tv Bloomberg Markets Bloomberg April 15, 2016 10:00am-11:01am EDT
markets." ♪ betty: we are going to take you from new york to london in the next hour. here's what we are watching. bank earnings continue to roll in this week. citigroup reporting a beat in profits, but have forecasters said a low for the banks? mark: the world oil suppliers meeting in delhomme this weekend. have we seen the tipping point for record high oil production? betty: shares of valeant have been dragged through the mud this year. one renowned investor thinks the stock is going to make a comeback. we are going to hear from bill miller on his big bet on valeant lettuce head straight to the markets desk.
bloombergs ramy looking at the michigan consumer index. is the number coming out right now -- 89.7. this is the lowest since the month of october. the median forecast was higher for this. the prior for march was 91. this the lowest since october. the highest point in the last year was 96.1, setback in june. let us see how this is impacting the market specifically with the s&p right now. right now, we can see it is pretty much flat. just a little bit lower in the past few minutes. we are seeing an extension of that loss to 0.12%. the s&p 500 there and the dow is down. the nasdaq paring losses from 1%.er by 2/10 of a
with that said, let us also go ahead and dive into my bloomberg and i want to bring up the which is a check of the s&p's 10 sectors. we can see that three out of the 10 sectors are in positive territory. we are seeing an increase in negative space here with energy the most down by 1.1%. did have to say that financials were the biggest leader, but we can see right now that they are paring those losses despite what happened with citibank coming back with its earnings. energyyou just show that is the biggest laggard. with energy, all of it has to do with oil. wti crude down at session lows by more than 3%.
down for a third day. and people are looking ahead to doha and what is happening sunday. they will be meeting to talk about freezing oil production. the chief among them is russia and saudi arabia. if they fail to greece on a freeze mark, that could send .his number even lower includingbig decline auto parts as they are down for the first day. the best winning run six october of last year. still an hour and a half to go today in this session, but the stock 600 is down one half of 1%. the biggest weekly advance in two months. one of the big gainers and contributors is the french retailer mushers up by 4.6%. reported growth
because of improvements in europe and latin america. that compensated for a decline in china. this is a great chart that focuses on volkswagen. the first quarter market share reached a five-year low, 23.4%. effortsso snubbing its to resolve its omission cheating scandals from the likes of bmw, fiat chrysler, and i' diamler. industrywide demand rose up to 7 million cars in march. that is the 31st consecutive month of growth. this is the auto index since the emissions scandal broke on september 18th last year. you can see that volkswagen is the bottom of the pile. the automakers have not fared very well since then.
really quickly, a london-based company, the world biggest publicly based hedge fund firm, reporting net inflows of half $1 billion in the first quarter. it is computer-driven funds attracting investors. upes of that group are 6%. betty: let's get back to the bank earnings here in the u.s.. the fifth first quarter profit of citigroup topping highs. citigroup joining big banks by slashing costs more than anticipated. joining us now is josh rosner. your take on citigroup could that is the big hurdle for all these banks. how far can they go with these cuts? very there is still little real natural topline growth. trading is obviously hurting .
betty: hurting less. josh: and the cost-cutting has been the game. you have to build reserves after years of releasing them, which becomes a headwind. of the large caps have headwinds in front of it. betty: this is goldman if you can take a look at the screen. speaking of cost-cutting, we want to show this chart. on the far right, you can see that goldman is likely going to be cutting their expenses to the lowest in a decade. josh: that's right. it makes sense and there has been room because obviously in the wake of the crisis, expenses rose quite a bit. there is the opportunity for dispenses to naturally fall and for cost-cutting to happen. betty: do they jeopardize the business? josh: they do not jeopardize the business. the business is jeopardized by where we are in the cycle. that remains really the issue
the sense that first of all from a market volatility perspective, we need to see some change there. cutting dodd-frank act off business lines, we have headwinds of their. from the loan growth side, commercial industrial loans, which we have talked about before, i'm still concerned that yes we have seen enormous growth. it is larger than residential real estate has ever been, but i am concerned about the quality of the loans they are putting on their books. giving someeast opportunity for some loan growth. it is not enough. we are waiting. we are stuck in between a period where we need to see rates give us the next leg of the story, other than the election cycle having some impact. mark: that leads to the obvious question. how much do you think rates will rise this year? are you more with the fed or more with the market? josh: i really don't think there is a lot of opportunity for rates to rise. theeen europe, between
numbers that we have seen today out of industrial production, i think the economy is doing ok. i think of the certainly stronger than has been. i do not see any built-up or pent-up inflationary pressure that would cause a significant increase in rates in anytime soon. mark: that means we are not going to get any real, natural topline growth? josh: that's exactly right. that is to my mind the ultimate issue. topline growth is going to have to happen with a strong recovery , but the strong recovery may show some of the credit quality problems that we have had in some of the lower quality assets that they have been putting off because of rates really rise, the re-pricing will become a little bit of a headwind. you will have to start paying up for deposits. that is one of the concerns. betty: are investors to bearish on banks? they are the worst performing index so far this year. josh: i do not think they are realistic. it is an everyone of the actresses playing their part. on the it is wells fargo
pure banking side or whether it is goldman sachs and morgan stanley on the investment banking side, or jpmorgan giving us relatively good loan growth and cost-cutting, everyone is doing what they are expected to. unfortunately, i think the market is realistic in the right place on this. betty: another -- i would not call it a headwind because it would only be a headwind if our entire country was falling apart. , ande case of a recession the living will issue we saw earlier this week, are they fortified enough? you heard jamie dimon and a call earlier this week talking about that. i want to read that quote where he said, "we will do everything possible to fix this issue. if other firms can satisfy that, i would be surprised if we can."
couldn'te of for that satisfy complexities. josh: if you remember the requirement, they have to get the business to wear could be resolvable under the bankruptcy code. if they cannot, they have to ultimately semper fi their business, consolidate businesses. the reality is that has some the operating subs that that becomes the hurdle. i think that becomes the other opportunity. i think it will force the banks to start rationalizing their business, which gives us more opportunity for cost-cutting . mark: cost-cutting is taking place on the side of the pond. how much sympathy do you have for european banks, which weighed down by all sorts of issues whether legacy or otherwise? josh: i think the u.s. banks are obviously must a decade ahead of the european banks. they really have largely addressed their loan book
problems. europe really has stalled out and has not really bothered with it. now you are starting to see the approach of how are we going to do that? the good bank-bad bank solutions we have seen really in europe are not very effective. if you look at what has gone on in some the peripheral banks, they have really never address the problems. you are strange approaches to climb back assets and the bad banks that should be in good banks. i do not think they have the resolution regime and the ability to raise capital they need for the most part, especially if they are scaring off capital market investors, distressed investors who feel they are going to be penalized in resolutions. betty: josh, good to see. , let's check in with the bloomberg first word news. matt miller has more from the newsroom. matt: belgians transport
minister has resigned after the leak of a secret eu report detailing lapses in airport security oversight after the bombings in brussels. the controversial document says security measures at the brussels airport were flawed and cited serious deficiencies and the way that safety checks were managed. aftershocks have been rattling communities in southern japan after a quake that killed nine people and injured about 800. rescue workers have been coming through rubble in hard-hit areas to make sure there are no more trapped people. the prime minister says the government wants to prevent any secondary disasters from aftershocks. another casualty of the panama papers. this time it is posing manual anuel serria.se m
he initially denied any involvement before backtracking as new revelations came out. bernie sanders is now and rome to attend a vatican conference. the remark senator is making the trip even what he faces a crucial new york primary against hillary clinton week. sanders will join several speakers on the anniversary of a document by pope john paul ii. the vatican says that pope francis has no plans to address the conference or meet with sanders. president obama is set to enter the brexit debate when he visits the u.k. next week with a clear call for britain to remain in the european union. mr. obama says it's a decision for the british people but also in the best interest of the united states, the u.k., and the rest of the eu to keep the 28 nation bloc intact. call the new story for hours a day powered by our 2400 journalists and more than 150 news bureaus around the world, i matt miller.
mark: live from london and new york, i am mark barton. betty: i am betty liu and you're watching "bloomberg markets." time for the bloomberg business flash, a look at the biggest business stories in the news right now. sun edison is talking with creditors about restructuring its financing coul. sessions are ongoing and there's no assurance it will result in a deal.
it is hoping to avoid default on billion's of dollars in loans and credit facilities. bombardier is close to a deal is selling its jetliners to dell ta. it will be the largest for the struggling aircraft program and would equal half the total orders that the already has on its books. , the world's largest publicly traded hedge fund firm, is reporting that inflows of $500 million in the first quarter as its computer-driven funds attract investors. billion in a-point redemptions. that is your bloomberg business flash update. let us turn back to the latest economic numbers coming out of china. we have lots of steps to talk about. according to the bloomberg gdp
growth tracker, china's economy rose to its highest level in 2014. it draws on a range of indicators, including electricity production and exports. mark: take a look at this chart, showing one of the big surprises. it is the surge in new credit. aggregate financing reached more than $360 billion in march, far exceeding estimates. earlier today on "bloomberg tom keene and francine look what i asked if china was out of 10 with the managed currency. >> it is hard to see how that will end well if they do not managed to free up the currency and next for years. they had trouble with it this year. they've gone back to tighter currency bounds by saying they are going to squeeze capital, but that is hard to do when you're such a big global economy and you trade so much. tom: they are now at your job,
but at the imf, at gunpoint, you're forced to read at graduate school. what is the new thing that you teach with maurice in that book? see in china today that it is very hard to do one thing with your monetary policy that is completely counter to what the world is doing and at the same time have a fixed exchange rate. you need the capital controls. that is still true, but the world is so integrated that you the markets are very connected even if you are able to protect he your economy. tom: our market vigilantes telling christine lagarde what to do? kenneth: they have been reports of the markets were tanking when they have been going up. francine: you were talking about the roo remained.
will it turn ugly? kenneth: that is the number one risk in the world still. were a bad systemic accident happened, there is greece, but china is more important. what they have been trying to do things his manage things that they would not have a crisis by tightening everything coul can they stil. can they still grow in that environment? i think that's a contradiction. francine: is greece systemic? i think the leaders are tired of making meetings about it. i do not think it will end systemic. the broader problems is that if europe does not grow, what happened in greece may happen other countries. fs withere kickof outlook on that .
i know this is secondary and tangential and not part of the debate, but for mario draghi and other central bankers, they have huge pressure to just do something to assist greece. and for that matter, to assist brazil. what is your prescription now for europe to jumpstart growth. ? btsneth: writing down de in the peripheries and getting it done. is a transfer and they do not like doing it, but they need short for reforms. there's all the talk about fiscal boost, but if you do not do structural reforms, it will not work. look at japan. they are still growing solely. tom: we are way out in front of this with professor rogoff. just get it done. francine: it is easier said than done. this is not something the u.k. needs. we have very flexible laws in london. it is countries like france and
italy. my counterargument is that we have are you done more than we have in the last 30 years. it is that we are starting from such a far point that europe needs time. spain has done quite a bit. the u.k. has been doing better in part because the market is more flexible. if you want to know the answer over the long run, your output is determined by these fundamental factors. it is talking about big fiscal stimulus. is a good idea when demand is low. if you think that will fix things in the long run, you are very mistaken. mark: harvard professor kenneth rogoff there on "liberty surveillance" with tom keene and francine lacqua. since the oilha slump began in 2014. spent $314tions has
remy: stocks on pace for another week of gains and financials taking the lead. michael regan joins me now with some ways to play the banks, using eps. this week was the week to be in banking stocks if you are in the long. it's all the biggest rally in six weeks. it is the highest point for the week since last week of 2015. what is your take on all this? mike: jpmorgan set the tone with the earnings beating estimates. that said, none of the banks
reporting are really crushing it. revenues are down and they are focusing on expense cuts. that said, there was so much pessimism about banks. a rationallmost in pessimism earlier in the year that created this huge bear market in banks. they bottomed in february and had been picking up. the earnings estimate is not great for big banks, but it was like a rip the band-aid off of the wind type of thing. people bought off on the fact that the hope that the worst was over and the pessimistic outlook is not as bad as we thought. remy: we will have to leave it there. more "bloomberg markets" coming up. please don't go away. ♪
the global exchange has just opened for trading at $22.80 a share. at $1.8 the company billion. someows there is perhaps demand for an initial public offering. they tried to go public a couple of years ago. markets' opening trade at $22.80 a share. let's check in with first word news. matt: bernie sanders and hillary clinton went on the attack last night facing off in a debate in brooklyn ahead of new york's crucial primary. the two candidates questioned each other's records with the former secretary of state clinton back hard on her decision-making. >> the people of new york voted for me twice to be there senator. [laughter]
[applause] mysident obama trusted judgment to be secretary of state. matt: the debate was the first face-to-face sense the campaign moved into the united states where people had to the polls on tuesday. some of president obama's financial supporters have not projected to hillary clinton's campaign. about a quarter of the donors of the super pac that backed missed obama in 2012 are supporting clinton's bid have not contributed to her campaign. lawmakers will be leaving washington without having made the deadline to pass a budget long stalled in the house. there is other work left undone continuing provisions the 20 party makers and house gop leaders putting aside an effort addressing puerto rico. the white house is ramping up
efforts to combat the zika virus. boston is making the third year anniversary of the boston bombings. the mayor will join the survivors operation -- survivors' victims for a wreathlaying ceremony and a moment of silence. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. i met miller. mark? up for thes are first time -- stocks have risen for five consecutive days. stocks falling, but up for the first week in five. the weekly gain is the biggest in two months. they are down despite data out of china. encouraging gary shilling the 's biggest industry.
week, bank energy and autos are rising. let's finish with the currencies in the bond markets. interesting moves and the german bond market because after the yield fell for four consecutive weeks, it is rising. down by four basis points. your -- is up and the and the euro is up against the pound. the yield doolittle has the latest data -- abigail doolittle has the latest. let's start with gopro. abigail: pretty interesting, the stock had been down sharply and now higher at 3%. ownership shows that among teens has declined 12% from 2013. she maintains an underweight
rating. as for the stock trading higher, when we look at the chart over the last year, we do see the stock has recovered nicely off of the february low. suggestingnaround the recent upside may continue for shares of gopro. mark: but the fallout from the seagate warning yesterday. in particularn was hit pretty hard yesterday. today, trading harder as raymond james has upgraded the stock to a strong by. tacticalis is a upgrade following the weakness welker green capital is out initiate on a stock with a new by rating. analyst mike burton is saying .- seeing a potential it is in a tough time for micron. mark: good stuff.
thanks, abigail. betty, let's do doha. betty: let's do doha because they will be doing the market. [laughter] falling for a third day before suppliers meetor in doha. for more on this, let's turn to enter cost growth joining us from our princeton bureaus. andrew, there was a survey out showing among 40 analysts, they are evenly split on whether we are going to get a freezer not. are we come our are we not going to get one? andrew: it can go either way. even if they do agree on some
sort of freeze, the rhetoric and details around it will be to opaque to really understand what that really means going forward. doesn't mean saudi arabia a keeps it flat? does production ramp up to the january levels, which is already down 400 barrels a day for opec? there are too many unanswered questions that will not be answered after the meetings. market rallied 30% from february. 50% since january. it is hard to see whether that will continue after the meeting. , and it iss indeed also hard to see even if there was an agreement what exactly could happen to oil markets because it are a lot of factors. what i mean is i want to show our viewers a chart we have of what happened the last time there was an agreement within opec, how the opec and not opec
members behaved when they agree to a production cut and what we 2001, excuse a, 2002, after the meeting, the only countries outside of opec that actually agreed to a production cut were mexico and norway. everyone else, including russia increased production. even if opec agrees to a free come it depends on what these other producers do. think a lot of these producers, not only the ones inside opec, but the ones outside thank you mentioned are struggling. everybody has an incentive to maximize production right now. opec can invest and is investing -- the middle east is the only part of the world increasing going forward. with domestic demand faltering internally, there only outlet is to maximize capacity and it makes financial sense. projects are economical below 30. it makes sense for them to
maximize output and let's just bring it back to last year. the market was overbought in 2013. we are overbought right now. we had saudi and iraqi production increasing. remain -- that this those same factors remain on the table. on the downside, there may not return back, but on the upside, there is too much -- too many of -- too many hurdles to overcome. if we don't get a freeze, how low do be go? give you a figure. andrew: i am not allowed to give you a figure, per se. mark: what are the analyst saying? freeze or there is a cut, then we rally to 50. range-bound until we get
bearish or bullish catalyst going forward, whether it be production from iran or an increase, or even u.s. production falling off more than anticipated, but we don't really think production is going to fall off 900 to one million barrels a day like some people are saying. betty: andrew, thank you so much. andrew cosgrove, our bloomberg in doha.nce analyst americans get some comic relief as a file their taxes. today?iled your taxes that is next.
♪ betty: this is "bloomberg markets." withetty liu in new york mark barton in london. he made the case to bloomberg radio kathleen hays. >> one of the things that is theyme about valeant could not find any wrongdoing. you have a busted roll up and a company that spend $30 billion by a bunch of companies under a premise that is sound. companies tenda to spend way too much on rmd to become more diversified and have a better product. you create a diversified pharma company by buying specialty pharma companies and cutting
back on rmd. that idea was carried too far. the stock has lost 90% of its value over the last year and a half. it looks much the stock is very well sold out, and when you begin to look at the pieces, even though the pieces may not prices thatginal too paid, we think there is much fair price into the company, and more importantly, it is one of these classic behavioral names with a name gets so beaten down and the risk is so high, that people don't want to show it in their portfolio and a want to admit having owned it. the controversy continues every day. we had a bondholder file a notice of default on the company. from our standpoint, we think there are many levers to pull. they are naturally cache generative -- cash generative. assets toany sellable
pay down the debt and remove the concerns of people have about leverage. even if they did that, their guidance this year is somewhere in the nine dollar to $10 range on a $30 stock. they can still earn seven dollars or so that puts it 4.5 times earnings. >> high diesel that it has been investigated by congress and the sec? doesn't go away? about," the"what cheaper the price. i will tell you a funny story. 2003, the bernstein decisions conference in new york, i went into a meeting run by joe not show, who went to jail, the company were being
investigated by the sec. the accountants said there financials could no longer be relied on. there was one other person in , weroom, a friend of mine sit in the front row and there are two of us. joe looks at us and says, i can't take any questions. you can't rely on our financials, but i can tell you what our business is. we nodded and jeremy looked at me and said, this cannot be any better. there is nothing that can go wrong that has not already gone wrong. -- it is goodat that no one is interested in this company and we made five times our money. >> what about the corporate loans and the bonds issued by valeant? good think those are money and bought those in our income fund and showing a profit. >> you have written previously that successful investing involves the discipline and
patient execution of a long-term when it isspecially emotionally difficult. is that the case for many investors today? is it emotionally difficult for them to acquire a position? >> i think for many people it is emotionally impossible, not just emotionally difficult. that has been exacerbated by what has happened since 2008, where the perception of risk and owning equities is high because of the scars left from the collapse in 2008. that is why we have negative interest rates around the world and people wanting safety and equities money for the hills. we saw the market selloff the most in the first two weeks than it ever did in its history. and it rebounded all the way -- then it rebounded all the way back. that is most in evidence. miller ont was bill
bloomberg radio. in the u.s., time is running out, you have to file your income tax. you have until monday. i did not even, taxes. file my taxes.en about aprilfacts 15. in the comment was go back in history and figure out how we got here. it started out as march 1 and then world war i came along and they expanded the number of taxpayers. then it went to march 15. then it wasn't until the 1950's whenwe went to april 15 income tax was a middle-class thing. we have a chart that shows how much americans pay in federal tax overall.
it could be quite misleading loansing american tax whether income taxes. americans pay payroll tax, a social and medicare tax, sales tax to the state government, property tax, which can be really exorbitant. it is hard to put everything in one chart. it is true that the wealthy pay more in the u.s. mark: but this other charge, which is a lovely chart, the wealthy are paying more and they are paying a healthy chunk of their salaries, but nothing like they were paying back in the 1930's and the decades thereafter. >> back then, you were talking about 90% was the top income tax rate, especially in world war ii and he needed the money. betty: indeed, right. what else did you learn from doing this? warsat i learned was, the
were really important for extending the numbers of people, and when they got these new taxpayers into the system, they were really concerned that they would not know what to do or file a form. they created the w-2 during the second world war. that basically meant that your taxes were withheld before april 15, and then you filed to get them back. that was an innovation that saved the country in the sense they were able to collect the kind of revenue they needed. betty: thank you so much. you can check out his comic in "bloomberg's business week." mark: betty, you got your accountant to do your tax forms, you don't even have to worry about it. still ahead on "bloomberg markets," the former studio 54 founder is building luxury
♪ ian schrager was the man behind the world's most famous nightclubs, studio 54. now the real estate hit maker has a new luxury residential development in manhattan that he is hoping that will be just as successful. joining us is ian schrager. great to see you today. roy us more about 160 lead and why this will break the mold. >> it is something mike anything else in the markets. the finishes and details will be sophisticated. most departments have two to the wayat respond modern people letter has an island.
if you want to prepare and do things. it is just personal for me. it is a very unique, innovative product, unlike anything else in the market. designed by prize-winning architect. betty: is this it? it looks beautiful. is ae no doubt that it beautiful product, however, you are releasing this when we are getting numbers that condo sales are softening. in the first quarter, i believe aggregate condos' price down from last year. are you worried about that? ian: inf worried about it. -- i am not worried about it. our products are unique. we would rather be selling in a strong market and a soft market, but when you have a really great
product, it sells. when apple comes up with a product, it sells if people don't even need a new iphone or ipad. ian, you partnered -- you partnered with marriott for your brand. will that help or not? ian: i think it will help. i was really a proponent of this deal. sorenson is really a brilliant guy. i am happy for everybody at marriott that it happened. company should be operating different bands -- brands. all the other lifestyle brands that come with starwood would be position to agree with each
other. mark: london has been a fruitful place for you over the years. you opened the london addition -- you said it was your best work. what are your plans for london? what about luxury, residential property? ian: i don't know the luxury, residential market in london very well, but if an opportunity came along, i would love to pursue it. far, i have only done residential properties in new york. i am doing one in west hollywood right now, which is fun and interesting to do. what we are trying to accomplish, which is really, really special, you can go anywhere, any time. i would feel very confident doing something and yet in. -- something in london. betty: thank you so much ian
schrager for coming in. mark? you know i liked my statistics. before today, the stoxx 600 was up for five days. you know me, if it had hit six days, it would have been the longest run since october. the winning run looks to be coming to an end. you know i do not let my winning runs coming to an end, but there it is. there is a stocks -- stoxx 600. we are up over the week after four weeks of decline. next.uropean close" is stick around.
close" on "bloomberg markets." ♪ mark: we are going to take you from london, to new york, to amsterdam all in the next hour. here is what we are watching. crude falling ahead of this weekend's critical meeting in doha. iran said oil minister won't attend. can all producing countries which a meaningful agreement on freezing production? betty: feeling the pain at goldman sachs. planning the deepest price-cutting in years. obama entering the brexit debate when he visits the u.k. next week. how much influence was he really have?