tv Bloomberg Markets Bloomberg March 15, 2016 10:00am-11:01am EDT
♪ yorke: we will go from new to london to japan. 33% asare plunging down ceo michael pearson talks about guidance and the possibility of a fold. the latest on what he is saying. we will tell you about the trading day. stocks are low after disappointing retail sales. shares in europe are snapping a two-day gain. energy shares drop. we will talk to the jcpenney ceo martin ellison. rally upk about their
70%. we have that exclusive interview. vonnie: let's go to the market desk where julie hyman has the latest. julie: i will start with valium. in plunge that we are seeing shares down 34%. the company cut its forecast. we talked about the future where the company moved remarkably. then, on the paul, a slide was put up. the company said today that it is going to focus more on the financial reporting, the transparency, and a typo happened. if you look at the bloomberg, you can see trading over the pre-market and regular session.
it is falling and then sharply falling again when we got the news that there was the revision. something else we have been mentioning quite frequently. in the shareholders company are moving. a lot of these people have been moving a lot of money because of the stock. that's 30% drop, that is the biggest drop in record. vonnie: we will keep an eye on that. what about stocks, broadly? steep.they are not as we have declines. the bank of japan is not making any moves on the stimulus. that is pushing commodities down around the globe. take a look again at the bloomberg for groups on the move. energy is the worst performing group.
falling asancials well. is working with jefferies. it is up 82% last quarter. it has been dealing with alzheimer's treatment that is testing the feds. it is fixing one of the endpoints. investors are taking this as disappointing news. vonnie: thank you. mark: let's go to the european markets. stocks are falling after the biggest gain coming through three weeks. japan did not add to the stimulus. decline is 35%.
is down by 9%. that is through the richest family. .t fell down by 1990% the big bombshell today is a cutting the dividend. it is getting rid of it. it is joining the likes of anglo american in cutting their chaos. what we're timeout yesterday with the bloomberg story according to people familiar is being confirmed that the a 684ler has agreed to million euros. shares are up by half a cent today. vonnie: thank you so much. to first word news. courtney donohoe is at the news desk. courtney: it is a big tuesday for presidential hopefuls.
holdingtes are primaries today. ohio, florida, north carolina in missouri. ohio is a pivotal state for republicans. the recent poll shows governor john kasich with a three-point lead over donald trump. meanwhile, polls show donald trump with a double-digit lead. it is a big loss potential for senator marco rubio. for the democrats, hillary clinton is expected to increase her delegate lead over bernie sanders and four of the five dates. do not miss a special two-hour edition of all the respect. we will break down all of the races and what is at stake right here on bloomberg tv. president obama is expected to change course on drilling for oil off the southeast coast. the obama administration is expected to open the south east coast for the first time. have opposedists
the plan. so has the pentagon. russia claims that troops stationed in syria are heading home. this comes after russian president vladimir putin puts pressure on his syrian ally to reach a deal in the peace talks. no sign of compromise from the negotiators. dayal news 24 hours a powered by our 2400 journalists. i will take it here. we're back to breaking news. we will take it together. obviously, where washing shares tanking. ceo michael pearson said he is speaking to investors saying that earning investing begins at the top. >> it starts with me. we're working hard and have to deliver on our commitment.
we have changed to some degree since december. we have to do a better job. we have moderately performed businesses. that is totally on us. so, we have to earn back our credibility. follow guidance. we all have to recognize that. vonnie: we go now to somebody who is been on the conference call. michael waterhouse. ago,el, a couple of weeks he said you were not changing your long-term opinion on the company. after everything this morning, is that changing? michael: unfortunately, i think so. thee is no doubt with company changing. it sparked a lot of the initial fears with us. one thing that we really wanted to keep an eye on was how much performance could meet -- be maintained with the rest of the
business. some of the healthiest parts of the business by our expectations seem to be doing less than what we expected. that is the reduced guidance relief. that is a concern for us. vonnie: it is a question of speed. if the company was not on also wonders, they will miss the march 16 deadline in terms of bond paid back. there were bondholders on the call. is the liquidity that they have enough to keep the company going? unfortunately, it will get fairly close. that is what is initially sparking a lot of fear is that they are getting closer to the settlements that other companies have their eye on. it does seem like there liquidity position should be ok. they might have some non-core assets as well. that will improve the liquidity position. it will come through fairly
close. that will make investors more comfortable. mark: why do you stay with the stocks for so long? you've been through since september of 2015. that is the day you implement did the recommendation. are $47.w today, there why did you stick with it for so long? michael: we have been wrong on expectations. the relationship and the fallout on the dermatology business would be relatively well contained. i think that we do still have a lot of that expectation to a certain degree. alarmed by some of the more promising aspects. i think that there is no doubt that a lot of the fear and uncertainty will eventually play out. here come at morningstar, we
take a longer view on or the business could be in a few years. that, undoubtedly is the near-term question. can we survive this turmoil? now, we will revisit some of our expectations. up until now, we thought we would eventually get through and improve these expectations long-term. mark: should we get on with selling one of our units which is the vision care for so long? michael: they could, if they need capital. i think the problem now is that when they start selling assets, they will not get the best review for the business. with the recent sale are probably one of the more attractive aspects that the business has. we probably would prefer them to hold onto those as long as
possible. you know, there is much less critical area there especially with some of the older generic will reallys that not have a critical outlook on the long-term. all along, we would say that is one of the more attractive parts of the business. will nothey said they look for new acquisitions before they are done with leverage. they did offer some positive things as well. talk about theto role and bring it back through the bring? -- brink? michael: this is the baby he has created over the last two years. i think that i love people are wondering if he can turn this around. if not, we on the what will happen to him. ofecially as the chairman the board position changes when he returns for medical leave.
you know, it is hard for me to tell as that is the board's decision. through the next few quarters we need to see a turnaround. the 10k will not be filed until april. is this a red flag? michael: we do not actually have the numbers. we got some closures today on the call. some of the products were doing with sales estimate. they did provide q1 as well as 2016 guidance. obviously, guidance now is below what it was from their most previous guidance. i think there's probably a fair amount of skepticism and guidance overall. it is true, we probably will not get a good peak into those numbers until quite some time which does raise some concern for their filings.
i think really, as investors and as analysts are more concerned about the future, their guidance will probably set more realistic expectations for them through the coming orders. obviously, they will need to meet that. reducing guidance would be unfortunate outlook. vonnie: will you reduce the rating into a hold or a cell at this point? michael: i would rather not say. we will bring the value down. we do think that fear is that an all-time high in the stock. , but of that is warranted as we take a long-term approach, we might come out with a unified recommendation. vonnie: thank you for joining us. analyst for morningstar. coming up, will speak with the ceo of jcpenney that is at 10:30 him bloomberg markets. ♪
♪ vonnie: live from london and new york, i am vonnie quinn. mark: this is "bloomberg markets." let's get to the latest central-bank action. japan is leaving interest rates unchanged. they have a rate cut. we have the diagnostic executive. is it only a matter of time before we get through the easing from the bank of japan? >> there was a flurry when a line was left out of the written statement. briefing, he said sure. we have not ruled anything out. the stances unchanged.
there is a potential for further moving. mark: this inflation target is disappearing into the distance. we were told today that it is unlikely that the doj will hit that target in three years. , hasast in the question monetary policy reached its limits? >> every time that question is asked, a central bank comes out and do something new. they definitely want to push back against the notion that they cannot. when you look at the inflation trajectory of japan, when the target came in, there really did seem to be an impact. they got off the floor, it a god trading that is no longer deflating. things have stalled since then. the about the idea that
currency will be impacted forever? vonnie: now, we are seeing the latest rounds of qe and in japan strengthened the currency. >> that is one of the things they are wrestling with. the thing about currency that you can do what you want with your money. it all depends on what is going on everywhere else in the world. the dates and japan would intervene daily with the ministry of finance. those days are pretty much over. as dependents just on their trading policy at what is going on with the doj. vonnie: we have divergence. we have global divergence in the fed is on this path. how much would it be stopped this year by what is going on globally this year the central bank echoed -- bank? divergence may be driven just as much by what is going on outside. the bank has not abandoned its rate hikes.
tomorrow, it may show two or three. to show to still there, the have gonemay negative. scandinavian banks have been negative. the fed is on hold. it is waiting. that might be a sign of tightening. mark: there is a big survey today on the likelihood of a u.k. rate cut. and economist put the likelihood at 23%. looking at a sluggish bank of england? dan: it is hard to tell. we have to wait until the exit is out of the way. this is a central bank people thought would be right there with the fed. people thought it would tighten.
a lot of things really come out of that. i think that you'll probably see the doe on some old for quite some time. vonnie: thank you. executive editor of bloomberg economics. coverageave a special of the fed's decision starting at 1:00 p.m. eastern time. , we are getting more than the your brand. we look at how they are cashing in on classic cocktails.
at $760 million. the largest deal since the current ceo took the helm nine years ago. means,out with the deal it's taken european beverage reporter thomas barclay. tom: they have always made a clear priority of the united states. markets come from the u.s.. they are growing rapidly. we have seen the reemergence of the growing cocktail. it is almost reminiscent of the acquisition they made in 2009 of wild turkey. mark: i'm getting a hold of the distribution rights is too important. tom: i agree. traditionally, distribution has been lifted.
it is a luxury goods maker. taking some of the focus away. it will make these key priority brands trying to leverage from the distillery. vonnie: with the 60% premium, is that richly valued? it is an interesting valuation to see. i think in terms of their position, they have been able to draw in a significant aspect of the values with skye vodka and wild turkey bourbon. investors seem happy with it. they had stocks trading up yesterday over 5% or does the highest in three months.
vonnie: their plans for the wine , will they try to find new markets." will they add to laboring over the cure is? ? yours -- cures be interesting to see what avenue they choose. we have seen the emergence of cognac in the u.s. and africa. mark: i was looking at our wonderful new function looking back in time at the big deals in the spirits industry. 2000 sold forin $43 billion. are you going to see further consolidation in this industry? tom: i think it is about the potential for distribution. is especially something we
have seen recently in the united states. what we could see is the large-scale consolidation. will cashing those positions on the balance sheet. in the meantime, i think the acquisitions we will target may go through with the junction. --k: thank you for june thank you for joining us. thomas buckley. tune in to hear the first from this man. the chief executive. first on bloomberg. will be speaking with the ceo jcpenney coming up on bloomberg markets.
news. courtney is at the news desk. courtney: president obama thinks the decade old trade embargo with cuba will be lifted under his successor. the president travels to the island nation next week. said sentiments and congress are building towards ending the embargo. the president also said the cuban leader will take part in his planned meeting. donald trump has posted a win in the republican caucus. he won nearly 73% of the vote against all the delegates. ted cruz came in second with 24%. john kasich in march or in third and fourth. voters have told the german chancellor to reduce the refugees. she needs help from turkey which has the power to hold back refugees. they have given turkey unprecedented leverage. in brazil, lawmakers plan to
revive the stalled in peach process against the president. comes after millions of protesters march in the weekend. there are new allegations linking party to the kickback of the state run oil companies. dayal news, 24 hours a powered by our 2400 journalists and news bureaus around the world. vonnie: thank you so much. well, in the center of a sloppy retail, jcpenney is coming back to life. most of the gains are coming after the fourth quarter earnings results. beat forecastsey and outperformed their competitors. where do they stand today? marvin ellison joins us for an exclusive interview. what you have just been speaking with the store manager is with the meeting in the presentation.
how to succeed with the title. what you tell them is the recipe for success? marvin: we have to spend a lot of time with the customer and listening to them. find energy around specific things we have to do. and increase in revenue for customers. that is the strategic framework we have laid out. we're focused on delivering with those initiatives. vonnie: people have written jcpenney off. they said they were going to get rid of the coupons and that customers will not come back. where are you in getting back those customers." is that still a target? marvin: the key for us is creating valuable shareholder return. , we'll get a 2015
4.5% confidence sector. we increased our gross margin by almost 300 basis points. we reduce corporate overhead significantly. we're moving in the right direction. it is less about getting back to the specific sales level. it is about executing well and creating an environment for customers to come in and shop. those customers can come back or not, as they wish. tells about this private initiative event. back to the possibility it has seen in days." -- days? brands likeave arizona and stafford. worthington, these are great brands that only we can sell. we have roughly 200 around the
world. this is a significant strategic benefit for us. we think that by expanding the band's significantly that we can create a level of protection against e-commerce companies. at the end of the day, you cannot so which do not have. we had a dominant brand online. they are trying to limit all of the pricing analytics that these online competitors can play against you. not only that, it draws enormous profitability for us from the brand. to have a strong focus on perception shifting key brands like nike and levi. we also want to have a strong presence for profitability. vonnie: what are you trying to target for the private brands? marvin: it is not specific to the brand. it is significant to the
national brand. categories, we have already accomplished that. we know we can do more. we are trying to repair brands that have been totally eliminated. we have billion-dollar brands we put on the shelf. we stopped the expansion and design process. over the last two years we built the brands back. we have a lot of work to do. we are confident we can get back to where we were at some point in the future. pre-ron johnson, it was $17 billion. they said it would take 10 years to get down to that level. what level are you targeting? marvin: the business is different. if you go back into 2011, consumers shop in a different way. onre is no significant focus the mobile army channel.
now, we are simply going to create a strategy that will allow customers to shop where they want to shop. in a lot of ways, we are not setting a target as our goal. we have a growth initiative we want to stand through 2016. we want to create a strong and sustainable shelf for our return. there are a lot of people with low revenue. we are not trying to hit an justicial target, we're trying to expand profitability and growth year over year. we believe we can do that. last year, we grew that was significant. we're targeting growth in 2016. we have growth projections for the next two years. , consumer you said habits are changing. how can you see that process expand? do you intend to? marvin: we have to make sure
we're attuned to consumer demands. brand. our first fashion this is a private brand. it was privately designed by the new york design team. styles have different and different collections that will change throughout the season. design,shorten the manufacture, and delivery time in half. iss is something that directly akin to getting feedback from customers and learning what they want. we are excited about the early test results for these brands. we are rolling out a brand called boutique plus. that is the first brand for our plus size fema customers. this is something customers requested from us. this will be designed specifically for a woman who is a size 14 and above. we think we can design a brand that will be flattering to her.
something she will be excited about. fashion that she can going out we're excitedping about the designs for customers. vonnie: you talked about drawing a plan to the board. they're taking a second look at turning some of their properties. would you consider that now? for us, we look at the entire structure. as a reminder, we paid out half of a billion dollars in debt. we have goals to pay down that much through 2016. we will sell a lease back on our corporate facilities. have a very strong market. we will take advantage of that. options offng no
the table. our goal is simple. we want to take our debt down and increase our revenue. we are looking at all options for that to be a reality. vonnie: does that mean you will look at selling more stores? marvin: it means that if that is the right decision, it and if it is the right decision based on how best to serve our customers, then yes, we will. we have thousands of stores. we have thousands of distribution points. stores can come in and shop. every year, we take a detailed look at our portfolio. our setomfortable with of stores today. it is an ongoing evaluation. as i said, our goal is to leave nothing off the table. we want to reduce debt and grow revenue. the key focus is what we will be looking at. consumerell me -- as a
, we had low retail sales. you are divorced from the fundamentals. what do you see in the next few months for the consumer? marvin: for us, we have a moderate price consumer. that is roughly $80,000 for household income. those consumers, for us, have been consistent. we see no downturn in spending or consumer confidence. to the contrary, if you look at entry prices, if you look at the household savings rate. if you look at a wage increase, these consumers will be on increase in 2016. more so than the general population. we feel confident that the mid tier consumer will continue to expand and will be open to value. we think you have a value that
is attractive to them. we feel good about the quarter and get about 2016. vonnie: thank you for coming back on with us. it is marvin, ceo of jcpenney. the stock is up 41%. much more coming up. great job. the exclusive interview that does not stop there. blackstone president county james on his plan to fix the retirement system in the face of the world's largest private equity firm. take an exclusive interview with the canadian prime minister justin trudeau. that is coming up. ♪
mark: this is "bloomberg markets." for the bloomberg business flash. we take a look at some of the biggest stories in the news right now. they have said no thanks to a reset take over from apollo global. that is according to people with knowledge of the nasdaq. chemicaln when pharaoh manufacturing industry plans to engage in the negotiation or if apollo plans to return with a fresh proposal. representatives from both companies declined comment. valiant pharmaceuticals is quoting a missed. and, the ceo is warning of challenges of the last few months being behind us. shares for the company have fallen 70%. the fcc has been investigating the business practices. are not home builders
growing anymore optimistic about the housing market. it is a nine-month low this month. that is according to the national association. building has increased making it tough for first-time buyers. that is the latest business flash. we take a peek at what is happening in markets today. stocks are falling through every industry group. stocks are trading lower. that is aced on resources of them trying to stop the downturn. it is a letdown from the doj. more stimulus is on the cards. check out the market as the druggie stimulus is still working its magic. u.k. sales are down.
that is not necessarily directly impacted by the stimulus. a look at the euro in the dollar in the euro against the pound, the dollar today. it is still about the level where it was on thursday with the ecb. let's go over to the u.s. with abigail doolittle where she has the very latest. abigail, you're looking at apple. abigail: it stands out today. we have the nasdaq down 1%. of the top 25 point influenced isers on the nasdaq, apple the only stock among those 25 names that is trading higher. this is coming out of morgan stanley. it is stating that the march quarter iphone is traveling well. bake -- it could travel 56.5
units. stanley's own estimate of 49 million. it is possibly a nice beat or upside that could cause the stock to trade towards the upside. it could travel through the quarter. mark: abigail, the nasdaq is down more than the other averages. what is going down the index." -- index? abigail: what is interesting is that there is no real news out there to speak of. i did not speak to an aimless here. it seems to be that there is just more downside momentum in the bear market. the high fires in recent years show selling of the biotech sector. some of the biggest losers include bio jen, gilead, regenerate, and celgene.
let's check in on how the other major averages are trading. we had the s&p 500 down half a percent. the dow is below average 1/10 of 1%. as abigail mentioned, the abigail is down. pharmaceuticals are down nearly 40%. the conference call comes to an end a few minutes ago. conference call with michael pearson. still ahead, financing with art. financiers are putting up their valuable artwork as collateral. that is coming up next.
it reached 16 per u.s. dollar. it is up over 3%. this continues as the finance minister and the directors for priority claim an investigation. they are saying that they will try to ensure that they answer questions. speaking of emerging-market currencies, we open with the russians currency up 71. that is being strengthened by 1.6% of the u.s. dollar. right, in today's pursuits, we're talking about art as collateral. if you are one of the lucky owners of a masterpiece, athena art financers is allowing collectors of high-end art to cash in on the liquidity of their collections. to borrow.re eager they join us now to discuss. thank you. what kind of demand is there for this kind of service?
might tend to need liquidity? in theliquidity is market perception to balance the sheet. we seeing more and more of our collections coming to the idea that they are investing large amounts of their cash into our collection that needs to be freed up for an investment in the market where they can get a greater return. so, though liquidity need for cash is not just a function of being wealthy, it is more of a function of managing the balance sheet. vonnie: if they come with a valuation on the painting, do you believe it? do you have to have it appraised and then you reward the final estimate? >> we manage risk.
we work with our own consultants. we have people in house. what we believe it is a fair market value for the peace. this is a two-way process. we worked with the borrower to determine the actual value, then we work to determine the amount of collateral for the loan that will be issued. billions -- if it is in the billions -- how many of this could actually be collateral? andreessen: most of this is dealing with other consultants have come to the conclusion that billion that$250 would bill out to be used as collateral in the market. what will you do with those loans? we put them in new products? , weurther down the line
want to create a large market where the portfolio of the loan and other investments in the market could be used to create a structured product and new securities that can be distributed in the broader investment market. vonnie: what kind of interest rates do you charge? >> between four and 500. this is a greater amount of interest rate compared to the where the normal market operates. we are off the baseline. asexclusively use collateral a security for the loan. mark: the art market is in a downturn. does that make your financing more or less attractive? -- attractive? >> sellers do not want to sell. we have that degree of uncertainty. we're keeping the market through the moment.
we're trying to balance the art and move into a better time for the market. vonnie: what do you do if somebody comes in with something that maybe overinflated? do you take that and give it to them at today's value? >> a great question. expandy, what we do, we based on the historical view of the outset. something that we hope is legible to be used as collateral. determineas a tool to what we will change. we have a perceived desire degree. we can go down as low as 15 or 20%. mark: thank you for joining us. the artread more about
barton. you are watching bloomberg markets on bloomberg television. we are going to take you from new york to london in the next hour. here is what we are watching -- a down day for stocks, falling retail sales in the united states. one of the biggest two days slides for commodity prices dragging down global stocks as well. then an exclusive interview with blackstone president tony james. it could leave 25 million people in poverty. ofk: a lawyer gives his view the battle over unlocking an encrypted iphone. commencing the trading day in the united states. julie hyman has the latest. julie: