tv Bloomberg Markets Bloomberg May 2, 2016 10:00am-11:01am EDT
vonnie: let's head straight to the markets deck -- markets desk where -- julie: manufacturing data coming in worse than estimated. the institute for supply management coming out with its numbers just minutes ago. versus a survey number of 51.4, so worse than estimated. prices paid higher than estimated, reading at 59, 52 was the estimate. 55.5 ands coming in at construction spending month over month up 3/10 of 1%, down from a revised 1% gain. interesting to be getting these numbers.
manufacturing is not the largest portion of the u.s. economy, but we know it is a portion that has been waning as the services portion has been taking resident -- president -- precedent. we see the nasdaq slipping into the red. major averages coming off the highs where they were when we initially opened up. the highs that we saw in the futures overnight, the dow and the s&p still holding on to gain. we have also seen movement in oil prices. you can see oil taking a sharp leg downwards. there were not any headlines that seemed to be the catalyst. certainly a drop in manufacturing would not be good for oil prices and we tend to see oil and stocks tracking together. stocks coming down after we saw, oil to this leg downward.
i want to look at the other assets we are watching. gold prices have been on a run, up 1 -- up half of 1%. investors have trimmed their interest in gold just a bit. this is the price of gold and this is the net long in gold funds. we have had inflows going back to earlier, this year, but we saw those inflows drop by the most we have seen since the money started coming in. people pulling back to some extent. despitetopic has been the central bank stimulus we have seen around the globe, there is waning confidence in it working, whether in japan, europe and yours our questions about the fed strategy here in the u.s.. here is the 10 year yield and as we have seen, it is a rising
/ine environment in theater theater -- in theory. the euro is trading at the highest versus the u.s. dollar cents last august -- since last august. you would expect rates and currency to be coming down. the yen is trading near in 18 -- 18 month high. topics sort of a hot morning, can central banks continue to prop up things in their respective areas? theie: another hot topic is -- justice department calling it unfixable. julie: if you look at how halliburton is trading in reaction, we are seeing a gain. they are announcing with the breakup, they are doing a buyback. halliburton also on the rise. it has been a long time coming for these companies,
first-degree to that acquisition back in november of 20 working, oil at that point, wti was about $75 a barrel, a different world. mark: we have been stuck in one half of 1% trading range, high as a quarter of 1%, as low as a 1%, now we are down by about a fifth of 1%. it is a bank holiday in the u k and japan and china, but the rest of europe is open, and it is a mixed day. reiterated its 2016 targets, don't forget we saw the biggest fall on ride a in two months, we saw the european equity benchmark stoxx 600 rise in april, the second consecutive month, something it has not done since april. i what the sure you the for the
live index, the italian benchmark and you can see seven out of the 10 worst performers aren't how banks because private investors snubbed an ipo by ankle papillary -- by -- unicredit is one of the main and you will see its shares are down by 5%. a regulators are sent to decide whether -- is eligible for a listing on the exchange after -- if the bank does not get a listing, they will buy all the shares. a separate story today for the italian lender, it has agreed to to a group that includes bain capital and advent international.
1.7 4a deal valued at billion euros. euros -- 1.74ion billion euros. -- upset by contraction in france. what was interesting was comments from market economics which brought out the report and said the gauge points to anemic factory growth in the region. the report also showed price declines used in april. this news comes after data on friday showed the economy grew by .6% in the first quarter. that was the best growth in a year. still minus two -2%. -- is still manufacturing data here
as well, hassan aiding. a first look at manufacturing. i want to point to something -- some mario draghi headlines. he is speaking at an annual meeting and paying that lower or negative rates are not unprecedented and that it is felt all over the world. he says structural rebalancing is advancing too slowly, as if we did not know that and he says that reforms to u.n. institutions is essential to boost demand. he is saying what he has been saying for some time. let's get to first word news. kayla rates is in the newsroom. taylor: bernie sanders says front runner helder clinton will not have at pledged delegates to win the nomination. he is counting on being able to flip some of these
superdelegates who are supporting clinton. tomorrow's indiana primary has become a last stand for republican ted cruz. a new poll shows he has some work to do. according to wall street journal, he is trailing donald trump by 15 points in indiana. he is hoping his grassroots organization can counter donald trump's appeal to displaced middle-class workers. a car bombing has killed at least 18 shiite pilgrims commemorating the death of a revered eve on in baghdad. the car detonated shortly after mid-a in the neighborhood. 28 others were wounded. john kerry says intense work is beginning in an effort to retort -- restore the truth -- troops in syria -- truce in syria. global news 24 hours a day.
vonnie: thank you so much. let's get back to the markets and i want to mention we are watching mario draghi live on our live go function. -- faltered last week amid lackluster earnings and signs of tepid growth. --we enter a new month, joining us now is tom, the biggest ball on the street whose s&p 500 targets is among the highest surveyed by bloomberg. he has six reasons why q2 is going to be a good quarter for equity investors. it seems like everything is stacking up against a -- equity investors. >> that is the impression our
clients and india has, but economic data has improved, tentacles are certainly a lot younger, but i think the sea -- single easiest thing to focus on his how good conditions are in credit markets. how yield on track to have a double this year and that is all investors need to know. stock follows high-yield. tom: can you just make that generalization? if you asked me if high-yield was making -- having a good year and one of only three in how thatdecades, i might think is because people are reaching for yield because they will not go into stocks. tom: that is possibly a dynamic. there is 30 years of high-yield dynamic to analyze. there is not a single instance that high-yield had a double-digit year were the s&p did not also have a double-digit year. they are highly correlated asset classes and stocks can easily post a double-digit year. six out of six of your
strategies have outperform the s&p 500, this year. can you quickly run us through when you call these markets agnostic strategies. tom: our clients don't necessarily want a directional view, they won guidance. what we have focused on as you strategiesare the and the most successful are the ones where recalls are -- stocks the new bonds. it takes advantage of the fact that there is a lot of reach for yield, globally. it has driven money into income fund. we think the best dividend stocks are stocks where the yield exceeds the company's own bond shield. risk, butt taking a if you want to take advantage of the dollar, which is a huge story and something we said would happen, you want to buy value and if you want to take advantage of using credit conditions, we have a list of
low-quality stocks, slightly higher leveraged companies. you had to think about the macro correlations an interesting opportunity to buy stocks with dividends. mark: a great story says the bloomberg dollars pot index has risen every year but one, since 2007. may is the month to buy the dollar, but as you said, the weaker dollar has helped earnings per share and has driven the earnings, which has driven the rebound. has the dollar found its spot or does it have other to fall thus have further to fall -- have further to fall? u.s. inflation is rising asked her than the rest of the world and that should weaken the dollar. vonnie: i feel like oil has bottomed. oil is a case where we tell
our clients we don't have to be right and we think market is wrong. is, client demand has never explained the bottom of oil. what has actually explained it since 1890 is -- has always played out in the derivatives market. it happen on every 11, 2016, now that level of containment is down to 2% and has decisively marked every oil bottomed. we think oil is bottomed at 27 and would suggest it could go to 60 by the end of the year. vonnie: if the fed moves or we have a surprise in the brexit outcome, do you change your approach? tom: these are not directional strategies. they have little to do with the fed. we don't think the fed is going to move. for it to move now would have to
have a confidence level that the market does not have. mark: great to see you and thank you for calling us. cofounder and head of research at fund strut global advisors. looking at some deals happening in the u.s. from international paper the oracle. we will get you -- to oracle. we will get you caught up on this monday's session. coming up live at 3:00 p.m. eastern time, a qr capital management founder and chief investment officer. ♪
look at the biggest is the stories. -- profits surged 21% in the first three months of the year and the insurer reiterated its 2016 targets, operating costs slipped as sales dropped. income rose to $2.5 billion. they could reach the 2016 outlook. today -- usa. today -- it will urge shareholders to withhold their votes for a nominees to the company's board. afterent public unsuccessfully making a private offer. they own the chicago tribune and they'll l.a. times -- and the l.a. times. time to head to the markets desk were julie hyman has latest. julie: we have the abandoning of the acre huge halliburton deal, but there are other deals being announced.
one of them is international paper agreeing to buy warehouse or's pulp business for about $2.2 billion. it will add production company of what is called fluff pulp which is used in diapers and other products. you can see both of these stocks are rising at the moment. , although not getting a huge game. oracle, one of the most inquisitive countries -- companies out there is acquiring -- power. -- cloud computing services to electric utilities. you can see it is rising by about 31. percent, going above the offer price. i was prompted to look at over coals. deal history. you can do that on bloomberg. this is a scattershot of the company's acquisitions going back about 10 years or so, and there are a lot of little dots.
. the yellow ones are the ones that are pending. the one is -- that is easier to see is by timeseries. these are the annual acquisitions the company has made, obviously a little busier in the late 2000 and has become less so, but less busy for a company like oracle, still making this year, retro acquisitions or offers that are worth around $2 billion. busyusy for oracle, still for many other companies. there is a deal in the canadian telecom business. agreeing to buy manitoba cut --telecom services for about billion dollars . it has been consolidating in the industry within that nation. mark: coming up on bloomberg markets, what comes next for halliburton and big issues after
mark: halliburton calling off their $28 billion merger. the deal faced resistance from regulators in u.s. and around the world due to trust concerns. loretta lynch said the company's decision to abandon this transaction which would a left many oil field in the hand of a duopoly is a victory for the u.s. economy and for all americans. wedding who david is in houston. hughesl placed is baker to whether the fact this merger isn't taking place? of $3.5e the break fee
billion will soothe any concerns. >> that is definitely nice to have. baker hughes of the big three -- theyice firms, their have been a bit more lagging, disappointed investors numerous quarters in the past, so it has been a self-help story they have been working on and having $3.5 billion in the pocket will help, especially but the announcement that they will buy back shares. they can work on some of the businesses that have been lagging in the past. they are working on more of a technology portfolio which is already pretty good, but they can work on some kinks. having that will definitely help them. mark: we have a nice chart showing how the shares have moved in unison since the deal was announced in the backend of question,h begs the are halliburton ok without baker
hughes? >> they would've loved to of had some of the product lines -- product lines that baker offers but being the second largest oil being theiride sheer size and having all the product lines, they will be a lot better than a lot of the small service firms. north america has a global footprint, so they will be ok. nobody wants to go through this oil market downturn, but. they will be ok. certainly they are smaller than their largest rival and buying bigger would it help them get closer to them. competitive,,l be but they don't have that bullet in their arsenal. vonnie: so far, it has worked out beautifully for baker hughes. now they have some money to play with and they've also been able to buy some time to lay off people, restructure, have rigs
go dry and so forth. what happens now? do they get approached run ge or oceaneering, another can -- company that might approach them? >> very potentially, they are seen as the takeover target, and from what i hear, it makes a lot more sense for somebody like ge oil and gas or in a vb -- a lot more sense for one of those types of manufacturing companies to be interested in baker because there is very little overlap, so it might rub the dig -- doj better. past thatd in the potentially it might want to get into more oilfield services than just oilfield equipment making, so by buying the number three services firm, that involves you very quickly. it makes sense on paper.
ge certainly has the stuff to do it. national oil has been inquisitive in the past. whether that happens, nobody knows. there is potential for that and baker hughes looks good in that regard. vonnie: thank you, our bloomberg news in houston. 1.8% ino and is up today's trading, baker hughes up about a third of a percent -- halliburton is up 1.8% in today's trading, baker hughes up about a third of a percent. we have more on what might be turning to the biggest crisis in the markets. ♪
change the way you experience tv with xfinity x1. shoah, ha ha.ew artist. show me top male artist. my whole belieber fan group. it's not a competition, but if it was i won. xfinity x1 lets you access the greatest library of billboard music awards moments, simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. vonnie: live from bloomberg world headquarters in new york and london. mark: i am mark barton and you are watching bloomberg markets. let's get to first word news
with taylor riggs in the newsroom. taylor: democratic presidential whole old held a clinton raised about 26 lien dollars in april for her primary race. the campaign says it has $30 million in the bank heading into may. millionnow raised $213 in primary funds and more than $46 million for the national democratic parties. if former secretary of state is campaigning in. kentucky and west virginia, today the supreme court is leaving in place a ruling that advertising claims about paul wonderful were deceptive. they rejected the deal, ruling the company violated speech rights. ftc -- work.ally proven to in detroit says 87 of 100 public schools will be closed because of a threatened teachers strike.
the teachers union encouraged instructors to call in sick after the district said they would not have enough money to pay educators this. summer emergency funding was made available in march. china's communist party is placing a property mogul and outspoken critic on probation for a year. this is after he offered online criticism. the punishment handed down is one step from expulsion and is seen as a stern warning to him and other already members that political dissent will not be tolerated. but apart hall at brussels airport has reopened for the worst time since the terrorist attacks in march. those. suicide bombings killed 16 people. authorities say the airport should be back at all capacity by the middle of next month. capacity by the middle of next month. now it is time to get
you caught up on the market action. many markets such as london and hong kong are closed. japan led a selloff in asian equities. held near a 18 month high. >> really only one opportunity for japanese investors to respond to last week's central-bank decision and the yen's continued surge. the first trading day of the week. after friday's holiday and a break, mondays at session was met with sugar failing. -- close -- closing lower for a bit session, the longest losing streak since january. started just telling us at bloomberg there is a massive gap in communication between the bank of hand and the market and that is why investors are getting panicked. us -- let's see how
the european stocks are doing. no trading in the u.k., but there is trading elsewhere. stocks up -- a big drop on friday, biggest drop in two month. small gains in germany, france, the ftse is lower, big news on banking. investors,ng private the rescue funds in the country had to buy almost all the shares which leads me to the best of worst arming industry groups on the stoxx 600. thanks among the worst performers. -- selling -- most of the big decline is on the banks index and italian. lenders energy down with the price of oil facing resources likewise, autos trading higher today and a little reminder of
what's happening in the currency markets. the is above one dollar 1510 the first time since august last year -- $1.15, the first time since august last year. dates, anufacturing contraction in ranch manufacturing, today, they yield is lower by a basis point. let's get over to the u.s. with abigail doolittle. what have you got? >> nasdaq trading is slightly higher at this time. it is set on. pace to snap a seven-day losing streak. monster beverage shares are higher today, three days in a row, a big move last friday on what rbc capital -- wells fargo is telling me a better than feared first quarter results. monster was held by strong
global growth and impressive margin expansion. they see several catalysts including the mutant beverage and the company's entry into china. the stock is up sharply over the last three days. nonetheless, shares are caught in a neutral sideways range, a battle between the buyers and the sellers. we will see what side wins. mark: any other companies moving on the back? >> we do have one penny stock, groupon down once again following the 18% lunch last friday. today, shares are down as rbc capital's mark mahaney has downgraded the stock. he says the fundamentals are weakening of the company faces significant challenges ahead, including local presence from amazon, facebook and alphabet. on all of this, the market is there a sleep back below it moving averages -- below its moving averages. mark: let's talk puerto rico.
vonnie: puerto rico turning into a major crisis in the credit markets. the governor says the island will default on a $422 million bond payment to the governments the relevant bank. is theirpayment biggest yet and a warning that puerto rico will probably default on an even larger payment due july 1. the governor explains the difficulty of the decision. >> let me be very clear. this was a painful decision. we have preferred to have had a legal framework -- to restructure our debt, including those acquired by other government. faced with the inability to meet the demand of our creditors and the demands of our people, i had to make a choice and decided that essential services came first. vonnie: joining us now is michelle kaske who is covering the story. this is a 400 million dollars
payment. the island has defaulted on hundred and $3 million. how is it only defaulted on so -- that much? >> about 10 months ago, the governor said in -- in another address, they can't pay all of their debt and since then, they have been withholding payments beenppliers, they have slowing down their tax rebates, but also, they have been taking their tax rebates, but also, they have been taking money from other bonds --
-- very serious and it could tip -- dominoes and luckily enough, they did get a forbearance with some bondholders, so that means at least for a while, the gdp in puerto rico does not need to worry about immediate losses on this default. mark: what is going to be next? where is it going to default? $2 billion will be due in june between the central government and all its agencies and of that $2 billion, it is roughly $800 million in general obligation debt which is considered to have the strongest repayment fledge on the island. mark: where does this leave the u.s.? lawmakers are trying to resolve this massive crisis. is this going to impede that at all?
>> it could also help speed things up. that is what we have to wait and see, on or can only. federal lawmakers are in recess, this week. they have said that the plan is to have a fresh, new draft of the bill when they come back that they can work on. unfortunately, time is running out and for this bill to get to the house and the senate and get president obama's signature, that needs to happen before july 1 and cannot happen in that timeframe? mark: we shall see. airlines has a new chief executive. we will sit down with him to find out where he plans to take the airline, next. ♪
mark: this is bloomberg markets. time for the bloomberg business flash, a look at some of the biggest stories in the news right now. u.s. construction advanced -- construction spending advanced the first time in eight years. there was an increase of 3/10 of 1%. construction rose 1% in fruary of last year. hope construction was a bright spot for the u.s. economy. supporters expect it to continue through 2016. bank -- central critics have called the 500 euro note only used by people up to no good. it is called the currency of choice for criminals and terrorists. one sticking point, suspicion
and german-speaking companies, the ecb is trying to abolish cash altogether. that is the bloomberg business flash. vonnie: they are still keeping is --iss $1000 note which delta airlines has a new ceo today. he takes over after eight years as the company's president. in an interview with erik schatzker, he unveiled lands to make delta a more global airline. >> when you think about the u.s. international marketplace, there are few markets where you can make the route work on your own merit to get international travel to many of the places we fly to and take aircraft, $200 -- $200 billion plus investments before you can get to paying her fuel or airport costs. you always want to partner with some of the best local carriers that they can see you -- feed
you. it is a perfect collaboration. it is a different business model that a lot of u.s. industrials. u.s. industrial, corporate america, outside the airline to go by,y want consolidate, shrink, they want to squeeze out synergies. this is not an industry where you can do that. this is an industry that there is regulatory requirements, national ownership restrictions. you have to be a great partner if you are going to grow and succeed and that is where our focus is. >> where it want to be that you are not, now -- where would you want to be that you are not, now? >> canada, we looking to expand our canadian president -- presence. that is a place we could spend more time in. >> minority investment?
>> i'm not speculating on investment, just in terms of the productity and offerings, and i would say central america. >> how about consolidation? delta pa consolidator? you pulled off one of the most successful mergers in history. >> i don't think there is more to be had for our company. we are at a point in the u.s. where we -- we are as large as our government wants us to be. i think we can compete, we have all the opportunities to have a great product offering and great investment for the future given our current size. internationally, i think there will be investment opportunities. vonnie: that was delta's new ceo. an unlikely coalition of corporate leaders is forming in the u.s. their mission is to fight the
almost 200 anti-gay bills being considered across the south. gendering about inequality issues for bloomberg businessweek and jeff joins us now. it surprises me that there are that many bills being considered. give us a state-by-state play. >> getting closer to the end of a lot of legislative sessions, so about a hundred and 44 of those are now dead. . there are still quite a few that are active the lgbt crowd had a great victory in missouri, they were able to defeat a bill that would have added a constitutional amendment they did not like. in tennessee, a bill allowed counselors to decide based on religion who they want to serve which they see as potentially discriminatory if someone religionhere -- their predicated counseling a gay couple. there are a few others that have been passed, a lot more that are still waiting for an outcome. vonnie: some of america's
largest corporations are forming a coalition to fight this, but they are in different states. how are they coalescing to fight in each state? >> the idea is if you are a big company in. one state, you can put your resources there. salesforce flew people into georgia and indiana to try and help successfully change or defeat bills. in north carolina, it is a different route of companies. the idea is for each of the companies to look at where they have strength and where they don't to make sure they can help other companies. you look at mississippi, they don't have as many big companies. there, but has been other companies have signed on to letters to make sure there is a showing of opposition in each area. mark: how much leverage does this coalition have? >> it depends on the state and how concerned they are about their image this group.
in north carolina, the leverage is not in that effective. there was a new ad coming out today in a airline a, the kind of shows the issue with denying transgender people to use the restroom they have. transition toward it shows a very male person showing by law that they must use a woman's bathroom and how that might be a problem. it goes back and forth, but right now, the fight is very much about the bathroom. mark: how much is this fight? how costly is this that'll? -- is this battle? >> the company's health by supporting organizations like the human rights campaign or freedom for all americans or on the other side, the alliance for defending freedom. they put their money into those groups which then pay in the states to set up the to groundons to lead war and coordinate the business response. mark: great to see you.
winged doors and a 17 inch dashboard screen has everybody talking about the electric car. we put the model x through its paces for five days along the california coast. >> sometimes i don't trust love at first sight, even when a car looks this good. i decided to put the tesla model x through its paces for five days along the california coast. i needed to know, was this just a crush or a lasting affair? ♪ 151,000drove the dollars suv briefly in l.a. last year and it -- at the time thought it was one of the best cars i ever tested. a road trip can make or break any relationship. one push of the button and the model x will automatically route your trip according to run the superchargers lineup. it probably won't be the fastest route, what you know you won't run out of juice. we were on our way, it was the start of something beautiful.
the seats are situated high inside, but easy to access, even the back row. the interior cabin is so quiet, i can hear crickets chirping outside with the windows up. nobody rollalmost around the corner and be -- handles beautifully on a sandy beach. i will say that the battery gauge can be deceiving. it does not decrease at a stable rates are you can jump down a lot quicker than you would expect. >> we left this morning with a full charge and we have been driving her four hours. we are down to about 77 miles on the battery. i asked the car defined as the look -- closest supercharger and we should get there and about 12 minutes. -- in about 12 minutes. ♪ turns out i had some major time to kill. >> a grandma.
-- hey grandma. nothing much, how are you? back on the road, i could focus on the feel of the all-wheel-drive, tested three thet -- the springtime and 762 of the blood horse power. it feels fast when you push down on the gas pedal. the brakes are regenerative, so you have to get used to their different feel. the automatic front doors can be tricky. they open when you least expect it. at the end of the trip, i realized real question is not should you buy this car, but do you want to join the electric lifestyle? you really feel virtuous when you drive it, no fossil is here.
is hardn electric car to be spontaneous and free. you have be ok with giving up the wrong, p are feeling of driving a mechanical car. if you are the kind of driver, the kind that wants to be on the cutting edge, you will fall in love. columnist 10rg car elliott. before i get to ferrari, i have a question for you. when it you ever driven on a beach? hannah said when you drive on a beach, it handled wonderfully, like she drives on the beach all the time. vonnie: i never have. mark: i have never driven on a beach. you know you have made it if you drive on the beach. startups are trying to make destinations obsolete by trying to bring the gas to you.
mark: i do not fancy sitting for two hours calling all the people -- i won't go there. shares,t ferrari because some big news today. first, we were telling you that the carmaker was about to make -- the new -- news was announced and he will leave and continue to serve on the board. shares little change. vonnie: he will take full responsibility of expanding the luxury sports car maker allowing its january spinoff from the oxides for -- from fiat chrysler. ♪
close" on "bloomberg markets." ♪ mark: we are going to take you .o new york to milan signs of strain from the italian numbng sector as investors a new ipo. will the rescue funds to be enough to keep the industry going at go vonnie: it is a major energy deal gone bust. how investment bankers have called off the proposed merger. what is it signal to the rest of the oil markets? mark: ferrari, the chief executive is leaving. what is ahead for the luxury carmaker? we are 90 minutes into the training day. let's head to the market that's