tv Bloomberg Markets Bloomberg March 8, 2016 10:00am-11:01am EST
liu. mark: i am mark barton. this is "bloomberg markets." ♪ vonnie: we take you from new york to london to paris. we are half an hour into the trading day. aftertocks are climbing their longest rally since october in the s&p 500. economic headlines out of china are dragging down global stocks again. mark: bank of england governor mark carney defending himself from allegations he is trying to influence the brexit debate. he says it is his job to lay out the economic implications, but u.k. lawmakers say they are -- he is jeopardizing the central banks credibility. luxury goods maker
setting up defenses against a possible takeover of burberry. let's head to the markets desk where julie hyman has the latest. julie: declines steepening as we get out of the gate. just half an hour into trading. already stocks hitting the lows. the s&p doing the worst of the three, not the pattern we have seen recently. the chinese export data and the japanese gdp data, and commodities breaking down, stocks cannot sustain their gains. we have energy and materials, the leading groups yesterday, down big. each falling more than 2%. it is a broad-based decline. consumer staples little changed. besides that, a lot of red. in stocksen selling
and buying in treasuries. yesterday to some extent as well. the yield on the 10 year note going down to one point 82%. people looking for safety today. 1.82%.g down and with economic data out of asia, commodities are having an effect. oil prices, which had gained as much as 1.5 -- one point 5%, now plunging 2.5%. it is not clear if anything had happened. copper prices. data, notse export good for copper, which is intertwined with the chinese economy and demand. that also down 2.5%. this also has repercussions for companies that produce these items. a patchy one of the big
he one of in -- apac the big decliners in oil. a rebounds for these stocks, coming down today though. thank you. let's check in with the bloomberg first news. courtney donahoe. have fourrepublicans states and democrats have two in the primary battle today. donald trump has the double-digit lead in michigan. but john kasich has been gaining ground. hillary clinton also leading in michigan with a double-digit margin. kohl's show bernie sanders are still doing better with younger voters. meanwhile, donald trump's newlarity ending in a national poll. he leads the gop field by more than 30%.
but trump is on a losing and in a head-to-head matchup with ted cruz and marco rubio. the u.s. government appealed apple's win in a court battle over unlocking an iphone. prosecutors say that apple has helped the government unlock at least 70 iphones in the past. in syria, the united nations has begun delivering food and medical supplies outside of damascus. the u.n. says a cease-fire in the civil war has made it help -- has made it possible to help some of the millions affected. --be primer serve china says they are committed to solve the agonizing mystery of the disappearance of malaysian flight mh 370.
global news 24 hours a day powered by our journalists and news bureaus around the world. vonnie: thank you so much. investors on their toes. causingexports are stocks to fall. and europe still has its woes with the gluing -- with the looming brexit. ,et's talk to barry ritholtz what do you think your -- what do you take your cues from in an environment like this? barry: it depends if you are a trader or investor. if you're a traitor -- you mentioned earlier, we had the number of in quite a years. now we are seeing the opposite
of that. have theaders opportunity to take advantage. but if you are take -- but if you are a long-term investor, brexit does not matter. this is theness -- third decade of a weak japan. china is coming down the other side of a huge boom. i do not think investors should get caught up in the day today headlined chase. think back three months ago. haveferent set of worries people on edge. then we forget about it. vonnie: that presumes we're going back to some type of normal. will that be the case? normal, the great stagnation, all of these havendous changes -- i never been a big believer in the
fact that things change. hit 1000.he dow 16 years, we did not get over 1000 on a permanent basis. you had a huge bear market. not coincidentally, that is followed by a bull market. in 2000, the markets peaked. 16 years later, a lot of markets are still below that level. history has repeated itself. we are in the latter stages of the bear market from 2000. i am a believer of mean reversion. eventually, prices revert to the mean. mark: you mentioned brexit. let's switch years and focus on the governor of the mark -- governor of the bank of england, mark carney. he talked about the potential impact on investment. >> it can be short-term implications. for activity in the united
therefore puts pressure. there are potentially counter forces that could lead to lower levels of activity because of the degree of uncertainty that would affect investment and household spending. reasonable during a period of uncertainty. mark: i love your columns. but in the u.k. in a couple of months, we are trying to vote on something which the two sides tell us will mean this or this. what is your take on the whole brexit upcoming referendum and what it means for investors? barry: it is kind of fascinating. you have had great britain really be a benefit of what is taking place on the continent without having to carry a lot of the downside. without having the costs of,
let's say, a germany or france european currency. i am a little perplexed as to the arguments in favor of brexit. it looks like they have most of the benefits and not a lot of the headaches. why not just let this go? local there are a lot of and political reasons why people are looking for a brexit. only do we have no idea if there will be a brexit -- this time last year, we were talking about brexit and then whoever -- about grexit and ,hoever else would leave the eu but no one has a firm handle on what it means for local and 18ernational markets 6, 12, months down. longer term, it is probably meaningless. short-term, i am hard-pressed to guess what the impact will be. mark: the other big impact is
the ecb meeting thursday. mario draghi again expected to press the stimulus button. are you shaking your head in disbelief in the lack of traction when it comes to inflation expectations within the eurozone, despite the fact draghi has pressed of this button 10 times the last 47 meetings since he has become the head of the ecb? barry: the best way to frame -- to look at this is to think --ut three different reasons three different regions, each running their own monetary stimulus in different phases. the u.s. began in 2009 and finished last year. we completed our round of economic stimulus. us asry policy has taken far as it can go. that we have enjoyed the benefit
of that. now we are moving forward. japan is somewhat behind the united states. they brought out a bigger bazooka than the united states. qeative to their gdp, there is a norm us. when you look at what the europeans have done, they are the last ones to the monetary stimulus party. i do not think they have ride out the -- brought out the bazooka like the japanese. if you try to take out an aephant and use too small of gun, that will just get them angry at you. that seems to be what the ecb has done with the local economy. if you will not do fiscal stimulus, which all three regions should have done, you have to have a big gun and they have not done that. vonnie: barry ritholtz will stay with us as we talk about the presidential campaign.
and treasury secretary jack lew presidenting about obama's fiscal 2017 budget. among the headlines, the omnibus spending bill is already contributing to economic growth. and the budget will make critical investments and domestic and national security priorities. the full testimony on the bloomberg at live go. ♪
mean for investors? to tractors when he took office. then the s&p 500 surged more than 200%. be tougher to predict what trump and clinton would mean for the markets? this.ritholtz wrote about he joins us now. where we led astray in the is electedt whoever president will have more of an impact on the portfolio? for sure. when the market is doing well, the president gets too much credit. when they do poorly, they get too much blame. they are one part of a three-part government system. the supreme court has a huge on tax policy, regulation, etc. and congress, who hold the purse strings and approve regulation are another aspect of this.
to say the president is the only thing or is the most important thing that matters misunderstands the entire system. none of which is as big as the economy. mark: let's start with this bloomberg intelligence chart consumers it is the who controls the president rather than the president who controls the consumer. take us through the chart and tell us what it means for the voter. barry: everybody gets this chart backwards. we hear things like the market is up and the market -- and so lling, so thes po market likes his chances and what this means. it is the opposite. when the economy is good, when there are wage increases, that is good for corporate profit -- profits come a which is good for stock prices, which is good for the incumbent. but with a poor economy, low
wage gains, profits are squeezed. that is good for whoever the challenger is. when you look at that chart, going back 30 years, the sentiment was strong in 2000 when george w. bush came into office. you cannot blame the.com collapse on him as some people try to do. from 2003 to 2007, the stock market doubled -- whether you give him credit or blame is besides the point. with obama -- i remember a wall street journal op-ed saying that he was going to destroy the dow, which preceded to nearly triple the next six or seven years. blaming the president or giving the president credit for the market is besides the point. vonnie: breaking news from craig torres.
$750 in three contributions were given to clinton. barry: the only fed president who contributed. vonnie: right. should they not be contributing? the rules on this are clear. as long as you disclose what you are doing, it is allowed. it is a bigger argument as to whether or not -- $750 or some littlemount -- for that money, the optic issue it raises is probably not worth writing that check. that said, you give up a lot when you become a public servant. when you forgot either a higher-paying academic or wall street job. either aou forgo higher-paying academic or wall street job. this is the only fed governor who wrote a check to a candidate.
energy. from tortoise i assume tortoise is named because if you are patient, you will get there in the end. how patient do we have to be with oil prices? rob: the tide is turning because u.s. production is falling. u.s. producers announced production cuts for the first time in a long time. that will result in us moving from an oversupply to an undersupply for the end of the year. oil pricesat means approach $50 towards the end of 2016. don't: as that happen, companies jump back in as soon as oil breaks the level, at which case it becomes profitable for them again?
rob: sure. there are few oil companies in the u.s. that can be profitable under $50 a barrel. tiny resources has said that they can produce between $30 and $40. at that company and another are unique. a lot of u.s. producers need $60 to $80 a barrel to economically produce crude oil. mark: tell me about opec. a lot of movement in the price to thispartly due notion that russia and saudi arabia will freeze out, and we gather a meeting could take place in the next few weeks. you see this happening and happening an impact? has ahe potential freeze positive impact. we look at oil prices on a long-term basis.
opec is producing near its capacity. , as demand continues to increase, what is that demand will be filled by? u.s. and u.s. shale producers will fill long-term supply. u.s. shale is here to stay. producersselma shale are earning the same rates of return a $40 that they used to at $90. tell us how that happened. $40 oil will be the new $80 to $90. that producers have done by cutting the cost of drilling each well and also increasing the recovery rate of each well they drill. he used to cost $10 million to drill a well that would produce
500,000 barrels of oil. the cost ande double the production, to increase the break even. see a way from bankruptcies? rob: we have seen 40 bankruptcies already. we have the tortoise north american oil index. it is around 60 right now. only 11 have ratings across all agencies. high debt levels have impacted producers. but what we tried to do is pick producers who have strong balance sheets and assets in the right locations. vonnie: can you give us names of those who may go bankrupt? rob: we do not focus on those
who go bankrupt. but companies that will gain because other companies go bankrupt are companies like pioneer. they have ideally situated strong balance sheets, investment-grade credit ratings, and management teams that have managed through crises before. energy definitely an sector that is used to crises. still ahead, online marketplace is at $12 billion. we talked to one of the biggest players in the space, lendingtree's ceo. ♪
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the ecb executive board. we get his sense on brexit and what can happen with european banks if the ecb decides to boost stimulus this week. london, iw york and am vonnie quinn in for betty liu. i am mark barton. you are watching "bloomberg markets." courtney donohoe is the first word. courtney: joe biden lamented the nest state of u.s. politics. thatld people in dubai gerrymandering encourages candidates to adopt extreme positions. reagan were alive today, he could no more get the nomination that i could get the nomination for the republican party. i am not joking. tot you see is this movement
the extreme in the republican party. stopney: uae is the first foran international tour the vice president. in washington, the white house is unhappy after prime minister benjamin netanyahu canceled a trip to washington. the u.s. agreed to a meeting between netanyahu and president obama this month. the white house says it was surprised to learn through media the trip was canceled. indonesian lawmakers are considering whether to give police more power to fight terrorism. the government once police to be able to detain suspects for up convictedths, and terrorists could be stripped of citizenship. the u.n. security council sanctions were not enough for south korea. own onmposing their
north korea after its recent nuclear and missile tests. it is also blacklisting people link to north korea's weapons of mass destruction. global news 24 hours a day powered by our hundreds of journalists in bureaus around the world. want to head to the nasdaq now where abigail doolittle is digging into lendingtree. they announced a buyback extension. how has it been performing? abigail: lendingtree is about flat on the year. this is misleading. sharply. went down after a buyback, the stock has bounced back. a free go back to 2008, lendingtree is up nearly 10,000% and itsits 2008 trough record peak in 2015, going from
$1.42 to nearly $140. but the stock has fallen more than 60% recently. it is not clear why. one thing that could stand out is a high bear shortage risk of 27%. vonnie: any idea why there are so many short ends out there? abigail: perhaps valuation. 60%k is trading at a premium. frankly, revenue and earnings are growing strong. 40% in a year-over-year basis. no debt. it is not clear what the whole -- the hole is. the stock cross back over its 50 to moving average, similar 2014. the stock could just climb higher from here. donee: abigail doolittle
at the nasdaq. thank you. lendingtree's ceo to answer the questions. doug lebda joins us here in the new york studio. abigail raised the idea of valuation of your company. are you concerned it is to richly valued? doug: no. we are trading at roughly 16 times next year's cash flow and we are growing nearly 50%. i think our valuation is actually lower than two years ago. much moreere is scrutiny these days on online lenders. example.l ads for you helped all of these lenders. what standards do you have in place? doug: lending today is where invel was post september 11
2001 and 2002. we work with more than 4000 lenders. we are not relying on any one lender. we make sure they are licensed with good ratings and reviews. those are the important things. -- enders perform well the winners win. vonnie: do you have guidelines in terms of interest rates they can charge? doug: we tell lenders where the market needs to be. there are over 500 basis point spread for the average consumer between the low and the high rate. diversityat there is in credit policy appeared baltimore italy, the low rate, the best service, and the best customer service really wins. -- ultimately, the low rate, the
best service, and the best customer service really wins. in europe are having a bit of indexes sent a crisis now. some of it is down to financial technology. fintech. she thing that will take bank out of existence in the future? doug: i do not think that will happen. i think banks can apply technology in the same way startups do. they'd do it later. i say every bank once to be once to be no bank first. you can see it and our home equity business. before 2008 -- we had a wonderful business in home equity. -- close to 2008, it did not work. lenders are moving back into
home equity. we have more than 50 lenders doing home loans in the u.s. and we see more every day. we arenother trend seeing is negative interest rates. people have postulated whether negative rates could come to the united states. if's be hypothetical -- negative interest rates happened in the u.s., what would be the impact on your business? doug: that is a really good question and i can honestly say i do not know the answer. what i can tell you is if lenders want to lend money and borrowers want to borrow it, we are the best place to make that match. in the same way, going to a travel site, if someone wants to pay you to fly, you will get paid more if you comparison shop. same with lendingtree. as long as lenders want to lend
and borrowers want to borrow, that is the key thing. vonnie: but the comparison with , if you buy as ticket, you do not have a hanging over you. we are seeing mixed data on the housing industry. our more subprime borrowers getting in now? doug: we are not seeing subprime in the housing sector. andlenders are widening out do acceptable underwriting as opposed to risky underwriting. you price risk in the same way a corporation can get financing, even if they are going into chapter 11. it is just a different rate than a aaa rated borrower. vonnie: where are they getting their money? are they packaging their loans? doug: they get it from
securitizations. for from balance sheet lenders. -- or from balance sheet lenders. arehave companies that doing securitizations. you also have new startups who are doing things are friendly. analyzing credit based on your employment history or where you went to college. it makes it interesting for us. up 72% in theock past year. thank you. -- congratulations. thank you to doug lebda. powerful sec chair has power -- the chair, mary jo white, spoke earlier. mary jo: what you want the sec
since its founding, is a very strong, independent agency. where you have not only expert career staff but commissioners dedicated to its mission. i have confidence that will happen throughout -- ?> you do not think that mary jo: is at riskmary jo: in the outcome -- are veryappointments important. erik: you have a accomplished a great deal. record numbers of enforcement actions. collected in fines and penalties. you also enacted rules that remain unpopular on wall street. speaking, would you not expect donald trump or ted cruz to reverse or gut that?
you want attention to rulemaking going forward, but no one wants to relive the financial crisis. many of the rules the agency has executed have made us more that cause a market schachter and financial system. no one should want to undo that. if we were to roll back what some of the sec and other agencies have done, you believe he would expose financial markets to greater potential of a financial crisis? mary jo: without question. erik: how about what the sec gets from the left? of thee politicalization agency make it harder to do your job and make it harder for the next chair? all jo: the criticism from
directions comes with the territory. the sec in particular. in its policymaking. it touches important industries and investors. about 50% of what you do will be -- this by every dirty like by everybody. the key for the sec is to fulfill its mission as an independent agency. irrespective of lyrical party, agency with athe particular goal, and that is to not be politicized. mark: sec chair mary jo white speaking to erik schatzker. target ofould be the a takeover. how the company plans on defending itself from a mr. investor, next. -- mystery investor. ♪
mark: this is "bloomberg markets ." i am mark barton. vonnie: i am vonnie quinn. we go to julie hyman. julie: thursday deal that is not happening. -- now to a deal that is not happening. long day ofen a opposition to the deal, including from shareholders of terraform power, an affiliate of -- of sunedison. terraform was supposed to buy some of vivint solar's assets.
tepper still is not a fan of management. terraform up, sunedison up, vivint's declines have been going faster. citigroup says that a takeout price could be $81 a share in american express. its growth story could be attractive to a bank, for example. shares at $59.34. yahoo!, there has been talk about whether it may try to sell its core assets. verizon -- ityer, is unchanged now -- but they verizon cfo says there have in no discussions with yahoo! yet. those shares down 2.5%.
we will stick with this m&a theme. mark, you are looking at burberry. mark: yes. is the third-best performer on the stoxx 600 today. shares up 5.4%. there is speculation it is setting up defenses against a potential takeover in response to state building. let's get more details. we turned to bloomberg andrew roberts, who covered the trenchcoat maker. who could. for burberry-- who could bid for burberry? it is a big question. the company is not commenting officially, but people familiar with the matter says that the company asked brokers to investigate who has built up the stake. they also asked hsbc who the mystery investor is. if we were look -- if we were to
look at a broader view as to why they would be interested in who those candidates are -- burberry's been down 30% the last year. in terms of people with the firepower to take on burberry, lvmh is the biggest candidate with brands -- with more than 60 brands, covering everything from handbags to boots. with burberry fit in its portfolio? -- would burberry fit in its portfolio? aey may feel they are doing better job than christopher bailey, who is both chief executive officer and chief creative officer. equally be inactive shareholder who is disappointed with the company's performance. we are all waiting to find out.
if hsbc will reveal the identity. in the process, burberry is defending itself. mark: there have been seven big luxury goods deals and the last 15 months or more. $50 million.ly why have luxury companies been inward focused? andrew: you have to look beyond that period to understand why they put the brakes on m&a. a lot of luxury companies went eyeugh an enormous physicians are in the late 1990's and early 2000. they have been digesting that we are growth is slowing in areas like china. that means they have to switch from buying businesses and
expanding them to actually running them. that means they have their hands full. ofhave been through a period that. lvmh has been able to turn around a brand by becoming a bit more exclusive and distributing its brand. -- straightened out but so 1000 euro products are growing more in the market. vonnie: even with the game, burberry is down 22% last year. and it has already made a lot of the cuts and difficult decisions that a private equity firm would do. but is it a good target for private equity, the other big group in luxury retail now? andrew: i do not want to overplay the fact it may be lvmh.
there are plenty of arguments that burberry would be better for private equity. earnings are expected to fall again, but anyone coming into the business would put leadership first and foremost. they may query whether christopher bailey can be chief executive and chief creative officer. vonnie: our thanks to bloombergs andrew roberts. , we take you behind the wheel of the 184,000 mclaren s. ♪
tires on its 19 inch alloy rim. those tires affect how supercars handle, but they proved perfect on this ride, because we shot this video and a thunderstorm in the swiss countryside. it was the perfect scenario to test how well this white lightning machine would do to the daily driver. the 570s has a twin turbo v8 that gets 570 horsepower on a seven speed automatic transmission. zero to 60 in 3.1 seconds. the handling in the 570s is fantastic. exactly what you would expect from mclaren, whose brakes are so sensitive. it is very easy to drive the. for a car of this caliber, that is saying something. it has way more visibility than lamborghinis. it is easier and more practical
to drive, even though it is a high-end car. more surprising is the fact that the 570s gets 38 miles per gallon on the highway. you could say it passed our rainy day driving test with flying colors. and looked good the entire time. it has new front and rear lamps, and special air blades and a rear air diffuser that makes it unique. the doors open high, meaning you can park in tight spaces. though the trunk is small, it looks bigger than a trunk in a lamborghini or bugatti. pursuit reporter hannah elliott there. we are seconds away from the european close. stick around. ♪ ♪
betty liu. mark: this is the european close. we are going to take you from london to new york. this is what we are watching for you. mark carney is under fire in the brags it debate. exit debate. some say he is undermining the 's credibility. vonnie: some big-name sponsors ties with maria sharapova after she admits to failing a drug test. what this means to the world's highest-paid female athlete. we will hear about the lack of female represent