tv Bloomberg Markets Bloomberg April 15, 2016 12:00pm-2:01pm EDT
scarlet: from bloomberg world headquarters in new york, i'm scarlet fu. alix: i'm alix steel. here's what we are watching at this hour. dilma rousseff hit with another blow as the supreme court overturned a government motion that will allow the impeachment vote to proceed on sunday. what it all means for the bills economy. scarlet: critical talks on oil on monday in doha. there is news that iran will send a representative to this gathering. alix: the contrarian views on valeant as the struggling pharma company deals with $32 billion in debt. we will speak with david neuhauser, who is shorting a stock, while bill miller calls it a buy. a big by is what it meant to say. [laughter] scarlet: first, we want to check
in on the markets right now. ramy.head over to ramy: i'm going to call the session on to middle because we have going between the red and the green. you can see that we are pretty much at the zero mark across all of our major markets. less than a 10th of a percent down across the board here. some of this confusion might be coming from some negativity and positivity from the u.s. as well as around the world. u.s. factory output from march down. output upactory and china gdp up 6.7%, which is on target. let us also switch to look at right now and the u.s. dollar is lower across the board against these major currencies. 1.42 for the dollar-british pound and
one dollar will get you ¥108 down there. i will also talk about oil because it is on the mind of everyone as we head into sunday as that is going to be the round of the doha conference. down, but off of the order of nearly 3% here. when it comes around, if those countries do fail to make any kind of freeze, you might expect to see oil fall even further. let us take a look at what is happening with safe havens off of this uncertainty happening in the markets. gold futures are up about three --rters it for percent could three quarters of percent and the 10 year yield is down by four paces points. biggest fall in the past two days. alix: what else are investors buying today? ramy: i wonder if we can take a
look into my bloomberg real quick. i want to show you the imap function. thank you a much. what people are buying today are materials, consumer staples, consumer discretionary not too far behind. some of the big ones i want to talk about are utilities, transports, as well as rates. bitsports are up a little around 1/10 of a percent here. about see some news virgin america as well as well as alaska with that merger and low oil giving that of beat. today, even higher numbers as utility averages up by nearly 50% and the dow transports up by more than 6%. alix: thank you so much. scarlet: let us check in now
with bloomberg first word news. mark crumpton has more from the newsroom. michigan governor rick snyder and water experts are proposing that the state institute the country's toughest lead testing rules. that is according to be associated press. other recommendations would require utilities to test all schools and day care centers not just homes. lawmakers will be leaving washington without having made the deadline to pass a budget that has been stalled in the house. there's other work left undone as well, continuing divisions between tea party lawmakers and house gop leaders. effort toside an address that, crisis in puerto rico. enoughte house's amp pressure on republicans on delays in providing money to combat the zika virus. bernie sanders and hillary clinton when on the attack last
night, facing off in a debate in brooklyn ahead of new york's primary. the two democratic candidates challenge each other's judgment on wall street banks, minimum wage, and gun control. it came at a total moment for the party's primary campaign with clinton leading in the delegate count but center sanders getting huge enthusiasm for his candidacy. today marks the third anniversary of the boston marathon bombings. mayor marty washable joined survivors and victims families for a wreath ceremony at the marathon finish line. later today, there will be a citywide moment of silence. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world, i'm mark crumpton. investors are betting that brazil sunday spectacle will lead to the ousting of president dilma rousseff. the have been pushing the real stronger. we have a chart that really
shows the movement there. a currency swap is also signaling similar things. the blue line is the deposit rate futures. i should say the orange line is the deposit rate futures. it gives the central bank room to cut interest rates. alix: investors are bullish, but our next guest is not. when, why are you a little more skeptical than the market is? >> right now, brazil asset needingre everything to go perfect. you need to wave a magic wand and every thing will be fine. really a lot of the problems that brazil is going through his low commodity prices and sluggish growth that will not go away overnight. i would say other countries are going through the same problems, but because they have better policy, they are in a better position like chile and mexico.
that storm of things going on politically and economically. scarlet: there's also the appreciating value overall. win: the big selloff back in january in brazil was very negative with dilma rousseff heading on. it was across emerging markets. the global developments brazilianed the weakness and started to turbocharge it back the other way. everyone is positive on emerging markets. it suffered a lot and it's gained a lot. the truth is somewhere in between. alix: we do get an impeachment vote and reset has to take a break and then we have six months before the senate votes on impeachment. what happens to the market as reality sets in? win: if the vote goes through, it is a yes.
they would continue buying, but i think the numbers continued to come pretty bad. it would be very difficult for this rally to sustain. said, the fed tightening is being pushed out more than the markets. emerging markets are benefiting from this global liquidity story. selloffs in the end will be fairly limited. scarlet: if you drop an investor wish list for brazil, what would be at the top of it? win: higher commodity prices. that would be the best thing for brazil right now and most of the emerging markets. we have seen oil and copper try to bottom a little bit, but i think the supply dynamics are still quite negative for commodities. scarlet: is there any scenario in which there could be still over from what happens in brazil to other latin american or other emerging market currencies or will the fallout really be limited to brazil because it is so specific to domestic turmoil? win: there may be residual spillover, but the big drive for the emerging markets as a whole
to me is the fed policy. if you look for the fed funds futures market, they are pressing in one hike this you ear. we think there may be one or two rate hikes this yoear. as june approaches, that will be more of a headwind for emerging markets. alix: the other elephant in the room's china and we have killer data out of across the board overnight. the one bearish factor is that growth and outstanding credit -- it was up almost 13% year on year. if you take into account local government bond issuance, 6&,was even higher at 1 meaning growth comes at a cost. win: a year ago, everyone was wringing their hands about this and how negative it was for china. they seem to be eccentric in positive so to speak.
it is very worrisome, but at this point, people have put china on the back burner. the negatives are mildly positive for markets. globals are coming in around 6.5% or 7%. no big blowups but no huge positive surprises either. alix: at what point does it come to roost been? at what point do we remember there's a lot of debt? win: the fed is really the driver. alix: when they hike, it will become a problem. win: with the ecb using more and the fed hike pushed out, that makes global liquidity the backdrop very positive from where we started the year. as long as liquidity is sloshing around, china can get away with it. when the fed tightening gets back on the radar, it will be tougher for emerging market currencies. countries likeve singapore adjusting their monetary policy, easing or
monetary stance. what exactly did they do and does that mean there is more scope for further easing? win: they surprised the markets a little. singapore is unusual. it does not run monetary policy by interest rates could i. it runs it for a nominal exchange rate. l.ey made it neutral cou they want a flat exchange rate. before, it was a slight policy of appreciation. this was last in 2008, which tells me there's big concern about their own growth. theink the takeaway from singapore action is that emerging market policies remain concerned about growth. they do not want currencies too strong and they will continue using. we have india and indonesia easing last month, so that is still there. that is another monetary policy that will put some pressure on emerging markets going forward.
chipotle maybe? ramy: it is chipotle. i was going to give you a hint. our producer says life has not been buried rito-ful. i role at that. scares, today is on the up and up. it is because of what has happened. let us look at intraday right now. it was up by 2% and it is still up by 2% here because callan says chipotle's coupon strategy is actually bringing some people in. they did a survey the first week with 1000 people who go to chipotle and found the more coupons they sent out more likely customers would come back and buy something. callan does keep a market rating at a $430 price on the stock.
let's go to another pair of stocks and want to talk to you about. 3-d and stratus a systems are down six and 10% here. this is because of cuts from citigroup and on valuation fears. citi thinkstems, it is overvalued. the stock has crippled since the market selloff earlier this year. asys is also on valuation. alix: it is time for the bloomberg business flash. that's global markets is now theing and priced i initial public offering at $1.8 billion. after shares money were sold and $19 each. scarlet: citigroup said first
quarter profits beat estimates and joined rivals by slashing costs more than anticipated as a trading and deal making slump continues. the ceo has been eliminating jobs and narrowing the focus to market and business funds where he can generate acceptable returns. revenues from trading fell 13%. blankfein is trying to write out a years long slump and bond trading and dealmaking by embarking on the bank's biggest cost-cutting pushing years. that is according to people familiar with efforts. the firm began dismissing more support staff and is ejecting bankers spending on airfare, hotels, entertainment unless it directly serves clients. that is your business flash update. scarlet: financials have seen their biggest rally in six weeks with citigroup reporting earnings today that top estimates in the first quarter. we spoke with charles peabody about the first quarter earnings
season for banks. charles: they are trading the on the first quarter earnings because they were not very good . they are trading more on expectations that the second quarter will see a significant rebound. reports of dollar $.10 this quarter. you are seeing that at bank of america and jpmorgan as well. jonathan: you mentioned stability to characters to april .hat a cautious outlook it is going to get worse from here. how much worse? charles: we think it is facing a recession this year next year. the key is that they are not going to have balance sheet and payments so the capital would be sound. they will be able to grow their values throughout whatever economic downturn we have. citigroup group 3% sequentially.
that is pretty impressive. their stock prices not going up and that takes the price-to-book value in the wrong direction. charles: it has been going up since february when we upgraded citigroup. we downgraded the banks last july because we thought we had seen their secular peaks. and are trading vehicles bank stocks historically have underperformed in the market in the last 12 months of a bull market. that is where we think we are. right now, we are trading them with the idea that there's a recession out there sometime in 2017 and they have to make it through that. the on that, i think the banks have proven themselves as a really good managers of balance sheets. the capital has doubled. there liquidity has doubled. i think they're going to come out of this next downturn in very good shape. scarlet: that was charles bloomberg "lumbe
scarlet: this is "bloomberg markets." a warning on overreliance on monetary policy by the imf. scarlet: there needs to be structural reforms and efforts to deal with global growth. here's david lipton. david: monetary policy has been dealing too much of the way. support has held up in of the major economies, it is really not enough to get the economy going again. the problem is not just cyclical and structural. the need for support a policy. -- there is need for support of policy.
we asked for a three-pronged approach to try to strengthen the pace of global recovery and to try to ward off the downside risk, which we think is significant. >> has all the central-bank action, does it risked sowing the seeds for the next global shock or global crisis? david: i don't think so. it is very hard to be worried about the economy growing too strongly. moreover if it ever would happen, policy to be adjusted. the much greater risk is the slow growth continuing, the disinflation continues, and we have a hard time getting by writ economic growth in the world. look atn you wor your work on russia, what is your measurement of global instability at this moment? david: this is not a moment like 2008. we are not ringing alarm bells,
but we think there ought to be some alert to growing financial pressures and the vulnerabilities especially in the corporate sector and companies and countries that have seen oil prices and commodity prices decline, where credit bins have become advanced. with the monetary policies that we see, it makes sense that we would be watching how risks are moving around the financial system in particular from banks to nonbanks. there is plenty to be looking out for, but we are not ringing alarm bells. >> on the structural side, do you feel very frustrated? on the fiscals, i kind a here you. on the structural, i'm not sure i do. david: we devoted a a lot of work on that subject. many in europe properly complain that when monetary policy holds up the economy, it creates room for policymakers not to take on
the important structural reform that they need to p. it is no answer to ask policymakers not to act because others are not acting. that is why we have the three-pronged approach. we want to see a cooperative approach, one where everybody does their part. morenk that would create a balanced expansion and one that relies less on exchange rate change and diverging demand. on structural reforms, we have tried to point out that it really matters which reforms you do, whether they have short run effects that are helpful or runs a hopeful -- or unhelpful and to try to make sure that fiscal monetary policies fit in a package together properly. i think it is important for domestic coronation
policy rather than international coronation policy. alix: that was david lipton speaking on "bloomberg surveillance." i've been reading a lot about coronation policy as well. central-bank finances the government and some capacity and are literally cutting the debt they are you have or giving the money right back to the government. what helicopter money is is here's a check for $50,000, go ahead and spend it. scarlet: you get it in it's a direct impact. isn't quantitative easing some fort of that already? alix: you offset that in some different ways. scarlet: we will be right back on "bloomberg markets." ♪
this is bloomberg markets. let's start with the headlines with bloomberg first word news. mark c.: another casualty to the panama papers. this time it is spanish industry minister. he resigned today after giving tiesicting stories on his to a firm. he initially denied any involvement before backtracking, as new revelations came out. belgium's transport minister has report on lacka of oversight in the security in the wake of the bombings in brussels. it cited serious deficiencies in the way that safety checks are managed. bernie sanders is now in rome to a conference at the
vatican. several's acres, commemorating the 25th anniversary -- several senators, commemorating the choice of a 25th anniversary. . senator sanders: i'm very excited to be at the vatican, and say a few words. mark c.: the vatican says that no planscis had to address the conference or meet with senator sanders. some a presidential bomb -- president obama's backers have clinton's hillary nomination.
they are supporting her bed, but have not yet supported -- her bid, but have not yet contributed to the campaign. back to you. scarlet: thank you so much. an investorst that someonerday would invest in valeant. >> what strikes me with valeant -- what you have is a busted role of, a company that spent billion dollars buying other companies under a premise that is sound that specialty pharma company spend way too much to become more diversified and have a better product. you can become diversified by
buying companies and cutting back on the r&d. i think that has been carried too far. the stock has lost 90% of its value. it looks to us that the stock is pretty well sold out, and when you begin to look at the pieces, even though the pieces may not be worth -- especially the but -- thef there marginal price that they pay, we think there is too much fear priced into the company. it is a classic behavioral finance names where the name gets so beat, people don't want to show it in their portfolio's they don't want to admit to iting it if they have owned in the past. from our standpoint, we think there are many levers to pull. we think that they are nationally -- naturally cash generative. we do think that paying down
debt makes sense. if they have to sell things, toy have many good assets pay down the debt, and remove the concerns that people have about leverage. if they did that, their guidance this year is somewhere between the nine dollars-$10 range and earnings on a $30 stock. sevenould still earn dollars, or so, putting it at four times earnings. >> how do you factor in the fact that if they get investigated -- does that go away? >> the more what about, the cheaper the price. as the what about dissipate, the stock would move up. i will tell you a funny story. 2002-2003, at a decision conference in new york, i went companyeeting and the
was being investigated. their accounts that the they could no longer be relied on. and went in the room, and there was one other person in the room, a friend of mine from london, we sit in the front and thee two of us, other person looks at us and say, i can't answer any questions, we can't rely on the financials, but i can tell you what our business is. my friend looked at me, and said, this could not be better. there is not anything that could go wrong here that has not gone wrong, and is clear that no one is interested in this company. >> what about the corporate loans are bonds that have been issued by valeant? >> we think those are good. in fact, we bought some of those, and i think we are already showing a profit, if i'm not mistaken. >> you have written that
accessful investing involves long-term strategy, especially when it is emotionally difficult. is that the case for many investors today -- it is emotionally difficult for them to either acquire a position or shed an existing position? >> for many people, i think it is emotionally impossible, not just difficult. that has been exacerbated by what happened since 2008 with the perception of risk in owning equities is high because of the scars left from 2008. that is why we have negative interest rates from around the world, and people wanting safety and equities. we saw the market selloff in the first two weeks more than ever in the history, and it has rebounded all the way back. i do think that is much more in evidence since 2008.
scarlet: that was bill miller speaking with bloomberg radio. alix: activist investor david neuhauser is taking the other side. his partner shorted the stock. he was on bloomberg television last month, painting a week peach or -- bleak picture. scarlet: we have him now on the phone. where do you stand with valeant? a short in have valeant, but we have cut back considerably. we still have a nominal position in the name, and are still evaluating it. , or didth that tactical something fundamental change for you? >> i think it is a couple of things. one is the shares themselves.
as heard by the previous guest, we are getting to the point where you are truly living in -- andding in a default bankruptcy case for the company. as long as they get a sign off on financials, then the stock rate -- rerat the te to where it is today. we saw the possibilities, and made a decision there. the question from investors standpoint, whether longer sure is what is your downside, and where should you look to cover if you are short? if you are investor, where is this potentially an investment case? it is easy to see that the stocks look so beaten down, that if you would instill strong management, relive it the balance sheet, and regain
credibility, of course the rerate.ould today, i think there is still too much uncertainty in the name, and therefore, should avoid it. scarlet: too much uncertainty, something to be avoided, meanwhile, the company is doing all it can to raise cash. what is the level of rerate urgy completeeant needs to the sales? >> it is something they have to work on now. the issue at hand, and we talked about this before, when you are in a distressed situation, and strongvaleant has some brands and products, the issue is you need the proper valuation on the sale. if you look back at some of the assets they have purchased, they are not worth nearly what they are worth today. what can you get when your back is up complete the against the wall, and you need to sell some assets, but you don't want to sell essentially the crown jewels.
what was focused on in the previous comments, though there are some good businesses here, some of the main products andshowing slowing down higher inventories. that was the big issue on the last call. when you have a fundamental ofwdown in the sales your best product, i don't know if i would go bottom fishing in the name. alix: entertainment one, you want the company to improve their cash flow. they just got a takeover offer. you support that? i was in london the other day, and i met with management. the goal was to meet with management before we saw anything from this bid. we made a stake in the company when the shares were cloned down -- blown down.
we talked about it when i was on the program about a month ago. it looks like anything of value investor would look at. it is very depressed. there seems to be tremendous value to the name. i think content is king. they are well-positioned. the film business has suffered, therefore they have suffered. aty have refinanced the debt a higher rate. ultimately, when you are a valued investor, and find opportunities like this, definitely a company would comply. the company has come out of the blue to make the bid. scarlet: with they make a good suitor? that they areid interested in tv, but not the film side. >> that is true.
i don't think they would have an interest in the film site you could always sell that off to someone else. i too think there are other players. media itself, we have focused on simply because a number of the valuations, whether it be time warner, disney, or others -- lions gate film, which we own. that would give a really good opportunity if you can find the proper company to invest in. acquisition opportunities, again, i don't want to speculate, but there is netflix, amazon, viacom, so many different players. i think it is an approval -- inevitable that you see others in the sector. no doubt, they would be on the list of a number of players. alix: what other companies do you see in the media industry that are possible for of --
could possibly be taken over? in thehave seen rumbles past with stars, lions gate, a chinese company went out and .ought revolution media we are looking carefully. we are not looking at the sector as a whole. we're looking at very specific companies with very specific metrics in which we see there is good opportunity either proactively, to work in a collaborative fashion with the management and board, or even more proactive and aggressive at times when we don't think we're getting the proper feedback. alix: thank you so much. we appreciate you joining us from monaco. david neuhauser, livermore partners founder and director. scarlet: more bloomberg markets after this. ♪
scarlet: you are watching bloomberg. i am scarlet fu. alix: i am alix steel. this is your global business report. scarlet: iron ore is 50% rally said to be to fade. is moving major market shares in europe, proving it has been successful in bouncing back from the emissions scandal. scarlet: the bank of england has a new advisor. tinto ceo says that iron is to diminish.
a harvard university professor spoke to bloomberg about his outlook. >> i think the number one risk in the world still if you are asking where can a really bad system and accident happened, there is grease, but china is much more important. i think basically what they have been trying to do this year is manage things so they don't have crisis. can they still grow the environment -- i think it is a contradiction. alix: rio tinto reports first-quarter results on monday. from a year ago. it was there were showing for the period since 2011. environment -- i think it is a contradiction. alix: rio tinto reports a citibank economists will join
the bank of england. the world they downgraded its forecast days after the imf said that stagnation is imminent. the globaldowngraded growth forecast this year from 2.9% to 2.5%. of globalriod economic slowdown, we are facing global challenges -- forced displacement, climate change, d endemic. scarlet: it is time now for the bloomberg quick take. atzil could he coming apart the seams. a vote is looming in congress that could lead to thea ousting of dilma rousseff.
in 2009, whlula declared the discovery of oil as the passport to the future. cup, inted the world addition to the choice 16 olympics. petrobras, the state owned oil giant is in the scandal. ofsecutors have charged lula heidi axis, he denies wrongdoing. brazil's future is tied to three sources. .ffshore oil also, the second largest iron and soybeans. brazil's rising prosperity seems to have run its course. it's well distribution among the most unequal.
mismanaged say she the economy, and her time is over. supporters argue that her opponents are trying to invalidate her democratic choice, and even if she is removed, it's not clear that stability board followed because congress has suggested impeachment proceedings against the vice president as well. that is your global business report. for more stories, visit bloomberg.com. alix: what kind of bidding war can be expect? we will discuss next. ♪
of yesterday's 6.5 quake. we are hearing from ports of a 7.3.as high as as soon on the warning has been issued great so far, we have not received reports of damage or injuries. again, another major earthquake. this 1, 7 .0-7.3. it is in the southern region of japan for yesterday 6.5 magnitude earthquake struck. so far onreports damage or injuries, but of course, we will continue to follow this story, and bring your developments as soon as we get them. alix: this is bloomberg markets. i am alix steel. i am scarlet fu. we want to check in now with abigail doolittle, live at the nasdaq. she is following some tech movers. abigail: one is netflix.
we take a look at the short stock. this year has been a volatile right here at a huge turnaround here. shares were initially down. expectations are high going into this first-quarter report, it seems to focus on guidance. uplands price increase could impact numbers. near-termlook at a chart. it seems that others may also include these concerns. stocks are up off the february lows. the upturn has cracked. we could see some concern out of up, down,volatility -- or both. alix: that is a really interesting chart. also, yahoo! reporting their
first quarter after the bell on tuesday. what is the situation? abigail: yahoo! is reporting its first-quarter after the bell on tuesday. it goes on the fact that preliminary bids for the business are due on monday. potential bidders are thought to be verizon, daily mail, perhaps microsoft. today, the stock is down. this could reflect a report out of "the new york times" that makes the bidding process sound very difficult. they're not apparently being given an outlook for 2017, something that makes it difficult to value week the company. price may be a sticking point here. ceo marissa mayer is looking for $10 billion. we will have to stay tuned to
see how that one plays out. as for the stock, we look at a long-term chart, shares are above the bullish average. perhaps shares will climb higher yet. scarlet: thank you so much. abigail doolittle reporting live at the nasdaq. alix: a quick check on where markets are trading. the much nowhere. volume is also light when it comes to stock. the real action is an oil. not just because i like it, but it is. scarlet: the doha meetings will decide whether it continues to move up. much more coming up in the next hour. ♪
scarlet: from bloomberg world headquarters in new york, good afternoon. alix: stats struggling for direction right now but the dow and s&p still on track to end the week higher thanks to better-than-expected earnings, but there is still skepticism among the bowls. scarlet: we are watching brazil, president recep hit with another problem, what it means for latin america biggest economy. for aoil prices falling third straight day as world leaders meet in doha to discuss an output trees. iran says its oil minister will not attend. we will take a look at everything at stake. want to go to, we the markets desk ramy inocencio has been tracking the latest. on track to end the week with
gains in stocks. ramy: at least today, we are nominally in the red, down by .1 percent across the board for the major markets. the dow is the biggest laggards, down .14%. negative data weighing on the market today, u.s. factory output for march fell by the most since february 2014. consumer sentiment falling to its weakest in seven months. one interesting thing is on the s&p intraday. we have been training in a very tight band for the entire day today. only about five point and flows at 2078. not only the smallest trading band of the year, but also the smallest since july 2, 2014. i want to show you the trading volume off of that based on the
10 sectors. anything below this line means negative volume against the 20-day moving average. the only thing that is popping right now is financials, up about 21%. health and telecom have had lower volumes over the 20 day average. looking at the s&p sectors in -- performance, best sector gainers, utilities, materials, consumer staples. utilities are up .7%. we are talking about next era and edison, both of that 1%. cvs up as much, as 1%. take a look at the laggards as well. .nergy, health, financial energy down the most by about 1% on the back of falling oil. scarlet: thank you.
a look atlet's get the first word news with mark crumpton. mark: another earthquake in southern japan. officials say it is a magnitude 7.1 and struck the district a short time ago. this is near the site of yesterday's 6.5 earthquake. the japan meteorological agency said a soon on the advisory has been issued for the area. we will continue to follow this and bring you details as they become available. hillary clinton has widened her lead over bernie sanders. 57% tods senator sanders 40% in the latest nbc wall street journal marist poll. is tuesday.rimary more presidential politics through the day. join us at 5:00 for an interview with republican presidential .andidate senator ted cruz
that is on "with all due respect" here on bloomberg television. michigan experts are recommending the state institute the toughest lead testing rules. other recommendations would require utilities to test all schools and day care centers, not just homes. the disclosures would become mandatory in home sales. marks the third anniversary of the deadly 2013 marathon bombings today. officials joined survivors and victims families or a wreath laying ceremony at the marathon finish line. later today, there will be a citywide moment of silent. scarlet: thank you so much. a pretty constructive week for
u.s. equity bulls. near a 500 holding four-month high and so far corporate earnings are coming about estimates. alix: but what has been keeping the bull market alive? oliver renick easier to explain. underneath it, it all boils down to buybacks. all over: there is always a new way to look at it. another way to look at the impact that buybacks have had, through the lens of what is available in the market. this looks at buybacks and issuance. not the entirety of the stock universe, but a good idea of what is new in the market and what is being taken away. this is a combination of not just companies going back and buying up their shares, but also the effect of fewer ipos, fewer companies coming to the market. you have a net issuance number that has gotten pretty negative. if you look at the white line, that giis the number of
buybacks. on an annualized basis, about 600 billion. if you look at actual number of stocks coming into the markets, that is the blue line, about 100 billion. you can see the spread, big and negative. to some degree, that puts a floor on the market. scarlet: in terms of buybacks supporting shareprice gains, i was reading a note from goldman 75% of s&psays companies are at the moment not allowed to buy back shares until early may because of this blackout period from earnings. this is why we are seeing stocks not showing any direction. when you doty hard not have one of the biggest proponents of the market. i think this will be a more bullish week that people are giving it four. it is pretty easy to beat, and
when you do, you get a solid move. what is interesting, a leadership shift from the stocks and sectors that have done well, defensive names. we had a move of 1% in the s&p on a day in which consumer staples had a negative day. that has not happened since october. anytime we had a move in the s&p, there have been big moves in the value names. this is tracking sector shifts and rotation within the s&p 500, and you are seeing consumer staples, utilities, telecom moving into this weakening phase. they were among the best performers in the first quarter. oliver: absolutely. analysts and strategists see that as a bullish sign. not only are people looking to take more risk and move out of that value, but also lends itself to the conversation of breadth in the stock market.
if you look at inflows into thes, the most were in iwm, russell 2000, tracking all caps. -- small caps. i think that tells you that people have the risk on mentality. thehe same time, second one was minimum volatility etf. that is what is happening at the heart of markets. people willing to put on risk but at the same time, they are much more eager to be protective. flipside, you have a high-yield market benefiting from this risk on trade. spread narrowing after rallying so much. the question is how long can that last, is that a good thing? is that keeping companies in business when they should not be anymore? part ofi think that is the rally back, the stabilization we had in the bond space. if you look at volatility on the
high-yield bond etf versus the earlier in the year, the volatility for the price shot way up. a lot more than the s&p vol, which did not happen in august. i think a lot of what we had stems from the bond market, concerns that those types of issues in energy were spread. alix: great stuff, thank you, oliver renick. scarlet: we have some headlines on apple that could be hurting the stock. ramy: right now, according to review, apple says it will maintain a lower production of the iphone in the june her. -- quarter. right now, down 1%, trading at $111.
we will continue to monitor what is happening here, but the trend has been or concern over apple shares ever since the past quarter or two. maybe people are just not buying as much, in terms of iphones, as much as they were expecting. alix: thank you. part of that is, you have slow sales of the iphone 6 and 6 plus, which is causing them to rejigger their inventory. scarlet: shares of their suppliers are lower as well. companies are falling in reaction to this report. we will continue to monitor that for you as well. alix: much more coming up. ♪
alix: you are watching "bloomberg markets." i'm scarlet fu. scarlet: --i'm alix steel. scarlet: i'm scarlet fu. alix: let's get a check on stocks with ramy inocencio. ramy: metals doing very well for the past few weeks. routerse, we did see the in equities, which weighed on metals. let's take a look at iron, copper, aluminum. iron ore is the biggest gainer, up by nearly 8%. the biggest weekly jump since mid-march. the same or copper futures, up by 3%. 2.5%, itsutures up by highest in six weeks. let's also see what is happening with steel, especially with what
is happening out of china with the better-than-expected gdp data. u.s. steel up by 16%. cor up by about 4%. nucor, their highest share prices since last june. take a look at what is happening in copper. report, its biggest weekly jump in a month -- freeport-mcmoran, its biggest weekly jump in a month. southern copper and teck resources also up. teck resources up by 6%. before i hand it back to you, take a look at the london-based metals index year to date. this is looking at copper, aluminum, tin, zinc, and nickel. base metals year to date are up nearly 4%, and it is trying to
end a multi-your down session. the past three years has been down. so far, it's on track year to date. scarlet: thank you. alix: breaking news on the panama papers. of 20 is threatening penalties against tax havens after the panama papers worriedly. they say there should be transparency and we need to track the ownership. in addition, they are considering waiting penalties. this is how they would fortify their position. penalties forgh not cooperative tax jurisdictions. some of their comments about the global economy as well, saying they see global growth remaining modest and the g-20 reiterating its commitment to using all lobal growth.gro alix: we are also getting some
saying thatbrexit, it could complicate the global economy. another warning from a major financial institution. getting back to our metals bulletin, we are joined by ken hoffman. from princeton, new jersey. ms. the rally that we have seen this week sustainable for base metals? ken: great question. we started out the year horrible, the fifth year in a row of of a market. -- of a bear market. they went into the new learner -- lunar new year. when they came back, everything was fantastic, huge rally off the bottom. if i am a bowl, i can play to a bear, data, and if i am a i can play to a lot of data. total confusion in the markets. scarlet: that reminds me of
something that one of our guests mentioned. people tend to forget that the first quarter tends to be slow. maybe this is the increasing impact and influence of the asian markets, where you have the lunar new year holiday sometimes occurring in january, sometimes in march. that disrupts the functioning of the global economy, and we get a reset after the first quarter. alix: is this the reset, what do we need to see to think that china is in recovery mode? we have a bloomberg profitability index which has soared, which means customers are paying big time for steel all of a sudden. on the other hand, domestic steel demand year-over-year was down 14% in march. that is the confusion on talking about. i would like to see either their steel consumption start to rise or flatten out year-over-year, or see that profitability in
steel -- and the people that do not believe it say it is a big restocking, exports have taken off. if they have, who are they exporting to? not to europe, the u.s. is not that rate. -- great. these numbers do not make sense to the analyst's. i have rarely seen so much confusion but most of the guys are saying it is heading up, let it head up. alix: that perplexes me, looking at the export chart. that implies to me that you have china importing a lot of iron ore, over $60 a ton, using it to make steel, but then re-exporting it to the market, so then we are left with another surplus of steel, which will weigh on prices. u.s. has put on a lot of trade restrictions, a lot of talk of whether the u.s. will do something called the section 201 , where we keep all steel out of
the country. europe is talking about it with tata. they are talking about trade retaliation. the clouds are not clear yet. in these fold conflicting snapshots of what we have heard from china in the gdp report. ken: the number one thing people should look at is the chinese yuan. when it is strengthening, it seems to be an all clear to the marketplace and people like metals. when it weakens, that is when they have a rough go. if you have an opinion on the yuan, you will have an opinion on the base metals in the markets. scarlet: ken hoffman, thank you so much. alix: another stock we are watching is apple, now in session lows. crossing on the news that the company is reducing its iphone production cuts. that comes to us from the nikkei report. we will bring you the latest on the other side of the break.
scarlet: this is "bloomberg markets." i'm scarlet fu. alix: i'm alix steel. scarlet: a big week for the tech industry next week. of course, yahoo! kicks it up on monday when you deadline for buyers to bid for its core business comes due. alix: for more, alex sherman is with us now. who is lying up to be the strongest bidders come monday? it is universally thought that verizon will be the front-runner. of course, they acquired aol and the idea would be to marry some yahoo!'sassets to
assets. yahoo! is potentially a bigger version, but there are a lot of synergies. tim armstrong, who ran aol as a public company could run a combined aol-yahoo! within the verizon umbrella. if not, there is the possibility that private equity firms may partner with media firms, smaller media firms, to make a bid for yahoo!. "the wall street journal" reported that "the daily mail" was interested. we will find out on tuesday, when the dust will settle, when we will have some clarity. scarlet: you reference the possibility of pe teaming up with media companies. do we expect anyone to emerge from the woodwork? >> absolutely. i would not be surprised if we reported one or two names that
we had not heard from at this point. that said, i have asked that question to several people that are very close to this sales process, and they have consistently told me, chances are the company that ends up by yahoo! has already been reported. you would hear another name or two, but whether it actually emerges victorious, i would say the probability is fairly low. alix: how do they want to value in the company? i read report that yahoo! was not able to give forecasts. how do you make an informed bid? >> [inaudible] you discount back the cash flow. the problem is, with yahoo!, how
do you do that with a declining asset. you have the yahoo! japan estate, verizon could be interested in acquiring. then you also have the core business that you actually put a value on, using whatever models and synergies come out. if we marry aol with yahoo!, if you are verizon, we think that is worth x billion. scarlet: what is the company likely to say on his earnings call when people inquire about the latest of its sale of assets? >> remember, there is a looming proxy fight in the background. starboard, and investor, has said we want to kick all the directors out of here. and then there is this process going on at the same time. what i'm interested in hearing is, is it possible, if the directors are kicked out, that this sales process could be for not?
if a new board is put in place, could they re-run a sales process? it is one thing i would be interested in hearing on a call. the other thing to look for is what is softbank's role here? company, theyess own mistake in yahoo! japan. chances are, if they are sold, saw they will have a say when that happens -- softbank will have a say in what happens. scarlet: thank you. before we go to break, apple stocks at session lows after a report that they will continue iphone production cuts through june. ♪
mark crumpton has more from our newsroom. with a powerful earthquake a preliminary magnitude of 7.1 has struck southern japan barely 24 hours after a deadly quake in the same region. it occurred at 1:25 local time saturday. so far there are no reports of damage or injuries. ace in on the morning and advisory that had been lifted earlier has been lifted. the reactors at the sendai nuclear plant are said to be operating normally. bernie sanders is in rome to attend a vatican conference. whilemaking the trip even he faces a crucial new york primary against hillary clinton next week. senator sanders joined several speakers commemorating the 25th anniversary of a high level teaching document by pope john paul ii on the economy and social justice at the end of the cold war. >> i have been enormously
impressed by pope francis speaking out, and his visionary views about creating a moral economy, an economy that works for all people, not just the people on top. the vatican says pope francis had no plans to address the conference or meeting with senator sanders. lawmakers will be leaving washington without having made the deadline to pass a budget that has been stalled in the house. there is other work left undone as well. continuing divisions between tea party lawmakers and house gop lawmakers have put aside an effort to aggress the crisis in puerto rico. the white house is ramping up pressure to provide money to combat the zika virus. hush money case says that if he wants letters of support considered during sentencing, they must be made
public. april 27. sentenced he pled guilty to breaking federal banking laws. to conceal sex abuse when he was a high school wrestling coach. he faces a penalty of five years in prison. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. apple is at session lows, headlines crossing that the company, from reports from the nikkei, that they are extending iphone production cuts. scarlet: we are joined by tim higgins in washington. you have covered apple for years for us and still following closely. is there enough detail for these report to be credible? get into the details because the company has not commented but the market is sensitive to any forward-looking statements about apple.
the first three months of the year, apple forecast their first sales declined since 2003. going into the summer months, traditionally when sales falloff ahead of a new product, there is ofensitivity that the froth the iphone from last year cannot continue. headline, i saw the kept thinking about the replacement cycle. the people that own the 5 and 5s have not upgraded, but the 7 will be a huge game changer. tim: that would be the hope, you see this two-year cycle. ,ast fall was a midyear upgrade and then the bigger changes will come in the fall. there has been some chatter that the 7 will not be as big of a change as we saw in the 6, which drove record profits because of the larger screen that really appeal to the chinese market.
that is the other thing happening here, the slowdown in chinese sales. scarlet: which is why apple is looking to sell more used owns in places like india. we are looking at shares of suppliers too, apple falling in the wake of this report. any indication from these suppliers, here in the u.s. and outside, on whether things are slowing down for them? we would expect sales of the iphone to slow a little bit in the summer. ahead of the new iphone, which is always expected in the fall period. what was surprising in january was the idea that it would be the first quarter over quarter sales decline since 2003. the report today it suggest going into the next three months, we will continue to see decreases.
alix: the nikkei reported in january that apple could cut its production more than planned. the idea is that these rumors are nothing new. when dealinglenge with the supplier community for something like the iphone, apple has a lot of incentive for them to be thought. you need to have a lot of them quickly and you need to move quickly. forward-looking statements like that are sometimes difficult as we get into it. we just came off of a new smaller version of the iphone, they had to up production for that quickly. we will see what happens in the summer months with the bigger phone. that will be the test, to see if it will continue to get growth against the 6. also said in january that they expect production to
return to normal levels in this quarter, so it is a continuation of that theme. scarlet: apple does not actually report earnings until april 25, after the market closes. basically two weeks from now -- a week from now. apple did not comment on these reports. do they tend to, will we get any indication on whether these reports are accurate? tim: i would not expected from them. classify it as market rumors, if they commented at all. we would be looking for any kind of color in the earnings call toward what the market is heading toward and also anything about what the next potential .roduct, features may have any morsel of news heading to the summer and fall. scarlet: alix: thank you. the bitter political drama
that has all but paralyzed brazil will take a climactic turn. the fate of dilma rousseff will hang in the balance. yesterday, we asked a managing director at blackrock why his firm have started to engage in brazil. there is a complete paradigm shift to argentina. the economic cycle, the ability of it to improve, the ability to create capital, this could be a big story. i am not making of anything new. the point i am making is that this could run for longer. thelet: but what will brazilian economy look like under the likely replacement? our next guest says we could see more economic conditions conducive to rate cuts. why are you so positive on
a new government? >> we think they will be in a much that are positioned to implement its reforms. these are crucial to stabilize debt dynamics and to get the country growing again. he would be in a better position because he is from a center party, he knows how brazilian politics work. he has been leading the most important party in brazil for the last 15 years. but that is more about the confidence in the brazilian economy. scarlet: you call him a .ragmatist will he want to use of his political capital on this? >> yes, and he already made clear what his policy agenda would be. he will try to lead a unity government. in hisn risk we see
administration is a collapse in the investigations. that aside, we don't think there will be any surprises on the policies he will try to implement. tracking market reactions, the hope is to have a stronger real, inflation expectations coming down, and then you can boost growth. you sent us a chart of that what you think the rate will be over the next two years, and you are really dovish. under 11% for the benchmark interest rate by the fourth quarter of 2017, well below market consensus. what is your call for inflation then? will think inflation continue to deteriorate. trends have been going down since the change in government became more likely. within that, the crucial number to look at is inflation expectations. if things become more clear, those expectations could continue to accelerate.
then the central bank would be a much better position to start if it takess, even all of 2017 and part of 2018 to get to central-bank targets. scarlet: wouldn't that be dependent on commodity prices continuing to stabilize or rise, compared to anything that a new administration could do? >> that is an important variable, but the impressive rally we have seen in the real, inflation expectations, largely caused by improvement in the political outlook -- or the hope that it could improve. we havemething else seen is an improvement in manufacturing and consumer confidence. we have a chart that shows sentiment or both has been stabilizing. manufacturing is orange, consumer confidence in white. scarlet: so things are not
getting any worse. that is good context. another thing to remember, this is not brazil's first impeachment face-off. what happened in 1992, and will this time be different? >> we see a lot of similarities .ow on sunday, it is likely the house will move and advanced to the senate. what we are seeing is an ever more isolated roosa. -- rouseff. this is the same thing that happened in 1992. [indiscernible] he decided before the senate vote. alix: optimistic than heading into the weekend. thank you. coming up next, thanks,
let's go to the markets desk where ramy inocencio is taking a look at apple and their suppliers. apple has been done by as much as 2% on the news from japan's nikkei that they would keep cutting production into the june quarter. we can see it is off of session lows, down by 1.6%. the reasonaying apple is cutting production is because people are not buying as much as they thought, or not replacing their older iphones as quickly. looking ahead to the september quarter, when apple usually comes out with their next phone. as we aree the 7, expecting. of course, a knock on effect on their suppliers. broadcom, they develop integrated circuits, down 2%. semiconductors, radiofrequency systems, down 2%. all of these are off of their session lows. semiconductors down the
least, but down by about 1%. take a look at what is happening to the rest of the s&p over the last hour. you can see there was a dip around 1:20, but we are off of that session low. s&p still down by about a quarter of a percent. take a look at the impact on revenues, on the impact of apple and its products have. we know that revenues makeup alliance share, iphone, about 60%. mac after that, we can see s. the ipad about my present. when that knock on effect happens with the iphone, that is basically alliance share. scarlet: thank you. this weekend is the major oil meeting in doha. these are the three chart
you need to know heading into doha. first of all, what would a freeze look like? this orange line is the proposed level of freezing opec and non-opec producers begin to freeze. just around 29 million barrels of oil. this is what opec is producing now. around 28 million barrels of oil. basically, opec has room to increase production, if they were to decide on a january level threes. so will a freeze do anything to the supply-demand dynamic in the oil markets? there is a deficit under the way, no matter what. deficit.e looking at a q4, you are looking at a deficit, if opec loses around these levels. but the fact is, supply was coming in regardless of any freeze.
supply disruptions in nigeria, also fallingsupply here in the u.s., under 9 million a day. you also have supply falling in places like mexico, china, brazil. so will doha actually move the price at all? we have seen a huge run-up in brent prices into the opec meeting. the history of what doha actually is. opec and998, you saw russia and mexico cut production. you did see prices move higher, even though russia did not abide by the breeze. around 2001, the same situation. another big rally, even though the phrase did not work. -- freeze did not work. the market is very long right now, anticipating something coming out of doha. so will we see a rally this time?
that is the question. $50 of america does predict a barrel oil if we see a production freeze. if we get disappointment, prices could come off anywhere from two dollars to three dollars because there is so much optimism baked into the price. scarlet: emerging market currencies are hanging in the balance as a result. alix: you can see that here on my chart. scarlet: alix steel with the latest on oil. coming up, a bullish view on today's economy with neil dutta. ♪
week's u.s. data has supported stocks, but initial jobless claims were also strong. neil dutta says those claims are at 843-year low and lowered nation is a good recipe or equity prices. alix: we spoke to him yesterday about his view on the economy. neil: there is no chance u.s. is in recession, and on top of that, inflation is moderate, which means that can go slowly. given the changes we have seen in march, they are going more slowly, trying to allow the global economy to catch up to where the u.s. is. there is so much policy divergence that the fed is willing to tolerate. the fact that inflation is still below target gives the fed breathing room. >> it is great at the economy is doing fine, inflation is still cool, but is there a problem with the framework, thinking about inflation, when there are
so few levels of layoffs? it seemed like the labor market is tight, the economy is doing well, but when it looked like inflation was picking up, we have this setback. neil: the trend for inflation is still above 2%. those components tend to move much more slowly. have seen the dollar come down, oil prices and commodities generally come up. for the equity market, that will push up earnings expectations into the second half of the year. level fora strong the past few months. that is to delete a proxy or the corporate outlook. ism is picking up and the profit outlook is brightening up. i would not make too much of one number. i think the phillips curve still works. i think it is flat, but if the unemployment rate continues to
fall, which is likely, the bias is further to the downside, you will see that relationship continue. scarlet: what is the fed more inclined to do right now, talking itself into or out of a rate cut -- increase? neil: i think the biases toward accommodation. i don't think they will raise ahead of the brexit vote. globalesents a risk to markets. it makes no sense to me, given the risk management approach that has put themselves into. scarlet: it also will not move before the election. neil: i think they could. the election is not systemically important for financial markets. maybe policy will change, maybe it won't, but not as big of a deal as a potential crack in the european union.
reasonable base case, the markets will be in a better place, that will allow the fed to go. alix: joe weisenthal joins us now. obviously, he is super bullish. joe: all of the data this week just confirms that nothing has changed in the economy. it is just doing its thing, has not broken out like people expected, has not fallen off a cliff. i hate to use the cliche, but if you look at his goldilocks data we have been getting since 2009, if you think it is good for the markets, then nothing we have heard from the fed recently is changing the position. scarlet: until the currency market shift gears again. until the dollar is weak, we are easy-going. brazil, weg on to have a poll that we are conducting. we have the impeachment trial coming up in the house on
sunday. we have a poll out on twitter. scarlet: does brazil's market rally have more room to run? we have 245 votes in. joe weisenthal has 100,000 followers. as a stalwart, we want to hear from you. alix: thanks so much. we will be looking ahead to the delhomme meetings at 4:00 eastern and will be speaking to chris norman from the eurasia group on his belief on whether we will see an impeachment for dilma rousseff. scarlet: coming up, virtual to an will be with us to discuss global ipos as well as the future of high-speed trading. ♪
here is what we are watching this hour. stocks taking a leg lower, once again treating the narrow range commending the week in the green -- ending the week in the green. shares surged 23% in the trading debut after a software glitch wrecked the 2012 ipo. we will speak to bart chilton. as tech companies get started with their earnings season, apple shares are following -- falling today. extended their iphone production as sales slow. r