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tv   Bloomberg Markets  Bloomberg  April 28, 2016 12:00pm-2:01pm EDT

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scarlet: from bloomberg world headquarters in new york, welcome. tracy: here is what we're watching this hour. u.s. stocks are bouncing around. is the market tuning out central banks? scarlet: dreamworks has found a new home. it is being bought by comcast. is this a good business move? shares of facebook are soaring after hitting an all-time high today. can the company continue the rapid pace of growth? first, let's check in the julie hyman because we are halfway through the u.s. trading day. the dow is still negative. julie: the dow was negative and it is earnings and in the day driven. there has been a surprising amount of the day.
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deals were announced or offered, even if they are not done. the s&p is gaining a little traction thanks to facebook. the dow was being held back to some extent. when i look at the s&p 500 as emblematic as what is going on in the markets and look at the biggest movers, it is a mixture. you have facebook on the list and when you look at facebook's future growth, a lot of analysts are saying the bulk of the revenue increase last quarter. all this money comes from facebook itself. not even monetizing messenger or instagram. analysts are looking for future growth in the company. st. jude medical getting a buyout offer $25 billion with bristol-myers squibb. it is a mixture of earnings and m&a driving these performers. take a look at the latest on the earnings in the s&p 500. here is the current quarter.
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a little bit of a decline in sales. now, more than half of the s&p 500 members have reported. a decline of less than 6%. going into it it was looking like 10%. companies always beat estimates, that is the deal. but it is interesting to see the version by which they do that. tracy: amidst the day lose we have a small matter of the bank of japan. julie: just that little thing. that's dominated the headlines overnight. he bank of japan is not making a move to further increase stimulus areas saying they have time to the market and the economy to digest the stimulus that has already been done. just over half of the economist that we surveyed said they were looking for a change. that means that less than half were not looking for a change so it does not seem like a huge shock but the market seems to take it as one.
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we saw a big drop in the dollar versus the yen. we also saw a genetic reaction in japanese stock. if you look at the nikkei, it was a similar cliff we saw it fall off after this announcement was made. and what the bank of japan has been doing thus far has not proven as of yet to be effective. if you look at the various points of stimulus here being announced, you see inflation going lower, not higher. far, it has not worked. it'll be interesting to see if we give it more time if it there is more fruit. finally, rates here in the united states. yesterday we saw a rates go lower in the wake of the fed statement today, tax higher again. eight of the past nine sessions we have seen an increasing yield on the 10 year. scarlet: a lot of people are pointing to that.
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julie hyman, thank you so much. she will be back with the mystery stock. tracy: my favorite part of the show. let's check on the first word news with mark crumpton. mark: i thought first word was your favorite part. the former house speaker john boehner says he would vote for donald trump in a general election if he was a republican nominee but he would not vote for senator ted cruz. that is according to the stanford daily. speaking to the university, he is quoted as saying ted cruz is lucifer in the flesh and again quoting that he had never worked with a more miserable sob in my life. who get their health insurance from president obama's affordable care law will likely be showing out more money next year. many insurers say there has been a financial drain and it has been a wave of insurers seeking
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premium increases. in virginia, some insurers on are asking for price hikes as high as he 7%. the michigan civil rights commission plans the first public hearing over the flinch water contamination crisis. residents faced discrimination during the switch to the flint river for drinking water. commissioners plan to discuss the potential roles of racism and environmental justice and other discrimination in the crisis. greece may be a step closer to getting more a lot funds. international creditors are leaving athens's saying they made progress in negotiations with the government and president. creditors are demanding that they impose more austerity measures before they release any more money. global news 24 hours a day, powered by our 2400 journalists and 150 news bureaus around the world. back to you. scarlet: central banks are on
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positive. developed economies are barely growing. data today showing u.s. growth but s&pless than .5% 500 companies that have reported reports show sales are flat. tracy: let's bring in michael arone and he joins us from boston. would you agree with the characterization that we are in a growth, purgatory. both the gdp statement and the numbers released confirm a growth purgatory. so if heaven and nevada are closer to 3%, we can't get there. and it seems like permanence liquidity provided by central banks keeps us from recession so we are kind of stuck in this growth purgatory. tracy: we saw continued
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commitment from the central bank in terms of staying but it seems markets were disappointed today. right? michael: absolutely. what is fascinating about these policies is that they are intended to produce consumption. that is what theory tells you. you boost fiout these policies is that they are intended to produce consumption. that is what theory tells you. you boost financial asset that consumers who wealthy and they can do and businesses borrow cheaply and they put assets into long-term capital expenditure projects. what is incredibly interesting is that if we look at the gdp data this morning, that is not happening. it is down 5.9% and the savings rent -- the savings rate ticked up. so what the fed is doing is not following through with consumption in personal or business. scarlet: when i talked to traders they feel like they have given up on equities until after the presidential election in november. we all know that there are some calendar challenges here after may.
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the fact that generally speaking, stocks go up until may and then after, they basically go away, what do you do now? how do you position yourself to come back in november? michael: most of the investors that i work with don't have the luxury of going to cash. so what do you do? our view is that you have to think about four things. we like stocks with online characteristics. those that pay dividends. not just high-yield spurs. i can get you a lot of expensive utility stock split those that grow their dividends. those that grow cash flow and increase topline revenue rose are working as well area did -- as well. we think those are good themes and the last one would be bonds with stock like characteristics. so in this environment when more return is likely to come from those income, we think
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things will work well for investors this year. tracy: one of the other things that has provided a boost to equity markets has been share buybacks. a lot of companies using cheap capital and borrowing costs to buy back shares but there seems to have been a change in the market lately. some of those companies are not doing as well as they went in. i think we have a chart of this. see companies announce share buybacks and we are entering the end of the blackout by back time. these companies buying back high? michael: the rate of buybacks has been declining. what's interesting is that this is largely a function of central-bank policy. think about all of these -- if i am a corporate executive and my choice is to invest in a
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long-term, capital project with an uncertain outcome in this time versus buying back my stock and returning capital to shareholders through dividends, i think that choice is pretty easy. we are finding that folks are returning the capital through buybacks. it is happening at a slower rate than it was last year. ,carlet: michael arone thank you for joining us. our mystery stock is looking a little dimmer. tracy: but with a new star, maybe the future will be sunnier. we reveal it when we come back. ♪
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scarlet: this is "bloomberg markets" and it is time for the bloomberg business flash. synaptic's will miss an end of april target date to announce the sale to a chinese investment group. the maker of the touchscreen technology make that a lower offer then previously discussed. synaptic's is still in talks but the company has fallen to $100 a share or lower. the chipmaker reports earnings after today's close. tracy: china eastern air has signed an agreement to buy planes from airbus and boeing. they are ordering 15 boeing 787's. they and us their plan in a filing to the shanghai stock exchange. it is retiring a dozen planes made by airbus by 2020. scarlet: the company behind a
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american idol filed for bankruptcy. globalpany, co-owned by management and 21st century fox, owes the creditors almost $400 billion. that is the bloomberg business flash. it is time for the big reveal of the mystery stock. a little dimmer, a neustar on the horizon, the future will be sunnier? tracy: a solar company? lightbulb maker? julie, help me. julie: solar, that is what we are talking about. shares are down 11.5% year to date and down again today because they reported earnings. it has been a troubled interstate. there was the bankruptcy filing of con edison and not strong trading for many of the companies. it has been choppy this year and today is not helping. the company came out with a
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earnings but announced a change to the executive officer. jim hughes will be stepping down and will be replaced by the chief financial manager but that is not happening until july 1. hughes says that the succession planning has been going on for some time. shares are down by 6% and the company came out with sales lower. they say it will not give 2000 17 guidance which is something that analysts had been asking for because of the uncertainty in the industry chu to the con edison bankruptcy filing and also due to uncertainty about timing with the completion of projects and sale of assets to a yields co. companies have a yields co structure and so a lot of that is weighing on the shares today. we have other earnings report. i wanted to hit some of the other gains and losses we see related to earnings. universal health services is coming out with numbers that beat estimates as did coca-cola.
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et incomerted record n of $2.5 billion. and meet johnson nutrition also got a lift. on the downside, we do see steeper declines here. we have whole logic which is in medical diagnostic devices and the audio equipment company and xl capital are seeing steep declines after they came out by missing estimates or in forecast. all of that said, it has been a mixed picture when you look overall at stocks today. i love that you brought up yield co-news. always in the mood for yield co-. scarlet: comcast planned to buy dreamworks animation and we reported it was a 3.8 ilion dollar price tag, a 50% premium. tracy: let's bring in alex
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sherman. you were saying earlier that you think this might be a rich valuation? alex: no question. it is a surprise that it is comcast doing that. jim works animation has been sale four years. and part of what anchors and advisors and people in the industry have told me for years is that they didn't want to give up the business. and so of course he is giving up control of the business by selling it to comcast. he will stay with the company so we will see what happens. but this is a huge multiple for this company. it is a 40 times plus multiple with a 50% premium from two days ago. and this is a company that is hit or miss. sometimes they come up with big kids and sometimes, failures.
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one thing that makes it appealing to comcast is the theme park connection. they make how to train your dragon and various different sequels that go with these things. so it is very easy to say ok, we can build different rides. comcast and universal have done a great job with "harry potter" so there is a very clear tie-in. this was appealing to comcast. scarlet: but comcast has an animation studio? illumination? they make minions? and who is the guy? how does that fit in together? alex: there are obvious synergies when you put companies together and i would imagine that comcast hopes to draw on the business, obviously, this is someone who knows the business.
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scarlet: by the way, it is gru. alex: yes. yes. so comcast can get in this world, also. and they see the idea of kids animation being fruitful for them at dreamworks animation makes two movies a year. scarlet: do they only? s a lot of it take work. so it is hit or miss. this is a bet on a big multiple that there will be more hits than mrs.. that said, comcast is huge. mrs. $3.8 billion. it's not a risk -- if it doesn't pan out down the road, comcast will survive. scarlet: alex sherman, thank you so much. get your kids on gru. tracy: still ahead. facebook shares. facebook shares and twitter
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shares are at a low. we export the tale of the two social networks next. ♪
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tracy: this is "bloomberg markets." scarlet: facebook earnings getting a nice surprise today. quarterly revenue up 52% year-over-year. tracy: caroline hyde spoke exclusively with carolyn everson. we were years ago, essentially be facebook mobile app and if you look at the portfolio today, we have facebook with the core platform but we also have instagram as part of the family reaching 400 million people globally. we have messenger at a standalone mobile app. and of course, we have
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significant investments in future opportunities like oculus and the areas of connectivity to help achieve the mission of connecting the world. so the portfolio has changed dramatically. our growth continues to be impressive and largely because we sit at the intersection of a dramatic change in consumer behavior that has been led by mobile. we had to evolve as a company three years ago when more consumers joint facebook via mobile i'd utilize the platform on mobile. now we see industries and businesses recognize that they also need to track -- to transform. between facebook and instagram we have two of the most important platforms in the world. carolyn hyde: not only news from mobile but what i hear again and again is the video. his video still where it is that? is this where the euro -- the low hanging fruits are? aswe think as transformative
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it has been, we think video is more transformative which is a very strong statement. right now we have 100 million hours of video being consumed on a platform. movest made a significant on the consumer side to a product called live which is essentially a very authentic way for people around the world to instantaneously communicate with either a very small audience or as large of an audience as you can reach if you are a public celebrity and that format, the raw authenticity of bringing people into the world you are in is something that is catching on dramatically. we are seeing tremendous engagement on live videos. we are seeing 10 times the commenting on traditional videos. the way to think about video on the consumer side is that it is early days but the behavior is lifting into this mobile discovery. on the marketing side, it is a
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form that we have loved for decades and now, the opportunity to have the advertising community discovered -- in the u.k. we have 37 million people on facebook and 30 million people a day -- when you say to a marketer that you can get your video content in front of that large of a scale it is appealing. scarlet: that was carolyn hyde in an exclusive interview with the vice president for solutions. the big reason why facebook has done so well -- member when people talked about facebook and twitter in the same rest? it is not even close. if you come inside the bloomberg you can see how revenue has taken off. that is almost nine times what twitter came in. twitter is dragging along the bottom there. tracy: analysts are making the comparison between facebook and twitter, if you take a look at this chart on my bloomberg you can see the year on year revenue
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growth. it is picking up at facebook and falling on twitter. we have people throwing shade on twitter today. thelet: and you see what stock is doing. it is actively trading stock by value. when you graph out what it looks like, they have moved on earnings in the last three quarters. in the third quarter, stock jumped and in the fourth quarter, 16% and today, as much as 9.8%, getting a lift from the quarterly response. coming up, signs of a slowdown in the economy. we unpacked today's gdp report. ♪ show me movies with explosions.
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show me more like this. show me "previously watched." what's recommended for me. x1 makes it easy to find what blows you away.
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call or go online and switch to x1. only with xfinity. e.t. phone home. when you find something you love, you can never get enough of it. change the way you experience tv with xfinity x1. scarlet: from bloomberg world headquarters, you are watching "bloomberg markets."
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tracy: lets art with the headlines. mark crumpton has more. mark: ash carter testified today before the senate armed services committee. 6 c1hearing dealt with middle headlines. mark crumpton has more. mark: ash carter testified today before the senate armed services committee. the hearing dealt with middle east strategy and the obama administration efforts to counter in islamic state. carter told lawmakers that there is a two-part attacks. >> cyber operations in syria and iraq, my feeling is very direct. we are bombing them and we will take up their internet so forth as well. mark: meanwhile, peace talks in syria seem to have stalled. the special andre once russia and the united states to revitalize the cease-fire that has collapsed. the special envoy and it two weeks of negotiations without setting a date for them to resume. joe biden made an unannounced visit to iraq today.
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the first visit since 2011. the iraqi prime minister is struggling to gain his grasp on power. donorss that republican are not giving presidential hopefuls ted cruz and john kasich the funds they need to stop donald trump. finance records find that the donors who gave big bucks to marco rubio have mostly disappeared from the political landscape. records show your than 3% to gave $2700 limit to rubio also gave that much to ted cruz or john kasich. if they had donated at that level, they would each have as much as $39 million to compete with the deep pockets of donald trump. several news organizations are reporting prescription drugs were reported with prince when he was found dead. they are citing unidentified law enforcement services that
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prescription painkillers were found on the 57-year-old aunt in his home. they are citing unnamed sources to say that pills were found but it wasn't clear if they were described to him. the autopsy results are not expected for another 3-4 weeks. global news 24 hours a day, powered by our 2400 journalists and 150 news bureaus around the world. >> it turns out that the slowdown in fourth quarter was more sluggish that thought. scarlet: joining us now is constance hunter. does this provision lower confirm the volatility that we saw in market was a direct drag on the economy? constance: this is actually the very first release of the gdp. s isi think what it confirm
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that the oil and gas sector is very weak. we saw a big fall quarter over quarter, almost 40%. and this has been a drag this quarter and the fourth quarter of last year. tracy: the other thing that people are watching out for is any clues into the u.s. .onsumer, a powerhouse what did we find out on that front? constance: a great point. the consumer is leading the way. we saw lower auto consumption. but we did see a continued thestment, the highest in last several years, almost 70% on an annualized basis and this is good because it helps to support growth. with this data backing up the it will continue to be a growth driver this year.
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scarlet: you mentioned the oil and energy sector and the consumer, why aren't we seeing more benefit from low gas prices? constance: we saw consumers begin to spend much more on services before gas prices fell but you have to remember the u.s. consumer is extremely sensitive to gas prices and they are up $.30 so far this year. and that is actually quite significant. so we are seeing very low levels of gas prices. so one of the metric that i look at his gasoline sales and it is down below 8%, almost a historic low. that means the consumer has other cash left over to spend on disposable income items. tracy: on a similar sort of note, when do ecb see the weaker u.s. dollar actually kick in and boost exports? constance: the problem with that is that the u.s. dollar is weaker because the fed walked back some of the expectations
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for a rate hike this year. so in december it was at 4%, they walk to back and it has been part of the reason for the u.s. dollar weakening. it is not because other economies are doing that much better. what that means is that there is not that much more steps. that thee seeing is rest of the world is pretty weak. tracy: what about business investment? that was a disappointing part of the report. the biggest pump in seven years. this is where the federal reserve doesn't have much sway even though it is monitoring the fallout carefully. constance: that was so much in what happened in oil and gas. whale and gas in 2013 wac1 even though it is monitoring the fallout carefully. constance: that was so much in what happened in oil and gas. whale and gas in 2013 was 13% in the u.s.. it worked the next three
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categories. we have seen a very big decline. have seen a fallen breakdowns. have seen a fallen total investment and that was a big part of investment. if you at that to the part that we see a slowdown in auto purchases, it looks like capital investment is in a bit of a doldrums. the one possible thing that could change that is that we have seen a pickup in new firm formation and business formation. that had been very weak and it is a problem because a lot of the new job growth comes from. it is also where innovation comes from. new firms are in new areas of the economy and they are driving competition. that is good for productivity. if we continue to see that , that will bode well for future investment and job growth and the future of the economy. but this all says the fed will go slow this year. their data dependent. they really don't know if jobs
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will carry the day. we have seen strong jobs growth and residential investment which does lead to more jobs but we are in a positive circle here but when you compare it to everything else that is negative in the economy, they need to see more there. think they will do it in june. tracy: i realize there is a big date -- a big debate about seasonal quirks. but does that vindicate the decision? constance: yes. in a way. but remember this is the first release and there could be a lot of revision. so far it looks like there will not be a big revision. trade might be downward. those are wildcards. when you produce gdp numbers, it is the thing that economists get wrong most of the time. trade and inventory. those numbers could swing up or down. so we will have to wait to see if we get the rest of the data.
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i think they will do the second rate hike in june. tracy: we look forward to having you on in june. that was constance hunter. scarlet: coming up, we have today's global business report. we will take a look at the rise of islamic bonds. assets in islamic banks have tripled. amazon reports after the bell today. the company is known for the prolific spending. ♪ scarlet:scarlet: amazon's usual report earnings later on. ♪
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scarlet: you're watching bloomberg. tracy: this is your global business report. here is what we're watching. a rough quarter for volkswagen. how much did the scandal eat into sales? scarlet: the world bank of scotland is struggling financially. when will they pay shareholders? tracy: london luxury hotels are running empty. g back right fit brin visitors? scarlet: volkswagen fell to a loss in the fourth quarter. the automaker blames market support measures linked to the issue. demand declined in brazil and russia. tracy: the royal bank of scotland is casting doubt on
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williams andy its glenn consumer bank by the end of the year and the cost of the disposable will be more than expected. it is so majority-owned by british taxpayers and hasn't paid a dividend since the government a lot in 2008. the global growth outlook looks murky. the slowest pace in two years. the fema president spoke to bloomberg about the headwinds ahead. >> well, i think there was a slowing down with the economy in february and march. that was signaled in the data as it began to come out. so the question has to be, where is the growth going to come from next quarter and the rest of the year? the consensus is still for an acceleration but i think we will see it come down because the investment is not there that would be needed in order to make the economy grow faster. tracy: luxury hotels in london are having the worst year since 2009. the priciest hotels were only
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65% occupied the first three months of the year. among the reasons are terror attacks in paris and brussels, economic turmoil in russia and the chance that the u.k. may leave the union. scarlet: it is time now for the bloomberg quick take where we provide context on issues of interest. islamic finance, how does it work when they for been charging interest? enter in islamic law. the muslim population is growing rapidly and wealthier, creating new customers. so here is the situation. assets of islamic banks increased to $2 trillion in 2015 from 820 billion dollars in 2008. much of this comes from the sales of islamic bonds. holders hold a share of the asset that back the debt and receive income from any profit the bond generates. the u.k. was the first
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non-muslim country to sell bonds in mid-2014. luxembourg, south africa and hong kong soon followed. here is the background. the first sharia compliant bank was established in egypt. in iran, all banks must be sharia compliant. a group of gulf states as well as malaysia and indonesia hold 91% of the remaining islamic banking assets. here is the argument. supporters of the approach say thet financing supports county because it avoids overloading companies with that. money is channeled towards companies that produce goods rather than buying or selling on markets. some say it can appeal beyond the devout. to those interested in banking practices. others worry about institutions being exploited to funnel money to islamic terrorists, an issue
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in the u.s. safety memo. for more stories, visit ssa mayer'smari future as yahoo!? ♪
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scarlet: this is bloomberg markets. let's get a check on how u.s. stocks are trading now. a mix to day. the big surprise coming from japan overnight where they didn't do anything. tracy: by a slim majority, economists were expecting something more. it feels like markets are disappointed with the lack of additional stimulus. ?carlet: the s&p 500 is treading
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my guess is that was the meyer will move on. she will be a great project manager. she might find a job that is
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conjugated financial engineering. >> so what does yahoo! at the corporate level say about this? >> it is complicated. they are trying to sell the company. not if
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especially compared to facebook earnings. mobile is a big part of the money they are making. yahoo! has a long way to go. one of the interesting trains of thought is that tech companies eight faster than regular customers -- companies. stocks are not doing a whole lot. the real action is commodities and currencies. 5% high, an indication
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that the lower prices are prompting producers to cut back. that is giving rise to the prices. >> it is interesting that the oil going higher is not feeding into stocks that much. at treasuries, too. seeing yields not move very much. 1.86%. most of the move came in the last several days when treasuries were selling off. finally, let's take a look at the dollar because we did have the fed meeting yesterday. it is lower today by half of 1%. >> another look at markets to come.
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>> it is 1 p.m. in london and 1 a.m. in hong kong. >> welcome to "bloomberg markets." ♪
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>> from bloomberg world headquarters in new york, this is bloomberg markets. i'm scarlet fu. as markets fluctuate with minimal gains, will this become the no normal? a new report says the golden age of investment returns is over. investors should be there -- should prepare for an impending collapse. >> with a $5.6 billion deal help save the company? this eeo joins us to explain. buy -- st to is comcast overpaying? we are going to head over to the markets desk. there was a lot of anticipation ahead of the doj. >> it was a negative reaction, but turned around in the united
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states. dissipated overnight as investors turned their attention to the other news. nasdaq has given up some of its games. it has been a leader all morning. it the s&p 500 still hanging on. out this point movement you are seeing has been typical since the beginning of earnings season. 11, that back to april is when alcoa reported. then we had a 1% move a couple of days ago. since then, we have been trading sideways. we had a move up at least 1% in either direction on the s&p 500. since the2.7% beginning of earnings season. a lot of that movement has indeed been sideways. session,ack to today's
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on the plus side, facebook coming out to beating estimates. shares rising to a record. amazon rising ahead of its earning report. st. jude medical on its $25 billion acquisition. bristol-myers squibb beating estimates. those dragging ? we have microsoft and apple. microsoft continuing its decline. labs is declining and verizon is also sliding. even though overall, a mixed picture here it individually with stocks, a mixed picture. >> we did hit a market milestone today. >> matching the second-longest bull market run ever.
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tomorrow, presuming nothing will androng, we will exceed it it will be the second-longest bull run ever. we see it going back to march 2009, more than a 20% surge. whether this is going to continue depends if you are in the bowl or bear camp -- bukk camp.bear the s&p 500 is in white. and you have the stimulus purple. in blue, earnings per share for the s&p 500. there are schools of thought that say this upsurge is only because of stimulus be have seen from the fed and it is not going to continue. been there are those who have watched profits go up. profits areur -- now coming down to some extent.
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there in lies the debate if we continue to see this bull run. >> thank you so much. the entrepreneur who cofounded twitter and the publishing platform media is back in the spotlight. for more, let's handed over to emily chang in san francisco. me in the down with studio cofounder and ceo of jelly. you say this is a new kind of search engine. why what i use this instead of google? >> it doesn't search the web. there is a very significant percentage of questions that are way better answers. especially when you are asking the wrong questions. only jelly can tell you, hey you ask the wrong question. where is mission street? where are you trying to go? i am trying to go to so and so.
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oh, you don't want mission, you should go on howard. ok. what i want to know is where is howard? a web search engine will keep you telling -- a web search engine will keep telling you what you ask. >> my producer wanted to know netanyahu?an as -- it took a little while. search likes to say we gave you 100 million results in seconds. then you have to look to the results and spent time in click on it and get some semblance of an answer. so you spent several minutes in your search. what we are trying to do is say it takes 13 seconds to ask a
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question. keep having lunch with your family and we will do the work for you. then thereone dings, is your answer. it is answers on demand. we will close a a and -- we will close the gap from 13 minutes down to a second. we are starting with people who know the answers. it's liked amazon on at go, explain that to me. >> i am envisioning a world where boys is the main ui> movie ever have seen the where the guy has a little thing in his ear and he says e-mail, next, read that one to me. and when you ask alexa a
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question, which i love. it oh my god, everyone should buy that. i have welcomed her into my home. she has had dinner with us. how far away is mars? when you ask her something like what is the name of that tech or the club that all the tech guys go to in san francisco? person with a like -- a person would say like that is the club i have been to before. >> you have gone back to the drawing board. how many people are behind the scenes? what is a technology? , well, west version have always had a people and five engineers which is not enough for this grandiose vision we now have of the future of search.
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the first version was very much tied to two social id. turned out it was not a good idea because think about it, if your googles were your tweets, how many googles would you do? but asking on twitter is great if you are willing to exposure question. you saw, i have a huge network on twitter. i get great answers, but not the answer sometimes i want. this time around is a lot more computer science in it. there is a later -- lay your of ai to determine if that is a real question. then it passes it through to the next question and as topic to the question. then it is routed with an algorithm. those people are also tagged with things they know. it gets into the right people. you don't know those people. let's talk about twitter.
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the stock is down significantly since the last earnings report. >> it is? >> it is. donald the last six months -- down over the last six months. why do you not think investors are feeling it? time to take long over as ceo and turn the ship around. it is not an overnight thing. i think wall street thinks and quarters. people like jack, they think in decades. they are decades ahead. hase it is down now, but he long-term plans. just by jeff bezos. don't invest in is if you don't like us. i am building a company of enduring value and you will see in 10 years have great it is. i am with jack on this. he seems to have gone into a time chamber with a master ceo
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advisor and come out after 40 ands, only two years older, he is great. he is super good at this now. >> do you think it will take a decade? decade,t won't take a but it could take longer than six months. give it a couple of years. i am holding on to my equity. that's for sure. jack -- it is so great jack is back. adam,ination of him and the world needs twitter. it is not going away. it is not a stable. it can't be unneeded. it's there.ere it is only going to get better and grow and everything else. it is a temporary thing. >> facebook is getting into live . twitter has been the place for live. facebook has incredible resources.
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-- has incredible resources to scale this. do you think twitter can grow significantly bigger than it is right now, or is it fine as a smaller platform? >> both are true. i always thought of -- it's funny because jason goldman, a friend of mine who used to work at twitter and work for me at google, he always uses me up bending -- spinning things. i just think i have a positive attitude. say twitter only has 300 something million people using the service and facebook has one point something billion using the service. i said, great, that is how many more people can use twitter. there you go. that is the number twitter can grow to. and people are like, are you spinning this? i say that is an aspirational number. >> but about snapchat and instagram? >> i don't know.
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i use instagram because i like to put the little filters on it. but i stopped using it because the pictures were all on my kid. and people were like, is that all you are going to do? and i said, pretty much. i use it a lot less now because it is the same thing every single time, like look, here is jake, isn't he cute? -- if it iss delivering value, it is here to stay. twitter delivers value. historically, getting information first is key. it makes you win. the same thing with jelly. getting information, the right information, the good, quality answers rather than just looking through results. you win. do you know what i mean? you get through life. the whole idea of value is the same. new kind of search engine,
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jelly. jelly -- is where you can find this new search engine. speaking with cofounder of twitter and now jelly. >> we are going to take a look at the big gains for companies like cliff national news. >> dealing with metals, coming up.
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♪ >> this is "bloomberg markets." i'm scarlet fu tracy alloway. >> let's head to the markets
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atk in what you are looking with the metals movers. >> we are looking at the iron ore reducers. cliffs natural resources having its biggest one-day gain ever. 30% gain. the company reporting first-quarter earnings that beat estimates. it has been cutting its cause. have seentheme we across are just the metals industry and the mining industry, but the energy industry as the underlying commodities have another pressure. he talked a lot about the iron ore rally we have seen your to date if you look at the average price story, it was lower than a year earlier. on the flipside, cliff reduce its cost to produce it by 20%. that benefited the company. then we are looking at a brazilian metals giant. the company having its first
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profit in three quarters. it also benefited from cost cuts. also, the rebounding prices and a stronger rally. we are seeing those shares. they are up by 4%. finally, we are watching nadal the sewage workers came to an agreement that will cover 13,000 employees of the company. benefiting those shares today. if you look at those iron ore prices and what we have seen, we have talked a lot about the big rally this year. also speculation about stimulus in china, that has driven it up and now it looks light it is benefiting -- it looks like it is benefiting the equation. >> thanks so much, julie. it is time for the bloomberg business flash.
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with italian pharmaceuticals. it may replace five of its directors as early as friday. the move comes as billion overhauls a strategy governance -- prepare's for its own prepare the arrival of its new ceo replacing michael pearson. the highest-paid ceo goes through a 63-year-old dr. he netted 330 million package. we will be back with more "bloomberg markets" after this.
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♪ >> this is "bloomberg markets." i'm tracy alloway along with scarlet fu. we are going to talk about silicon valley. a new startup once to make genetic testing for breast and a
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bearing cancer available to the masses. it is called colored genomics. can it thrive? and cory johnson are standing by with more. the changes in technologies -- a companyked called colored genomics is doing fascinating stuff with gene sequencing that is going to exposing a lot of people's' inherent risk to cancer. this greg me exactly what you guys do and to whom your services are available. genetic to democratize testing. the new test we lost was a 30 gene test that his physician ordered that covers hereditary risk for both men and women. for women, it covers breast, a
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bearing, and electoral -- colorectal. >> angelina jolie had a test liked this years ago i decided to take radical steps to make sure she did not get the cancer. she was genetically predisposed to have. but that has probably cost or what? >> up to $4000. normally, these things are very expensive. artest is only $249. our test is only $249. it in aay you do responsible way. what you mean by that? >> throughout the process of testing, that they have proper support from both the physician and a counselor. all of our tests are physician ordered. we also included counseling session is part of every -- gete so people make important life change information.
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it is a different approach. how is that test so different than what you are doing? actionablesed on health-related information. we want to make sure that everything is extreme high labity and we follow a process an excellence perspective. as far as your business model, let's think about this from an investor point of view. you need a physician to direct the customer to you, or the customer has to ask his or her a test withganize you? is it better for you to court doctors into court clients? >> we spend a lot of time
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marketing to physicians because we think it is important for them to be aware of the availability of our test. half of women who carry mutations have no family history. this has been shown in scientific study after scientific study. in many cases, insurance won't cover women for these types of tests so many physicians are excited about what we are doing because it provides them with a venue that someone can take -- paid $249 out-of-pocket and get this information. >> the of companies offering this to employees. that are very excited few dozen companies can actually decide to offer the color test is a benefit to their employees. there is these, the sacramento kings, slack, stripes, insta part. happy to be a part of that. ultimately, they are offering it
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as a subsidy. testu have been doing the for how many people? >> for a year and we are excited in terms of the traction we have got in so far. are, the biggest insurance companies who refused to cover this? to me, it seems liked -- like a bad business decision. it is a great point. the issue has been because the tests cost 4000 dollars, it has been difficult to justify it for everyone. at the 249 price point, it is something you can do at a much larger level for bigger populations. in oncology, a group looked at the benefits of testing. sensely, the r.o.i. makes
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to screen populations as a whole. that recently came out. >> fascinating that you are taking this from a few cancers too many. interesting story for color genomics. scarlet, let me toss this back to you on the tv side. scarlet: thank you so much. cory johnson and matt miller. stock andll ahead, bond returns. we will talk to an author behind a new report that investors need to set their sights lower when it comes to investment returns. ♪
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the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. ♪ >> from bloomberg world headquarters, you are watching "bloomberg markets." i'm scarlet fu. tracy: and i'm tracy alloway.
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vice president joe biden has made a surprise visit to iraq. mr. weidmann meet with leaders and u.s. personnel in iraq. it is now all but certain the courtea on the sprint will remain vacant until after the supreme court election. failed to crack republican opposition. nextlicans insist the president's vacancy created -- will fill the vacancy created by antonin scalia. shootersn bernardino have been arrested in a marriage fraud conspiracy. office for the central district of california says those arrested include the brother and sister-in-law of shooter syed farook. the wife of enrique marquez
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junior, a friend has been charged in his alleged role of aiding the violence. the two arrested our russian immigrants. obtainder oath to immigration benefits. in northern syria, air strikes and artillery attacks killed more than 60 people according to activists. one of the places hit was a hospital run by doctors without borders and a rubber -- reveled -- a rebel held -- >> this was the place for women to go and give earth, this was the place for children to get place for special treatment. back to you. click the s&p 500 might be on .he cost of history
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that is at least according to new research. quite explain to us investment returns. if you look at the last 30 years, we have had 2% returns. be a forward, there will number of factors that will help drive a number of returns. in bonds and in equities. it will not be there. we have inflation. that has helped drive returns. and with interest rates. since 1980, interest rate have been in decline. we have strong gdp growth for the last 30 years. for the short term, we had stagnation and a long-term, we have problem with them and
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graphics. the workforce is not growing. finally, a great time for corporate profitability. theorations have sold classroom on the world. they have the benefit of global supply chains and technology has allowed them to bring down costs. going forward, we think competition going forward -- >> i am sorry, they always managed to find a way to continue managing profitability. why would we start the ability to do so now? >> profits are about 10% of gdp. there is an element of changing competition. a competition will calm from people like asian companies and other emerging market companies here it these companies have a much lower level of
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profitability. that will kill profitability. three people will suffer. first of all, the 30-year-old. 7%years ago, able to get a return. work longer orto retire poorer. secondly, a bunch of u.s. public , the third is educational institutions.
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the educational institution has to look out for the prospects. i have a whole bunch of funds. he will have to look at opportunities to invest in alternative assets. managing costs will matter much in a lower return world and a higher return world. >> i have a fundamental question based on scarlet's point p or we have people talking about a new normal, the area of low returns.
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thate seeing any evidence investors are ratcheting down their return targets? is there any way they can actually do that? >> if you now look at what the u.k. regulator has done, if they have lowered their returns, the u.k. you do it on forward projections. you can a longer promise quite so much. i think there is a degree of optimism. we have all lived in this wonderful world. >> let's try to end on a helpful note. what kinds of opportunities does this create? it must create something for someone. >> there are opportunities for people on the industry to offer alternative assets. in a world where returns were
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where the returns are down, they have a lot more value. creatingds and strategies they can consistently outperform -- >> they have pricing power when it comes to fees as well. all right, richard, thank you so much. coming up in the next 20 minutes of bloomberg markets, a major order from delta, breaking a 19 month drought. does this make a bigger threat to boeing and airbus? comcast and dreamworks. >> then, a quick check on media stocks. by .2%.rrival lower stocks also gaining modestly. ♪
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a 5.6 billion dollar deal with delta. the us-based airline placed an order and deliveries will begin in 2018. this has gone for the past 19 months without any taker for these. >> earlier today, the ceo spoke with bloomberg tv's amanda lang in toronto. a company poised for exactly this kind of deal. a lot of very decisive actions to reset our production rates on the weekend. there was no market demand for
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that. we have reset the schedule, which will be the best aircraft in the world. if you look at what we have done so far in the first order of 2016, you can see we are getting a good performance. solid in a tough market. i feel we took the right decisions on a business site to make sure we keep on driving growth in the great franchise. the best business aircraft franchise in the world and i have high confidence we will upon drying the business moving forward. on the train side, clearly, we can do better on the s-ish in front. and there is a reason why we made significant leadership changes. performance that we had with
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the toronto situation, i feel confident we will put in place thet actions to address problem. i am fully committed to that and so is my new team. performance and service is very good. it is not about the polity of the product. it is about the challenges on the manufacturing side. we will address that. >> you expect delta to lead to other orders. >> at slowly. -- absolutely. it is a landmark order. with delta, it gives us tremendous momentum. includers, 800 if you the options. it puts us in a very good position, but most importantly, you're about airlines.
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delta is one of the best airlines in the world. having them as a customer is a strong endorsement that will be brought -- of what will be brought to customers. >> joining us with more is roger of labor television, canada. is the delta order the lifeline needed? >> great to be with you. it is a very important water that came at a crucial moment. it is a vote of confidence. ceo's's love to get ahead of themselves. it is great but still a long way off. this company is two years late to use the proverb, there is still a lot of runway here to get across before they get a lift off.
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>> and have not even put it in production yet. >> that is it. you are absolutely right. the plane has been bedeviled with technical and testing issues. it has frustrated them. the fact that they lost orders on the order but. theines say he cannot bring plane to me on time and on schedule. delta probably got a heck of a deal. there are rumors they got the planes 40% off or 50% off. a big, prestige a vote on the book for of confidence. >> there has been a lot of back and forth for the canadian government injecting $1 billion to help stabilize it. will this help or hinder the process? >> the quebec government is in for $1 billion of taxpayer money. this is a dual >> structure.
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you have got the family with a very small piece of act -- actual equity exposure but effectively whole heck of a lot of control urine of people to not like the fact that the family does not have a great track record of this. you guess the canadian government a bit closer, maybe, but the political costs are still too high for them to say yes, and more likely they would say great, you have got delta and confidence, do a free market companies should do. these successful marketplace and do not look for the government for a handout. -- hanie: scarlet: thank you so much. time now for a look at some of the biggest business stories in the news right now. semantics will miss an end of day target. the maker of text treat -- touchscreen technology makes up
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a lower offer been previously discussed, all of this according to people familiar with the the batter. the potential offer for the company has fallen to $100 per share or lower. +++ person for the carmaker's in missions scandal. a two-minute conversation with the president during his visit to germany earlier this week. volkswagen's namesake brand suffered a loss in the first quarter. the company blames measures
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linking to the emissions issue. scarlet: abbott laboratories create to a price tag of 25 billion dollars in cash and stock. medical device makers have been consolidating to gain bargaining power for hospitals. that is your business/update. >> julie hyman has some latest on media stocks are a lot of news there. julie: comcast agreeing to buy dreamworks animation, $3.8 billion is the price on the deal. comcast is getting a stronger animation franchise based in the united states. dreamworks is the maker of films like shrek and the kung fu panda franchises. comcast shares are rising a pity today'session. viacom is coming out with earnings and those earnings estimates. loss and itwith a reported a modest decline in cable subscribers. fors a mixed picture here the company. the cable unit recording it smaller -- smallest profit margin in five years, down 1.5%. that thearing
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dreamworks deal may be good news for other property valuations. paramount pictures are planning to sell a stake, so he says it could be good for that and lions gate could be good for the valuation there. by 7%.are trading look at some of the recent deals in the film and entertainment business. it seems as though animation is more valuable. analysis by an bloomberg intelligence that looks at recent deals, not that recent, over the past 10 or more years. here are some of the deals we have had. disney pictures goes all the way back to january of 2006. that was at a similar multiple. 36 times versus five times for this dreamworks deal. that with contrast lucas deals. a first glance analysis would be
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that when you're getting animation, it is a little bit pricier. >> definitely, as we were discussing earlier. thank you so much. coming up, amazon is set to report latest numbers after the bell today. will it deliver for investors? ♪
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stories we areg following today. comcast buying dreamworks and amazon is set to report its latest quarter results after the results are debt -- the results today. let's bring in paul sweeney of bloomberg intelligence. he follows both of the companies. with follow-up with the dreamworks deal. it is probably a hefty price tag
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based on previous deals. >> yes, it is a huge multiple. thatlk about the synergies bring it down to high single digits. on the surface, it is north of 25 times cash flow. they are clearly saying animation is important to us and come -- content is important to us. have a good animation business. buying dreamworks, this really sets them apart and puts them in the business -- animation, all that content derived off of these characters. scarlet: wasn't dreamworks the brainchild of steven spielberg -- the league i left out of that crew is going along as well? >> i do not think so. he is getting a title and a role but he is not part of the transaction. he will take his money out of
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the company and it is all caps deal. this is really a deal where comcast is saying, i want your content, your library of content because throughout the universal family, i think they feel they can do it disney does very well, it andntent and monetize all these types of things. >> what was the catalyst for him doing the deal? we know he was a sin for a long time. company has been for sale for a couple of years and it is facing the reality that it is difficult to be a standalone, in a globally consolidating industry in the media business. it is very volatile and your results based upon the number of films you have, only a couple of films for it -- per year. the stock is very volatile.
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i think he was looking for a big parent to take his franchises and grow them. on.let: let's move web business, the cloud business driver ofthe vague amazon's's profitability. apple is a big customer of amazon's but it is changing its strategy there. >> yes, it is interesting. jeff bezos never delivered profits for his shareholders. investors do not care. it is starting to change a little bit on the margin and the cloud business is part of that, a business growing 50% for them. are in the midns 30's, very profitable and it helps the bottom line profit for amazon at least get a little bit of profits to shareholders. this quarter, it is a little bit the same. looking for about 25% revenue growth. profitability of the
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cloud business, it is a very competitive business between amazon and microsoft and google and the big players and the business is characterized by all of the companies going after market share by cutting price. at some point, that will have an impact on the margins. we were talking earlier about the echo. >> i was going to bring back the exact thing. color likely to get any on the success of amazon's various device is, the echo and the kindle, will that come up? >> it is a big and growing business. they are just not that meaningful to the bottom line for the company. most people are focused on the gross merchandise value of going that pipeline. they are making investments in content and hardware. that is all really designed to drive traffic back to
1:56 pm it is promotional like amazon prime offering you video services, giving you the content as a way to drive prime membership because members are so much more profitable on the amazon platform. scarlet: thank you so much. hour, we in the next will speak to the ceo of dunkin brands. favorite doughnut? >> i have to go with the classic glazed. scarlet: i like old-fashioned. ♪
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>> welcome to "bloomberg markets ." ♪
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>> lisa: welcome. david: the bank of japan surprises by holding up stimulus as the economy stalls. one surprise to many. lisa: how much is oil priced lunch the texas state economy. david: 10 million. that's of any videos snapchat users are watching per day. the company monetized the new content trend. what will it mean for the user experience? markets close in about two hours time visited julie who has a look at the latest. julie: we had a mixed picture today. we had overnight news about the bank of japan and then investors shifted their attention. we had so many deals coming out in the u.s.


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