tv Bloomberg Markets Bloomberg April 13, 2016 12:00pm-2:01pm EDT
scarlet: from bloomberg world headquarters, i am scarlet fu. alix: i am alix steel. the clout that china cast over financial markets may be beginning to list. u.s. stocks are gaining for a second day on first-quarter earnings. scarlet: commodities are also getting a boost. crude oil is falling today as more speculation draws over the outcome of the meeting in doha. alix: plus, stocks in brazil are climbing to a 10 month high. can a new government pull its economy out of the worst recession in a century? scarlet: we are halfway into the trading day. julie hyman hyman has been tracking the moves. it is a positive day for the stocks.
julie: i want to look at facebook. the shares dropped suddenly just in the past 15 minutes. they are bouncing up off the bottom of little bit. there is some talk, i saw some tweets about ad spending and figure out exactly what might have been said to cause the decline in the shares. the reversal, really -- they are down 1.6 percent. we will keep digging and bring you an update when we have news from that conference. for a look at the broader markets, we are seeing a rally across the board. we see a gain of 1.2% in the nasdaq. if you look at the dow, the dow is also up .8%. we have been seeing a range earlier in the day and a leg up around 11:30. jpmorgan is a big part of what is going on in the dow today. the earnings falling year-over-year and trading sales
falling euro per year that all of the declines were smaller than analysts had been estimating. jpmorgan has actually been building on its gains throughout the day. this may shares are rallying. jpmorgan is raising the analyst estimates. ahat is because of the zootopi and the jungle book, opening this weekend. scarlet: and despite the rally that we have seen, it has been a volatile session in the oil. julie: exactly. oil prices right now are not down as much as they were earlier. but we are seeing a little change. we did briefly turn positive over the course of the day. we did see a larger than estimated bills in the overall crude oil industry. you can take a look at that on the bloomberg terminal. you see the week over week change. more than 6 million barrels have built.
at the same time, an uptick in athlete demand and a down pick in production. those things seem to be more bullish for oil. something bearish in oil is that the dollar continues to rally. if you look at the bloomberg dollar index -- that is the biggest one-day increase going all the way back to december 17, so the dollar strength is not doing any favors to the oil prices. scarlet: thank you for setting the scene for the markets. alix: let's check in on the first word news, mark crumpton has more. mark: nearly 50% of republican voters say the candidate with the most delegates after all of the state contests are finished should be the nominee, even if he doesn't have a clear majority. according to an associated press poll, 40% say it would be except all for the delegates to take a different candidate. a senator in oregon is endorsing bernie sanders for president.
he is the first senator to endorse bernie sanders. he conceded that bernie sanders has an uphill battle ahead of him to win the democratic nomination. the fbi paid professional hackers a one-time fee to access the iphone at the center of a legal fight with apple. the washington post reports the hackers used a software flaw to access the phone of one of the san bernardino shooters without triggering the security code. the government is still trying to decide whether to disclose the flaws to apple. -- around the world are meeting in paris to discuss the fallout from the penama firm. the penama disclosures have shaken the rich and powerful by exposing how they use networks and shell companies to dodge financial obligations. no details on the agenda were released.
in sports, it could be a record-breaking night for steph curry and the home state warriors. if they did pete the grizzlies, they will end the season at 73-9, breaking the record held by the 1990 5-19 96 chicago bulls for the most wins in a regular season. meanwhile, it is the end of a 20 year career for kobe bryant. he plays tonight or a final time against the utah jazz. tickets have been listed at an heerage of $1072 on t secondary market. global news, 24 hours a day, powered by our 2400 journalists in one of 250 news bureaus around the world. i am mark crumpton. scarlet: thank you. fresh data out this morning shows that americans have been reluctant to pry open their wallets. unexpectedly declining last month after americans bought less cars and clothes.
alix: michael gapen joins us now. michael: this is mainly an auto story. auto shares were very low. we thought that was unsustainable. and it had to come down. so that is happening. we had a big drop off in march auto sales and that took money off the retail sales numbers. outside of that, he march data was still disappointing. the good news in this report is that january and february data was revised higher. and those revisions outshined the weakness in march. so we did bump up the tracking estimate. scarlet: there is no evidence that consumers are ramping up their spending. how does the fed pull that in? there is not a tremendous amount of evidence to
see that things are accelerating. it is unlikely to make the fed want to do something sooner. so i think they have to whether they think the decline in autos is moving towards a more sustainable pace and they are likely to say, we need more evidence that it is a transitory story. so there is the automobile story. this is likely to be transitory but they will look for evidence. versus personal consumption, a part of the story is that they say, we are spending money on services. so the question is, how we'll can we take these estimates. that chart shows that there is a correlation. what is your expectation for consumption now? michael: that is right. 1.7re still only tracking consumption growth, down from 2.4 in the fourth quarter. autos do weigh heavily on that
number. scarlet: tele-sludgy think in terms of inflation data that is coming out. we do have the data that it is slow going and consumers may not be out in force. michael: we had data earlier that import prices were still strong. producer prices came in and showed the same picture. the message there is that the upside surprises that we received in january and february were due to the normal volatility in things like apparel. there to be at dollar impact and for it to be transitory but we didn't expect for it to come out that quickly. alix: there was a great note out last week that said the hawks have taken over the communications at meetings.
which is very different than what the up -- what the market took. michael: essentially, there is a split in the committee. there are those who think that we should not keep raising rates at a marketplace. and there are doubts with the fed chair. so we did see that it looks like the hawks are trying to say sure, we will skip a rate hike in march if we can avoid the language of raising rates in april. but that wasn't shot down. it may have led to the compromise language. it is one thing to influence communication but another to influence the actual policy action and they are not there yet. scarlet: how do they get there? alix: do they get there? michael: the data has to improve, global risks like we saw this morning with data out of china have to subside and actual inflation has to rise in a way that is sustainable. alix: the other thing that is
happening right now is that new york has released its own gdp tracking index. they are very different, for the first quarter. you have atlantic gdp at .1% in new york at 1.1%. something explain like that? we looking at different data points? michael: these models have different assumptions. a lot of them are based on the trend. so the last quarter was week. it brings weakness into this quarter. but usually it is a different estimate of one or two lines that may result in this. .ut we are tracking .4% we are closer to the atlanta chart. scarlet: what i think is interesting is that even with the divergence, everything is still below .5%. alix: and atlanta is exposed to
exports. when does the stronger dollar story stop happening? michael: assuming that the central bank moves recently have stop the depreciation of the dollar, the lack from trade should start to abate in the second half of this year. we are estimating trade will drag in the first quarter, so it should be a substantial drag. in the summer,, i felt like we were saying the same thing. this is it. this is the last time the dollar will be a drag. but this time it is real. [laughter] scarlet: final question, rapid up for us, what are you, as an economist, looking at this when you see what we are not getting from the data points? michael: the corporate data in our view matched the economic activity.
d rest of the world categories in energy but there is still pressure on domestic profits. even without wage growth, we are employing a lot of people. labor costs are rising. i am looking at that domestic component. that to me is where the key is. u.s.u're going to push the into a recession, you have to topple the consumer. alix: thank you so much. up, the mystery of the day. digging up the best performance since 2010 -- a golden opportunity. scarlet: you have to pay attention to all of these words because our producer's us these hints as we unveil them. ♪
scarlet: you are watching bloomberg markets. alix: it is time for the bloomberg business flash. the national labor relations board has declined to take up volkswagen's challenge of a union vote. the german automaker wanted to appeal the decision that allowed a group of 160 workers to hold a unionization vote. volkswagen refused to enter into negotiations. scarlet: valeant pharmaceuticals will comply with -- the deposition to a senate committee investigating drug pricing.
he previously said they would not go. attend a hearing on april 27. the panel will delay vote. alix: mccormick says it is scrapping its plan to buy premier foods. takeover talks failed, last month, premier rejected mccormick's latest offer. the premier brand includes stock packaged mr. kipling's takes. scarlet: that is the business flash update. would your daughter have them? alix: know, i make muffins. we are going to talk about the mystery stock.
julie: we're talking more about the equipment that is used for digging. is a little bit puzzling, the stock had done so well this year, a big bounce back, a 44% gain and what is also puzzling is that it is mysterious why it is up so much. today's performance for joy global, a more than 10% bump up in the session. rising 14% at this point. on one hand, one of its biggest customers just filed for bankruptcy so that would be bad news but on the flipside we had the chinese export game which was the biggest in a year, so that is the presumably better news. so it is a mystery in that sense. and it is not alone because we are seeing other industrial companies and machinery makers
be higher in today's session as well. caterpillar is getting a boost. and sticking with the industrial dash cam out with its earnings and they met estimates. shares are up or percent. the company is saying that there is a drop in volume in commodities. but it is doing cost cuts and there will be buybacks. $250 million per quarter and it has been helping with the shares. so when we talk about the groups that are doing well today, industrials are on the list. kansas city, norfolk southern, union pacific, all being -- i was going to use a railroad -- chugging along higher? all right. alix: still ahead on bloomberg markets, result stocks are
scarlet: this is bloomberg markets. alix: brazilian stocks are hitting a 10 month high today as the impeachment rally lives on. traders are increasing be bets that the president will be forced out of office. at the same time, a shadow government is forming. brazil's vice president is drawing up plans for a transitional government. scarlet: joining us now from washington is monica de bolle. what is the per bob -- what is the probability that she could be impeached as early as boost weekend? monica: the probability has risen quite a bit.
it has been changing and changing rapidly in the last two days. as of early this week, early this week there was a very important fact that happened -- a special commission has been set up in the lower house to put forth its recommendation on whether or not impeachment should go forward, it actually made the recommendation by a very large margin. so there were lots of votes for pro-impeachment. this has given new momentum to the whole impeachment process. so now, what we have been seeing in markets is a reflection of that. and most people are working under the assumption that the vote will happen on sunday is going to be the beginning of the end. the brazilian royale rallying so much and you have stocks there, with the idea
that inflation will get under control and the central banks might get to cut rates. all of this optimism is circulating and is it founded? will he vice president be able to do anything? monica: that is the key question. a large part of what we are seeing now is a relief rally. so we had this huge, political mess with it government that has been unable to govern and do anything. so the mere fact that there is an improvement down the road with the prospect of having a new government form, perhaps with a sound cabinet filled with well-known names, it is something that is definitely moving markets. the problem is that the isllenge the country faces huge. we cannot underestimate that. so brazil's main challenge at this point is fiscal. there are a number of things on the fiscal side that will need
to be done. these things are unpopular and they are things that are like cutting back benefits, dealing with social security reform, raising the retirement age, possibly having to end the general is minimum wage indexation rule. so it is a number of things that are very difficult to tackle, particularly given that the political crisis does not and with impeachment. and that is something that the markets will soon realize once the whole process is done. scarlet: is a case of needing a new leader? the vice president also faces his own charges. but he is next in line. is there a brazilian politician right now who has the confidence of the populace? monica: no. putting it bluntly, no. thatwhole corruption scheme was exposed by the investigation
basically touches on every single political party, practically every political party in brazil. the traditional political parties are being treated with a huge amount of suspicion. there are no outsiders, so no one who can step in and say, i am clean and i had nothing to do with this thing. so really, the answer is no. which makes this scenario that the government -- if it is formed -- the new government that might be formed, it makes the scenario difficult. because the political issues will remain, the investigations are going to continue. we don't know what else is going to come out of the investigation and we don't know if they will touch the vice president at any point. so again, it is a challenging
complexith lots of challenges. the political crisis may subside but it is not going to go away. alix: dallas monica de bolle joining us. they give a 35% chance that the -- that the vice president will be out of office and they will have a snap election. scarlet: the next guy in line also faces his own issues. coming up, facebook shares continue to decline after comments on a conference call. we will discuss this movement. ♪
charged with killing nine people in a charleston, s.c. church last year are seeking a delay in the death penalty trial. his attorneys say they will not have enough time to prepare an adequate defense for the trials current start date. former republican presidential candidate, marco rubio, is giving a lukewarm endorsement to ted cruz. rubio said he hopes the party nominates a conservative and he says "real me one who fits the criteria is ted cruz p o." says the republican presidential nomination is being stolen from him. the new york times says donald trump is trying to cast a shadow of illegitimacy over the contest. donald trump calls the system absolutely raped. he says ted cruz outmaneuvered
him in a delicate contest. more turmoil for the brussels airport, only this time, it is a walkout by air traffic controller the airport is already reeling from last month the tax and today, the strikes disrupted flights that began over a dispute about extended the effect of working age of air traffic controllers to 58 years old. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am are crumpton. scarlet: thank you. we are taking a look at shares of facebook. you mentioned earlier how they gave up earlier gains. take a look. this function shows the most active trading in the market. right now, facebook is down , but if you look at the value of shares traded, about $4
it doubles the next most traded stock. on socialany people media are talking about this which triggers alert so we do want to go to abigail doolittle, who is live from the nasdaq. abigail: yes, we have just had intraday volatility with facebook. earlier, the stock was up more than 1.5% on a positive reaction to the company's annual developer conference and right around 11:45 this morning, the stock started to drop and it appears because behind the drug is a tweet from mark lehman who said that facebook is jobbing on comets that ad spending is declining worse than expected. this is unconfirmed. i have reached out to try to confirm that, saying that ad
dropped 18%r ad year-over-year in the first quarter. all of this after a bearish call out of deutsche bank two weeks ago who said the company could miss first-quarter estimates slightly. all of this is probably what's behind the big volatility today. scarlet: is the volatility consistent with what shares have been doing recently? abigail: it is. recently, the sox have been bouncing around and dropping below the 10 day moving average. this tells us that investors are moving in in the near term. been serious downside so shares of facebook may just trade down out of the first-quarter report. scarlet: a great chart, very interesting. that was abigail doolittle reporting. we will stay with this story. alix: yes. sarah, what can you tell us about the tweet that we saw
about ad spending going worse than expected? >> it coincides with a i don'tce call that believe the press was a part of. we are working to confirm the details of the call. it does look like people are worried about advertisers on facebook but this is from the developer conference in san francisco -- you would not get weak.ea that they are in fact, they have many opportunities to make money. messaging, for example -- e-commerce transactions, virtual reality is just getting started -- so here at the developer conference, no notion notionsover advertiser with facebook itself. scarlet: the tide seemed to be
turning with facebook. facebook may just missed estimates for the first quarter. how has the public opinion shifted over the last couple of weeks? >> a lot of people are talking facebook over personal posts. as we have grown our friend bases over the last decade, that maybe we aren't writing as much about things that are more intimate on facebook. we are sharing links or videos, viral content, news. and we're not talking as much about our feelings and our days. so they is working hard to reverse that trend. they are prompting people to talk about things like -- this weekend was national sibling day. things that will get people to talk about themselves. so that is a big concern and
people are turning away from facebook as they go to competitors like snapchat. scarlet: don't bring up sibling day with alix steel, she is an only child. alix: it's stupid. like facebook wants to be the center of the universe for all of these technologies. artificial intelligence, artificial reality. these book wants to be the company giving the tools to all of the rest of the ecosystems and businesses, the developers -- to encourage them to build on top of facebook as they create these features. so they want to control everything that will happen over technology in the next 10 years, from those huge markets. could go ahing that
different way, if somebody else comes up with a better way to do things. the world might not be as standard around them as envisioned. we will keep talking to developers about how they plan to partner with facebook and we will see what they say. scarlet: sarah frier, thank you so much. a credit check on facebook yet again, shares her off the worst level, they had declined as much as 2.8%. air now back up a little bit. -- they are now back of a little bit. alix: peter thiel spoke with emily chang at the revolution and how investors are choosing to spend their money outside of the u.s.. >> we have found good companies both outside and in the u.s.. so far, we want investors on deck and we have invested both inside and outside of the united states. are alwaysat there
specific business model questions that are -- one of the companies we invested in is new bank, and investing credit business in brazil. on some level, we like that business model better than comparable ones in the united states because brazil is a smaller market. you can get to scale. you can take over the market much more naturally than doing something similar in the united states. so, the u.s. advantage is that if you get something to work, you have a bigger market. in many parts outside the united states, you start with smaller markets. it may not get to be quite as big, but you can take over a market, it is easier to get the point where you take over the market. alix: that was peter thiel
talking with emily chang. scarlet: it is clear what he said at the end, better to start smaller with an emerging market company. alix: no one knows that better than our next guest. reynold wijaya joins us now from boston, one of the cofounders of funding society, a startup that launched in singapore in 2015. scarlet: it started with an e-mail to the ceo -- that is like the equivalent of e-mailing jamie dimon. thank you for being with us. how did you get his e-mail address? it was actually done by a prominent member. my cofounder and it up e-mailing honest, we to be didn't have high expectations. has greaty, the ceo
thinking on how things can grow. so we got a bit lucky on that. it only went up from there. alix: he answered like three hours later? was that surprising? reynold: it was. everybody was surprised and everybody was energized by him responding so fast. he talked to us directly. so it was a really great discussion and we clicked right away. we just started. scarlet: and your business is to correct investors with and are prizes. you keep about 1%. my question to you, you focus on the southeast asian market. evolved and it changed at home in southeast asia, versus what you see in the united states?
reynold: the united states, it has been more mature than indonesia. we have a southeast asian market. we expect to grow the system further. that is why our -- we like to work within the current financial system. in terms of the landscape itself, there are still lots of markets that we can work in the financial system. alix: to what extent do you see yourself as a service disrupting traditional banking or creating a totally new market entirely? reynold: i believe it is more like creating a new market. we are the missing middle. [indiscernible]
it has been proven that it is profitable and safe. it is an e-commerce platform. we believe we can serve this market quite well. we can still grow the portfolio. states, in the united the u.s. treasury is looking to online lenders. there are lots of companies and tell us about the due diligence about dealing with regulators? reynold: we are very close to the regulators. we already launched a new platform that can generate corporate outlook. andhe filing of indonesia they see this as something that is required for the company to grow, especially in the markets
[indiscernible] but again, they see the need is imperative and we believe that is the case as well. so what we are hoping to do is to work together. we'll work with indonesia and continue to move forward to create a healthy situation for all of us. scarlet: good luck to you. reynold wijaya. a graduate from harvard business school. alix: as we had to break, let's take another look at facebook stock. it is off the lows and inching its way back to the neutral line. we did have a report that said ad spending is falling worse than expecting and we are trying to confirm that. we are keeping an eye on the stock. ♪
scarlet: you are watching bloomberg. alix: this is your global business report. scarlet: jpmorgan kicks off bank earnings this morning beating estimates on pay cuts. revenue declined less than expected. alix: the imf warns about a spiral of waning debt. it could require a corded response. scarlet: meanwhile, senior staff is expected to be cut because of restructuring at nomura. ere in theegin h united states where jpmorgan kicks off bank earnings statements this morning. the first quarter profits beat wall street estimates. revenue also declined less than analysts'expected. jamie dimon was optimistic on the earnings call this morning. we hads and trading --
decent returns, good margins and not the best year but a pretty good performance. trading losses be estimates. $40,000, so that is really good. a pretty healthy business. wall street pays attention to jpmorgan's report as it is the first to show how much money banks are making from trading and advising on deals. scarlet: a warning on the global economy from the imf. it says that there is a self enforcing spiral of weakening growth and death that could require a corded response. the fiscal deficits in emerging economies are projected to exceed levels during the global economic crisis as country style -- countries struggle with oil prices. nomura is restructuring,
spreading to its european fixed income operations. they have cut senior management jobs and the asset-backed security divisions in london. senior managers in these divisions -- the overseas business has not been profitable since 2010. argentina can resume paying its bonds. the u.s. will allow it to reenter international credit markets. the decision by the u.s. court of appeals today means that argentina can go ahead with a plan to use of bond sales to pay settlers. alix: time now for a bloomberg quick pic. we provide context and background on issues of interest and today we take a dive into
what it means to be middle-class across the globe. what does middle-class mean? the answer depends on why and where you ask the question. here is the situation. in the u.s. and other rich countries, the crash in 2008 hit people in the middle hard. economy are being hollowed out and the middle section jobs are not coming back. in a emerging market economies, a middle class is growing fast. in the rich world, governments are having to counter middle-class things i-80 and in the developing world they are challenged by new middle-class aspirations. economists usually defined middle-class in terms of income settings. 2010 international studies to find it as household spending between $10-$100 per person, per day. o that the global middle class at 2 billion people. many people considered
middle-class in india would be too poor to qualify. the meaning of middle-class varies among rich countries as well. in the u.k., five main classes have been used. according to their jobs. in rich countries, the middle class can afford cars but in china, washing machines and refrigerators. -- an unusually wide range of incomes, even amid rising concerns about inequality. u.s. global campaigns are often fraught over competing ideals with middle-class values shared across a wide spectrum of income and wealth. here is the argument. the definition is unavoidably arbitrary and with any given country, it means different things to different people. good jobs are under pressure in the united states and other rich countries but anxiety across a wide middle of these economies is well-founded. in emerging market economies, a
pumping below freeze levels without even trying so are the frieze talks serious? thatlot of this is a game i think is being played by the leaders. both the saudi's and the russians, dealing with setting up the iranians. the iranians are not going to concede to anything and they have made that pretty clear-cut. but by doing this, the saudi's position themselves to do one thing very different from what they have said. and what i expect is to steps forward and one step back. their goal is to keep the western producers, non-opec players in capital starvation mode while they work back to a price that they can sell the bulk of their exports at in a
better level than they had in the last year. so, i expect it will drift upwards but we will have reminders when they set this up to fail. that is what i expect on this one and i would be surprised if it produces something sensible. david co just watching from a distance, it looks as though they are negotiating for a rug. is there a pass, including iran, that says there will be an agreement? even at a high level? >> if we go back below $30, somewhere in the 20's, that might bring them around. that is a very expensive proposition for both saudi and russian engagement. so i don't expect it. the other key thing to recognize is that the iranians front and loaded and they are not up as much as people thought.
because they are always trend shifting oil over the last six months through iraq. so the incremental supply out of iran, until they make new investments, it will not be that big. scarlet: that was tom petri earlier on bloomberg go. alix: we are following the dip in facebook today. shares fell off. this is all based on a tweet saying that facebook is dropping comments that add spending is declining worst than expected. that is making the rounds right now. scarlet: it is something we will continue to monitor. emily chang will be sitting down with facebook's cto later today. ♪
scarlet: from bloomberg wealth headquarters in new york, good afternoon. alix: stocks are higher with the s&p approaching the highest levels of the year. there are signs of a slowdown may not he has bad as some investors are worried about. scarlet: shares of jpmorgan are climbing after they posted earnings that beat wall street estimates. bank of canada keeps its key interest rate unchanged. does this mean more is on the way? markets let's go to the desk with julie hyman. we mentioned jpmorgan and the china trade data. had economic data in the u.s. that was more mixed. retail sales mixed estimates but
nothing is derailing the narrative. the nasdaq is leading gains, up more than 1% and all three major averages have been hovering your the highs of the session. for the groups on the move, financials are doing the best today because of the jpmorgan earnings. industrials are rising and discretionary and tech are participating in the rally. there are substantial declines in the defensive groups like telecoms and utilities and consumer staples. looking at j.p. morgan, it showed declines across the board . those declines were not as large as estimates had come in. the shares have been building on early gains today. it's a very broad rally within the banking group. indexs the s&p banking and you see everything is green. citigroup percentagewise is leading the gains today. it reports its numbers on
friday. yeara reminder, financials to date are still the worst performing group, down by more than 4%. it's one of the reasons that skeptics of the recent rally we saw in step -- in stocks were skeptical. it's remarkable how much we are up so far for the year from that february low. those gains came in less than two months. exactly, these are the highs of the year as of today but that's because of this 13.5% rally we saw in stocks from the lows coinciding with a rally in other types of risk assets including oil prices. scarlet: thank you so much. let's check in on bloomberg first word news with mark crumpton. mark: nearly 58% of republican voters say the candidate with the most delegates after all the
state contests are finished should be the nominee even if he does not have a clear majority. according to a new associated press poll, 40% say it would be acceptable for the delegates to pick a different candidate. house republicans say they are likely to grant up portion of president obama's $1.9 billion request to combat the sick a virus. virus but they will probably wait until september to do it. the white house says the budgeting maneuver is only a temporary solution and more money will be needed before september. new jersey has the nation's most expensive medical marijuana. governor chris christie says that's fine with him. block democratic lawmakers latest efforts to broaden the list of conditions eligible for treatment. sponsors say the program's current restrictions may -- make
pot pricey in the state misses out on revenue. a tv network has uncovered previous the unseen footage of abdelsalam. in the footage revealed today coming he is seen strolling casually through the market talking to someone whose face is not seen. like many of the men in the islamic state cell blamed for the deadly attacks is a native of the brussels neighborhood. global news 24 hours a day, powered air 2400 journalists in more than 150 news bureaus around the world. thanks so much. financial stocks are getting a lift after jpmorgan reported estimated first-quarter profit but bank stocks are still taking a beating. this is the s&p versus the major big banks and the blue line is
the s&p 500 and you see jpmorgan as well as wells fargo being the best of the bad. there has been some kind of recovery as of late. it's a pretty ugly world for banks even after that february 11 low. isrlet: our next just bearish on financials. she is the technical analyst at btig. you see tough resistance to the upside. xlf and compare that to the 200 day moving average. we are 40 -- pretty far below. >> we have seen lower highs than lower lows for financials on a relative basis. 200 day moving average reflects how much they have underperformed. they have exhibited downside momentum.
today we have a nice relief rally. rally asw this really something to sell into or is it something that's the beginning of a sustained advance? i would guess is the former. scarlet: what you need to see to confirm this? >> it follows some breakdowns. last week, we saw a breakdown in the bkx which is the benchmark for the bench just for the bank sector. that was concerning because in january, the banks exhibited leadership. a really rally as opposed to something more significant. that is the assumption i am making. alix: is it banks across the border are there leaders? from a technical standpoint, the supply and the demand for the stoxx, there is always rotation.
when i look at the charts for you cander sector, always find spots of relative strength. the other asset class is oil. area thisge breakout is oil versus the 200 day moving average. the first time it went below that since july of 2014 and we are trending below that level. wtihe generic contract of has broken out in may futures faced resistance at $42.5 per barrel. we need to highlight that rake out by the generic contract because it is a psychological hurdle and it reminds us that we really have seen a nice advance off the lows which suggests it
was an important low for crude oil. now we have a higher low and a pending breakout. alix: it's not like everything is moving up at once. about where is relative to resistance. there are signs of life but not confirmed. scarlet: i have a function on the terminal. alix: it's like a stock weather map. scarlet: it shows relative rotation grabs and it looks at the different rotations taking place in markets. what you see is that over the past month, telecom, utilities, and consumer staples are moving into a weakening phase. on the leadership side, materials are moving into its own. a little bit in terms of the industrials. or certainly improving as well. but perhapsre stuck moving into the improving quadrant. do you see this backed up in
your chart? ofof course and that's one my favorite functions on bloomberg and it shows that rotation on the sector level. seenotation so far we have in industrials and energy and materials has been much like a countertrend move. we have not had total confirmation that that is the beginning of a bull run for those sectors. but it has been a tradable move as something of note. those moren defensive areas where the market loses the momentum versus the bottom market. alix: the last thing is the general snp versus its 200 day. we have been above the 200 a for a while now, almost one month. do we break out of the range we are still in? >> it really is a range and it's a downtrend channel. the resistance would be around 2100 based on the downtrend channel.
it would be a major breakout if we saw that on consecutive weekly levels. there are still a lot of risk to the market. katie stockton uses our function which is a shameless plug. alix: good to see you and thank you so much. coming up, great britain and greece are moving about leaving the european union and switzerland is feeling the pain, next. ♪
alix: you are watching bloomberg markets. scarlet: it's time for the bloomberg business flash. executive is asking an appeals court if he can remain free while appealing his horse. asking theship is court of remain free on $1 million bond pending appeal. he was sentenced to the maximum prison time of one year and find $250,000. he was convicted of conspiring to willfully violate mining safety stampers in the coal mine exploded in 2010 telling 29 people. alix: tens of thousands of
verizon workers on the east coast walked off the job. they have been working without a contract since august and the strike involves hurting 9000 employees in nine states and washington, d.c. the union say they are striking because verizon wants to free pensions, make layoffs easier and rely on contract workers. being sued,nival is the case till the policy preventing cuban nationals from arriving or departing the island. two cuban-americans are claiming their civil rights were violated because they were not permitted to buy tickets on a cruise for miami to cuba. the potential class action lawsuit asked a judge to force carnival to allow all people to serve on cruises to cuba. it's time for the metal bulletin with julie hyman. she looking at gold. julie: gold is down for the first day in five as we see more of a risk on sentiment coming into the marketplace with stocks
trading higher. seemis lower as investors to be less concern for today about the global economy. we are seeing gold down 1% which is the biggest drop since march 23. even though gold is strongly up for the year, is out down for two straight months. i am looking at the monthly moves average. every month this year but we have been seeing some waning gains for oil prices. we have been watching the gold price in oil metrics. gold is been getting more expensive if you price in oil. let's look at the feet through to the minors. if you take at look at some of , all of themocks
are trading lower today. what is the overall sentiment in gold? you can look at the total etf holdings in gold over the past year. we have seen it build and build not everybody is so bullish. , one of their asset management people said there is not much value in gold beyond storage value and hedge value against prices because there is no yield associated with gold like other assets. ubs forecast $1200. scarlet: thank you so much. druggie -- as mario draghi digs into the ecb toolbox, europeans are feeling the pinch. alix: you can see what's
happening in switzerland. rancatter what, the swiss f cannot help from depreciating. and then apike follow-up but it's been climbing higher ever since. scarlet: in the last six weeks or so, you will see a much sharper move. we inverted the charts of the line shows this rising against the euro. it gained almost 3% and its holding below a dollar nine. who is buying it? you have hedge funds and other investors worried about the brexit and the greek bailout so is the demand for safe haven. i took a look at noncommercial contracts. a are up 34% in the past year. a lot of long bets are coming in. scarlet: with that, you got an
increase in volatility. you look at the one-month volatility on the swiss franc, there is a spike off the low in late march at the end of the chart. a stronger frank is not what the swiss national tank wants. that big move lower in the euro versus the franc, the s&p intervened to keep it from dragging down the economy. take a look at the swiss gdp. hurts withfranc exports and we will see more negative rates in switzerland because they have to do something to address that. scarlet: we will be back with more on bloomberg markets. ♪
over an online asian retailer. scarlet: will it help ali baba? ofcan clark is the author the book on ali baba and is standing by. : thank you so much. we are here with duncan clark and we have his new book it great to have you here with the bloomberg team. talk about your first meeting with jack mott 20 years ago. >> it was in 1999 in the apartment where he founded the company earlier. carol: what was that like? >> it was smelly and noisy. he and his wife are cofounders. feltople were women so it like walking into a college campus. jack was born in 1962 so he was late to the game. it was his third venture but he
was determined to focus on how to connect chinese businesses to the world. he had this passion for what he was doing. was the feeling that he was taking in the u.s. and in seattle in particular and importing that into china or was it more of an inspiration of creating something new? >> it was the combination of both because he did not set out to create an amazon. he started out focusing on disney's to business opportunities. others tried to create an amazon of china but it failed. he knew he could not make a copy of amazon in the states. he was focusing on local companies in his area at near shanghai, the home of entrepreneurship. carol: like jeff hayes is, he has been spreading out -- -- bee jeff reseau's -- b's oce
zos he has been spreading out. he is expanding into hollywood and other ventures, does it make sense to you? you build a small fortune in hollywood? you start with a big one. ali baba has a big fortune. what he is doing is defensive. in reason he is investing the u.s. is to arm themselves for the competition at home. ande bomb a -- ali baba tencen have teamed up so this is a three dimensional chess game. we see the emergence of the u.s. and chinese on the global scene and then you see some logic. movesis also risk as jack beyond core areas into finance and entertainment. he might not know how to deal with competition in those areas. cory: i'm curious about your
early days with jack ma. something about his character and the outrageous things he does and the way people follow him. i wonder if you saw signs of that. how much of an act is that or is it intentional? l: is that really who he is? >> i have been toying with this and i decided to write a whole chapter on this and i call it jack magic. what is it about this guy? impossible of the and an element of whimsy, doing things in a fun way. cory: but the costumes alone -- the whigs make him taller. what's behind his
thinking and doing something like that? if a ceo did that, you would think what's wrong with them. >> you might call security. jack came from nothing. he was born in a great location but other than that, he did not have much going for him. jeff bezos went to princeton. jack was not good at math. he has had to hustle his way.+ he has that irish style gift of gab and the incredible work ethic and entrepreneurial spirit what about his relationship with the chinese government? answer he gives is fall in love with the government but don't marry them. he basically has to work completely in a nimble way with the government.
last year, he said he had 40 this it's a government officials. carol: they are trying to figure it out. we have to run but thank you so much. thank you so much. it looks like a good read. still ahead, jpmorgan is tightening its wallet for traders and bankers and it helped the bank be profit estimates but they may have to rely on more a cuts in coming quarters. ♪
candidate bernie sanders has received his first senate endorsement. jeff merkley of oregon use him high marks for resisting trade treaties that sanders says has cost american jobs. he also concedes that sanders has an uphill battle ahead to win the party nomination. a south carolina judge has delayed the trial for the manic use of telling nine people in a charleston church last year. attorneys for dylan roof requested the delay saying they want him to undergo more psychiatric testing. beenuly 11 trial date has pushed back to next year and he also faces federal charges. charges of workplace discrimination against lg bt communities jumped 28% last year according to the chairman of the u.s. equal employment opportunity commission. she said more and more people are willing to talk about the issues. the increase in bias charges follows the supreme court landmark decision legalizing same-sex marriage.
data shows monetary awards for the bias cases increased 51% to just over $3 million. business groups from some of great britain's biggest continental trading partners are voicing their support for prime minister david cameron's bid to remain and the european union. they say it's good for trade and investment. international monetary fund affairs director had this to say earlier today -- >> and exit from great written from the european union would be to economic and financially to great britain and the european union and that's something that would be negative for confidence including confidence in the city of london as a global financial hub. as the campaign ahead of the june 23 vote steps up, the
camera government argues that people's jobs depend on remaining in the 28 member bloc. global news, 24 hours a day, powered by eric 2400 journalists, in 150 news bureaus around the world. jpmorgan posted first-quarter results that beat wall street estimates. , at itsk is up 4% highest level since january. let's take a closer look. global investment bank revenue has plateaued and jpmorgan is no exception. estimates last quarter, the climbing 3% rather than the expected 4%. trading revenue was the focal point. jpmorgan saw a rebound from past quarters. fixed income is the white line. there is that move up. jpmorgan had warned its investment banking revenue with the client and the numbers show that. yearumped 25% versus last
mainly due to less underwriting for equity and debt. for bank management and employees and investors, the keyword is cost controls. the better.e ratio, jpmorgan is missing its long-term target of 55%. the bank is targeting $4.8 billion of cost cuts by 2017. credit quality is critical for this quarter and onorgan added $520 million oil, natural gas and gas pipelines and that number is helping to push over all loss provisions up, more than double what it was a year ago. a better picture of the health of the whole industry in the coming days. bank of america, citigroup and wells fargo will report later this week as well as morgan stanley reporting next week. let's bring in jason goldberg.
you predicted the industry's worst start to the year since the financial crisis but is this the trough? >> we expect results to improve from q1 into q2. there have been challenging investment quarters. trading revenues which were challenged in january and february got a bit better in march and that stability carried into april. if you look at the jpmorgan corder, loan growth is solid and we think that trend continues. you have seen some deterioration in energy, we think there is more reserve building away from energy. we haven't gotten a read on near trading perspectives, is that because there is no predicting what central banks will do next? >> around trading, it's a fluid situation.
investors have been somewhat risk-averse. some capital has been put to work in march. to sayes are hesitant had that will proceed to the second quarter. the price of oil is a big driver. companies are reluctant to call a bottom. alix: especially when i have to put more money away because of the energy loans going poorly. we have a chart that breaks down where they are exposed to the energy companies and a good portion is investment-grade. the draw on investment-grade loans is only $5 billion. do you feel they have set aside enough money for bad loans and energy? >> for jpmorgan, yes. they have been more proactive in terms of building reserves. 2% alone is not a big part of what they do. some of the more regional banks will report this weekend next and we will get a better sense of how big a piece of the pie is
energy. scarlet: we need to ask you about the regulatory setbacks that the banks face. they need to face sanctions or revise. how important is the governor diss of -- government disapproval? bige don't view it as a deal today to the extent that the banks take action and mediate the problems the regulator's pointed out why october 1. as long as you make that deadline and fix things, you will be ok. if you miss the deadline, we think things get dicey. in the next round of submissions, i think the banks have to do a better job in terms of living up to the fed. you have seen other implementation like a stress test. with each passing year, the banks get that her and better at meeting government requirements and we think this will be no
different. scarlet: let's look ahead to wells fargo and bank of america. ands fargo is the top oil gas banker. what does management need to show investors? it's not just energy loans, they have the most exposure to the high yield energy market so it's riskier. >> wells fargo is a big energy lender, they are one of the biggest banks. it's a percentage of what they do. energy loans is 3% of the overall portfolio. we think they will put up reserves for the energy portion and the other 97% of their portfolio seems in good shape. scarlet: good perspective. thank you so much. staying on the banks, investors are watching the health of the industry following a rough start to the year but house wrong do banks need to be? scarlet: earlier today, we posed that question to the cio of
calpers. they talked about how much the economy relies on banks for growth. >> i don't think the road to growth lies just in the banks. we need healthy banks and i think these earnings show they are fairly healthy. the banks are only half a bank and have a brokerage firm. they are stuck to wall street and trading is razor thin margins so it's tough to make a profit. the key is to be healthy. the stress tests are a key measure and a living will is a hard thing to do as a company or as a person. it's tough for them to figure out how to put that together if they were in a situation where they were barely able to survive. it's a critical step in any to do that as far as the financial security. jon: where does the growth come from? >> i think it will be slow and daddy. employment is in a good
a bigion but there is swath of long-term unemployed is part of the generational transition. baby boomers don't have the skills anymore and are leaving the workforce and we are seeing the millennials come in at low wages which is what is costing the lack of growth in income but that's what we need to see is some improvement in the wage, average hourly earnings and the wage growth and keep it going. the u.s. is very steady but it's growing at a very slow pace. coming from california, we think you will see continued innovation that helps to spur growth. jon: and wages? >> slowly but over time, it won't be immediate. the rest of the world is growing slowly. see the rest of the markets continue to improve. vonnie: does the u.s. need its banks to grow to beef up gdp?
what about european banks? >> the u.s. needs the banks to be stable but not necessarily grow. credit is available and credit is at a low rate now. i think the european banks are fairly strong. the french banks and german banks are doing well. the italian bank is a whole different story. the south is still the week as part of europe. you need to see some growth out of the european consumer and that has been a very difficult market with the refugee crisis and all the different issues going on. said he would support the euro so that a stable and now you have brexit so it's one thing after another. that valuations are cheap, would you want to take positions in u.s. or european banks? i would not look at that one industry but look at europe as an opportunity to invest slowly over time.
i'm not saying it's at a bottom but looking at the rest of the world, european equities are cheaper than the rest of the options in the world. that is a place to slowly invest over time but they are not out of trouble yet. david: you are in a unique is it was a long-term rising and you said growth will come through innovation. how do you invest for the long term in innovation? >> i wish we could. california innovation mostly out of venture capital is very difficult for us to invest in . the rules and regulations will make it tougher so we will be investing in innovation more in the latter stages after it becomes national and it picks up by other firms. we are not investing as much as i like in the venture capital formed -- venture capital areas. scarlet: that was the cio of
scarlet: this is bloomberg markets. alix: it is time for the bloomberg business flash. a federal appeals court has cleared the way for argentina to settle its debt. the second u.s. court of appeals in new york city turned away creditors wanted to keep court ordered protections in place. has toanuary, argentina
$3 billion to creditors. they went to court after argentina defaulted on $100 billion of bonds. scarlet: mike pearson will comply to a senate to midi investigating drug pricing. he had previously said he would not go. he will give his deposition to the senate committee on aging on april 18. he will appear in another hearing on if of 27 enemies the panel will delay a vote to hold them in contempt of congress. alix: facebook is putting emphasis on virtual reality as it unfolds its sa gathering. they cannot with interesting test it -- statistics including one billion stories posted on facebook every day and users have logged 2 million hours of video. with chang will speak facebook later today.
that's your business flash update. scarlet: you post at least two updates on facebook. alix: usually about the mta. scarlet: let's check in with julie hyman. coal is filing for chapter 11 and this was expected to four other coal companies in the u.s. have filed for bankruptcy during this slump in coal prices. peabody energy founded more than 100 years ago. this sector continues to shrink. the two left standing are consol energy and cliffs national resources are trading higher in today's session. you can look at the story of what has happened to peabody energy through a number of different charts. you have metallurgical coal which is used to make steel and thermal coal which is used at
power plants. the first of these has seen prices tumble 75% since the peak back in 2011. we have a chart we can look at. we have seen some big declines. as for thermal coal, it is trading at its lowest in three years and below the five-year average. that has also seen big price declines. one of the other things that has put pressure on the coal industry has been the tumble in the price of something else, natural gas. be a cheaper to alternative as natural gas prices have fallen. the client andat there the environmental policies that have been changing, putting pressure on the industry. thank you so much.
interest rates in canada have been left on the hold as expected but a flurry of upside surprises in the country's economy and prospects of fiscal stimulus have allow the central bank governor to back away from his january suggestion that another rate cut could be on the table. alix: let's get some perspective from pamela ritchie in toronto. let's talk about these upside surprises. for the month of january, for instance, we saw gdp coming in at 1.6%. we don't have a full picture of it for the first quarter but january was better than expected. we see output from nonenergy commodities through january up 4.3%. if you look at february, we sought nonenergy exports grow by 8.4%. the unemployment picture changed in canada with the rate now at 7.1% because of a blowout number on the march data. all of these pieces leading to
the bank of canada saying growth is higher than we expected but careful, we don't want the loony to move. scarlet: what kind of growth projections to the bank of canada give for this and next year? >> the commentary from most economists on these numbers, 4.7% growth. they bumped that up. most economists think it's probably higher than that. the bank of how to is trying to keep it as low as possible. that's the commentary. by2017, they brought it down 1/10 of 1% to 2.3% growth. the fiscal spending going on in canada is part of this. they say if this fiscal spending was not happening, i would be decreasing my outlook for growth numbers. there is infrastructure spending
experiencing a slowdown of their economies. to seeat would you like at the imf meeting discussed and what steps do you think you policymakersen by around the world to revive growth? there is a very important agenda to talk about in a meeting. g-20hing is the so-called level coordination to address the slow growth globally. that the solutions to improve the global financial safety net that we might have relied too much on the central banks that causes some kind of instability. joe: you mentioned of the slowdown in china.
how do you see the chinese economy now? is it a hard landing or a slow or have things stabilized? >> we hope they have a so-called soft landing. i think that is the expectation. saying wei keep cannot [indiscernible] i believe they have the thisility to manage so-called soft landing of their economy. i think they are on the right track although, as you said, it is [indiscernible] alix: that was an exclusive interview. joe weisenthal joins us to discuss. what was your take away? the willingness
to use further fiscal expansion as a tool if growth targets are not hit. i think we will get to this time clearlyme countries are willing to use fiscal policy as an expansionary tool like canada and maybe korea will be another. others are not willing to. places like germany and the eurozone and it will be a good meet -- macro economic test as to how to the ones with fiscal flexibility do versus the ones that relied solely on monetary policy. scarlet: that fiscal flexibility is done now through verbal intervention. it remains to be seen how it can be put into practice. right.at's exactly it's one thing to say you will spend money but getting that money out the door, it's always easier said than done. it's still interesting to see
the split among countries willing to try more. scarlet: i like how you asked about china and korea specifically. that hes interesting said he would like to see moderation of the yen and intervention because it has been a wild ride. it was dramatically weakening and now tightening has been extraordinary. andall the regional players japan's trading partners, some stability is desired. alix: good stuff and we will talk to the merck rory economist and he said the doha meeting is unlikely to have a good outcome at 4:00 p.m. ♪
-- eight times a year. closely at inflation and wage growth and a breakdown of the regions. let's go to erik schatzker in washington. signs of inflation, that is the key take away from the new beige book. the fed said prices increased modestly across the majority of its 12 regional bank districts. modest may not sound like much, but it a lot better than generally flat, which is how the fed banks-- characterized february. modest economic growth since the last beige book, seven districts as opposed to three come a significant improvement. this