tv Bloomberg Markets Bloomberg March 29, 2016 2:00pm-3:01pm EDT
betty: and i'm betty liu. janet yellen, doubling down on a in newfed, signaling york that sluggish global growth should be to caution on further hikes. risks tolen: given the the outlook, i consider it appropriate for the committee to proceed cautiously and adjusting pot -- policy. this is especially warranted with the federal fund rates so low and the fomc possibility to use conventional monitoring policy on economic disturbances is asymmetric. stocks are shooting higher on her comments, erasing earlier losses in tech, with telecom
being one of the leaders and financials lagging. oil is selling off for a fourth straight day. the longest decline in a month. oil has enough support to stay around $40. markets are closing in two hours now. yellen,re higher post so thanks to janet we are headed to the markets desk, where julie hyman has the latest. we seem to be staying around these levels? julie: it seems that way. it was a dovish tone to her commentary, right? the markets have been confused over the last couple of weeks and are now coming out with a bit of a hawkish by. resumes the more dovish bias that the markets have been pricing in. we are seeing all of the major averages higher. the nasdaq in particular after .trength and technology the s&p 500, if you look at the trajectory over the course of , as betty was
pointing out, stabilizing around the highs of the session. all of that said, volume still remains relatively low. it is elevated it looks like above where it was yesterday, but if you look at volume by sector versus the 20 day average, we are still seeing with consumere staples having a little bit of a bump up. particularly in energy and in health care today. with today's returns for the major averages, the s&p is once again positive year to date. not by much, but up by 2/10 of 1%. got the dow've twice. i don't know what that is. but the nasdaq is still lower year to date. what about some of the other asset classes? pops: there were bigger
into bigger extensions of declines. the u.s. dollar, for example, had already been seeing some weakness and then really took a leg downward versus a basket of currencies as she was talking with this more dovish stance. again, we already have a sort of that continues to not be terribly strong for the remainder of the year. the 10-year note, the yield ,ontinue to move lower, 1.28% before she began speaking, with gold prices, that's where we really saw the inverse of the trade in rates, right? we saw the pop in gold prices, up by 1.5%. thank you so much. we didn't see that much new, just are saying -- really, guys, i was serious last time. let's get to the first word news. mark? is making hisrump
first campaign appearance in wisconsin today. attending a rally this afternoon in janesville, paul ryan's hometown. meanwhile, other presidential candidates are also converging on the state one week before its primary. ted cruz has been campaigning in wisconsin for a week, at brookfield and cedarburg. ohio governor john kasich hopes to play the role of spoiler, campaigning in the state as well. on the democratic side, hillary clinton spoke out at a form in milwaukee. her rival, bernie sanders, heads to appleton. scott walker today endorsed for president. governor walker, whose own presidential bid ended in september said that cruise is in the best position to win the nomination and defeat hillary clinton in november. judge merrick garland is meeting today with mark kirk, marking the supreme court nominee's first visit with a republican senator.
gop leaders insist that the chamber will not act on the presidents pick to fill the high court vacancy. they say the next president should select a replacement for the late justice, antonin scalia a. more than one dozen senate republicans say they are moving to -- willing to meet with judge garland. it means victory for unions in half the states. a four to four split allows unions to keep eliciting fees from workers who choose not to join their organizations. operatingh court is with only eight justices, since mr. scalia's that. death. he had been expected to vote against it. oscar nominated actress patty duke has died. she won a nomination as a teenager for her role in "the miracle worker." she built on that success in the sitcom, "the patty duke show." she was 69 years old. global news, power by 2400 journalists in 150 news bureaus
around the world. i'm mark crumpton. lisa, betty? atty: janet yellen, speaking the economic club in new york, doubling down on being dovish. saying that it's appropriate for policymakers to proceed cautiously in raising interest rates. >> prices in these markets have since largely returned to where they stood at the start of the year, in other respects, economic and financial conditions remain less favorable than they did at the time of the discover fomc meeting. lisa: let's get some reaction from joseph davis. strategy at the vanguard group. you were there, you hightailed it over here. what was your biggest takeaway? joe: not really a surprise. they were very clear to articulate a very dovish setting. it's a lesson that some at the
federal reserve may have learned in december and january. that being that the market clearly views their market policy steps as potentially to hawkish and that that was one of the primary reasons why we saw a deterioration. a doubling down on the dovishness, which i thought was appropriate. itty: i was noticing -- lisa: was noticing the comments on twitter. the chief market strategist at jefferies called this a market strategy game of thrones, where there seemed to be some kind of split or divergence in the language coming out of the fed. what is your take on that? joe: what we will see going forward is a bit more of a narrowing on policy. i think it's counterproductive at some point. at the end of the day they been very clear that they will be
reacting like they did in the market. fed risksing that the is being too tentative. it's appropriate to because us in the outlook for the economy, but there is also the risk of being too tentative. thething stronger than chairwoman was given credit for today. >> i will get to that in a moment, but being in the room, how did you read the room? joe: i think the room anticipated those comments. some were looking at her and thought they were hinting on raising rates in april. that's clearly off the table. i think that june is very much likely to happen. we have been of the view that the federal reserve would be hard-pressed to raise rates over the next two to three years. not because we were bearish on the u.s. economy, but because given the admission of the trend in the global economy, i think the world can still comment -- tolerate a high fed fund rate. room todaynt in the
was more of an acknowledgment of that sort of you over the next several years, that the federal reserve will likely raise rates this year, but to go to percent, 3%, which is in the baseline, is unlikely. betty: one of the biggest shifts that i saw was around oil, talking about how it used to be transitory and it is now suddenly potentially a downside from what she said. let's listen. janet yellen: in the event that oil prices were to fall again, it could have adverse spillover effects to the economy. if such downside risks were to materialize, they would likely slow u.s. economic activity to some extent. how much does that shift in language director changer thinking? changes thehink it outlook materially. it's ironic, though. in the past four years the federal reserve has been far from the core inflation target.
we are the closest we have been since the global finance -- mobile financial crisis. i read the comments today and they were perhaps even less confident than they would have been even two years ago. i think the volatility in the oil markets, i simply certainly caught myself by surprise. where is the floor? i also think just greater knowledge of global financial conditions. we are of the mind that we are unlikely to see material rebound or the next several years. whether or not that's true, i think it will have an imprint on the global economy and global and freight -- global inflation risk premiums. consumer confidence has gotten better than expected. housing numbers have been pretty good. we have had good numbers yesterday and today. robert kaplan from the dallas fed said -- look, consumer spending is going to keep us out of a recession. the fed funds rate will keep going down. , as theymagine why
were saying, it's like a game of thrones. there's always an element of psychological warfare. if you want to impart where you believe the market is going, the market can fight back very voraciously. the u.s. economy is fairly resilient. we have significant headwinds demographically and parts of the labor market, but anyone was asleep for the past six years and woke up today with unemployment at five, you would think that the fed fund rate would be well below one. i think we have to keep that in mind. i understand the cautiousness of the federal reserve, but if they were to resolve in the u.s. economy we would have a different trajectory. stay with us. we will continue this discussion in a moment. as we go to break, here's a look at the 10 year into year today. dropping on the dovish fed. ♪
this is "bloomberg markets." i'm betty liu, here with lisa abramowicz. we are here with joe davis, a vanguard. he was there in the room with janet yellen. let's actually play for you the part of her speech where she talked about china. i know that as you mentioned, you have strong views on emerging markets. here is what she said about china. >> there is a consensus that the chinese economy will slow in the coming years as it transitions away from investment towards consumption and from exports towards domestic sources of growth. there is much uncertainty, however, about how smoothly this
transition will proceed and about the policy framework in place to manage the financial disruptions that might come. betty: she was really trying to tell a careful line there. from one hand to the other hand. what did you think? joe: i think it's appropriate. we have leading indicators trying to did indicate how quickly or slowly china is growing. for years it has suggested that real feel temperature in china was closer to 5% 7% growth target. we don't anticipate it. i think it's going to be a more turbulent environment for emerging markets writ large, because many emerging markets of not fully adapted to the new growth model. i don't think recession, it depends on the emerging market we're talking about. brazil gets all the news. for china they are on the path towards deleveraging and many
emerging markets have not begun that path. that's the structural heyday we see. betty: there is -- lisa: there is the headline that the brazilian ruling coalition party announced a split from government. there you go, news right this minute. the political instability in brazil at this minute, john williams said that they were talking about how brazil was in ineefe -- was a key factor addition to china. how does the fed position around political turmoil in emerging markets? the statements we saw from chair yellen today are appropriate. they increasingly are realizing the we are nearly globally integrated in the economy and to set policy conditions solely on the u.s. unemployment rate and inflation is inappropriate. the federal reserve has acknowledged that as they continue on. yearse first time in 15
the gap was going to be the smallest between devout market growth and emerging-market growth. in large part because of the slowdown in china, brazil, russia, and so forth. we see that as a trend and ironically the developed markets, u.s., japan, to a lesser extent the deleveraging that they went through, painful over the last several years is actually providing the marginal growth to the world economy and i think that that's something that the investors are still grappling with. betty: are we going to see more central-bank easing? clearly at the limit. developing markets, clearly negative rates are not of fan of. that's partially setting a deflationary expectation, so it's an experiment. clearly the federal reserve -- one of the reasons we continue to see 1% is that it could be the high water mark in the friend -- fed funds rate is the
next couple of years. i can't see them pulling away from that tractor beam. they seem to come in with bazookas whenever there is a fundamental problem. joe: that's a big question. how much can they influence asset classes? it really should be the latter. i think that we went into the year with the most cautious outlook we've had in a decade. we weren't bearish, by any means , but if i am an active manager looking to incrementally at risk my portfolio, i would do so modestly because i don't think that the premium to that extent is in the financial markets. equities and spreads that have come in, the closer to a policy portfolio they could be, the more they are prepared in terms of one wanting to re-extend engagement in the markets. lisa: think you so much, joe. great, thank you. overall markets are higher. let's head to the markets desk,
where julie hyman is looking at brazil. julie: yes. the ruling coalition, the ruling party in brazil says they are not going to stand with the head of the potential impeachment amidst broad allegations of corruption. i just want to take a look at what all this means for the markets in brazil. we are not seeing that much reaction to this current headline. we had already seen brazilian , rallyinge in white the most on a monthly basis going back to 1999 on optimism that she would be removed from her position. this is the currency that has been weakening today versus the u.s. dollar. as the central bank has stepped in. the increasing trade that we are continuing to see in brazil continues to be in focus with this developing situation. back in the u.s. i want to take a couple of movers we
have an watching. one of them is chipotle mexican grill. we have been watching. one of them is chipotle mexican grill. company sales may not recover and to 2018 at the earliest, according to one analyst. it will still suffer from lower profitability as they have to spend more from -- on food safety issues. stock,t a cell on the saying that the average sales per restaurant will return to that level by 2018 in a best case scenario, not race case scenario. i want to take a quick look at , the indexes come down but it still pricier than many of their peers. i also want to take a quick look at tesla today. they are expected to unveil the model three on march 31. shares have been unchanged and falling for much of the session.
chinese car and battery manufacturer backed by warren buffett may boost deliveries of electric vehicles three times this year. in the competition for tesla in terms of the model three unveiling, with analysts mixed as to what that will mean for the company. betty: this is supposed to be a game changer for the company. mixed reaction so far. julie, thank you so much. still ahead on "bloomberg company" at tech introduces what it calls the word -- the world's first smart wine bottle. that's interesting. we'll be back. ♪
lisa:lisa: this is "bloomberg." i'm lisa abramowicz, along with betty liu. in the good old days if you opened a box of wine and it -- bottle of wine and it didn't get finished, you had one recourse -- the court. time tout maybe it's upgrade. that is where a brand-new, high-tech smart bottle comes in. carl, is made by a company carltonoming up on -- -- called kuvee? karl: it has a touchscreen and you slide in this stainless steel canister of wine with a special valve. betty: where the wine is? slide it into the bottle, you can swap lines in the middle of dinner. they keep for 30 days, which is the real selling point. lisa: who is the audience for this?
if you think about a wine connoisseur, there's something your sitting around with bottle of water -- wine. kyle: they are basically aiming for the middle of the market. someone who will spend 15 to $50 on a bottle of wine. the high-end will go for the pure experience, the ritual of the court. the low-end is going to buy cheaper wine. they are hoping that their is a broad swath -- that this broad swath of the middle will carry the day. lisa: how much? is $200. bottle the canisters are like $10 to $50. who has invested in this company? kyle: well-known venture raised $6 have million. the founder himself as a notch up and or and has put some of his own cash in it.
betty: interesting. we shall see. over and over again, that's what we're talking about. still ahead, commodities close. oil dropping for a fourth day. investors worrying that stocks will hit problems for a seventh straight week. is it done or is there a rebound ahead? you can see here prices are down all day long. lower dollar, not even helping. ♪
markets." lisa: let's get to our first word news. mark crumpton is at the news desk. mark: battlelines are being drawn in north carolina over a state law preventing cities from approving protections for lg bt citizens. the state's attorney general says that he won't defend the law in court. roy cooper is a democrat. the measure was passed by the republican-led legislature and signed into law by governor patrick rory. cooper is challenging the quarry in the gubernatorial race. another federal judge is allowing a conservative legal group to seek more information in a lawsuit over ad sales former secretary of state hillary clinton. they limited discovery to digit -- to judicial watch. they sued to determine if the state department properly responded to public records request related to mrs. clinton's time as secretary of state. governor rick snyder has toned a bill in michigan
keep detroit public schools open through the end of the school year. the states largest school district was in danger of running out of money. meantime, current and former school officials are among those accused in a kickback scheme worth millions. thatttorney's office says more than one dozen people face charges. the hijacker of that egyptian jet did not have the explosives -- have the explosives he claimed he was wearing. on board waseryone freed or escaped. authorities say that they arrested the hijackers. officials say that it wasn't a matter of terrorism. there are media reports that say that the man wanted a meeting with his ex-wife. the federal aviation administration says that it's changing its policy to let commercial drones fly as high as 400 feet. the previous limit was 200 feet. commercial banned in the united thees, but with a waiver is faa can authorize some drums. they can now fly at higher
altitudes. mobile news -- global news, 24 hours per day, powered by 150 news bureaus around the world. back to you. lisa: commodity markets in new york are closing. let's take a look at the biggest movers. right now we have gold up. 1.5%. that's pretty impressive, actually. building on the rally that has been gaining some steam. oil is a fortunately -- is unfortunately down again. it seems to be that if they have been lower, they been lower all day long, despite a weaker dollar. it's been more of a supply issue or being arshadowing dominant force, really, for oil prices. for more on oil, let's bring in the director of commodity strategies for the eurasia group. funny, i couple of days ago
people were saying that it looked like we had reached the bottom in oil, things were stabilizing. you turn around and barclays comes out with a report saying -- hang on, head for the exits, this has nothing to do with fundamentals. >> i wouldn't say that. i think it has a lot to do with fundamentals. the super cycle is over. people are used to seeing oil do one thing, go straight up. i think we need to get used to a new price regime. that's really all about .esetting into ranges we've had forceful rallies from the lows. for sure. betty: it was like a 25 year low. bruno: sure, sure, we needed to test the resolve of u.s. oil and gas producers. let forget, we media production off the market. betty: but is this enough? at what point does this bring the shale producers back in to
capitalize on somewhat higher prices? bruno: the answer is that it's very hard to tell. the reason for that is that we've never been through a cycle with shale yet. you can't include 2008 from the cycle -- in the cycle because the bounce from the low was so extreme and it didn't start as an oil problem. it started as a real estate problem. we cannot forget, the shale phenomenon is a nascent phenomenon. we haven't been through a cycle yet. we don't really know. what we can do is gravitate towards what the emts are telling us. what they are telling us is that on $50 average in the u.s., they are learning how to be profitable. first i think we set a range. betty: wait, so what's the range? bruno: look, we are calling for an average price of $40 and 2016 because we don't think that production will come off materially until we get into the first quarter of 2017.
that will be priced based. what's ultimately happening, production declines, the wells are never better or more productive than the first day they are drilled. after that you start to lose steam in the well. you have to constantly drill new reserves. trilling new reserves is not generally economical at these levels. we are starting to disincentive eyes new production coming on. declines will kick in, the market will rebalance. since 2015 we have seen more than 50 bankruptcies of north american oil and gas companies. how much further does this have to run? bruno: you know, that's the million-dollar question. everyone seems to gravitate towards that question. every piece is different. but if you look at history, right? what you really know is that when producers go into bankruptcy, it's not like the spigot gets turned off and that's it.
sometimes a bankruptcy protection can maintain production. while you have organized the company it is in everyone's best interest to have ongoing and profitable operations. the reality is that even if they declare bankruptcy, the production is not going away, a portion of it is going away. what i think the real outlier risk is if banks that have already let money to producers ,ave drawn lines of credit there is a risk that some of these banks get worried and they demand money back. happened in texas, didn't it? in the 1980's? there were a lot of bankruptcies. a lot of reports of come out to say that there were 30 companies that have already begun to's to law firms, bankruptcy law firms in preparation. the question really is -- how
many companies that are volumetric late significant -- volumetricaly significant are going to go up? lisa: speaking of, what is the chance that opec could come to an accord about a production freeze? bruno: we have taken a long, hard look at this and as a company we understand the politics a well, looking at the middle east. we are only putting up a 15% probability that something will happen and likely if it does, it will be a freeze. a freeze on january output levels that doesn't do much to balance the market. at the end of the day, i think that opec is smarter than people give them credit for. they know that this is a secular shift in the manner in which we produce oil. the genie is out of the bottle. we know that. it behooves them to actually compensate for lower prices by gaining more volume. how you combat a lower price
realization? you increase volume. they will go after market share. even if you do come up with something, when the rubber hits the road the reality is that the numbers will not add up. they will continue to battle for market share. so, bruno, totty: top it all off, what do you think was behind this date rebound? short covering? is there a sound cause for this? what was it? bruno: i think there were a couple of things. primarily it was flow driven. people chasing alpha. if you look at crude oil's performance relative to every other asset class last year, it was horrific. right? look at the price decline. a lot of people were gearing up for commodities to outperform. you have to put money to work. you are going to allocate
something. allocating more to commodities versus other asset classes. that is why you have seen that performance. having said that, fundamentally we are seeing some signs of demand stabilizing. china was a big factor. people were worried about a hard landing. consistent in the moderation for demand. people seem to be embracing the effectiveness of the fiscal measures. china is not as big a problem in the eyes of the world. gasoline has been a shining star of demand. consumers are not spending it on a lot of things. but 56% of new car sales are suv's all of a sudden. a micro level, gasoline demand has been strong throughout the world. china is less of an issue. the fiscal plans seem to be satiating concerns in the market. i think this other factor is --
brazil. b approved the motion and promptingng others to follow suit. the fast market has gained this year, despite the political turmoil, which has been one of the most surprising stories of the year. not only the stock market, up here today, but also government bonds in brazil up more than 10% , one of the biggest gainers in the world markets, which is phenomenal thinking that the economy there is tatters. so deepou would think, recession, wire the assets up? typically it's that investors have been betting that there will be a chip -- a change at the top of the government. with this today it looks like she is facing the possibility of being impeached. a big part of it was the
last year they were so devastated that this is a somewhat recovery rebound. turning from brazilian politics the u.s. politics, president obama recently described the campaign trail as a carnival atmosphere. this footage was released appeared to show it bets that appear to show a trump event in which he grabbed the arm of a reporter asked she tried to ask the candidate questions. -- betty: they said that he is not guilty and is completely confident that he will be exonerated. to roil theg republican front-runner campaign? let's bring in megan murphy. megan, so, how bad is this going to be for trump? or can he blow this off? megan: he's been able to blow
this off so far. the people that support him don't care and the people that do support him -- don't support him aren't going to vote for him anyway. the issue today is not so much that we have this new video, and acknowledgment from the campaign of the charge, it's just that the stories contradict each other. when this first happened in a blaze of tweets, she called her delusional for suggesting that he grabbed her on the arm. , inthey are saying -- look the thrust of these campaigns and scrums that we have, these kinds of things happen. the story has changed quite dramatically today. what does this incident do for the argument that trump is altering violence and creating the district -- the disruptions we been seeing. we have seen things of
these events that we haven't seen in years. people rushing the stage, people being punched, kicked. they canceled a rally in chicago amid the threat of violence. they say that they are drawing do people into the party and are doing their best to protect their first amendment right to we'vepeech -- but look, had the campaign manager for the front runner of the republican presidential ma'am -- nomination today be charged in the case of simple battery. that's something we haven't seen and it will impact his race. he's in a tight race in new wisconsin and has a huge lead going to new york. those wisconsin voters may take a second look at just what they are voting for. betty: it was a really a great day for trump. he also did not get an endorsement from governor scott walker in wisconsin. that went to ted cruz. how devastating is that? think that anyone expected scott walker to come out and get on the trump train.
.e exited the campaign early people thought that he would have dominated the campaign, along with jeb bush. that was a long time ago, it feels. he's hoping that he can coalesce support around the establishment candidate, but he went for ted cruz. a man who he says always stood by his conservative principles. i don't think it was that much of a surprise. the clamping down on public-sector unions, limiting the size of government. some of the same principles ted cruz has stood for as well. i think it does deal john kasich a bit of a blow in his bid to either come in a close second or maybe even take wisconsin, he is showing second in the polls there right now. ok, megan. thank you. for all things politics, tune in ,"night to "all due respect
starting at 5 p.m. eastern time. in the meantime, stocks are advancing amidst dovish remarks. julie hyman, taking a deeper dive into the spiders sector report. technology is doing the best that. it's not directly tied to race. fortunes of the global economy and is up by 1.5% games ofilding on the the year. even as the nasdaq is lower on the year by 3%, this etf is higher for the year to date. 3% of the rebound that it has experienced has taken it back to positive for the year. since technology is also the most heavily weighted sector in the s&p 500, it helped matters there as well. is higher today. ubs reiterating its target on the stock's, $60 being a price target here. recently, ubsysts
is focusing on the cloud opportunity at microsoft, saying the company continues to expand in the business organically and is aheadcquisition and of schedule to reach its stated objective in a revenue run rate for that business, the cloud business, by 2018. we are also watching apple today, the big news that the government is abandoning the fight to unlock that iphone from the san bernardino bomber shooter. you can see that those are up by 2.4%. although they had not been much effective over the course of the conflict area finally, a berkeley's note on linkedin and ebay. linkedin going to equal weight. ebay going to underweight. between the two, ebay getting the worst of it here. ebay capital returns will continue but fundamental improvement is lacking.
revenue slowing more than expected, the multiples should come down. materially, the stock is hanging in today, gaining with the rest of technology in the market. -- lisa: thanks, julie. the google ceo was paid $100 million in his first year. was it worth it? price,look at the share one would think so. here is google over the past year. ♪
is he worth it? hope so. for the sake of google. i mean, who knows. i don't know how much of the deal was for cash in the filing. one of the reasons they restructured the company was to allow other people to rise to the top of the different business positions. mayernly with marissa with a very big pay package, ined a way to yahoo!, taking $100 million before leaving. very big payback, google has been a part of that culture for a long time. mostly come in the form of salary and stocks over the long term. betty: take us back through, cory. what has he done that has propelled the stock price so much? if the stock -- if the
business continues to perform, if the free cash flow continues to flow, i don't think it will be an error. what about apple? let's talk to the people you talked with in the fbi's move in the case who basically say -- forget it, we have a backdoor to get in here. it's all good. apple kind of has a problem on their hands in terms of reassuring those iphone users that they have some privacy. -- cory: you've got to losers here, right? saying that no one could hack it, but then in the course of the week the federal government could get into this iphone five c. nonetheless, their notion of a phone and data is shown to be untrue. at the same time, the government was pursuing a case that would
have created a russian that would allow them to break into other phones. selected this has particular case, this violence against american soil that gathers no sympathy in public opinion. they take that case to go after apple. but for some reason the government thought not only to break in without using apple's help, but announced that they had succeeded. oneas to wonder, why did they announce this at all instead of pursuing a case that they thought they could win? it's also been suggested that they knew they were going to win this case -- lose this case. that's the why they were trying to get the court to drop this. they don't want to lose the case where public opinion was moving against them and set a precedent in which individuals may indeed have a right to the privacy of what's on their phone.
that would have been damaging to the government. --a: i just wonder betty: betty: i just wonder if we will i just wonder if we will ever find out what they did. there are issues of privacy were corporations want to be able to find out what the leases are. required to do so by law with cyber technology. lisa: thank you so much, cory johnson. hosting "louvered west" all week. be sure to tune in this week here on bloomberg television. coming up in the next hour, we got more for you. ♪