tv Bloomberg Markets European Close Bloomberg March 15, 2016 11:00am-12:01pm EDT
london, i'm mark 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. going to start once
again with valiant because the tumble in the stock keeps accelerating. a guest one-day drop on record and is now the lowest since november of 2011. this was his first report and did not express a lot of confidence. if you take a look at the the $40 puthis is option expiring on march 18 which is this friday. and ahis surge in prices surge in demand with an option that thish the option is going to remain lower here. and watching the market cap as i've been talking about,
valiant grew by explosive acquisition growth. remember the acquisition of bausch & lomb? that closed in april and so that cause the market cap to surge to nearly $90 billion. then came a subpoena from house to kratz overprice -- from house democrats from overpricing. cap has plunged from nearly 90 at the peak. it's been an incredible journey for this company and it continues. oil is helping to push stocks russia says iran will not be participating in a meeting on a potential production freeze. look at stocks as a
function of what we've been seeing in the energy markets, you see all across the board with energy stocks leading the way. quick peek on what's happening to europe's maine equity industry groups. you mentioned oil, the fourth worse forming sector today. stocks.the individual estimates andith shares down today. why is that? the company rose its dividend by 19%. itadjusted the way determines dividend payments and analysts are worried that means lower dividend growth. this is one of the uk's biggest supermarket operators.
the big news is first quarterly rise in sales in two years. good news for shareholders. you know i am obsessed with the euro, especially in light of what draghi did. a little decline on friday. andeuro actually up deutsche bank says it will hit rarity by the end of the year. it had an estimate of parity by late summer but says what the ecb pushes the emphasis away to an end of the year parity. is 108 in forecast the fourth quarter. parity -- the end of 2016? we will see if they are right. vonnie: americans don't save
enough for retirement. studies show 25 million people will be in or close to poverty by 2050. president of blackstone has a new call to address the retirement savings crisis. isk: this proposal thoughtful, comprehensive, i would even use the term bold. but it's almost too good to be true. it doesn't mess with social security, is deficit neutral, the returns are guaranteed and pays income for life. how does it work? tony: every working american would be put into that account, 1.5% from the worker and 1.5% from the employer. those savings would be invested over the life or the career of the worker and, at the end, it would be converted to an annuity. powerfulle, but very
because you get the earnings on those savings for 40 or 50 years any earnings on those statements fund a lot of the shortfall. erik: there are people who say i've got a 401(k), i don't need a guaranteed retirement account. why is this better than a 401(k)? reasons.ew 401(k)s are inefficient. they have to be invested in liquid securities only because the holder can pull the money out. human nature being what it is, people pull the money out and spend it unwisely. convert to does not an annuity at the end and only half of working americans that don't have pension plans have a 401(k) anyway. the other half have nothing. is for peopleon
below median income, they don't have the savings to put in the is(k) and our plan repurpose the text inductions effluent savers get with the 401(k). this chart explains graphically how it would work. whatonliquid investment, you can get out of the 401(k), you make sure there's no drop-off. tony: as long as you and your spouse live, you will have that income. erik: the retirement saving could be achieved with no tax increase, no cost to lower income household at little to no additional expense for most employers. that leaves the obvious question -- who is going to pay for this thing? tony: we are repurpose thing
actions that go to affluent savers and doing all workers up to a $600 per year credit against their contributions into the savings plan. that will pay for people at median income them below. in we're moving that money around and that is an important underwriting -- what you are taking economists would call a regressive system and turning it into a progressive system. tony: that is true. people view those contributions to the 401(k) as tax management more than funding retirement. they tend to have enough money that this is not going to be what they are going to retire on anyway. ways for other affluent people to stay on top. ofk: i know you've put a lot
time and effort into this proposal, so let's take care of a lot of arguments that potentially stand in the way of that happening. you are conflicted -- the proposal makes the case for longer-term illiquid investments like hedge funds, private equity, and real estate, the same assets managed by your firm , the blackstone group. tony: right. because we manage the money, we know returns can be earned. what if this gets an active, there are going to be thousands and thousands of asset managers that will benefit, i suppose because more savings and more benefits -- more savings benefits all asset managers of all types. retail, ands small, our funds are already oversubscribed. erik: here's the second 1 -- you have alter your motives. this is tony james angling for a job in hillary clinton's
cabinet. tony: i'm certainly not doing that. i love my job. i deal with retirement savings every day and i can see the problem. 86% of americans worry about retirement security. 80% of americans this country agree on? it is dominant and no one is talking about it. this huge issue shared by all americans and no politician is talking about it. have somee i expertise and i should do something about it. i don't care whether my plan works or not, i just want this issue to be dealt with seriously. myself whyder to tackle this issue and not a number of other pressing issues? 18-30 were to survey four-year-olds, the people who will benefit ultimately, they will tell you the biggest problem they face is that -- is
debt. there's a trillion dollars of outstanding student debt. i imagine you have some good ideas for that. tony: i have some ideas of something she can do, but i'm not an expert in student debt. is it advisable for someone in your line of work who supports and raises money for local candidates, and this case, hillary clinton, to be vocal and policies? especially when her connection to wall street is perceived as a liability. tony: she has had nothing to do it this. erik: the current president flag crisisent savings in the it poses for america as an important issue. tony: i think politicians on both sides understand this issue. that nobody's doing anything
about it. the plan has an appeal on both sides. the reason this is getting discussed and the reason we have senators and congressmen coming to our office from both parties is because it has accessibility to both parties. that is its power. erik: acceptability, but what about the other parties with vested interest in the current retirement system in the infrastructure built up around it? neutral fund managers, brokers, fightample, won't they this because they stand in some cases to lose business or fees and pricing power and in certain cases, to lose jobs if this were to come to pass. high-paying jobs, i should add. tony: maybe brokers, but more savings, which is what we are talking about creating. i don't think there are many losers here and why the way, the
savings we create, it will be reinvested in the economy and short-term overly focus by having capital formation. i knew will be great for the economy and create jobs. todaythe fed is meeting and tomorrow to assess the state of the economy and make an assessment on monetary policy. what is your assessment? tony: i think it is solidly growing at 2%. almost at's contradiction in terms. tony: we have sectors that are weak and sectors in procession. but the consumer is doing very well, wages are going up and we see wage pressures on a lot of our companies. 2.2% wageou think growth understates what's really
happening? tony: i think it's the beginning of an increase. it's a little hard to answer that question as to where it plays out. 3%hink we are going to have wage growth going forward for a while. erik: that is pretty solid. blackstone's patient on energy has proved wise. did you miss the window? tony: i hope not. that rightbeen all about predicting energy prices. let me say this, when oil prices companies will have that need capital because they can drill wells again and profitably. they are probably still over levered and don't have access to equity as a result, so they will need our equity one prices go
up. i think we will have a lot of activity. erik: will it be your most active investment? tony: yes. we thought it would have been last year but that wouldn't be the case. tony: we have a lot of dry powder, a lot of interesting deals and we just bought a big interest in a large field and i think we've made some great productions and it will be better. you get higher prices by recapping wells -- do you see a feeling on crude prices and if so, where is it? tony: i don't know about a ceiling because geopolitical prices can spike at any moment. that in any sort of
normal market, think you are talking prices in the 75 area. well above the four curve. erik: energy has been among the commodities anyone could not want to be part of. effectivelatility blackstone's business in a positive or negative way? tony: it is kind of both. some markdowns from existing portfolios. we are in a place where that is the way of the world. among your three main businesses, private equity, real estate and credit, which is best suited to deploying capital and which is best suited to monetizing right now?
tony: i think we are doing both in all of this. now, there's an amazing opportunity in credit. with the banks pulling back and lot of redemptions coming out of the fund because of energy worries, real estate, the u.s. has gotten a little price here thein private equity, with s&p down, suddenly there some values out there. one company in the news, a chinese insurance company that has made a bid for star wars, it up -- for starwood. it appears you may be in the process of selling that for more properties. what can you tell us? they talk about him being the next warren buffett in china.
a very smart man and has a long-term investment horizon. in america, the store of value is stocks and they think that gives them value. in asia and the middle east, it is real estate. hold aey in real estate, long time and it will take care of you. i think he's got that attitude and is buying great assets. what does it say about china that this market is being deployed in american commercial real estate? tony: he's got a lot of money and is deploying it all over. what he's seeing is what i'm seeing. the u.s. economy is the most flexible economy long-term and we have some of the most favorable demographics. the population is starting to sink in china.
vonnie: starting today, britain american will service flights between san francisco and denver. holding ad branson is demonstration of the amenities aboard the plane, including high-speed wi-fi. cory johnson joins us now. cory: richard branson flying right now somewhere -- joining us -- you appear to be in first class, naturally.
looks like seat to aid me. i'm familiar with that seat. sir richard: i'm glad you know our plane. andre between san francisco denver, over the mountains at the moment. it looks very beautiful out there. it's incredible. here we are talking from 35,000 feet and anyway it's good to talk to you. cory: at least half of me hopes this demonstration for technology hoped it would fail because it would be good tv. ,t this is classic virgin "screw it, just do it." talk about the switch to the faster internet service. sir richard: it is important. we can do wi-fi incredibly quickly.
we introduced wi-fi and we know how popular it is. people want to do business on the flight and talk to their friends. but it has been very important. this switch is going to be a good one. cory: as you chose this route to denver -- why sfo to denver? it's interesting to look on your attention focused on the technology sector in san francisco and in denver. sir richard: denver has a lot to offer. beennk it has largely technology driven, attracting young tech people. , and is been important think we get the lambs share of them. denver is a wonderful city to go for skiing, mountain hiking. if you want to join, you go to
denver. cory: what is it about the things you do in the big is this is you take on, things that might not typically attract the interest of entrepreneurs and startup he, and yet virgin has done that. what is it about the way you pursue your business that speaks to entrepreneurs and startups. sir richard: we have just experienced some turbulence. i see situations where i feel that things are not being run well. the american airline system 10 years ago did not have a decent airline. let's launch virgin america and make the best airline in america. do the best at anything,
you will do well and survive. virgin america over the last nine years, we've been noted best airline in the states and the team has done a great job. we attract both ledger people who want to be flown in a slightly more hip airline than our competitors. cory: the big question, finally once you get to denver, snowboarding or skiing? sir richard: i do both. skiing with my daughter and snowboarding with my son. sadly, i'm going to be in turkey tomorrow morning. so i'm there for about two hours. i ask for trouble. back.'m, i will come i've got an airline that flies
there and i can afford to go there. i will do some skiing. from sir richard branson 35,000 feet. i don't want to get you in trouble with the flight attendants. sir richard: how is the kite surfing going? opportunitiessome this summer i plan to take advantage of. going: i can't believe in to be able to skype from 35,000 feet and watch netflix. cory: they encourage people to use this service for live streaming. like i said, i was half hoping that would fail. vonnie: coming up, five states go to the polls in riemer east today. we will be asking some tough questions. ♪
from our news desk. courtney: the syrian opposition says the russian withdrawal will help the peace talks in geneva. in a surprise move by vladimir putin, russian forces began pulling out of syria today. warplanes will stay to continue attacks on opposition targets. in greece, scores of refugees have returned to their waterlogged tent city after trying to cross the border into macedonia. about a thousand were able to make it. they hope macedonia will let them continue north to europe. another big tuesday for presidential hopefuls -- five states are holding primaries today. ohio has become the main battleground for republicans. showerage of recent polls governor john kasich with a three-point lead over front runner donald trump. and while, pulls show trump with a double-digit lead in florida. a big loss therefore marco rubio could put an end to his
campaign. hillary clinton is expected to increase her lead in the delegate race. she is favored over bernie sanders and four out of five states. don't miss a special edition of "with all due respect" of this afternoon. don't expect to see john kasich on the ticket with donald trump. he told fox news today there's no way he could ever team up with trump. news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. vonnie: this could be a make or break a for marco rubio's campaign. he's just one at 153 delegates and is trailing polls of florida voters. for some perspective and a look at what may be next, let's bring in a policy advisor to marco rubio's campaign. campaign be trying
to say to florida voters to get them out to vote? rubio hashink senator made no bones about the fact that florida is an important state. he's been in florida for the better part of last week or 10 days. the message is simple -- that marco rubio is in this campaign to stay and has been here to stay. we would love to get the support of floridians across the state and already feel good about the support we've gotten from early voting. we hope people get out to vote for senator rubio. do you think used trailing in the polls in his home state? guest: polls go up and down. in 2012, in -- governor romney was down in the polls and he ended up winning. the only poll that matters is
the one that's taken tonight. mark: if you doesn't win florida, is it time to mark -- time to walk away? guest: he's committed to being the republican nominee, so we will take a look and see what happens after tonight's election. mark: will he support trump if trump is the man who wins the ultimate prize? guest: over the weekend, i think you heard senator rubio say it's becoming incredibly difficult to support donald trump with his divisive rhetoric and the challenges he has created in this campaign. we will have to see what happens. how do you feel you have performed in the last few days in the wake of the difficulties of trump rallies and so forth. did marco rubio had a chance 10 -- have a chance to make some gains? guest: i think senator rubio has made the case over the last couple of days that he represents a forward-looking vision for the republican party, that his demeanor and character
would be veryes different from that of donald trump. i think used in a great job. we will see what the payoff is. think senator rubio is hopeful. tonight will be very important. why is it not resonating with voters. if you say he's done a great job and has been on the trail, why is he not making more inroads? polls are going to jump all over the place. --nie: it's not just polls we've had many primaries and caucuses now. senator rubio has been out there trying to put his policies forward. it's a very unusual campaign cycle and we have an unusual character who has been occupying a ton of media attention.
i think it has been unusual in that respect. mark: who advised him to go after trump? the context in the last few weeks have this send it into name-calling and some would say he lowered himself to trump's level. clearly he regrets this. did that lose him support? what: i think we will see the outcome of that was. the reality is it was very difficult for senator rubio or anyone else to get any kind of withtion without competing donald trump on all sorts of different metrics. doing what he did, he said he regretted it, but that was one of the ways to get people's attention. and that was a tactic that was employed. mark: policy is your thing. less tradenton is friendly than may be she was. if they run against each other, might we get into a scenario anti-freeee a clear
trade consensus ahead of the election? this is an interesting dynamic and hasn't been talked about very much. you could have the nominees of both major parties who are essentially anti-free trade. i don't think we've seen that in a long time and will put a lot of pressure on president obama who says he's committed to getting the tpp through before he leaves office. we could have, regardless of who it is, and anti-free trade president. mark: great to see you. please come back in the next day or two and throughout the campaign. two-hours a special edition of "with all due respect" and we will break down all the close races. .oming up, a busy our apple filed its response to the week ahead ofst a
vonnie: apple is expected to file their response today for the government second filing over encryption. and the fbi will argue before a federal judge on whether apple will have to comply with the court order. let's turn now to bloomberg west anchor, emily chang. emily: joining me now is apple's lawyer from l.a.. thank you for joining us. it is a big day and we are expecting your second response
to the government. what can we expect? any surprises? ted: it's great to be with you. we are looking forward to getting our brief on file. we are going to walk through the fact of the law and show why the government's act -- -- is asking for something for no -- asking for something no federal court has ever granted. it would require to send apple -- for apple to send six or 10 engineers into a room and write code that they think is dangerous and could threaten the security of hundreds of millions of iphone users. we are going to focus on some of the history of the law and show history does not remotely support what the government wants. and we will respond to the factual misstatements and false statements the government included in their brief. we are going to take the high road and show they are wrong in the facts of the law and the
court should deny their request. emily: the department of justice is pushing this perception that apple has helped the chinese government in a way they have refused to help the united states. including building a special algorithm into its phone and china. can you respond to that? ted: that is wrong, very misleading and very disappointing the government would take that position. they know better, or maybe they don't. one of the things we've seen with their briefs is they don't seem to understand the technology they are asking the courts to order apple to do grade. -- two the grade. applies the same encryption standards everywhere around the world. it does not treat china any differently or any country any differently than it does the united states. no country in the world has ever
made a request like the one we are seeing from the justice department, asking apple to write software to degrade and eliminate encryption protections. acting totally consistently. it is the justice department and fbi that are the outliers here. we don't think they have the power to do what they are doing and that's why we feel so strongly that we have to draw the line. apple cooperates with the government and did in the san bernardino case. but this goes far beyond anywhere the government here has gone. emily: he has criticized the tech committee for taking an absolutist view on this. he said there should be a key only a few people could access on select issues, there should
be some kind of compromise. why is that not workable? ted: i've seen some of the coverage on that and people think he is arguing for a backdoor that would allow the that would break down encryption in devices. the secretary of defense said a week or so ago that he is against backdoors and encryption is vital to our national security. we've heard from former cia directors and nsa directors. inre is a strong feeling this administration that encryption is important. the main message from the president was we need to have this conversation. president obama is someone who will listen to all sides of an issue. it calls for a commission to
study these issues. that would result in a resolution to address these issues of law enforcement and data security, not a court proceeding. through the fbi is going in on this very important policy issue and asking the court to resolve it. courts are not supposed to be it is the people through their elected representatives to address this issue. instance there any what apple would provide the government is asking? what if the threat of imminent that thousandsat of people could be injured? ted: we are talking about the justice department going and sheriffe san bernardino
has said there probably isn't any evidence on this phone. if they were hot on the lead of additional evidence of terrorism -- we understand their desire to leave no stone unturned. i don't want to talk about future issues. apple is a great corporate citizen and takes its obligations very seriously. is problem with this case the government is asking for a tool that would apply in every case. the district attorney from manhattan says he's got hundreds of phones in all different types of cases that he would want to powerurts to give him the to use this tool of the court here allows it. director, he testified that of course they would want to use it.
apple takes its obligations as a corporate citizen very seriously but this is just the wrong gocess and the wrong way to about addressing what's a vital policy issue for this country and for everyone around the world. emily: so what are the next steps in this case? it seems far-fetched that congress will solve this in an election year. at what point does this go to the supreme court? : we take it one step at a time. we have a hearing next week. as a lawyer, i'm just looking for the next battle down the road. that said, we know this is an important issue, so we are building the record before the magistrate judge that we think provides strong grounds if there are appellate proceedings in the ninth circuit court of appeals
or beyond to the supreme court. but we are hoping we can convince the magistrate judge that what the justice department unauthorized, is unconstitutional, and perhaps the justice department and fbi will come to their senses and realize this is not the right way to go about dealing with these important issues and at the same time, we can have the policy debate. i thought the meetings were very productive last week where you had members of congress, security experts and the director talking about these issues. i feel there's a way to resolve these issues even in an election something that has a policy basis rather than trying things that were not trying to address such a policy issue.
mark: you are watching bloomberg. vonnie: this is your global business report. here is what we are watching. refrains frompan adding more stimulus but downgrades its few of the economy and says it is ready to do more if necessary. campari downs a shot of grand marnier, cashing in on the growing popularity of cocktails. michael buys out
jackson's estate, gaining full control of some of the music industry's most popular songs. the bank ofrt with japan holding off on more stimulus, keeping the benchmark rate unchanged. it did leave the door open for further easing if necessary. economist expect that to happen by the middle of the year. stakes are rising as investors question whether monetary policy is reaching its limit. executive jeffef cole said previous stimulus measures have not kicked in yet. jeff: you are going to see a complementary element with fiscal policy beginning to pull some of the liquidity into the real economy. a lot of people have forgotten sub country a
budget that put ¥30,000 of cash into the pockets of more than a million pensioners. that's going to happen in april and means the liquidity from the central bank gets fold into aggregate demand. we will have more on the implications of negative rates in just a moment. in china, the central bank drafted rules for foreign exchange transactions. curbings aimed at currency speculation but it could undermine the government's pledge to increase the role of market forces. liquorl-known european companies have a new deal to drink too. campari day -- campari has agreed to buy grand marnier. more than half of the sales come from the u.s.. campari is the maker of wild
turkey bourbon and skyy vodka -- vodka. bought the estate of michael jackson for $750 million. the deal will give sony's sole of theip of the work beatles, bob dylan, and others like taylor swift and alicia keys. jackson's estate says he bought almostalog in 1985 for $42 million. vonnie: time now for our bloomberg quick take where we divide context and background on issues of interest. the bank of japan is keeping its benchmark interest rates in negative territory and it is not alone. more central banks are adopted negative interest rates in an attempt to reinvigorate economies. surprised markets by pushing rates below zero. more policymakers are willing to
test the technique. -- europe's central agreed to it and sweden and denmark also have negative rates. switzerland moved its positive rate to below zero. janet yellen said negative rates could be on the table and things got worse. it distorts the price of other securities. by february, more than $7 trillion of government bonds worldwide offered yields low zeros -- below zero. that means investors holding the bond to maturity won't get their money back. traditional policy options have proved ineffective. they punished banks that hoard cash instead of extending loans to businesses. policymakers in europe and japan are trying to prevent a slide into deflation.
here is the argument. negative interest rates should and him practice, there's a risk they may do more harm than good. money,s pay more to hold they may hold on instead. useore central banks negative rates as a stimulus tool, there's concern the policy might lead to a currency war. that is your quick take and global business report. mark: let's have a quick peek at where european equities are right now. have a look at the stock market -- it is looking at its biggest two-day rally in three weeks. and toxx 600 led lower be fair, every single industry group is falling, led by basic
resources. which has risen 35%. have a look at the bond market. stimulus measures. today, still ahead on the european close, we've got the big 1 -- the chief executive of campari on its deal to acquire grand marnier. shares of this man's company rising to an all-time record. init going to be further m&a the liquor industry? the market closes next.
this is the european close. we are going to take you from new york to london in the next hour. here is what we are watching -- global stocks dropping in the biggest two-day slide for commodity prices, reminding investors of the financial .arket turmoil hoping to cashs in on the growing popularity of cocktails. scarlet: and alex and i go head to head in the battle of the charts. we are well into the trading day, so let's head over to the markets desk where julima