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

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>> from bloomberg world headquarters in new york, good afternoon, i'm scarlet fu. at -- >> and i'm alix steel. new reportsstall, showing private payroll more than expected, with wagers on the next fed move. scarlet: voters flocking to donald trump, calls for more establishment republicans grow more apocalyptic area alix: is it the beginning of -- apocalyptic. alix: is it the beginning of the end with prices shrinking in january? get at: first we want to snapshot of today's market activity. we are heading over to the markets desk julie hyman has been tracking the moves. upon his from yesterday's buying is what we are seeing in today's session.
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nasdaq meeting on the downside, looking at the today moves in the s&p 500, you will see indeed that we had a big upsurge and yesterday we had pretty much gone sideways. put another way, look at the bloomberg. i have the s&p 500 intraday range thus far. right now it's only at 11.7, 11.8. it looks like that could be the lowest of the year. of course, that has happened a couple of other days with late day changes. we will see what happens this time around. in terms of the groups on the move, we have material shares that are lower largely because of monsanto, which we will talk about in a few moments. consumer discretionary with energy and financials, turning around later in the session. what's interesting to me is that these inventory numbers from oil or what terrible.
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lower by 20,000 barrels per day, but it was ugly and oil didn't really go catastrophic. neither did the stock market. it really is strange. we did have loyal take a leg lower after the numbers came out. it was down by 2% and then it quickly rebounded higher after we got the news that inventories last week rose to an 86 year high. and yet we are seeing oil perform relatively well. not getting much guidance for stocks from that. we have seen a little bit of correlation day some but oil is only 1/10 of 1%. moving to other commodities, looking at gold and copper, the movement there, we are seeing gold prices on the rise with copper on the rise, helping some stocks, like freeport mac moran, copper, and gold for sure, and the dollar -- let's take a check on that as well. interesting that as we see the upturn in some of the same times, it's the
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we've seen the dollar up as well after that adp report coming in better than estimated. the copy out on that report and any list it might be giving to some assets today is that it is not a very good predictor of friday's jobs report, even though we do see some market reaction to it. alix: thank you so much. scarlet: stocks are fluctuating after yesterday's gains, weighing the fresh payroll data and results from super tuesday. alix: our next guest says that it is not actual leadership in washington that could fuel returns, but actual gridlock. joining us now from philadelphia, tell us what you mean by that. >> what we've done is we've gone back to look at different times of leadership in washington, from 1947 onward. what we have found, interestingly, when the white house is fully aligned with a least one ofty, at
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the two houses of legislature, that produces actually the worst outcome for stock markets. interestingly just a little bit of gridlock, either the white house is fully opposed or they only have a week majority of control within the legislature, those two situations tend to present the best outcomes for the stock market. you know, we can all get worried about nonestablishment candidates winning, which i think the market is trying to deal with, trying to figure out exactly what that creates in terms of uncertainty, but the real true story is that what we are looking for is a modest amount of gridlock that basically forces whoever is in the office, whoever is in control of the senate and the house to actually make deals that are better from a more kind of middle of the ground legislature perspective. that tends to be the best thing for economies and the markets. gridlock leading
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training ranges for stocks. our a listen to what earlier guest had to say. >> equities in particular are in the bunker. equity managers are in the bunker and therefore managing accordingly. it's still short-term oriented. no one has longer-term perspective -- perspective. we are trading more on the blips and we think we are headed to a fundamental market. scarlet: we think we are headed into a fundamental market. does it aren't that we continue to buy last year's losers? does it mean that we continue to buy last year's losers? >> last year was leadership that was driven by a fairly small minority of stocks, driven by some highflyers in the technology space. otherwise the market was relatively flat. coming into this year we have seen weakness in those areas. biotech has been definitely been one of the areas where we have
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seen some weakness. a different leadership has to step to the four. in particular this year we have to deal with a slowdown in global growth and in u.s. manufacturing. it's been particularly hard hit. only the services sector of the overall economy, here and abroad, is really holding us up in a sort of growth situation for the economies and stocks in general. that should persist, and our mind, but there are risks right now and investors have to think about how they could play out. alix: recently in the last few days something interesting has happened. the market has been able to rally without oil and you had week data out of china with a market that still rallied. do you feel that this is coming to an end? >> i don't know that decoupling has come to an end. i would say that by bringing the
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clip on it said that people were height -- people were hiding in the bunker. i think that numerous investors are going defensive and they had to bring that out. that doesn't take the risks away. the risks are still there. are stillhe risks there, yet we are seeing money move into things like high-yield credit. almost $3 billion. as you noted. given that the market manager credit always leads, what does the signal to you for the appetite of risk? >> on the market, some appetite has moved in. the truee true more -- motor oil of the economy and creates part of the economic over cycles.ccurs we need to have that flowing. having the credit markets continue to behave in a somewhat healthy manner is probably good for the long-term sprint on tech. still, i would tell you that
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that does not take away the risks of default in the high-yield energy space, the downside that comes from oil as it ripples through corporate america and some of the weakness we have seen in global growth. the risks are still there, it's just that to some degree they are being held at a and the economy is still in an expansion mode. scarlet: something we have seen over the last 12 months is unwinding. what do you like? quality now there is a or low risk approach in our equity market. throughouts persist this year. therefore we are taking a slightly defensive tack. at the same time, it's interesting, the valuation spread has opened up quite a bit between the highflyers of the group area and the discounts available in the value space. i think it is interesting and
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appropriate to be taking those steps to buy those value opportunities that they have permitted themselves. it's likely that that opportunity will be around for a full year. scarlet: thank you so much, jason. alix: coming up in the next 20 minutes of "bloomberg markets," ted olson says it's not up to the court as to whether the tech giant can break into its own device. the gold market continue? as march gets underway we take a look at three charts that shows that activity may be in the rearview mirror. will break down the draws of we have been seeing. will they have an impact action mark -- impact? ♪
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welcome backlix:
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to "bloomberg markets." time for the bloomberg business flash. a look at the biggest stories and news right now. fixed income investors, too conservative, according to bank of america. forecasting that investment grade bonds may fall to the chief his levels in seven months. by the end of the year they predict a big corporate bond rally. scarlet: an increase in 2017 at more than twice this year's pace, the company is getting more aerospace work. honeywell just dropped a proposed $90 million offer to purchase united technologies. that the laborgn market is still strong. adding more jobs than expected, found that private employers boosted payrolls and the january number was revised upwards. the government comes out with the february jobs report on
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friday. that is your bloomberg business flash. hyman has been checking on the individual movers, starting with chipotle. time, it is lunch appropriately enough. according to one analyst, more and more people are going there for lunch. the chipotle shares was raised at cls a. analysts they're saying that the stock will rise on improving results following an aggressive promotional campaign from early february. she's been doing spotchecks and found that it was successful. that of course represents a rebound. they have been underperforming ever there were reports of various sicknesses related to the food at chipotle. looking at steelmakers in the wake of the department of commerce decision to impose -- impose tariffs of 266% on cold rolled steel after they determined the price on rarely. this will affect not just
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imports from china, but brazil andndia, south rea, russia, the u.k., subject to tariffs of various sizes. this has been an overhang persona the steelmakers who were concerned about what the tariffs would be as they came out. are seeing steelmakers rallying today. dollar tree, the retailer falling. it rose yesterday after reporting earnings, but today being downgraded to market perform from strong buy, analysts point out that the stock is trading near an all-time high and so the poor dollar tree segment for comparable sales growth may be slowing noting that they had a strong buy on the stock for sessionars after a long of being bullish on the shares. i mentioned monsanto earlier. the feed producer cutting its forecast, blaming in part the argentine peso, in part falling prices for herbicide.
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some otherng agricultural related stocks. fertilizer also under pressure. thank you very much, julie hyman. the encryption battle between fti and apple is intensifying. -- fbi and apple is intensifying. emily chang spoke with apple's lawyer, ted olson, a former u.s. solicitor general. job.ngress should do its to consider the various different alternatives and the impact on citizens, balance the concerns of law enforcement, which we respect. apple has cooperated in every possible way with the government except for throwing out the design of the iphone and redesigning it. needs to consider what technological resources exist. what can be done by the government without scripting
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private to change the product that they make. things like that. there should be hearings. there should be expert testimony. i have the most -- the most enormous respect for that tremendous public citizen, but that testimony from him, testimony from the head of the nsa and other security agencies, testimony from experts who work on the private sector, and testimony from law enforcement. let's have this debate. the director has asked for this debate. the ceo of apple has asked for this debate. debate.ve this i cannot predict where it is going to go, but we should have the discussion and the where it takes us. emily: the attorney general shot down the argument that this affects the fifth amendment.
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that they are not alleging that apple did anything wrong. how do you respond to that? has first amendment rights, whether they are doing anything wrong or not. you are absolutely right. the director said that apple has been very helpful in this and every other invest nation. they have gone as far as they possibly can. apple has a responsibility when it is being asked to communicate with iphones all over the world, that's a first amendment right. you want a first amendment right? i'm surprised that the attorney general for suggesting that only people accused of doing wrongdoing have first amendment rights. you have a first amendment right, no one is accusing you of having done anything wrong. and me, too. apple has first amendment rights to protect its product and avoid the government from compulsion to its it has to say products in order to change the design of those products.
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and it has the responsibility to protect the integrity of the right of privacy of all of the people all over the world who are dependent upon apple to protect the privacy that they use with respect to these phones. you can imagine what a taranto government can do to the individual privacy of individuals wishing to communicate with one another or their neighbor and private. so, we are talking about the rights of apple to make sure that it's iphone has the integrity that it carefully built into it. those our constitutional rights. everyone has civil rights in this country, not just people accused of crime. emily: apple is also arguing that it's responsibility to its customers is greater than any responsibility that it has to the government. there is another argument to be made that apple may not even have an iphone if it did not
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benefit from the government's own investment in technology. from everything from gps to the internet. what if the government made it a condition that did benefit from all of that in -- that investment, apple had to comply with legitimate law enforcement requests? mr. olson: i hate to get extreme about this, but it reminds me of the 13th amendment. the united states government made it illegal to have slaves. that's obviously an overstatement and i don't mean that literally, but the government cannot conscript private citizens. they can't say that in order for you to use technological information may have been produced in but in by the government, that just does not work. i don't know where that could possibly come from. is a force ofple great good for this country. apple has used its creativity,
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it's technical logical wherewithal, its resources to develop products that have changed our lives, that have made us more free. where would we be today without inventions like the apple iphone and its various iterations, the ipad and other devices that have made us free. has done that,e the reason apple has been so successful at doing that, the constitution gives incentives to adventurers. to provide the creativity of silicon valley, which has made the engine of this country so successful. that's free enterprise, but that depends on a rule of law and consistency of the government with rights given to all citizens, including companies developing products that we all use. that was ted olson,
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defending apple in this case. alix: the name of the game when it comes to the market, but could it come to a recession? we have the charts you need to see. ♪
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♪ welcome to "bloomberg markets." i'm scarlet fu. alix: and i'm alix steel. certainty has exploded. take a look at this chart from ubs, showing the huge increase in the number of times the fed mentioned uncertainty in this january meeting. what does it mean for stocks? julian emanuel had a forecast for 2175. chop -- a couple of the a couple of the charts he's watching. the first is the dow transfer. if you want proof that he's made a broad market bottom, look at
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the weakest link. in the month of february after bottoming in january after january 20, it's up 11%. leading to questions on whether all of the industrial weakness we have been seeing has changed since. look at how much farther it has steadily declined. is it bullish that we are moving up to that level or bearish that it's getting lower? that it is the question we were asking yesterday. scarlet: right, was it horrible? alix: exactly. but if you look at margin debt -- for new york stock exchange terms, typically falling margin is bad for stocks. typically it can be a sign have topped out. we haveu can see that rolled over. is it a negative sign or will it be more like 2011 or 2012, when
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it rolled over a little bit and climbed steadily higher all the way to the peak? could easily have circle that area as a brief pause in which we kept going. correlation is not causation, it could just be a coincidence. the other thing that ubs points to is that companies are still incredibly cash-rich. , 11.4ing financials percent of their total assets is still being held in cash. meaning they have plenty for dividends and share buybacks with m&a as well. we heard from the chief equities strategist at goldman sachs that they been leading in the last few weeks with companies now getting into the market to buy back their stocks, which they can't do before the earnings season. if you go inside the bloomberg you can see the goldman sachs buyback index with this tremendous rally we've been seeing since february 11.
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scarlet: that has certainly been the ammunition for the past year, year and a half. aix: so these charts being kind of cipher, can we really believe some kind of stability rally in the markets? scarlet: have we reached the beginning of the end for the biggest oil crash in a generation? we will speak with one energy analyst who calls it a distinct possibility. ♪
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alix: welcome back to "bloomberg markets." scarlet: let's start the headlines on bloomberg's first word is.
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mark: behind them, the presidential hope all's on both sides move onto the next political battlegrounds. this weekend five states are holding primaries or caucuses. the next major contest is march 15, when five more states are up for grabs. as far as delegates are concerned, donald trump increasing his lead with the delegates he needs to win the nomination. ted cruz has 100 one. marco rubio has 87. on the attic tight hillary clinton has a big lead over bernie sanders, with 1001 delegates. president obama and vice president biden are backing patrick murphy for the bid for the seat in florida. the vice president will campaign with him later this month. harry reid has also campaigned
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with murphy and has urged alan grayson to drop out of the race due to a congressional ethics invest asian. the supreme court appears sharply divided over abortion regulation. the biggest one in the courts in a quarter-century. strict loss. half of the state us available and it would leave the regulations in place put out naturally. issue interrupting passenger service between chicago in new york service, amtrak. crews are working to group -- repair a leak of ethanol on one of the trains.
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they reported its that had stated -- there -- look for a plea -- look for a peak bloom for the cherry blossoms and washington, d.c. maximum peak, on average. if marking the anniversary of japan's gift of 3000 cherry trees, running from march 20 through april 7. -- global news, 24 hours per day. i'm mark crumpton. back to you. european banks still seeking for ways to shore up earnings, reducing the ability to charge higher interest on loans. ubs joined usof -- you today with what used to that.
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given that we've been taking order over the last couple of years basically price our theices, to reprise ukrainian side of the situation. the fact is that what's going giving --nk that your getting a subsidy. adding high and waits to our claims. what this it mean for certain rivals? the side effects are negative. it it is extremely difficult to judge. >> i think that this is something that european banks have been trying to get used.
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you can also start to see the effects of that. avoid negative rates, some banks are over extending credit, a condition that in my point of view might create potential risk in the system, like in real estate mortgages. so, i don't know if there is a way out of this. on the credit side, talking to us for fees on services that used to be subsidized by the pause -- by deposits. deposits today, the fact of a lower rate environment is the proposition. >> are we going to see consolidation in the banking sector in europe because the has been so much pressure on your rivals?
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sergio: i think in general it is that huge capacity. the problem is creating the environment in which we learn from the past. not every bank should try to copy the other. every bank has to find their own ways to weave through the mix and make it to the next phase. that means focusing on what you stand for, what you are good at. things like geography. >> you mentioned what you are good at. it is a pleasure to the to you. your story of working in the trenches -- as you look at the strategic path forward for your bank, your competitors are slashing costs for the knowledge segment and investment thinking. at deutsche bank they used very strong language. what everyone wants to know on global wall street is -- how are you going to retain your
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intellectual, trading, and making firepower? what are you going to do in the next six months to keep that talent? sergio: look, you know, as we mentioned, everyone has to find their own way. but what we really focus on is what we believe in in our clients and what they believe we are good at. investment ranking, this idea of one-stop shop is that. i don't really buy the story that when you hear people share, ig on market full that that is capacity. in certain businesses, the reality is that so much of those capital requirements makes certain businesses structurally unprofitable. therefore i think you can retain and investment banking franchise expertise, but you need to pick
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up which segments you want to be good at. that was the ceo of ubs earlier this morning. $9.5 --ming up, the $9.5 trillion debt all -- debt wall. look at superser tuesday performances. how our markets reacting, if at all? ♪
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alix:. here's what we are. late news from switzerland. returning to growth at the end of last year as it overcomes the frank shock. warnsater -- blackrock
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that leaving the eurozone will do more harm than good. scarlet: the ultimate driving machine will soon drive itself. bmw developing a car that will allow you to watch tv and check out facebook as it drives itself down the highway. begin in switzerland with encouraging news for europe. switzerland returning at the end of the year with tdp rising 4/10 of 1% in the fourth quarter, the most in a year. signaling switzerland fighting off a soaring frank attempting to send the country into recession. despite the better than forecast performance, the country suffered its worst year since 2009. but there is an optimism. they expect the economy to accelerate by 1.5% this year. scarlet: meanwhile, the threat of a so-called brexit is looming in europe and markets are concerned. the head of ubs worries about consequences of
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an exit. >> it is an impediment to the globalization that i think is financialt for systems, for the global economies. abrexit --t that be triggered,t let's see how it comes out. alix: the head of blackrock also said that it would mean big risks for the u.k.. they are not the only country to generate less economic growth, but they would see a drop in investment if they decided in june to leave the eu. the firm also predicted that volatility would increase before the vote. scarlet: there has been a silver lining to the stormy credit markets. european countries have been able to buy back hans cheaply. among those who have agreed to buy back bonds at below safe value, generating ensued profit
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and reducing the company's debt load. this year they announced plans to buy back $62 billion in bonds, more than five times the amount -- during the same time last year. alix: months and so is not expecting 2016 to be a great year. iny say they see no let up the difficult conditions facing its business. weaker currencies are hurting foreign revenues and on top of that the decline in agricultural commodities are squeezing the agricultural profits of farmers. bmw, and about a mercedes-benz over self driving vehicles. you can watch tv and check out facebook while speeding down the highway. iny say it will be available four to five years. bmw under pressure from restated. for sadie's has been bolstered a fleet of newby
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cars they can drive themselves along simple country lanes and recognizing -- and recognize jaywalking pedestrians. that is your global business report. alix: abigail doolittle is live from the nasdaq with the latest. abigail: we're looking at a tight day of volatility swinging up and down. if someone in a tight range, mainly the red, dragged on today, retail would seem to be a dominating theme. one of the worst percentage performers in the nasdaq 100 is atlar tree after analysts raymond james downgraded the stock to market perform from strong five. slower same-store sales growth even as the stock is at a record high. he also made note of the fact that he has had a strong buy rating for eight years. really a big shift in view their
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-- shifted view there. scarlet: what retailers are you focusing on? boostl: costco is the top to the 100 today. a bit of a surprise. reason being that after the last report it had its worst drop since december of 2012 and investors are optimistic, looking for a slight decline in -- comp store sales. they are also going to be watching membership trends and the impact of low gas prices. we will have to stay tuned after the bell. oil prices will have a tough time with a sustainable rally. even if production is rolling needs to global outlet be trained. guess what? it's actually happening. energy aspects found that 12 million barrels of oil were
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drawn globally in january. we are joined now by our correspondent from london. what is the significance of that draw? >> first and foremost, we are not building stocks, which is good news. when everyone is thinking that the market is only oversupplied and we are seeing lots of vessels offshore, everyone thinks we are resorting to floating storage. we expect to see more in the coming months. we are seeing unplanned outages. refinery work. maintenance. not payingif we are attention, the stock will be drawn down. a drop in the ocean compared to the 300 million that we still have in stock. alix: you mentioned of course that the other part of that is
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production declines. leucine it roll over a little bit, but it's really these unplanned outages that have really surprised in iraq. you feel that the market has actually been acknowledging these? >> not enough, not enough. i think that the kurdish pipeline being off-line was one of the biggest surprises. those will continue to happen. have been discarding a lot of these outages because of the over supplies. it will have markets paying much more attention. eventually when demand picks up you will have a draw. could this really hedge off surprise? we think that it will catch us by surprise and when it
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does, minimum action could be volatile. expect prices to start increasing as of this year. >> on the flipside we get those truly terrible inventory numbers in the u.s.. pushing it to be almost maxed out. what do you see as a turning point in the u.s.? ted: the u.s. with -- michal: the u.s. will take a longer time to clear. the market is much more global and brand action will lead to wti action with stocks rebalancing in the region. scarlet: do you see any chance of floating storage in the u.s.? highly unlikely. we are seeing a little bit off the u.s. gulf coast, it's waiting to be discharged on refinery maintenance, but it's not a sustainable prospect for a long time. there is still on store short -- onshore storage that makes more sense. scarlet: these tankers offshore
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don't mean floating storage. it could be congestion due to price contracts. do you think that the market looks to broadly at these and says -- we are panicking? definitely. that's the case in the u.s. and china, when there are lots of tankers floating off of customs. this happened when china imported hefty amounts and this month they will likely import anywhere from 7.7 million barrels to 7.9 million barrels. huge amounts. that, wee it's over see this kind of congestion. the independent refiners tend to buy disrupted crude. there are more sort of car goes off in the port just waiting for the opportunity to sell. we are seeing product cargoes being mistaken for crude. of course.
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when you take a look at market positioning, traders are just so sure when it comes to wti. should these factors just make them less sure? reconsider ashould lot of these positions. the market is on its way to lostancing, but because it its anchor, the market gets jittery and nervous and takes that reaction to the extreme. much, michal,u so of energy aspects. exxon mobil energy analysts, headlines coming out from rex tillerson, saying that oil m&a is getting harder to transact, not easier, and it will not a cup until the glowing discrepancies are surging. he sounded negative about the global macro environment, calling the conditions not inspiring. alix: which was fascinating in terms of m&a.
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you guys finally going to buy something? the idea that these bankruptcies would need to happen before it occurred is dicey. especially with them able to access the capital market again. it has not 100% dried up. scarlet: as we know, they have reduced the earnings to get more of a share count. exxon has not made any layoffs during the downturn. alix: we will have much more on that coming up in the next hour. scarlet: companies with loans coming due, they could have a tough time paying them down. which industries are struggling the most?
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alix:alix: welcome back to "bloomberg markets." scarlet:
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nine point $5 trillion, that is how much that companies have to pay down in the let -- the next five years. the wall of debt is becoming more difficult to scale. be bad news for a global economy that is losing momentum already. dive wither into that lisa abramowicz, our gadfly commentary section. put this into perspective for us. lisa: going back to 2013, it's the biggest since then. it's probably on pace to be the biggest as companies have borrowed so much debt on the hills of federal reserve stimulus. 2020,ak year is really when $2.1 -- $2.1 trillion comes do. bigger than the peak of previous maturity walls. that will be of a hurdle to cross. the big question is, going forward, how resilient will
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credit markets be? how much will they be willing to shoulder the debt going into the future? bondng at a high-yield yield right now, 9% on average from 5% just a couple of years ago. at 5%y borrowed debt rates, refinancing it would be much more expensive. can they do that? most of this is investment grade debt. still, there are some big concerns right now. terms ofin refinancing, our companies with investment-grade debt more likely to do that? how does that work? lisa: investment-grade companies are having an ev -- an easy time right now. it depends on which one, of course, but they are tapping the market at good rates. another question in my mind is -- how many will be downgraded? could2.3 trillion bucket
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swell. we are on pace for the greatest volume of fallen angels for ingress -- investment-grade companies downgraded to high yields this year for a calendar year since 2009. increasinging an number of investment-grade companies fall from that pedestal. scarlet: you had argued that i could happen very quickly as they are conservative and reluctant to downgrade, but when they do they change the outlook for many companies. >> particularly when it comes to commodity companies. quickly.happen fairly >> that is what is going on right now. moody's is going through a re-rating of commodities companies. what is that going to do for this pile of debt? lisa: something that we've seen in the oil community is that it's no big. the refinanced in the fall, spring, tapping the capital markets now. we were worried about it drying up and it hasn't actually happened. >> it depends on for who.
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for high-yield companies in the u.s., it's pretty much dried up. 50, maybe 70 bankruptcies? it hasn't rocked her the entire market. but let's say that these companies can pay back their debt. scarlet, before we were on air you asked me about whether ofpanies could buy back some their bonds cheaply. some banks have done that. what does this do to the economy that is already slow if companies are using free cash flow to go out to their bonds? alix: paying attention, thank you very much. lisa abramowicz, of bloomberg gadfly. ♪
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welcome to bloomberg markets.
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worldt: from bloomberg headquarters, good afternoon. alix: here is what we're watching. donald trump and hillary clinton take the top spots after super tuesday wrote in. we discussed what it means and whether investors are pricing in results. scarlet: new dings cite rising debt and declining reserves, but further risks to emerging markets, goldman sachs says there may be disappointments in store. alix: the exxon mobil ceo saying economic conditions globally are not inspiring and that m&a will not pick up until bankruptcy is due. scarlet: first, the setup and checking in with julie hyman. equities kind of meh. a look at commodities. , what looking at energy
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we're watching is not just crude oil prices, which are up despite the fact that we see him and tories and an 86 and inventories at an 86 have in your high, that natural gas is falling to a 17-year low. there is pressure on natural gas. one of the other things in the report is that refineries are processing more crude. that may be supporting prices today. in terms of natural gas and the apple effect, we see kind of mixed trade among some of the gas producers. spectra energy is lower. williams companies has turned higher. and looking at the refiners because of the refinery processing number, we see the refiners under pressure today. -- tesoroesk tesoro leading the pack. chesapeake energy rose as much as 21% right now, up 16%. who is after the man
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started the company was indicted big rigging of contracts, colluding with a competitor overpricing. a standout.s it has underperformed by quite a bit. that it isadjusting such a big natural gas producer -- rising in the face of the load natural gas prices, which have been tumbling over the past couple of years. here is a chart showing that 62% decline. i know you have been following this story with great interest. alix: it is truly fascinating. mclennan is one of the few people that invented shale. from there to now armed the last few years has been a tremendous sting. scarlet: now he is like the poster boy of what can go wrong. alix: materials sent to be dragging on the s&p today. julie: that is one of the reasons why stocks are not getting much traction. monsanto falling after the
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company cut its forecast. it talked about lower pricing for an herbicide. we are seeing chemical makers feel a ripple effect here. dupontes like dow and trading lower today. what does this push and pull mean for stocks? as scarlet said in the beginning -- meh -- not seeing much reaction today. the s&p 500 right now is the smallest this year. scarlet: thank you so much. has morek crumpton from our news desk. mark: the encryption battle between the fbi and apple has intensified. the general counsel and the director of the fbi appeared before house committee yesterday to discuss whether apple should unlock one of the san bernardino iphone to her today, emily chang spoke with apple's lawyer, and he says this should not be resolved case by case. something that
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congress needs to debate one way or the other. if you do it on a case by case basis, you will have different outcomes in different cases and different parts of the country. director comey says they have 12 or 13 other cases in which they are trying to do this and federal courts. number ofagine the iphones when you think about every jurisdiction in the country. a case to case solution is no way to go about this. mark: apple says complying with a court order would threaten the privacy and security of millions of iphone users. the pentagon is looking for -- the defense department is recruiting experienced hackers. a new program gets underway , and hackers will run for flaws on apps, websites, networks. lordyer for a mexican drug
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says his client wants to be expedited to the united states as soon as possible to it he says guards at a mexican -- mexican maximum security prison will not lead guzman sleep. he wants to negotiate for a lighter sentence and confinement and a medium security prison to his lawyers previously promised to fight extradition as long as possible. donald trump and hillary clinton hoped to solidify their positions as front runners in the 20 16th presidential race. both won seven states and super tuesday. leading over ted cruz and marco rubio. he has 285 of the 1237 delegates needed to win the republican nomination. ted cruz is at 161. rubio is at 87. mrs. clinton has 1001 of the 2383 delegates needed. bernie sanders has 371. next up, five states have primaries or caucuses this again.
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forthen five more states up grabs later in the month, including florida, ohio, and illinois. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. back to you. scarlet: super tuesday, big wins for donald trump and hillary clinton yesterday. what is next? in our washington, d.c., it bureau chief, who has spent all night up following results. you have done this a million times, but what still surprises you on the day after super tuesday? >> super wednesday, wednesday hangover. the things we saw last night are animating the day's conversation. in aepublican party is tight spot. ted cruz had a better night than expected. donald trump had a great night to marco rubio had a really weak night. they either unite behind donald trump, which looks unlikely
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given some of the comments from leading figures, or they put more money into sort of stopping trunk, whether dad is through cruz or rubio. scarlet: how come no one has dropped out yet? wouldn't it make more sense at this point to get off the stage? who runs for president thinks they have a path, and i truly believe that. scarlet: ben carson has a path? >> he is a different story. he may reconsider ailing and other political role somewhere else after this. week inich am even next michigan, if he can do well there, he will consolidate some , being the one with moderate sanity. marco rubio lucy can get florida, his home state, winner take all, a huge prize. let's the clear, donald trump is the front runner in this race.
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he has the delegate lead and a clear pathway to nomination. the only thing that looks like it will stop him is some huge event, a huge debate stumble next week, or a really effective campaign to stop him led by money and establishment figures. der who former fx tra writes never bloomberg said -- when guesstimating what is priced in, there are few things you remember. the election is big, for sure, but not imminent. there are many trades you could put on now that you to ignore global events in the next eight months. absolutely. you could say bernie sanders is a spender or donald trump is a protectionist. but the order that it is up limited -- the market has a hard enough time trying to decipher the economic data they get daily
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and handicap with the fed does next. not have to deal with getting congress to vote on policies. alix: confusion in the race and confusion in the markets. megan, thanks very much. we know you have been up all night. scarlet: go to sleep. coming up, he founded chesapeake energy and was forced out three years ago. he is now facing an statement. what it means for the future of the oil and natural gas producer. alix: fears about china's economy -- are they over done? how much impact does it have on other emerging markets? scarlet: we talked about candidates' futures after super tuesday, but what about the specifics of their policies question like we will big deeper into bernie sanders' controversial policies. ♪
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scarlet: welcome back to bloomberg markets. alix: time for the bloomberg business flash, some of the biggest business stories in the news. scarlet: brazil has released a facebook executive who do not comply with a court order. ofwas the vice president latin america at facebook and instagram. it is that he failed to comply with a judicial order to cooperate with an investigation into drug trafficking and organized crime. icahn says new jersey approved two casinos outside new york city, if they do, he will pull his hundred million dollars investment into the trump taj mahal casino in atlantic city. woulds the competition devastate atlantic city, making it impossible to put that much money into the new casino. arco google is betting one and likely demographic will benefit from self driving cars, stranded
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senior citizens here at more than 43 million people in the u.s. over the age of 65 and 10,000 over the hitting that mark, aging americans are a natural fit. the chief says mobility should be open to the millions who do not have the privilege of holding a drivers license. business flash update. alix: over to the markets desk for a check on some of the company movers. you are looking at some 2015 laggards that are rebounding. julie: both with fundamental news and not. in some cases, it is just momentum reversing into the opposite direction. goldort-mcmoran copper & has been rebounding, along with the price of copper and gold. oil also a significant version of that company's revenue. chipotle is rising after being possibly mentioned by an analyst to missing the recent promotions are starting to bear fruit. range resources is rebounding, along with oil prices. ak steel rising as the u.s. says
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it will impose tariffs on steel imports, particularly from china. those shares rally and 16%. here is how these stocks have done for the year to date. pretty positive, particularly ak steel, 52% gain freeport-mcmoran up 26%. it had a record gain in the month of february. the police and range resources also higher on the year -- up ole and range resources also up. chart is adjusted for percentage changes for 2015 for these committees. chipotle is in yellow. range resources in green. ak steel and purple. freeport-mcmoran and white. all of these had steep declines in 2015. now seeing that rotation back into some of these stocks this year. alix: thank you so much. the exxon mobil analyst meeting underway in new york today. the oil giant says it will cut down the production target and
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lower spending by 20 5% this year. scarlet: on monday, it is sold $12 million in debt, raising speculation it might snap up assets, but it may prove difficult. joining as is the bloomberg managing editor for energies and commodities in the americas. there were comments about how oil m&a is getting harder to transact and not easier. we are still waiting for some has eludedivity that us. year, whenre last oil prices continued their fault, the discussion was about when we would see the m&a spur. it really does not come. what was pointed out today was all these equity fails, all these companies selling shares, and keeping finances afloat as a reason you are not seeing more m&a, so you might have to see
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bankruptcies first. scarlet: are the current is not as malleable because of the declines? >> it does not matter. they need enough cash coming in to keep them alive. people are still talking about these assets being overvalued. people are hanging on to them, trying to ride it out. alix: some of the targets include anadarko and apache. .hey also have a lot of debt is that a bad matchup that will never happen? withxon is its own bank $310 billion worth of shares. all the discussion about the $12 billion bond sale, essentially, if exxon wants to purchase something, they are free to get whatever they see. maybe not apple, but anything else you can think of. alix: what do they raise the money for? >> they said it is for drilling purposes. they are trying to cut and cut money on drilling. this is a way to find that in the short term.
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aboutthere is talk chesapeake energy and rig bidding. >> aubrey mcclendon is a real character in the oil and gas energy. been indicted for allegations that he and his company colluded with another company to drive down the price they have to pay landowners to drill in western oklahoma for a few years prior. he has left chesapeake here chesapeake said it has been cooperating and has immunity as part of this deal. scarlet: what does this mean for chesapeake and the perception in terms of their ability to move forward? >> chesapeake has been trying to undo the legacy of aubrey are they brought in a new ceo a few years ago that they have been selling off the weird things he added to the company. they used to have clergy on a staff and things you would not
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necessarily think of. things you would not associate with an oil and gas company, like restaurants, those sort of things that interested aubrey. they have been cutting debt and selling off the stuff they do not need. scarlet: thank you so much that is the bloomberg managing editor for energy and commodities coverage. alix: still had, virtual reality is not just for gaming. we will hear from a ceo of a startup that makes headsets used at hospitals to help rehabilitate patients. ♪
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scarlet: this is bloomberg markets. alix: controlling things with your mind might sound like science fiction, but the
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technology is that -- not that far off. a virtual reality group is that can beadgets extensions of bodies. scarlet: is valued at $1.1 billion, the company. let's good to bloomberg radio for more. >> a lot more to it than that. thank you so much. we are talking about virtual reality and how to control it. and motions and you do not -- hand motions. the notion of controlling things with your thoughts is what this company is looking at. ceo of mind by the made. talk about how thoughts can control ar and dr. been tooal has emulate the bring a little bit. reality experience, the goal is to feel as real as you would in the physical world.
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the best way to do it is using examples from the brain and eliciting that part to make it feel real. it could be real and natural. it could be how you elicit parts to engage game play, emotions and feelings. >> i am listening to you talk and it sounds really cool, like the stuff in movies. talk about the real world implications beyond gaming. >> it is something we have focused on over the last year, making virtual reality platforms for patients with brain injuries. there have been strong implications and how they recover. the recover much faster from not being able to move their limbs. they train in virtual worlds and get much better. cory: interesting how does it work? >> it is an interesting concept. the patient who, say, has right brain energy -- andriy and
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cannot move the left hand, they he the goggles and essentially says, i feel like a want to move my left hand. in the virtual world, he sees the left limit move, which tricks the brain into believing this hand can move. it took us that activity. you can eventually add arbitrary commands but the visual is so compelling. the brain is saying, i want to move it, and he sees it move in real time. neurals there a measurement as to what part of the brain is firing to do this? >> the parts of the brain executing a movement are also implicated when you imagine you want to move them. will we know what that is? >> that is the neuroscience part. we know what that is. it is triggered through virtual reality. environment,t that and it is much more fun, activating the areas.
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how are you getting something like this used on a grander scale? >> we have got to regulatory clinical trials. now is dealingg with home devices so patients can take it home. it is actually out there. patience is it would cory: what is the cost right now? >> it will come down to a subscription model. patience will say they want to train their hands, and they download what is needed. some might pay $50 a month. it will be affordable. cory: where are you doing this written up? >> in europe and on the west coast at a few centers here, including ucsf and stanford. there is a plethora of things
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where it has a fantastic application. aix: we were talking about time as vehicles helping the senior sector, those folks at will have a problem driving around to talk about some of the futuristic applications that maybe you guys are working on right now. >> anything that is human and machine, you have to use mindmaze eventually. the demographics that have a problem and maybe cannot drive, those driverless cars can have share control and safety. fun, and there is engagement. that is where we are going. he wanted to be fun, but you want to make it safe and secure and ecological, much more natural. cory: quickly, what is the typical time a treatment in something like this? >> it varies. but you see a lot of improvement within two or three weeks.
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there are different time points for different people. ze -- fascinating stuff really interesting. no first-person shooters here. back to you on the tv side. thank you. scarlet: thank you so much. coming up, we have been through the dotcom bubble on the credit crunch, so what about emerging markets? we are getting the outlook from goldman sachs, next. ♪
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has more from our news desk. you were just googling how to move to canada? emily: i was not, scarlet. [laughter] scarlet: a lot of people have been. emily: i would tell you more about -- mark: i would tell you more about that in a minute. rubio cast their early ballots in the march 15 primary in florida. senator rubio says that super tuesday was a positive night, given his name in minnesota, even though donald trump took seven states and senator ted cruz 13 states. we are now hearing that romney will speak tomorrow about the 2016 presidential race. hillary clinton's campaign says int they raised $30 million february. mrs. clinton stressing that she the $31 million in the bank, more than enough to a competitive primary.
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senator sanders did not release the amount he has on hand. the united nations security council has unanimously approved the harshest sanctions on north korea in 20 years for its recent launch and your test. including mandatory inspections of cargo leaving or entering north korea by air. cashng the much needed through its sales of natural resources. cuba has its first case of the zika virus. a venezuelan postdoctoral student arrived in the country a few weeks ago and developed a high fever and rash. the government says the woman was under medical quarantine outside havana with other newly arrived doctors when her symptoms were detected. now to the story that scarlet was alluding to, canada may be the real super tuesday winner. shortly after donald trump declared victory last night, the
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official canadian immigration website crashed. according to do -- according to global trends, how can i move to canada as a search term spiked 350% in a four hour timeframe. global news, 24 hours per day, powered by our 2400 journalists in 150 news bureaus around the world. alix: china's government will layout its roadmap days after moody's downgraded its sovereign credit outlook from negative to stable. the -- the problems, the big debt burden, reserved, and doubts about structural reserved. rodriguez, joining bloomberg earlier today with his insight. has shownernment imaging -- shown amazing reform willingness. the problem is that they want to do many things that are
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contradicting against themselves. perform andto andned up the excess -- clean up the excess capacity in some sectors, it implies that your growth aspiration you to be lowered. what does this mean for the rest of emerging markets? let's ask the senior portfolio manager for emerging market debt at goldman sachs. that fx willd bottom out. what would this recovery look like? you say that it will not be rapid or v-shaped? havingt of all, thanks me. you are spot on in saying that we are skeptics. in the same time we have had three years of returns with valuations. class islly the asset
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the one where there was consensus, which certainly seems to be the case in the emerging market. fundamentals were better than the emerging market perception. where things have replaced the loss and that's a euphemism for things being beaten up. julie: of course -- alix: of course, the issue is how do you stem the default. yakov: china remains a concern for us and quite a few people out there. we are armed to the teeth with china hedging. what we are looking at right now is that in china, but the idea is still the same. debt rising. it's ahaving said that, matter of how much is in the price? it's been rising across the
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board. looking at sovereign balance -- sovereign balance sheets, theing materially lower in developed markets. then we have to think about overall yields. overnight japan issued a 10 year balance with negative real interest rates. what you find in yemen on the other hand, 60 plus yield for countries that have replaced the gdp and are climbing with yields that have adjusted materially. we are nocarlet: longer comparing this to 1998. that feels very last year. is there any scenario in which the big wave of corporate defaults on the horizon could spread to the sovereign level? there is certainly that narrative out there. be defaults.ill probably more in the next couple of years. having said that, it is not likely that these contingent liabilities that people worry thet spillover into
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sovereign. for us we are fairly cautious on the corporate sector. it's not exactly time to jump in to corporate, but what we see in that space is still very healthy debt levels. more importantly, we would look .t the universe of sovereign there are 64 or 65 countries that we follow. the only country that comes to mind that is on the verge of default or is likely to default next year is venezuela. where concentrating at $.35, $.40. you can certainly say the risk is in the price. that somementioned debt is so cheap, the yields are so high, there is a chart that really illustrates that. in the premium, the 10 year treasuries. the spread is the highest we seen since 2009. what in the university like based on this kind of valuation? i would say that there are two key valuations.
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dollar debt and debt from local currency. on the local currency side, we think that in the next few years that is an asset class poised to deliver lower returns, but we are willing to stomach volatility over the next few months because currencies are so correlated. if you have the right to rise up , if you have the stomach for the volatility, it certainly the right asset class to be in. horizon, iter-term would say that we are much more positive on dollar sovereign debt. we are seeing lower defaults in a lot of the yields without the fx risk. economies, terms of russia and brazil, the thing is these are not china. do brazil and russia have the ability to pull the emerging markets out of their melees? would i think that what make emerging markets great again, i think it's going to take a lot, right? the business
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model has certainly been the one of digging stuff out of the ground and sending it to china if it doesn't work anymore. having said that, we have a huge rise of countries to pick from. it's not about russia or brazil being able to salvage the whole sector. we are finding the gems and positioning the portfolio appropriately. focusing on importers. scarlet: indonesia, mexico? is that what you are thinking? yakov: i would say the caribbean. it's a region that imports oil. eastern europe, india, sri lanka, they all come to mind. thank you very much, yakov. coming up in the next 20 minutes of bloomberg markets, canadian doubledposure has
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thanks to untapped loans. what kind of risk does this bring to lenders? we will explore. bernie sanders and donald trump could not be farther apart. what is the sanders economic plan? alix: plus the fed beige book report. we will bring you the analysis at 2 p.m. eastern time.
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scarlet: this is "bloomberg markets." it is time for the bloomberg business flash, a look at the biggest business stories in the news right now. lining upd of shell assets for a divestment program into trinidad and india according to people with
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knowledge of the matter. following their record takeover of bg group with stakes in oil and gas fields in india on the block. pipelines in the u.s. are also on the list. scarlet: credit siu's says 4500 jobs in london could be at risk -- credit suisse says 4500 jobs in london could be at risk. of the jobs in the financial district could be terminated. the u.k. vote to leave the eu will be held on june 23. alix: americans have always headed north of the border for bargains whenever the canadian dollar falls, but now they are finding discounts online. spending by u.s. shoppers using paypal on canadian websites rose 20% last year. that's your business flash update. over to the markets desk, julie hyman has the latest. looking at earnings today. bhuj, let's start with
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shall we? the company in particular cutting its forecast. looks like that is weighing on shares, cutting the earnings-per-share forecast, underlining it the full year will be 5%. the sale ofs for its southern comfort brand. box maker,et-top shares are down even after the missed came out with resmed -- missed estimates in the fourth quarter. some are not so profitable in their outlook on the company. some are questioning why this interim ceo is making such big changes if it's not a permanent position. he also says the current --uation is confusing giving given the fcc proposal to let consumers choose their own options. those shares under pressure.
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on the flipside, bob evans, raising its forecast for the full year. those shares gaining by 7%. withrombie & fitch, strong fourth quarter possible sales of 1%. the estimate was for them to be little changed. shares have been bouncing around a little bit today. one quick turn i wanted to look at on the bloomberg, you can look at this on the website or the bloomberg -- this is a change in analysts estimates were earnings quarter by quarter. you can see that as we get to drop --t quarter, a that's how much analysts have slashed the earnings estimates. the biggest drop we have seen in five years and those estimates. a lot of adjustments in those estimates. thank you so much, julie hyman. alix: untapped loans in the struggling oil and gas sector in canada have reached double the
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total of the outstanding amounts of loans, as highlighted by the big banks. pamela richie joins us with more. pamela, how significant is this? mentioned, it sort of doubles. we've come to the end of earnings season. doug alexander has gone through the numbers of the exposure on the loan book side of things to the oil and gas industry -- $50 billion -- that is, canadian, for the banks across the board. what has been mentioned in the numbers but not highlighted in the conference calls and company presentations quite as much is the credit lines that many of the oil and gas companies have. and what portion of that is untapped. it could represent another layer of risk that is being disclosed but perhaps not focused on is much. perhaps in difficult times this is exactly when a company might be willing to go into tap the
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rest of the credit line allotted to them to make sure that they have liquidity to pay their bills and so on. rbc, in fact, among many of the lenders lending to oklahoma in january. major the full 500 million on that credit line. days later in january they missed the interest statement on their bonds. that's one of the pieces of the pie that will be more. fair enough. as we know, sand ridges very close to bankruptcy as well. but you spoke to the ceo of which a bank. was he concerned? you allso, i will let hear what he said, but brian porter put that question to him on his level of concern. this is what he said. >> 75% of our undrawn exposures are investment grade. so, no, this is playing out as we thought.
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we are comfortable with our exposures. pamela: i guess your question would be -- the other 25%, are there concerns on that front? i'm sure it's a similar number for rbc. this question was put to all of the banks as to whether there are concerns rising across the board. scarlet: all right, pamela richie, thank you so much. alix: coming up, we are going to dive deeper into bernie sanders's economic plan, which he says will create 26 million new jobs. ♪
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alix: welcome back to "bloomberg markets." presidential hopeful bernie sanders vowed to take his campaign to the already convention in july, despite only winning four states in super tuesday. he will also be bringing his
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controversial economic plan that he claims will create 26 million new jobs and increase real gdp growth by 2026. "the new york times" says that those numbers are based on faulty math. ofspoke with the university amherst professor, gerald freedman, who defended the plan yesterday. there is a difference in perspective. i'm using a keynesian model. it's a difference in perspective . we recognize that there is involuntary underemployment and when you increase the growth of the economy and absorb some of that unemployment, you can have faster growth. that faster growth persists. if you look at these periods, we have had bad depressions before, particularly in the 1930's. coming out of that in the 1930's we had growth rates over double digits.
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from 1947 to 73, when we had aggressive fiscal and monetary policy and higher growth rates than we've had since. government intervention can boost the growth of the economy. >> just to clarify, the growth rates would remain elevated even once it was fixed? it is intuitive for a lot of people that demand can grow as spending accelerates, let the complaint is that once the sanders lands spending hits a certain level, your analysis continues to show growth even if spending remains level. >> that's right. because we primed the pump. after you get the government spending in their, you get more employment and the businesses will be investing more. consumers will be spending more because they have more money and that is going to put more money in other people's pockets, encourage more investment. as the economy approaches full
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employment, businesses will be looking for ways to approach -- to make productivity through investment and people working harder and more productively. once you get the economy going, then it will continue to go. employment, there is a question here about the labor force participation rate. a lot of people wonder if we are at a peak level there. the retirement of baby boomers, for instance, represents a structural change. >> yes, there is a certain amount of structural drag over there. keep in mind that the majority of the decline in labor force participation over the last 15 years has been within demographic groups and age groups. if the labor force participation rate within age groups was back to where it was in earlier times , there would be plenty of workers available. plus, of course, as the economy
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expands, immigration will be increasing. i use i believe very conservative numbers for the increase in immigration yet, but by thejobs aren't filled labor force within the country, there will be pressure to bring more people into the united states. figure is5% growth subject to some criticisms that . might be willing to accept it could be that the multipliers are too high. the point is, if you use the most conservative assumptions on low multipliers, no effect from the redistribution of income through the minimum wage, using very conservative assumptions you still get a very significant boost in growth coming from the sanders program. >> you say you're using a
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conservative approach. why the criticism? letter that said -- we are concerned to see the sanders campaign citing extreme claims by gerald freeman about the effect of this economic plan, claiming it could not be supported by the economic evidence. if you are using standard keynesian models and conservative estimates for multipliers for immigration, why the strong pushback? what do you attribute that to? >> because they are not using keynesian economics analysis. respect great deal of for them. when i sent that letter, my stomach was in knots. we see things differently. keynese working and what himself called the classical model. they assume that the growth rate of the economy is bolstered by demographic factors and technology independent of the state of effective demand.
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this is exactly what keynes criticized when he wrote the general theory. it's the approach that was rejected in the golden years from the late 40's 70's, when we had higher rates of growth in the economy and higher rates of productivity growth. many in the economics profession have swung back to the old law named after john batiste, who did not say it, but it is that supply determines demand. so, what they do -- what is done by -- i don't want to call them my critics, but i will -- the critics adjust expectations for the economy to what is actually happening on the assumption that we will basically always have full employment. that we are moving towards it. they have lowered their estimate of capacity growth of how fast the economy can grow in line
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with what's been happening in the last five years when we been in that. of stagnant growth. scarlet: that was gerald freedman, university of amherst. alix: at the end they asked -- who are you voting for? he said -- he didn't know. he really likes clinton but also likes sanders. it was a top -- it was a tossup for him. scarlet: his eyes got really big. he didn't know how to answer that one. coming up, have emerging markets hit a bottom? we've got a roundtable debate. be right back on "bloomberg markets." ♪
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>> welcome to "bloomberg markets." ♪
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carol: from bloomberg world headquarters in new york, good afternoon everyone. >> i'm tracey loa. here is what we are more -- what we are watching at this hour. will it put pressure on the fed to hold off on another rate hike? exxon oil is putting mobil into a budget crunch. they are turning down this they get on capital spending as they scale back their production target. tracy: breaking news here, mitt romney is set to speak out against donald trump. plans toformer nominee say as they try to slow down the momentum of the former gop front-runner after his big super tuesday. the fed saying at

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