tv Bloomberg Markets Bloomberg April 29, 2016 2:00pm-3:01pm EDT
from bloomberg world headquarters in new york, welcome. >> here is what we are watching. markets are tanking again as if all comes to a close in stocks are flirting with ending the month lower. oil is bouncing around but it's heading for its fourth straight weekly gain. earnings reports from exxon and chevron are exposing the differences between how the two companies prepare for an oil slump differently. puerto rico faces of payback.
us down. everything is cyclically oriented so it is a risk off tenor to the markets. it is there where amazon lives and not in information technology. the best and worst performers today in terms of index point contributions to the s&p 500, we have amazon, on the upside of 9% after recording record net income and part of the -- because of the strength of its web services division. gilead's hepatitis c drugs came
in lower. some of the best performers related to earnings, monster beverage being because of its relationship with coca-cola. resources raising its output forecast for the year. downside. . seagate coming in with results below estimates and sky works as well suffering from waiting apple demand. it is one of the apple suppliers that has been hit as people have been buying fewer iphones. a lot of energy companies going into earnings season. that sector was supposed to be a big drag. is beating estimates because this is how it works. butyone beats estimates
that is it. here are the examples. exxon mobil showing year-over-year decline. biggestwith its quarterly loss since 1990 two. philip 66 suffering among the refiners for tighter margins. if you look at the terminal and ea, i looked at energy specifically. 50% beating sales estimates. wet is a lower rate than have seen for the broader s&p so they have been beating at a lower rate. on average we have seen the earningss of 1.1% and beat more than 500%. in some cases because analysts were anticipating losses for some of these companies and they are not necessarily reporting losses so that is why there is that huge gap between expectations and what they are reporting by 29%
sales decline, 97% drop in earnings per share for the companies that have reported thus far. think about how much oil is down over the past year. mark crumpton has more. mike pence is endorsing ted cruz for president. a victory ins indiana after getting swept by donald trump in five northeastern states earlier in the week. the endorsement marks a setback for mr. trump. the primary is tuesday. secretaryo's health said the island has reported its first zika death. the u.s. territory has seen more than 600 cases with 73 involving pregnant women. norway rescue officials say the
rescue operation is over. all 13 on board are presumed dead. norwegian aviation authority said it is banning all similar airbus helicopters from flying. king harold and the queen have canceled a trip to neighboring sweden because of the crash. world's mostysics complex machines has been temporarily immobilized by a weasel. largest atom smasher, the large hadron collider has suspended operations because a weasel in baited a transformer that helps power the machine. authorities say the collider will be up and running soon. the same cannot be said for the weasel. it died and little remains of it. news 24 hours day powered by our 2400 journalists in more
than 150 news bureaus around the world. back to you. make ated temptation to nursery rhyme reference is my crew asked me to but i did not. david: how big a risk is this for the u.s.? it may be a big enough deal they could prevent central bankers from hiking rates in june. >> there are meetings on the 15th than eight days later is the vote. i will have to make an assessment on june 15 what the likelihood is and right now it is a little bit unclear or it is unclear. unclear ons still june 15 that will be a factor. lisa: that was on bloomberg markets earlier. britain leaving the eu so concerning for the u.s. economy?
how concerned are you about a brexit? we are not that concerned. it could be disruptive. there is a low probability. there is 80% likelihood that britain stays in the eurozone. obama's tripsident to london the editorial he wrote for a newspaper encouraging voters not to vote for brexit. have onect would brexit the u.s.? >> the eurozone would have leaving theh likely feds to be accommodated for longer but i do not think it will be major impacts on the u.s. gdp going forward. it would be a second order 10th
of a percent difference of that. lisa: i have got to think at a certain point is this just the fed looking for an excuse or reasons not to hike? it seems they are going to keep rates low. does this lead you to make the conclusion that it is a good time to be buying investment assetsredit, other u.s. that rely on rates to stay low? issue and we think that the global economy will be stronger has led us to have a risk on portfolio. we like high-yield and residential mortgages. we have a risk on portfolio. we think the market is too pessimistic about negative outcomes. lisa: i just want to point out if you take a look into my terminal i am looking at the chart that shows foreign denominatedn guilt
assets, it is the bank of england and it shows that they are not that concerned about a brexit. there does not seem to me so much of a concern but what is the risk that credit quality will deteriorate or we could see more bubble activity in the prolonged rate environment? guest: there is not much inflation and although rates have been low you really do not see growth in debt. u.s. debt to gdp peaked around 2010 and has been trending downward. do not worry about a debt bubble. and our multisector bond funds we like credit. we like credit and we like u.s. credit. given the fact we think the u.s.
economy is the strongest of the developed market economies around the globe. david: you stressed the need to have a balanced on. when you look at allocation of risk how do you see it right now? onet: we probably have third to 40% of risk in credit. in ratesne third or so and so in particular we have a shorter duration so we have flex -- less exposure. we think ultimately central blank -- banks will briefly economies. that is a third any of the third is in things like fx and securitized product. so it is a balanced portfolio. lisa: with respect to your u.s. holding some much of that the credit is in riskier securities versus investment grade and with the risk year are you diving into energy-related stuff or looking
at distress? -- distressed? are not looking into distressed. we started to defer towing recently and by recently i mean march and april. our portfolio is roughly 40% below investment grade though not all of that is corporate credit. itfact if you think about lower energy prices, lower inflation is good for the consumer and that is good for homeowners and good for mortgages. lisa: what do you think is your most contrary and bet? guest: we have a position in tips and so that means we are expecting inflation. the market clearly does not behave as if we are going to have inflation but we think central banks ultimately will reflate economies and therefore having that protection in your portfolio is quite attractive.
particularly at these levels of breakeven's in tips. david: that was andrew johnson. it is no dead the beach for puerto rico. the island will fall on the $22 million payment due. what does default main for the island going forward? lisa: a closer look at exxon mobil and chevron earnings. the two largest american oil companies to verge. exxon beats, chevron disappoints. our guest joins us to break down the government's role in the future of a ton mr. diving. utonomous driving.
david: julie hyman is ticking on company moving. julie: selling 52 million tores at 446 to raise money pay down debt and those shares are down 72%. they were down more steeply overnight after announcing the share sale but once the pricing great care to losses to some extent. we're seeing an advance in some of the miners today. gold and copper are both tired today. gold as we are seeing a little bit of a risk of scenario and the lower dollar, copper getting a lift from the lower dollars. and some assurance on the chinese friend. agreement.g after an
just seems to beginning on that as well. generally we're seeing the materials talks down. a duo of stocks that are falling session,econd straight field air declining after porting earnings and sales that came in below estimates. falling for second day after being downgraded at nomura. all these -- let's take a look at how the stocks have done this year. freeport has done very well but remember last year it did very poorly. falling 75%. newmont also. some of the mining stocks, see industries, the fertilizer maker , the index is up 7%. kind of in the middle of the pack of the s&p 500. david: thank you. the debt crisis tips into a new phase this week.
unless the u.s. commonwealth can strike a deal with the bond payment it is in danger of a technical default. brexit may not be ready to lawmakers return from recess may 10. what is different about this default? puerto rico has defaulted before albeit at a slight -- smaller slice of debt. governments the development bank at $422 million, that is a larger amount. the government gomez bank has rico for wall street. it has structured so many missable bond deals. it really has been the goto source for the financial industry. they are under an emergency
measure and now they are looking at this potential default. david: what is happening behind the scenes in the weekend? >> in puerto rico there is lot of meanings -- lots of meetings going on. the government is in talks with creditors to see if there is some sort of work out they can do for this may one payment. it all the money to make the payment. and so they are doing that. there is talks that potentially they could race -- reach an agreement on half of the amount and in washington they are about to go on recess. when they get back it is possible they will have a new draft they can release and hopefully then they will have something that might help puerto rico out for the next big deadline which is july 1. basic: it is such a complicated situation. i am humbled every time i delve
into it because it is so complicated and hard to understand the moving pieces. does this default accelerate anything or create more incentive to get things done with the creditors, with the government and puerto rico? >> with the government development bank with the money video, is -- there could be some if they do not make the full payment. they may feel the need to take action immediately if they are not getting paid in full this weekend or monday. but it is the july 1 that people are anticipating more of the major losses would happen if there is another default on july 1. billionhat is when $2 is due. combined puerto rico and the agencies that oh $2 billion. $800 million is obligation which
-- that is the direct debt of the government and it is guaranteed by the constitution. that would be a major change if they chose not to pay on that. david: the focus has been on washington for so long jack lew has spoke about it. paul ryan spoke about it as recently as this week. emphasizing this would not be a bailout. what has happened here, why has congress been unable to come up with a plan? >> it is so complicated and so they are looking into this in realizing this is a spider web. everything is so interconnected and so that is part of the put order how best to back on track when there is so many different cuts of debt, so legal backings and repayment pledges for these hugerent securities and a
collection of different types of bondholders, hedge funds, mutual funds, folks on the island. individuals. this: who is going to get hurt the worst? fundsis a combo of hedge but there are local credit unions that hold some of this debt and individuals, retirees that hold it individually through a broker on island. basic: thank you for joining us. still ahead. delta airlines welcomes a new ceo. what is his plan going forward as airline stocks continue to get crushed across the board. delta and all. ♪
david: this is bloomberg markets. time for the bloomberg business flash. looking at some of the biggest stories. the business bank has been facing investor pressure to sell but determined now is about time. americans kept their wallets in their pockets. with an spending rose expected. income has increased and consumers saved the most money since december 2012. they sent -- safe but would not spend. afterting a 61% drop margins shrank. $987ncome fell down from million a year ago. surging supplies have pushed cross -- prices less than two
dollars a gallon. that is the bloomberg business flash update. we're looking right now at a live shot of protesters in rowing game, california outside san francisco. they have gathered at the california republican convention. point people were arrested protesting a trim campaign event in costa mesa. watch the event live when it starts in an hours time. lisa: that looks like a lot of people potentially. monday delta will have a new ceo. he takes over for the returning richard anderson at rough time. the s&p airline index is down 40% in the past you. it is amazing, they have cut costs, they have made it so you're paying for everything from more leg room to your back
to snacks, you name it. they cannot get it going. oil prices are lower. what can they possibly do? david: i saw the most recent survey and there has been an .ptick united was one of the worst when it comes to carriers. see companies trying to address this. most interesting is the volatility of fuel prices. how airlines are trying to do with that. at least anecdotally. i have not seen the cost of tickets go down. still ahead. the commodities close. coming up after the break.
newsroom. mark: loretta lynch says the justice department has not set a deadline for the investigation into former secretary of state hillary clinton's use of time it e-mail. she made comments to al hunt during interviews on the charlie rose program. ande had to do a full independent review of everything that comes toward -- attention. we have to be full, thorough, fair, and independent area that cuts off the independence of that area the thoroughness of that. we do not predict the timing of any of our matters. see the entire interview tonight on charlie rose bloomberg at 7 p.m. and 10 p.m. new york time. president obama announced what he called common sense steps to curb gun violence. they include identifying that so-called smart guns would have to meet for law enforcement's -- law
enforcement agencies to use them. they prevent accidental shootings or to track down a missing gun. officials expect to complete the process october. played a white house secretary on the west wing. she got a chance to do the real thing. she took the podium normally reserved for josh earnest and told reporters she hoped to to bring attention to the nation's opioid epidemic. who presidentsked bartlett did be supporting. she responded i think you know the answer to that. two british men have been accused of giving money to a key suspect in the brussels and paris bombings. they gave $4000 to mohamed abrini. he was the man in the head seen before the deadly bombing at the brussels airport. howardnews 24 hours date
by our 2400 journalists in more than 150 news bureaus around the world. back to. david: thank you. let's take a look at some of the biggest movers. the slumping dollar giving the first -- boost from everything from corn to sugar. sugar and cocoa futures also on the rise next to the dollar in supply concerns. prices making their third straight months of gains. 3% for the week. prices settling at $40.90. some asset classes have overtaken stocks. seeing the biggest monthly gain since december 2010. lisa: it was also a big day for oil and gas. with exxon and chevron taking a hit from the collapse in oil prices. for exxon they were able to help
cushion the blow as profit topped estimates. chevron reported a loss that would double what wall street was expecting. this is like a tale of two cities. this will prompt chevron to accelerate any efforts to diversify? >> will my think about chevron they stated they were hoping for asset sales at five to $10 billion and that should help cash flow andof monetizing some of those non-core assets. performance today relative to chevron, you saw the strengthen the overall integrated structure. so the diversity of that feedstock slate maximize the downstream margins. that is what an integrated company has to do and that is why you have the upstream married with the chemical.
david: we have a plan going forward. do not pay attention to this quarter. >> it will be a different and difficult stay of the course. is program, the ability to push through some projects and get them online. for chevron you have gorgon ramping up and so their plate is full. >> i think i read that this is the first time that they did not earn profit from their production and expiration endeavors. that it was entirely the chemicals. first of all to get that right? >> thinks of -- think about it. price realizations versus last year's quarter report and production did not move much. so you have two things working against you, not a lot of uplift and weak pricing overall.
lisa: with the chemicals, what are the chemicals and how does it fit? if you take that feedstock, the crude and you crack those into all the various plastics. and so with that lower cost from your upstream, your feedstock, you are able to crack these chemicals and their platform is integrated quite nicely within the overall downstream business so you're are able to get those higher margins. it is a mix volume and margin issue going forward as well. lisa: they use the oil to produce other chemicals and because the oil was lower in cost they were it'll to more cheaply produced the chemicals and maximize their profit. >> to maximize the overall slate. here, at theg brent oil price in lieu and the world energy index, the price of
oil is pushing up the values of these energy firms. >> if you think about the fundamentals you are still a million or million and a half' oversupply. this is about sentiment. the sentiment shift in the marketplace do we have not seen that play out in reality in the market. have some companies reported the trading gains trading against the price of flight. how did that factor in and all with exxon and chevron? >> these are two operating companies. speculation has always been a player in the energy markets for the most part. if you go back to the fundamentals you still have not seen that tightening in the balances and where up 65% from andlows, w ta -- the uti brent.
david: maybe the smallest of the three we are talking about. there, --ins performance? >> it is comparable year-over-year and you do not have the upstream segment but you have reliance on the downstream in north america. exxon and chevron have a mobile -- a more downstream segment. downstream can offset some of the issues you have in respect to this. lisa: what kind of price projection do they give going forward? >> their view is that this is the time of lower for longer and this is a time where it is about stay the course, generate that cash flow, get rid of those non-core assets and hope for a better way 17 and 2018 where projects can come online and offer the push for a better tomorrow. david: this is a diversified
country. is ellen g going to be the next lng going to be the next thing? theseis depending on non-core asset sales to calibrate it spending in 2017 and going forward. up, removing the roadblocks to driverless cars. the government is holding new safety meetings while google and chrysler near partnership. at pandora and linkedin are trying to jumpstart growth. we will hear from both of them coming up. inid: a look at the nasdaq april. looking at 2%. more coming up after the break.
david: this is bloomberg markets. lisa: the u.s. department of transportation has looking -- been looking to advance driverless cars. said to begoogle is in late stage discussions with fiat chrysler to form a technology partnership. david: the latest meetings in stanford, california. many are calling for fast and efficient deployment. he had this meeting with industry players. what was the thing foremost on their minds, would you say?
grexit is about trying to find a how do to save lives so we nurture innovation, get this out as quickly as possible to save lives but do not stifle innovation with too much regulation? close are we to a driverless car future? >> this is a question everyone loves to ask and i point out they are already here. we have automatic emergency braking, the safety technologies are already on the road which is why we have to figure out how to make sure they are safe when they get there. david: president obama has committed a lot of money here. do you expect more government investment in the sector? i think at some point it is going to have to. this is a down payment that shows the president's commitment. safety technology saves lives.
this is the first part of this exciting journey. lisa: i want to break in here but columbia lifted its key rate to 7% amid a 15 year high cpi. this is a big deal because they wasted from 6.5% to 7% at a time when there has been so many low rates everywhere else, it shows how desperately they would like to curb their inflation but would like to say, columbia lifted its key benchmark. turning back to my apologize for the interruption. with all of those developments that we already have seen in driverless cars, what is your biggest concern for me safety perspective and how are you addressing it? guest: i delete make sure we encourage innovation, do not stifle it with regulation but the balance is we have to make sure that it is safe when he gets on the roads. so that is why we have been talking to people and why we
have identified we will put out employment guidance, a model safe policy. if we do not have a uniform national framework that could prevent this innovation from getting on the road and we're looking at things that an tsa could do. david: how close do you get the guidance out to the public? announcedretary fox in january that we would have it done in six months so in july is when we will announce those three things. we are in the middle of it. that is why we are out it stanford for the public meeting. lisa: when people thought -- talk about driverless cars i going aroundars picking people up. what reality are we looking at? guest: i do not think we know. what has been fascinating for us is hearing ever be described with the think this future looks
like but it is being created right now. my people come with their exciting excite -- ideas, the reality is a could be anything. a colleague and i respect said what will change and his response was everything. there is the mobility which is what you were talking about. what it means for the planet. i do not think we fully grasp we are on the cusp of right now. david: google says often that their vehicles have driven 1.4 million miles. >> that is part of what we are trying to do right now is to figure out what the metrics could be before you could put something on the road that will be safe and that is a great example of in some cases you have to have them on the road. you can only simulate so much. you have to have them on the road collecting data to make sure that they will be safe in the real world. they toow close are settling matters with the takata
airbag? guest: we have three different independent investigations. we are in the presses of analyzing that to determine if further action is required. goal of 55e is this miles per gallon. do you anticipate giving some relief in light of the price of gasoline and light of what we are seeing in terms of the booming market for cars that are less fuel efficient than others? guests: you've just hit the interesting discussion. some people saying look how great those standards have gone and on the other hand do we need some relief. we will be releasing a midterm review of a technical report that will gillett -- give everyone a chance to look at our evaluation and make transparent, open comments about whether we go forward or possibly make changes.
lisa: thank you for joining us. let's head over to markets desk for julie hyman. looking at some of the tech movers. apple is worth mentioning because it is down yet again. has anck like apple effect on the major averages. it is down 1.7% and if you look at its weekly performance it is setting up to be the worst week for apple stock going back to summer of 2013. a decline of nearly 12%. the month has been negative for apple harshly because of this bad week. take a look. looking at the seasonal variations and the monthly performance. 14.7 -- 14.47 a drop for april. it looks like that will be the worst since january of 2008 for apple shares if the pace of decline continues through the close of trading today. elsewhere in technology we are looking at a deal, agreeing to buy tivo.
arees of these companies trading higher. it is a 40% premium to the closing price of tivo. that is when reports surfaced about a deal. the market is opening up. the fcc has proposed to separate the set-top boxes from the cable companies so people can buy them or rent them independently. itself at anng interesting time. the company's first-quarter earnings and sales beating estimates but it did not change its sales forecast for the full year. that is disappointing to investors and they are sending the shares down by 17%. about them.talking you remember groupon, it has scale.lot of
david: time for the bloomberg business flash. michael pearson got a huge incentive to boost the share from af valeant surgical. a payday of $2.7 billion. the company disclosed what it has given its ceo. 2.2 5 million shares. reaching almost $1200 on three specific dates. is seekingealth care potential private equity bidders
according to people with knowledge. firmsave contacted buyout to gauge interest in a possible takeover. talks are in the early stages. nfl prospects are going to the rams, ingles, and charters. the company is signing endorsement contracts with a whopping 15 members for perspective -- for perspective, one. armour just has -- pandora areat searching after reporting first-quarter results, giving both companies a much needed boost. otherwise a challenging year. david: emily chang joins us now. let's start with linkedin. you set down with the ceo earlier. what did he have to say about the direction of the stock rice that was down and now rebounding
a little bit? emily: we remember linkedin start plunging on the last earnings report down more than 40%. it did not recover but after this report we are seeing shares pick back up. they said we are not going to grow as fast as we thought we would. this time they said we are going to grow that fast. investors are more optimistic. it has not recovered from where it was but it is on the way back up as of this morning. the recruiter product which makes it two thirds of its business, and gross is decelerating. they said that is a $12 billion addressable market and we are 20% penetrated there but there is a question as to whether if the market is so big and they are not that penetrated then wiped -- why could they not grow quickly? to jeff weiner this
morning and asked him about volatility and why in particular linkedin shares have been so volatile, why we're seeing such swings after these earnings reports. take a listen of dust to what he had to say. and understand volatility at times where going to do her best to try to provide as much visibility as we can into the business. as our business continues to grow we are introducing some additional lines and it takes the for people to outside company at times to learn those businesses and calibrate expectations. they have been introducing these new business lines and they are immature. there is not a lot of visibility into how quickly they will grow and that is why perhaps analysts and investors are not understanding the business right away and communication seems to have broken down between
linkedin and wall street. basic on what about pandora? speak with the ceo and founder. they just brought him back a couple of months ago. it was around that time that we reported that pandora was interested in selling itself and looking at potential offers. he is on the side of this is going to remain an independent company for the long-term. he has laid out a long-term plan and said he would not come back if that was not the case and he thinks that there are a lot of misperceptions about pandora. when it comes to their earnings, numbers ticket a little bit but not that great. pandora has a lot of work to do. the stock is down more than 40% over the last year. we talked about how do you get pandora back to a place where investors understand it. take a listen to what he said about marketing and advertising getting even louder.
mean speakingt louder. we are investing in marketing and as we were a lot products you will see us a more vocal about that, declare what we're doing. ofly: pandora facing a lot competition. there is spotify, apple music, it is a crowded landscape but pandora does have a strong niche. tim westergren is back to prove it. david: thank you. do not miss emily later today. she will have more with the views of -- more interviews. i will talk to the ceo of amc entertainment joining us to discuss the challenges ahead for the movie theater chain.
from bloomberg world headquarters in new york, good afternoon. the u.s. consumer turns cautious . the slowdown mean for markets in the federal reserve? and linkedin goes all in on its mobile app and we unpacked the companies are earning and see why analysts are bullish on the stock step late -- stock. are one hour from the close of trading. let's head to the markets desk. julie: we are capping off the month with the worst two-day drop since february. in part because of her and in part because of some economic data.