tv Bloomberg Markets Bloomberg May 4, 2016 2:00pm-3:01pm EDT
vonnie: here is what we are watching this hour. stocks trade down as the latest economic data paints a mixed excerpt for the united states. there are signs of weakness in the job market. oil is trying to get back on track while gold is dipped from its highs. the path to the republican nomination is now clear for donald trump. john kasich about two quit the race. before we get to the markets, more breaking news on politics. cnn is saying that john kasich is not expected to endorse donald trump when he formally suspend his campaign this afternoon. that will take place in columbus, ohio in moments.
back to the market, they close in two hours. julie hyman has the latest. julie: markets are hovering around the lows of the session. volume is running about 4% above the 20-day average for the s&p 500. it has pared its gains for the year. the nasdaq has been taking the worst. economice some mix data today. the trade deficit is one of the with thehat came out smallest going back to february 2015. we had fewer imports. there was more of a balance between the two. overall, if you look at the economic data and looked at in the u.s. recently, today, we had the adp numbers. we had factory orders. we had durable goods. we had services.
if you look at the u.s. surprise index, it got pretty close to neutral. that means that there were more positive surprises at than negative surprises. but we have gone back down again. that means the preponderance of economic reports in the united states are still missing what economists are estimating them. that is one of the reasons that we have a lot of concerns about growth, not just in the u.s., but globally. take a look at how this is affecting different assets. the u.s. dollar seeing gains today. it is up half of 1%. if you look at what is going on with the 10-year note, the yield is going in the opposite direction. basis much, but off a point rate here. we see some buying of treasuries. and oil and gold, it has been curious over the last couple of days, that even though there has been a risk off environment, gold is not catching a bit. it wasn't yesterday and it still isn't today. crude also turned lower after the weekly inventories report.
vonnie: what have been the big movers today? we have ack wise, looking at priceline which moved downward after the forecast came in below estimates. it said it was affected by the timing of easter and global issues. under armour shares are also down sharply today. it had some management departures, including its chief merchandising officer. i should say they're announced departures. they will not be leaving until july. but there is concern about the company's business and those shares are down 10%. vonnie: thank you so much. mark crumpton has a lot from the newsroom. mark: john kasich and, the last man standing in donald trump's path to the republican presidential nomination, will end his campaign later today. two people tell bloomberg news
the ohio governor will suspend his campaign in a speech at 5:00 p.m. local time in columbus. is is reporting that kasich not expected to endorse donald his inability to win any contests beyond ohio, if for but a few hours after ted cruz dropped out last night. trump is being called the presumptive nominee after the win in indiana. that victory force senator cruz to drop out. today, he said he is confident he can unite the party, although some of it he doesn't want. a huge wildfire has destroyed entire neighborhoods and forced the evacuation of fort mcmurray in western canada. toown of 80,000 is home oilsands. trudeaunister justin
called of the destruction "absolutely devastating." there have been no reports of injuries or fatalities. environmental groups are suing, .eeking a court order the need has become more acute with the prevalence of fracking. a minneapolis attorney said today prince arranged to meet with a california doctor who specializes in addiction treatment the day before he died. dr. howardys said, kornfeld, had never met or spoken to prince before his representatives reached out to him on april 20. dr. kornfeld was not able to travel to minnesota, so he arranged for his son andrew to go instead. the attorney said that it was andrew kornfeld come along with
three others, who found prince's body and called 911. vonnie: thank you. as we have been reporting, there is a ton of new economic data out today. over the last week or so. to sort it all out before jobs best we have seen various, different estimates. you are looking for a little bit of weakness? guest: exactly. we are a little bit under consensus. but really the expectations are quite clustered around 200,000. vonnie: that shouldn't derail the fed, right? it's weaker than we would like, but probably within the margin of error. and really, it is not the labor economy we are worried about anymore, the creation of jobs,
as wage growth and inflation. laura: you're right. it is important to think about where job growth will be six months from now, a year from now. and if we have a slowdown in growth, bad news on productivity or other information, how confident can we be that this expansion in jobs can continue solidly? we have seen interesting tension between low growth and strong hiring for some time now. we think that that will be resolved a little bit through slower growth. vonnie: we got the disappointing adp figures as well. we have the jobless claims tomorrow. read on the another labor economy. but what about the federal reserve's? -- the federal reserve? laura: i think that they want to keep open the possibility of potentially going in june. they want to keep it a lie
possibility in the markets view. they want tok -- keep it a light possibility in the market's view. we were creating jobs at 200,000 plus a month. suddenly, people are seeing some signs of weakness in the data. laura: it is not so much a sharp slowing we are seeing. it is an economy that remains fragile, that really probably can't handle a whole lot of shock at this. it is seeing lower trend by amption, being shocked weaker external background. and it's really just an economy encounter andlly market tightening at this point. the caset is certainly
that markets believe that. we see the financial markets are not looking for a rate hike in june. they are not even looking for a rate hike possibly in september. but it is not clear that the federal reserve believes that. laura: right, but they are data dependent. her forecast on assumptions on the economy. the fed assumes a number of things. they assume that productivity growth picks up rapidly over the next two years. that alone would suggest maybe a higher registry would be appropriate. at bmp, we are less optimistic that productivity growth will actually change. we see it hanging around .5% to 1% in the near term. and over the less -- the next couple of years. in that environment, it an higher interest rates are not -- in that environment, any higher interest rates are not appropriate. i don't think anybody has a good
answer for it. certainly, there isn't any evidence out there to suggest this trend will dramatically shift over time. it has been with us for five years now. we will keep an i on the number. thank you for joining us on "bloomberg markets." e posting a jump in the first quarter. we will hear all about the road ahead. gross is out with his main investment outlook. what he says central banks should probably drop mean a from helicopters. and a look at some of the most active stocks today. there you see them, bank of america down by 2%. ford posting a drop of 1.4%. ♪
vonnie: time for our latest bloomberg business flash. once advertised as the heartbeat of america, will not be really new models in the streets of iran anytime soon. it has been struck off the list of allowed brands after the ayatollah criticized the american not a mobiles in a speech last week. the first online broadcast of her sure hathaway's online meeting was viewed 1.8 million times. yahoo! finance broadcast the meeting last friday with warren buffett and charlie munger
answering questions for more than five hours. in addition to the online audience, buffett says roughly 40,000 people attended the event in omaha, nebraska. the 500 euro bill is being discontinued. it will no longer be issued after late 2018. the bill is the biggest nomination for the year of, and it is rarely seen today. some merchants don't take them. i have to say i am sentimental about them. but i don't think i have ever even seen one. julie hyman has the check on the latest moves. julie: it is funny that we are sentimental now about the old euro notes. cbs was higher and has been
giving it those gains, even after the company reported first-quarter results that beat analyst forecasts, partially on the strength of viewership for things like the super bowl and the grammys. sales overall were of 10%. the company's broadcast network performed well as well. seemed totrends that benefit cbs's rivals as well. time warner above what estimated. turner cable unit, including tnt and tbs, up 7.2%. here we see a chairman of the gains from earlier in the session. msg networks also benefiting from these trends,
and the company reporting earnings that beat estimates because of ad and affiliate revenue, nation. finally, in a different part of the industry, live nation, the concert company, that company out ahead of estimates. it reported a loss that was slightly smaller than estimated and had a 10% jump in sales in its concert unit. in itsexceptionally well secondary unit. vonnie: so there are some bright spots out there. thank you. thes time now to look at french bank. jump. held by a 17%
>> the start of the year was awkward with fears on the economy, on china, etc. in that environment, which was very special, i think it is very strong. it seems to me we have a more resilient model. in particular, if we see a drop of equity revenues. on the other hand, the stick business has been a revenues. at the same time, we benefited from the increase of our financing revenue because it puts more capital at work. so we are pretty resilient. all in all, it is pretty strong given the environment. the end of the first quarter was better.
the brexitk about referendum, there might be some nervousness. present us carry a lower model. able to increase our market share in the eurozone. >> you are saying you may have some additional oil and gas provisions. can you give us a little more detail? and we have seen a slight recovery in oil prices. is that improving your outlook for this business? downe cost of risk is compared to last year, quarter on quarter. risk comes from the -- sector. confident in the portfolio at the end of the day. >> what kind of provisions? we had year overall,
something like 400, a little bit more than 400 million euros. the fullrranged for year between 400 million and 450 million euros. >> the concern at the last earnings was on the roe target. 1.7% for this quarter. atfirst of all, if i look the first quarter, it is 7.1%. but the standard is where all the taxes are posted for one quarter. ,f you take a quarter of that the taxes normalizing the economic impact, we stand at 9.8% on equities. so i think him again, it is a pretty resilient performance. what we said at the end of last year was to say we have the kind of environment we kind of expect.
critic. he said the alternative is an all turned --t to two austerity rehab and an extended recession. explain what helicopter money is and where it originated. john: it isn't money falling out of the sky. that milton friedman and ben bernanke said it should be something that should be considered. back in 2002, he suggested that also appeared a sickly, it is this -- also. basically, it is this cyclical way the fed buys out treasury money.
and because interest rates are so low, they are not paying any interest. it doesn't cost anybody any money. so they increase of the money supply, adding to economic growth without raising taxes and to pay private borrowers. so it is free money, in essence, to grow the economy. vonnie: it is quite clear in the letter that there is tone in writing. john: he is a very colorful writer. is saying what is the alternative? you raise taxes or we go into an age of austerity or we go to recession, unless we kind of of what he has at times called a ponzi scheme, but keep the borrowing going and the escape is basically inflation. and itlation increases
is easier to repay the debt. and it will make more sense for people to save and the fed will be able to raise interest rates. he sees that is the real solution to our economic malaise, doldrums, whatever term you want to use. alsoe: he thinks there is banks already.er john: yes. other banks have been buying treasuries. they have been buying mortgage-backed securities in the u.s.. in japan, they are talking about buying corporate debt. in japan, they are even buying corporate stocks. they are investing in the economy. bet bill gross says would good investments would be infrastructure, health care, and universal basic income. because so many people, he says,
are going to lose jobs because of automation, robots, they are going to need to get money somehow to pay for basic necessities. so helicopter money may be the way to pay for that. he sold some of his stamp collection today. how much did he get? john: $4.5 million total. what is interesting is bill gross left his former employer a couple of years ago very acrimoniously. about $2.5 million of this money went to the pimco foundation. although he may be met at the company -- vonnie: thank you for joining us from los angeles. ♪
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mark crumpton has more. mark c.: two people close to the told bloomberg news that he will and his bid for the white house later today, just a day after the exit of texas senator ted cruz. this cements donald trump as the gop standardbearer and sets the stage for an almost certain matchup against hillary clinton in november. cnn reports that, at the address, kasich is not expected to endorse mr. trump. it's not over, that's what bernie sanders is saying after beating misses clinton in yesterday -- beating mrs. clinton in yesterday's primary. say an agreement has been reached with russia to extend syria's fragile cease-fire to the northern city of aleppo. a deal was reached yesterday and
took effect at midnight in damascus. officials have seen a decrease in violence since then, but they acknowledge that violations persist in some areas. this agreement follows an earlier deal to reaffirm the truce in the damascus suburbs and the coastal let's talk yet -- coastal latakia province. still, about 3% of students aged 12 to 18 said they were victims of crimes at school in 2014. about 1.3 million students were suspended for at least one full school day for alcohol violations, violence, or weapons possession. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. back to you. vonnie: thank you. commodity markets closing in new york at this hour. let's take a look at the biggest
movers. oil bouncing around in reaction to stockpiles. two 17nventories rose by 8 million barrels -- by 2.78 million barrels. gas futuresural climbing for a second day on speculation that hotter weather will boost demand for fuel. gold calling for a second day, falling by more than 1% today -- falling for a second day, falling by more than 1% today. still, gold is up more than 21% this year. anre may be concerns about overblown rally in gold. this is a chart of outstanding -- e for more on the outlook for gold, using his own special
brand of etf's, i'm joined by greg king. you usually launch a couple of gold rated funds -- you recently launched a couple of gold-rated funds and etf's. where does it go from here? it topped $1300, now down to $1280. greg: it's an interesting question. we are talking to a lot of investors who are thinking about gold in terms of investment in the portfolio. people are wondering what's next with the fed. it definitely looks to be consolidating a bit. i think people are watching the gold versus market rate. the way we look at it is from a long-term perspective. from a short-term perspective, it can be a safe haven. usually only in extreme market moves. not the day today -- day-to-day stuff. vonnie: the thing about gold, there are so many
constituencies. the china market is stalling a little bit. into currency.y in your etf, you are using it as an equities hedge. tell us how that works. greg: the concept is built within the etf universe. there have an gold funds -- have been gold funds for 10 or 12 years. hasgold bullion fund bullion backing. those are physically-backed funds. most investors don't worry about the physical backing. they just want protection in terms of price. our etf takes an equity portfolio and puts gold in it, supported by your equities. vonnie: that's pretty complicated trade for your average retail investor, right? you are leveraging up your betting options. you're not quite sure how it's going to pan out. what kind of interest is there in these etf's?
they are often running about a month, right? greg: right. it's fairly straightforward. the idea is, if you have a portfolio where you want to get cold exposure, you might as well take that exposure into a portion -- get gold exposure, you might as well take that that is into a portion already supported by a position, rather than selling out of an asset you already own to put into gold. using capital more effectively, we find those investors are interested. vonnie: typically, when you see a large these surveys, amount of short interest and so forth, it might even be a contrary indicator. what makes you believe gold is going to go higher? doesn't matter? -- does it matter? greg: in terms of gold's performance over 45 years, it has kept up with inflation nicely. on a long-term basis, we think
that monetary events are going to create some inflation at some point in time. vonnie: it has been pretty -- negative really -- negative rates are not doing cold any harm -- doing gold any harm either. you were in business with credit suisse for many years and other places, too. the most recent ones launched yesterday are etf's based on the bics -- vix. vonnie: vix is an interesting asset class. it is used by traders as a hedge. we have been in the space for a while, as you mentioned. most of the products give access to vix through futures. it's a one or two month exposure. our fund takes advantage and gives you a shorter-term, closer to spot vix access, and does so as an actual etf. vonnie: you can actually trade it during the day. greg: absolutely. vonnie: the takers are -- ti
vmin.are vmax and greg: you're looking for something that people can remember and something meaningful. vmax gets you long exposure to vix ask -- vix futures. vonnie: the thing about this, it strikes me that it could wreak havoc. you want to know what you are getting into. you want to be a little lose your shirt. is that the case? is there some way to minimize that? greg: these are definitely for sophisticated investors. one of the innovations is rolling them out as a fund. you have a portfolio manager investing this portfolio and rolling these uterus contracts. previous -- these future contracts. previous products did not have that. vonnie: a lot of etf's launch
every year. not all of them make it. greg: we think the vix space is a liquid space. vmax is typically used to hedge and s&p portfolio. vmin is more to take the opposite view. vonnie: thank you for joining us today, greg king, ceo of rex shares. coming up in the next 20 minutes ," donaldberg markets trump is the last man standing for the republican presidential nominee. his last opponent will audibly throw in the towel -- will reportedly throw in the towel in a few hours. apple changing its tune on apple music. the company will make sweeping changes after a lack of response to the service. and falling for the ninth time in 10 days. ♪
vonnie: this is "bloomberg markets." i am vonnie quinn. time for a look at some of the biggest stories in the news right now. saudi arabia's stock exchange has identified a list of banks -- the shortest includes -- shortlist includes morgan stanley and j.p. morgan. the official decision could come as soon as this week. the ipo could raise more than i've hundred million dollars -- more than $500 million. takata has agreed to a stunning increase to the recall of airbags. the expanded recall will bring the total number of info aiders-- -- inflators to be
replaced to 59 million. it will take till the end of 2019. tesla is losing its global head of production. this comes as the company prepares to release a mass production model 3. a recall affecting tesla's model x. that's your latest "bloomberg business flash." in politics, republicans ted cruz and now john kasich looks to be out. cruz conceded yesterday. john kasich is set to make an announcement at 5:00 p.m. eastern today, with some news outlets reporting he will end his campaign. donald trump is the last republican standing and the presumptive nominee. from a technical perspective, trump won't athletically clinch the nomination until -- trump won't mathematically clinch the
nomination until june 12. mark halperin, host of "with all due respect." he will have some competition from john kasich today. mark h.: not a surprise after last night that his two rivals would get out of the race. it's not always the way it works. someone becomes the presumptive nominee. both john kasich and ted cruz saw that going forward would not yield them the nomination, so they are stepping aside, leaving trump as the last person standing. vonnie: he did say he would met -- vet john kasich as a possible bp, but basically kasich and -- possible vp, but basically kasich and cruise are -- and cruz are out. h.: what will dick cheney, george bush, both george bush's say about trump?
you've got the option of saying you will be for him. you had a united states senator from new hampshire, kelly ayotte, who is up for election, saying she is supporting trump, but she is not endorsing trump. kind of unusual language. you will see a lot of prominent republicans make this choice. say you are not voting. say you are writing in someone else. orr this new option of " -- this new option of "i support him, but i don't endorse him." ted did is aat very brave thing to do and a great thing to do, because we want to bring unity to the republican party. we have to bring unity. [applause] much easiert's so if we have it. vonnie: that was last night, obviously. the whole ballgame has changed. the campaign changes. do we hear trump's voice still,
or do other voices take over? mark h.: particularly if he does not moderate his report -- his rhetoric, you will hear a lot of republicans hoping to be part of shaping the rhetoric of the party. they will take over planning the convention in july in cleveland. his positions on what the party should stand for will be as influential as anyone else. this is an unusual nominee. i think you will see a few -- fair number of other republicans jostling. mitt romney -- how big of a voice does he try to be now? your intentions and your principles will only take you so far when you are in the political game. mark h.: so much of politics is predictable. this is not going to be protectable. most people i'm talking to ofnk 80%, 85%, 90% republicans will be publicly for trump. it hangs in the balance a little bit.
trump is going to have to win people over, but i don't think it will take much. a vice presidential pick, some new positions could make the party rally around him. most republicans don't want hillary clinton. vonnie: i want to move to hillary clinton, because she still has the bernie thorne in her side. he had the big win last night -- in her side.orn he had the big win last night. how does she get around bernie? mark h.: i think our colleague al hunt was right when he said it is a two-front war, but one she can manage. she does not have a majority of delegates, but she knows now --t she needs to obtain change more of her attention on donald trump. she will fight the two-front war, but, as al hunt said, it's a manageable one. vonnie: where does she find
passion? who does she bring on board? mark h.: many people would like to see a female president, but she doesn't energize younger voters. she needs to energize the coalition that got obama reelected. she is counting on donald trump to provide a lot of the energy for her campaign, because people on her side of the political spectrum don't want trump. vonnie: can he fail? will he do something -- now it's a different ballgame. up till now, things could be written off as publicity stunts or silly moves. is he is a potential -- potential presidential material. can he afford to make mistakes? mark h.: donald trump is going to be donald trump. he's going to count on the american public deciding that what they want -- that is what they want for president, an unorthodox type of person to be the republican nominee would be an even more unorthodox president. everyone in america is going to have an opinion about this. vonnie: we will be watching
"with all due respect" for john kasich's announcement. coming up on the program, we the -- you have joel benenson. stan has taken the stage. he has not yet talked about specific stocks, but he is coming in with guns blazing against the federal reserve. he says this is the least data-dependent fed in history, in contrast with what the federal reserve officials have themselves said. he says that low interest rates in this environment have caused an environment where not a week the by of extolling equities market. the seeming goal is to avoid a 20% pullback in stocks. some strong words, although he has not yet offered investment
advice or investment strategy tied to some of these comments about the fed. we did hear from smith of starboard, who likes westbrook. he says -- westrock. he says it is attractively priced. but weres took a leg up, are not seeing any recovery of any substance here in the shares. not much of an effect. a biotechstock, stock, which he calls deeply undervalued. he plans to replace the board of the company. off the this climbed low of the session, but it is still low on the day. interestingly, the most movement came from someone who had not spoken yet at the event. reiterated his short of tesla motors. we saw the shares beat up a little bit by that, but also by
the news that two top manufacturing executives will be leaving the company. there has been a lot of concern about its production schedule. here are the other shorts that chanos mentioned, and all of these are reader rations of short he had already held -- are reiterations of shorts he had already held. bank of the ozarks was singled out. he said that this bank has unsustainable earnings growth. he says the balance sheet may come under pressure. he says it is overly concentrated in commercial real estate. you saw a big leg down in the shares. they have since recovered. this conference is going to be going on for the next couple of hours. we will be monitoring more. vonnie: it's one of the better conferences of the year. it always invites fireworks. the foundation doing all sorts of great work for charity. coming up, about a year after beats and rolling out
vonnie: this is "bloomberg markets." i am vonnie quinn. be coming tomay apple music after being met with tepid reviews. the one-year-old music service is set to do more to change the product. anchor emilyst" chang is with us now from san francisco. we need a pretty big reboot to be interested, write? -- right? emily: apple music does have 11 million subscribers, but if you consider how big the apple platform is and how many people use iphone, some people say that is not much of a success. it has certainly gotten tepid
reviews. the critics say it is not up to apple's typical standards. we have learned there is a big revamp coming for june. they are going to fiddle with the interface to try to make it more intuitive. they are going to do a big marketing push. a number of executives have left apple music. a number of executives that came on through the beats acquisition, for example, the ceo of beats. we don't know why he left. we are reporting -- our reporting has led us to believe that the decision-making process inside apple music has been fairly bureaucratic and difficult to get ideas through. some of the people who have been working on the team have felt that is unnecessary. trente: trent resin or -- reznor was involved to give it some heft. apple wanted you to buy the music, buy the storage for that
music, and also wanted you to stream. emily: apple owned digital music and sort of chaperoned the transition from nondigital to digital music, but itunes sales have stagnated. they are making $3.5 billion on music downloads, which is not a drop in the bucket, but, for apple, it's not that big. that's three times what they are making on streaming. he idea apple had was to marry the downloading -- the idea that apple had was to marry the downloading and the streaming side of the businesses. it has not seamlessly come together. the fact that apple still has a download business should give apple an edge, but, in practice, it has not really worked out that way. vonnie: do we expect spotify to respond, or is spotify's interface already pretty attractive? emily: i don't see spotify
reacting. they have their own challenges to overcome. adele still has not released her latest album on spotify. you can download it, but you cannot stream it. spotify has mind-share. it seems to be thought of as the place where innovation is happening. we don't know a lot about what's happening at spotify. it's a private company. they don't release those numbers. vonnie: emily chang, thank you so much. i just want to break in and say that turkey's prime minister is said to be planning to step down. the lira is falling. ♪
from bloomberg world headquarters in new york, good afternoon. i am betty liu. stocks are headed for a second straight down day. u.s. economic numbers -- earnings failed to impress investors. can we call this a good one? john kasich will reportedly suspend his presidential campaign in just two hours, leaving donald trump as though l -- the lone gop presidential candidate. trump already setting his sights on the fall presidential campaign. mr. trump: we are going after hillary clinton. she will not be a good president. she will be a poor president. betty: and is tesla steering into trouble? two of the company's top production executives have left the company just as production is starting to ramp up on the model 3. scherzer falling on that news.