tv Bloomberg Markets Bloomberg February 29, 2016 12:00pm-2:01pm EST
good afternoon. i'm scarlet fu. this is what we are watching. if you wanted to avoid the worst of the equity route, look at what analysts are recommending. wall street's favorite calls are not heading out. super tuesday is almost honest. we will tell you what donald trump could mean for investors. a crucial time for their industry. what it could mean for dealmaking. we want to get a check on the activity. julie hyman has the latest. a surprise move from china central bank. stocks are rising.
julie: it does not look like a reaction. stocks were muddling along earlier. is athis movement upward recent. we did have a chinese central bank cutting the reserve ratio. if you look at the s&p 500. it gaining steam in the last hour or so. that's when the gains were coming. it looks like that coincided with the gain in oil price. oil had been higher on the day. it took that leg up and then we saw the stocks move with it. we have had that going on. seeing arehat we are on it relatively low volume. it's running below the 20 day average. in terms of oil, we see this latest uptick in prices. aree fund managers increasing their wagers.
given oilt surprising really bounces. stocks of been doing the same. seen a bullish bets on gold. at the same time, we see oil rising. it's up 1%. , we see leont backed holdings. that is the blue line. this is global stocks. the buying gold we have seen is in part a response to the turmoil we've seen in the stock market. they are seeing these bullish wagers coincide with gold. it doesn't always happen that way. you've got to hedge in some capacity. we are now positive for february. the you remember february 11, when the world was ending?
julie: there was light at the end of the tunnel so to speak. the nasdaq is very close to going positive for the month. that's really the index we are watching. the dow and s&p looks like they will make it. once the simple within the , the best performers on the month for the nasdaq. a lot of this has been earnings driven. they came out with their numbers over the month. on the downside within the nasdaq 100, this decline came on the heels of the earning report. viacom has been week. if you look at the bottom 10 performers, a lot of it is pharmaceuticals and mediate. -- media. scarlet: we will check in with
julie later. we have more from the news dexcom. >> clarence thomas did something he hasn't done in 10 years. he asked question from the bench, at least seven. it's the second week the high court has heard arguments since the death of scalia. donald trump is blaming an topiece for his failure condemn a former ku klux klan leader during an interview. he said he thought he was being asked about david duke and various groups. he wanted to know which groups. duke endorsed him for president last week. donald trump and hillary clinton have widened their leads in a new national poll. come leads by 49%. rubio and ted cruz are virtually tied with 16 and 15%.
the former secretary of state leads bernie sanders 55% to 38%. say donald trump and clinton will get their nominations. raised $36ers million this month. clinton picked up 14 $9 million. ted cruz took in $7.6 million. president obama has awarded the military honor to a navy seal. rescue an american hostage in december. he is the 11th living servicemember awarded the medal of honor. global news 24 hours a day powered by our 2400 journalists
and news bureaus around the world. alex: the market is showing signs of recovery. they are still leery of getting back into energy. scarlet: that is according to jeffrey sherman. >> it's an extremely oversupplied market. if you are a futures investor, you don't hold physical oil. oil or delivery of oil does not change in price, you lose money. you enter that contract and roll down. you will sell it at 33 or 38. that means the investor has a negative carry. you have to overcome this amount. that's just breaking even. i like buying things with negative yields.
if we think about corporate bonds and the like. it's an oversupplied market. people have been taught with policy to buy it. people have been burned on this trade for many months. they are trying to make a call. if you corroborate what's going on with the energy spread, the bond market does not think we are getting out of this range. week, theu had last fed came out and said the inflation market is wrong. real money is being put to work to bet on inflation spreads. market goes to zero over the next two years. there is some hubris in that. there is no other source of inflation. only oil is driving it. ultimately, oil have to go to zero. maybe core inflation has to go down.
the bond market is doing something different. we think it's way too early to be buying these high-yield energy names. >> you are painting a picture of very slow growth. that environment, what's the most sensible thing to do with your money? saw the cpi numbers. that's assuming no bedbugs. what you find is risk is not what you want to buy. sometimes you have to play defense. we see a macro environment. we will see if this is the kind of spike in inflation, going from sub 22 22%. earnings growth in the u.s.. to be negativeg
for 2016 after stripping out energy. there are some decent spots. there are places you can be careful. exposure,based market i think the high-yield market has more pain in the near term. scarlet: that was jeffrey sherman from the line earlier today. coming up, the pmo financial ceo weighs in on the commodities route. we have a conversation from the metal mining conference. scarlet: what will the fed do next? we will have tensions on interest rates this year. alex: we are less than 24 hours away from super tuesday. what would donald trumps mean ♪ for markets?
alex: welcome back to bloomberg markets. i am alix steel. government owned oil company is posting its 13th loss in a row. forcompany laid out plans deeper spending cuts this year. it has not made a profit since 2012. torlet: citigroup has agreed portfolioan expresses sales. microsoft will ship a realityr version of its device for $3000. that's around the same time oculus will start to ship.
seeets viewers three-dimensional objects in the real world. that is your business flash up eight. scarlet: julie hyman has a check. it's the end of the month. were just talking about how the nasdaq is still a little bit negative for the month. the dow has been the best performer. this is the best monthly performance since october. a diverse group of stocks has went there. dupont has done well. of cisco has done well. united technologies is in talks with honeywell's. these are the three best performers. session, we've seen some similar suspects at the top of the doubt. apple has had some ups and downs. we seen a stronger performance from boeing and caterpillar.
that's the snapshot of the dow. i want to look at some other strong performers. signet is coming out with its earnings. they are reassuring investors they are not relying on financing to drive jewelry stores. says it will sell them i and in virginity -- virginia. nonetheless, investors seem to be reassured. the stock will have its best month ever. that points to how much free point -- freeport stock has performed. that has helped the stock. it now has rebounded by so much. $4.60 on january 29.
alix: let's head now to hollywood, florida. the mining conference is underway. withet: we're standing by the ceo. daniel. start, this is the 25th anniversary of the conference. normally, a lot of deals get done. these are not ordinary times. what's the appetite and like so far with deals? >> the appetite for conversation is very high. this form does not just provide a place for presentations. we have thousands of one-on-one meetings. the did business is in transition. lots of meetings are going on. people are talking about the future and the realignment of assets. >> in canada, we have seen some
shares. there have not been a lot of ipos. the you see that enough? >> there is capital raising going on. companies are reconfiguring. companies want to stay down -- paydown debt. there are companies that want to make acquisitions. optimization of portfolios and improving operating performance is the big focus. people want to get the answer to what's next. or does it go next? >> that depends on the sector. a lot of these companies are on their knees at this point. are we getting to the point where we start to see sales? >> the market devaluation has down. they are in a better state than they were two years ago. ofare coming off a long time heavy investment. the optimization of property is
what people are focusing on. i would not say companies are on their knees. we are late and off now in the correction that the ability to trade properties and sell things is greater than it's been. >> your own people, your own analysts say there might not be an improvement until the end of the decade. are goingese big guys to ride that out? >> it's hard to call the bottom of the market. this,a time like breakeven's come down. people do clean up their balance sheets. that's what you are seeing. some companies overspent or anticipated higher prices for longer. they are building themselves for lower prices for longer. the ability is coming in markedly. the market cap of the presenters
was $750 billion. this year, it's $500 billion. you can see the adjustment that is taking place. >> the u.s. dollar is a big factor. -- companies that have been or to have their labor costs elsewhere. what is your forecast for the u.s. dollar? >> i don't have a forecast for the u.s. dollar. i think by nature it's going to be a strong currency for some time to come. when you look at the strength of the economy, how strong the consumer is, the likelihood of continued good gdp growth. there is a rebalancing going on. who can predict what's going to out ofas we move monetary stimulus. i think the dollar will retain strength for some time. an impact on all of
the commodities. i should ask you about gold. there is some relief on the horizon. what does that mean for you? we are above $1200 an ounce. >> i hope so. with our position in the industry as a leading mining bank, we are working with each sector. many of the companies find ways to increase the value of their enterprise. it's encouraging to see the price of gold firming. i can't pick where the price of gold is going to go. >> it strange look for deals to take place. ,t seems like the core assets there are still a lot of buyers interested in those. anything under that, it sits on a self -- shelf for a long time. >> the least productive
properties are going to be less productive. there is a natural rationalization that happens. we tend to underestimate. i think investors were here oray are asking themselves should i be investing in the long term? which companies? which management teams will be more successful? which company needs to take some steps in their capital structure? >> we believe it there. it's a pleasure speaking with you. scarlet: that was bill downs. ahead, our popular companies that are victims of their own success. we have some charts about how they are trailing the s&p. ♪
scarlet: this is bloomberg markets. alix: is it time to favor the underdog stock. if you want to avoid the retreat, you have to avoid the usual suspects. have declined 11% on average this year. companies that are ranked at the bottom of the heap are down 3.4%. the data illustrates that's compared with a drop for all stocks overall. this is compiled by bloomberg. momentumart of the
trade falling apart. alix: why? is the selling what they have to because of the oil price collapse? mutual funds are going through the same thing. it becomes a catch 22. there is more selling and more pessimism. scarlet: there is a timeline you have to keep in mind. when analysts adjust and respond and come up with their own updated calls, that will take place later on. pessimistic when that was the perfect time to turn bullish. alix: we have seen a minor rotation. take a look at this chart. we have a ratio between a world growth stock versus value stock. it has been a huge climb. growth has outperformed. on the right-hand side of your screen, the line came down slightly.
more money is rotating into those value gains. scarlet: it's distinct. that's what we have seen. it's taken people by surprise. most frequently, hedge funds. they piled in on the same stocks. some of the momentum stocks they favor include amazon. they are linked to china and those funds that hold onto those stocks don't do as well. they are beating the s&p by 541 basis points. that's the opposite of what hedge funds are doing right now. you wind up making money. we did see some money come out of hedge funds this year. lowts for hedge funds are $3 trillion for the first time since 2014. that is accelerating the bear
news desk. mark: at least 25 people were killed and dozens other wounded at the funeral in baghdad. the attack was the deadliest in a wave of recent explosions that have targeted commercial areas in and outside of the city. north korea says an american college student has confessed to what officials call a hostile act. he appears other news conference. a is accused of taking down propaganda side. all of this happening as the u.s. pressures for more sanctions against north korea. stephen rhodes will oversee a school district but will appoint person as quick as
possible. covers nearly 25,000 players in the nfl. global news 24 hours a day, powered by are 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. back to you. scarlet: thank you so much. let's return to markets here. our next guest is underweight equities. he says that volatile markets are not typical and require an active strategy. joins us now.ters equities, underweight where are you overweight? >> we are overweight in bonds. parts of the world have a slight scale equity as well. it is important to consider why we are where we are. our view is that when you are
managing a portfolio, you only think in terms of long-term allocations. it isason you choose because there is a risk zone that you are comfortable with. today, markets have become much more riskier than normal. only 55% equities puts you at the high end of the zone you normally would be in. aterestingly, we also look how volatile volatility is. right now, volatility itself is more volatile than usual. that is why we are more underweight on stocks. in this kind of environment, you don't want to make sure you are getting -- alix: you mentioned the volatility of volatility. there we go. vix of the vix.
it is elevated, but nowhere near where we were last august. >> or into thousand eight, that is true. they are changing every single day. not only in the u.s., but in markets all around the world. not only for stocks, but commodities, bonds, etc. we look across the markets and adjust accordingly. scarlet: you are looking at the volatility of the vix for equities, what other risk signals do you pay tengion two for commodities, fixed incomes, currencies? onlyu have to look at not have risky things are, but what are the compensations. when you look at it from that it is helpful-
for the very uncertain world we are in today. alix: you also look at buybacks in japanese equities as well. >> that is true. what is increasingly true if there is divergence at the stock level. there are stocks that are mispriced after these emotional reactions to news magnify deficiencies in the market. the future, with the return for the market being overall, the stock value will be higher than average. scarlet: what is the first question, the number one question that clients are asking you that was not an issue a month ago? >> the first and most important question is can i still expect to meet the plans that i thought made sense to-three years ago. it is a different world that we were expecting. a lot of countries' and just
rates are negative, something that people thought was unthinkable. it is important to look backup plans. in many cases, we find they are still in good shape, in other cases, they have to make adjustments. scarlet: under what circumstances do they have to make a complete paradigm shift? >> it depends on their expectations, and goals. in many cases, people have to push against the boundaries of the risks they have to take, given the goals they hope to achieve. up in the next 20 minutes of bloomberg markets, tomorrow is d-day for the primaries. we are talking super tuesday. we will take a look at what a donald trump presidency would eat for -- would mean for investors. alix: the pressure is on for universities. we will talk about the changing face of higher ed.
♪ scarlet: you're watching bloomberg. i am scarlet fu. alix: i am alix steel. this is your global business report. china central bank does it again. it lowers the amount of cash the bank has to hold, hoping to encourage more loans. alix: how low can they go? prices in the eurozone fault again putting more pressure on the central bank. and, joining alibaba in a stock by back.
we start in china. china's central bank is trying to stop a slowdown. it is the fifth time since last february that they cut the ratio. even with the reductions, china still has one of the largest ratios in the world. bloomberg intelligence estimates the latest move will free up $105 billion in funds for banks to make loans. turmoil, confidence in china is growing again. companies like general electric says they first see strong growth for the country. companies like ge, we believe in china. the growth is not what we wanted to be, but it is growing. especially in big infrastructure industries, think of what is happening with the energy economy in china, health care -- china will continue to invest in these kinds of infrastructures
in the country. consumers are adapting. that is one thing we are seeing, the adaptation. alix: european policymakers have more add news to digest one week before their meeting. the picture deteriorated in february. the development almost ensures easing.round of policy the price growth has fallen short of the goal just below 2%, thanks to the drop in oil prices, pushing the central bank to take more and more aggressive actions in response. scarlet: amazon is entering the competitive grocery business in the u.k. inside one of the largest supermarket chains to deliver fresh groceries to members. sellinge considered fresh food for some time, but costs had been deemed too high. alix: bankers and lawyers
working to salvage a billion-dollar deal. the sources say this too early foxconn willer lower the value, or change its bid in some way. jack watt showing confidence and his company, alibaba. alibaba is down about 50% for the year. alibaba has been grappling with slowing growth in china, and squeezed in price cuts. it is currently worth $26 billion, making it china's -- making him china's richest person. alix: for more stories, visit bloomberg.com. , livebigail doolittle
from the nasdaq. abigail: here we are at the end of the month. it has been a bit of a roller coaster. februaryace to finish slightly higher. a real recovery there. one of the biggest, in fact, the biggest, point boost to nasdaq is cisco systems. second-quarter estimates . it is in some contest to the week outlook provided -- weak outlook provided to others, apple and and tell -- intel. alix: it is interesting that cisco in particular is higher on the month. what about some other tech leaders? abigail: it's funny, some other tech leaders like apple, amazon, alphabet, facebook are some of the biggest drags.
cisco, shares are up about 20% at the month, they be fourth quarter estimates. however, remain stuck in this trading range. we have analysts recommending to buy it. the average price is right towards the top of the range, suggesting that shares of the price could continue to trade between $1000 and $1500 for many months to come. alix: some say he is unstoppable. donald trump's momentum puts him in a solid position heading into super tuesday tomorrow, with 11 states up for grabs. you can see, he is speaking live at a rally in virginia. scarlet: what would a potential trump presidency mean for investors?
with a look, dan clifton joins us from washington, d.c. trump has been on rhetoric, and not on details. right. is exactly thank you for having me on today. but we started to look at donald gain, and he started to in the polls, we asked, what will be his priorities? one of them is getting the economy going, and corporate tax reform has been a big priority of his. another has been immigration reform. whether he can get anything through congress remains to be seen. the third is anti-trade protectionism, which at the very least means the transpacific punishable knock it done. when you look at that, you can start putting together pieces of what to invest in should donald trump win the presidency. scarlet: the issue on which he has been both specific has been taxes, income taxes. where would he fund these tax
cuts? >> from the start, the whole reason donald trump is able to rise in the polls is because the economy is growing at a subpart pace. what donald trump is saying is he wants to do a big individual tax cut and corporate tax cut. it could be done by removing credits, less so the income text. -- tax. on a01, george bush won tax cut of $1.6 trillion. when it was passed by congress, it was closer to $1 trillion. there will probably be appearing back. you asked for 10, you get five. alix: he also talked quite a bit on stopping attacks on imports from -- slapping a tax on imports from china. that would hurt us in our ability to buy cheap goods. what does it mean for gdp
growth? >> great question. the number one concern of investors is the protectionist rhetoric coming out of both the left and right. donald trump has been the leader on this. but we know? we know he will not sign any new trade agreements, that could restrict growth. whether or not we have the on importedut a tax goods, some would argue that the bretton woods agreement prevents putting that into place. i think a lot of his rhetoric on the issue is trying to get people to the table, and say, if you don't do this, we could put this tax on you, and it will actually be put into play, but being used as a negotiating tool. scarlet: you mentioned that there is question as to which of these policies would be approved by congress. you say that investors are not paying enough attention to congress. the congressional involvement --
developments will be crucial for this year? >> if you look at the big issue, it is that mind terry policy is bullets -- it is that monetary policy is out of bullets. better rate, a patent box, the issues will take nine months to work out, the time today use the cruzat if trump, rubio, or get sworn into office, they have worked out the kinks. i think what paul ryan is doing is very significant and investors need to pay more attention to those. scarlet: you mentioned repatriation. in 2005, there was a tax receipt repatriation
holiday. in 2005, we were doing something a little bit different than today. we did at one time repatriation at 5.25%. billionre $ $600 overseas, $300 million came over. you saw an immediate rise in the dollar. today we have over two trillion dollars overseas. the impact could be much more significant. it is why you see companies with overseas holdings say, let us bring the money back, and we do want to be located in the u.s., but right now u.s. companies are competing at a this advantage. alix: could trump revived the coal and history -- industry? >> i'm not sure anyone can revive the coal industry.
we are basically giving away natural gas for free. do they slow down the epa rules that obama put in place? that is a big concern utilities and other stakeholders will not be able to meet the timeline that the epa plan yas put through, and they ma need a slow down on those. overall, we are moving to cleaner emissions standards, less coal, more natural gas. scarlet: great stuff. thank you so much, dan clifton. coming up on bloomberg markets, the changing face of higher education. we will tell you about one report that says, get ready for major changes to hit colleges and universities. ♪
these days, it is colleges and universities that feel sick hi themselves. alix: that may lead to more mma for colleges and you receive. here is the vice president of moody's. thelet: you talk about higher education sector, what are the dynamics at play here? >> to provide some context, we think there will be an uptick in mergers and acquisitions in higher ed. is between two and five entities a year, the average over the last decade. we are seeing an uptick driven by state governments. he received georgia system completed 12 consolidations. we are also seeing someone offs
and private higher education. that is coming from revenue pressure, primarily. a slowdown in the ability to create revenue is trading pressure -- creating pressure on colleges. alix: what does this mean for students and their money? counterintuitive, but because of price sensitivity, there is a slower growth in tuition prices. alix: good news. >> [applause] -- [laughter] that is actually one of the challenges. scarlet: yet, the demand from overseas students will continue to increase. you paint the picture of a shrinking supply. that suggests the online education fills a gap. how would it do that? right now, it is primarily
complementary to the education market. when you do see it replacing more of the traditional in person and moment is at the graduate programs and certificate programs. not to be programs -- nondegree programs. we have not expanded into undergrad going fully online. arizona state university is doing the freshman -- scarlet: and they are the ones who have partnered up with starbucks. >> correct. alix: what does that mean for school spending? >> it is very expensive. it takes money to do a very good production. it is quite an investment for college and universities to have a high-quality production. it is not just taping a professor at a podium.
in order to keep that fresh, it will require ongoing investment. scarlet: maybe there is a role for us after all. constrain government funding, that to me suggest more private donations. sandy wild and his wife decided to not donate because the judge said it could not be renamed for her. philanthropy is playing a much larger role in higher education that has in the past -- then it has in the past. it is not only about naming of buildings, though some places have done that very well. public you receive are using philanthropy to offset the cuts in state funding. more so, the cuts are coming from increases in tuition and out-of-state enrollment. scarlet: where do you think we will see the most m&a in the
u.s. and europe? it is smaller, colleges, under 1000 students. near anothernot easy consolidation. in europe, it is interesting because it is driven by the government and slightly different priorities. in france, for example, you had a lot of consolidation in part to make a larger research university. scarlet: thank you so much. alix: coming up in the next hour, bloomberg markets, jeffrey rosenberg. ♪
markets." -- scarlet: from bloomberg world headquarters in new york, good afternoon. i'm scarlet fu. steel.'m alix the market versus economic data. what does that mean for the fed? thatet: mark mobius says templeton is buying chinese stocks "very selectively." more of his outlook this hour. trading up 80% this year -- its chairman speaks to bloomberg. are there any lessons that oil can take from the turnaround? go to theets it markets desk where julie hyman has been tracking the move up in oil and and stocks. julie: right, and we were
talking earlier about relatively low volume and stocks. we are below the moving average for the s&p 500 and that has been the case for the past couple of weeks. we have seen that markets have gone slightly upwards to side ways. that said, strong and two february here, and it comes along with oil prices. if you are looking at the game, up by 33 and a quarter percent. ias weioned the upward b have been seeing. the nasdaq just eking out a on the month. the s&p and the dow higher. oil higher as well. making their lows on february 11 and bouncing from those levels. risk ond you have
trade, but you have these safety guys. julie: risk on and risk off at the same time. are seeing oiling doing well on the day and what are traditionally the haven plays. .old the dollar falling versus the japanese yen. treasuries and the yen gaining at the same time that the stocks and oil are gaining. it is unusual. if you look at how safety trades have played out for the day, you see treasuries moving higher, yields moving lower, and the dollar, we have seen folly against the japanese yen. it's not just an effect for have seen falling against the japanese yen. it's not just an effect for today. some hedging going on. we do not know what the next few
months will hold. good stuff, julie hyman. thanks so much. a little bit of a conundrum. firstnow to check the word news, mark crumpton has the news for us. state -- islamic this is according to defense carter at the pentagon. in the counterr: ifo campaign in syria to disrupt control, tond and cause them to lose confidence in their networks, to overload their networks so they cannot function, and do all of these things that will interrupt their ability to command and control forces there. the associated press says the cyber attacks are being run out of fort meade, maryland. 25 dead and dozens more wounded
at a suicide bombing north of baghdad. islam and state has claimed responsibility for sunday's twin bombings in the city that left -- the islamic state has and responsibility for sunday's twin bombings in the city that left 75 dead. clarence thomas broke years of silence and out a question from the bench. involves a domestic violence. this is the second case the court has heard since the death of justice antonin scalia a. president obama meets to discuss the vacancy on the supreme court tomorrow. selected someone to lead the search to replace scalia. will block say they any attempt to replace him. they believe that mr. obama should wait to make the nomination. global news 24 hours a day, powered by 2400 journalists in 150 news bureaus around the
world. i'm mark crumpton. alix, scarlet, back to you. scarlet: thanks so much. the fed will be meeting in two wakes -- already? alix: i was thinking the same thing. are we in march? how is the world's biggest asset manager positioning itself? alix: let's ask jeffrey joining us from his company headquarters in new york city. how does a loosening fed potentially change your strategy. jeff: certainly one of the biggest changes was in january, the first part of february, the tail risk scenario. what you have seen happen in bond markets is a significant reduction in expectations for what the fed calls
normalization. certainly we are paring back our expectations for how quickly the fed is going to normalize. it does not mean the fed will have to cut interest rates or introduce negative interest rates. but the idea of the fed is not going to be able to make good on what was a promise to raise rates four times this year is what the market and ourselves are expecting. beenet: we know you have looking at financial conditions and tightening. how do you reverse tightening without walking back the rate increase? that stuff is outside the fed's concern. a lot of this stuff friday and last weekend is on the g20. when we talk about financial conditions tightening, what does that mean? it means interest rates, but it also means the value of the dollar. as it has normalized, it has come with a significant increase
in the value of the dollar. for the average american, it does not mean that much. if you are borrowing outside the u.s. and the value of the dollar goes up and the expectation of interest rates, that is tightening global financial market conditions. if we could find stabilization out of the g-20 -- we did not get that. we got generally a little bit of a disappointment. but what can you do to ease tighteningwithout monetary policy, that is an example. alix: it seems like it is eco-data versus the markets. if you come inside the bloomberg -- this is the atlanta fed gdp announced forecast for tracking data versus the 10-year yield. that gap should not be there. we have a huge difference between the market expectation and what the data is showing. going to disagree just
a little bit. that gap should be there. financial markets are always forward-looking. economic data is at best coincident -- there is the famous quote where the markets -- stock markets threeted 12 of the last recessions. but when you look at market signals, they are not necessarily predicting where the market is going. when they are significantly signaling as they are today, have to something we pay heed to. to ask you about the bank of japan adoption of negative interest rates. it seems like when the boj did that, there was so much consternation. it was as if someone flipped a switch and this idea that central banks are out of ammunition really caught on in the market. why is that? came to a conclusion,
which is the interpretation following the boj's announcement of negative interest rates was that they were out of ammunition. the manner in which the announcement came about was a surprise to the market and the market response was a loss of confidence. perhaps because of this notion they had to resort to negative interest rates and they had to signal that, illustrating their view they had run out of ammunition. but the confidence channel is an important means of transmission. how can monetary policy support the real economy? if you looked at the g-20 mission -- it's really important that they are using the confidence channel and not the above confidence channel, particularly when it comes to negative interest rates. that policy backfired just a bit. alix: wrap this up for us.
we do see the fed backing off a in thebit, a pause dollar. what assets are attractive now? we have scaled back is how quickly is the fed going to raise interest rates? what we have seen in a portfolio context is owning high-quality instruments, even with maturities -- it's one of the only ways you can provide diversification and reduce volatility in your portfolio -- we have a more view.ed that makes high-quality, investment-grade corporate's, an important way to this audience, high-quality municipal bonds at the intermediate and longer maturity spectrum -- these are not risks we are unwilling to take here because adding duration to the portfolio will be helpful if some of these tail risks we are talking about
coming from china and commodities do show up. you are going to want to own some of those higher-quality, longer duration assets. chiefjeffrey rosenberg, investment executive over it blackrock. scarlet: and do not miss an interview with alan greenspan tomorrow. why: mark mobius tells us he believes chinese assets will rebound later this year. another is more cautious on the region. alix: a positive outlook. we break down those numbers. ♪
alix: welcome back to "bloomberg markets." i'm alix deal. scarlet: and i'm scarlet fu. let's head over to our markets desk where julie hyman has the biggest winners and losers on the day. julie: let's start with taser, one of the stocks in the plus column. they beat estimates by a pretty wide margin. nine cents a share and profit, up 20%. the weapons of segment -- of course, the tasers most of us are familiar with -- up 54% and ,t also makes axon body cameras that segment surging by 47%. the board authorizing a buyback of up to $50 million. also we are looking at signet jewelers today, one of the best performers in the s&p coming out with earnings, but specifically addressing concerns
about its credit business, finance for customers. it lost $60 million in bad debt. that,terest is exceeding and that is where the company is trying to alleviate fears about his financing program. , a company that distributes natural goods called united natural. whole foods is one of its major clients. it is going the other direction, down 20%. the company coming out with earnings that are below the lowest estimates by analysts. it looks like it is tied to a deal it will fund with cash and a revolving credit line, but most of that will have to come from the credit line. this appears to be causing concerns in the market. and finally we are looking at
specialty pharmaceutical makers after horizon said it got a conditionn november, -- continued questions about drug pricing. indo help falling today. some analysts say you should buy horizon on this weakness. you so much, julie hyman. china cutting the reserve rates for banks, employing a traditional tool for a weakening currency and slowing economy. mark mobius has been investing in emerging markets for more than four years and is considered an expert. scarlet: earlier francine lacqua spoke with mark mobius. mark m.: i think they have done a good job communicating, but being a command economy, sometimes it is very difficult for us to understand what the
the top.s from those commands are clearly laid out in the program of the communist party, if you read those, but the details are very important and that is not read very transparently. the volatility in chinese markets, are you still a buyer of chinese stocks? do you understand what the endgame from chinese authorities is? very selectively from china, and in fact, all emerging markets. you have to be very selective. onncine: what is your take emerging markets? people say, look, they are cheap. but there is no growth coming in from anywhere. mark m.: it depends on where you are looking. you look at the really bombed out areas. i just came from brazil. people are down and out and sad, and that's a wonderful time to
be buying. brazil is not going away. they are going through a lot of reforms. i think that is something to look at. again becauset, it is cheap, but we do not know if the president will be impeached. there is so much political uncertainty, that unless you believe the political doldrums will be put to one side, it may not be a good time to invest in brazil. ink m.: there is no question my mind the political environment will change dramatically in brazil. it may take another year, but the markets move ahead of these developments. it something to look at. if you look at the situation in argentina -- i was in one of uenos aires -- you see what the government is doing and the market is doing well. francine: you are ever the optimist. there has to be a point where you think, look, this is going
to turn badly. mark m.: we love this time in the markets. things look so bad, is usually the time to be looking at these bargains. the things that we are looking at are the strong consumer-oriented companies. companies with a good market share, growing their market share as a result of the -- services in the industry. those are the kinds of companies we look at. this is a cross or specifically in china? across emerging markets. particularly in china you will see this development going forward. you do not see this much in china yet, but you will see it going forward. francine: mark, you do not think there are assets bubbles in china? the outflows that we see from china, meaning something more sinister is going on? mark m.: there's no question there are a lot of people in china who would like to get money out. they are going through a huge program to stop the corruption and that result in money flows
trying to get out. but on the other side, there are many industries doing quite well in china. i think you have to pick and choose which are the ones you want to be in. of course, the country is going through a major correction as a result of the downturn in industrial production and the consumer area. a correction that consumers are trying to understand, because they do not know what chinese authorities are thinking, but you would rather play it through stock rather than currency? mark m.: right. i do not think the chinese currency will result in a massive devaluation. the fact that they have lowered interest rates means they are not that worried about the currency crashing down. and do not forget they have a lot of controls in place to prevent rapid outflows of the currency. that was mark mobius, groupan of the templeton
scarlet: welcome back to "bloomberg markets." i'm scarlet fu. alix: i'm alix steel. the largest gold producer has jobs and costs, and their efforts are paying off. they have soared 80%. got a rarer reporter interview. she joins us from hollywood. give us your take away from the chairman. he is not ones you normally talk to the press. reporter: i suppose the biggest piece of news for shareholders
is the fact that he said they are going to address the issue which haspensation, been a thorn in the side of investors for some time. he had more than a million dollars signing bonus when he became the chairman of barracks, and there has been criticism of how much he earns given the state of the market. -- when he became chairman of barrick's. barrickat is next for gold? the gold selloff forecasted the end of the commodities super cycle, so in some ways, these companies got hit harder in earlier than copper and oil companies. where are they in their transition? danielle: they are also different in that they had a
pretty hefty stake in copper. in 2011 andequinox it was a massive -- it was part of their problem. they acquired a massive amount of debt to do that. really the issue has been weighing on their shoulders, which is similar to what we have companies, they have massively over leopard alice sheets. balance sheets. they adhere marked to billion dollars to come off this year and they saving medium-term goal is to come off half, and philosophically they want zero debt. impressive targets. they have executed on them. as a result you see that massive pop in the stock. in context, the stock is still down 67% from its peak, but it is up 80% this year. scarlet: very quickly, any story
on the dividends? with the big commodity companies, there is the question whether they can continue to pay out dividends. danielle: yes, he says they are not going to touch the dividend. the priority is debt reduction. he was very clear on that point. thank you very much, looking forward to your interview. to catch herure interview live from the conference at 3 p.m. eastern time. the fed caught in a catch-22. our guest will explain. ♪
let's look at the headlines. mark crumpton has more from our news desk. -- i'm alix steel. polls show that donald trump hillary clinton have widened their leads. trump leaves his competitors by 39 percent. senators marco rubio and ted cruz are virtually tied. as to the democrats, hillary clinton now leads bernie sanders 38%.o 70% of voters say that clinton and trump will get their party nominations. raise --attempting to bernie sanders is attempting to raise $40 million by midnight. mrs. clinton picked up $14.9 million. the leading republican fundraiser in january, ted cruz, $7.6 million. president obama has awarded the
nation's highest military honor a navy seal. he is the 11th living servicemember awarded the medal of honor for actions in afghanistan. the ratings for sunday's skirt telecast -- sunday's oscar telecast have dipped despite controversy. it drew even fewer viewers than last year's show. if the number of holes up, it would be the lowest rated oscar number holdsf the up, it would be the lowest rated austere telecast in seven years. global news 24 hours a day, powered by 2400 journalists in 150 news bureaus around the world. a i'm mark crumpton. -- i'm mark crumpton. alix, back to you. alix: thank you. earlier today the "" bloomberg "bloomberg " team
said down with their guest to talk about affects on his business. guest: we have a domestic mandate. our central bank has a domestic mandate. the funds are out of eustacia, out of east asia, via japan. business, number one, money is coming toward the u.s. dollar. not just the u.s. dollar. the dollar is in the middle of the pack this year, as far as currency flows and relative action. yenally it is the japanese is the strongest. but there are a whole bunch of others. even the canadian dollar and the are better than
the u.s. dollar. the money is spreading out. why is the euro up slightly against the dollar with all of the problems in europe? money is leaving southeast asia. it has already left eastern europe, the middle east, and is flowing elsewhere. can the fed raise rates against a that, encourage -- why? i don't think so. yet go look at their mandate. catch-22. mohamed el-erian just balance the do you factors when you are constructing a portfolio? dan: delicately. you have to take the top down. i take the top down as the first priority. case of a-up, in the
bond portfolio, credit ticking, it is very,cking, very important. it is affected by the top down. obviously the price of oil and the impact that has across a number of industries and currencies. that is the big one. i think the top down is the most important thing. time, within the u.s. dollar -- or i should say within creditmerica -- the selection dominates over time. top-down will dominate. over time relative to other u.s. dollar denominated -- i do not will the bond picking dominate. inorter: ahead of the open
new york, inflation in the eurozone deteriorating in february. data, another headache for president draghi as ecb policymakers meet next week. we also have rates that are deeply negative. the g-20 talking about the limitations of monetary policy, and here we are, monday morning, and all we are talking about is monetary policy again. how much is left? : how much is left in want? o?w low can you g >> how much is left in what? i am amazed by low negative rates. they don't cover this in business school. it doesn't work that way with the bank. it's the government. i don't know. you don't wantis
to have your money in the government bonds where you have to pay the borrower. that takes money away from the eurozone, doesn't it? the brings money toward dollar. it actually sends some money back to asia, to japan. and it will send money to the --er borders of the euro portugal benefits from interest rates in germany. and it pushes money out and away ,nd toward credit, credit risk and that gets you cautious. it has caused me to back away from euro denominated, even though some of the yields there are attractive. they are attractive on the outskirts, and what happens if
the overall situation weakens further? you want to be on the outskirts? i don't think so. matt, why don't you painted picture on the bloomberg? as i speak.ainting the have my number has gone negative again. the core number here is still positive, but only at 0.7. how much do you pay attention -- we have a debate going on -- how much do you pay attention to core numbers versus headline numbers? are transient, but energy and food numbers are a smaller and smaller portion of everybody's daily spin. dan: the real thing is political continuity. they have a tremendous, jarring
risk to the overall political .ohesion of europe right now you have the northern problem but the real one is refugees coming in from the south and the strain that is putting on the european union as a whole, and it's not good, matt. . pray and hope for the best but that is not the way it is .rending so, i've gotten much more cautious on europe. i'm disappointed because i was so hopeful. is underuropean union enormous political stress right now, and that is a top-down -- and it's a severe top-down. and the price of oil ties into it certainly, because where is the disruption?
the disruption is in the middle east. that is a real problem. it is driving the people out. it also threatens, by the way, and in extreme cases -- i do not think that will be the case -- you can always have an upset in the source of exported oil. fusset: that was dan speaking earlier on "bloomberg ." coming up, the technology behind bitcoin could be a game changer. we will hear from someone focused on bringing it to the masses. alix: we will dive deeper into economic data. on a run to end the losing streak. is it enough. that is our focus for the next hour. ♪
alix: welcome back to "bloomberg markets." i'm alix steel. scarlet: and i'm scarlet fu. alix: you are. bloomberg/top stories -- target is trying to better blend stores.ne business with scarlet: in mexico, the government owned oil company fedex reported a $9.3 billion loss in the fourth quarter. they -- pemex. pemex has not shown a profit since two dozen 12. alix: argentina and creditors
are coming to the end of a 15-year dispute over debt. the deal is subject to argentine congressional approval and the repealing of several debt laws. debtd that is -- several laws. and that is your business flash update. scarlet: now let's go to the markets desk where julie hyman has been tracking the losers, including valeant. julie: yes, it has been a frequent visitor. giving -- the chairman up his title and the company is withdrawing guidance while it reviews accounting. awaiting its latest earnings report as well. and the company is -- remember, pearsonlly built by
through acquisitions, has also come under fire for its drug pricing practices, which is a hot topic. we are also looking at today.rton the u.s. justice department is beyond halliburton to go its plan -- in other words it has a plan to sell outfits and the doj is saying it will perhaps have to do more. speaking of oil and gas companies, looking at eog resources. that stock is being downgraded from a hold to a buy. atwonderlake -- at are fairly positive on the company. but the downgrade has to do with the asset values that are 15%
below. ripp -- the, ew sc company talking about lower tv and consolidate a -- consolidated ebit of. ebitda.olidated thank you so much, julie hyman. earlieritchie spoke with the author of "freakan omics," who has been working with canada's prime minister to bring awareness of blockchain. addressd how did he this with you?
-- pamela: do we completely trust this? what problem is this solving? this is what he had to say. guest: the first generation of the internet was the internet of information and a did great things, but it's not great for business actually because you cannot do transactions without a powerful intermediary -- e-government, a bank, a paypal or something like that, which the benefits of the digital age have been captured by very powerful forces area now we have an opportunity to exchange not just information, but value in a peer-to-peer way, and that creates a norm us --eno
enormous opportunities. pamela: interestingly, he does not think it will transform currencies. the bank of england and the bank of canada looking at making currencies truly digital. that's really a disruptor, he thinks, for banks. scarlet: absolutely. pamela, is there an issue around the energy computers use that he is watching? pamela: it's an interesting piece of it. computers and the miners within it seeking to add it to the blockchain takes an enormous amount of energy. listen to what he said. guest: the energy is part of what makes it work and part of what protects the network. pamela: i'm sure it is. guest: it would be unfeasible
for me to buy some in the computers that consume so many pat -- so much power to corrupt this thing. just with the system of achieving consensus -- it is called proof of work. i do all of this work, i use up all of this energy, and that is the righte i found solution and achieve consensus, but there are all kinds of new proofs being worked on. as we point out in the book, many of them show much promise. pamela: this is a topic i think we will be talking more and more about. right, pamela ritchie, bloomberg canada tv anchor joining us from toronto. alix: the dell losing some of its earlier gains. home sales disappointing investors with an unexpected drop of 2.5% for january. it was supposed to gain half of 1%. alix: i do want to point out
that natural gas prices are down 3.5% despite the fact that oil is rallying. those in energy dynamics are seeing a divergence, which is peculiar. natural gas under two dollars. unbelievable. markets producer was telling us that oil is up for the month of february? atx: up for february while gas pummeled. we will look at why current data signals may show strength ahead. scarlet: we will be back with more. ♪
less gloomy picture. alix: joe weisenthal, our co-anchor, joins us. -- he spoke to the chief global economist from citigroup. joe: this is talking about the global economy and he defines the recession for the global economy different than people who defined for one specific country might. just because the growth rate of the globe should be higher. but still, yeah, we had him on the show at the end of last year and you said it was a risk, a rising risk, and he said this is his call, global growth -- it was a 50/50x: can 2015. and now 2017 could be the big said it'sar, and he really about advanced economies,
not emerging markets leading this next leg lower. scarlet: what i find interesting, when you look at indicators to determine whether there is a recession or not, separate from gdp, you could say new building permit or manufacturer orders -- typically no capital goods orders, job openings, consumer spending -- this time around you don't really have that, right? you only have stocks falling down. and not getting up. joe: the data has not been spectacular, but it does not look like recessionary data yet, pretty much anywhere you look. there have been weak manufacturing surveys, but actual measures of manufacturing like herbal goods we got last week, not that bad. retail sales last week, not that bad. initial claims -- very muted. anything could deteriorate, but so far in the u.s. data -- and
he calls it global -- we are talking about u.s. with this data, you do not see that. scarlet: it seems like the markets are getting out of the data. alix: he talked about financial conditions tightening. the other part was that spending might be vulnerable, the second leg, and even if there is a risk in the global economy, due central banks have anything they can do to stem that side? those three legs of that stool are the big issue. had the g-20 meetings this past weekend and it was not a great his appointment in the sense that no one had particularly -- it was not a rate disappointment in the sense that no one had particularly great's expectations for them to deliver anything. fromthe general view is the major central banks, there is not much room to ease effectively and there's not much appetite for fiscal expenditure.
scarlet: it goes back to what jeff rosenberg of like rock -- us, shortwas telling , ithe fed walking back really depends on the policymakers on the fiscal side. alix: right, and he calls for abenomics plus. it is the kitchen sink of all stimulus. is this really going to help the global economy. you need to stimulate demand. if monetary policy cannot do that, you need to find other ways to accomplish that goal. joe: we have talked to lots of people on the show who say it needs to be a fusion of government and monetary policy. government spending. it feels like policymakers are a long way from there. it definitely feels like economists and more more people on wall street think that would be the form of stimulus that
good afternoon, i matt miller. stocks on pace to snap their two-month losing pace. monthly gainirst since november, thanks to a rally in crude oil. valeant pharmaceutical ceo is just as thechair, companies facing questions about their accounting practices. can he turn around the drugmaker's stock that has lost two thirds of its value since august? case prepares to make its as they prepare to tell lawmakers on tuesday that it is their job to decide the encryption issue, not the job of courts