tv Bloomberg Markets Bloomberg April 19, 2016 12:00pm-2:01pm EDT
scarlet: from bloomberg world headquarters in new york, good afternoon. i am scarlet fu. alix: i'm alix steel. here's what we're watching at this hour. stocks are still makes today as fears about lockstep starting to fade. scarlet: a different story for goldman sachs -- the worst performance in the dow this year. the lowest revenue this year since lloyd blankfein took the post. alix: netflix seeing a hiccup in stream strategy. the company cannot seem to duplicate its success overseas. we will speak to one analyst who sees this as a buying opportunity. we are halfway through the u.s. trading day. let's head over now to the markets desk with julie hyman, including a leg down in the u.s. major index. julie: the s&p in particular coming off its highs of the day. the dow had been trading at its
highest of nine months. gainsre hanging onto the and the nasdaq going more deeply in the red after some disappointing earnings reports. one of the main themes of the session has to do with commodities. this is the imap and you will see materials and energy stocks if you take a look at that imap are the two best-performing groups. materials up 1.5% and energy up 1.4% even though the imap wheel is looking a bit mixed at the moment. something else i wanted to look at is a global commodity monitor. columnlook of the third over there, it is almost all green today. the only exception being sugar. in other words, we have a very broad commodity rally today from energy to metals to act. some of that is due to the decline that we are seeing in the u.s. dollar could the
. the bloomberg dollar index hitting its lowest since last june. we have seen that in advance and a lot of those commodities. having to deal with the u.s. dollar is that short on the u.s. dollar are going to a higher level. here's that bloomberg dollar index going to its lowest since last june. theou look at shorts on u.s. dollar, we are seeing them at the highest level since last january. in others are betting words that the dollar is going to continue to decline. alix: the other big theme is earnings. thisanks slog is done at point. julie: moving on to the regional banks, but looking at the plus and the minas within the earnings universe today johnson & johnson coming out with earnings that beat estimates as its drug sales continue to climb and make up the largest portion of its business. unitedhealth group saying it is going to exit a ca states.
they are getting out of them entirely. those are affordable health care act plans in those states that they say are less profitable. reporting lower revenue, but earnings still beating estimates. continuing on this theme of banks cutting their way to better profitability. on the downside is alumina coming out with the preliminary numbers. legacying out and its business proving to be too much of a drag overall. ibm putting pressure on technology as of course is netflix with the forecast for international subscriber growth low what analysts were expecting. those shares tumbling 11%. as we get further through the day, some these downward tech movers are proving to be more of a drag and accelerating declines. alix: it seems like nasdaq was
the one that flip first. scarlet: julie hyman, thank you so much. let's check in the bloomberg first word news. mark crumpton has more from the newsroom. mark: donald trump is counting on his home state to provide a big boost for the republican presidential nomination. polls show a double-digit lead over ted cruz and john kasich in today's new york primary. a win would give trump momentum going to five key northeast contest next week. he voted this morning in midtown manhattan,aying it was a great honor to be able to vote for himself. clinton, whollary represented new york and the u.s. senate, is hoping to increase her lead over bernie sanders, who has won seven of the last eight primaries and caucuses. ted cruz says he will notsk for a recount of his narrow loss in missouri's presence of primary. senator ted cruz had faced an end of day deadline to contest the results of the march 15 voting. uznald trump defeated cr
by fewer than 2000 votes with a margin of 151%. andcinnati man charged plotting attack on the u.s. capital has been ruled competent to stand on trial. christopher lea cordell's trial is scheduled for november. it appears mother nature is not ready to give houston, texas a break just yet. flash flooding is in the forecast for part of the state today and the national weather service has the houston area of a flash flood watch through tomorrow morning. nearly 18rms dropped inches of rain across parts of southwestern texas. more than 100,000 people have lost power and hundreds of flights in and out of houston have been canceled. at least five people have died due to the severe weather. global news 24 hours a day powered by our 2400 journalists
in more than 150 news bureaus around the world, i mark crumpton. earlierme breaking news on the potential ipo of the state owned saudi arabian oil company. jpmorgan had and been selected to advise this ipo according to people familiar with the matter. scarlet: bruce david is the reported ruth, is jpmorgan taking the company public when it does list? ruth: that is what we believe. it is interesting to keep in mind that it is the only big deal bank that has this control. it is our understanding for they have been working on it for a couple weeks now. they are in a prime position that when the deal happens to underwrite it and be the lead bank on it. michael klein is a very well known banker. we know him from other deals, but he cannot provide
underwriting and he cannot sell the deal. he is coming in as more of a strategic advisor. for both of them, it is a hugely prestigious mandate. alix: and it comes with what i am guessing enormous fees. aramco is looking to sell at 5% stake in the business. overall, it could receive $106 billion in cash from its sales to the sovereign wealth fund. what kind of fees are we looking at here? blastererage ipo fees globally were about 4% of the deal. the thing to keep in mind is that on government deals, those numbers do not apply at all. national commercial bank listed in the region and the middle east in 2014 and the banks on it made 0.1% in fees. the numbers are really small, but where they make their money is from commissions and selling the deal to investors. profitable hugely
event for them. when banks take their check helpful to say that i worked on the biggest ipo of the decade. alix: what kind of relationship do we know that michael klein has with the saudi arabian government? he has worked on very high-profile deals. do we know anything about his ties with saudi arabia? ruth: not much actually. he is a pretty secretive banker. he is one that we do not see much interaction with. you do not see these big interviews and profile pieces and all that. be clearlyseems to valued. it is interesting that he is the only boutique bank in there. his background is a lot of energy deals for this is a former citigroup banker. he is known for his advisory roles. alix: thank you so much. we appreciate it. scarlet: let's get back to the markets and equities, which are back on track for the year. u.s. stocks were rising and come
off of their highs of the session. you can certainly see that over the past four months that they are at the best sessions on better than forecasted results. gains in oil boosting energy producers today. joining us now is all over run it. today, you have seen stocks give up some of their gains. -- whale is kind of monetary. oliver: there's been a rebound in the commodities base, which has helped equity markets and not just oil. the bloomberg commodity index has been up since the beginning of the month really. oil, it comes down to whether or not you look at the longer-term picture and its impact on equities or the shorter term. this is something that we try to be diligent about when we analyze the correlation between those two assets because there is a very distinct point between looking at a 30 day or 60 day correlation on what sort of direction the to move stocks. from a trading standpoint, that correlation is lower on the
intraday moves. you can see a little bit more of a relationship if you narrow it down by days in which oil moves by a percent or 2% in either direction. big swings in that commodity will typically have an effect on stocks. just because oil is up or down, if you look of the day today, it is not quite as compelling of the relationship. scarlet: a great way in determining whether this is a key driver are not over the longer term. another thing as we churned through these levels, because we are pretty much. and a rancher oliver:. at fund flows you can tell a clear story about stocks right now using a simple observation about etf flows. basically inflows into the two most popular funds of the past week. this is where people have and putting in their most money since april. it has been ishares small-cap fund. and then there is the minimum volatility etf. it is this weird dichotomy
between people wanting to get back to sort of a growth mentality. at the beginning of the year, it was getting into the defensive type names. in the past couple of weeks, they have rotated into growth type names like small caps, which are typically more risky. almost as popular is the minimum volatility etf. it keeps it little bit of a balance when the market gets volatile. it shows you that even people are shifting toward getting a little more risk on, you're having a small trudge up and no one is bullish on getting past the previous highs. we are getting there, but there's clearly some hesitation right now. some of they temper s&p 500 have reported earnings, but we are not getting conviction either way. alix: take a look at the sector breakdown and most of the sectors have actually rallied and timex except for financials us by the fact that a looks like profits are going to
be down across the board. it is that blue and orange line that go in both directions. that means financials have more room to run, but the rest are in pain. oliver: i love this chart because it shows what is happening leading up to earnings. you talk about what happens during earnings, but you have to keep in mind where sectors are coming into the profit reporting session. you say,at this and everything that has been doing poorly is also expecting -- everything that has been expecting shanking profits has actually rallied. the only one that did was financials did they were down 7% year to date going into earnings. maybe a little bit of the strength we have seen is because it had room to run. whether or not those investors will have the same leniency, i'm not sure it will extend to the rest the market. i think will be interesting and telling in terms of which direction the stocks will go if they miss revenue or profit. are hey going have a be on both. ? alix: a lot of mysteries there
track, the royal name in it sector. alix: we were thinking royal caribbean. scarlet: it was a sports reference. the kansas city royals. [laughter] julie: we are talking about a railroad stock. kansas city southern is up 27% this year. that is where all disputing track funds come into play . the stock is on done well and is doing well today. at one dollarn zero three cents, but revenue did follow year-over-year. it was down 7% because carload volume fell by 5%, but the stock has still been rising today. if you look at the daily performance, you will see that nearly 4% gain in the stock. say this is the
smallest class one railroad based on revenue and traffic, but what is unique about kansas city southern are its mexican operations that are unique among the other class one rails. it also makes it more vulnerable to changes in the mexican peso as opposed to the more domestically oriented railroads . we also may see a pickup in volumes in the second half of the year. on the riseads today in the wake of getting these numbers from ksc. 7% increase iny shares this year -- 27% increase in shares this year, it is not nearly as strong from csx. canadian pursuit to norfolk southern, which is down. there is deal talk among the rails that has not quite materialized here. that is part of the story.
kansas city has certainly been mentioned as one of the potential deal targets. i want to take a look at the company segment revenue on the bloomberg. this is a chart that comes from bluebird intelligence -- bloomberg intelligence. intermodal, which means from rail to truck, different types of transportation here in blue. the total commodity group, not just energy there anin tank. pink. yes tina declining revenue -- you have seen a declining revenue. maybe we could see some improvement in these numbers in the second half. despite all this, shares are doing pretty well. scarlet: thank you so much, julie hyman. alix: i should've gotten that one. earnings plunged for 60% for the dow jones worst performer. goldman sachs doing the worsens
lloyd blankfein became ceo in 2006. scarlet: bloomberg contributor bill cohen broke down the results earlier today. >> when the first quarter has the eighth largest drop in the dow in history, basically it took a lot of people by surprise. you would think that wall street traders might pick up on this somehow or be prepared for it, but i think it would startle a lot of people. that is what you are seeing a numbers across the board, especially in trading. places like morgan stanley and goldman sachs do not have other sources of revenue to help them out in situations like this. goldman always had a reputation for being smarter than everyone else. i'm curious whether to see in the trading businesses, they are able to do better. >> total trading revenue be estimates, but it is down 47% from last year. >> something like morgan
stanley, which had the deemphasized in trading in recent years, had something like $850 million in revenue in trading, which was quite low for them. i'm sure goldman did better than that. does goldmanis have that exceptionalism that people have come to expect from the firm? >> jonathan ferro, weigh in here. , buttal revenue down 37% here's a copy that managed to beat 17 out of the last 18 quarters. should we pay more attention to what is happening with the specs on wall street? bank of america the only one that missed. how much longer does this go on for? >> you are absolutely right. one of the interesting things about jpmorgan's earnings is that they were down from what people expected or down from the previous quarter, but they are still making $5 billion of profits.
the last two years, they have been the most profitable years and j.p. morgan chase's history. what this is showing to me is that there is real benefit in this kind of economy and this kind of dynamic on wall street for a more diversified base of revenues. i think you are seeing that with j.p. morgan chase, who is sort of hitting on all cylinders compared to competitors. you see the weakness in the business model of a goldman sachs or morgan stanley, which is more monoline in that regard. i still think happy days are in front of us for wall street, believe or not. factorthe limitation still remains that the fed will not allow any m&a activity among the big banks. i'm sure that would be a subject that lots of people discuss on the political trail. that would really help a goldman sachs or morgan stanley at this point. scarlet: that was bill cohen speaking earlier today. alix: oil rising for the first
scarlet: this is "bloomberg markets." i am scarlet fu. alix: it is time for the bloomberg business flash. business the biggest stories run up here apple has engineer.as he will work on special projects related to the tech giant electric car initiative. he will become apple's most senior car guy in a likely candidate to lead the company's secret project code-named titan. beenet: as we have reporting, state-owned saudi arabian oil company has chosen jpmorgan and michael klein to
advise on the initial public offering. that is according to people familiar with the matter. klein is providing strategic advice to the government while jpmorgan is working on preparations for the ipo and maybe among the banks that underwrites the list for aramco. the saudi prince is looking to list shares on the domestic stock is change as early as 2017. saying thatola is it is giving cans and bottles of its flagship soda a makeover. their plans to unify the appearance of coke, like coke, coke zero, and coke like. it will roll out in mexico next month and spread to other countries. coke is still considering its options for the u.s.. that is your bloomberg business flash update. scarlet: what is coke light? i've never heard of it either. do you live longer if you drink it? that would be cool. [laughter] scarlet: if you look at the
major indexes, the actual net change does not show you the direction. the direction has been a leg lower in the last hour, but we are moving in a pretty tight range as we are looking at oil as the driver here. a bit, buts up quite not really having that much of an impact on the overall stock market. coming up in the next 20 minutes, investors are still rattled as netflix stocks continues to plunge a day after reporting weakening subtract the growth. we will speak to an analyst to as a bold call on the company. scarlet: you who reports first quarter earnings after the bell today. in-depth look at the company in our numbers don't lie. discussing that preview. ♪ you shouldn't have to go far
we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. alix: live from bloomberg world headquarters in new york, i am alix steel. scarlet: i am scarlet fu. this is bloomberg markets. let's begin with the headlines on bloomberg first word news. from thepton has those
newsroom. mark c.: hillary clinton has lost the last eight races to bernie sanders. now, the front runner is hoping to be gained the upper hand. mrs. clinton is favorite today in new york's primary. meanwhile, donald trump is counting on his home state for the republicands nomination. polls show mr. trump with a double-digit lead over ted cruz and john kasich. president obama is at odds with senators in his own party over a bill that has angered saudi arabia. the measure would allow saudis to be held responsible in u.s. courts for any role in the 9/11 attacks. chuck schumer of new york supports the measure. the president spoke with charlie
rose of cbs news. president obama: if we open up the possibility that individuals in the united dates could routinely start suing other governments, then, we are opening up the unites dates to being continually sued by individuals in other countries. mark c.: house speaker paul ryan is refusing to endorse the bipartisan bill. saudient obama visits arabia tomorrow. you can see more of the interview with charlie rose and president obama tomorrow night on charlie rose on bloomberg. raleigh, of p brought north carolina has lost $3 million, according to the agency that promotes tourism. pearl jam joins a list of
performers who have canceled performances in the state. boston, bruce springsteen, and regal start are among those refusing to perform in the city. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. back to you. scarlet: thank you so much. let's get to the intersection of market and politics, and talk about performances in the state. boston, bruce springsteen, and regal start are among those oil.ing to joining us now is bloomberg's chief energy correspondent. when you look at the strike on kuwait in its third day, what is the impact on the oil market? g. it is quite bi production is down about 50%. normally, the emirates produced -- it is down to 1.5 million
barrels per day. to 1.1ion went down sunday.on it is still a big factor in the market. alix: it is not just kuwait. you have nigeria, supply disruptions in venezuela. we have a chart detailing the kuwaitwti rising for the first n five days. the tomlin dollar boosted demand for commodities. alix: strike -- over one billion barrels per day. the fourth bar is saudi immediate capacity. shortfall.up for the big bar on the left-hand side is saudi capacity, what they can get out of the ground during 6-9 months. we can deal with the shortfall now, but the question is later, what will be the impact? scarlet: that is really good
context for what happened over the weekend in doha. you had a really good article about what happened at doha being about saudi arabia leveraging its politics, facing off over iran. >> that is true. for the last 70 years, politics theoil has been mixed in middle east. saudi arabia is trying to keep .oreign policy and oil separate it is a sign that the deputy c crown prince, a very influential prince is becoming more receptive over oil policy. onto side very late he indicated to everyone that they were ready to sign a draft
agreement, but everything unraveled overnight when the prince changed his mind, and ordered his delegation to not negotiate a deal, unless iran was present. alix: is there other options for they don't want oil to go to $50 per barrel. they want to keep a market share. >> i don't see a potential freeze agreement now. opec meeting in june, in vienna, it will be a very difficult one. other countries are complained that they don't understand what in minister of petroleum saudi arabia was doing in doha. i don't think the freeze agreement is on the cards. is quite low.ip the relationship between saudi arabia and other countries, including qatar, has been damaged after what happened over
the weekend in doha. alix: great stuff. bloomberg's chief energy correspondent in london. scarlet: let's turn now to technology. yahoo! reports today after the bell. it sells are falling by double-digit percentages. forysts report a 13% slide the year. today, thlet's analyze the numbr in today's numbers don't lie. the company draws in over 200 million unique visitors with desktop and mobile sites come up to its relatively slow adjustment to mobile devices has plunging.umbers the shareable fall to one point five -- 1.5% this year. here is the steady drop-off in
yahoo! search ad revenue. $1.4 billion worth this year, 6% of the global search market. the outlook is not much better. after holding steady last year, it is likely to contract this year to also $1.4 billion. display ads has become yahoos a yahoo!'snings -- biggest earnings ranging in margins from 5% to 6%. the margins trail google and facebook. that differently bidders find value in different business,ahoo!'s whether news, cloud, social, flickr.g tumblr and alix: staying on tech, we want
to go to abigail doolittle, live from the nasdaq, where she is looking at netflix, which got totally destroye. abigail: that is a good way to put it. if they get really destroyed. is plunging, the second-biggest drug on the nasdaq. the cause of the plunge is because they offered weak second quarter guidance. .ne analyst called this he thought the first quarter would strong, but he was concerned about the second and third quarter. he told me that 2016 is now progressing as a digestion year for investors. it is showing in the near term chart, with sellers taking control. more recently, there has then been up trend. , and we-- it cracked
down see shares trade back to this year's low, around $80, or so. alix: we continue our coverage of netflix with benjamin swinburne. you see the recent pullback as a buying opportunity, though you target down. price where do you see the long-term value? >> the investment debate on netflix has not changed. it is how big can u.s. business get and how close to the u.s. penetration rate can be international member get? we got good news and bad news yesterday. netflix.ll homes have i think two shows, "make a ullerr," and "fo
.ouse" drove it unfortunately, international growth is taking longer and slower than we thought. that was reflected in q2 guidance. q1 was ahead of expectations. a lot of this bad news is digested in the market today. it comes down to, do you believe netflix can replicate the success here overseas? they have proven that out in some early market like the u.k. and latin america. we do not think the market has broken at all. scarlet: they will have to localize some of the content which means more cash outlay as well. >> it's true. it will cost the more money on originals, but i think they will replace a lot of content with
that original programming. the they have scene is contentis the original gets a better thing for the book .- bang for the buck you might think that spending five dollars-seven dollars is a per episode, but that is a per household number that is manageable, and more efficient than your local broadcaster is going to be able to put up. we give some a competitive advantage. alix: are there competitors guys like amazon, for example. it seems like a for income households will have more than one streaming device, and lower or middle income will have one. can netflix compete with the deep pockets?
>> the reality is most people spend most of their time watching cable television, satellite television, or free tv. what we are talking about is those experiences losing shares to new global players, amazon and netbooks. i think netflix has a time to market share to amazon, but the markets can grow quite a bit from here, and take money from the incumbents. scarlet: i wonder to what extent it is instructive to look at netflix's numbers on a year-to-year basis. what kind of seasonality is there to the company's business? >> i think seasonality of content is important, as it seasonality of tv viewing. if you look at the television business, people watch less television in the summer and
more in the winter. that seems to be true when you scribernetflix a growth -- subscriber growth as well. the seasonality is going to be there, which is why we think that q3 adds will be better than q2. scarlet: thank you so much. alix: i chart their looks at the upside and downside, based on earnings. much more coming up on the other side of the rate. ♪
the verge of paying back of billion are, as well as tracking of a political win for its new president. plus, kentucky based company is so popular in china. beeret: plus, the biggest merger ever. alix: we begin in let america. argentina returns to the international debt market. they plan to sell $16 billion in bonds in a four-part offering. it has been 15 years since argentina was shutout of the credit market following the default in 2001. as return from exile comes fixed income undergoes a major shift. >> the movement in the front end
of the curve has not been dominating. what has dominated the backend is the boom market. this is an extremely low interest rate world. i think investors here are confused about that, and at risk of really missing the opportunity in fixed income here. scarlet: china wants to take control of the country's most popular fast food brand, yum! brands. they are interested in taking majority stake in the business. the $8 billion unit includes kfc and pizza hut restaurants. a beerr maker may be -- maker may be closer to an miller. to buy
asahi.hough alix: time now for the bloomberg quick take, when we provide content and background on issues of interest. oil is one of the most-watched commodities the world. the factors that set prices are much more complex than supply and demand. after opec the non-opec members failed to agree into hot, there are more issues in the air. after four years of record high prices, crude began to plummet in 2014. it dropped over the next 18 months, during producers into turmoil. instead of pumping glass, middle for a pricers opted war. sports.ramping up
here is the background. opec was formed in 1960. members use their power for political and economic ends, shocking the economy with an embargo in 1993. in the 1980's, infighting, and the development of futures exchanges gave rise to new future market prices. here's the argument. oil prices are not expected to rise dramatically anytime soon. producers worried that there could be an underinvestment, setting the stage for a new urge in prices. opec numbers are toward over the best strategy. that is your global business report. for more stories, visit bloomberg.com.
alix: this is bloomberg markets. i am alix steel. fu.let: i am scarlet a critical two weeks for banks around the world. in two days, the ecb announces decision. then, two weeks later we hear from the bank of england. two: it is a very busy weeks. what is the one thing you are honing in on? big move. had a very in the markets. we have had a lot of repricing in terms of central-bank actions . a lot of the expectations are reflected in the markets. the u.s. bond markets are barely pricing any expectation, really praising no movement in terms of expectations from the fed. the focus is on the june meeting.
what will change here is the focus for the u.s., and they'll look here is on the inflation data. the bank pulled back. the market is not a good thing on that. it is cheering that. what will pressure the said, and perhaps its ability to be accommodated is if we see signs of inflation. i think inflation date will be critical going forward. alix: we have this chart showing the inflation expectations for the next five years. japan is the blue line. the u.s., orange. the eurozone, white. although word. no matter what the central bank does, it cannot get higher. scarlet: janet yellen has made stay that she is happy to at the 2% level. i feel like we're climbing this wall of worry. what does this mean for the bank
of japan and how it acknowledges the limits of monetary policy, especially with the yen reacting the way it has? >> certainly, as you highlighted, the bank of japan meeting has a lot of focus. the movement into negative interest rates really backfired. it's not deliver the kind of response the policymakers came of interest rate differentials. they got the opposite reaction. crude has been out. a number of speeches reasserts confidence that negative interest rates will deliver on the promise of weakening the currency. the promise and ability of negative interest rates to stimulate the economy. the manner in which it does so is through the currency. there has been a lot of pushback from the global community as
well. we don't expect them to go right back into negative interest rates. goingt there will be more back to traditional nontraditional measures of quantitative easing. soon, relative to the movement at the beginning of january, not a lot of expectations for the meeting later. alix: we heard a little bit about that from the deputy secretary, jack lew. sort of saying, you can do the domestically, japan, through fiscal policy. what did you think of that chuckle >> not only is he saying that, for all global policymakers. every time that mario draghi talks about monetary policy accommodation, they are all saying, we cannot have monetary policy acting alone.
we cannot be overly reliant on monetary policy. the problem is that fiscal and structural reforms are much harder to implement than the monetary policy. they require political compromise. that is a much more difficult policy shift for any policy maker implement. that is why we have seen very little, or partly why we have seen very little of those other policies being brought to bear here. scarlet: thank you so much for giving us your outlook on the big central bank meetings. alix: coming up, a challenging environment for banks. ♪
scarlet: from bloomberg headquarters in new york, this is bloomberg markets. alix: stocks are pulling back earlier from some gains and earnings are the focus. johnson & johnson and goldman sachs are topping estimates. scarlet: how high can gold prices go? analysts say the rally has room to run. alix: it was valued at $9 s admitsbut tharnano it's under investigation. the ceo is vowing to survive but can she? let's go over to the markets desk and julie hyman. the correlation is not forceful today. look athe downward
stocks as they are now little change and have hovered at that level for the past hour or so. the dow and the s&p are not doing much but the nasdaq has been exerting the downward pressure. there are a lot of declines within tech knowledge he. over the course of the day, the s&p 500 went down around mid day and there has been adrift since then and in the major averages. the downward pressure from tech knowledge he has at least something to do with earnings. ibm came out with a forecast that was below analyst expectations. one analyst pointed out that the stock is up for the year, it was up 11% going into the report. he said the report had to be top-notch. the earnings forecast was a isappointment and illumina up with preliminary earnings that missed estimates on the company said several of its devices have missed estimates and it's out with full earnings
on may 3 and netflix has a forecast that missed estimates. internationals what investors have been banking on in terms of growth is going to come from. if it's not up to par, that is proving disappointing to traders. you'velook at the imap, got information technology is the worst performing and consumer discretionary lagging. energy and materials and financials are still up but as you can see, this is equally not much change. technology is the most heavily weighted group in the s&p 500 so when it's down it exerts pressure. alix: it's weird that energy is not helping enough because you have the dollar at a nine-month low and the two tend to move inversely. julie: you definitely have that, it's a matter of scale in terms of the various groups. there is the bloomberg dollar index which is down about 0.5%,
trading at its lowest since last summer. that has been having a ripple effect on the commodities. let's take a look at oil prices. it's strengthening throughout the morning but especially taking a leg up around 10:00 a.m. and now up by 3%. it's above $41 per barrel. the dollar is having an effect on metals but we will save that for the next bulletin. alix: that's a good tease. scarlet: we will be back in just minutes. alix: let's check in with first word news. mark: in washington, house panel is certain testimony on encryption. the senior fbi official says she does not hiring third parties to help the bureau hack into locked iphones should be a solution. >> i think we really need the cooperation of industry, the cooperation of academia, the cooperation of the private sector in order to come up with solutions. mark: also testifying before the
committee, apple general counsel. the primary day is today in new york and hillary clinton's campaign manager is predicting the state will result in her taking an important step for the nomination. her rival, senator bernie sanders, win -- needs to win 68% of the remaining delegates if he hopes to win the nomination. on the republican side, donald trump needs to capture more than 50% of the votes statewide that would put him in strong position to win all of new york's 95 gop delegates. it has been one year since the death of freddy gray. 2015, weekil 19, after he was seriously injured in a baltimore police department transport van. his face became a focal point in the national debate over police treatment of african-americans. six officers are charged in his death. none of the cases has been resolved. in september, the freddy gray
family in the city of baltimore reached a settlement, awarding his relatives $6.4 million. belgium remains on high alert following last month's suicide bombing. authorities are investigating new information that islam asked state may have sent more fighters their way. police say strategic sites like airports and major rail stations remain under close surveillance atle security is high shopping complexes and cinemas. news 24 hours a day, powered by our 2400 journalist in more than 150 news bureaus around the world. i'm mark crumpton. alix: thank you so much. we are eight days away from the next fomc meeting. boston federal reserve resident eric rosengren said the economy is strong and fundamentally sound. >> i actually think because the economy is stronger and the economy is fundamentally sound that we will have the conditions
were gradually raising rates faster than financial markets expect would make sense. scarlet: one of the most bearish forecasters on the street, savita responded on "bloomberg ." >> in my view, no one is positioned for excessive hikes this year. if you look at valuations, what is expensive? utilities, high dividend yields, that the gets clobbered when the fed state -- starts hiking it just rates. my sense is that that would be the big surprise to investors if we get a more hawkish fed than what's in the numbers. david: at the risk of reading too much into this, i thought what he was saying is don't be too surprised. he is at least keeping open the options. don't go too far in the direction of no height. think the fed speak is confusing. in the bank of england, there's a fair amount of clarity and they are focused more on inflation dynamics than they are
on guessing the real economy. jon: it's their mandate. the federal reserve is confused at the moment. they are looking abroad so the market is looking abroad and that's why they are so dovish when i look at the places like japan and china and the eurozone. growth expectations have been cut. you cannot have the likes of eric rosengren complaining about it. the biggest risk they run is whether the rate hikes get pushed too far out and then they have to hike more aggressive and then we will talk about inflation of growth that financial stability. what if it's a market that has to handle series of hikes over a series of months? em and this new focus on other countries is already worked. the dollar index has softened. tom: the markets are doing some of the work for the head.
it has been somewhat of a tightening going on anyway. >> every source of capital has gotten more expensive. the spreads have risen, ipo activity has slowed down to almost a standstill on the first quarter. it's tougher to raise capital and so on the margin, we have already seen some tightening this year without the fed doing anything. vonnie: does that mean that the fed might be able to go next time around in june? our view is that the fed goes in june and the data is strong enough and they go one more time this year. i think that would still be more than what the market is expecting. vonnie: when is the market going to come into line with that? and thathuge downdraft was just fantasy. now we have had this steady incline upwards very slowly. >> one of the reasons our target is below where we are today is the market falls off a little bit ahead of june as we digest the fact that we might see another tightening.
on top of that, you've got brexit and big potential negative headlines. once we digest that the economy is stronger and can handle a rate hike, that can put the market on stronger footing from a fundamental perspective. at this point, it feels like we are running on fumes a little bit. scarlet: that was the head of equity at bank of america. we are in earnings season. let's get you a scorecard on where things stand. you can see that we've got about 52 companies reporting and so far -- alix: that is my terminal. this is looking at the issue that some companies are meeting peak margins but let's go to your screen. scarlet: 52 companies are reporting earnings. in terms of sales growth, only 1/3 of 1% are down.
when you look at the beats and the surprise on the sales side is there is barely any, up 1%. up by 4% on the earnings side. alix: revisions have been so negative in terms of estimate so it's surprising on the sales estimates, you can still have a beat. this is one of the issues that companies are dealing with and that's peak margins. are these blue lines that are recessions and this white line is s&p profit margins. peak, see profit margins when it comes down, you wind up having a recession. the concern is we have seen margins peak and we are slowly coming down and these big drops in corporate property ability 10 to foreshadow economic reversal. also consider that wages are starting to increase. we have not seen that trickle
down to profit margins yet but that continues to be a risk for the market. scarlet: that will be the color that investors want to get from the ceos. coming up next, gold has been exceptional bright spot markets this year and some analysts say will get brighter. alix: how high do they see prices going? we will ask next. ♪
affect is benefiting a lot of commodities today, metals included. we talked earlier about the boost it's getting to energy prices so we are watching gold and silver in particular which particularlytoday, silver, up more than 4% so that's a substantial gain. that it in silver means may enter a bull market. you go back to the lows where silver was on december 14 of last year and you look through today and we have a 24% again. the gains of today would have to remain intact for it to enter this bull market but it looks like it's a safe that that that is going to happen. gold, itmpare it to entered the market in came out of it again. lows, it hascember rallied 20%. it has gone kind of sideways over the past month or so.
some of the more bullish forecasters on both happen to be the most accurate forecasters. from capital economics who were the best gold forecasters in the first quarter and cantor fitzgerald think the gold rally might have more room to go. you have the relative strength indicator was looks at momentum so it's neither oversold or overbought right now. this is what gold has done and this the capital year end target which is $1350. cantor fitzgerald things it can climb but not that quickly. there are still some bears out there because goldman sachs thinks it will fall to $1000 per ounce. there you have the dollar versus gold. scarlet: thank you so much and the perfect setup because gold one of theeen
year's best performing assets in some analysts say it has room to run. scarlet: joni us now from chicago is tim evans of longleaf trading group. alix: give us how much more juice is left in gold? >> our view given the market fundamentals and the very hot start we have had this year in gold, we feel we have seen the highs over the intermediate term. $1275 level shows excellent resistance in the market, the volatility component of the market suggest we probably put in the near-term high. scarlet: do you see switching out of golden into silver which is still precious but more commonly traded as an industrial metal? >> i think we are currently seeing that. if you look at the multiple of the price of old over the price of silver, gold lead this rally as we started the year. ofd traded up to a multiple 82 over the price of silver. as goal has found the trading
rage we are currently in, silver has accelerated. it has moved to the upside and we are getting back to that 75 to one level which is the medium point we have had for the past 12 months or so with those two markets. vix: you also look at the of gold. index inhe gold vix the volatility has picked up for gold but the chart is nowhere near the levels we saw back in 2008 and even 2011 42013. what does this tell you about the market? >> we look at a little bit different. we are looking at where the support level is in the volatility in what the market does upon reaching the support levels. if you look at the last 12 months of the market, the biggest moves and gold have come dexn the gbc volatility in has come down to the price level.
you can get it expansion out of those price ranges. we feel comfortable effectively selling volatility, expecting the market to continue to consolidate the trading rage you are in approach that $15 level, at which point it will be time to reverse that strategy and belong on volatility. scarlet: thank you so much. ahead, will the bulls keep running when it comes to stocks? more on the market action today. ♪
from a separate low helped by central bank policy and positive data. scarlet: let's turn it over to our radio colleagues carol massar and cory johnson. colas we've got nick here. thank you so much. this is the bloomberg advantage. nick colas is in the house. nice to have you back here. you use a movie reference to look at the market environment. cory: and the bazaar one. >> it comes from " hannah and her sisters" and there is a reference in their a page 112 that michael kane wants his love interest to read and it has become an award in france. the prize of page 112 and it's a lyric -- literary contest based on page 112 of a whole bunch of different novels.
the first 50 pages are easy to write and you make them spicy and move fast but by the time you get to page 112, the real writers are still working in one's not so talented have given up. cory: i love it. carol: how does it apply to the market environment? >> i thought we are there. we had a spicy first quarter in the first 50 pages have a lot of volatility and it was difficult to call the market but now we're into that time when people are not really focused on what's moving right now. is moving now? what should we be focusing on? for the year, we are looking at for the year at 2.5%. >> the first thing that caught my eye is how much small caps of moved in the last five days. the russell that was down all year long rope positive in the last five days. small-cap s&p is up 4.5% in the
last five days. up 2.3%.tself is only [no audio] it's up over 4.5% in the last few days in a big move upward in a group that has been under load. energy has been big the last few days but you expected that. financials really stand out. we had the goldman sachs results today. is that's what's carrying goldman sachs? it's a moveight, back to financials and spaced that there is a risk on sentiment and financials have lagged. you you do to catch up? look for things that have not moved in those are the financials. we are at page 112, how long is this book? -- more are of matter
matter of if we want to finish it. the first quarter was tough in this quarter is better but it looks like investors are putting fresh capital to work. etf flows have turned positive in these groups. carol: many are moving toward emerging markets. >> that's good because of the weaker dollar but over the last five days, efa the, the developed economy equities have moved like the small-cap area so people are trying to play catch-up going into the back half of the second quarter which is another couple of weeks away. cory: are there signs that something might be reaching the end of the book? will be reaching a certain witht thatcarol: we talk just about the duration and length of this bull market. we feel it's getting long in the two. does that matter to you? cannot go longer question mark >> the economic expansion in the current bull market evan it going on for much longer than average. carol: does duration matter?
>> it doesn't matter this time because that downdraft in 2008 was so bad and put us in the precipice. the first two years, we were crawling out of that hole before you normalized and expansion. cory: what do you look for to change? where does the best opportunity domestically? carol: is it energy or financials? >> the surprise area has been technology. it has not out paste the market. -- it has not outpaced the market. it has not caught up with performance hits of that's the area looking to be the final confirmation that this rally has legs. this far is the next big part of the story, it has to be the fed meeting and fed chatter because the markets took off after janet yellen's talk at the u.s. economics club. that was the sign to go longer in the markets observed that. carol: she is a major character
in your book. >> she is the lead. carol: nice to have you here. i will send it back to alex and scarlet. scarlet: carol massar and cory johnson. there is always something interesting to highlight. ahead, first the fda and now the sec and we have the latest in a string of damaging revelations for the blood testing startup theranos. ♪
thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish.
thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. shoshow me more like this.e. show me "previously watched." what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. scarlet: from bloomberg world headquarters in new york, you are watching bloomberg markets. alix: let's start with the
headlines. donald trump is counting on his home state to provide a rig bone to his nomination. the polls show him with a double-digit lead over ted cruz and john kasich in the new york primary. a win would give him momentum going into five key northeast contest next week. democratic front runner hillary clinton who represented new york in the u.s. senate is hoping to increase her lead over senator bernie sanders who has won seven of the last eight primaries and caucuses. senator ted cruz says he will not ask for a recount of a narrow loss in missouri's presidential primary. he face in and of day deadline to contest the results of the march 15 voting. donald trump defeated senator cruz by fewer than 2000 votes out of more than 939,000 cast, margin of about 1/5 of 1%. the obama administration is warning states about cutting medicare funds to planned parenthood.
the administration has sent letters to officials in all 50 states advising that such cuts may not comply with federal law. 10 states of recently cut medicaid funds to planned parenthood. raised rents for -- no relief yet for rain in texas. 18 inches fell in 24 hours. the national weather service has the area under a flash flood watch through tomorrow morning. in houston, at least five people were killed in the massive flooding. global news, 24 hours a day, powered by a 2400 journalists, in more than 150 news bureaus around the world. alix: i'm mark crumpton. thank you so much. johnson and johnson beat analyst estimates today and the company raised its 2016 forecast fueled by drug sales. scarlet: as a result, it is experiencing a healthy bounce
and the ceo was on "bloomberg " this morning. >> overall, the business continue the momentum we saw at the end of last year into the first quarter. we are off to a great start to the year. we have had a strong quarter with all of their businesses picking up momentum. pharmaceutical sales have been very robust. the pipeline continues to build which will be good for continuing of that strength of excellent performance going forward. the consumer business is making steady progress as well as improving its margins on a medical device business continues to show signs of improvement so we are pleased across the board that all businesses are performing well and we will continue to see that throughout the year. david: start with pharmaceuticals, that is 45% of your sales. remicaid has been a big factor. how much will that part of your business grow? >> we gave guidance overall in
sales which is consistent with their guidance and jenny worry which did not assume that a bio similar competitor will enter the market in 2016. we still remain with that because weprimarily believe we have strong intellectual property that techs are products. we are not assuming a launch this year of a i/o similar in the u.s.. it, thesei understand drugs necessarily have a half-life. what is coming along down the pipeline? >> there are many drugs in the pipeline that will replace or other products that lose patent protection over time. it's a normal course of business and pharmaceuticals. we have 10 new products we are filing between now and 2019, each of which have over $1 billion potential so it's a strong pipeline for the future. vonnie: what is your plan for access cash? will you beks or
looking at potential mergers? >> good morning, our capital allocation strategy has been very consistent and i think rewards shareholders significantly. dividendarts with our , we have 53 years of increasing the dividend. but at then mm&a right price with the right partner and the right valuation at the right time. until we do that, we will return more cash to shareholders and we are in the middle of a $10 billion share buyback right now. we are about 25% of the way through. david: tell us about your consumer business. that is heavily dependent on the emerging markets. how vulnerable are you to the volatility in those markets? >> the consumer business continue to do well with steady progress throughout all the major products. veryit's not only significant in emerging markets but it's a great opportunity.
although we see some slow down any connie's in emerging markets, it's clear that consumers in emerging markets want that are consumer health products and they are willing to spend for premium products in the consumer space. we are thrilled with that business and we think it will do fantastic for us in our emerging market growth. you think about inversions? should they be allowed and are they good for the economy question mark >> that's really a topic of whether our corporate tax system needs to be revised. i think everyone concluded that it does need to be revised. unfortunately, it may not happen during this political season but its territorial system with a lower tax rate and incentives for innovation really matter and that's what we like to focus on. scarlet: that was the johnson & johnson cfo. has been feeling the heat from multiple health authorities bring it's facing criminal and civil charges.
ceon interview, the defended her company against reports that its technology may not work. devastated that we did not catch and fix these issues faster. ceo of thisnder and company. anything that happens is my responsibility. we stopped testing and have taken the approach of saying let's rebuild this entire laboratory from scratch so that we can ensure it never happens again. scarlet: david boyd made comments defending homes. what did you learn from him? >> he wanted to take this opportunity to strongly defend elizabetholmes. he says the board has total faith in her and she is still the right person to lead the company and she has the scientific knowledge and the management skills to do this. he also clarified some of the
headlines in the news over the last couple of days about the investigations. starting last fall, after several harsh articles appeared in the wall street journal questioning the company's technology, the company got a request for documents from the sec and the u.s. attorney in southern california. those document requests have continued and have been very broad. the regulatory agencies have not indicated what exactly they may be interested in pursuing charges on. they are just sort of collecting information. if the investigation continues, they would eventually reach out to the legal counsel of theranos with specific questions and start to depose questions and that has not happened yet. he wanted to make clear that this is still an a fact-finding stage and we don't know what will happen. that's the latest. scarlet: i am surprised to hear that the sec is involved because theranos is a private company. >> normally they focus on
companies which make sec filings. coulds case,the sec potentially look into any representation that the company made to investors during early fundraising rounds where investors got stock in the early stages of the company. that has not been confirmed by anyone but if you look at the pieces of the puzzle, that is one thing the sec could be interested in but theranos says they do not yet know exactly what the sec is interested in. alix: did he mentioned questions they would get from shareholders? >> i asked if they were hearing from their investors and you would think the headline risk would fall down on them. he said so far, they are standing by the company and elizabeth who says several investors who bought in early have made tremendous returns at least on paper on their investments. they are not likely to get super upset. he said some of the later stage investors got involved in a company because they believed in
the technology and the potential of the technology. they are hoping that this is going to clear up and theranos can continue to pursue its goal of offering inexpensive accessible blood testing. what extent is this scrutiny emblematic of the challenges these unicorn companies face because they got so much money so easily? in silicon companies valley take this approach that they will barrel forward and disrupt. scarlet: someone's giving them money so why not. alix: you don't have a huge compliance department. sort of charge in there and ask questions and asked permission later. that doesn't work so well in a heavily regulated industry where people's health is at risk. i think theranos is learning a tough lesson. piecesd not have all the in place and the personnel they needed and a regulatory expert to help them navigate this and they just are growing quickly.
now, some of those things are coming back to want them. alix: you mentioned the aggressive articles that were negative but why now? you have to look at the political climate and the election. is there an idea of the trigger? >> no, the wall street journal has very fine reporters and they have done accelrys pouring on this. position isranos' that some of this reporting has had effects that are now creating a snowball at least that's their argument. whether you accept that argument depends on whether you believe in this company are you are one of the many critics. elizabeth holmes ultimately will have to prove definitively through releasing data which he has promised that the technology works the way the company says it does. we are looking to see when that happens. alix: thanks very much. next, willming up the sun shine on alberta, we
scarlet: this is bloomberg markets. alix: time for the bloomberg business flash and a look at the business -- biggest business stories. dishm is warning network subscribers of a may lose channels. the companies are involved in a the losste based upon of internet viewers. viacom is seeking to increase the subscriber fees they get from pay-tv distributors including --. scarlet: goldman sachs reports a
60% drop in first quarter profit and revenue fell to the lowest since lloyd blankfein took the top post back in 2006. he is in the process of the major cost-cutting push, dismissing support staff in leaving open positions. he is spending less on printing brochures. there was a surprising decline in housing starts which fell about 9% in march and the annual rate about 1.1 million was the slowest since october which is a sign that the housing industry has lost some momentum as a goes into the busiest time of the year. that is your bloomberg business flash. scarlet: let's go to the markets ask and a julie hyman. we are looking at some of the biggest movers. julie: i will skip viacom because you just did that. i will move to the next thing which is apple and tesla.
there is a website called electric. that says that apple has stolen luck, the ofaz vehicle engineering to work on special projects to work on the apple electric car. they did not cite a source for the information. they said he would become apple's most senior car guy and likely to lead and electric car initiative which apple has not confirmed it apple shares are down about 0.5% but has let his off life 3%. thoseatching cabella's, shares are surging after another report that it may be finding a buyer. it was getting a bid from vast pro and the unit of goldman sachs. egg leges are taking of up and the shares are still hanging onto it gained a 7%. shows that it has
been a frequent source of speculation. you can create a custom news search and create little flags along the chart. it are the company responds to these speculations are the speculation comes from other services so when there is a blue flag, there's been a time when we have had these mentioned so it has happened recurrently and it's one of the reasons the shares are up about 13% year to date. about whobeen talk could i it. no confirmation yet, this is one particular report. i think we will see more little flags on that stock chart as time goes on. scarlet: thank you so much. a new day is dawning in alberta and the canadian province betting that sunshine will chase its fossil fuel blues away. month,tarting next aberta will propose
suggestion for solar industries. some say canada has fallen behind in the race for renewables. here is amanda lang who joins us from toronto. why the talk that perhaps canada is so far behind? >> we have an annual report got on the sector to keep tabs on the growth and rate of investment and it's not good news. for the second year in a robe the size of our clean technology industry is flat and revenue from the 700 odd companies in the sector are around $11.7 billion and they'll to 11.6. the bigger problem is this is a booming sector globally. there's lots of activity and investment even in hard times. we are losing market share so while the whole industry grows, our share of it has fallen. drop, we are giving
up revenue potential. the number that jumped out at me in terms of the canadian economy is if we managed to hang on to what we should and -- should hang onto which is 2.5% of the globe, that is worth $50 billion in seven years. every little incremental downturn matters. we have at a tough time with oil a lot of our cleantech as mrs. are focused there so capital investment has fallen in 2014. you would imagine that would continue in 2015. scarlet: suncor is investing. what is its plan? story onis a great suncor we think of as the biggest energy company in canada and its heavily invested in traditional oil and gas, it is a big player in. it's got plans for solar and it has made it clear that solar is something it wants to expand into in alberta.
alberta is the seat of our great energy resources and happens to be an amazing resource for solar. it's very sunny there and there are wide let planes. calleds something radiation per square -- solar radiation per square meter and alberta is 40% better than germany and germany is the current world leader. suncor is making this bet and they are not talking anything specific that there are reportedly three different programs they are looking at. the alberta government has created new incentives to get businesses investing in solar and wind because they want renewables to be up to 30% of their grid in less than a decade. it comes together in an interesting way. sufferingsiness is that suncor is using the cash flow from traditional energy to pump into renewables. alix: interesting, you think of germany as the solar capital. thanks ari much. -- thanks very much.
the kuwait strike is indicative of the bottom. oil workers are pretty well treated which has been highlighted by the strike. it will -- they will be probably less well treated relative to the rest of the population but when you look at what's happening with nigerian pipelines getting blown up, colombia, ecuador and you look around the world, you start to see that is what happens when you have fiscally stressed got -- governments unable to appeal their populace by throwing oil money at them. alix: how sticky are these outages? at some point they come back so can we count on the tightening market to continue? >> it's tricky to pull apart how much of this tighter oil market we are in now is because of outages and how much of it is because of organic rebalancing. it indicates both but the reality is we are in april and this is supposed to be the maxim barris part of the cycle and looking for tankers because we were full everywhere.
we weren't going to see the mac -- market rebalancing until the second half of the year. these outages of certainly been conjuring factors but you can also look at data coming up from mexico and colombia and china ex-us, wen see that are seeing impact of these low prices on production. head that theo client but that was a necessary but not sufficient condition for the market to rally over $40. you needed to see ex-u.s. declines in that will not go away. this two-year bear market in oil is really over. here is joe weisenthal and we will talk more about commodities in relationship to what it means for fx markets. february, this low in we have seen the huge rally in
everything from commodities to emerging market commodities and high-yield. our guest today points out that and has been driving em fx sickly takeaway latin america, is the rebounded commodities. we have a chart showing the brazilian real. scarlet: you mean it's not the impeachment rally? everyone is guilty about this talking about these stories in brazil. there is his big macro story going on and it makes you wonder whether these tiny stories we talk about our was driving the show. rallyingee the real pretty close to the commodities. what does this have to do with impeachment? everywhere there is localized stories that people are not telling but it might be something more macro that's going on. alix: it's fascinating and the feedback as well. joe: disentangling these things are hard.
alix: we will try to do that by speaking with the head of latin american fx strategy from merrill lynch. also be joinedl by stephen england or to discuss the ecb before the rate is a decision thursday. alix: don't miss the ceo of ameritrade at 3:40 p.m. eastern only on bloomberg markets. we will be right back. ♪
from bloomberg world headquarters in new york, welcome. david: can stocks and bonds keep rallying? materials a big gainer, tech the laggard. lisa: peabody energy becoming the latest mining giant to file for bankruptcy. is this the end of the american coal industry? david: the clintons casting their votes. will a win in today's primary seal the democratic nomination for the former secretary of state? let's head to the markets desk where julie hyman has a look at the latest. julie: stocks took a leg down midday and the net leg right back up. we've made a round-trip here. w remain higher by .2%.