tv Whatd You Miss Bloomberg April 25, 2016 4:00pm-5:01pm EDT
>> crude oil declining from a five-month high. joe: the question is, would you you miss?at'd apple reports earnings tomorrow after the bell. how far have iphone sales really fallen? exclusive an interview with the ceo later this hour. >> we begin with market minutes. an eventful week but we do not feel any of that today. the s&p 500 slipping from a four-month high as oil slides. energy shares by far the biggest losers. the only group to fall more than 1%.
all this comes before we get apple earnings tomorrow. pretty good week for central bank earnings. but for now, pretty quiet. wait and see has to find the markets. is at ank market important juncture because the s&p 500 last made its record high may 21, 2015. since then it is come pretty close to matching that high, but no cigar. months.mes in the last july, november, and a less week when we got within 1% of that record high we cannot get past that final hurdle. we are seeing a bit of a backup in rates everywhere you look. this chart on your screen is a one-year look at the 10 year yield on german boon. now over 0.2.
not too dramatic. but you can see there was a huge tantrum last spring, some people talk about we see a repeat of that? we are nowhere to that we are seeing yields rise despite the lack of rally and equity markets. tracey: let's look specifically at the british pound against the u.s. dollar. the pound rising to its strongest level against the dollar and more than two months. this is they've on the idea that remain cast is strengthening. we have some bearish size for the u.s. dollar. hedge funds coming out bearish for the dollar for the first time in something like many, many months, at least since july 2014. a driver for equity to
date a drop in crude oil prices. 11 a lot of a lot of different crosscurrents. increasing production, that you have investors trying to assess what it would mean for a global rebalancing effort. some big oil companies are going to be reporting earnings this week. a lot of stuff for investors to sift through. those are today's market minutes, now is take a deep dive into the bloomberg. i'm glad you brought hedge funds and their position against the dollar. you said it up perfectly, because the dollar has come and gone and this is the latest data. remember when everyone was betting on monetary policy divergence? that is not happening right now in the same way it was before. large speculative's are now betting on dollar weakness for the first time since july of 2014, near the front of that
chart, the left. the fed cut its inflation forecast and signaled rate increases this year. theoretically the divergent argument still holds water considering how much closer the fed seems to be to its targets versus other major central banks. but with the selloff we're definitely seeing speculators change their tune. i want to look at economic data from this morning, housing continues to be one of the arguments that the eco--bowls use that there is still a lot of potential left in this recovery. new homeo -- we have sales out this morning, single-family houses. the data is mediocre. i want to give context at some of the numbers. incredibly low levels for home sales, prior to the downturn the last time we were at these levels was in the
early 1990's. this white line at the bottom is homes for sale. one of the reasons homes have not taken off in terms of recovery is people are saying there's not any inventory. you can really see this, if you go before the downturn, the last time we had these few homes for sale was 1980. you have to go back that far to be this little inventory on the market. you have to figure, there is plenty of room on the upside for month'sings it this data was not that great, the bowler side said there is a long way to go. not like yout is could just change a switch. joe: it takes time and labor, which is in short supply. this is a case with there may be -- i'm taking a look at
something and will bit different, this is a technical analysis indicator in the s&p 500. it is a golden cross, when the short-term moving average moves above the longer-term average 200 day. most people take that as a bullish sign, good for stocks. however, i think we should mention the last time we had a golden cross was in december right before the index fell almost 10% over the course of the next month. so make of this what you will. scarlet: debbie downer. tracey: you can see all these charts and more on twitter. here to help set the scene i want to bring in bloomberg news reporter. oliver: we are going way down. joe: what are you seeing happening in earnings? we still have a long way to go,
but are there any interesting trends you're seeing? oliver: overall it is largely playing out as most people expected were you have lobar, and companies are beating that bar. but we have some rocking us. we are flat from two weeks ago. thing, one particular maybe it is related to earnings, maybe other things, that if you actually look at what has happened here with stocks and s&puations, looking at the it is flat, but look at evaluations and they have risen. parties because earnings are down. that calling into question what people were calling -- were paying. those sectors that did a very well and got up too high evaluations. staples, they were paying 22 times for these names. you go into earnings, maybe it is earnings related, maybe it is treasury.
then you have people going to reassess and moving away, and those three sectors have now flipped and are the worst. you're seeing a rotation here, part of it is a violation related. scarlet: overall we have seen a significant rally, but it does not feel like investors are that happy about it. there still seems to be a lot nervousness left in the market. oliver: one word is anxiety. it shows up and everything. we talked a lot about these volatility products. trackge creative funds, volatility. at the same time, although we have seen a short covering rally, an average they remain historically very high. stocks, speculative positions, and i think that indicates questions about company fundamentals. if you actually look at cash
levels, this is been leaning over the past couple days, they have gone pretty high and brought back up to january levels. much managers how are keeping their money and cash. even though it is not yielding anything, by some definition it is a negative yield. it does not make sense, why people are doing that. i think people are caught offguard by what happened in january and february and are still looming questions out there. people are not taking part in the rally. >> last week we got within 1% of the high. the companies themselves are in a blackout. joe: what are people saying about this blackout. buybacks of the main source of demand, this quarter i have not heard as much about the blackout. is that something people are still talking about?
happeningybe what is is breaking the conventional wisdom of how buybacks work. there is a committee of people who are vocal about buybacks. companies were the biggest buyers of equities in the first couple months of the year. but this theory that is out there from a certain timidity on wall street that buybacks and engineering are the only thing keeping the stock market afloat, there are holes in that. example, maybe the earnings beats are more of a factor. it is hard to know. yes, people buy back shares, it is a big part of the market. all -- whether it is all the only thing that has brought us up, i think is hard to say. maybe if you have a earnings season where your blackout, and you're are doing well, that pokes some holes in it. >> you have been looking at how
people are pulling money out of u.s. funds. even as the u.s. is outperforming. why is that? oliver: it is hard to put a finger on it. a lot of it will be this idea of investors chasing quantitative using. is a big story right now but what is happening around the globe is diverges between interest rate policies here and other markets. this divergence between demo economies markets, equity markets versus emerging market, it is interesting. the orange line here, that has developed markets. the white line is emerging-market equities and that outperformance is unparalleled. you have to go back to 2010 to see a brief. in which that outperformance exists as strong as it does right now. perhaps some of the concern about china was a little overblown and we have seen that
weakness in the dollar over the that isple months, helping alleviate some of the concerns that beset those markets at the beginning of the year. >> thank you for helping us set the scene for this week. coming up, since the start of the year warning signs have been popping up signaling a u.s. recession. our things as bad as they seem or are they better? ♪
united kingdom and germany. they touched on a wide range of topics including the battle against isil, the civil war in syria and the refugee crisis. donald trump meet another big win tomorrow night to stay on track to clinch the nomination for president by the end of the primaries. five states vote. he can only afford to lose one. there are 172 delegates up for grabs. mr. trump could walk away with 92 delegates. he heads into tuesday's contest with a hundred 45. it takes 1237 to win the nomination. fatallyfied assailants hacked two men in bangladesh's capital including a gay-rights activist. ofice said it is the latest a series of attacks targeting atheists, modernists and foreigners.
there was no claim of responsibility. withthan 3300 foreigners suspected links to jihadist groups have been deported from turkey. that is according to a government official who says another 41,000 foreigners have been barred from entering the country. deadly bomb attacks in turkey since july have been blamed on islamic states. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. data on temporary help is flashing a possible warning sign of a recession. take a look at this chart. lastdid was speaker the two recessions. right now it is showing signs of rolling over. is this simply a pause or a sign of something more ominous?
let's bring in our guest. --aging partner at you said there was a 40% chance that the u.s. would go into a recession this year. you are here a couple weeks ago and said anyone who talks of a recession should be publicly shamed on air. should dan shamed on air? >> know because he didn't say 50%. it is a game we play on the south side. we had this 50% chance of recession, every time a data point would come out mood up date the recession odds. there is not any sector of the economy that is particularly stressed right now here what gets a -- now. what gets a recession is an aggressive economy.
upbeatthe reasons i more is that we have two unusual features. the economy is close to full employment, at least many of this and that, and we have some recovery in the housing market. the housing market is rolling over. -- have a when the economy is at full employment you see fiscal policy going from neutral to type. type now it is going to two slightly collated. there are economists that point to nearly precipice as the catalyst for the recession. mind, the unemployment rate is not moved for six months. fact that the unemployment rate is moving more slowly i think is a positive sign.
>> i think we don't have anything to worry about about being over employed in this country. 14 and a half million jobs. thatump into categories collectively pay $16 an hour and evolved 30 hours a work a week. $25,000 a year compensation. these are not typical jobs that would come at a peak of anything. not believe we're anything near full employment, obviously we are still bedeviled by a low labor force participation. a lot people excuse on the basis of demographics. if you look underneath those demographics, there is a lot more at play. what i'm concerned about is the same thing that has bedeviled us since this whole recovery started in that is that we have to do with the rest of the world. trying to actually construct models, it is very difficult. there is no really good will
model. these institutions that aggregate data. as a practical matter there is no world model. we do know is that japan, china, and western europe are in difficult situations. they are competing for incredibly inadequate demand relative to global supply. you saw what happened last week. he tried to talk it down by saying he was going out and buying all sorts of things. all sorts of crazy ideas. and the yen started to tank and then reverse itself. this will mean that the only tool left for the ecb, the banks of japan, and china has been doing this all along, his direct intervention in the currency market. i'm worried about the rest of
the world but there is a statute of limitations that there will spill over and send the u.s. economy into a recession. it has not happened yet. i agree that there are more concerned about what is going on globally and i do think the fed is gravitating to this role of being the backstop of the global economy. they were waiting for the rest of them to catch up without naming names. the new have to ask yourself as a strategist or a forecaster, what is the likely scenario going to be here? of a scenario, the optimal policy is for the fed to let inflation in the u.s. surge to offset disinflation everywhere else. i think that is what janet is telling us. she will let inflation run hot in the u.s. to the point where people will begin to dump their treasuries. when that happens, then the fed will go. wait, wait.
the latest information puts growth at 0.3%. where are you now? >> slightly less, but that is a technical argument. there is no difference between 0.3 and -1. as a practical matter, that is not really was going on. what is going on is we have a lot people still looking at this as though we are in a normal business cyclical environment. i do not believe we are. it is creating fluctuations within the environment. also macro economically, you have an enormous amount of countries out there, enormous markets, that are eager to fuel demand from the united states and they have been doing that successfully. every so often however, they run
out of gas. suddenly, their economies tank and they respond with more the same, and that brings the dollar back up, drops out exports and more importantly, heightens the impact of low cost import which really hurts the united states. the dollar is in putting pressure on core inflation. you look at the currency market, u.s. policy has been getting tighter relative to europe for the better part of a urine have. -- a year and a half. i think they are trying to do other things now. with respect to gdp now, how he times do we have to go through this? if you believe all the economic
data and take it at face value, u.s. employers are hiring 2000 people a month to produce nothing. there is a wide range of studies stableow that the more of output is employment, growing at a healthy rate. we can talk about productivity but i do not think productivity growth -- >> there is a reason productivity is so low and as because labor is the new capital investment. people are hiring people and getting rid of them when they do not need them because they are are unwilling to make investments they cannot dismiss here. >> i'm sorry to call it when it is just getting heated, i'm sure we could go on but we have to cut it short. thank you so much for a great debate. coming up, this time tomorrow will be moments away from apple's earnings. next we will dig into the company's numbers and take a look at white iphone is so
>> let's get to first word news. john kasich is calling off to planned public events in indiana after his agreement to stand aside for ted cruz in the state. kasich had planned tuesday vincent indianapolis and noblesville, but he announced a voting give ted cruz here a clear path for indiana's may 3 presidential primary. >> i don't see this is any big deal other than the fact that i'm not going to spend resources in indiana and he's not going to spend in other places. so what? what's the big deal? mark: attorney general loretta smooth theying to
way for governors to make it easier for convicted felons to obtain state issues identification, saying roughly 600,000 state and federal prisoners are released each year. prime minister and -- canadian prime minister trudeau is describing the cold-blooded murder of a canadian hostage in the philippines. the 68-year-old from alberta was one of four tourists in the that last september threatened to kill one of the hostages if a large ransom was not paid by today. a syrian refugee was seriously , will carry bombing the olympic flame in the greek leg of the torch relay. he will carry the torch at an athens refugee camp hosting 1500 people tomorrow, the next to last day of the relay there. handed to brazilian
officials next wednesday. global news 24 hours a day, powered by our 2400 journalists in more than 100 if the news bureaus around the world. i'm mark crumpton. joe: today's market action pretty muted. nothing too dramatic. one big loser, energy stocks down over 1% today. there were some big a nurse last week. consumer staples rallying but overall fairly flat. it has been pretty brought based. -- broad based. we have some big events coming up later in the week. we might get some action later in the week. >> speaking of big earnings, apple is set to report. we will head over to scarlet fu has more. scarlet: the company has artie warned investors that results
will bear bad news, the question now is just at-bat. the numbers don't lie. analyst project that apple will sell just over 50 million handsets in the first three months of the year, down everything percent from the same time a year ago. apple is not alone. the estimate global smart phone sales will only grow 7% this year, the slowest rate in the product cost history. and macntrast the ipad makeup less than 10% each. back in january apple predicted quarterly revenue would decline for the first time since 2003. analysts on average are looking of 52 billion dollars, roughly a 10% drop from year earlier. the outlook helped send apple slide overr, a 21% the past 12 months. apple and samsung led the
high-end smart phone market. together a combined 92% of the market. it comes to apple, the distinction is it is almost completely reliant on the premium segment. as a result, apple is investing in new products and services -- like the apple watch. iteration of the device is probably around the corner. the april quarter is critical because apple traditionally announces ipaq and dividend plants right around now. at the end of december the company had $216 billion in cash. bloomberg estimates and almost 10% dividend increase while others see it boosting it share repurchase program by 20%. we will get all these numbers after the closing bell on tuesday. >> down we turn to commodities. two dollars national gas prices don't worry this company.
they make money to matter what. and percent of facilities are rented out to energy companies who have to day of fee whether or not the actually ship out natural gas. that comes to $2.9 billion to gear over 20 years. alix steel set down with the interim ceo and asked how the industry has changed in the last two years. >> even within the last three or to 2015,hs, going back we are seeing new participants coming to the marketplace. jordan,ple egypt and which is sedating more frequently in the market. that is a good sign. sevenct that we sold cargoes and five went to south america, the middle east and asia, they did not go to the likely destination, europe. there are a lot of traditional players in the marketplace whose natural gas markets are on
decline. andindonesia, trinidad algeria. they have less to offer the marketplace. is, hopefully we have seen the bottom of the oil .arket we are not largely exposed to the oil market. those three elements will begin to supply a floor in the market. alix: what is the minimum margin you are happy with? that is clearly under discussion. as i said before, we contracted at 2.25 all the way up to 350. clearly some of the contract talks it of come out recently, -- we don't think the contracts really clear the marketplace.
that is a matter of debate right now serious with the market rushing to sign long-term contracts, it gives us time to sort out for we want to be on that continuum. focus -- we'rey focused on the margin. have sold seven cargoes in the marketplace so far, all profitable at a two dollars. that is a function of the base price. right now we have a relatively press shipping market. at four dollars we make money. it's unlikely that price would induce other people to build facilities like shin near -- niere.he there's an old adage, there's no better cure for low prices. in order to satisfy the demand
that we think will begin around the year 2020 and other people the price has to be sufficient to induce investors to enter in the project and at the other end, the buyer has to believe it is a fair price to for the long-term. four dollars is not price that will allow that to happen. a growing market. in 2014 you represented 10% of the global gas market. by the year 2030, that will be 15%. that will be in a much larger base than the 10% was. that undoubtedly is going to happen so we need to find a clearing price that allows new facilities to be built into .lear that gap alix: investors seem comfortable
with that $2.9 billion from sabine pass over 20 years. boostl give it the extra in the marketing arm but that seems to come with a lot of risk . >> i would not say there is a lot of risk. we have certain cash flow. improve, we can market our excess cargoes at a margin. even today as the company there is still a margin for us at the current pricing. the transportation prices quite low. as the market moves the, that improves our possibility for cmi but as a risk management, cmi is there in the first instance to the risk our portfolio. it's not a risk-taking element, it is a risk reducing element. coming up, austria's
restaurant chain bob evans is laying off 1100 workers in an effort to boost profit. 21 the restaurants were company owned and closed last week. bob evans farm's operates more than 500 restaurants in 18 states. aurora investment management is said to be returning 5.4 billion dollars that it overseas from clients in the coming months. letter toording to a investors obtained by bloomberg news. comes after termination of a deal last week. that is the bloomberg business flash. the government coalition licking its wounds. capturing 35% at the ballot and raising the
stakes for the may 22 run out. joining us over the phone is our correspondent. next thank you for joining us. the role of the austrian presidency and why does this election matter? the role is usually only ceremonial. the real government is led by the chancellor and not by the president. however, they both have some symbolic meaning because he can dismiss the government and dissolve parliament. he is also the commander-in-chief. the victory of the freedom party in the first round is emblematic for the lack of support the government now has in the electorate for a number of reasons. >> a lot of people are drawing this to the refugee crisis in europe. just to play devil's advocate,
austria does have a history of , mostwing candidates recently in 1999, sometimes coming out on top. how much does this actually say about the current situation in europe? i think the support for the freedom party has a lot of other reasons, it started much earlier . there is rising unemployment in austria and a stagnant economy. also i would say that the government has joined angela merkel in the refugee crisis and at the beginning of this year, flip-flopped in the other , pandering to the freedom party.
if that was a test for this policy, it failed, i would say. >> what interests me most of the story is the idea that the freedom party is not on its own, it is not operating in a vacuum. to what extent does the freedom party work at all or coordinate with the national fund in france? it seems like they would have a lot more in common than not. >> they have, and they have a group in the european parliament , they are together in one group and each group congratulated the victory today. >>'s was the first round of the vote. what are the prospects going into the next round?
>> there is hope against the opposition candidate on the opposition green party. we never had a situation like this. in every other mainstream election the two mainstream parties thought for the boat. it is a net and neck race. a lot will depend on turnout and a lot will depend on how many supporters of the other parties will make their choice. >> what else is the freedom party -- and what other areas does the freedom party have a strong platform? >> to big issue is the european union. they are skeptical about it. some of them are even planning to pull out of the european britainome say, if
votes for leaving the european union. the european union and the euro currency are the main issues they stand for. >> on that note and going back to what scarlet brought up earlier, it does seem like this is just the latest instant of populist politics enjoying some success in the eu. i keep going back to the 1999 parallel. with that surprise success we saw a huge backlash from the world and particularly the european union. are we likely to see any retribution this time around? >> i very much doubt that. the eu policy was not successful in avoiding that. some have said that it backfired. -- iu look at how the
>> u.s. banks are generating about 10%, european banks 5%. that's because the european economy is still coming out of crisis while the u.s. is ahead of it. the investment bank visions are slower. the best example has been ubs come the first of the global investment banks to be ahead of the curve. they decided to go to a live model in terms of capital usage, more focused on investment management that is useful to society. the one that has been behind the curve is barclays and credit oldes which was based on an dated investment model.
the top line is shrinking. , is there anyrice value opportunity out there or is there more pain to come? >> i think there is value. >> i think there is value increases. ago.almost 21 years it gives you an idea. i think the structuring of the investment banking is this has to go forward. i don't necessarily agree with the spin off of the retail operation. the high yield trading book was
rather disappointing. i cannot believe top management was not aware of it. it just makes no sense to me. >> are you concerned about chinese banks and the fact that the debt load will get worse and that could lead to financial crisis? in the longerned run. the situation in china is well known. shadow banking is about 6% of total assets. chinese banks are in their own world. 6.5%place it -- pay dividend yield. the reality is it is not sustainable. crisis in theny next two or three years, it is longer term. it has to do with when china will be able to really open all its current accounts and then we will see domestic debt and foreign reserves.
scarlet: don't miss this, durable goods tomorrow at 8:00 a.m. we were just having the debate on whether there is a recession. >> one of the questions for the economy is how do households feel? we learn a little more to -- learn a little more tomorrow at 9:00 a.m.. we will see if home prices are continuing to rise. highlight forig tomorrow is apple and twitter reporting earnings tomorrow after the bell and the question is how much apple revenue falls in a quarter. there looking for the first quarterly drop in revenue since 2003. joe: lots of earnings after the