. what do you make of this disconnect? jim: i think that it is interesting. has been so fascinated and drawn to the oil story and withommodity collapse, worldwide commodities collapsing it seems sacrilegious to be -- considering inflation. but it's interesting to look, divorcing yourself from what's going on with energy and looking at the core measures of what's going on to core costs in the economy, you are seeing a clear
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excel a clear acceleration in core consumer price inflation backing up more than half of 1% over the last 12 months. you are seeing an acceleration in the core pce deflator index. this month it mailed rise to one of its highest levels in the recovery. you are seeing the median cpi calculated by the cleveland fed. you are certainly seen wages accelerating here to the highest pace of the recovery. while we have all been fascinated by the global inflationary of this that is commodities, underneath that the core pricing structure is starting to rise. if we stabilize oil and manufacturing? i think that the absent in will quickly come back to what's happening with core inflation, which is going to look out of sync with the 50 basis point fed target rate. as you mentioned, the lowest expectations in the recovery. that, why are all
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investors still so stubborn about this lack of inflation? well, it's not like any of the inflation measures are frightening or anything. and we have had disinflation for so long, it's hard to imagine having any problems with the other issue. weust think -- it's not that have a huge inflation problem, but the markets, particularly the fixed income markets, are not priced. core inflation may be going from 2% to 3.5% over the next couple of years, they will have to come an adjustment to that we are even if it's not frightening inflation, it's a different environment than we have been in until now. -- thenside the blame bloomberg, that white line as opposed to the 10 year yield, they tend to move in tandem is the growth is better and yields
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pickup, but we do see a huge gap . what does market repricing look yeah.jim: well, i do think that economic data has gotten better of late in the united states. probably to the last jobs reports. jobs reports, joel reports, industrial production. i think that that's responsible for the stocks that are doing better of late, as people got really close to agreeing that we would have a recession, i think that we are backing away from that now. that atlantaith fed estimate. that would dispel some recession fears. the problem that we might eventually have in stocks is that while we might get excited about revitalized economic growth, once we do that we are also going to go right back to -- bond yields will have
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to come up. cost pushpressures -- pressures. i still think i could be a problem for stocks as well later this year. glad to you mentioned the federal reserve. we have a slew of fed speeches this week. under the events calendar in the bloomberg terminal you can see how many events we have planned for the week. eight different fed speeches, potter in an hour, lockhart on thursday. do you think that last week's uptick was mentioned by any of these officials? -- jim: i do.ix: i think you might see some of them mentioning the core pricing structure picking up or crude oil finally stabilizing. leaving us with higher inflation and wages. i think you will start to get some mentions of that and with that is going to come mentions
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that, you know, if the markets are stable, the fed might continue on on its pattern of raising rate. eight if minimum, with it speeches, we will get some volatility or fix from those from those vix comments. scarlet: at what point do they actually provide value, then? time to gok a great in after tips is when no one around you is an spec -- expecting inflation. on the 10 year, expectations are down to 1.3% over the next 10 years. as i said, core inflation is 1.2%, wages are 2.5. if you can buy them when citations are low and they are going to go up, that really increases your total return from the bond relative to the alternative. i would not put all of my money in tips, but i would think that for those holding high quality nominal bonds, adding some tips
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,o your fixed income portfolio it's a good time to be doing that right now in lieu of may be inflation expectations going back up a little bit. scarlet: jim, thank you very much. coming up in the next 20 minutes, london mayor boris johnson, the latest announcing that he's supporting the so-called brexit. how will this affect the biggest banks in britain? anie: an in-depth -- alix: in-depth look at less volatility. scarlet: what is behind this drug makers success? we will discuss. ♪
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alix:alix: welcome back to "bloomberg markets." time now for the blue -- bloomberg business splash. the president's economic advisers say that more americans gained work and experience pay raises last year but that the u.s. will face global headwinds continuing this year erie of the council of economic advisers is a -- recommending a reduction in income inequality, many relying heavily on cooperation from a gop led congress. yahoo! will start approaching possible bidders for its core business today according to those familiar with the process. companies like verizon, comcast, and att are interested. marissa mayer is under pressure from activist investors after struggling to boost revenue. a new study slams hollywood for lack of diversity. the report finds that film and
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tv shows produced by major ." inos are "whitewashed running to the industry for women, minorities and lg bt people. the report comes from the university of southern california. that is your business splash update. at the markets desk, julie hyman has a look at individual movers. jules? julie: we have been looking at the bounceback from many different stocks. tec has been a frequent mover on that list. it's the same situation today, with many large-cap technology companies continuing their bounceback and contributing a lot to the gains in the overall major averages. also, we talked about the gains that we are seeing in metal prices, saying that we are seeing the producers of those metals do quite well in the session. moran,la, freeport mac
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copper and gold continuing a bounceback as well. are also watching some of the health insurance stocks. medicare advantage came out with its 2017 rate increase of about 1.35%. analysts are saying that this is a positive number that is lower than what some analysts had anticipated but that it is still a stable increase in revenue. and analyst says that this should be viewed favorably for the managed care organization group and that there are some areas of concern ahead of the release of rates that have proved to be more benign than anticipated. we are seeing a broad rally across these health care insurance stocks as a result of the release of those rates, which happened late on friday. alix: thank you so much. the debate of whether -- over whether the u.k. should be the european union is picking up major steam. boris johnson said that he will campaign for a brexit.
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amid this discussion, hsbc said that they would move 1000 bankers to paris if a brexit brexit happens -- if a brexit happens. when you talk about hsbc, it's really about the global footprint for the bank and it is certainly causing some pain. derivedhe revenue is from asia. hong kong and the rest of greater china. that used to be a good thing, that diversification. did the banks simply bet too much on one region? revenue that you mention comes more even than from other pretax profit and they want to expand further into asia. they are going to have to curtail those ambitions.
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every global problem that the economy is hitting is hurting the bank. whether it is oil, gas, or emerging markets. that's why they posted a loss for the fourth quarter. expect to slow down those ambitions for a bit. alix: what did we here that was different from hsbc? we saw someel: provisions. they were relatively low compared to rivals. right now the bank thinks that it is staring at dollars this year, so not a lot in terms of reasons to worry from the bank itself, but certainly investors are looking very closely at every bank's disclosure. often where they -- whether they are taking a tough enough stance on provisions. so far no one is really rocking the boat just yet. scarlet: hsbc said that they would keep a progressive dividend policy.
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what does that mean? and what are they willing to give up to protect it? lionel: it basically means that it will be in line before a its but investors i speak to take it to mean positive, meaning growing. the problem with that is that earnings are growing at the same time as dividends are rising. if hsbc doesn't want to find itself in a problematic mismatch , the bank today said that the scenario would be comparable to a crisis scenario, the bank is going to have to cut back its ambitions to reinvest and grow in asia and they really have to deliver the cost cuts that they want to achieve to reassure investors about that, which is what investors want right now. alix: what is the potential of a brexit to put a crimp in the plans of hsbc? it's difficult to tell.
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they have said that they would stick by their headquarters in the u.k.. one imagines they have looked up the potential cost. they have talked about moving a thousand bankers to paris, of all places. one wonders if paris can really be a true rival to london as a financial center. one would imagine that london would simply retain some kind of staffer about other centers of europe, even if there is a brexit. that's the message we are reading. expect of people, but nothing that would force the bank to leave lunch -- leave london or the country. much.t: thank you so , or bloombergl got fight columnist. lionel: still ahead, -- alix: still ahead, a bullish market and the chart signaling its risk on. ♪
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welcome back to
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bloomberg markets. are we seeing a risk on signal across the markets? we have a chart that shows the fix futures curve over the past month. alix: you saw a jump in volatility at the front end of the curve, petering out on the backend. within seven days volatility profile drastically changed. the white line and orange line is where it's headed right now and you can see that we are in a backwards tango. basically seeing lower volatility in the short-term and higher volatility in the long run. it was very surprising. absolutely. this is a completely different situation than it was. and what changed in the world in the last seven days? exactly. because it's a sloping curve
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that is doing that much, flat, we are seeing less volatility ,nd upwardly sloping with flat there's less volatility that's more bullish. scarlet: but if you take a look at the cash vick's, this is the recent advance. we are certainly down from the 28 that we saw in middle february, but you will notice a series of higher highs and higher lows. anyone looking at the chart on a technical basis would say that this is perhaps trending higher. calling for the next summer, volatility? maybe. call it the botox effect. plumping up revenue, next. ♪
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alix: from bloomberg world headquarters, welcome back to bloomberg markets. i'm alix steel. scarlet: mark crumpton is at the
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news desk. mark: congress once apple to get involved in the dispute of unlocking the iphone for one of the san bernardino shootings. apple is resisting a court order to help the fbi with the phone. in a statement on its website, the company says the order should be withdrawn. apple says, helping the fbi would create a dangerous president. the uber driver accused of shooting six people in michigan will because first court appearance today. went onay that jason a shooting spree on sunday. the rifle makers of the rifle used in the sandy hook shooting are in court today. 20 first-graders and six engineers were killed in the 2012 shooting. u.s.ng hit a record in the
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in 2015. the last record was set in 2007, before the recession sent in a recession. global news 24 hours a day, powered buyer 2400 journalists and more than 150 news bureaus around the world. i mark crumpton. scarlet: thank you so much. alix: botox is not only bumping up facial wrinkles, it is also plumping up allergan's bottom line. scarlet: it wasn't just the profits that analysts focused on. everl would be the largest for the pharmaceutical energy. by phone froms
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new york, and symphony. -- cynthia. let me begin with you. cynthia: it was a strong result today. there were some good numbers for botox or other drugs, like a stomach drug and a dry eye drug. ony had a couple good bids key projects. delay inhere is any the sale, will it affect you deal with pfizer? teva deal may slip into the april timeline. the key question is, if there is any delay selling the generic business, is there any delay with pfizer? they said that things are on track with pfizer. they were adamant that business
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is as usual, though there has been a hiccup with teva. alix: the elephant in the room is the u.s. treasury department. is there any word on backlash from the government. >> on the earnings call, they said they don't expect the treasury note is coming up -- notice coming up anytime soon. keep in mind, a lot of these notices coming up are aimed at 7864.on that is where a lot of the noses are relevant. the way pfizer -- the waser-allergan struc structured, -- alixscarlet: the company gave
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guidance that was weak. what is behind that? week, atidance was not least i think. i think was perfectly in my with consensus. two things happened. number one, if you look at the most important number two track, the baseline growth. it is still 10%. if you look at the consensus for next year, it is 17.5. the guidance they gave it 17. the delta is from a very super low margin business they had the is now going down. it really doesn't impact the numbers. alix: a stock on her plate to on our platee -- .oday is valium part of the downside is it is using so much of its cash flow to pay down debt, they will not be able to do more of the mma.
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cynthia, what do you make of that? thehia: this has been question for quite some time. when will the music stopped for them. when will it be the scenario .hat they cannot buy products i think we are really waiting. critical earning period. normally they would have reported by now. there is some question as to why they have not at least set a date. there are competing factors with lookingbeing ill, and at their practices that have come under scrutiny lately. the question of whether or not they have the ability to generate enough cash, the question now is today have enough cash to make sure they can pay off their debt at the rate they need to payoff the debt to keep their lenders happy. that is the real question and what investors will have to pay attention to when they look at the numbers. scarlet: what do you think?
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valeant was at 150, we should be evaluating their growth profile. , i don't pick it is going for the future growth profile. the reason weakness has almost entirely been lack of clarity on earnings announcement days. alix: there are also some other issues that the wells fargo report brought up. can management actually change? did they overpay on some products that they did make, like the female viagra. i will not get into the wells fargo report. there is a lot of feedback on the valuation there. the way i run my model is i do not subtract interest and net debt on top of that.
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having said that, some the launch of the ongoing, it seems a recent one is not going well, but it is one of many parts of the story. in the grand scheme of things, -- purely on a free cash flow basis. i did the question right now, at least on the stock, or more around ceo's return as well as earning dates. that, one ofdd to the questions is what is the distribution model now that they have done this innovative deal with walgreens. it is something we have not seen before. that will replace an unconventional model that has been a bit of a to fairway to sell drugs. the real question is we have had what does it mean in the environment going through
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judicial channels, will they have trouble selling some of their big products on the market? what does it end up meaning for the general mma world? valeant is a huge mma player, allergan as well. cynthia: not only is allergan coming out. pfizer is coming out. a lot of other companies say they are looking for small, new clients, to augment their pipeline. that has been the tone and tenure. , maybeome of the deals there are bigger deals to be done. it still seems like the massive deal of that era are coming to a close. scarlet: your final thoughts? at least from valeant's perspective, they are on the sidelines.
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allergan and pfizer -- the pfizer-allergan situation, those companies may likely continue, but it is hard to say. alix: thank you very much. every corerector of isi -- evercore isi. scarlet: yahoo! is looking at potential bidders as early as today. and, a backer of john kasich presidential bid. the details coming up. ♪
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scarlet: you are watching bloomberg. scarlet fu. alix: i am alix steel. this is your global business report. scarlet: here is what we are watching. building a global safety net. the international monetary fund says it will build market confidence. alix: currency traders are becoming a dying greed on wall street. they are falling victim to automation. president former opec says there is reason to believe a deal will stick. alix: we start with the upcoming g 20 summit. finance leaders are heading to shank i'd this week. one key topic, how to strengthen the safety net of the global financial system. with money pouring out of
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imfging nations, the estimates nearly $4 billion exit world markets in january alone. that has spurred calls for policy coordination between emerging economies. scarlet: it is not a good time to be a currency trader. the job action suite coincided with the shift to automation. the 12 against banks cut currency staff by 5% last year. foreign-exchange headcount is down by 20%. oil prices are higher today. there is s speculation that russia could healthy global surplus. saudi arabia, russia, and watar reached a preliminary agreement last week.
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momentum for the freeze could be building. >> there may be consensus to see whether $50 is reasonable, whether $70 is more reasonable. i think it is a question of achieving some kind of agreement between producers and consumers. maybe the target would be around $80, which would be satisfactory to both consumers and producers. alix: argentina is a step closer wideturning to world markets after a 2001 default. the ruling is a blow to hedge funds. that is your global business report. for more stories, visit bloomberg.com. scarlet: let's go down to abigail doolittle, live from the nasdaq where she is taking a look at amazon. abigail: amazon.
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mode.l rally the on amazon, we are looking microsoft, facebook, and alphabet as well. interestingly, the for stocks are among the worst today. returning to amazon, the biggest boost in the index today. height the minimum free shipping -- for free to $39. from $49 this may be to get more people to subscribe to its amazon prime service. another big presenters mover, tesla shares have been moving higher since the company provided a better-than-expected guide a week and a half ago. plus, smaller pieces of positive news for tesla. today, bloomberg reporting that the ceo has
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regained rights to the tesla.com sally.from silicon a lunch today. there could be more selling ahead. alix: thank you so much, abigail. let the bidding begin. yahoo! is said to be approaching corporate buyers as early as today. alex sherman talked with the candidates on bloomberg . over what we've learned the weekend is who are the advisors. jp morgan -- basically the three banks hired to sell yahoo!. who are they targeting? for rising, comcast -- comcast is a regional cable player,
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still not a national player, going after a large global site, a little off the path -- at&t, which might be an interested. for eisen is interested, so what interested, so why not. maybe silver lake. verizon. tim armstrong is there and has one of this forever. comcast, they have a pretty powerful digital product that they could feed although 700 million people through. is maybe ahead of the game look into what is next. they have more let's have their come to jesus moment that says, traditional cable is not the future here. we need to do something else.
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many people that are close to comcast has told me there is a camp of people in comcast that are relieved that the time warner cable deal did not go through. it allows them to channel their energy around wireless, digital, or something other than traditional cable to focus the company on the future. onx: that was alex sherman bloomberg this morning. scarlet: coming up, stanley druckenmiller throwing his support behind john kasich. ♪
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alix: welcome back to bloomberg markets. i am alix steel. scarlet: i'm scarlet fu. is backingckenmiller john kasich for president. he says the ohio governor is the best republican to take on hillary clinton saying that case
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john kasich has been his favorite all along. stephanie, what was behind the decision to back john kasich? stephanie: this is a case of follow the money. to christie inng 2014, and has given john kasich four times the amount he gave to christie. billccessfully moved clinton to the center. he says that john kasich is a serious candidate with serious credentials. he is making the point that this is anyone's race at this point. donald trump is this wild card unknown, even though he is not in the lead. the case that
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with the right financial ba backing, there are plenty of open. scarlet: when it comes to cash on hand, is it possible for him to catch up? >> the point he has made is there is a pathway. the pathway through states like michigan, ohio, other states. the problem he faces is that before that, we have the sec primary with a lot of southern states, the evangelical vote, where he will not do belt. -- do well. whether he will make the case effectively to main street that he has the right choice, the establishment candidate -- that is a different question. i think it is going to be a really tough hurdle for him, and there will be calls for him to drop out. as far as getting more financing behind him, wall
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street has gotten burned. it backed jeb bush, chris christie. that is dead money. money loss. you're hard-pressed to find an enormous amount of funders from the street saying, give me a candidate. they are waiting on the sidelines. alix: literally, in cash, waiting on the sidelines. stanley that justi druckenmiller has the ability to bring in his friends? stephanie: he is saying, john kasich is not that far behind. it could be anyone's race. that is not what he is saying just on the sidelines, he is saying, this is my guy. he looked at john kasich and said, he was able to work with newt gingrich to pull bill clinton to the center. that is the message we are looking for. scarlet: the other thing we have
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to bring in this conversation is john kasich comments that he was by an army of people at age 26. megan is already shaking her head. is this something that will come back to burn him. something from 1978. >> this is the issue. for chile for john kasich him a he is not donald trump. donald trump can get away with anything. is this something his opponents will use? absolutely. it is not great to talk about women leaving the kitchen in 2016. he has to keep building what but he is building. he is the guy who can forge compromises, a stephanie said -- as stephanie says. when donald trump fades -- i don't think he will fade -- he is the mainstream choice. scarlet: could one make the
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argument that what john kasich theirwomen leaving kitchen to put signs in the yard, it was true. >> the demographic of working women was very different than what it is today. these kinds of things can be put into any kind of context that andle want to flash and ad sound bite. john is a very in justin candidate an interesting guy. donald trump, i think has a clear pathway. if we can get establishment money and support behind one candidate, different story. alix: that is what has highlighted his campaign. donald trump has blown it out and does not need any money. that money has been sitting on the sidelines. what other hedge fund money is out there or big money is out there? >> there is a ton of money waiting. it is also money that i called
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panic money. one who is looking to put their money somewhere once that to happen. what they're looking for is donald, how he does over the next two weeks. they're saying to themselves, with let's see where we get after super tuesday -- if marco rubio emerges. the thing we will be watching is if wall street money ever goes behind donald trump. much.thanks very megan murphy of bloomberg news. scarlet: coming up, ibm making waves in the clouds. announcing a new initiative. ♪ . .
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alix: it isn'talix: 1 p.m. in new york and 6:00 a.m. in hong kong. scarlet: welcome to bloomberg markets.
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alix: -- scarlet: from bloomberg world records in new york, welcome to bloomberg markets. alix: standard & poor's is taking the hardest line on it rating firms in emerging markets, but is it being too unforgiving because of criticism it received following the 2008 financial crisis? oil prices surging as shale prices are expected to fall further this year, helping to reduce the global glut. alix: a homecoming for barney's new york, returning to downtown manhattan where it started more than 90 years ago. headet: first, we want to over to the markets desk and get a backdrop on the markets. julie: last week, we had the best week of the year for stocks and it is extending into this
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week as well. we see the sort of risk on scenario back in effect, so stocks rallying with other associated with risk rally in. all the major averages are up more than 1% today and holding onto the gains. we have not seen the choppiness that characterize the markets like we saw a couple of weeks ago. percentage movers today are some of the battered stocks over the last year. chesapeake energy which has been as weing, all coming back see the underlying commodities rally as well. movements wetable are seeing is a volatility index falling to the lowest level so far this year. that's another measure of this tighter range that we see, not as much volatility in the market and we see the drop to this
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level. isther way it plays out that people are buying stocks, they are selling treasuries. we are seeing that a huge gain in yields, but just a tick there today. as we hit that low on february 11, we really bounced off. in terms of a catalyst, some are saying it's a matter of protective levels. the chief strategist at oppenheimer for equities pointed out that the past times we've valuation fall0 to a range of 16.5, you seen a bounce of about 6%, so we have a chart that goes back over the previous instances and then the oncece that we see came
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the pte ratio has gotten to that range. that's not to say it's a catalyst in and of itself, but if investors were looking for reasons to high, that is one of the reasons we have seen historically investors come in and judge it cheap. scarlet: we have been talking about how stocks have hit their low-end that has been the case and we've seen an upswing since then. firstget to bloomberg ward news with mark crumpton at the news desk. mark: british prime minister david cameron says there won't be a second chance to stay in the european union. the referendum has been set for june 23. the prime minister made his case today in a speech to members of parliament. mr. cameron: the government's position is to make sure britain remains in a reformed european union. mr. speaker, this is a vital decision for the future of our
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country and i believe we should also be clear that it is a final decision. mark: the prime minister is going up against popular male, boris johnson, who has come out against britain staying in the eu. stanley druckenmiller says he is backing john kasich's did for the presidency. in an e-mail, he said four states, she didn't california, new york and pennsylvania could give case a quepasa to the nomination. -- could give him a pass to the nomination. the money manager who boasts one of the best investor track records over the past three decades. senator marco rubio says he is anti-constitution but adds he would not make it a -- is anti-prostitution but he would illegal in the
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state. michigan governor rick snyder is under fire for failing to turn over documents concerning flint's water to a committee. governor snyder is said to have ignored and earlier request. petition tohe recall the governor has cleared a major hurdle after five failed attempt. chief justice john roberts is remembering the late and then scalia -- antonin scalia as an irrepressible spirit. roberts called his former colleague our man for all seasons and we will miss him beyond measure. remainposture will draped in black bunting until next month someone the associate justices switch seats to reflect seniority. information onw the syrian cease-fire -- a statement says the cease-fire will begin this saturday. u.s. secretary of state, john kerry, says the cease-fire is to
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reduce violence and help the syrian people. dayle news 24 hours a powered by our 2400 journalists in 150 news euros around the world. back to you. comes to ratings, standard & poor's has taken a hard line in emerging markets. there are the first to downgrade saudi arabia and poland. scarlet: have the s&p downgrades been too harsh? joining us is our emerging markets reporter and the head of e.m. at brown's brothers in london. give us the breakdown of the developing countries downgraded and the reasons why. guest: last week, s&p downgraded five countries, including saudi bahrain.razil and the reason is these commodity prices tend to slow economic growth well worsening their
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credit worthiness. brazil was deep into junk status columbia, the company has a negative outlook as well. alix: do you agree with these downgrades? guest: i do not. it's a mixed bag. ratings in general are under pressure to be a little tougher in the 2007re back or 2008 crisis. that was housing and housing related securities. view is they are probably overcompensating a bit, in some cases, too much. but it does serve notice to policymakers that they have and little room
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to skate by in the sort of environment. guest: it seems like s&p is more aggressive and turns -- in terms of downgrades. these countries that we mentioned, s&p has the lowest ratings. , the rating onch brazil is two notches behind moody's. moody's smp is more aggressive. do you know why that's the case? surprising not too when you look at the case. turkey had doubled the plus, which was too generous. quiteense, they weren't as optimistic and they seem to be a little more pessimistic on the way down. viewed or wrongly, it is as being a tougher judge on emerging market credit.
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every agency and myself, we have our own metrics and a lot of things are common in terms of the fundamental numbers, but each industry can wait on different indicators and that's where we see a little divergence. my model is to find the middle ground and predict where rating downgrades are likely to come. all of: having said that, ratings agencies generally don't like to stand out from each other too much. expect to see moody's follow any time soon? guest: i get the sense moody's has been the most generous. investmenttill at grade, which is a had scratcher. it does occur, but at least two or three of them are sort of the key going
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forward, especially for commodity producers is how commodity prices behave. thissort of payback for last year when the commodity , we may see a little breathing room for these commodity producers. oil is trying to bottom. it's not clear. what if oil can bottom, are ready for a downgrade? guest: malaysia is at risk for a downgrade. pressure.ing under aa minus may seem a little too high. -- southica and africa's other commodities exporter and as we know what the whole debacle of the finance
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minister, it is definitely vulnerable. , because of these ongoing sanctions, i think russia is still vulnerable. scarlet: there was also a downgrade of poland, which is not connected with this commodity story. what is the story there? guest: it seems like ratings agencies place big important in terms of political dynamics, because there is always the political dynamics and framework. poland was cut to one level for the first time ever last month and the reasoning was they are concerned about the new governments push to take control andome of the key agencies that's going to weaken their independence. they were critical of the decision, basically saying smp is overstepping their role as
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the traditional ratings watchdog. much.thank you very coming up in the next 20 minutes, a fourth-quarter -- is there an end to the rout insight? will saudi arabia and russia cutting oil due to the rebound? we will talk to big blue's biggest cloud event ever coming up in las vegas.
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alix: breaking news -- bloomberg
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has learned that david haro has baltimore glencore shares. julie: harris associates now owns just over 8.5% of glencore after some additional buying in recent weeks according to an interview bloomberg news conducted today. he said the bear story was way overblown and we have the company rising from the abyss. the intradayng at shares there. ups state he now holds is from 7.1%. a spokesman for glencore did declined to comment and one disclaimer -- the chairman of bloomberg lp is a senior independent nonexecutive director at glencore. the otherto some of
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movers -- some of the declining stocks we are watching. buying bain capital, including $2.3 billion in debt. although this will generate sales, theyllion in are concerned about adding to the debt led to the company and that is one of the reasons shares are going lower. sticking with food and looking at a couple of other movers, one of them is kellogg, the credit rating was downgrading over at such. essentially looking at the company's slowing growth profile. also looking at dean food -- earnings beat estimates and accompanies forecast heat estimates, but volume in gallons work down 6% and the company expects a drop in the low single digits. dean has been all that -- has been investing a lot in new
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products that have been bearing fruit but not enough to boost the overall volume. scarlet: shares of hsbc are falling today. they surprised with a loss and a bumpier road overhead because of china's slowing economy. fears aboutnforces the health of the banking industry there. guest: banks overall have struggled. u.s. banks have struggled. at rbs go back and look and barclays and ubs and deutsche bank more recently, credit squeeze has held up well, hsbc path business model is different, but european banks have been under siege. >> one of the things that strikes me is they are trading
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substantially below the book value. isthey not believe the book worth as much as what they carry the books as? what are they saying? think you can see banks trading below book value and i are worriest, there about where the assets are valued. , there are issues around growth and i think that's the other issue. you cannot just take bank and unwind it. to generate profits and if you look at profit lines of various ranks, regulation has beaten banks up. >> let's wrap up what an ugly quarter it has in. losses, you queerly mentioned the revenue environment. where does the prophet come from
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for these guys? when you go into the investment bank, every single division down, down, down. where does it come from? have a good't answer for that. i'm sure there's a lot of introspection for bank managers. a are the largest bank in germany and one of the largest banks overall, but the model they had thus far is not working. to your to play strengths. one thing banks are able to do is gather deposits at attractive rates. matt: some u.s. banks are trading below book as well and if you look at the entire index of s&p financials, we are getting right down to price-to-book. european banks are trading much cheaper but why are we coming down with u.s. banks as well and do we have further to go? guest: i think it is an earnings
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issue. it's not like banks have bad assets so much on their books. extent, they may be somewhat bad but that is relatively small. the bigger question is what is the banks earning model going forward? they are basically being forced to exit business after business. alix: still ahead, we will hear from the former algerian oil minister on when he sees prices stabilizing and whether an out put freeze will have any impact at all. ♪
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alix: brazil's btg is said to be considering bringing the company private. it may repay the bailout it did receive. this is a brazilian investment bank that did get rescue
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financing after its founder was arrested back in november. two people with direct knowledge of the matter say perhaps the company could be going private. a huge spike on that news. still down about 37% over the past one year and certainly creating lots of problems for the brazilian ruling elite. let's bring in julie hyman who can give us a little more context. i was going to switch gears and talk about a different story. we have a bunch of breaking news affecting movers in the past few moments. i want to look at honeywell and united technologies. the two have had merger talks that honeywell is said to have made a proposal to united technologies and united technologies was said to have seen the issues as difficult. maybe you can look at my bloomberg or that.
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we have notere -- confirmed these headlines. we don't know if they are still on the table. that said, we saw a spike on the table. let's also take a look at the united technology shares. although those are holding up at a higher level, up by 5% versus where they were before. about one more breaking story affecting shares and that has to do with go-go, the wi-fi company. those shares are up nearly 13%. i have to look at the headlines american airlines dismissed a filedatory judges action against go-go. the shares plunged after american airlines said go-go's competitors offered a more , so thosee service
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shares have plunged and now, a lot of moving parts happening in just the past you moments. take a look at honeywell and united tech in the terminal. is downfor honeywell 4%. the idea is that it's really hard to grow the top line and impart, perhaps that is why we are seeing some bubbling merger talks there. it is a tough environment. even though we haven't seen it this year, last year was a more blockbuster year for strategic mergers and deals. it will be interesting to see if things start to heat up with this deal. scarlet: and just a reminder for anyone who wants to keep track ,f the mergers and acquisitions
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you can keep track on your bloomberg terminal, including the numbers to qualify how money transactions there have been globally and in north america. -- btg,d just to recap the brazilian investment bank, looking to take its company private. potential chatter emerging between united technologies and honeywell, and we also have gogo surging after american dismissed judgment actions. a filing against them has now been dismissed. lots of breaking news. coming up, big blue has bigger ambitions in the cloud. ♪
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alix: from scarlet: bloomberg world scarlet: headquarters in new york, welcome back to bloomberg markets. let's get to bloomberg first
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toward news with mark crumpton at the news desk. mark: president obama is asking the nation's governors to help push his free-trade agenda. he wants governors to talk to congressional delegations about the pacific rim deal could boost business in their states. he said governors can push congress to hold the vote and had this to say about china. president obama: i don't think it's any secret that china in the past has not always operated fairly. they are now in a process where they are trying to transition their economic model. they recognize they cannot forever sustain an export driven growth model. but it is going to take some time and it is tempting for them bysolve short-term problems dumping a bunch of state subsidized goods into the u.s. market. mark: the president urged governors to help fight the zika
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virus and back new cyber security initiatives. apple wants congress to get involved in the dispute over unlocking the iphone of one of the san bernardino shooters. apple is resisting a court order to help the fbi with the phone. in a statement on its website, the company says the government should withdraw the court order and congress should form a commission to discuss privacy and personal freedom. wouldsays helping the fbi create a dangerous precedent. a michigan man has been charged with six counts of murder in connection with a shooting rampage in kalamazoo. authorities say jason dalton picked his targets at random during his shift as an uber driver. the associated press cites the local sheriff he says uber is a -- uber is cooperating with the investigation. a swedish think tank says global arms exports increased 14% in the past five years. the united states is still in the top position after sales
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grew 27%. sales from the next biggest exporters, russia and china, also increase. exporters accounted for 74% of all arms sales with the u.s. and russia supplying 58%. global news 24 hours a day powered by our tray 400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. back to you. ibm has its head in the cloud and that is exactly the way the ceo wants it. they've been divesting away from their legacy businesses and pivoting a two big data. its: big blue is holding against cloud event in las vegas. here with more is emily chang with an exclusive interview. robert leblanc, the senior vice president of ibm's cloud business is joining us
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from the conference in las vegas. you guys are announcing a big .artnership today how do you expect these are ships to expand ibm's business? robert: thank you for having me. if you step back and take a look at what clients are trying to do, they are trying to move to a hybrid cloud environment and take advantage of all the investments they have made. they are all around, helping clients expand out into the cloud and do it in a seamless fashion.stent a lot of clients are running important applications but they want to take advantage and combine it in new and unique ways. we now have a consistent set of tools and a consistent, seamless way for clients to move there workloads over to the ibm cloud
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and really make it easy to utilize tools and experiences they already have. that is value to the client. -- withgit hub, they use the tools and technologies to build the applications. that has always been the purview of the cloud and now they can do it behind the firewall. they can build the private cloud and public cloud applications. around the swift programming who build applications for mobile. able to connect to your data and applications you have already built, so we are the first cloud provider to take the language and supported natively on the cloud. is still early days in
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the cloud business, but some also say when it comes to amazon and microsoft in their race for the cloud that you are not a good sport. how you change that? robert: we don't look at it as a race for size, we look at it as a race for value. we are focused on helping clients take advantage of a hybrid cloud, which means they can take advantage of all the cost advantages and capability of the public cloud but connect it back to their clouds and back to their data centers where most of the data and applications are running. so we say take advantage and build a hybrid application that takes advantage of what you already have. our differentiation is a little different.
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robert: we have a good mix and that is representative of where clients are investing today. early still in the innings in a long-term transition. what we are trying to do is make
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sure we help the client make that transformation and that transformation will be hybrid. -- looks like we are having some trouble. with your shot coming out of las vegas. i'm going to ask one more question. i want to talk about revenue sharing. how does the revenue-sharing ?odel work how is it adding to ibm's bottom line? : if you look at it, we are going to sell the market vmware and we will enable them to select capability. they start to move workloads over to the ibm cloud,
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that is revenue and that helps us open up the market and open up what clients can do on the cloud and that helps both vmware and ibm. it gives clients choice and the ability to consistently move workloads. we think this will help clients accelerate their investment in this notion of the hybrid cloud. how many are currently ibm cloud services? robert: we have over a million developers on that cloud today. of swiftadd the number programmers, they all have and they capabilities can get access to all of our wants and cloud services and we are starting to see unique applications built by new startups.
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i started it with the clients. they kick it off and one client who is a startup using cognitive services to provide new and unique insight and analytics into the way traders trade. we are seeing a lot of people come from different areas coming , so you have to think about developers coming from all of these sides all utilizing the cloud. platform rather than just a destination. emily: robert leblanc, big announcement for you guys out of las vegas today. thank you for joining us. scarlet: thank you so much. emily chang with robert leblanc. alix: coming up, barney's new york makes a manhattan homecoming. the s&p 500 markets
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worst ever start in january. alix: an yahoo! is approaching potential buyers for its core business again. we will tell you who would make a good fit. ♪
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scarlet: welcome back to bloomberg markets. alix: let's head over to the market desk where julie hyman has latest. julie: i'm getting back to these breaking stories just to update you on the stock movements. .et's start with gogo
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shares surging after american airlines dismissed its declaratory judges action it had filed. that was in reference to an action filed last week. the stock fell 27% last tuesday after american airlines talked about the comparative services offered by another company that offers in-flight wireless services. they are still down by nearly 2% but recovering little bit from earlier. we are watching honeywell and united technologies. the companies have held talks in the last two weeks. honeywell offered a premium for honeywell, largely in stocks with some cash. we have not confirmed the story and we do not know what the status of these talks would be, but we see united technologies gain more since it would be the suppose it target. both of these companies have a market cap of about $80 billion,
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so we are talking about a large deal here. -- btx outbid for honeywell but that did not go through. a brazilian investment bank that got rescue financing, talking about potentially going private and shares in brazil are up 6%. alix: barney's new york marks a manhattan homecoming. a return to the block in which the luxury retailer was founded in 1923. >> barney has new flagship store in downtown new york, 58,000 square feet, just open. barney's was founded on this block back in 1923.
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>> it was much made about the nostalgia, but for us, it is an opportunity to engage with a modern downtown manhattan customer we believe is underserved. ramy: but barney's is not the only retailer eyeing an opening in manhattan. marcus and nordstrom will open their first stores in new york in the next couple of years. the city will gain 650,000 square feet of retail by 2016. does new york have the capacity to take in all of the stores? >> i would not comment on that. i think the customers and the market will decide on that. i am confident we have carved out a very unique plane of his this and we have substantially differentiate ourselves from our competitors. a blindat includes
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barber and exclusive connections that make up nearly one third of the downtown flagship. >> we tried to make it so that it was a compliment to madison. it's about carving out exclusive products with the larger brands we carry. ramy: customers might notice the absence of registers. sales associates carry ipads and customers can check out with apple day. >> having a more mobile checkout experience and not a traditional cash wrap behind the scenes was part of that. the: that was part of investment to improve its digital and physical experience. this is thanks to our very supportive owner who was able to satisfy our debt. since then, the retailer has seen record revenue growth
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and closed 23 stores. store is thewn only significant store we have opened and that is quite intentional. barney's doesn't need to be everywhere. ramy: and barney says they see profit on 7th avenue. >> we are 93 years young at this point. winds will always be market conditions, but there is strength in with the brand stands for. scarlet: you can have that kind of retail without real estate. estate mogul paid $55 million for the property in 2007. >> you've got to believe what you are seeing today, barney's opening in chelsea, it is the next page, the next stage in the development of the evolution of
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this neighborhood and becoming a higher-end destination than it was the day before barney's opened up here. in the not be surprised next couple of years of you see more luxury good retailers with stores here. yearsin the next three through 2018, there will be about 650,000 square feet of retail space. do you think the city can absorb all of that new space? >> i believe it can. touristo do with inflows to the city and the allomic situation, but things being equal, i think 650 thousand square feet can be absorbed easily in a city like new york. we have falling oil and slowing numbers in china and the dollar -- which of these things will affect people like you the most? affect thegoing to
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real estate and luxury good at real estate is how good those brands will perform in the next couple of quarters. will drive their desire to open new spaces and what drives the industry. ramy: you have said you are considering your own cause in real estate purchases here. do you hold to that? >> we were not buyers in the last nine months. trying.t for lack of we cannot find the right topic at the right price and we are price-sensitive. the right opportunity turns up, we will look into it. ramy: moving more comparing new york versus other markets, where else would it be if it were not new york you wanted to invest?
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>> it would be definitely boston, cities in europe -- we invest a lot in prague and warsaw. we invest in stockholm, which is an amazing city. if you look at the scarcity of real estate, real estate is scarce. sao paulo is an amazing location. i know that brazil is out of vogue today but usually opportunities don't come wrapped in cellophane with a nice ribbon. i believe sao paulo represents a huge opportunity in real estate. are looking tole china with a bit of fear and trepidation because of the slowdown in economic growth. with that, one point 3 billion people cannot be negated. any thoughts on china and investment there? >> no. ramy: that was quick and fast. >> we are not retailers, we are real estate people. i don't look at china as a priority for different reasons,
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not because the demand would not be there. i believe the problems would be on the supply side. it's not that i'm ignoring the fact that there are a billion people who need to buy a lot of things. side isthe real estate not the way we would like it to be. i don't think there's scarcity enough to reward us for the risk involved. ramy: you own about 540 shopping malls around the world. what are you seeing in terms of retail? >> we have 15 million visitors to our shopping centers every day. we are the us, providers of daily necessity items and we have supermarkets in 400 or 500 shopping centers, probably more. the ongoing flow of people continues. i will give you an example to
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the extreme. people talk about how bad the situation is in brazil. we've seen 11% growth in our sales today. it is very steady. you see people coming for different purposes. not just to shop, but to be there with friends and have a cup of cop -- cup of coffee. so as far as the footfall is concerned, we don't see a drop. we see a slight interest. alix: coming up, who is getting rich from last month's stock rout? we will tell you. ♪
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scarlet: u.s. stocks at session
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highs right now, but the start of the year was one of the worst. that might have helped some of the paychecks of big banks ceos. alix: how does that make sense? guest: every year, the boards of and says get together we're going to pay our ceo asked million. how they do that is a track their stock price over five days and divide 9 million by that many shares. when your stock prices down, you get more shares. in the long run, hopefully that will pay off. scarlet: but these guys do own a lot of stock in a company. doesn't that hurt them more than help them? guest: if you look at jamie dimon or lloyd blankfein, they were both leaders in this route has made them not billionaires. in the short-term, it hurts them, but hopefully the stock price continues to go up and
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they continue to collect more shares. as we saw jamie dimon coming in buying jpmorgan shares. what is the difference this year versus last year? guest: this year, the route means more shares. a lot of these guys are getting raises, so that they hired dollar value and a higher number of shares with it. scarlet: thank you for your time today. if you want to take a look at which go and pay go on the bloomberg terminal. alix: coming up in the next hour, maurice leavy will join us at 2:30 eastern to talk about ad landscape and the possibility of a brexit. ♪
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reporter: it is 2:00 p.m. in new york. welcome to "bloomberg markets." ♪
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>> from bloomberg world headquarters, i am matt miller. here are the stories we are watching this hour. stocks rising in a session high with u.s. equities extending the best week of the year. is this just the call me for the storm of further volatility? 51 of the remaining 65 stocks from the s&p report earnings this week. what to look out for from some of the biggest names in retail, including macy's, target, and gap. could hillary clinton and donald trump grab their party's respective nominations as early as next month? bloomberg politics makes the case for the paths of both candidates. julian.ad over to she has the latest on the rally. julie: stocks rising to

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