tv Bloomberg Markets Bloomberg April 15, 2016 2:00pm-3:01pm EDT
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. ami: we are just obsession
those right now, but our lows are not that low to begin with. lows right session now. so. off about .25% or u.s. factory output from march fell to its lowest since february of 2015. consumer sentiment falling to its weakest in seven months as well. i want to show you what the s&p has been doing intraday. bend,ook at this trading one of the smallest we have seen in a while. so, weuly of 2014 or just barely hit 26. that's only about several points are so. news crossing that apple is going to extend its production cuts through the next quarter. apple is obsession those that
did hit in the 1:00 hour, but still down about 1.5% there. the nikkei in japan suggesting people are not buying as many phones as apple expected. this having a knock on effect on apple suppliers. what's been you happening with how this has been impacting the dow. -- let's show you. let me illustrate this. the biggest drag on the dow right now is goldman sachs, down about 16 points or so. the second biggest drag on the 11 is apple, down by about points. dominatingeems to be any action there is. rami: we are all looking ahead to what's happening on sunday a.th doh
nymex crude off session lows, .ut still down by about 2.4% we are looking ahead to sunday when 18 oil ministers from major oil-producing countries will be talking about a potential production freeze. we could potentially see that oil price fall. the fall in oil, we can see how it is hitting our major oil producers, including exxon mobil , down .7%, chevron down 1% or so. let's check on the bloomberg first word news this afternoon. mark: for the second time in as many days, a powerful earthquake has struck the kumamoto region of japan. a magnitude of 7.1. japan's meteorological agency a siouxnd advisory for not me -- tsunami up to three
feet. is attending the vatican conference in rome. he joins a several speakers commemorating the 25th anniversary of a high level teaching document by pope john paul ii on the economy and the social justice at the end of the cold war. the vatican says pope francis had no plans to either address the conference or meet with senator sanders who made the trip even as he faces a crucial new york primary against hillary clinton next week. ,t 5:00 p.m. new york time senator ted cruz will be on bloomberg television wi "with al due respect." jose manwell soria -- soria the latest victim
of the panama papers leak. revelations came out -- penalizing tax havens that don't share information on their banking clients. the statement from the g20 comes in the wake of the so-called panama papers leak that exposed millions in assets hidden by the wealthy and tax havens around the world. the g20 says it will consider defensive measures against financial centers and jurisdictions that don't commit to the exchange of information about account holders. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. lisa, back to you. lisa: bonds have done amazingly well this year, better than stocks in many cases. joining me from st. louis is sameer samana from wells fargo. your view is that stocks will do better than bonds.
it is better for investors to be overweight equities rather than bonds. can you walk us through how you got there? theer: for most investors, goal is to get from point a to point b. take whatever money they have on hand today and try to grow that through retirement. if you look at the rate of return on the three major asset classes, stocks, bonds and cash, if you are trying to generate a rate of return above inflation, if you look at cash, you deal with zero levels. , use the 10at bonds year as a proxy, it yields around 1.7%. almost no real return. look at stocks, look at the earnings yield, it's about 5.5%. close to historical levels. that gives you about 3.5% above
the rate of inflation. if you try to generate after inflation returns, you want to focus on stocks. lisa: a lot of investors are pretty fearful mother is not a lot of reach for yield feeling -- there is not a lot of reach for yield feeling. they're worried about projected downturn. what gives you confidence that is not going to happen? sameer: we tend to fall back on the economic indicators. payrolls, you are seeing strong payrolls growth. initial jobless claims are a good indicator of whether people get laid off and go find another job, those tend to be very low levels. that shows you the labor market is healthy. i know the retail sales number , but ifk was a bit weak you look at the broader measure in gdp that includes services, that is starting to tick higher.
we think a lot of the leading indicators that eventually feed into consumer confidence and consumer spending which drive a large part of the economy are still pretty sound. lisa: which stocks do you think are the best bets right now? which bonds do you think are the worst bets? u.s. large-cap equities with cyclical sectors would be the best. ,onsumer discretionary industrials, technology. we also like developed markets. europe, japan, the central banks will support growth and we like those equities trading a bit cheap compared to u.s. counterparts. they tend to be much more oriented toward commodities, are more sensitive to chinese growth. there are concerns there. on the blind side -- bond side, we don't want people chasing yields. now is not the time to go to out on the curve -- to go too far
out on the curve. staynt people to try to balanced and disciplined -- this is not the time in the cycle to be reaching too much for yields. sameer: what is the biggest tail risk? downside right now in your view? sameer: by far, the fed. if they were to raise rates aggressively and ignore weakening economic data like they were talking about earlier , that was something that led to the volatility in the february those. -- lows. once janet yellen began to speak more devilishly, you saw the rebound. heighten rates
aggressively, that would be a big risk in our opinion. lisa: what kind of returns should they expect this year? sameer: the mid to high single digits. compelling after the rally we've seen, but at least in february, we were feeling pretty good. sameer samana, thank you for joining us. the future of high-speed trading -- we speak to bart chilton at bats global market, knocking it out of the park on his first day of trading. dilma rousseff hit with another blow after the supreme court overturns a government motion that will allow the impeachment to proceed on monday. a look at brazilian stocks this year, up 26% even amidst the turmoil. ♪
lisa: congrats to bats. public for years after a software bug ruin its first ipo attempt. shares trading up on its first day. joining me now for exclusive interview from little rock, arkansas, bart chilton. put thesuccess of bats negative connotations about high-frequency trading to rest? bart: bats was a group of guys that were my frequency traders.
these guys have done a great job. duo, if youynamic will, at bats. talk about kid crusaders. caped crusaders. these guys have done a fantastic job. last i checked, before coming in, shares were trading at 2279 .79.22 and nin when they tried to do this in 2012, they were hoping for $16 a share before they were foiled by a computer glitch. good on these guys, they are doing really well, and they should. they have diversified their got into etf's and fx.
, that has put hft a lot of concern about hft's to rest. lisa: you are not surprised by how well the stock is doing. bart: no. these guys diversified a lot, they have grown. ,hey bought european exchanges they have four x equity markets markets. equities they are doing a great service, not just to people that will be shareholders and investors, but they do a great service to our economy. the capedlate crusaders at bats. bats uses hft market makers just like every single other exchange does in the u.s. and around the world.
hft's afteron about that book a couple years ago, i think it is changing based upon having the benefit of being true. reported just a study about a financial conduct of 40 that says hft's do not get any particular advantage. -- financial conduct authority. there have been dozens of studies. the perception after that book a couple years ago is changing. it is a good thing it is changing because it has the added benefit of being true, the hft's are making markets editor, faster, cheaper. lisa: bats has been expanding and acquiring other platforms.
there has been this wave of consolidation among exchanges. the you think consolidation will eventually make the markets a stronger -- make the markets stronger or more vulnerable? bart: i'm not worried about consolidation right now in the equities space. one thing i am concerned about is that they are getting too complex because there is a myriad of exchanges. you have 13 exchanges in the u.s., equity exchanges. 45 different dark pools that are out there. there are so many different order types. they are considering whether to grant the approval of the exchange in canada by ex. that may not happen because that would add more complexity, adding a speed bump, dissecting the minute by which you could trade. not get the best
execution and might not get the best prices. i'm worried more about added complexity to markets. i think we should limit the order types and we should make things transparent, which is what i've always talked about, to ensure that people know what maker programs are and that investors have added confidence in these markets. lisa: what is the most promising line of business for exchange like bats? bart: they have done a really good job in the etf space. a lot of them are treating their. -- trading there. and in foreign exchange. both are incredibly important now. everybody needs to be involved in the foreign exchange space if you are a multinational company. that is a bright future for them. it would not surprise me, given in the lasthistory
four or five years, if we do not see them doing more mergers around the world. ,hey are in singapore, london kansas is where the equities exchange here is based and in new york. i don't think there is any limit to their success. i'm pleased that these guys are doing a good job after they had that fall back a couple years ago. joining uschilton from little rock, arkansas. let's head to the markets desk. -- i'mompany movers taking a look at my imap function. financials down about .5%. the third biggest weight on the s&p right now. over the course of the past year week, it has had the best since march.
jpmorgan down the most by about 1.7%. they are all turning negative after five days of gains emma -- five that streak days of gains, breaking that streak. the question is whether they can intinue to cut to keep afloat want to head to the aviation sector and barclays is making a couple of calls pushing a couple stocks higher. a bump up seeing about 1% here because barclays raised its call to overweight from equal weight sing the company's revenue boosting measures make for a far more formidable company in a year or two. southwest up about .5%, the highest since december of 2015.
very quickly, let's take a look at what's happening with calls by citi impacting shares here. 3-d systems down 6%. downgraded on overvaluation fears. stratasys is getting infected down by 11%. -- impacted down by 11%. lisa: still ahead, the political crisis in brazil. all eyes on the looming impeachment vote monday. ♪
brazil to its knees. legislators will vote on whether to move forward on impeaching president dilma rousseff. .oining us is julia leite how will this impeachment process work? it has been going on for quite some time now. the house is meeting today and tomorrow so all the parties have a chance to talk. they will vote on sunday starting at 2:00 p.m. and all 513 lawmakers vote and they needed two thirds majority. on ton passed impeachment the senate. bea: dilma rousseff could sidelined for 180 days as this process goes on? what is the specter of political turmoil going to do to the country? accepts thee senate
impeachment process in a couple of weeks, she is been temporarily removed and vice president takes over while the senate makes its own ruling. she could still appeal and come back, but the idea would be once he is in office, he is president. lisa: we've seen the realit dip against the dollar, same as stocks and bonds in brazil. has this gone too far given all of this turmoil? julia: it depends on which investor you ask, there are quite a few people saying it is still time to buy. down for fiveen years, currency last year was down 30%. there are some people who say it is still time to buy. lisa: is there any precedent for this?
has there been another impeachment process like this in brazil? julia: not quite like this. we had a president impeached in 1992. he stepped down before the impeachment process. i guess we will see what happens. has it been crazy on the streets? julia: yes, little crazy. on sunday, we are expecting that national tv will broadcast the vote life. -- live. lisa: we have to run. thank you so much. julia leite. still ahead, we will look at the commodities close. ♪
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earthquake killed nine people in southern japan come in the region has been hit by an even more powerful one. had aay mornings quake per luminary magnitude of 7.1. agency meteorological lifted an advisory for a sinnott me up to three feet along the tsunami. t boston marking the third anniversary of the deadly marathon bombings today. jointvernor and mayor survivors and victims families for a wreath laying ceremony. later this hour, a moment of silence will be observed to mark the time of the first bomb. some of president obama's biggest financial supporters have not contributed to hillary clinton's presidential campaign. donors toarter of the
the super pac that backed the president in 2012 are supporting mrs. clinton's bid but have not contributed to her campaign. the it comes to rudeness, republican presidential contest wins in a landslide. 70% of americans see the gop race as discourteous. only about 41% say the same about the democratic campaign. the lower chamber of brazil's congress has started debate on whether to improved president dilma rousseff. a vote is set for sunday. lawmakers backing impeachment say the ministration violated physical rules -- fiscal rules using sleight-of-hand accounting. if they vote in favor of impeachment come the process moves to the senate.
global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. lisa: commodities markets closing in new york. let's take a look at today's biggest movers. con futures fell the most in six weeks today. prices have been under pressure against china is inspected to flood the market with supply. -- cotton futures fell the most in six weeks today. oil is lower today ahead of this weekend's meeting in doha where producers will consider capping output at january record high levels. joining us from our princeton bureau, andrew cosgrove. here with us in new york, christopher louney. what can we expect to see out of this this weekend -- doha weekend?
andrew: i don't think you will see a followed -- solid freeze agreement. be,t of the takeaways will ok, we don't know what will happen in saudi arabia and production going forward. are too many ok things, too many questions left unanswered and the market has run up 30% since february. expectations are really high and they could disappoint. lisa: there was a survey of traders and analysts that showed it was evenly split with people thinking there may be a freeze or not an agreement reached in doha. what could they agree to this weekend that would materially change the outlook for oil prices? i think they will definitely avoid anything
negative. iran said they would not stop producing. i don't know what they could say that would send this higher. they are solidifying the rhetoric from february and continuing that stance is the most important thing for them at this point to avoid material downside. thing that has been very important throughout the past 18 months has been the positioning of traders. how are commodity traders positioned at this point? chris: november and december were incredibly negative. we saw massive drawdown in assets under management in the space. increasen a massive come a pretty broad increase. it leads us to the question of
whether or not they should start buying commodities again. lisa: there has not been enough optimism. who are these traders and has the composition changed at all? chris: when we look at commodities across the space, look at the constituent for commodities, the vast majority of them are trading five-year -- many and five-year are closer to five-year minimums in most cases. it looks higher by the end of the year. what we saw so far in q1 with the next investors in particular -- index investors in particular , they come back into the space and quite large size. lisa: that is the technical side
of it. , thethe oil company side people who actually have some really massive money in the game , what kind of prices are they planning for the long-term? one point previously mentioned, some of the institutional flows and some of the retail money that is come in, there is limited to the downside going forward. mp's in theh shows e permian basin could start putting rigs back to work in the low 40's. if we are at 45, maybe by the end of the year as an example, that gives us more confidence that more companies start adding rigs. we don't see a big pickup next aroundless prices stay
45-50 through most of 2017. if it stays there, it picks up more in 2018. you have a lot of opec capacity. outincentives for them to -- pump that max capacity is high. lisa: what commodity right now looks the most undervalued? is by the basket but the basket -- by the buy the basket of commodities. andrew cosgrove and christopher louney.
with investment bank's review options after receiving interest in some of its businesses, that is according to reuters. nomight disposes certain n-core assets. buying polycom for $2 billion in cash and stock, elliott management said it took stakes andolycom and mattel publicly urged them to combine. the deal will allow the companies to expand videoconferencing business. lounging aboard a super yachts in the caribbean sounds nice, but the cost of operating a is $5 yachts -- charters rose by 21% last year. let's head to the markets desk where rami is checking on notable movers. rami: i'm thinking about that
yacht. let's do some stocks right here. i'm looking at ensco, the offshore drilling company. is down by about 7%, but had been down by as much as 11%. news coming earlier today that there's been a second offering of shares in a surprise announcement. let's move over to footwear. for foot locker, mixed calls happening from piper jaffray's and cowhan. you can see the bears have been just a little bit, down by about 1%. it is also paring some of those losses. selling prices for nike
footwear fell about 1% in north america in the third quarter. the bullish take at piper jaffray's, they surveyed teens and people are bullish on a key and adidas. -- on nike and adidas. -- two analyst calls for micron come up by nearly 3% here. saying they see a potential rebound later this year. cablevisionver to systems. the biggest jump in two months. right now, it is up about 1.5%. that is after the new york post reported that the new york city government accepted the fact that it cannot stop a deal between a dutch multinational telecoms firm from buying up
cablevision. earnings, it has been a better quarter, sort of. jpmorgan and bank of america having their best weekly gains but is thers, banking sector really this healthy or were expectations sibley lowered too much -- simply lowered too much? alison williams covers the banking industry. read these good reports -- were these good reports? alison: estimates were being dramatically reduced into earnings. what investors were happy about were two things. on credit -- a couple reports, little better, a couple reports a little worse. the managed risk seems manageable.
at wellsisappointed not as good as expected. investors are feeling better about the jumping off point after the -- after being increasingly depressed about the outlook. lisa: the energy lows were not as bad as people thought. yet, the numbers are pretty staggering. $1.4 billion in the fourth quarter and additional reserves -- what is the risk that this is the tip of the iceberg? alison: wells fargo said they were 25% through their redetermination process. there is more to come. we will see continued weakening.
one of the things that investors are concerned about, we are starting to see the credit cycle turn. we saw wells fargo releasing reserves. filled reserves since 2000 and. -- since 2009. citi and bank of america still releasing a little bit. we are seeing the cycle turn, but not seeing weakness outside of energy. that has been a key positive. it is not spreading to other sectors or loan categories. lisa: the ones who really provide companies with their credit lines and do a lot of the underwriting -- next week, we have a lot of the broker-dealers, the market based morgan stanley's and goldman sachs's of the world. what are you looking for? alison: from an industry
perspective, we want to hear about their outlook. what are they hearing from their corporate clients? how are the ceos feeling? the deals have stalled and people have been hesitant. fees that haveg gone down, 50% decline in equities this year, but we are starting to see the ipo market open, so that can be a key positive. dramaticanley has putting 5% cuts to its -- 25% cuts to its income division. what investors want to know is, what does this tell us about the view for the future? are you pessimistic after a tough quarter? will things get better, or do you think they will just not get back to the levels they were at
before? lisa: do you think the optimism last? -- will last? say you have to keep in mind the context. we started out this year, people were excited about rates rising. people have lost enthusiasm for that and for the global growth story. the stocks are down for the year. repriced in af more negative outlook on the cycle. to decide,you have do i think things will get more positive? lisa: thank you for being with us. coming up up, a preview of upcoming tech earnings. yahoo!, microsoft and intel. "with" will have an interview "with all due respect"
lisa: this is "bloomberg markets ." potential yahoo! buyers have until monday to bid for the company's web operations. the sale comes as ceo marissa mayer comes under increased pressure to cut costs. is herling yahoo! best chance to salvage your legacy. take a listen. >> were some minor is at a crossroads. this result meyer is at a crossroads. is at asa mayer crossroads. finding a buyer might be her best chance to salvage her legacy. yahoo!'s stock price alone might to just that she's been a
success. shares traded at less than six and always when she took over, then reached a high of $52 in 2014. before settling at about $37 in april. -- shares traded at $16 when she took over. the reality is that yahoo! under mayer has become unprofitable and its outlook is only getting worse. its financial troubles have sparked fierce debate. it has two asian investments in alibaba and yahoo! japan. valuationon tricky best value assumptions, investors could be valuing yahoo!'s web business at less than zero. that means selling the company
or bringing it up. time is of the essence. right now, got who is still the third most popular web property in the u.s., but it's online mobilee and especially audience is not growing. that mayer hasing done has worked. she can take a lesson from her former colleague, tim armstrong. he was struggling as the aol ceo. he got an offer to sell the company for a 23% markup. now, armstrong is helping lead verizon. if she sells now, she can hop aboard the same liferaft that saved armstrong. lisa: a number of major companies are due to report earnings next week, including yahoo! on tuesday. joining us now from san francisco is emily chang, following netflix and yahoo!
what are the big things you are watching from yahoo!? emily: of course, the bids are due for yahoo! on monday. tuesday, we will be watching earnings. as we've heard, we are starting to hear that the field might be narrowing. number one is verizon, they have been straight up about their interests. with it arianna huffington come which was bought by aol, which was bought by asked. -- i she would like to see yahoo! in the family and she said absolutely. >> it is a hybrid. it is a journalistic enterprise and it is a platform. tumblr is an incredible asset. as more and more people want to
express their views in more than 140 characters, you have an incredible opportunity to use tumblr to allow people to express their views and also use play.an advertising us, definitely one of the most important monetization channels. emily: i asked if she had sympathy for marissa mayer who is now fighting for her job and she said, yes, of course i do. however, she chose to run yahoo! with a strategy that is not working or that shareholders are not happy with and she believes yahoo! can perhaps be revitalized under new leadership. kind what is the strategy having the bids come in and the day after, reporting earnings? could this be an issue for yahoo!? emily: that is an interesting question. i'm not sure anybody knows the answer to that.
it is difficult to get into the head of the yahoo! board at this point. what we are hearing from people pitching to yahoo!, they are still a bit confused, yahoo! is not giving them all the financial information they want, which may be the reason you are not seeing as many companies bid as initially expressed interest. we will not know until monday. yahoo! have to see if talks about these bids on that earnings call. come emily week chang sits down with it arianna 1.0."gton on "studio up next, more "bloomberg markets ." stick with+++
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from bloomberg world headquarters, good afternoon. i am carol massar. apple reportedly extending production cuts for the iphone of mid-slowing sales. can the tech giant move beyond its core product or have we reached a peak when it comes to apple? brazilian lawmakers beginning the impeachment process ahead of the sunday vote. has her presidency run its course? is herballife a pyramid scheme? maker of a new documentary about the victims who have lost thousands. we are one hour away from the close of trading on this friday. ramy inocencio has the latest.