tv Bloomberg GO Bloomberg April 20, 2016 7:00am-10:01am EDT
clinton versus trump? soth winning their party' race in new york. set?e election a very warm welcome to "bloomberg ." , vonnieme in new york quinn and david westin. david: wish you were here with us. we have some great guests lined up for today. --exclusive interview with marko kolanovic from j.p. morgan jonathan golub join us on
"bloomberg ." governors central bank who may toe the line with the government. the question of central bank independence here. this the first policy decision of the new central bank governor. the government wanted to cut. that's exactly what they got. the rate to 10% from 10.5% previously. lira a stronger turkish because many did expect this move. other board for you. i arrived in the city of london hours ago. , thanksto the u.s. open
now positive on futures. dow jones futures up about one point. here in london, still lower, down by about .25%. out, the japanese government 10 year yield, -13 basis points. when i arrived in london this morning, it was remarkable. yields below 0.4% on the way out to 40 year that. -- 40 year debt. david: a big story for the markets. we are looking forward to the japanese and central-bank later this month taking more action or not. the european union earlier today took another shot at u.s. tech giant google, this time over the company's android software. there has been an ongoing tussle here between the eu competition authorities and google. what is different about this? >> he just got a lot more serious. the antitrust chief at the eu
has outlined what they call a statement of objection, outlined what their problem with google is peered they have three main issues. this is the android operating system that basically runs your phone. that is a very dominant operating system in europe with morehing like 70 mo% or market share. that's where her concerns lie. in three particular areas. tools want to use google on your phone, you have to accept other google tools. theou want google play, store that gives you access to all their apps, you have to accept other google -- you have to bundle them together. you have to put search, you have to put chrome. agreementslike the that google sets with other smartphone manufacturers, paying them lots
of money to make google search the predominant search engine on your phone. the other search engines are not as prominent. isit comes preloaded, it right there on our phone, we are less inclined to go to a competitor. david: this is google, search, mobile. the trifecta. tom: that's how we are communicating now. it is all on mobile. the android operating system really is the gateway to a whole host of apps. david: thank you for joining us, tom. a slew of earnings coming in over the last 24 hours. matt: coke just out with a beat. first off i want to start in japan come overnight, mitsubishi motors tanked after the company described nissan manipulating
emissions test data. it we will see fallout from that in the coming days and weeks. last night come intel announced its biggest job cuts in a decade. cutting 12,000 jobs, decimating its workforce, cutting it by 11%. after missing estimates for second-quarter sales forecasts -- revenue rose by $1 billion. net income rose by 2.7%. speaking of computers, printer maker lexmark international is is beingbought -- bought by a group of investors. lexmark.share for we are seeing it rise in the premarket. more earnings news.
the corporate software, and he can still grow through vmware announcing a share buyback. or toy, coca-cola first-quarter earnings came in one penny better than expected. revenue could only match consensus estimates of $10.3 billion. as theslipping a bit gross margin fell one full point. sugary carbonated beverages in the entire world, in the whole world, 49% of those are coca-cola made. jon: that is quite a stat. it's about growth at this point. joining us now is jonathan golub . you talk about how companies
that are more globally focused will remain under pressure because of the global growth slowdown. that is not been reflected in a boost to the new k -- nikkei. are we had a point where we say central-bank stimulus is not working? jon: there are a couple stories here. this is the first recovery cycle that we've ever seen where global trade actually is declining. some of this is related to the china story, some of it is really related to the strength in a market like the u.s. compared to the global market. is not a current quarter issue. this has been going on for three years. for those investors looking to find faster global growth to invest in, they would be much better served to stay at home and focus locally. jon: is that really a reflection
of what's happening with economic fundamentals or a structural shift in relationship between trade and income? the point.s exactly right now, we are running u.s. gdp something like 2%. that is about half of what it would normally be. in those kinds of environments, it is not conducive for those companies industrial that normally do well in a robust economic environment. that is the story. r tends to favor domestic. the mystic companies in germany or japan. u.s., butt the domestic companies in germany or japan. the front runners in both parties and scored big victories in the new york primary yesterday. jump beating john kasich and ted cruz.
>> we don't have much of a race anymore based on what i'm seeing on television. senator cruz is just about mathematically eliminated. we have won millions more votes than senator cruz. millions and millions more votes than governor kasich. vonnie: trump won all but a handful of delegates in new york. z cannot possibly collect the delegates he needs before the convention. broke bernie sanders's winning streak. she won with 58% of the vote. again,y, you proved once there is no place like home. [applause] victory makes it almost impossible for sanders to win the nomination. sanders will determine his path forward after the primaries next tuesday.
for more, we are joined by megan murphy. waswhiteness of the margins surprising. ideness of the margins wereas surprising. >> it makes trump's pathway a bit clearer. side, -- on , it shows she is the candidate to beat and bernie sanders will think about what he wants to do going forward. vonnie: are both candidates thinking about how to shape policy message now? enjoying the clip -- we've moved away from policy of the last couple of weeks.
him to outline a few more programs come a few more proposals as we head into populous states. not been an election long on substance on the republican side so far. david: to say he is mathematically eliminated -- it doesn't mean trouble go into the convention with a number. that is true. his pathway to getting the number is still a bit tortured. even if he comes into the doubt -- into the convention 80 , he will be able to use some wheeling and dealing to secure those last delegates. i think the chance of a contested convention have dwindled a bit after last night. vonnie: what is the strategy now for trump? he needs to get his act
together on organizing and getting these delegates and not bleeding delegates support. the processtake seriously and take his message is seriously and focus on best withis he going to target hillary clinton and a population where he still has huge unfavorable numbers? vonnie: later on, we will be speaking with mark halperin from "with all due respect." --t, looking at the value jon: the value of active management despite recent manager underperformance. ♪
vonnie: you are watching "bloomberg ." itted continental has made official. shaking up its board as part of an agreement with activist investors. robert milton will be the new chairman. he will replace the current chairman -- united will give to board seats to -- two board seats. mitsubishi motors has admitted to manipulating emissions test data. shares of mitsubishi fell 15% in tokyo, the most in more than a decade. have -- oilrkers futures lower in new york. --kers returning jon: futures firming up as we
edge towards the open. you can see s&p 500 futures up just over one point. dow futures up about two points. the story really, the s&p -- jonathan golub is still with us. you put out this chart showing managers performance against the s&p 500. many of them week performers despite the rally. what is the story behind the market move and the manager underperformance? couple stories here. if we look at manager underperformance recently, managers do well in certain environments more than others. active most important is managers do a great job of protecting on the downside. when you are invested in a traditional mutual fund, you tend to outperform -- you do
that with a willingness to underperform when the market is strong. what we've seen recently is a very strong market. that tends to be more difficult for activist managers. jon: do you think there is active management as the way to go going forward? you will see less money going into the likes of etf's? jon: it is very cyclical. in the late 1990's when the market was on a terror driven by speculative stock, that was a hard environment for managers. they protected you when the market got sloppy in 2000-2002, 2008-2009. it is the ride you get when you go with active managers that may be more important than sibley
whether they deliver you better performance. david: the message i took away was sometimes active managers over perform, sometimes they underperform. perhaps the best approach is to have all your money in neither. i'm not sure it really matters as much in terms of making a decision. ,f they are underperforming now realize this is not an environment that is conducive to what they do. they do better in environments that are more broad. environments like we've been in where the biotech's are leading the market by a big margin, 10 tend not to be the most speculative companies -- they tend not to be the most speculative companies. ,hen they are underperforming you are not disappointed with what you are getting because you
realize there are other environments than actually they do quite well. david: i want to turn now to earnings and how these countries are actually doing. you said the expectations were down 9%. they are doing a bit better than expectations at this point. away toy are shifting the market more broadly. in january and february when things were falling apart, wall analysts slashed their estimates by a massive number and as a result, companies are beating by a big number. of closee average beat to 5%, way above average. that's why the market is hitting all-time highs. things aren't great, but not as bad as we thought in january and ferrari. you will see the market continued to rise higher.
-- not as bad as we thought in january and february. the s&p and dow does not include dividends. we are above peak. right now, the big surprise is earnings are coming in better than expected. investors are expecting corporate profits to be stronger than they were last year. we lose the headwind from oil. there's a shift in investors thinking this has become much more positive than we were in jail or a. things a lot more positive in this session in the futures market. david: there has big a big turnaround -- been a big turnaround. china's stock market suffers its worst day in seven weeks despite what we just said about the markets overall. the question is whether people should be taking money off the table.
jon: this is "bloomberg ." let's get you up to speed on global financial markets across the board. the city 100 after printing a fresh 2016 high yesterday, now down just a little bit. above 2100 on the s&p 500 for the first time since december. futures market just edging higher. two points on the s&p 500. dow futures up about eight. the crude market and retreat through most of the session. wti downow down by -- by 1.8%. oil producers set to end their strike. we are down by 1.8%.
in the bond market, yields in japan grinding to -- i all-time lows on 2030 think may be the headline this morning is that we had a very soft session in china. a lot of concerns there and it did not carry through to europe in the way it may be would have done a number of months ago. i want to kick up analyst calls. in china finished with their worst loss in seven weeks. a late day rally perhaps fueled by the usual government intervention. a number of analysts calling for taking money off the table in china saying to sell into any first half rallies. we are nearing the point where things are as good as they are going to get. that is the call from number of on china -- nomura on china.
tourists spend less money, taking fewer trips globally. goldman sachs has lowered its rating on burberry. high-end consumers in the u.s. may be cutting back. two other luxury names were cut in france. my was lowered to a hold and set to underperform. finally, very quickly, turning away from consumer goods to industrials, one of america's leading exporters, boeing was downgraded today. ron epstein lowered his rating to an underperform. equivalent from a neutral. jon: thank you very much.
jonathan golub, the headline this morning, concern over china did not carry through. concerned that maybe the market ignoring china in a bigger way or are they right to ignore chinese markets? jon: we have to put china in a broader perspective. i think they will be an economic disappointment on an ongoing basis. the expectations for them to be a driver of global growth are too optimistic. that's one of the reasons we like more domestically oriented companies. near-term, it is may be different. vonnie: thank you so much. will be looking at saudi arabia and its dependence on oil, next. ♪
york primary. john kasich was second, ted cruz was third. trump told supporters it is not much of a race now, saying crews cannot possibly collect the delegates he needs. road to the nomination almost unstoppable. president obama in saudi arabia. king expected to push the to provide more cooperation and military support for the fight against islamic state. the president may also try to mend relations after criticizing the saudi's as "free riders" last month. the ap says to state regulators and a flint employee will be charged.
global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. jon: thank you. it is a big deal. the japanese government bond market falling to a record low this morning. bringing down all japanese sovereign bonds below 0.3%. joining me to discuss what this means. not just for japan, but for the whole world. is the only discussion that was taking place on bloomberg radio this morning. the rewriting of the textbooks. have you ever seen anything like this? tom: definitely never in the textbooks. this is absolutely the cliche words uncharted territory for mario draghi. uncharted territory for janet yellen. axis, everything is moving out in time.
within that distortion, corporate leaders have to go faster and faster to readjust to all these new dynamics. investors chasing that curve all the way to 30's, 40's to get some kind of yield. has a decisionan to make. they own a third of the government bond market, half the etf market. -- they caniveness do more, but will it be effective? tom: i'm unsure about that. with the visits to japan over the years, absolute certitude is japan is a closed system. culturally closed, economically closed, even with all their trade, dynamics and so, the fiscal and financial flows that or for yourars paper is not the same as in the u.s.
the cultural economics of these two systems is so different from what we see in japan. morning on january 29 when the bank of japan win into negative territory for the first time. it has come down, a stronger japanese yen. we are told that rate differentials matter. you would think the yen would weaken. how big of aroldis janet yellen having in all this? role is janeta yellen having in all this? -- a bigt big role yellen for japan, janet really matters on a rate differential basis. the untold story is on a slow basis, something mervyn king
would look at. importantare just as around for an exchange. -- foreign exchange. jon: fascinating discussion. much more on bloomberg television and "bloomberg surveillance." david: from japan to oil. saudi arabia said to have picked jpmorgan and citigroup to handle ipo. this fund would control more than $2 trillion. we are joined by colin fenton. welcome. if you look at the long run -- you've written a note of the rocky balance. telldoes this move
us about where oil is headed? colin: the rocky road to balance is the supply and demand curve slowing at the same time. imagine a mountain climber is going up the hill and it is rocky and they slipped down. and saudiat doha arabia try to do this weekend. they tried to find the supply that would balance demand. the central bankers think the answer to a rocky road is rocky road ice cream. you were getting massive doses of sugar, stimulants, red bull runs. that is the only sort of soution in the short-term -- that the global economy does not go completely haywire. colin: would you rather take a dose of medicine in the short run or are you willing to risks
some kind of financial crisis? the bellyache that comes from having all of this stimulation given to these markets as if it's a good thing. vonnie: why would it be in the interest of any of the companies that are oil producers to have supply and demand come into balance immediately? colin: we've been playing this game for two years. oha,e were 17 countries at d 15 of them already producing below their peak. this is more of a public relations kind of attempt to get sentiment moving in a direction -- prices happen moving for entirely different reasons. david: take apart those supply and demand -- demand for oil continues to grow.
it's not like it is going down. colin: exactly. it is the slower rate of growth. iea -- it was the supposed to be closer to 1.6. you have a bit of contraction in the expected positive growth. we had a very warm winter in december. back in january, year-over-year growth in u.s. demand was contracting. now, it is growing 200,000 barrels per day euro year. -- year-over-year. it was much easier to control supply. production --more think back to october, they were expecting u.s. supply to contract 190,000 barrels or
day -- per day. producers are within 60,000 barrels per day expected -- what has surprised the market was a warm winter and what is happening in the u.s. vonnie: where does saudi arabia go as it looks to expand avenues for revenue? cost: it is the low dominant producer. its behavior is consistent with economic theory. they would like to diversify into solar, get into electricity and natural gas distribution to their neighbors and i suspect they will do that. in the short run, we have this issue over whether or not the u.s. is slipping into recession. my guess is we are probably already in a recession.
i would say probably sometime around january. what are the chinese data showing us? the official nbs data show 5% growth. jpmorgan says 6%. if you had to ask for one theistic come on april 1, federal reserve dropped u.s. industrial production estimates for 65 of the past 80 months -- go have been dropping back to 1920, 16 of the past 17 recessions have looked like this at the start. vonnie: even with this kind of job creation? >> what kind of jobs are being created? the december numbers were off the charts. only 3% went to full-time jobs in the 25-54 demographic. i'm very pessimistic of the arety market -- we
complacent about what the data are showing. david: tomorrow, we will hear from mario draghi. what you do if you believe we actually are in or headed toward a recession? >> don't be a plumber or mechanic. jalopy onfind every the side of the road, you don't unclog every drain. it is preferable that we all get back to a more conventional policy as soon as possible. david: thank you to colin fenton . vonnie: pretty phenomenal stuff. the new york primary last night in the wins for hillary clinton and donald trump. ♪
david: i'm here in the hewlett-packard enterprise greenroom. in the next hour, an exclusive interview with -- that is next ." "bloomberg vonnie: you are watching unionberg ." european openg a new front in its fight with google. if formal antitrust complaint over its android mobile phone system, the company accused of using its power to crush other apps. volkswagen says it does not think there will need to be a new trial in the u.s. over those faked emissions tests.
the company meets with a federal judge tomorrow. the largest health insurer in the u.s. is cutting its losses when it comes to obamacare. the ceo says the obamacare smaller and riskier than the company expected. david: last night, new yorkers went to the polls in the state primary. putting both hillary clinton and donald trump solidly as front runners in the races. trump is still in the lead for the republicans. ted cruz and john kasich trailed to seventh when her delegates for john kasich and -- trump: we don't have much
of a race anymore based on what i'm seeing on television. is just about mathematically eliminated. more votes millions than senator cruz, millions and millions of more votes than governor kasich. byid: now, we are joined mark halperin. let's take up with where mr. trump left off. mathematically eliminating senator cruz. there's only one person who can get a majority, that is trump. strategy is to win on a second or third ballot. he is not a sure thing. will have to bigger out a way to generate momentum after subsequent contests when other northeastern states vote. vonnie: you guys did amazing math last night on pledged delegates. stake for them to
forget about remaining states and focus in the general? mark: hillary will be the nominee barring some huge event -- trump cannot take his eye off winning the majority. needs to focus on getting that number. it is winning elections, but also the inside game. arehe convert people who unpledged delegates or delegates still to be named? david: is there time left to catch up on the inside game? mark: ted cruz is winning with the outside voters -- there is time to catch up. not all the way, but probably enough. vonnie: the rnc is meeting this weekend in florida.
what will they say? matt: there is a big debate within the party about whether to change the rules. there is so much attention to are theestion of trying to fix the system. a lot of debate and discussion. i suspect trump has been so effective at talking about don't let the party insiders rig this that you won't see a lot of changes this week. david: let's assume for the moment they are the candidates, both have a challenging unifying their party behind them. are there going to be bernie sanders supporters who say i don't like hillary clinton, i will stay home. if clinton is the nominee, there's a bunch of sender
supporters who she will have trouble turning out to vote. she does not need them all. trump is the nominee, uniting the party will be very difficult. the nominee will have to engage trump's voters. trump-clinton, they both have -- theyimage problem have to energize the base of the party and reach out to the middle. that is tough. clinton's staffers sanders campaign is still trying to damage her image. on his ownsanders start to ratchet back on attacks on her knowing that it makes it harder for her to improve her image? do the clinton people start to pressure him?
look, you can keep running, we know you will not get out of the race, but you have to stop engaging in these attacks so hillary clinton can start to focus on the general election. mark halperin on every at 5:00 eastern time on "with all due respect." jon: from the politics in the u.s. to the economics of china. chinese company's have never had to wait so long to get paid. a stock price build and customers delay sending funds. we take a look at the charts, next on "bloomberg ." ♪
willing to fight and are gaining ground. we have to be sure to provide them more support. provide training and special forces who are backing them up, when we are gaining intelligence , working with the coalitions we have come a what we've seen is we can continually tighten the news. coalition we have, what we've seen is we can tighten the noose. watch the full interview tonight at seven effect p.m. eastern time on bloomberg television. time onp.m. eastern bloomberg television. what exactly is cash conversion in china? matt: this is a fascinating story on the bloomberg. i come in every morning at 5:00, my bloomberg has usually picked
out the favorite story of the day. it was the same as david's. the cash conversion cycle is the time between when usa company pay for your inputs to a product and then you get paid for that product after it is out the door. -- when you as a company pay for your inputs. it has risen to 192 days in china. this is a real problem because it was already high at 125 days in china last year. is the longer your money is locked up, the harder it is for you to pay your debts in a timely fashion. here, you have to get loans in order to send money to your suppliers. obviously, there is a number at which you get paid.
is one oil company in china waiting 700 days to get its money back. it has one of the longest cash conversion cycles. this comes at a time when there are so many new loans. 260. at g #btv check out this chart. it shows you that new money going out and turning into debt has risen to its highest point since really before the financial crisis. in fact, even higher. this as the white line shows you that gdp is coming down. that is the crux of the story. china suffering its worst economy in a quarter century right now.
stories about how it's the future, that's where everyone wants to be. they are in a slump as they have not seen -- vonnie: there seems to be not much of a reason why this has risen to 192 days given how much stimulus the central bank is pumping into the economy and credit is surging, but people are not getting paid. there's a bit of a mismatch. that is maybe why people don't have the confidence in china that they should have. came out and made statements to the effect that they will not be stimulating as much. matt: they have a lot of different authorities doing a lot of different things. the concern i hear from economists is all these actions in china are not coordinated very well. the go through fits and waffle
on the policy moves they make. against the backdrop of gdp slowing from double digits down , it is a tough time to be in business in china. vonnie: matt, thank you so much. coming up in the next hour, you've got -- jon: an exclusive interview with with the ceo.-- futures were lower when i got into work in london. dow futures up nine points. s&p futures positive three. ♪
donald trump and hillary clinton take new york in the primary, getting them a bigger lead in their race for their party's nominations. welcome to the second hour of "bloomberg ." i am david westin with jonathan ferro in london this week and vonnie quinn. vonnie: entre nous gonzalez in this hour, talking about the possible sale of one of the world's largest oil producers. jonathan: looking forward to that interview. just a remarkable session in japan once again. the yield falling to all-time lows, below 30 basis points, to 14 years.urve i want to have a look at markets because what i have from the city of london about 7:00 a.m.
london time, the ftse, it got up to a high yesterday and down by .1 of 1%. switch up the board very quickly and i will show you the classes, a single currency, euro-dollar. here is one to watch. advancing for the fourth straight day. that is before the ecb meeting this week. gotten even stronger. that is the story in the fx market. over to commodities, a little retreat. it looks like the strike has come to an end and the output will come back online. matt miller, it felt like it was done in time. matt: no, there is still more a lot more to go. we only have about 100 companies down carry s&p 500, let me highlight some after the close to keep on your radar.
also some news, united air cutoff of potential [indiscernible] name airming a plan to new ceo as the chairman. capitall also give par and another, who joan lee earned -- or jointly earn some of the shows, act is the ceo's criminal news time to turn the company around as he comes back from a heart transplant surgery. not a lot of movement there. definitely one to watch after the bell. yahoo! next. we want to look at those shares. a little higher in the premarket as the first-round of bidders will submit proposals. marissa mayer says it is moving to buy the offers web operations. she says they speak daily with the board committee reviewing the proposals.
analysts at oppenheimer are believers that they raised the price to $49 a share, so big premiums there. i looked next at canadian pacific, the ceo feels the next best railroad to buy is his own and he is announced a plan to buy that 5% of his shares. backompany is going to buy 5% of its shares and it will raise the dividend by 42% after being rebuffed in efforts to buy rivals. they wanted to get out there and consolidation, they could not and now they will focus on their own business. let's take a look at coke. first quarter earnings a little bit better than expected but sales just matched estimates with the 4% fall from last year. last year's second half price tose is so far not enough boost investor confidence. coke shares are down 1.4% in the premarket. vonnie: thank you. let's get a check of the news. front runners scored big
victories in the presidential primary. the republicans, donald trump rebounded from the campaign and he won 60% of the vote, leaving john kasich and then ted cruz in third. >> we don't have much of a race anymore based on what i am seeing in television. senator cruz is just about mathematically eliminated. we have won millions of votes more than senator cruz, millions and millions of more votes than governor kasich. vonnie: trump won a handful of delegates. cannot properly collect the delegates he needs before the convention. clinton put an end to bernie sanders' winning streak. in the state she represented in the senate, she won with 58% of the votes. againay you proved once there is no place like home. vonnie: clinton's victory makes
it almost impossible for sanders to win the nomination. hisc sanders will determine typed forward after the primaries next tuesday. -- his fight forward after the primaries next tuesday. jonathan: thanks. here is something you don't get this a often, a country bonds yield below .3%. you get to say today about japan. bond yields, which matched a record low in the session, it could actually give them some kind of field. the yen moved for the first time in three days against the u.s. dollar and they said they would not hesitate to take further measures. joinsesident of security us now on bloomberg. mark, a question we don't explore often, do you look at the front, the middle, the end of the curve, there is no such
thing as a negative coupon. you have to pay for the price that you get. i just wonder, further down the road, what is the consequence of what is happening in the oil markets? the consequence for investors is they will look for yield regardless of where to find it, and they are finding it in places he would not expect and here, so you have to pay yield -- our treasury significantly higher and that spread has continued to widen, and i predict our bond yields to go much much higher. for u.s. positive equities and the positive for global investors to look at the u.s. market. i also think it is a positive for the bond market in the states. jonathan: do you hold it because he went yield or just because you assume that the buyer of the bond will depreciate and they will carry lower? ark: i think it is combination of both. you have a yield that is attractive. you have the u.s. market that is the best market on a tough block
around the world. this growth in the states, you cannot say that around the world, and i think that is the place for you will get yields an appreciation and that is a great thing compared to what we talk about overseas. issue lotspanies can and lots of debt quickly. itk: they can and i think will show that that will be more attractive and rates will be a lot lower. we thought for some time now that that would change and it has not changed. it has gotten more attractive for companies to issue. that market has spent a little bit tighter, a little more unsettled. i expect that to calm down. global equity markets have calmed down and i expect that as the year goes forward, especially as the election year is sinking over. david: more on equities and our earnings seasons and has begun, how is it looking to you right now? mark: they were modest expectations, i would say frankly, we have met those modest expectations.
i sat on this set a couple months ago in the market was dropping and others were predicting a much tougher equity markets going to the rest of the year, and that has not happened. i think we will see this typical up and down market that we have seen for some time now. i expect that the election cycle becomes more of a reality and we think we know what we are going to get. i would expect equity markets to break out year into the fall. some of the things have been tighter, like the ipo market and other markets, will loosen up a little bit, which of the positive for investors. vonnie: many markets have not been able to differentiate and move away from the trade. it is coupled with the yen trade, jjb trade, currency trade. is it possible at some point for investors to look away or not really? ofk: we have seen a little that in the last couple of months. oil in china has been running the table for the last six months. we have seen a little of that change. we will see that around the $35 barrel to $45 barrel.
that is enough for people to safety coupling that you described. if that happens, i would expect, and that is when i would hope the u.s. market and other equity markets will break this a little bit, and we don't have to wake up every morning saying, what did china do? david: -- matt: what about the u.s. treasury market? what about just investor diversions? when you see, this is the japanese coming down below 0.3%, this is the u.s. two-year. when you see it yields like that on the u.s. two-year or invest the money in japan for nothing or 40 years, doesn't that force investors into u.s. treasury's? mark: i think it does. you can put the italian market up there, with all due respectively, the italian yields are higher -- sorry, lower than our yields. it is probably a safer bet to buy two-year, five yard tenure than some of the markets getting far more spec than ours, and i
would expect those to go lower. what would you buy at the front end of the u.s. field curve when it is sensitive to rates and downside, actually, the downside is quite big at this point to hold two's, and also, should we be thinking about yields and not nominal? right. think you are you could look at those yields and it depends on your timeframe. if it is short-term, you could get in and out. if you look at the 30 year and 10 year, those are attractive relative to global yield and i would ask that to be an attractive entry point for some people given what is going on in the global markets. jonathan: mark lehmann thank you. coming up, an exclusive interview with jose untenured io gonzalez,- anton the world's largest oil producers. ♪
vonnie: here is aaron latest business -- here is your latest business flash. regulators [indiscernible] over at android mobile phone system. the company is accused of using their power to crush competition . google responded saying that it will show that the android is this model is good for competition. volkswagen does not believe they will need to be a trial in the u.s. over the admission tests. that sent shares of more than 5% in frankfurt. the company meets with the federal reserve tomorrow. mitsubishi is on [indiscernible] they discovered that shooting
shares of mitsubishi fl in tokyo and that dropped more than a decade. david: thank you. antonio gonzalez may have the toughest job in mexico, turning around pemex, the oil company. last $32n and the billion last year. in an interview, erik schatzker sat down with the pemex to talk about --pemex ceo to dock about his turnaround plan. jose: we are prepared to talk about pemex. that are a lot of rings they do not necessarily have to be run -- erik: i can imagine that could be a fertilizer company that pemex bought, is refining open for sale? jose: to partnerships, yes. erik: but not outright sale? jose: well, we want to retain
part of the equity, but not the majority. we are open to having a partner in which -- erik: majority operator. jose: yes. erik: in refining and where else? jose: the entire structure from upstream to refining to downstream in. erik: everything. jose: everything. erik: are you in toxic potential buyers? -- with potential buyers? jose: yes, and i would like to call the partners rather than buyers. erik: when they talk about potential partners, i was talking about financial partners or oil companies? jose: both. erik: and the oil companies are from where? jose: everywhere. they tend to be all over the world. it is interesting because they are very interested in mexico, but they are very interested in [indiscernible] oil companies do not like to go into a company without domestic
partners and pemex is a good domestic partner. erik: you said pemex has a lot of room left on the operating side, where? jose: there are a lot of inefficiencies prove we need to improve our procurement practices, negotiating practices with which we find professionalized equipment. there is room for maneuver rising. erik: what about jobs? jose: i hear i am very conscious about one thing. not an end in itself. erik: it is a sign of efficiency. jose: profitability is the end of the game. true.that is exxon mobil produces twice as much oil as pemex with half as many employees. and they have big refining operations, too. this, we willay take the decisions we need to
take a stock profitability. let me counter in your example quickly. isthe wage bill for pemex only 50 billion pesos, that only takes care of half of the cuts for this year, so we have to do that. we are committed to becoming more efficient, but it is not the end game. erik: understood. the part of the reason i asked the question is the alternative, besides finding other capex.ncies, is to cut how can that be good for mexico and pemex? jose: pemex bones cap -- own and that we will share is the key issue. that is what makes me optimistic about the future for mexico and pemex. erik: here is something i would like to know, what is your
incentive to push for real change at chemex --pemex? this company has had eight ceos in the past two decades. why would you want to do anything risky when there is a strong likelihood that you will be doing something else three years or four years from now, like other pemex ceos have? jose: i was typing the social security institute and it is insolvent and it is not anymore. that was three years, so i have the same incentives. i'm committed to being a good public servant and i want to get this done. it is the biggest challenge in my professional life, and if i do not feel good about myself, -- and if i feel good about myself, it will be good for pemex and more importantly, mexico. erik: let's talk -- go ahead, go ahead. ise: and this administration permitted to change it. we came here to change. erik: you are confident that mr. pinion ye he will protect you
politically. jose: yes. isid: erik schatzker, this an important and timely interview. you know mexico well. pemex is not just another company. for three quarter of a century, it has been a cornerstone in the mexican society. erik: and there are few companies like it. perhaps venezuela, some russian companies, but pemex does everything. it is not just oil production. it is everything all the way petrochemical industries and the fertilizers that at the very, very end result of the oil extraction process, not even just crude refining. david: and it has been owned by the government and they decided to liberalize. they will go private at a time when you would not want them selling into the energy. erik: this is the problem. pemex effectively has begun to its head. had the government been willing
to take tough decisions a year ago and bring and private partners, everything would look a whole lot better because those partners would have been buying assets or entry relationships with pemex when oil was at $100 or more. now, the mexican mix, and this is an important point to make because mexico does not get the same price as you see wti trading or brent crude trading for, mexican crude trades are at a significant discount, so the cuts they have made for this fiscal year are on the basis of $25 of revenue per barrel of oil , so their circumstances are dire, and that is why this man, who is been in the job since february, has such a tough road ahead of him. vonnie: we were talking to somebody lasted to make mention of china companies being agencies rather than functioning companies because the labor market. that is the same with pemex. how much does it risk social
unrest by divesting? erik: that is why he answered that question about jobs so carefully. he is a tricky balancing walk entering the needs of the government, the opposition of the unions, the history of the company. 5.5 billion dollars on refining alone master, no wonder he wants private partners. youd: erik schatzker, thank very much. coming up, gold has weakened after hitting a 13 month high in march. we will talk gold, features and focus, next.
gold the forecast rally on stagnant interest rates through the end of the year. that is according to forecasters on gold. we speak to bob from the cme. we had that runoff between the beginning of february and now we're between $12 an ounce and $12.50 an ounce per do you see it climbing at some point? bob: at some point. i think that is the key. the correlation between gold and the u.s. dollar has not really been that title over the past two years and it is starting to attach it out the dollar weakness. i think talking about dollar , which itontinuing will, has been the weakest and it will seek cold rally, -- could rally, but we're looking at in the short-term, you'll probably see a little pressure. see it hitting 1300 by the end of the year. vonnie: even if you see rates
decline? they are still looking for a quarter percent of the 10 year. bob: you look at the gold-silver ratio and their people saying that they are actually predicting falling inflation, and of gold has come back to being an inflation hedge, which the prior 10 years you have seen that be part of a fear trade, a global collapse trip, and the global collapse people of gone to the background, so if you see ppi and cpi continue, it is flat to downward trajectory globally and that would keep the cap on gold. vonnie: what about the etf? we are seeing inflows, or is that? -- why is that? the retail investor tends to chase returns, and return chasing does not seem to work out that often. i think the outflow, as you saw, and the rally getting people back in, just like with the s&p $26 rose, oil up from
so you are saying the stock market move sideways. lastly, you might see those influences slow down a little bit. vonnie: do you have a trade at the moment? bob: not in gold. i have been a little slow in my calls. my calls have been right but they have been a lot faster than i predicted. vonnie: we should get it now been. bob: yes, ma'am. vonnie: thank you for joining us. coming up, coke's new drink sizes boosting sales. ♪
beautiful in my hometown. spring has arrived. how long it lasts is the big question, but enjoy it while it lasts. about one hour away from the open in new york. futures still warm. -- still ferment. s&p 500 index teachers up barely three, but in europe, the ftse the .2 of 1%, but automakers storming ahead. matt miller is trying to bring some [indiscernible] to what is happening to the program. screen, a bige story in fx. the head of the ecb meeting, given that the last time they had the last meeting, we were at 1.10.ar .10 -- at that ends at $40 and $.27. vonnie quinn for first word
news. vonnie: we'll get to that in a second, but a look at coke first. shares down 4%. boostverages are helping the markets. joining us is stephen powers, ubs equity research analyst. same story, cutting to meet margins? stephen: that is part of the story. what you saw, they put up good bottom line results and topline came in lights in november. the north american business was not really the issue. that is where they are boosting price. the issue is really overseas. china, eastern europe, russia, so macro slowness, pressuring abouts and they came in one point life the work consensus wanted it to and about one point lighter for what they expect to be for the full year. back of marketing and
over the key summer months, on the positive side, productivity and pricing benefits drove and even margin and operating margin you along the bottom-line to come and stronger than expected in spite of the topline miss. vonnie: is it strategy for some of the foreign markets? are they targeting the wrong type of consumer or is it just the consumer is weak? stephen: i think it is more the consumer is weak. similar th something out of pepsi, and we will hear what it says, but specifically in eastern europe and china, we have seen incremental deceleration since the start of the year. in terms of what coke is pushing, the good news is they p business, water, were up strong in
the first quarter, citing the company is making a good strive to get the consumers more of what they do want to consume and less reliance on soft drinks. the issue is really the macro. david: if you could take fx out of it, how would they have done? taking tx added -- fx out of the, expectations were at 4% to 5% on the quarter. about one point 22 points of disappointment all most all of it to them by volume. and a bit of geographic business makes. they expect the acceleration. vonnie: your question, i imagine you have one? for the ceo of coke, guess, i think a lot of it will be understanding why the have confidence to accelerate over the balance of the year if the
issue is outgrowth. to the expect macros to improve or do they believe they can fight through it better on the back of marketing? on the positive side, it will be about if they can continue productivity, drive margin and bottom lining cash? going atig story on coke, re-franchising efforts, so they are in the process of divesting capital-intensive low-margin businesses in the u.s., europe, germany, as well they are pushing on that and boosting returns through basically divestments, so that is a great driver as you look forward. did show progress on in the quarter, so i think on the positive side, continuing momentum on productivity, divestments of low-margin businesses, and of real question in terms of driving the topline is, and they fight through the macro challenges, especially in eastern europe and china? vonnie: stephen powers, thank you are joining us.
pepsi domestic has been saving for them. david: exactly. donald trump won a victory new york last night, but some business ventures are not quite victorious. most of us know that donald trump pacifist bankruptcy -- trump's grip see, but what about bankruptcy, see -- but this is on the terminal this morning. this is a fascinating story. the saga of trump vodka. about it,tell you all but i thought better than telling you, i would show you trump vodka. vonnie: a miniature tower. >> i had some this morning. david: you did? in trouble.ld get i did not have any this money.
exist inka, it barely the world any longer. you can sometimes find it on the back of a random shelf and it exists in israel for the passover holiday, happening now, but by and large, this is a product that just this appeared. vonnie: you are using this product to tell us probably about his life deals. if this disappeared, is this another shady deal? max: when you look at donald trump's career, you see two things. one, especially in the early days, he was actually a developer and used his own money to put holdings up. after his real estate and casino nearly disintegrated in the early 1990's, but when he bounced back, he was the guy who d his vents other people behind merchandise and this is an example. there is a fellow named j patrick henney, very nice guy, enjoyed being with him, and he
and started to negotiate and trump said, i will negotiate the [expletive] out of you and there was a guy holding of boom mic and it became this big spectacle. david: this fellow got the idea ifm britney spears, who said we put vodka with a famous person and they looked around and saw trump. meantime, the company has a penny stock. it is not like he went to class a. max: you hit it on the head. what went wrong is that the company that made it, they were a brand-new company and they had been trading for less than one dollar and they had a hard time getting their sec filings in on time. their office in connecticut, the phone number had belonged to a pizza parlor before, so people would try to order calzones and they would be mad. [laughter] david: this is the question that
may really pertain to whether you should be president or not. he would get 50% of profits, did you get to $2 million? max: he was supposed to get $2 million by 2008 and then more, but by 2008, the world is falling apart and it did not take much longer for kenny to leave the company and it ended up going -- it was run after kenny left by a businessmen, ironically, considering what trump has to say about mexico, so rather than promoting trump vodka, they promoted beer. kenny made a deal to sell in israel and trump was upset because that was unauthorized and then he cut his own deal. david: by the way, trump never drinks. max: no. david: but he would have gotten $2 million. max: i would be surprised if he got everything that came to him, he ended up suing for $4.8
million and i would be surprised if he got that much money because you know that drinks america announced as of 2013 that they are $1.5 million in royalties. david: fascinating insight. abelson, thanks very much. the latest issue of "business week" is available. first word news of vonnie quinn. hillarydonald trump and clinton have ended their losing streaks in a big way. they both scored victories in the new york primary. wonp took more than 50% and a handful of delegates, john kasich was second and ted cruz was third. the associated press has said it is close to impossible for cruz to collect the delegates he needs. makery clinton's wins [indiscernible] ponder anders will path forward after the primaries next tuesday.
three people will b [indiscernible] and ane regulators employee will be charged for almost one year and a half. flint residents [indiscernible] president obama is in saudi arabia. the president is expected to divide more cooperations and military forces for the fight against islamic states. he may try to mend relations after criticizing saudis as .free riders" last month are ,"ming up on "bloomberg chinese smelter and rebounding exports renewed. that is next. ♪
matt: i am in the hpe greenroom. coming up, jpmorgan global high the quantitative and derivative strategy. he is one of the most sought-after voices on wall street. vonnie: you are watching "bloomberg ." here is your latest business flash. united continental is shaking up the board as part of an agreement with investors. the ceo will be the new chairman. in the workplace and reminders. united also agreed to give up our capital. those firms that asked for a airline with experience. investors may have hoped for a
stronger turnaround as coca-cola fell in the premarket after the company posted first-quarter earnings that beat estimates. the sales were down 4%. the largest health insurer in the u.s. is pulling a soft one when it comes to obama care. united health will drop out of organized government health insurance markets. thehen helmsley says obamacare market is proving to be flawed and riskier than they expected. that is your bloomberg business flash. jonathan: thank you. for today's morning meeting in london, we are taking a look at aluminum. i am in london and allowed to do that. china is leading the u.s. union following the tax on imports. the director remains bearish and joins us now. great to have you with us. there have been a series of cuts we have seen cuts to supply around aluminum as well. you don't think we will see twoe continuing
stability effect to go much higher? >> the u.s. producers have been under pressure and not benefiting from the dollar or the e.m. currency weaknesses in other regions. we have -- we did see cuts in china, 14 biggest producers in china announcing they were going to take 4.9 million times the annual capacity off-line. he sought production coming down in china in january and february, shine have prices -- shanghai prices rose sharply. , onthan: just to get a grip this program, i say we are expecting cuts. we see what is done is done, but it takes longer. talked to about the process find the cuts. david: you cannot say one day, i'm cutting out aluminum and switching it. basically, you have to do it
cell by cell. you switch cells off and then you take out more material. if it freezes, that is a nightmare and you end up digging out of the cell. it has a slow process. press a button and it all comes back on. jonathan: let's talk about this because it is fascinating. i will name the names, but at this point, quite clearly, they want higher prices and they went to see what is happening with china because what is happening with china would steal is happening with the same with aluminum but then we have coke reports, coke went higher, so do they? who wins out in terms of the corporate politics, and to get any kind of policy response from -- david: you have the international trade commission announcing an investigation and i think the first hearings will be in september and they're not planning to produce any reports
until june of next year, so we don't expect to see anything happening in the short-term. this week coming up the steelworkers union in u.s. launching a petition, and this shows the importance everywhere. if you look at u.s. aluminum production, not to river to say aluminum and not -- jonathan: you are in london, you do what you want. david: production in the u.s. has been on a downward trend since then, so it has not just been the emergence of china as the world's biggest aluminum , exports have been an issue, but the industry has struggled from competition from other regions as well. jonathan: the question on rebalancing markets, with crude, they demand supply regarding storage capacity.
there is no storage capacity really when you think about it. get a field, put a fence around it, pile it up. when you look at fundamentals right now, where have we seen the biggest readjustment and where are you most bullish? david: we have seen a fairly big zinc with ain number of mine closures. we lost nearly 10% of world mine ofply because of the process smelting and it collapsed as markets tightened, so there was excitement about zinc because there has been a fundamental change. in the copper space, we are optimistic. the supply was massively underperformed last year and the outcome was less than 3%. is we thinksensus
it will be less than last year. you are starting to see some kind of demand stabilization in china. metals that are struggling are ones they had not releasing that much of the supply adjustment or significant adjustment. -- isum what definitely definitely too much, so those are ones that will struggle. jonathan: david, thank you very much. promise i will stop saying aluminum. i will change just for you. vonnie: it took me half a dozen years to stop saying it, but i have gotten used to saying alumina. a little more efficient. well, if you invested a $100 bill, where would have been the best place to invest? we will explain, next on bottom
vonnie: and these the revenge. david westin is taking on matt miller in today's battle of the charts and i cannot wait to see the style and presentation. david? david: we will stay with metals, so you can say aluminium that the more times, but we will talk steel. last week, we had commerce secretary talking about this, and these blue bars are inventories. matt: inventor raise. david: inventories. it goes down, and this is the story, green is exports from china steel. down, soe green goes every time, this is the peak of inventory and let ship date out. take of inventory and let ship
it out. this is what he was talking about, the alleged dumping of chinese steel into the united states and europe. matt: you think they would do that? david: i am just saying what the secretary of commerce claims, but that is what this shows. matt: i think the chart tells that story very well. i have somewhat of a compound or see, but i think 1973 was the greatest year in world history. i was thinking or hillary was thinking, what happens if you $100 in a different asset class and what gives you the best return? let'sked at $1973, $100, say my mom had given it to me for birth, in stocks, bonds and gold. if you did that, he would have and's of $475,000 -- 1004 $75,000 worth of stocks, and to insist that thousand dollars worth of gold. gold would barely have doubled your investment.
stocks would have been the best investment in 1973. if you're interested in that, check out she #btv 979. i predict this of the the most e-mailed chart of the day, so maybe get on it before your friends do. $25 -- $265? got $100 worth of gold, you would only have $265 today. cash,: if you kept it in it would have been worth $536. matt: this is adjusted for everything. vonnie: so you have doubled your money. ok, time for judging. to viewers that do not know, in the office sitting near matt miller is a hard to vote against, but i'm not there so i'm voting for david westin
because i'm fascinated in stores with markets and politics. with the trades movement, it is gaining momentum and it is fascinating for anyone in the u.k. many people it's a this government could respond more efficiently if there are part of the eu, so i think what happens a china and record steel production over the coming year and what happens to the politics that beat into that will be a big story this year and beyond. david: thank you. vonnie: as much as i ca a matt's chart, i will go with david. an interesting story. it has risen now. 400, goodwhat below so iator of global trade, think that is a good illustration of what you are seeing here, trade is not always
a good thing. said, as itnathon becomes with the presidential election and in europe with the trade agreements, citrate and politics are really coming together. matt:g dumping going on here, this time, the prices going up. in the past, dumping push the price down and now you are seeing the price go up. i think even matthew miller is voting for david weston's chart. i will bring you a present back to apologize. coming up, his research one of the most sought after on wall street. his name, marko kolanovic. ♪
in cell falling in early trading. cutting 12,000 jobs. the deepest cut tax been one decade. -- cutbacks in one decade. about 30 minutes from the opening bell in new york. this is "bloomberg ." i am vonnie quinn david weston and jonathan ferro in london. now, i'm told us that behrens calls are the contrary and guru, so we get to find out what she is contrarian about. jonathan: i am looking forward to that conversation. in equity markets and futures ahead of the opening, futures still positive, up about eight points on the dow jones, positive on three points for the s&p 500.
the tax gaining off the back of a strong, strong rally. the gains for fourth straight day, one 1367. the story in crude, down by 2.3% and the story comes in kuwait. workers get back to work and get production back online. ahead of the open, here are the three stories right here and right now. we're talking about the flight to safety. is it all about japan with yields getting all time lows? are talking about crude as well? oil falling as the kuwait strike ends and coca-cola profit disappointing investors. let's start with japan getting a bid today. yields falling across the board the longtime lows down end of the curve. 40 year yields below 0.3%, 10 year yields at -13 basis.
i went to come across and ask, is this about the state paid in bid or something that is happening -- a safe haven bid or something that is just happening to new lows? >> i think it is correct. i think there is deflation which japan has not managed to vanquish yet, but i think this move was led by what kuroda said, which is see considered the dovish tone to push down again and it dropped out of the iticopter, which i think explains why the yen appreciated in the last couple of days. jonathan: a couple of banks change their calls and they expect the boj to act again. many think it is next week. what else can they do? rupal: not much. i think you called it. vonnie: the federal reserve has done a little work for them, or at least they have to wait to
see how things pan that once the federal reserve starts making a move toward april? rupal: i think that is a exacerbating the yen problem, which is the dollar was strong and that allowed the yen to be week. currencies are a fair trade. everything can go up at the same time, so it is the dollar yen tos calling the fall, which is now at the government once. david: i wonder whether kuroda is trapped in a chinese trap where the harder you pull on the fingers, the more grips you. what does he do if you want the economy to go? everything he does has the reverse effect. rupal: i think you're right. monetary policy has run its course in europe, not just japan. it has temporary effect. once it is done, it wears off. i think the burden is on the real economy and fiscal policies
. that is where the market is not looking forward. story, oilsecond prices appalling us kuwait workers said they would and a strike. wti was down as much as 3% earlier in the day and kuwait had the fourth-largest producer. in the equities area, you like volatility. do you like it in oil has read are seeing the paramount -- because we are seeing a fair amount? rupal: i think this show is about being the smartest in town, so here's what i will tell thingiewers, the smart about oil to keep in mind is that everything below $65 oil is not a signal to review need oil to go about $65 for a lot of the listed equities that you and i can own to really get traction in terms of earnings and cash flow, said the volatility in oil is really between $30 and $50, i do not care less about it because it should get about $65,
which means that if oil does not, stocks are devalued. david: so you are not interested in the energy sector until $65? rupal: that is right. it is interesting below $65 because they should be pricing in. i think the markets of be looking at this downturn. oil is headed up in the term because you have a supply line coming through and demand, unless it declined to much, which is unlikely, oil has to head up because it is one of the few commodities, unlike iron and copper, which you have a negative view on, oil is a depleting asset and the decline curve naturally falls to supply shortage, so it is a matter of time before it comes back up. vonnie: where did you come up with the figure $65? rupal: we do a lot of fundamental work and we do scenario analysis, so we really kind of looked long and hard about the minimum breakeven that
you need for people to really refuse in the shale field -- reviews capex in the shale field. i am not saying every company, i am talking on average. marketsnumber three, are wondering about shares of coca-cola falling in the pre-markets. hosting premarket estimates mostly at expectations, but they were looking for faster turnaround from the ceo. earlier, we were speaking with an analyst that says this is about the consumer and the north american portion was quite healthy, but how do you see the american consumer? consumerthink the everywhere in the world is week. that is a challenge. i think the fundamental problem we face is not just deflation, which everyone is worried about, but when you have a group scarcity, people are belying on consumer staples because they are supposed to have reliable growth, and when that
disappoints, it sets the stage for the rest of the market. i think that is the read across from the weak results we are getting, even from the consumer sector. the consumer that has redirected their spending, as you and i both know, technology has consumed more of the consumer spending budget as opposed to traditional areas, food, rants, and the classic consumer staple kind of items. i think that there is more opportunity in enterprise people like microsoft as the ultimate consumer staple, like some that we just talked about. of companiesot based in the u.s. have faced a big headland, the dollar. they do not face that so much anymore. could coca-cola be a winner there? think any multinational, including coca-cola, will benefit when the dollar weakens. the last couple of years as acted as a headwind to a lot of multinationals. that is certainly a benefit.
those other stories that matter to market now. is sticking with us. we went to get some first word news now. donald trump and hillary clinton have ended their losing's greek -- losing streak. trump took more than 62% of the all but the handful of delegates per john kasich was second and ted cruz third. the associated press says cruz cannot possibly collect the delegates he needs before the convention. hillary clinton beat bernie sanders at 15% of the vote. theakes clinton's road to nomination almost unstoppable. they say sanders will determine his path toward after the primaries next tuesday. president obama is in saudi arabia meeting with the king and other persian gulf allies. he will also attend the
corporation counsel. the white house says the president plans to discuss against thelies fight in the islamic state and brother terrorism efforts. global news -- and broader anti-terrorism efforts. global news sponsored by our journalists and news bureaus around the world. matt: dish beat estimates and raised prices, but they had a decline in pay tv subscribers. fish raised rates in january, tved viewers for sling until option but lost subscribers for the regular service. beel, the chip heavyweight consensus earnings, but they announced plans to shed 12,000 workers, decimating their work horse and cutting it down by 11% as demand for pc chips continues to wane. playoffs a part of the larger corporate restructuring that
will cost $1.2 billion. intel gets 2% of the revenue from chips for pc, but the stock is down because it disappointed with its second-quarter forecast. staying intact, emc announced earnings today in sales that were below estimates but also said the takeover by dell's passivity right on schedule. the subsidiary is vmware and if the burning estimates and its shares are rising on use to buy back stock after shareholders vote on the emc-don't tie up. it is kind of a complicated web -- butry interesting very interesting to follow and doing well. one that jon mentioned earlier, shares at six-week highs. investors are settling in the u.s. over emissions scandal's, and today, they expect no need for a trial and that makes progress on battling the
engines. shares are up right now. in the frankfurt trade, of for vw meets with the judge tomorrow. in the u.s., there were more than 6000 cars affected stateside. jonathan: on the dax, one of the big reasons the dax is up despite the big move in europe over the last four days. automakers leaving the game in frankfurt. coming up, important conversation with marko kolanovic of jpmorgan. predictedtly and we will get his latest prediction for the s&p 500 and his views on the fed rate hike. ♪
vonnie: you are watching "bloomberg ." i am vonnie quinn. reporting increased demand for medical plans and nutrition products. abbott is the largest maker of heart bins and adult nutritional beverages. they posted first-quarter earnings that beat estimates. they get more than half of sales abroad. bag and says they do not expect the trial in the u.s. over the fake --volkswagen says they do not expect the trial in the u.s.. shares went soaring in frankfurt. we are dealing with 600,000 cars affected in the united states. $200,000,nearly $55,000 above the sticker price, to buy one of the first suv's made by tesla motors. 54th made at the
tesla factory in california. automakers often fly cars made by competitors for protesting to reveal how they are put -- fort road testing to feel how they are put together. jonathan: thank you. counting you down to the market, let me get you up to speed. futures a little bit positive, s&p 500 folding up and down, negative one point. hardly anything. ftse 100 down .41%, but the story is switching up the board. had gainedoducers running an opec like strategy to production, boosting volume despite would prices are. have beenst producers doing just that, but what has happened recently? the world's biggest mining productionting forecast for their australian mines by 4% because of bad -- and and real word real work maintenance.
it is searching up $60 a metric ton. by 2.5%, so, rio up the minors gained a rebound in the commodity market. that is something i am looking at in london because that is where a lot of based. matt: absolutely. you have all of them, anglo, rio and bhp billiton. i wanted to beat a couple of analyst actions that will move shares or are moving shares into the trade right now. marriott shares were cut from an upper former -- of an outperform is ad analyst say it valuation call. despite the fact that shares are up 1.1% so far this year, they upside opportunities are in balance at these prices. that is marriott. let's take a look at spirit airlines in the travel world.
shares downgraded to neutral from overweight. jpmorgan also name a valuation shares that have gained one third this year. jamie baker analyst says it is making more sense as far as valuations. finally, a big stock for the dow jones and u.s. the economy, boeing had a downgrade at bank of america merrill lynch that we told you about earlier. ron epstein has concerns of the cash flow from the airline of program and says --t going to generate just that boeing will generate $60 million in cash. -- $16 million in cash. jonathan: thank you. i want to bring your attention to a trade map. , ilondon, the obvious trade get that it is the worst-performing major against the dollar this year, but if you look at another trade, here's
one from pioneer. great story. it is on the bloomberg terminal. they are selling sterling credit against u.s. debt. you can see it widening just a bit on euro debt right there. buying other trade is , so i thinktection it is really interesting and something that we are really trying to get a grip on. what is the trade going into brexit? if you want to do something outside the fx markets, this is a pioneer investments are doing. this is under sally bakewell's bio. have i -- go?t: have i showed you brex .he bloomberg function brex go it is great as a get closer to that vote on the exit or no exit of the u.k. from the eu.
investing. we talk about volatility and humidity look at the vixx. it is under 13 and has not gone anywhere for ages but we feel like we are in a volatile environment. what do you look at? rupal: we look at individual stock price values, so there has been a lot of bad news out, whether it is an emerging markets, and japan at one point had a lot of bad news in 2012, so we are always looking for opportunity and volatility. one of the things i have loved doing this, someone in the world is going wrong and that presents opportunity because we're longtime investors. david: you emphasize value versus price produce a value does not equal price necessarily, which must be a market imperfection. what is your secret sauce to identify those? rupal: a lot of people, when they call themselves dowdy
investors, too many people are identifying that with quantitative investing, like a low-price multiple. that is information that is readily available. that is readily available is already priced in, say you cannot make money from that. fundamentalto do is research and identify a value spread, which is what is the business fourth? the valueou look at spread of the business and that is what makes it different. vonnie: is it getting harder to identify those? there are leading and lagging factors, but it feels like a lot. career, ioughout my have heard you can only find value or opportunities in small gaps but i have done it in large gaps. i have also heard it in small and emerging markets, but i have
been developed markets. i think it is a misnomer and is active investors, it is our job and opportunity to find these. one great idea, we have owned it for a couple of beersyears. we accompanied that will double earnings of the next five years, glaxosmithkline, it is not similar to johnson & johnson, which is performing great, but if you rewind three years ago, all were underperforming and it was just the natural time when they fixed that and we owned johnson & johnson a couple of years ago and we did great with it. now, the time is to look at glaxosmithkline with the opportunities ahead. for active investors, we do not need hundreds of top performers but just a handful and this is one idea. david: where does that value spread come from?
what do you know that the market does not know? rupal: the market does not appreciate the barriers to entry, which is today, under earning. it makes at the 30% operating margin and you take a break even and the margins go down. then the manufacturing know-how will allow them to make this division performing again. it is not instant, but it is just a couple of beers and then you get a beautiful margin business to operate, that is a huge mark to go forward. likewise, [indiscernible] not similar to what johnson and johnson has in their portfolio, and that business is only have to margin that they have earned. they have new management turning it around, sue have multiple drivers in the business that will normalize. in the meantime, you go up 6%
and this is a classic set up. rupal, thank you so much . she is the chief investment officer for global equities. jonathan: fascinating interviews on this program. up next, marko kolanovic a jpmorgan joining us for the opening bell. the menu correctly predicted the selloff in the u.s. equities. we will get the latest prediction for the s&p 500, next. just over four minutes -- under four minutes to the u.s. open. debt flat across the board. ♪
quinn in new york. you will hear the opening bell very soon. futures seem to be on a road to nowhere. dow futures, negative nine going into the open. futures are positive. on the s&p 500 yesterday the headliner" 2100 for the first time since -- if you're looking to commodities, wti down by 2.4%. rallyretraces some of the from the last couple of days. $40.10. about 25 seconds at the open let's peel some of it back and get to matt miller. matt: from the studio of new york we are looking at stocks that are unchanged at the open. the dow jones industrial average losing about 10 points. s&p and nasdaq hardly moving. if you dig in and look at the intraday trade on the s&p futures i think it is interesting.
when crude was coming down people were trading down on stocks as well thinking we still had these two trading in tandem. around 5:00 a.m. i was arguing in the morning meeting we should be leading with stocks give up the ghost as far as the rally is concerned. proving me incredibly wrong, although not by much, stocks continue to rise. i think the haven trade is interesting. we have covered that well on bloomberg as far as the move into the end. yen.he move into the the 2100 level of the s&p. i think it is fun to look at these big round numbers. luckily we have a famous market technician on who will tell us what he thinks in a minute. over 2100 yesterday for the first time this year. the s&p gaining about 3% year to date. 3.5%.nes up
18,052. big movers in today's session. the google was a hot story this morning. the eu continues to look further into google for anti-competition reasons. i feel like they have been doing this for a decade and will continue to do it for a decade. microsoft story led into the google story and will continue to bleed into the eu wanting to take money from whoever makes it. you have the intel story. decimating their employees, cutting the workforce by 11%, letting 12,000 people go and missing second-quarter forecasts for sales growth. apple, down a little bit today but this is the world's biggest company so when it moves it can weigh the index down or lift the index up. gene munster and piper jaffray saying apple is still a big pick. a lot of talk about how many iphones a will sell and how that will feed into their bottom line. jon: great breakdown. i want to get to the round
number. s&p 500 above 2100 yesterday and today at the open. the first time since december 2015. if the index stays above the level it may spur further demand onm traders whose purchases the rally could reach as much as $100 billion. this according to marko kolanovic of jpmorgan, global ro derivative strategy. he joins us now. let's start from the top. why is 2100 such important level? marko: the level is somewhat important because it represents price momentum on s&p 500 and if you look at the yesterday close, the price turned positive. very briefly, it has to stay here for a few days to see this type of inflows. decent sizede a deposit and could put in money
in and out of markets. there could be some inflows in to range, it $80 billion $100 billion. we will need to stay for a few days above these levels. jon: this $80 billion to $100 billion level, how'd you get there? how you catholic that number? -- how do you calculate that number? atko: we look straightforward strategies. cta's. various data programs. trying to say historically -- trying to see historically how much the index has swayed up or down. -- thesee momentum was investors had significant assets. we look at what they have now and what would they need to buy. what type of impact, it depends only liquidity conditions.
it depends on volatility. a lot of these strategies look at volatility. lower volatility they will probably buy more. it is hard to estimate but we think it could have a few percent upside on the market. you mentionedy high valuations of the s&p 500 that could keep us range bound. thequants to are valuation? they are pretty ugly in terms of year on year declines. quants are largely insensitive. a lot of quant funds actually have pretty high amount of leverage. the last leg of systematic inflows. the other investors have pretty high leverage. if we see these types of inflows into equities that probably will be last leg.
i do not see much more buyers markets up to that point. multiples are pretty high. systematic funds apart from ctas are pretty levered. quants to that point, typically do not take notice of much in terms of fundamentals. what about the federal reserve and interest rates? are you waiting to see what they will do before making a decision on where the s&p is going to go based on what quants will do? marko: central banks have a huge impact on the market. the last six months i think there was quite a bit of a change in the tone since march meeting and interviews after that. i think that created a new environment for emerging market and value assets. i mention in my note i could call it almost a goldilocks environment for these types of trades. fed is most likely to stay put and be more dovish as compared to last year which could benefit
and emerging-market value side. vonnie: what do you advise based on that outlook? marko: we advise clients for something i would call -- you go on a risk curve with some of these value assets so that could be moved to national companies. even commodity sectors like energy materials. potential is much higher in terms of -- on the other side i think one needs to have some sort of hedging instruments in place. we would recommend having slightly higher allocations of cash. perhaps risk off assets like gold. we advise volatility but volatility is getting expensive in terms of the cost of enrolling. risky assetsvery like emerging markets, multinationals. on the other side, some hedging tools in case things go for
worse. david: as you look at the value represented, how much of that of what a direct result essentially three central bankers are deciding? how much of a risk does that pose for the market? marko: a very good question. the last four or five years the rally and s&p for 2011, 2014, a sharp ratio. nots hard to think that is partially driven by banks. is it 20%, 10%, 30%? we think the s&p are repriced in the dovish policies over the past you years. david: that could change. if you have three people, three central bankers who can decide this, that is putting a lot of eggs in one basket. marko: that is why we mentioned back in august and december this is a risky situation. it needs to be mindful of this type of risk.
think there is risk and i think that is why they will stay very dovish at least this year and they are not going to get close to the risk. previously you described systematic strategies and hedge funds as having "above average level of equity exposure." wisdom, the discussion right now is that hedge funds are quite short. marko: we look at various heads hedge fund indices. if you look at the sort of exposure of these indices to equities, you can look at the short-term data. that exposure started shooting up in the past month, pretty much coinciding with the rally late february. when you look at exposure and .istorical numbers, about 80%
that is what i call above average. not extreme but not low. point, 2100 the buy signal, what is the cell signal for you -- what is the sell signal for you? marko: 2030 to 2050 range. that point momentum turns negative. at that point option positioning will result into some outflows from equities. if we go to 2030, volatility will shoot up so you have funds the levered. couldk 2030 to 2050 range turn things ugly. jon: marko kolanovic of jpmorgan, thank you very much. : up next on bloomberg , intel is cutting 12,000 jobs. deepest cutbacks in the decade. ♪
matt: coming up at 10:30 a.m., i will speak with harley davidson ceo matt levatich. vonnie: you're watching bloomberg . the largest health insurer in the u.s. is cutting losses when it comes to obamacare. united health is dropping out of government organized health insurance markets in at least 16 states. helmsley says the obamacare market is proving to
be smaller and riskier than the company expected. united continental is shaking up its board as part of an agreement with investors. former air canada ceo robert elton will be the new chairman. he replaces henry myers. united is giving award seat dashboard seats -- firms have asked for a chairman with airline experience. the european union is opening a new front in its fight with google. regulators have sent google a formal antitrust complaint over its android mobile phone system. the company is accused of using its power over smartphone makers to crush competition for apps. google says it will show the android business model is good for competition. that is your latest bloomberg business flash. let's get some stocks are moving in a check with matt miller. matt: crude oil moving. some of the stocks in the crude sector. crude is down for the fifth day in six. some upgrades for some of the big service company. david anderson thinks shares
will trade at $93 within a year from 80 right now. anderson says no oil service company has improved in self more during the downturn. halliburton is a topic at wells fargo. a bias toward large-cap oil service stock. bailey thinks margins will return to 2013 2014 levels. regeneron shares are trading higher after it's -- growth concerns on its eye care treatment. analyst jim burger know is concerned about changes for coverage which may preface cheaper treatment. , coke is another one and tupperware. abbott labs, you can see right now trading over a third of a percent. down -- it didg
not beat by enough on the revenue side or raise outlook. tupperware trading down three and two thirds percent. jon: the nasdaq down by roundabout seven points. abigail doolittle at the nasdaq with a look at movers in early trading. abigail: one stock moving against nasdaq come at dish network. stock is higher after the company reported a strong first quarter. in increase in streaming subscribers that more than offset a loss in the satellite subscribers. companyffett thinks the possibly satellite business could way a downtrend in the stock chart. suggestions that moffett could prove to be right. a price target of $40 per share. one stock that has been volatile in the first few minutes of trading on earnings, intel. 1% range after the company reported an in-line first quarter announced in an 11%
workforce reduction and a cfo succession plan. the company offering a second-quarter sales outlook that missed estimates. that is similar to last quarter. an event that helped to trigger a bearish cross. we could see the shares of intel trade further down. david: let's stay on intel. job cuts are you let's bring in cory johnson. intel announced 11,000 job cuts. something like that. what's going on? cory: about 11% of the job cuts. 12,000 jobs. the brute force of the slowdown in pc sales has hit intel. intel has a lot of success gaining market share. business was not wrong but as they gain share they were able to blunt some of that. pc sales are just not with the used to be and not going to be what they used to be. the advent of the mobile phone and intel's lack of ability to
get chips in those phones has been substantial. david: where do they go from here? cory: they are looking to benefit -- every time we access information on our phones we're accessing information in a data center somewhere. quite often using intel chips. that is been a high-margin successful business. they are looking forward to the internet of things. a world where there are sensors and chips in just about everything gathering data to be processed in data centers with intel chips. doubling down on those investments. while the interesting things about yesterday's conference call, the company will continue expenditures even though they are cutting back on staff. vonnie: has it gone well for other major tech companies in the past? do you think intel will be able to pull this off? cory: intel dominates in the markets they are in they just failed in the mobile computing arena. the next iphone to see if intel gets inside of that. vonnie: there are rumors it will. cory: certainly fighting to be
that chipmaker or at least be in the phone in some capacity. in the long run intel is such a strong company. also a company where people work for a long time. if you've been there for 10 years, you're one of the newcomers. these layoffs probably come as a shock for a lot of people. matt: you are one of the kids at bloomberg. i been here for 17 years. i learned this punch in my first started here. -- i learned this function when i first started here. you can see where job cuts were made. here, 6000 back in 2009. we had not seen that many until 5000 in 2014. 12,000, decimating the staff ringing it down by more than a factor of 10. intel cutting jobs. is anotherl over, gf option i love. i type in employees and turn it into columns.
this is the employees, the staff in brown. the white and green are profit and revenue. revenue comes down, it is a cyclical business but profit comes down so much more. they have to cut jobs in order to right size for profitability. cory: absolutely. i think there is a transitional change where we are going away from pcs. everyone wrote a headline that pc is dead wrote it on a pc. the pace of upgrades is dramatically slower because they are mixed with tablets and phones. david: cory johnson, thanks very much. jon: they give her a much. in the next -- thank you very much. heard matt miller say 17 years at bloomberg. he said, as long as me? i am moving this week. mark: you are moving?
ben manziel is joining us. he will be telling us about all the big stories of the day. 1.7 trillion. big day for mgm global growth. growth properties president who is james stewart. they carved out from mgm resorts. it is their ipo today. the second big ipo this year. we will be asking -- a big day for miller because he is interviewing the harley davidson chief executive. what can we expect? jon: i expect and excited that trying to ask very serious questions. i'm sure he can pull it off. just look at that. matt: i have to say i am biased because this is my sportster 48. that's why i was off the bike.
i record gas tv and go to guess stations to watch it. you know what else i'm doing? i'm going to battle mark barton in battle of the charts. i'm going to use david's chart. david: there you go. watch out. jon: up next on bloomberg we are not going to the hollywood arms. we are in the midst of earning season. some of the company's to watch today and in the following week as well. ♪
vonnie: you're watching bloomberg . that is new york city. such a beautiful day outside. i feel it we need sweeping music for this. looking ahead to earnings later today. american express reported after the bell expecting to show moderate loan growth. earning season continuing with microsoft and mcdonald's among some other companies scheduled to report. jon: here is the data in the
economic events to watch area u.s. existing home sales at 10:00 a.m. eastern. tomorrow, ecb rate decision and news conference. we will have that live in full on bloomberg. friday, manufacturing pmi. stay tuned tomorrow for full coverage of the ecb rate decision 7:45 eastern. 12:45 london time. david: later today on bloomberg markets, bank of america chief officerogy joining us for the 1:00 hour. that's it for bloomberg . nearly 30 minutes into the session. let's get you up to speed as we head out. futures were largely unmoved through most of the trading session. stocks are up. not even four points on the dow. not even a point on the s&p 500. that does it for bloomberg .
tomorrow, bases are loaded. deutsche bank chief international economist. chuck stevens, mark keeseville vonnie.vid, aces are loaded tomorrow. david: the leadoff hitter is mario draghi. following the entire press conference live. vonnie: we will see if he has a new term for the markets these days. that does it for bloomberg . tune in tomorrow for more ecb action. ♪
betty: we will take you from new york, to london, to hong kong. here is what we are watching. half an hour into the trading session. stocks are fluctuating. s&p hovering around a fourth month high. crude oil is slipping for a fifth time in six days. mark: donald trump and hillary clinton both take new york by wide margins, ending losing streaks from both campaigns and pushing them closer to their party's nomination. does sanders or cruz have any path to victory or has a general election started? betty: intel is slashing 12,000 jobs. the deepest cutbacks in a decade as pc sales contract for a fifth consecutive year. can the wod'