tv Bloomberg Markets Bloomberg April 7, 2016 12:00pm-2:01pm EDT
good afternoon. alix: here is what we are watching at this hour. a rush to save havens is driving the dollar to its lowest level against the end in 24 -- in 2014. scarlet: u.s. stocks pulling back since the march fed meeting, turning their attention to what the next earnings season will bring. alix: for still no relief in the commodities market. crude oil not showing any signs of remodeling. scarlet: we are halfway into the u.s. trading day. we need to check in with julie hyman. stocks, aike the u.s. resumption of this weeks declines. julie: definitely.
all three major averages down with the nasdaq leading, now down by mother 1%. it all has to do with concern over global growth. and to rotation of the fed minutes. the upside is that maybe -- with dovish representation of the fed minutes. the averages are now may be giving up their gains or getting closer to it. the yen has really been the big market story of the day. it continues to push higher to its level since october 2014 versus the u.s. dollar. 1.0 -- 108.
we have to look at options trading on the end. we have the highest level of in optionsf volume that we have seen since february. this is something that definitely has picked up. we have also seen a lot of folks who has been saying that the yen rally will not last. they have been giving up on that view as they have been forced into it. alix: this is the third day the s&p has swung 1%. we've haven't -- we haven't seen that since february. and gold is a beneficiary of that. julie: indeed. we have seen gold do well with -- once again. in terms of some of the other commodities we are watching, oil
and natural gas, oil resuming its declines as well today after getting a lift yesterday. a substantial live from the weekly inventories report. and natural gas is higher today is the weather in the forecast are turning cooler for the northeast. there are pot -- there's also positive analyst commentary. vix trade, the biggest one-day gain in a three month-time -- three-month time. still relatively low for what they call a high volatility environment, but it's ticking back up again. scarlet: thank you. snow on sunday. [laughter] : belgian prosecutors investigating last month's
want information on the so-called men in the hat. he was seen with the suicide bombers minutes before the airport explosion. they see him leaving the airport and then walking to a nearby town. they are asking the public for any information. contractt workers and workers have been kidnapped near damascus, syria. the rhetoric is heating up between senator bernie sanders and hillary clinton. sanders says the democratic front runner is not all find be president because of wall street donations to her super pac and her support for the war in iraq. clinton asked if senator sanders was qualified to be president, she refused to answer that question directly. merry girl and will go to the university chicago where he
wants top constitutional law. the president will argue it's in a republicans should reverse course and give judge garland a confirmation hearing your so far, the white house campaign for the judge has had little effect. alix: this earnings season could really hurt. earnings per share for companies in the s&p could follow must 10% year on year, the sharpest a kind since 2009. and a fourth straight quarter of contractions. this come as corporate profits fell to a six-year low last quarter. scarlet: does that mean that we are due for a bear market? michael, earnings falling for a fourth straight quarter, but we haven't had a bear market yet. so why might this be different? peakel: i think earnings
in q3 2014. the market hasn't had any headway since then. and as we go in to next month, the market won't have made another 50-week high in a year. we are still enabled market. a bullre still in market. borrowedem is, this time of disappointing -- that we have delivered to disappointing earnings is probably going to run out at some point. in the meantime, the fed accommodation, global sultan pranks -- global central banks offer support. how much of value does they negative outlook really give you when you have short covering happening, which could support the market? michael: that is typical in bear
markets. me if you go back to last year, we had that big rally from the end of september through november, into december i think, and it was another short covering rally. we saw the selloff in january and february. again, another short covering rally to get us here. this is typical behavior of bear markets. because it has not dropped money percent yet, we do not call it a bear market. that investors should be looking at the earnings. that should be driving decisions . i want to get a sense more about the central bank angle. we talk about this fear that central banks have lost their ammunition. janet yellen and the federal reserve have proven to be fairly .ovish the last few weeks it has somewhat supported the market. does i keep the u.s. from
falling into a air market, continued dovish comments? michael: you can look at europe and japan, who have taken their accommodation to the next level. 50's down the past year. these regions are using negative interest rates. they have massive asset purchase program's going on. you see investors losing confidence in those central banks. so the concern here is, if investors here lose confidence in our central bank, we could see that kind of downturn of matter how dovish. we are at the end of a long expansion that has been going on for seven years now. -- there is only so much more the fed can do here. or categorize the first quarter is the correlation between portland stocks. -- what the horrible is
are the correlations that make them a sense to? michael: we saw earlier in the .ear, stocks and yen unwound those concerned may. while those factors should play into the equity market, it should not be on a tickertape basis. for tick basis.c that means people are speculating and not going for the long-term. thelet: what are ramifications of that for the rest of the asset classes? what does it trickle through? bankel: you have a central , in the yen, that are massively easing in the markets rejecting it. if you go back to 2007, the fed 07 wastes in september 20 at an all-time high in october and then went down for 17 months. in late 2008, investors lost
confidence. that is the fear here, the cycle is turning and investors do not have confidence in central banks. yen does goif the to 103, how much repricing has to happen in u.s. assets? think u.s. assets have to reprice. i don't think it has to be solely related to the yen. we are trading about 20 times earnings here. as you open to segment, earnings will decline this year. so this is a very expensive market at the end of the cycle. that expands why investors are so cautious and why everyone is so bear sleep position. alix: do you own a whole bunch of golden treasuries at this point? michael: treasuries are expensive, too. it would be all the way cash. it's one of those things where you don't want to be caught buying the market at what could be a downturn.
declining quarter earnings. on top of that, investors have been fleeing u.s. mutual funds and allocating overseas. for a closer look at these danny berger joins us now. you have been looking into this data. tell us more about what we are seeing. danny: if you look at it as a prettyat first, it looks positive. however, when you break it out between domestic inflows and world inflows, there is a big difference. this past february, we side massive amount of outflows from u.s. mutual funds and it's interesting because you have these two rallies we are going through. typically, these retail investors, they will be prompted by these past market actions and we haverough these,
massive outflows in february. it was about $3.3 billion this past month. scarlet: one thing we've noticed with this bull market rally is that retail investors are not really participating in and. what sentiment -- are dissipating in it. -- are not really participating in it. what sentiment are you using? michael: there is performance now. the problem is they don't believe the rally will be sustained. therefore, they are more inclined to just wait for the next dip in the market. jamie dimon yesterday talked about the market. here is a nugget we picked out. he said come in the last year or two, we have seen extreme volatility in the u.s. treasury markets.d u.s. equity we have also seen more normal
volatility in global credit market. these violent market swings are usually an indication of poor liquidity. is this why we have seen the flows out of the u.s. in the international, not fundamental, but technical liquidity issue? dani: one of the things you have to look at that can also be skewing this makes is a lot of retail investors have also been fleeing to etf's. they are not sure they want to be with an active manager. the thinking is that etf stew better. -- if not just as well. so there is some movement there. but in general, when you look at the market and you're deciding whether i want to own an international mutual funds are u.s., when you have we all over -- when you have qe all over the globe, it is a hard case in why you would put your money in a u.s. mitchell fun. scarlet: do e.g. if -- u.s. mutual fund. etf's function better?
ithael: the inflows into etf's and passive funds on the top and outflows from actively managed funds, that is one of the problems we have we have a fed that says we will support the markets the matter what. and you have this fed put or this indefinite bid, right? you train people much a think about their investments. so they say i will just buy the market because that is what the fed is telling me to buy and it is pulling funds from active managers who are doing due diligence and are actually researching stop. this is another example of the distortions that occur when you have a static, aggressively easing monetary policy for seven years. alix: we have been talking about your bearish outlook. what is your downside target for the s&p? michael: i think the s&p can get 1700. i think this year, but to say i know that is unrealistic.
asike to look at the market risk versus opportunity. and i see a lot of risk right now and i would be on the sidelines. i would be waiting for that pullback to occur. but with things like earnings and the additional for a global slowdown and investors losing confidence in the central bank, those are headwinds that are not going to taper anytime soon. been lookinghave along with arthur run it at about funds that are going to overseas markets. is that coming out of the u.s. or is that being advocated -- allocated out of cash at this point? dani: depending on how much cash retail investors are holding, they are still highly exposed. u.s.,eone sitting in the you kind of have to have this idea of whether or not the u.s. economy is strong. and if you are a retail investor, you are not sure about that. a very uncertain climate, maybe
club will be covered it into a more family result, a place for water skiing and paddle boarding. he is really excited about it had this is the first rebuilding he has done in las vegas going back to 2008. you can see shares are up. analysts are excited about it. you can see shares have already done incredibly well this year they just about doubled after reaching the low in january. we are also watching hanes brands, the clothing many factors seeing it is acquiring champion europe, which is closely held. the company also holding steady in terms of saying that the business is steady for the year. does shares are up nearly 5%. and bed bath & beyond shares moving higher as well. , optimistic about
the full-year outlook. four fed chair's past and present will be speaking later today. the historic event comes at a time when the country could use a collective wisdom. david bloomberg the economies and how they can affect the fed. thed: anyone who says that fed only operates on the domestic around was not around in 1998 when the is policy following the asian crisis the fed cut rates three times in the fall of 1998 at a time when the decline was full employment.
the fed seems more concerned -- the most that matters the most -- you can quote as many fed bank presidents as you like. i have been in this business 30 years. i don't remember a central bank chief having the lord "uncertainty" as the title of this speech. her title was the outlook uncertainty in monetary policy. you find sometimes uncertainty. in the title of her speech. is happeningt what in the u.s. economy. reprinted 1.4 on real gdp growth. whether you look at global developments or the u.s. domestic economy, the case for an fed truly do nothing for
extended period is quite strong right now. >> that's a i just gave you the fed minutes for yesterday and told you that the dollar-yen is down for the year. and then that they've forward estimated earnings was 17.5 times, would you believe me? david: again, it comes down to the earnings backdrop. week-oldhave the prices, week basic material prices. we have the impact of one point u.s. -- the u.s. dollar is up 20% year-over-year, a big turn a get underscore activity and foreign earnings. what does that do for the fed? i don't think there litan earnings performance drives currencies. really big shift this year -- we went into this year -- a lot of pundits, including
folks in the fed, boy, we have for rate hikes in her pocket for 2016. you fast-forward to today, and because of the things you just cited, the earnings recession in the u.s. economy, all of a sudden, you don't have -- earnings recession and the u.s. economy, all of a sudden, you don't have the big shift this year. it has been more to a dovish fed. that is what happened to the u.s. dollar right now. a quick check in here on commodities. crude down. copper as well. copper at a one-month low. gold up on safe haven demand. we are talking oil next. ♪
clinton and donald trump par leading three weeks ahead of maryland's primary. leading, court -- are three weeks ahead of maryland's primary. the republican side, donald trump, the front runner, has 41%, compared to 31% for john kasich and 22% for ted cruz. primary april its 26 along with pennsylvania, rhode island, delaware, and connecticut. former house speaker dennis hastert have asked a judge not to send him to prison in a hush money case. they say he is in poor health and has already been shamed by the case. he pleaded guilty to violating banking laws in paying $3.5 million in hush money to keep decades-old misconduct a secret. an egyptian request to extradite
a man who admitted to hijacking and egypt airlines has been cyprus refused. -- has been accepted. police arrested a suspected gunman after shots were fired near parisian cafes the paris attacks. the incident rattled nerves in a city that is still on edge. officers were deployed after shots rang out and a suspect, who appeared to be intoxicated, later surrendered. global news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. you. thank crude prices are falling over 2% today as oversupply still drowns the market. the big question is how fast
will u.s. production shut in and lead to a more balanced market. our correspondent just returned from north dakota and joins us from paris with and on the ground perspective. with a target price of $36 this in 2017, what was your number one takeaway from the trip to north dakota? production in the u.s. shale is declining by 100,000 barrels a month. what is different from what we saw a earlier is that a lot of oil services company's left -- companies left or let go three quarters of their employees. the question today is what bounce if oil prices
back? producers will not be able to compete. key point.is a if you see a rally, you have fired all of these guys. how quickly can they come back and start drilling for you again ? what did you find? how quickly can they come back? alex: we were there three months . there are a lot of incomplete wells. .verything is done they just need to frack and it will start to produce for a couple of years. today, i am pretty sure they complete a able to well in less than 12 months. -- lets says it
45-50. i am not sure there will be a strong restart on production before april, 2017. is more stress on the market. producers may need more time than what we expected earlier. alix: that is key, if you cannot get production back online until april, 2017. we are talking about drilled but uncompleted wells. we have a chart showing the rise of these wells in all of the major shale basins. in andically, you go drill the well but do not finish it. if oil prices rise, you can drill quickly. what is your take on how fast those guys can come online?
what he did six month ago. it doesn't matter if the well is uncompleted for a reason. it means there are more uncompleted wells, as we highlighted earlier. the and employment rate was much -- when they started drilling the wells, the unemployment rate was much higher than it is today. great distinction. still hard to complete those wells even if oil prices rise, and if they want to hire the workers back, they are going to have to pay up. fascinating take away. is our question for you producers hedging? are they selling forward? one line in this chart shows that producer short predictions
are rising. that means they are hedging on an oil price rally. did you find that out there? alex: yes. $45 is a level where they can survive. if you look at next year, they are at that level. .t's not a trend it's just something new where initial production is much higher. again, it's not a trend. -- d not feel alix: great perspective. thanks for sharing that. we sat down with the ceo of the world's fourth
.iggest iron ore miner betty liu ask how the company has been affected by overcapacity. >> what they are talking about is reducing overcapacity, rather than shutting production. the demand for steel is much more tied to the economic growth of china. we have heard they are looking to maintain growth above 6.5% and to ensure that they continue theprocess of lifting living across central and western provinces. for 800that bodes well million tons a year. betty: at the end of the day, china's economy is one that has to rebalance. on investment property driven growth forever.
how is for to skew looking to beyond china? >> we certainly developing other markets outside -- four to skew rtescu looking to diversify beyond china? developingertainly other markets outside of china. china is setting itself up to be a very competitive supplier to economiesgent throughout asia. we will assist in that process and accelerate the economic development of other countries in asia. i think the chinese steel mills are setting them up -- setting themselves up to be suppliers. china is our primary focus because it is such a major supplier of world steel. to talk about the mo
filing, which got quite a bit of buzz in the industry. it was very well received. given the issues of cash flow, do you see that materializing? >> it's a longer term prospect. to be it in the mou transparent. we wanted to make sure the market understood what we were looking at them working with, but primarily, this relationship will be driven by the blending costs --reduce the blending of ore to reduce costs and improve supply. by providing a product that is in greaterused percentage, it reduces the cost
supplyplexity of the chain. grexit has been a lot of talk within the industry about consolidation being inevitable. ?s there a chance of that >> i don't think so. it's hard to predict what will happen in the long term, but we are focused on making sure our business is strong. we have a strong balance sheet. this is really about trying to continue that process we started internally of blending our own product to provide a service to our customers, reduce their costs, reduce the complexity of the supply chain. we seeorward, development in further iron or projects as the market supplies them. coming up on bloomberg markets, financial brokers are speaking out against the new
will hurt london's market.exchange scarlet: a possible london housing bubble. investors are being offered discounts if they buy in bulk. and entrepreneurs venture went bankrupt. first oil entered u.k. market. scarlet: a possible london housing bubble. bankruptcy in february. bnp paribas and its lenders are currently owed about 131 million , but they only received about 70 million from asset sales. loans to first oil doubled in 2014, just weeks before the rise of oil began sliding. the loss illustrates the wreckage banks are likely to face due to the oil bust. if there is as brexit, the london foreign-exchange will be hurt. that leaving the eu would be good for london. bus candidate spoke
about why the idea of a brexit is -- labor london's spoke about why the idea of a brexit is ludicrous. 500 million potential customers walking away from a market that has led to so many jobs in london, the expansion of his nurses. it's ludicrous. the idea that we could elect a -- expansion of businesses. it's ludicrous. ae idea that we could elect mayor who supports it is taking a real risk. good time to get a deal on apartments in london, but only if you buy in volume. institutional investors are being given discounts of 20% if they buy 100 or more. sales of london properties under construction slumped 19% in the fourth quarter of 2015. despite the pull back, a record
number of high-end homes are planned across the city. alix: time for a bloomberg quick take where we provide context and background on issues of interest. this friday, elon musk's latest spaceship is scheduled to make a resupply mission, delivering supplies to the international space station. next cargo will not be supplies, but tourists. time inhe first history, now so once to hand off resupply missions to private companies. there is way more at stake than just food and equipment. these companies hope to transport tourists. here is the situation. these four companies, including spacex, are building spacecraft to carry supplies to space. >> we have liftoff.
>> to make space tourism realistic, the price of these trips needs to come down. space entrepreneurs are counting on two words to cut costs, reusable rockets. until now, booster rockets have been burned up upon re-empty -- reentry into the atmosphere. elon musk says that reusable rockets could reduce costs 100 fold. argument.e since the space shuttle program ended in 2011, nasa has been focused on mars and the farther reaches of space. that leaves russia as nasa's only option for sending .stronauts into orbit some argue that private competition will bring down the the cost ofth it
space exploration, but there are real safety concerns. virgin galactic crashed on a test flight in october, 2014, killing the pilot. but for a commercial company, in to being a tragedy, a crash with passengers on board good and space tourism all together. for now, russia appears to be the only option. scarlet: coming up, internet pioneer steve case weighs in on facebook's massive success. ♪
yesterday area the dow off 158, s&p losing 20 or better than 1%. aix: third day we have seen 1% move in the s&p. march is pretty quiet, by comparison. scarlet: let's head into the terminal. we have tesla trading lower today, this as the company says preorders have surged in the first week. , $14implies a huge loss billion. the company is now taking in more money for the model three launch, 14 -- huge billion dollars. the company is now taking in more for the model three than it did in its ipo. the stock could be down today because of consolidation of recent gains. tesla will more likely than not
reach its record high of 290 one dollars or perhaps even higher. down on the nasdaq is yahoo!. >> it appears they are talking while there are rumors that japan's softbank is a potential bidder for yahoo!, sources are saying that softbank has not met with management, similar to other potential bidders, at&t and verizon, that they are actual more -- actually more interested in ending an annual payment. preliminary bids for the yahoo! core business, yahoo! japan and the company's stake in alibaba are due next monday, april 11. longer: what is this mean to you?hart how do you interpret it? >> shares have climbed back above the 200 day moving
average. it's pretty bullish. long-term buyers are stepping back in, getting involved. the last time this happened in a inious way, both in 20 12 2014, the stock climbed significantly higher. alix: thank you so much. staying on track, facebook's success has evolved through many faces of the internet. ceo and author of "the third wave: and entrepreneurs vision of the a modelsays facebook is for other companies. facebook is a great example of what happened in the second wave. once the first wave was built and people were all connected on the internet, the focus was building on top of the internet. facebook is arguably the most influential media company, even though they don't own content, because of the way they
distribute it. we will see other companies come out of the third wave. will focus on key parts of our lives like how do we stay we think aboutow and consume food. big sectors of the economy have not been disrupted that much in the first or second wave, but they will be in the third wave. but it will require a different mindset. >> explained to me what facebook becomes five or 10 years from now. how big will they become, how far-reaching will they be? >> they have done a great job of taking the initial service and expanding it. they want to do facebook live with a 24-hour channel, which is getting a lot of attention. when they mentioned,
have seen interesting new brands and interesting disruptive companies, whether it be instagram or virtual reality with oculus, they want to be part of that future and they jump into it through acquisition. big companies in the third wave will need to understand what is happening with entrepreneurs and figure out how to partner with them. that was steve cates on bloomberg surveillance. scarlet: tomorrow, emily chang world of venture capitalism. we explore a prime time program with a special guest. speak to the dropbox ceo and airbnb cto. ♪
markets. from bloomberg world headquarters in new york, good afternoon. i am scarlet fu. alix: i am alix steel. here is what we are watching. stocks falling after s&p had its biggest jump in a month. policymakers are not racing to raise interest rates. scarlet: jamie dimon pens a 50 page letter and says watch out for your privacy. alix: shares of bed bath & beyond are rebounding today after the retailer beat estimates. a look behind the numbers made investors pause. want to headt, we to the markets desk where julie hyman has been following declines. we had some economic data, but it did not seem to move the needle. julie: it does feel slow.
i have had traders say that to me today. a few weeks of low volume trading. all indices are lower. growth areout global back in the four. the risk sentiment is back in the four. financials are the worst performing group today. the outlook for the year is we have seen financials perform better on days when the interest rate increases have been more likely. at least in sentiment. they are seen as benefiting once rates start to go up. they are pulling back on materials, telecom, staples. it's a mixed bag and a broad bag we are watching. individually, there are various things pushing around individual stocks. the price target for apple is cut. people are not upgrading their iphones at the same rate they once were.
and exxon mobil also pulling back. exxon falling with oil prices. it is sort of a mixed bag. the actionels like the last two days has been in commodities, in particular currencies, with the yen to climb higher. julie: we are hammering the yen, but it deserves hammering. we have seen monster moves in the currency in the last couple of days. dollar went below 1.0 eight yen. that's the lowest since october of 2014. dollar just the u.s. if you look at the world currency ranker, this shows the allnese yen as the base of the other major currencies. the brazilian currency falling the most. the peso, south african rand,
it's really a broad basket, all of these currencies we are watching. to end with at chart that alex made that i thought was great. in theoks at net long yen. the yen increase has been so persistent and unexpected by many that bears have sort of given up. we are seeing that long. these are the highest levels we have seen going back to 2008. people who were trying to short the yen have been killed. threw in bears really the taliban the end of the day. that didn't necessarily mean -- through in the howl at the end of the day. that didn't nasa's -- threw in of the day. the end that didn't necessarily mean we were going to see a reversal. mark: glad a mere putin denies
having any links to offshore accounts. -- vladimir putin denies having any links to offshore accounts. he says the panama paper scandal is part of western efforts to weaken him. a two day conference on violent extremism is under way in as part oftzerland u.n. secretary-general ban ki-moon's efforts to address the root causes of terrorism. on theeeping communities same page and focused on disillusioned and unemployed young people drawn to radical groups. takingar conference is place this week in washington. a young man is asking the supreme court to review his lawsuit challenging senator ted cruz paz eligibility to run for president. it was placed on the -- ted cruz's eligibility to run for president. it was placed on the high week.s docket this
senator cruz was born in canada, but his mother is an american citizen. hillary clinton encountered issues today trying to swipe her subway card. she was able to make it through the turnstile after a couple of tries. she has a commanding delegate lead over bernie sanders. she took a short ride through the bronx. global news 24 hours a day powered by 2400 journalists in more than 115 news bureaus around the world. i am mark crumpton. thank you. one big worry for her the federal reserve financial conditions. -- worry for the federal reserve's global financial conditions. alix: joining us is one economist who sounds more dovish than yellen. a senior economist at bnp
paribas and former analyst for the fed, laura you have seen no rate hikes or this year and for next year. you lowered that early in 2016. how come? i think fed tightening and expectations of fed tightening were problematic for the global economy. a stronger dollar brought tightening conditions for a lot of countries, and that had spillover effects on the u.s. fed has you think the unofficially adopted a third mandate in addition to full employment and price flexibility? laura: absolutely not. it's a good question. we get that a lot. in fact, its financial conditions that a roadie play should -- that erode inflation. really, the financial conditions do influence the outlook, and for that reason, the fed really has to pay attention to that. alix: but they are not a
mandate, so it is a third mandate. if you look at the actual mandate, you have unemployment rate almost at their neighbors. laura: sure, but it's all about are we going to get to those objectives within a reasonable amount of time? in financial markets could imply that growth slowed or inflation doesn't progress as fast as we think. it's a domestic economic slowdown, which is why we advise the fed to remain cautious and on hold at the end of this year. scarlet: many people are wondering if inflation -- if the fed will let inflation run a little hot before making a move. alix: and we think 2% is hot. this is average price gains from full go to yellen. quite frankly -- volcker to
yellen. quite frankly, we have treaded along that price target for quite a while. laura: i think they are indicating that their goal is the metric. i think easy policy might generate higher inflation, but it's not necessarily the fed's objective. it is more that we are zero bound. there are limited tools to these policy. you have to because this. scarlet: limiting tools is thething that came up when swedish bank minister made his comments. he indicated he is open to changing the inflation gauge. thehat something you think u.s. needs to have a discussion over?
laura: i know that i'm previous fed minutes, there were discussions about what the op golf -- in previous fed minutes, there were discussions about long-run planal should be. i don't think we're there yet. inflation't meet your objective, it does not help your credibility to lower it. alix: to change your goal. ofare looking at 21 months this rate. will the actual rate cycle have to be that much more aggressive down the road? >> i don't think so. it's not that nothing will be happening in the global financial system. financial conditions go through a number of dimensions, and that is what we have seen evidence of this year.
the fed doesn't need to raise the rate. they just need to hand added and there is a lot of tightening through out the financial markets. of fed on hold in terms of the is noterm rate necessarily a reflection of where financial conditions are going to be. so much.nk you senior economist at bnp paribas. don't forget today's conversation between fed chair past and present. they are all speaking at the same event tonight. bloomberg tv and radio will have full coverage for a starting at 5:30 p.m. eastern. scarlet: coming up, a big rally in gold today. we will ask a ceo if he is short or long on the precious metal. alix: jamie dimon has a lot to say to investors, including a warning about protecting our privacy. bath and beyond beats estimates, but there are
alix: you are watching bloomberg markets. scarlet: gold has pulled back after a monster rally, but the gains aren't over yet. alix: julie hyman has more details. gold canalysts think go higher, at least until the first quarter of next year or so. 50 peruld at around $13 ounce they say. all trading higher today. even though we have seen a little bit of a pullback from
the highs of the year, we have still seen a lot of volume in gold and gold etf's. take a look. lineis gld, the white price. it is down from the highs of the year. people are investing into this etf, and that has continued to be on an upward trend. wanted to point out since we have been talking so much about the yen today is the yen-gold correlation. typically look at the yen in its correlation with gold. right now, it is at 0.8, pretty close correlation. the credit suisse number is interesting because they talk about supply. thanks so much, julie hyman. scarlet: our next guest is launching two new gold etf's. than he has launched more
75 exchange traded products over the last 10 years. greg, welcome. gold hedge to investing etf's. what is that? greg: it's a first in the u.s. etf market. there is a misconception that when you are going to gold, you want to get out of everything else. investors face a situation where they feel they need to sell out of stocks or bonds to get into gold. we have a created -- created a way for them to not have to do that. gold is a futures market, for the most part. investors to be exposed to equities. so, does it go short gold? greg: this fund is definitely long gold. is an 8%lly, gold
compounded return since the 1970's, since it was decoupled. zero correlation -- i was just -- it has it recently a negative correlation to the s&p 500. this is a great thing to consider for portfolios. short-term is more of a safe haven. investor psychology, there's a lot going on there, but again, it allows investors a way to have access to gold without having to sell stocks. this is the function hf. withthe historical thread gold. they are now inversely correlated by .23. why would you want to be in a includes gold?t
>> what you want is a long-term positive return, and that is for 45ld has exhibited years. obviously, it goes way up and way down in different cycles, that we take a long-term view. the idea is to have gold in the portfolio without having to get out of stocks. scarlet: to what extent does this play into the macro environment where you expect more of that for longer? greg: i think one thing people forget about gold is the psychological aspect. people are asking themselves what next. we are sitting there with negative rates going, this is new. what am i going to do next? we have a bit of a wacky election making people think next fort snow -- what the country. i think that psychological pressure is to the upside for
gold. have another one, which is an emerging market hedge. we have a portfolio of stocks supporting a long gold futures position. there is some research that talks about gold being a decent hedge for currencies. of people avoid doing that, but this is a way to tackle that. alix: thank you so much. still ahead, how will janet yellen, mario draghi, and others continue to fight headwinds and detail wins? -- tailwinds? ♪
the global economy? that's a question many people are asking. speaking in lisbon today, ecb president mario draghi insist he still has plenty of tools at his disposal to fend off a slowdown. it over to carol massar and cory johnson who are looking deeper at this issue. carroll: thanks so much, and welcome everybody on bloomberg tv. eric, talk to us about what's going on in terms of global central banks. it seems like central bankers are trying to do everything they can to protect the markets. do you agree with that assessment? is it a good thing? eric: i don't know if it's necessarily about protecting the markets, but certainly, they are looking to fill a void, and that void is a reaction to fiscal stimulus. we have become very dependent on news events and headlines coming out of central banks looking at
continued policy accommodation generally among major developed central banks, and the potential for obvious change in policy among our own bank, certainly the fomc. cory: there was a lot of discussion in the last two weeks about the weakness of central banks. of janetfew words out yellen yellen a little over a week ago. you're absolutely right. , theg out of the meeting markets took it as a rather dovish commentary. we were immediately followed the week after by a number of governors who were talking rather hawkish lee. that spooked investors. of at a little bit reprieve and a greater sense of confidence that they won't be in a rush to raise rates during the course of the year.
carol: since the mid-february low, quite a bounce. are we overbought, in your view? aic: we really seem to be in middling type environment. certainly, our view was, as we were coming out of january, that we were not in the midst of a recession or there was not an in the unitedsion states. we had the lows put in in february as you mentioned, particularly in commodities. with a lot of the language out of the central bankers, we have also seen a reprieve as far as what had been a rather steady headwind for corporate's in the form of a stronger dollar. the dollar has been down on a year-to-year basis. that certainly has been helpful in propping up evaluations and drawing investors back.
carol: the numbers don't look good, and not just energy, across the board. eric: as a matter of fact, beyond energy, and remarkably, energy is not the worst performer on a year-to-year basis. financials have really taken it be followed only to by financials. ,oing back to earnings are muted as far as economic activity. we are coming off a fourth-quarter gdp of 1.4%. first quarter is shaping up to be comparable. i think a lot of guidance will be gleaned from comments, not necessarily wants reported. numberhink there are a of incidents where low hurdle rates will be exceeded.
carol: i'm just curious what you are doing with your clients in terms of positioning in this environment. eric: we had raised cash incrementally in june of last year, feeling that the environment became very difficult to have any great predictive outcome. as we mentioned, toward the end of january, we put some of that money back. it's an environment where, unfortunately, i find myself saying things like frustrating, and name it, using words like that to describe the backdrop. it is an opportunity because there is such churn in the markets. we are always looking to upgrade the quality of the portfolio. energy, we're still underweight, but one of the areas had been in
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senators sanders says the democratic front runner is not qualified to be president. pointed to wall street donations as well as her support of the iraq war. she declined to answer directly. both are campaigning ahead of the primary. militants have kidnapped cement workers and contractors northeast of syria. belgian prosecutors investigating last month terror attack want information on the so-called dan in a half. newly released photos show him leaving and then walk into a nearby town.
asking the are public for any information or photos. president obama is making the case for his supreme court nominee. republicanse senate should reverse course and get merrick garland a confirmation hearing. alix: thank you. i want to point out the statement from the treasury department. takecizing the roller to away the too big to fail label. scarlet: he is preferring to a
ruling from a judge that talked about how the government panel was wrong because they had not evaluated financial distress. label,s back to the carrying the burden of having to do more learning. ge is also trying to get rid of the label. jamie dimon is out with his latest letter to shareholders and it is 50 pages in total and covers everything from potential losses to bank regulations. one of his concerns is a decline in demand for treasuries. then you have a drop in demand from the biggest buyers, and
that could push yields lower. traders, he says, are still voting in the long risk. in terms of the treasury call, give us some more background. the fed with connotative easing, china with foreign exchange reserves and then u.s. commercial banks needed to meet regulatory requirements. eventually, all of that will stop. the commercial banks no longer need to buy treasuries to meet liquidity requirements. those natural buyers are gone. if you have a situation in which consumers returns and
start buying at a more aggressive pace, you could see a situation in which yields are back pretty aggressively on the long end. he is concerned about the dislocation is will create in the markets. if the fed were to raise rates even more aggressively, that is what he is concerned about. that is what he is concerned about, more severe market dislocation. >> he also sounded off on silicon valley. he is not so much paranoid. i am very interested -- i find it curious the ceo of a major financial institution would go
this far to call on what silicon ofley is doing in the way gathering information from consumers like you and me. context,eople have of the biggest, and has among the best safety protocols in place, but they ask you to surrender your financial information. to have a password so that they can give you your personal balance sheet, but you don't realize how much financial information you are surrendering. third parties trade and sell the data in a way that does not benefit the consumer. furthermore, even if you stop using the app, there is no opt out. so these companies continue to harvest your financial data.
chase is such a large bank. jpmorgan is concerned for its clients. one of the things they want them to know is if the providers were to be hacked, because you have then away the password, bank is not legally there to back stuff you any longer. that he is curious would spend so much time on this topic given he has so many other issues. jpmorgan is asking these companies to stop abusing the data in is now. it is trying to use the bully pulpit with a ceo calling them out. have you heard any of them bring this up, is this a new area? erik: it marks a new step in the battle to be taking space in his
annual letter to shareholders almost an entire page dedicated to this issue. alix: thank you. bed bath & beyond reporting earnings reports. better-than-expected profit and sales and initiated a dividend. they are in the crosshairs of amazon, so how can the retailer stay ahead? how they should be spending the cash? they are seeing fewer growth opportunities. that is generally what that means. iny are investing a lot
capex. to me, it is too little, too late. to beaton they continue is because the share count has come down. so it goes back to the share buyback story. comparable sales were better than anticipated. what are they giving up to get those sales? >> margins. there is a lot of competition andss the board from online brick-and-mortar retailers. hardut the coupon, it is to drive in-store traffic. since online was so small for them, it is still off of that base.
cannot comment on the stock performance but there is a high short interest. covering,ome short and it has faded as the day has progressed. is this company going to be targeted by activist investors? margin and boost close some stores. would they be a candidate to take on some that? >> they have a lot of cash flow. maybe there's a different strategy but maybe their time has passed. alix: do you feel the target is enough when they really have to hunker down to compete with amazon? have been spending, probably enough, but we have seen the decline in same-store sales, so they had a lot of
these functions, so are they working? it is funny that you call it a brand. i think of it more as a repository for stuff for your house. roic has gone down over 400 basis points in the last few years, so maybe they are not getting the money's worth. canadian oil and gas companies are making record cuts. ♪
bnp paribas and its a $172s are looking at million loss after a venture went bankrupt. scarlet: that is according to a person familiar with the matter who says the largest mortgage lender wants to boost the scottish widows insurance unit. tesla has received more than 325,000 reservations its new sedan. it is much more than expected. scarlet: let's get over to the
markets desk. julie hyman has been checking out the latest. starting out with tesla and seeing how it is trading. an interesting situation. theider the deliveries of previous vehicles. deliverany plans to 80,000 vehicles a year. 325,000.that with it will need to ramp up its production considerably. you have the pullback in the wake of those headlines today. the used car seller coming up with earnings that the estimates.
shares are down today, investors concerned about the underlying concerns. investors wanted more reassurance out of this report given some negative news that has come out from competitors. for owners also going down today . it could be a casualty of concern about overall growth, but they came out with chinese sales, saying it was up 14%. motors sharesal trading lower, down 1.6%. it looks like it could be a butalty of growth concerns the design chief announced that he will be retiring. he has spruced up some of the designs of the cars.
canada's oil and gas companies are slashing in vestments this year, according to the industry's main advocate. this is getting more attention on the nation pipeline infrastructure. pamela ritchie is now with us from toronto. budget,re slashing your why, as a pipeline operator, are you going to build it everyone else is cutting? it is more of a question of stranded asset. energy east will be built by transcanada, the same company building keystone xl. this one is meant to go from alberta east across to new
brunswick to get oil to tidewater. the concern is any company trying to plan its future is looking at its transportation options. another option would be to go to the west coast, which looks to be dead in the water. lng has been on the books for years but does not seem to be getting any traction. many of the plans looking to delay the overall estimate. that is what is being asked for. how to lessen the prospects of stranded assets in the future. mr. trudeau has to balance who are not in favor of fossil fuels being used , and also the crumbling situation in alberta with
resources needing to get out of the province. it seems it may eventually get through but they need help. scarlet: what did his recent budget a lot to the oil and gas sectors? not a time. the alberta government has lost about 20% of its revenue in the past few, tens of thousands of jobs lost. up thed speed unemployment payout system, so there is not a long wait to receive payments, looked at some affordable housing, infrastructure plans, and the government released less than a billion dollars in emergency money that has pretty much been earmarked or alberta by the previous government. the industry would want some strategies along the pipeline side of things. scarlet: thank you.
we have seen in finance you have to think about corporate bonds. crazy bull run over the past eight years, an explosion in new issuance at a time when borrowing costs are low. because there has been a scramble for new bonds, borrowing costs should be relatively low but banks are selling at a discount in the market. then you get a pop in the price. clients of certain banks are benefiting from that. >> is this a structural flaw in the bond market? this get between what companies are borrowing at and what happens the next day, what does it tell you about the structure of the market? people like new things, so
there is normally a lot of demand, so that carries over when a new security is introduced into the market. i think the major difference between the treasury market and the corporate bond market is the process of issuing securities is different. in the treasury market, that is a nondiscretionary process in which price determination, what the government will pay to borrow, is determined by an actual auction. the corporate bond market is determined by look and feel. sometimes the look and feel is not so great. where there is possibly a smoking gun, it seems to be t thating more for deb does not belong to the banks,
than it does for the debt that does belong to the banks. >> there are some who argue inre are natural frictions financial markets and it is natural for people to pay up for immediacy. what do you say to that? >> i think something about this ,esearch that is misleading is the problem is not that there is not an appreciation in the bonds value. when you have a discretionary allocation process, some people benefit, while others do not get to participate. that is what is causing major issues in the market. tracy, you wrote a great piece about this. one of the things that i think is a result of this type of allocation process, which is few people are getting most of the new issue deals, so
there is a concentration issue. this is a better explanation around bond liquidity problems than actual balance sheet. joining us now is go was in all. we are focusing on fx and the yen. , and as day we wake up you pointed out yesterday, extraordinary street. raising this question of, have they thrown in the towel on currency, and is it going to get to the point where they intervene? david bloom was saying there was a currency war pause. nevertheless, that is looming over the market but traders are not betting on that. >> extraordinary that it
david: here is what we are watching. financial brokers are speaking out against the retirement device. your retirement portfolio is likely having a bad day today. were receipt of yet again about global growth. scarlet: hillary clinton received some resistance from republicans and a new york city subway turnstiles. ramy inocencio is here at the market desk. basically a lot of concern on central bank