tv Bloomberg Markets Bloomberg February 29, 2016 3:00pm-4:01pm EST
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
-- both of which have done better than the underlying metal. we are an hour from the close of trading today and the month of february. let's head to the markets desk were julie hyman have the latest as stocks turn around and come down. julie: they have indeed turned and fairly substantially lower. all major averages are losing about as much as they were getting out of the gate this morning. they continue to fall on lower than average volume. turner, we saw stocks higher as oil turned more substantially higher. it does not seem as though they are tracking with each other. so thehave turned lower correlation is not in effect at the moment. oil is having a strong month for the month of february. dot as we have seen stocks the same. oil is up a half percent and it
looks like it will end up outpacing what we have seen for the stock market. matt: it is not really the commodity focused today. no, you could argue gold has been a more interesting story, a breaking of the longer term trend. we can debate that later. but gold today and's up another 1.5%. we are seeing a continued flight to safety. if you look at the year to date chart for gold and here you have andyou have gold in white it should really be in yellow or in gold, and then you have stocks in blue. the treasury bond index and high-yield corporate bonds. and gold is outpacing all of them. investors are concerned and this is an area they are going. this is a chart we have been looking at throughout the day. holdings have been soaring now
at the highest since october of globals we have seen stocks go down. another reflection of nervousness here. matt: i was putting together a little chart with a client, a bloomberg user e-mailing in. look at gold versus the s&p since december of 1927, the last time we had data. in gold on my charts and i do not know why you don't. can see that stocks have absolutely blown it away. i am too rocked by your insult of my charting skills. matt: it is not insulting, it is just a curiosity. julie: because i did not make that chart. thank you for the look at markets. let's look at stories we are following.
the headlines, mark crumpton has more from our news desk. mark: it is because julie is wearing yellow. that is an observation. some money keeps pouring in for bernie's tenders. he raised $36 billion this month. shooting to make it 46 million by midnight. up 14y clinton picked point 9 million. the leading republican fundraiser in january, senator ted cruz took in -- .6 million. -- 7.6 million. the congressional caught -- hispanic caucus is backing her. i am proud to stand with my colleagues today, giving my full support to hillary clinton because she has been a champion for the latino community her entire career. mark: endorsing senator sanders.
mrs. clinton and senator sanders are battling for the latino and after an american vote. supreme court justice clarence thomas wrote 10 years of silence today and asked questions from the bench during oral arguments. it concerned a federal law that bans people convicted of federal violence from owning guns. 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. senior adviser brian will have efforts to replace antonin scalia a. republicans believe that since president obama is in the last term in office, the decision should be left to the next president. news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus throughout the world. back to you. more now on the markets, our next guest believes the bowl fate -- debate will not be
resolved until a stronger by on up days and we see a broadening of stocks taking the market higher. the market strategist at prudential financial joins us. quincy, i was looking here to see how march has done historically. -- know if you ever use the function on bloomberg that shows his analogy. i broke down the s&p by months and in the past 10 years, only three have been negative in march. 70% of the time in the last decade, march is a good month. >> it is normally quite a good month. i do not know if you call this normal good times. i guess it is the new normal. what do you think we need to see, the oil correlation has in strong. have been at least stabilizing if not on its way back up. it is good for stocks. >> what that does is it evens
the pressure on high-yield and on some of the banks associated with the oil patch. it titans the yield. risk gone. lead to a overall, we need to see better economic data that would suggest a recession is not around the corner. if you believe there is a recession lurking in minutes, and there are those who believe we are in a recession now and you have them on your show. the market then goes down about another 25%, even 30%. that is why this is so important. data last week, we had a nice clutch of data and we suggested the data are stabilizing, not great, but less add. crucially, earnings are because if you continue to have
revenue growth coming down, coming down, and then companies take care of their bottom line, that is when they start cutting, that is when they start cutting advertising and cutting expenses and ultimately, if it does not heal, they start cutting personnel. what topline revenue growth shows you is demand, for your companies, products, but overall, global demands in the world, in the u.s., in your sector. hereed to see that expand that is the key, what earnings will tell us. matt: obviously, we could be in an earning risk -- earnings recession now. because have been week of energy. even if you take energy out, s&p earnings, still down 3.6%. exactly right and as long as the fed was underpinning the market, it was fine because bernankejob, ben
outlined it in november 4, 2010, in an op-ed he's. we want the markets to go higher and for people to spend money. you see the market trying to versushow much fundamentals. no one knows and the markets job right now is to find that out. matt: are you optimistic that companies raised at least the top line throughout 2016? iswhat you will see happen that it will be stock specific. the companies will be rewarded and the companies will be pulled back by the market. matt: active investing is better than passing investing. >> we think so. to talk to you.
market strategist at prudential financial. ahead, two big interviews focusing on gold, from metals and mining conference. we will speak with the gold course ceo who recently reported earnings that fell short of estimates and still his stock is up more than the price of gold here today. later in the hour, our guest is kevin, president of the world's's largest gold producer and that company has started thinking about acquisitions. its stock is up 90% year to date. . look at gold this month the best since january of 2012. we are all almost -- by 11% this january. thegs are looking good for precious metal as stocks fall. the dow jones industrial average down 92 points. stay with us. ♪
matt: welcome back to her let's check on where the markets are right now. the s&p 500 down after rising throughout the trading day. it is now losing about two thirds of 1%. look at the dow off almost 104 points now. it continues to fall further and further. about two thirds of 1%. the nasdaq down half a percent right now. ill look at business stories in the news right now. he is mentally in capacity a los angeles judge said today he will
dismiss a lawsuit, raising doubts about the competency of a 92-year-old. shareholder of viacom and cbs. set for may 6. microsoft said it will start for $3000 at the end of march here that is the same time facebook will begin shift -- shipping its headset for $600. they let the viewer see three-dimensional objects in the real world. one of shutterfly's largest shareholder's said the company should consider a takeover offer. asset management has increased online --in the urging shutterfly to put its permanent ceo search on hold and think about a takeout. that is your business flash
update let's head to hollywood, florida, or capital metals and mining, that conference is underway. danielle is standing by with the gold corp. ceo, david. take it away. danielle: thanks, matt. thank you very much for coming in. it is an interesting day for you. i have been referring to u.s. the incoming ceo of goldcorp for a couple of months now. what is it you are hoping to accomplish? classy goes through various stages because they provide incremental growth. are trying to line up financing to advance those? >> we are able to finance currently, update shareholders
on our plans. ofy provide high rates return. already aate what is veil sought -- very solid protection. denver,: when i was in chuck was there and people were the only company in the room in a position to make an acquisition. the balance sheet has been relatively healthy. you have had a bad fourth order and caught the market i surprised. are you still in a position that you could make acquisitions is the right thing comes along? she is stillamount bulletproof. we carry about $3.5 billion in available cash. toare in a great position finance internally and we are generating a quarter main dollars of cash. areelle: a lot of people
wondering what you will buy or you talked to me in january about africa. >> i visited all since i last visited you and the focus is really internally. you look at the landscape of isortunities externally, it what we own in our existing pipeline. our focus is on internal pipeline rather than looking in -- externally now. down the road, we will revisit that. , eightow, what we have projects in the existing pipeline. danielle: that is quite a change in direction for the company. every interview i have done, people have been talking about the fact that because your balance sheet has been bulletproof, there is a huge amount of opportunities there. you would not buy anything now?
>> we have almost 60 million ounces bring them in. danielle: you are saying you would not buy anything right now? >> our focus is on the external -- internal projects. danielle: i think april was when you're supposed to come in as ceo. >> when chuck had announced his retirement, there would be a prolonged ceo search process but they were able to run -- to land on me quickly. i got up to speed in the last two months and chuck and i where allconference our principal shareholders would be coming and they wanted an opportunity to meet me and to discuss the plans going forward. thing that came out was a cut. do you think it is stable at that level? >> absolutely. aboutvidend amounts to
$260 million per year in absolute terms. we are still generating $200 million of cash. atis absolutely sustainable every conceivable price. danielle: because of the latest quarter it is the last where a ceo says there could be a certain amount of getting the setting at one corner the stage for a clean -- a clean sweep. daniel -- david: they are using much higher valued assets and the values were inflated as a result. down, gold price came they ultimately had to come down as well. we are in a long companies that have breakdowns like this to right size our balance sheet. thank you for your time. matt: thank you very much.
seeing? >> as you said, line them is one of the year so far today in the market is sold off as i made my way here. something we talked about here a lot last week was watching implied volatility in the entire futures curve of volatility determining when -- has a floor in the 15 to 17 range. it has been bouncing around the 20 level over the past couple of weeks. if you look out over the return structure across the big futures curve, we expect it will get back to a nice, upwards loping
shape or you get about five points of spread and a six-month future. that we think is indicative -- indicative of stability. we think there is a tradable upside here in the next few weeks. >> you have been looking at the various sectors and how they have been behaving volatility lies. volatility -- that could be very helpful. we looked in the last six months since we moved into the high volatility market and we identify the 45 or so most actively traded and we judged where the applied volatility sets. about the midpoint. we expected to move to the lower end of the range before the rally is over. to getof that, we want
overnames that evolve best that time. think of of the decline in implied volatility. mining,ally metals and homebuilders, the three best performing homebuilders of the group that i made reference. volatility yourn are talking about? specifically since the 11th when implied volatility had begun to unwind. >> will they then continue to do so? >> that is what we think are potential energy. implied volatility at the 16th percentile for all three names. they are up about 12% apiece since february 11. , inant to be tracing here the next several weeks, we think there is more upside because of the fact that there is lengthy of downside applied volatility
in each of these names. julie: what with the trade be than on it? >> very simple. outright, the most risks you paid for, nice and finite, trade as -- as the rally continues. >> thank you so much. watching the rally potentially continue. that is it for me. more bloomberg markets is coming up with alex and scarlet. take a look at the index is coming down off the board with a loss of almost 100 points on the dow jones industrial average. ♪
our news desk. mark: 38 people are dead and dozens more wounded in a suicide bombing at a funeral north of egg dad. state has claimed responsibly for sunday's twin bombings. over 100 people remain hospitalized. the pentagon seeking $34.7 billion for cyber security in an effort to beef up offensive military capabilities. the defense ash carter said american forces are now so sexily disrupting the terror group using cyber weapons. >> in the campaign and particularly in syria, to commandingl's control to cause them to lose confidence in their networks, to
overload their networks so they cannot function, and do all of that will interrupt their ability to command and control board -- forces there. collects space operations including offense would get $14.3 billion as part of the plan. president obama awarded the highest military honor to a navy seal today. junior operator edward is the first living active member of the community to receive the award. buyers met with reporters. >> i do not know how long this will change my life. i plan on taking it one step at a time. , will continue doing my job continue being a seal and doing the thing i love ever since i was a child. daring 2012.
telecast took a dip despite the controversy over diversity and some suspense in categories. posted by chris -- chris rock, it ruin even fewer viewers them last year's show. it is the smallest audience powered by the 2400 journalists in more than 150 news bureaus around the world. markets close in less than 30 minutes. .bigail doolittle >> a real roller coaster on the day. following a roller coaster of a month with the nasdaq as well. the nasdaq was on track to finish up on a month, now down slightly on a much -- on a month. it will be at third monthly
close down in a row. the longest monthly losing streak since september of 2011. alix: who are the biggest laggards on the nasdaq this month as we wrap up february? >> we're looking at some of the biggest member waiting, including microsoft, amazon, and facebook. we are mainly dominated by some of the biotech names. and no is the worst of those names and much of the losses are coming from stock performances today. stocks are plunging after the company guided and said it is closing the women's health unit after failing to find a buyer. all of this has taken below last year's lows and even so, we have two eighth out there saying to buy the stocks. balancing out all the weakness down slightly on
a monthly index now. we're looking at a myriad of qualcomm andng priceline. the top of those names more than 10% on the month. stock is up, a strong second-quarter performance. slightly, notown just for the month of february. thanks. left and a half hour of trading is left for february. what a month has it been especially for financial stocks. they have turned some losses over the past few weeks but remain lower for the year. a brutal month for the sector. scarlet: absolutely. just cutting his outlook moving from a market perform rating and he joins us now for more. it has to do with your view on
inflation, which is that it will remain tame. >> it looks like it for us. we expect inflation will remain if a function of wages are not re-fleeting at a worry some rate. commodity prices are low, particularly oil with the rebound we have seen in oil over the last month or so. we have got to expect commodity prices to stay low. what we look at what our expectations would be, it is modest in the big issue is how can the fed reflate the economy then we are sitting here with a yield curve that tends toward flat earlier today. around 176.was to reallyore spread get some excitement going and financials. we took down our rating on the financials from an overweight with an expectation of
marketormance to a weight or basically a neutral waiting. that onu also have materials as well as transports. you are basically if e.on banks, materials, and transports, and yet you have the second-highest target for the s&p 2500. >> you have got to remember the target is for the end of the year. where we are today and from here of theere to the end day, a lot can happen. we expect what will go on with the dollar, the dollar will begin to moderate. we have seen that a little earlier. the dollar strength was around 98 last i looked. going down to around 96 and havingo the 95 mid point been close to 100. the dollar tends to strengthen it wasf fed tightening the fed begins the process of normalization, the next thing that happens is the dollar
begins to weaken. do you think that will be good for u.s. multinational companies, it will be good in terms of when they report, it will help drive revenues and and instead of detracting from earnings from abroad, it could just help as currencies from outside of the u.s. begin to strengthen versus the dollar. scarlet: we are looking at headlines on valeant. under investigation. this is valeant pharmaceuticals, whose ceo has just returned. aboutof questions accounting. you can see a plunge in the share price. it was already down on the day. the leg lower after a headline that valeant says it is under investigation by the fcc. this is after the ceo has returned. you look at valeant, a stock loved by hedge funds, it's beef to the fact that these guys momentum names have really --
how long do you expect the rotation to last in the market? >> we have seen a lot of that occur in the fourth quarter. the first quarter proceeds, we will probably get a little more of it. expected since the beginning of the year that valeant would begin to perform better. we did think investors would still want growth and a very low interest rate environment. what will drive the market will be a sprinkling of growth but considerable exposure to dividend stocks. likely, cyclicals. they look rich. if i look at consumer stick -- with just prospects of interest rates rising modestly, my thought is i want to own cyclicals. industrials, materials, technology, consumer discretionary, within health care, i want the traditional names. i am looking at oil
prices, which turned positive for the month. there is a lot of talk that it is stabilized. have seen the s&p 500 and the dow on february 11 and have stayed above the level. lookingextent are you for oil to continue to be the guide for equities now that it is no longer declining? to watch itave further. we are getting the reaction and thaty related to the count is coming down and we are beginning to see that in production get a little more modest. made seeing efforts whether it turns out to be successful or not. oil will dekepect from the s&p 500. this just makes sense and i think it will come through as we begin to see the positive effect cheap energy, except for near-term, the energy sector.
energy will be efficient relative to its new role in the .ystem with technology the consumer and businesses become more efficient at using the stuff. alix: valeant is under investigation. it is under investigation by securities and exchange commission according to the drugmaker itself. this is separate from and -- from existing investigations. this is according to a person familiar with the matter. it is not clear the new probe is centered around. lori little said valeant ongoingd it had several
investigations, including investigation by the u.s. attorney's office and the district of new york. the company had come under fire others ofess, among its rivals about it struck pricing practices. been inquisitive has raised prices on them, one of stocks underat rod pressure. they did say they are -- there was changes to the a county. that did affect its statements going back. nonetheless, there is confusion now. that is sending the shares lower. the company canceled and analyst conference call scheduled for 4:00 p.m. due to media interest
according to an analyst briefed valeant. the company said it never intended to make this a formal call. michael pearson, who had just returned to a two-month medical lead -- leave, would hold its call from analysts and it looks like that is no longer happening amidst the news of the investigation. still ahead, talking about calvin who joins us to discuss rising gold prices and if any acquisitions are in the pipeline. ♪
alix: having a bright beginning in 2000 16. gold stocks surging at 80% so far this year. danielle joins us now from the metals and mining conference where she is speaking with that president. >> thank you. calvin is joining me here. it has been pretty aggressive what you have done so far this year. another $2arget for billion. it gettingnt, is harder to find these cuts? >> a new crop of low hanging fruit every time we look in more depth. we could have job cuts but, it
is less about job cuts and doing more with the same amount of people. generating a lot more value. >> in terms of the debt rejection -- reduction, you're taking that from asset sales. some of it is coming from cash. gold is much better now. that potentially gives you more of a windfall. >> we have been cleared of debt so far. we will continue. to bring our total debt down to $5 million. and we got a cash flow certainly will channel a percentage of that. we will balance.
asset sales? if you had an unexpected windfall, would that reverse anything in terms of your plan to sell non-core assets? kelvin: no, the focus has been on non-core assets. it is one of those situations where you never say never. we would have to consider it but at this point, an aspect of that a a core asset does not stay core asset forever. to sell assets. >> you anticipated my next question. we were just told not all are equal. which are the crown jewels that could never be touched? >> they all performed, and they
are great assets, as you know. year, we generate 70% of our production. it is like asking which of your children do you like the best. generally speaking, we like them all. quite saying your executives have stretched their muscles in terms of preparing for a day when you go on the offense it and by these acquisitions again. what do you want to see in place? >> there was a year where it was foundational and we had to put more stability in the business and more structure in place and we had. we are on the defensive if you will. we are now moving away from that. time will be a point in when we move from purely defensive choppiness -- opportunistic.
we want to make sure we do not need to, we are generating good cash. we do not need to do anything. patient. we will see. >> back to you in new york. alix: that was danielle speaking with -- the close of trading is minutes away. take a look at the major averages as we head into the final trading day. the last 15 minutes or 10 minutes of trading on february. -- of february. the s&p 500 losing half of 1%. ♪
tell us how this came about? whether ored as to not they were under investigation and the company confirmed the number of invest .ccasions that was part of potentially what had debts had come about. some stuff that typically shows that there has not come out as -- in terms of what was going on for other reasons because they had to restate earnings. alix: do we know what they are under investigation for? >> we do not know precisely. . source says it is separate we do not know what exactly are there are accounting concerns that have been raised by the relationship with this pharmacy. obviousone that is most . it is not clear at this point. >> there were headlines about an hour ago.
valeant is relying on the debt market -- debt market to make his acquisitions. >> valeant, the question is how ifl they paid to act and how their business model is constrained in some of the ways a have pulled letter -- levers and they bought their earnings that way. they have raised prices and said they are not doing that anymore. can the base business grow? they need to improve that is looking for.s are everyone has been eagerly awaiting the update to let people know what is going on. that is what everyone will be looking out for. >> what is next for valeant? >> i'm sure there will be questions and disclosures at some point that will clarify some of that. that is what we have to wait for on that front.
they have a number of investigations and legal issues at the moment that they have to do it. it is not surprising this is another one they will have to settle in the next couple of months or years. we will have to wait and see. percent,n at 1.21 dropping the most since 2011. thank you. cynthia. scarlet: moving on to the markets, let's bring in mike regan, a bloomberg gadfly columnist. of corporate or economic news. a valeant story is raking late in the day. because of the forecast, very disappointed investors. i think you are right otherwise. not a lot of fundamental news coming in. technicals seem to be the fallback position. a lot of people are looking at the s&p 500 level.
it did not really stick today. saw the losses excel arete and then the 50 day moving 1940ge was a little lower, three and once the levels did not hold, things got a lot heavier and that is where we are today, close to the lows of the day as we speak. alix: the chart can be read two ways. other one was the 50 day moving averages. >> all of moving averages have compressed. emerging the flat market for a long time now, the shorter end, moving lower. it is something i think people would get more confidence if we were able to stay above that in a few days. it is never set in stone but you want to be on the upside rather than the downside. creuset seems like less and less
of an influence. the government did not seem to have a lot -- a lasting impact. >> the market was pretty big. what is interesting is crude oil. a big huge rally in crude. really, treasury yields were lower and gold was stronger all day. never a clear. going the opposite way of crude right now. as we had to break, here are the major averages. the dow is off by 98 points. valeant is the big loser of the session right now off by 17%. ♪
>> s&p wrapping up its second consecutive month of losses. the first time that has happened in 10 years. joe: the question is "what'd you miss?" >> the longest losing streak in four years. >> plus the cities -- plus citibank's chief economist joins us. what he thinks advanced economies are leading the downturn. >> tomorrow we are going to dig into sanders transaction tax and what it means for the financial sectors. >> we begin with our market minutes, stocks giving up their gains in the final hour of trading. utilities were the only sector to gain. health care down. secondmentioned, the straight