tv Bloomberg Markets Bloomberg March 8, 2016 3:00pm-4:01pm EST
from bloomberg world headquarters able welcome. bell, andilde closing the winning streak is in jeopardy. the chairman joins us. they need more stimulus. shows clipsetailer of thieving workers on tv screens as employees clock is very is the orwellian tactic working? we are one hour from the close of trading. julie hyman has been keeping an eye on this. aroundwe're bouncing
nearly close as we had around to the lessor of trading -- last hour of trading. is really energy stocks that are weighing on any potential gains today. yesterday were they were the best performance today the worst performers. there are some green areas, defensive groups. within energy the selling is particularly broad based. if you look at all of the members in the s&p 500 energy index, all of them are lower right now. you do not see any green on this screen whatsoever. of those stocks, the worst include chesapeake energy, which has seen a rebound recently, but now it is down again. murphy has resumed selling as
well. all of these are stocks that had significant will the day rebounds recently, and are now coming back to earth again. the fact that oil is lower does not help matters, off by nearly 4% going into tomorrow's inventories report. theyast by analysts show are looking for another building inventories. we will get those numbers at 10:30 a.m. >>-rush into treasuries today, erasing all of yesterday's gains. julie: we're deftly seeing a reversal. look for safety, that is the theme today. what we are seeing is treasuries with the yield on the 10 year going down to 1.83% people are doing some buying even as we have seen a shift in interest-rate expectations. it does not matter what people want to avoid risk and without
is one of the places they go. >> we will speak to our guest about this in a moment. thank you. let's get a check on bloomberg first word news this afternoon. mark crumpton has more from our news desk. mark: thank you. it may be a test of the stop donald trump movement today. is michigan who were donald trump has a double-digit lead with results will show whether ted cruz, marco rubio or john kasich anymore momentum. for the democrats, hillary clinton leads by a double-digit margin. show bernie sanders is doing better with younger voters a sitting federal reserve governor has given money to mrs. clinton's presidential campaign. according to federal election he gave $750cords in three contributions to mrs. clinton's campaign.
the officials have made the case of monetary policy needs to be nonpartisan and independent. the world health organization says reports from several that sexualggest transmission of the zika virus is more common than previously thought. increasingay it is evidence that birth defects can be blamed on zynga, which can be spread by mosquitoes bites. they say the outbreak in the americas constitutes a global emergency. a baltimore police officer can be ordered to testify against his colleagues in the death of freddie gray. that is the ruling today from maryland court of appeals. the attorneys for william porter argued he should not be forced to testify while avoiding a retrial. the first trial ended in a hung jury. five other officers have been charged in connection with his death. his death led today's of protest and writing -- and writing.
i am mark crumpton, back to you. our focus back to the search for safe havens that julie was talking about a moment ago. investors clamoring for u.s. government debt the 10 year yield falling back to the 182 level, reversing most of monday's selloff. a little research for yields, but also some p trepidation before tomorrow. >> absolutely. but what we are talking about is going to raise interest rates or not, and the interesting thing is even if they raise interest anything does not mean for the long end of the curve. today we are seeing a rally in the 10 year treasury because as investors, out to
the international investors are seeking you and they're coming to the u.s. treasury market. they are also coming to the u.s. corporate market as well. we have seen that in the flows. there has been hundreds of billions of dollars that have poured into the room treasury market because of the yield differential, but it's only getting wider. our first chart shows yields. you can see where we are now, we does retrace most of the year. the short end of the curve is actually up about 20 basis points or so since the lows that we have seen. the low end of 25 basis points. we are seeing those pressures for the long end of the curve to stay well encourage. >> does this mean that things
are back to relative normal at the beginning of the year for the federal reserve and we may be in date back to a hiking cycle? >> if you look at inflation data it would argue that we should be back on track for the hiking cycle, because you see that inflation measures across the cpud, whether it is core are cgi, they are all rising. expectations are rising as nominal 10 year yield is falling. that and higher wages can we do not get in the last report from but we've generally been getting higher wages. all of that should help persuade the fed that it is time to hike. but i do not think they will do that at the march meeting just yet >> you're seeing the monthly flows. it is really increased in the last couple of weeks again. this has as much to do with china and japan and other countries that are coming out with data as much as it has to do with the u.s.. if you look at the percentage
of the global bond index that is giving you know yield or a negative yield, it is about 20% of the index. no one wonder u.s. international investors are looking at the 10 year and u.s. treasury, and it is a poultry yield of 1.83%, but it sure beats a negative yield. >> what is the play for most of client? s? insurance companies, pension funds maybe planning to hold to maturity. individual investors may not be -- may nots i carry with it is difficult to say. we have to look at other pieces of the fixed income market.
we are still hundreds of basis points above the lows that we have seen. what that tells me is is betterisk reward than the high-yield universe on the stock universe. one thing that i would recommend to look at is the high-grade market, because what is the problem with the equity market, it is correlated. if you add investment-grade to your portfolio, you had a little bit of duration, and you get a little bit of spread product. together they actually do diversified portfolio. >> when you have a massive drop whatl and market turmoil, do you do to your strategy? >> we did not change the strategy. we are actually been saying since the beginning of the year that our expectations for the
equity markets were fairly modest. what we are expecting is positive returns whether they are set against a wider band of volatility. in theinvestment grade portfolio, having treasuries in the portfolio is key, but also our clients can be a little bit more nuanced and maybe a little bit more tactical within the strategic allocations. stock,t is the kind of where he if you bonus defense names in her portfolio committee would've held a much better that if you owned the rest of the industrial names. >> >> a better year? >> i'm going to stick with my modest upside. i think there is plenty to keep us on the edge of our seats. of,re thanks to the stage -- our thanks to anastasia. coming up in the next 20 minutes, sounding off on negative rate.
california bonds are back on the markets. the state is selling obligation bonds today. the biggest bond sale in a year and a half. the state is increasing gains from tax increase is supported by the governor. growth in silicon valley's technology industry. and more investment in private consumption drug europe's economy in the fourth quarter. overall gdp rose three cents and represents in the last three months of the year. it is the 11th quarter in a row that the region's economy has grown. and that is your bloomberg business flash. the european central bank is widely expected to announce a pack just announced measures on thursday. just how much stimulus is needed?
asked awe member of the executive board. have a listen. >> on thursday they were having new forecast. inflation at 2% is getting further away, they need to do more. i think the market expects them to do more. suggest ecbd you could and should do? >> a different instrument from a different levers greg i would pressures,ont the the amount of bonds to have an impact. >> you wrote in the financial times last week and now and in theh you said, and i quote, fact that monetary policy is the only team in town is problematic, but if central
banks start playing their part, this could become deafening. are you saying that we need more and more central bank stimulus? how does this and? end? >> the impact of monetary policy is maybe not as strong as we thought, but it is still there. what we need in europe in is to start the process of deleveraging, of reducing the amount of debt both in the public sector and the private sector. the use has implemented qe for six years before stopping. now we are only one year off qe in europe, and i think it is a bit early to start thinking about stopping. i think the force of deleveraging has to go on. >> i also want to bring up a chart that we have replicated, because it is religion private chart inflation that the ecb likes to look at.
we have replicated here at bloomberg and you will be able to access it through your terminal. this shows inflation going in the opposite direction to the inflation number we have been looking at. is inflation in europe, and dcs gaining steam anytime this year? >> you have the impact of oil prices pushing inflation down. european central bank's have that there ared one or two years ahead. of look in a panoply indicators, and what we are seeing is inflation for this year is going to be lower than expected. but if oil prices are realized is that there is a chance of moving toward this. you need central-bank action. i think that is what we will now on thursday. to use theaghi needs
for guidance toolkit once again as part of the measures. are you a fan of the? at? -- whatthe off guard is -- is thatfered is an effective way to keep policy loose? >> they tried it before starting -- the starting qe, and it did not really work. interest rates to remain low for some time you have to prove that you are willing to implement it. what matters in europe as market rates, not so much policy rates. that is the difference between the u.s. and europe. you really need to intervene in the bond market to keep market rates low. ? credibilityre a issue here, and does the ecb the face losing visibility -- ecb
face losing credibility? >> in the end, they want to be able to achieve their target, of 2%. it is not 2% tomorrow, in his 2% over the medium term. there is some time. by october of 2019, well we have reached it? >> there is a lot at stake. i think he will. he will do whatever it takes. mark: why has he not done it? we had those saying do what japan did. why not just go greg? -- go big? >> various reasons. when you take an action, you have to balance advantages and disadvantages. in this territory of your buying assets, you want to be sure you are not tripping the vote.
central banks are conservative, they are incremental. there is a medium-term that you do not want to rock the boat and bazookas af these bouzouk shooting at the mouse. is a difficult situation brady does not depend only on monetary policy. if we had better policy structure, and physical, it would happen. it is not entirely in the hands of mario draghi. he will do what is needed. -- that wasrenzo, lorenzo speaking with us. we are 40 minutes from the close of trading. the nasdaq down 1%, and the dow down .5%.
>> you are watching bloomberg markets. we are near the close of trading , and they look like they will snap that five-day winning streak. let's head now to julie hyman who has been keeping an eye on the market. julie: joining me today with options inside is the chief investment officer at recon capital partners. there is a new product in options that i know you are spice. about called the it is an option to compete with the vix. what is interesting to you about it? >> the spikes has come out from that. ofactually tracks volatility the etf. julie: rather than the s&p 500,
which is what the vix tracks. >> exactly. it is actually calculated on the floor from the traders. difference is for the spikes is that it is actually based on a electronic trading. this ismove faster, and in response to what happened on august 24, because the vix was halted for a 30 minute time frame. the traders had to fix it. this will not have halted because the spider was still trading. that is going to be the interesting thing to see, if not the options market starts moving toward electronic work is more for prices. julie: it will be. we will see what happens. i want to get to your trade of the week, and your headspace. looking at your notes coming you are very gloomy and pessimistic right now. what is going on with you?
what has changed in your thinking? >> we are looking for several reasons. we are weaning off of monetary , and we are seeing that central banks, the efficacy of their programs, are really diminishing. stimulatingading to growth. we are going lower than that. there is a disconnect from the fundamentals, we are seeing that in the short covered rally that has happened since february 2 now. we are starting to see is in the options market. we have seen volatility stay between 20 and 30 during the height, but the vix is peace through the 2008, 2009 levels. it is not making sense. iso, the s&p 500 trading at 22 times, and we are in a recession. what you want to do is buy an sp y in honor of the spikes today, 198 put. ly salafito actual
181 september plasma about 2.7 percent of the market. but it protects the 181 level which is a 52-week low. it is protecting you 8.5% down from here. inknow volatility weeks september, so this takes you all the way out to their and protect yourself. if you want to be bullish on it you go into the queue qqq which does not have financials or energy. julie: we have to leave it there. thank you very much. we appreciate it. we will have more on bloomberg markets coming up, including an exclusive conversation with mary jo white. ♪
mark: thank you. hillary clinton's lead over rival bernie sanders is narrowing in two new national old. mrs. clinton leads senator sanders 53 to 44% among likely voters, that is to a new wall street journal nbc poll. to 11 points in february. mrs. clinton leads senator to a 19why seven points point advantage in january oll.ing to another p mrs. clinton will take a break from the campaign trail to that 10 nancy reagan's funeral. many people who loved her to go without health insurance last year are paying a testing price this tax season. h&r block reports of fines are
doubled for those who fail to enroll under the affordable care law. the average fine is 380 three dollars, compared to with $172 for 2014. this winter was the warmest on record for the contiguous united states. that is according to the national oceanic and atmospheric administration. that attributes of the temperatures to a strong el niño. through february average temperature was 36.8 degrees fahrenheit, 4.6 degrees above the 20th century average. the previous mark was 36.5 degrees, set in 1999 and 2000. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. back to you. >> thank you. we have less than 30 minutes till the close of trading. the nasdaq is on his track for
the second straight day of declines. >> right now we have the nasdaq near session laws, unless you're is a monster rally into the close. have a look like we will two-day losing streak for the nasdaq, a reversal from yesterday. piotr traded higher. -- biotech was trading higher. interestingly, all 10 of the top 10.2 drags in the nasdaq 100 year to date are either big tech or biotech. a continuing theme to keep an eye on. relative selling, we're talking about the big names, amgen, regeneron, alexi. there does not seem to be in a new fundamental news. i reached out to our biotech analyst, who said that he saw after a couple of good days, or could be some retalix -- there could be some reflex volatility.
sure that the biotech bear market is over. we could see more selling ahead. >> thank you. fascinating. securities and exchange commission still has a number of regulations and projects in the works, but aim to boost stability and enhance the overall structure of equity markets. today erik schatzker spoke exclusively with mary jo white about the progress she has made thus far, and about other top priorities for the sec. i think we have accomplished a great deal already. one of my highest priorities confirmede i was was enhancing our equity market structure. we have taken a number of measures to date to do that. up the also set mechanism in the energy to do the first comprehensive review of the equity market structure in the agency's history. we have a market structure advisory committee is that is getting more active. there taking on all
issues, while we optimize specific areas to do more in the short term. last year we propose a rule for greater transparency, which was enormously important. erik: you have talked about the potential for fundamental changes. will that cover his of review be done while you are the sec chair, and will be seen as fundamental changes put into place? >> i think some of them may be in the eyes of the beholder of what is fundamental or not. markets forquity investors and those seeking to raise capital or fundamental. this is a review that will continue past the end of this year, without question. nice to cover has a deal with significant issues. the worst thing you can do is look at something that is superficial, and you do not have the data to justify going forward on it, and you do more harm than good. went to rest,n we and it is something we want to
have major treasure on. -- traction on. erik: what do you see as your role? we arember of years looking at, conflict of interest, the fee structures and you have to look at the srr structure, and whether that still makes sense or not. there are also places to get greater transparency for investors that are enormously important. also what happens to your order, how it is routed event to get pays what -- routed and who gets what. erik: some of that is wrapped up his concerns about trading in the pilot program that they have talked about starting. >> we will begin this year. erik: it will begin while your chair? >> it will, and i am pleased to see that a lot. the objective is to get the data and see if you can increase
secondary liquidity for smaller businesses. very happy to get that done, and it will begin this year. in terms of high-frequency trading, i think it is, as a most areas that we deal with, very important to define one's terms. high-frequency traders are not a monolith. they use lots of different strategies. you see strategies that talk about the benefits they yield to the market, some of the more aggressive liquidity taking strategies maybe the opposite of that. we are looking at this very carefully. continue to bring enforcement cases, as we would with any market participant. but again, the automated markets ts aree high-speed marke not just high-speed traders . risks, that that we have to be constantly evaluating an. 2014, you in
promised a rule put in place to evaluate these. >> what is actually going on is a staff formulating a regulation on the anti-disrupting trading rule, the one i talked about before. that is essentially to deal with times of ability in the markets. we have liquidity creaking strategies, which may be damaging to investors. erik: more specifically, on a related point, will you improve plans for a consolidated audit trail, the credit system where everyone needs to understand what happened? >> that is certainly very high priority to get the plan approved this year. i expect the commission will actually act on a notice to comment on that quite soon. erik: how about a fiduciary
standard for financial advisors? >> that is something i think is enormously important. every pfizer, whatever their nomenclature, whatever their regulatory regime, action the best interest of their clients. it is about that i've said before, and we would do it under section nine through tina dodd-frank but it is not a clear path to. . there have been difficulties for many years. it is important to proceed correctly, and i hope that we see traction on it this year. but i do not want to create the impression that it is something that will be -- >> so you will not put it in place before you leave? >> i hope there is a proposal this year. erik: the labor partner at this -- labor department will put their own fiduciary standard in place. is it not crazy that they will have to work under two sets of rules saying the same thing? >> coordination is very
important, there is no set about that. you see that over the derivatives we need to coordinate with international regulators to be as compatible as we can be. we do not have a typical market spaces, and that is true with a fiduciary duty rule. we are independent agencies, independent statutory today,ibilities and even brokers who are in me dealing with our rules, and they are dealing with the labor department's rules. it is not a new phenomenon that there may be different requirements again. >> that with the sec chair mary jo white speaking with erik schatzker in an exclusive interview. next 20 minutes, amazon wants to let its employees know they are being watched. it shows employees video of fired workers allegedly stealing goods. -- thatopes that share schaeuble scare employees
>> you are watching bloomberg markets. latest bloomberg business flash, the biggest things the stories in the news right now. two united continental shareholders are battling to change the airlines board. they are backing six candidates, including the former continental ceo. the two firms owned 7% of the
united continental's stock. they are frustrated with the airlines performance and blame the current board. attributed the forced to sell assets instead of the whole company. they have hired really nine securities as one of two firms to explore all strategic options. bank of america has had it fixed sales, while releasing bank of is one -- fixeda's head of fixed i income is sent to be out. that is your bloomberg business flash. a pressing concern for amazon. the company is going to grea
to stop theft. when employees clock in they are greeted with a large tv screen showing fired employees stealing. about what they see. employees have found that they are actually shown the videos that show former colleagues being caught stealing things, told what they -- shows when they of caught changing addresses shipped packages. helping workers envision what would happen to them if they were caught stealing from the amazon fulfillment center. they are very conservative with their tactics in order to get
people not to steal. issues millions and millions of products, all from warehouses. they are tiny for the most part can be very expensive. the data gets lost. cory: i have spent time at one of these velvet centers in unix can in the arizona area, and also in california. menial tough jobs for the workers more they had a lot of time in contact with merchandise, where they stole things in departments, with a pick the things like it was a supermarket, going from item to item and handling these items, and inventory management system which is custom-built by amazon behold,vel to but the workers are a very important part of this.
their concern over theft is a concern over every single margin for this business finding ways to make things cheaper and cheaper. it is an essential part of the amazon model, and the spirits of the workers is surely a rough one, not least of which because they are being shown these videos about what could happen if they were to make the wrong a ices and become e thief. >> is there any movement by these workers to have amazon change their policies? cory: apparently not. it is almost japanese in the way that the workers take breaks and are gathered around to do exercises together and even have company meetings during every right. it has a very unusual work environment but it seems to be working for amazon had >.
>> amazon had no comment on this story. it's employee turnover is not that huge. it is starting his first homegrown tv series on thursday. any point of weakness? cory: they are trying all sorts of new things. they are launching a brand-new show that they announced today which will be a live broadcast on their amazon prime video service, which will demonstrate how different their service actually is the netflix. not least of which is the availability of live programming. they tried it out with state of the union earlier this year, and now there's a show that will have interactive components to enable people able to contribute to the show and comments live online while it is going on. amazon tries new things all the time, some of them stick some of break stick, some do not
>> you are watching bloomberg markets. the markets close in less than 10 minutes, so let's head over to julie hyman. julie: we are the lows of the session. i have to report all three major averages are down right now. the dow is the performer of the day, but the s&p and the nasdaq are down by about 1%. if you take a look at the bloomberg energy stocks, a have
accelerated their decline as we have headed into the late part of the day. inergy down 4% as a group. many of the stocks have done very well in recent days, so they are giving of the gains and then some. financials, industrials, cyclical groups underperforming today. and then we have defensive stocks movement. while prices heading lower, so that is contributing to the declines in energy. that has also accelerated declines down by more than 4% going into tomorrow's inventories report. in recent days, we're talking about murphy, southwestern, and chesapeake energy, which saw a monster rally over the prior to sessions. but now, paring that advance we had been seeing with the stocks that are heavily shorted. a couple of other movers to mention, on the upside we do have urban outfitters coming out with earnings that these estimates, selling more higher-margin products. shake shack, growth appears to
be slowing, and reiterating their forecast for comparable sales. lumber liquidators holdings bears mentioning. whentock falling off after he says he is reactivating his short of the stock. was oneit last year and of the people who suggested that 60 minutes look into the company and the level of formaldehyde and its products. it is down another 15% today. where is the money going? treasury markets today. ,he 10 year falling to 1.83% reversing the movement we saw yesterday. ounce.te a b thank you. despite the losses, the vix is still below 20. we want to bring in our bloomberg stocks reporter.
thank you for joining us. the vix below 20, means that the volatility is nothing to worry about, according to the gauge. yet we are seeing massive moves. >> with we are seeing is people remaining calm about the markets. reaching a multiyear low in the middle of february, which trades inversely to the s&p, actually down about 34%. and whens low, you see this measure it is called imply correlation. this extent to which they move in tandem with one another. that is actually broken down. there will more independently than i have all your command that is a direct reflection of the reduced risk profile. >> fascinating. and we should be looking at that versus just the vix, which is more broad in what it says.
really what this does is one imply correlation is low, it is a perfect of urban for a stock picker. is all going the same direction, with or were down, and you can pick out the ones that are trading the best on the fundamentals. look ahead and earnings, you can look at things specific to the company, which during times of major market selloff is not at the forefront of people's minds. >> was good that to me? >> besler just give people looking outside of that, looking more specifically at these, or maybe they can invest with someone like your let's for warren buffett -- peter lynch or warren buffett, who can pick stocks effectively. something you see of institutional level as well. old schoollot of portfolio managers who are out there, looking for stocks that are well valued and offer good growth opportunities, and look
at them individually. >> what is driving the breakdown of correlations? we have had so much uncertainty for so many years now. i cannot think of anything that is new. >> talking to money managers, they do have a sense that the worst is behind us with the s&p, especially in the medium-term. we talked to people in the the nightmares of the market, but people are expecting a relief rally. this is a pretty volatile indicator, so right now when it appears that stockpicking is something you should consider, that could definitely change a .ouple weeks from now now that we know that the cboe s&p 500 imply correlation index is nothing to watch, is there anything to watch in the vix? >> is a good question.
if you look at the charts, the near each other quite closely. not not want to tell you to look at the vix. that would be to your peril. it is a tandem relationship. look at both. >> thank you so much. everyone read his story. that is it for bloomberg markets. why did u.s., and the market what do yodid you miss and the market close is next. ♪
♪ u.s. stocks closing lower, the worst day this month for the s&p, also the worst day for oil. joe: the question is "what'd you miss?" we have the charts you can't miss. us toord john brown joins discuss how companies survive with $30 oil. alix: what will break up the european union? ball call from neville hill. scarlet: we begin with market minutes. as you mentioned, the biggest drop this month, indexes retreating from nine-week highs, s&p and dow h