tv Bloomberg Markets BLOOMBERG February 29, 2016 2:00pm-3:01pm EST
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.
can they win in the courtroom and in the court of public appeals? let's head to the markets desk, first off. julie: down off the highs for the day, we initially saw not with the change people's reserve of china trying to add stimulus there. not seeing much reaction in the united states. moved higher with oil prices on the day. the low-volume situation continues. not only lower volume today, but a very tight range for the s&p 500. this index looks at the daily spread in the s&p and it looks
like it will be at its lowest this year unless something changes, of course, in the next couple of hours of trading. you have seen not a lot of movement in this session today. that has been more true over the past several weeks. matt: we have seen some interesting moves in the currency market, right? julie: we have. we have seen more of an appetite for safety, as evidenced by the continued demand for the japanese yen and the dollar falling against it. here is the movement besought overnight, falling versus the thear, strengthening versus yen as well, the yen strengthening against the euro. we also have euro area inflation data continuing to show that there is not much sign of it in the eurozone. a look att to take something that was talked about over the weekend at the g20 meeting. this is the yuan versus a basket of currencies.
the people's bank of china and chinese authorities have said that really they want their currency to be valued versus a basket of other currencies. there has been controversy that the dollar is an important part of that, but just a part. indexerg has created this against the basket and you can see that it has showed commensurate weakness versus that as well. also wanted to bring up the continued strength we are seeing for the yen. matt: is that the yuan versus the basket of currencies that can be accessed with the #chart? chart question mark julie: -- chart? julie: yes. matt: viewers sometimes ask. julie: it's right on the bottom of the screen, but it's good to say it out loud. here we have not only the yen going up, the japanese yen, but it will continue to go up and
rise. that's the yellow here on the continued strength. here it is, rising versus the dollar. not only do you have it rising because of its perceived haven status, right? but there is this perception that it will continue to do so. thank you for a much, julie hyman. now, mark crumpton joins us from the news desk. mark: there and are now at least -- there are now 38 dead and more wounded in a suicide bombing north of baghdad. the islamic state is claiming responsibilities for the twin bombing in the city that left 73 people dead. over 100 remain hospitalized. front runners donald trump and hillary clinton have widened their lead. trump leads his rivals by 49% according to a cnn orc survey. marco in ted cruz, virtually tied. as for the democrats, mrs. -- leadseads standards
bernie sanders. the money keeps pouring in percent under sanders. he raced $36 million this month and a shooting to make it $40 million by midnight. he raised 21.3 million dollars in january. mrs. clinton picked up 14 point 9 million. the leading republican fundraiser in january, ted cruz, took in $7.6 million. president obama awarded the nation's highest military honor to a navy seal today. edward byers junior is the first living active duty member of the navy is the first person to receive it in 40 years. >> am not sure how this will change my life. i plan on taking it one step at a time. i'm going to continue doing my job in the navy, continue being a seal and doing the thing that
i love ever since i was a child. he was part of a daring 2012 raid that rescued an american hostage in afghanistan. global news, 24 hours per day, powered by our journalists in 150 news bureaus around the world. back to you. matt: thanks very much. february jobs report dominates the data docket. other reports enabling economists and investors to fine-tune their projections for the next loop. after all, they are data dependent. the chicago area pmi rating showed that civic -- significant headwinds remain in the pmi sector. sprinkled throughout the day along with manufacturing data. wednesday we got the adp employment report and the fed's beige book. easeany of this help recession concerns? the chief market strategist from
foia investment managers -- management is your with us. doug, thanks for joining us. doug: my pleasure. mark and julie have been talking about, turmoil around the world, but you think that the u.s. economy itself is a relative safe haven? is.: it if you compare the u.s. economy, driven by a strong consumer with strong housing and strong auto sales with manufacturing, it's interesting, it hasn't gotten a lot of news, but the first ever export of liquid natural gas went to brazil for the first time in 40 years. low natural gas prices are on the benefits side of manufacturing, even though the glut of crude oil is hurting manufacturing in the u.s.. but compared to -- look at japan. a negative reading of gdp. look at europe. you had deflation numbers today. bright spot, but corporate earnings really feed
off the global economy. corporate earnings have been negative for the fourth quarter. matt: even if you take out , we are still seeing so far this earnings season that it's almost finished a drop of 3.6%. doug: that's why we need china and the developing economies to grow. really these corporate earnings, half the revenues are from overseas. if we don't get back on it, don't get the global economy growing -- the way to do it is really reform. enough of this monetary stimulus. it's really been overdone with negative interest rates. matt: you mean around the globe, negative interest rates like we're seeing in japan. possibly going even more negative now to be seen the no inflation numbers coming out this morning. stimulusctual fiscal doesn't seem to be forthcoming. neither is the policy shift. so, what are the chances? pretty low.
you would probably need a new administration. but the key thing is, do we really want the government involved in fiscal stimulus or infrastructure? really, it's a private economy play. that would be helpful. the thing that i think we need to focus on is to continue the corporate tax rate policy and lower regulation to help the economy out. i think that that would ultimately flow into corporate earnings. the key thing, as you said, is that right now it's about jobs. friday's number is critically important. what do you expect to see on friday and as a result? if we see a strong number for that in the fed, does that give them more reason to raise rates? in a perfect world we are in the normalization process, but we want the fed to raise rates.
the market might not like it in the short term but it is a signal that we are coming out. we don't want to be in this stimulusional monetary forever. raising interest rates is a good sign for the u.s. economy. we are seeing jobs added, wages starting to rise. how does an investor deal with the situation where the rest of the world the struggling with maybe negative interest rates or extreme monetary policy, and we are finally starting to see an albeit tepid recovery in the u.s.? matt: certainly -- doug: certainly in the u.s. you got large-cap with mid-cap and small-cap. in the bonds i think you need to be in that diversified portfolio. matt: corporate debt. doug: even long treasuries have done well this year. but 11 valuations overseas is really low. there's good value. check out international.
we think you should be internationally diversified. i think that would begin for the overall portfolio. overall the economy will get going and some of these markets have really been beaten up. i think it's a good opportunity. i've been noticing on the stoxx 50 index, they're sort of more concentrated stocks index, dividends at 6%. you are getting a lot more yield their than you are in bonds. the safety play in there is the stock paying dividends that have really done well in a portfolio this year. i think it is a good place to be. matt: thank you so much for joining us, doug. coming up in the next 20 minutes of bloomberg markets, is it too soon for investors to wade back into energy and high-yield debt? analyst says -- don't do it
yet. more pain is coming. also, mike pearson's back as the ceo of valeant, but for how long as the company grapples with continuing plunging stock and questions about its business practices? plus, crude is on pace for its best close in eight weeks. some of that gain is from hedge funds, betting that supply will tighten. are they right? or is it a misplaced that? here you see markets in the u.s. turning down, although you could really say definitely unchanged on the nasdaq. on the s&p.ed the dow down only 11 points. ♪
down, julie hyman will get us a look at the market movers. and the s&p have turned negative. the nasdaq, i should say. hanging onto a gain of one quarter of one point. bitnitely seeing a little of a downturn here as we head into the later hours of the session. i want to talk about these movers. potash is an dish -- interesting. the company's fourth-quarter loss, $518 million, it is in talks with creditors to avoid a breach with his loans because of weaker commodity prices. we have talked a lot about oil, copper, gold. we do not talk so much about potash, which goes into fertilizer. the company says that it's net sales for the fourth quarter was $277. one year it earlier it had been 348 dollars because of oversold imports that were aggressively
priced. all of that weighing on the company. looking at number liquidators, they continue to struggle. not down in percentage terms as much today, nonetheless trading at a multiyear low. the company said fourth-quarter revenue was down by 14% and missing analysts estimates at $.70 per share, though it is not clear if that is a comparable number. number liquidators, we know, has been struggling ever since last year "60 minutes" in the springtime talked about potential issues with the floorings and contaminants, high levels of formaldehyde in the flooring. they discovered a material weakness in internal controls over financial reporting, saying that that doesn't change the previously recorded results. finally, looking at federal mobile holdings, this stock is ,ctually going higher considerably with carl icahn remaining to buy the remaining 18% on this auto parts maker
that he doesn't already own. he's offering seven dollars per 212.8 million dollars here. above seven dollars. some analysts saying that there is an expectation that he will perhaps have two raises price. this would allow him to consolidate the auto parts and auto parts related companies that he recently bought. there was a bit of a question as to why he was buying pep boys at the time, but when you look at this consolidation -- not a parts, pep boys, this, he's getting it together. i should talk to him. i should talk to carl. i shop at all these businesses. julie: you have some input? matt: i do. showing signs with the exception of what we're seeing today, investors are still leery of getting back into energy and high-yield debt, obviously. at least that's according to
jack sherman at double line. he gave his outlook for the oil market and its affect on high-yield earlier this morning on "bloomberg ." >> you don't hold physical oil, you have to go by these contracts. it says that if the spot price for oil or the delivery doesn't change in price, you enter the contract at 35-25 and when you sell it it will be at 33, 38, real-time on the screen. with an investor that has a negative carry, you have to overcome this amount to just break even. call me old school, but i don't like buying things with negative yields, right? this is an oversupplied market, a market where people have been taught through central bank policies to buy the debt. a lot of people have been burned on this trade for many months now. >> [indiscernible] are trying to make a
call, make a view. if you follow the energy for -- spread, as we discussed, the bond market doesn't believe that we are getting out of this kind of low 30 to 40 type of range. ago was had a few weeks the fed coming out and saying -- well, the inflation market is wrong. real money is being put to work on the inflation spread. they are saying that the inflation market implies that he goes to zero over the next two years. there is a little bit of hubris in that. there will be no other source of inflation if only oil is driving it in if we are going to get these core numbers up to target, oil has to go to zero. maybe core inflation has to go down as well. maybe the bond market is signaling something different. lower for longer, that's what we believe, and we think it's too early to be buying these names. >> you are painting a picture of very slow growth, if growth at all.
in that environment, what is the most essential thing to do? put it in your mattress? jeff: the mattress portfolio always has arose and it. assuming no bedbugs. you are finding is that sometimes risk is not what you want to buy. sometimes you have to play will -- a it. -- with a little bit of defense. we will see if there is a spike. 2% talking about going from to 2.2 percent. nothing insignificant. but maybe we are on the cusp of generating some inflation. earnings growth in the u.s. with these lower quality names, looking to be negative after energy. there are some decent spots in the risk market, places that you can be careful. but again, for broad-based kind of market exposure, i think the high-yield market has more pain in the -- in the near term. earlier thiss
♪ matt: welcome back to "bloomberg markets." i matt miller. shares about and pharmaceutical plunging after the return of -- shares of valeant pharmaceutical plunging after the return of the ceo. joining me is cynthia tunes, bloomberg's health care reporter. first, what do we know about the decision to come back and lead this company? so much of its value was lost
under his leadership before he went on leave. cynthia: we don't know a whole lot right now. today was supposed to be in earnings update that instead late last night they said he was coming back and they weren't going to give us any numbers. presumably this says that the ad hoc committee, which was investigating the way they had operated with their mail order pharmacy had not found anything that would get him into serious trouble. that's what it looks like from the outside in, for that reason he can come back and start to essentially pick up the pieces. matt: so, he didn't break the law, so he can come back, but it has lost two thirds of its value since the scandal kicked off. what can he do to rebuild investor confidence? that he the main thing has to do now is deliver. he has to bring results and i
think it will take a little while for investors to get comfortable. they don't have the growth drivers that they had before. they cannot do deals very quickly now. they have to pay down debt instead of take on more debt. they said they weren't going to do that anymore in congress. what they have to do is show that they can do the organic growth that most companies rely on and through that pay down the debt. he has to do both of those things and make up substantial debt. a lot of these companies do their own r&d. they come up with drugs that people need and sell them. does valeant do that? they would dosaid more r&d, but it's still a very small percentage. it's hard to build it up would you have a reputation of not being interested in. you do have other ways that they can deliver value. to haveoducts indications on the label and
they can work to get more indications. that's what some of the branded companies do, build out the labels on existing drugs. one day, if everything works out in the -- near-term they will be back to doing deals again, but really what they need to do now is get their debt in order. i'm seeing headlines just coming across a terminal. moody's is reviewing their three rings for downgrade. you are probably going to want to get back to your desk and figure out what's going on here, but it looks like movies is taking a tough look at valeant's ratings, which are already kind of not exactly investment-grade. thank you. still ahead, oil climbs, saudi arabia works with producers to stabilize the market. ♪
in ohio authorities say the two students were shot when a 14-year-old pulled out a gun at therted firing cafeteria. two other students may have been hit by shrapnel or trying to get out of the way. none of the injuries are serious, the suspect is in custody. clarence thomas did something today he hasn't done in 10 years , he asked questions from the bench. by one count he asked at least seven about a case on gun ownership for domestic violence offenders. it is the second week the court has heard arguments since the death of justice antonin scalia. president obama meets with senate leaders tomorrow to discuss the vacancy on the supreme court. mr. obama has cap to senior adviser to lead efforts to replace justice scalia. republic -- republicans are promising to block any efforts from the president during his last months in office. the supreme court has hunted on an appeal from former nfl players challenging a settlement
with the league over the use of player images. the settlement covers nearly 25,000 players. global news powered by her 2400 journalists in 150 news p rose around the world. back to you. matt: commodity markets are settling. let's take a look at some of the day's greatest unit -- greatest movers. aluminum, its widest spread since november of 2014. inventories are down 4.7% this year. gold advanced today, demand for haven assets spurring buying gold backed funds. you can see the gains today at more than 1%. the price right now is that 123640 per troy ounce. settling at its highest close since january of this year, prices settling just under 34 to
33 per barrel. so a good day, for commodities. as our next guest is reporting, oil prices has -- have seen a since saudi arabia, venezuela, russia, and qatar tentatively agreed to cap levels. crude output drop for a fifth week. does this mean that we can expect oil to rebound? let's bring in mark, who covers the commodity for us. i kind of chuckled when they agreed to halt out put at the highest levels they've ever been able to produce. does it really make that much of a difference if it is halted that high? have they really agreed to all halt? march: they haven't really agreed to do that. they have said that it is conditional on other people joining them. we have not seen any signs especially that enron will take part. see. a kind of wait and it does seem that enough market
makers are paying attention. matt: iran has said that it's a great idea for other people to halt oil production, but they don't plan on doing it themselves? they just got back. yes, the sanctions were lifted in january. they feel that they are owed an opportunity to regain some of their market share before they would take part in anything. so we have seen a drop in the supply in the u.s., right? is that because production here is too expensive to continue? or is that just because we are not tapping new wells and oil -- old ones are running out? more of the second. as the price has fallen people thought that the shale oil revolution would cut out peter, but we have been waiting for quite a while and there is now finally evidence that u.s. oil production is responding. matt: so, the deal has been that
supply is growing faster than demand. is that still the case? is supply still steeper than demand? yeah. globally this year, if you listen to opec, the energy information administration, they all think that it's going to , butce supply and demand that the situation with improve as the year goes on. see a big going to draw. the u.s., that is a good sign. people that we speak to, investors or analysts, will say that they cannot forecast the price out, but they can say that in two years they will be much higher. is that because people expect supply to eventually start to come down as prices hover around this level? yes, they think they are going to cross at some point in the future and there seems to be
an agreement that things will start to rebalance on a global basis. much more -- if the saudi's, for example, say that they agree to halt reduction, how close are they to full capacity? could they produce a lot more anyways? could, butaudi's nobody else. they're the only people with spare capacity. bloomberg just came out with its february opec production numbers today. it showed that saudi was stable. maybe it's a sign that they want to follow through and see if they can get anyone else to, you know matt:, freeze production of january levels. --t:do you rely on opec go matt: do you rely on opec go? mark: yes, i do. matt: it really gives you a nice, clean snapshot. thank you so much for joining us, mark. of minutes a couple
away from the next fomc meeting and the likelihood that the central bank will go through with its forecast in multiple hikes in 2016 is smaller and smaller. bond markets are forecasting a much slower rate hike half that goes -- did i say a couple of minutes away, by the way? julie: a little bit. matt: not a couple of minutes, couple of weeks. alexandra skaggs joins us now. march 16? alexandra: yes. matt: let's talk about the expectations. p,t looking at w.a.r. anotherreat -- wirp, great function here. are low, but we finally have 50% expectations for next year. alexandra: it's funny, when you think about that it's just a
coin flip. year, maybeill this they won't. when you look at the market prices and overnight index swaps, the full price isn't in until the second half of next year. matt: how much bearing does this market production have? janet yellen will say that she is data dependent, but she clearly -- the fed clearly plans to hike at least one or two more times this year, right? they were thinking about four just a few weeks ago. which is interesting, because a gets to the question of what happened with markets in general, markets being so far down. ithasn't been great, but hasn't been falling apart. clearly we are not in a recession right now. that's something the market is trying to grapple with. the negative
inflation data from europe. the fed has obviously done much better there. cpi was 2.2%. getting closeras and closer to the fed target. is that as important as the jobs data? or does the labor market still eclipse that issue? theandra: i'm not sure that labor market still eclipse is that issue. if you look at it, the labor market has been doing well for a long time. looking at our get reaction and what traders are talking about, they sort of assumed that the labor market is just going to be good. with inflation it's a big question and that's how this international pressure translates through into the u.s.. the reason i'm wondering is we have this big jobs number on friday. how key is this in determining what the fed is going to do? it will bei think pretty important, but the most important thing will be the wage growth. matt: we have started to see
that pickup. alexandra: absolutely. if you see wage growth followed part or service sector row fall apart, people are going to start to get worried. i do think that from the perspective of an economist, which is not the same as a market perspective, the u.s. economy has been surprisingly resilient. matt: from a domestic point of view, i don't know if great is the right word, but it's not incredibly unhealthy. is it not increasingly important for the fed to look at economies overseas and currency fluctuations? these are things that were previously on the periphery but have to be part of the main equation now, you think? exactly, the u.s. dollar has been affecting oil. that's how everything might i mentioned before, the international weakness is coming into the united states into really is the inflation part of
the equation that has everyone worried. matt: you guys both cover such fascinating topics right now. alexandra, thank you for joining us. coming up in the next 20 minutes, the latest polls show donald trump, widening his lead among republicans. the key super tuesday battleground is quickly approaching. much more quickly than the next fed meeting. are any attempts to slow him down going to work at all? or is it too little too late? apple prepares to defend its privacy stance tomorrow. its top lawyer may have some advice for lawmakers themselves. you know how keen congress is on taking advice from lawyers. coming up in the next hour, ussident duchenne ski joins for more on the rise in the precious metal, gold. ♪
good news for donald trump and hillary clinton. the new cnn poll shows trump with a commanding lead, pulling and 49%. marco rubio in a distant second. ted cruz at 15. for the democrats, hillary clinton has 55% to bernie sanders 58%. voters in the 11 states for cast ballots tomorrow in what amounts to the biggest primary day of the election cycle so far. here to help us sort this out, murphy, ourin megan washington bureau chief. megan, thanks for joining us again today. what do you think about the chances for donald trump
clinching the nomination by, say, like wednesday morning? megan: look, that poll out this morning was stunning, the biggest lead that he's had in a national poll. a bit wonky,ays but that was 33 points over marco rubio. he didn't take the posted late hit that people thought he would last week. he may run the table tomorrow. no question about it. texas is maybe the biggest obstacle, they are still hoping to fend them off, but there are no delusions about what the reality of tomorrow is likely to be. he's got double-digit leads in a lot of the states going in and we would be surprised if we see marco rubio snatch more than one state. it will be a big win for ted cruz if he runs texas. if trump runs the table it will be difficult for a can -- for an establishment candidate. as an observer, the real question for me is -- can donald
trump be ted cruz in texas? i think that that would be the biggest shock. not if he just happens to win the others. i think that texas will be a huge battleground. but even if he blows texas, his pathway remains pretty challenged. in the winner take all states, that's more favorable to marco rubio and even the dynamics of john kasich in ohio. for ted cruz it really is the last stand. can play this out throughout the campaign, but if trump tomorrowto it's game over for the campaign and he has said as much. how about bernie sanders? why is no one feeling the burn anymore? megan: it's really interesting, he won in new hampshire, but what you did was interesting,
she went back to states in focused on what they are great at. in nevada she went to shift workers, casino workers, unions. african-american voters, making sure that their turnout beside. she has also won big among women. has she sewn up the nomination? perhaps she has. sayhe has stumbled -- let's she wins massachusetts and he wins vermont. obviously his home state. remember, he's got a huge amount of money. million this36 month so far, outpacing even her. matt: rank the, she wants to have a few stumbles, right? it would not have looked good if she ran against no one. she had to have some kind of challenger in the primaries. that's a good point, but
i think that they are worried about the unexpected strength of telegraphing weakness on wall street in some of the mother she gave an excepted. he didn't want to hear about the 33,000 e-mails she deleted and had no interest on what was in them, so he gave her a pass. not on wall street and donald trump won't do that on either. for sure. matt: later on "with all due respect" will have a full preview of tomorrow's action. among our guests, the former governor of mississippi, if i can get this out -- julie? having problems speaking. haley barbour. it is time for a look at the
biggest business stories in the news right now. they may cuthat valeant pharmaceuticals long-term debt rating. they said the company's operating performance may be weaker than expected and impede the leveraging plan. this comes after a valiant .hrough its forecast the drugmaker has been questioned about his business strategies, and accounting. ofentina and a group prisoners have decided to pay a 4.6 millionigants dollars, for about 75% of their full judgment, including principal and interest. the deal is subject to congressional appear -- approval and the repeal of several debt laws. problems for lumbar liquidators, battling
allegations that they sold flooring with unhealthy amounts of formaldehyde. last month they -- last month they were accused of selling the tainted flooring. this month official said the from the flooring is three times higher than first estimated. to the markets desk, where julie hyman has the latest. julie: you got through that smoothly, pleased to say. let's talk about the month of the s&p 500. today we are seeing it give up gains. it is still hanging onto a slender margin, breaking his losing streak. if you look at what gained the most in the month of february, free forresting to me, mac moran, copper and gold, had been doing so poorly, and the magnitude of the bounceback is
matt:matt: apple takes its fight with the fbi to congress tomorrow. in the general counsel are set to square off before the house judiciary committee. in testimonies committed for the that the fbi "is asking apple to weaken the security of our products. hackers and cyber criminals to use this to be cap on our personal safety and privacy. it would set a dangerous precedent." preview on what else we might hear, let's bring in tim higgins.
tim, he put out a statement today. i couldn't find anything new. they are basically saying the same thing that everyone on the apple site has been saying all along. tim: we will be looking for a couple of things. they want to frame the debate on , which is -- do we want to limit the protection of data, that sort of thing. should the fbi be able to and it is of the point it currently says that it does not make. is there a case law where one another grouped to do extra orders to develop a product? that is the court debate
that we will see in march. apple is trying to create a new national debate with a commission perhaps formed and a broader discussion about the balance between privacy and security in this country. matt: i guess what you're saying is -- congress could say that the idea that we have devices that are totally encrypted and cannot be broken into, that's a communications device. have seen it: we were those companies have been buted to work with them, the technology is changing. you used to plug your phone into the wall. the conversations used to travel on wires.
in the grand idea of liberty versus security. they don't build a fully and someonevice else is surely going to, right and they are concerned about what would happen outside the states and were a them one of megan: what's the mood that it comes to -- one of the keys. tim: what is the mood there? it's a republican issue that the folks who oppose apple withgh fighting this independence uncertain about
what they want and perhaps more willing to support apple in this. that leaves lawmakers on the hill searching for a -- answers and ways to navigate the situation. there are of course concerns among lawmakers on the grassroots ability of tech companies to rise up quickly on an issue such as this. really appreciate it, tim higgins. don't forget, you can watch the fbi director and apple general counsel testify tomorrow right here at 1 p.m., wall street bloomberg.com bloomberg television. you can see it on and on your terminal as well. -- on bloomberg.com and on your terminal as well. ♪
matt: from bloomberg's world headquarters in new york, good afternoon. i am matt miller, in for betty liu. stocks are down today but are on pace to close down february, actually just slightly in the green. the nasdaq lacks behind. financials are the worst performing sector in the s&p 500 this year. with uncertainty surrounding rate hikes and low inflation, is the row poised to get any worse or could it possibly get any better? can gold continue to keep soaring this year? it is the year's best-performing asset. it just had its best month in two years, and we have got