tv Bloomberg Markets Bloomberg May 5, 2016 10:00am-11:01am EDT
vonnie: here is what we're watching. alibaba sales surge. the e-commerce company seeing a 30% gain in revenue as they gain new users and sales on mobile devices. excuse me. trumpundlach says donald is extremely comfortable with debt. a closer look at what trump presidency would mean for investors. vonnie: and how tesla's new forecast could change the entire industry. introduce half a million cars a year by 2018?
let's head to julie hyman who has the latest. julie: we are seeing a little bit of a bounce back to we are not say much magnitude in terms of percentage gains across the board. for major most averages. following on the today decline that was the largest since early february. to be what wears are seeing here. earnings continue to play into the equation. if you look at the stocks gaining on earnings use, first quarter results they're beating analysts estimates and also a 1.5 lien dollar buyback. chesapeake, you can see one of those volatile energy stocks we are tracking. said it signed a deal to sell its oklahoma drilling rights for $470 million. ,raft heinz coming out expanding beyond catch up to mustard and barbecue sauce. that helps boost sales. alibaba also rising after that
posted a 45% in revenue. trip advisor following on the heels of priceline yesterday but the shares have turned around despite missing estimates. meeting estimates despite a not optimistic forecast. shares are plunging and that company policies short of estimates. it has been spending more innovation coming up with new products. out of its coming forecast. energy shares are the best performing stocks today. take a look at the imax here. we have energy shares as the best-performing groups, of better than 1.5 followed closely by materials, only up half of 1%. top ofwo groups at the the list here today because we are seeing a rally in the underlying commodities, particularly in oil, we are
seeing games. wti up more than 3.5%. a number of different things going on including the fact iran is saying it is willing to work with opec as production ramps stack up. gold futures are coming back in today'session. i wanted to mention the open interest is here signaled that traders might be expecting more gains. you can see we are at the highest level going back to 2010, which might be one indication that even after the big rally we have seen here, some traders are looking for more gains. basic resource stocks leading the european market higher as well. up, that is the basic component of the stoxx 600. , worst losinging march --
we continue to be dominated by earnings from the oil industry today. chemicalstimates, and compensating for the drop in oil prices. seeking to divest assets. these are the big oil majors in europe. three done 2016, the worst performers. they have risen by between two and three and a half percent. up by 10 and 13%. it is the best performer. there you go. interesting times in turkey in the last 24 hours. it seems as if the prime withter lost his battle met lastdent -- they
night. it was not a statement following the meeting but we have heard today from the prime minister and essentially, there will be an order -- extraordinary meeting taking place soon. he will not be on the ballot when they choose a new leader. this is a turkish bond in the last 12 months. look at what has half and in the last few days. this is the uncertainty that could take place in emerging markets, how politics could knock investment strategies. gains in the last month and it is a similar story because yesterday, we saw the dollar's biggest gain since 2008. the today gain before today was 5.6%. down byar is falling 1.6%. all sorts of questions need to be answered and we will ask mark from bloomberg intelligence about it later. because of the power struggle between the prime mr. and the president.
vonnie: let's get to first word news. taylor: we are staying with turkey. the prime minister says he is and will not seek reelection in the convention this month. he spoke earlier today in a televised speech. >> it would be more correct to solidarity.ty and >> he said it was not his choice because he was not the party leader. the power struggle between -- counter europe. the russians will create about 30,000 soldiers in the western and southern military district. nato is expected to send about
4000 troops to poland in the state. four out of five americans say the islamic state is their biggest international concern. almost three quarters of say they're concerned the u.s. will not go far enough to stop the group. say they half polled will not go too far. 500 million dollar restructuring plan for public schools. the plan aims to make sure teachers -- teachers held a two-day stakeout this week. house,race for the white a former republican president will not be endorsing donald trump -- donald trump and they bush.th named george expose before george h.w. bush says the nation''s 44th president will not be involved in the campaign even though he has endorsed the gop nominee in each of the last five election cycles. ditto for george w. bush.
in february, trump accused him of not doing enough to prevent the attack through 2001. global news 24 hours a day powered by our 2400 journalists and whether 150 news bureaus around the world. thanks. staying on politics, investors are monitoring the race to the white house. asking what will the next u.s. president mean? toldrday, investors attendees at the investment conference to prepare for a donald trump presidency. he said, what is going to happen is you are going to get a reagan response with donald trump. he promises the world and promises to bring jobs back and he promises infrastructure spending. let's face it, he is extremely comfortable with debt. president ate pimco where she health make
sense of everything going on in the political world, thank you for joining us. just to respond to this particular outburst, he believes donald trump would be very comfortable with a lot of debt. if there were a trump presidency, to you think he would rack up a lot more debt? >> thanks. fromard thing for markets an investor perspective is trump does not necessarily adhere to republicanional orthodoxy of lower taxes, lower spending, and open markets. understandcult to and prognosticate exactly what the trump presidency would mean for the economy and the market. comment, i think donald trump said yesterday interview, he was the king of debt, he is very comfortable with debt. time at a washington post interview a few recent go, he said he wanted to exhaust in
19 joy dollars of public debt what we are getting is not a lot of adherence or consistency. him policy advisers around and what he would mean -- to win. vonnie: do you anticipate markets will react or will we not see much of a reaction until we get closer to november? ? as have been pretty much in pervious to this long, dramatic, and somewhat unconventional primary cycle really on both sides of the aisle. i think we would expect them to be pretty much impervious for the foreseeable future. as "a to november as the debates occur between whomever will be the democratic nominee, likely
hillary and and at this point, and donald trump, the presumptive republican nominee, i think markets will be focusing on what they're saying as their economic agenda is formalized. barry says the president gets way too much credit during good times and too much grief during bad times. he says the markets are good at discounting future cash flows, that everything a president does will run into countervailing forces. is that the truth? is there an element of truth in that? >> there is. ise of the rhetoric mystifying. you are right, the president only has so many levers to pull in terms of the balance per -- balance of powers perspective. many of the proposals donald
trump is putting forth that hillary clinton and bernie sanders are putting forward require congressional approval. composition of congress will matter as well. in terms of what the president can do unilaterally, it is pretty limited. a lot of things donald trump is saying about building a wall or imposing tariffs on chinese imports, he cannot really do that unilaterally. listen to the sound bite from someone who says trump is a false prophet. businessman, a politician. unfortunately, he diverts into a different line any hits everybody. cannon.loose
make a correction, what he is doing is a mistake like a wall. i am not sure whether you could hear that. essentially, he was saying and advising donald trump that donald trump is making a mistake, making the world -- warren buffett was close about the election a few days ago and he said a trump presidency would not be a blow to u.s. is this as some fear. remarkablyremains a attractive place to conduct is missed. do you think that is the view held by a lot of businesses? >> going back to my initial comments about how i donald trump presidency is unpredictable, it promotes uncertainty because no one really knows it that we what his
economic agenda is going to be. on trade, he is even farther left than hillary clinton and even bernie sanders arguably. he is quite inconsistent. i think that is what businesses do not like. they do not like uncertainty and markets. as of now, markets are sort of, they have been desensitized to what is going on. think they will start focusing on this as we get closer to november. if those economic positions are not firm up and become more consistent, if he keeps i thinkting on things, businesses do not like that and i think that is not necessarily a good environment or this is. we are six months out so a lot can change and in the general election, we are in early days. funny: candidates are focused on fun rating -- fundraising and some have been able to have big
donors to even the bushes will not endorse donald trump. where will donald trump look to for voters and will he be able to bring the big donors back in? >>'s announcement yesterday's interesting that he will not necessarily -- that he is going to take money from external donors. his message has definitely been resonating with a certain part of the population. we have seen he has been able to attract interest in small donors, whether he could grow that beyond just that small donor base and attract the kind , thatr, bigger money remains to be seen. i think he is so different from partyhe republican wanted. after 2012, they put together an autopsy report that outlines some of the characteristics they candidate that could
win a general election in 2016, and donald trump is really antithetical to that in a lot of ways. to embrace someone immigration reform, embrace hispanics, minorities, women. as your previous commentor said, he has been alienating a lot of those groups. think the republican establishment does not know what to do. again, the early days in the general election, so a lot remains to be seen but i think a lot of people are scratching their heads in the republican party about what to do next. executive at pimco, thanks. note, the guest is republican strategist mary -- 5:00 p.m. eastern. mark: coming up, more on earnings. ♪
vonnie: let's head to the market desk were julie hyman is looking for some earnings movers. let's start with a specialty pharmaceutical maker coming out and make -- and having questions on -- treating degeneration in addition to coming out with earnings. the company is boosting the top end of its sales forecast and it looks like that is where the data is coming from because first-quarter earnings actually missed estimates. we are look at seaworld here that companies reporting its earnings, and also coming out with a forecast, trails estimates. the company has been making a lot of changes, including how it's work is performed in toious shows, bowing pressure from activists. those shares are falling by
8.5%. zynga, the game maker, coming out with its members as well. a mixed report. first quarter earnings came out breaking. analysts had been nesting -- themating a loss -- second-quarter forecast is for a loss that is deeper than analysts had been anticipating. one person said that it was really driven by "words with friends" and instead, it is great to see good numbers but we would like to see some of its newer games ramp up as well. it looks like traders are setting up a stock today. ok.: we are watching alibaba. the growth rate is rising even as china slowed here in more results are not. ♪
back, just have a look at my terminal. you can see alibaba posted a 30% surge in revenue during the march quarter. kendrys e-commerce operator .truggling with promotions shares are rallying in the early united states session following the report. let's get more from paul sweeney , senior media and internet analyst at bloomberg intelligence. shares were listed, investors have cooled off. the love affair is not quite as intense as it was. why is that? >> probably the overriding issue for alibaba is just the fact it is representative of the overall chinese consumer market. as the chinese economy has slowed, investors have rightfully stepped back from alibaba and said, what do i want to discounted terms of growth in the next several years. the world has changed a little
bit since the ipo and i inc. a lot of investors that invested really invested in it as a play on the growth of the overall consumer economy in china. to the extent that is slowing, i think that is reflected clearly in alibaba's stock price. it is really pushing it to the domestic regions in china is -- but on the other side, how's that working? >> are in early days for both of those but take a look at the quarter ended had 39% revenue growth. i think that is really helping the stock in helping the company back up its argument that even though the overall economy is the consumer in china is still quite strong. a lot of liquidity for the consumer and as you mentioned, there are growth lovers outside of the overall chinese place airport. the are moving to some of
communities and there are 600,000 in china and the early stages there, bringing the internet e-commerce platform there. they are making -- internationally. those are contributed to the growth story but still, this is a play on china. vonnie: jack ma made that very clear last year that they wanted to be partnership with other companies and in particular american small businesses. how is that going? >> early stages but i think it is going well. i think they are finding a lot ofopen doors and a lot people answer calls me want to talk about partnerships. obviously, a lot of manufacturers and service providers are looking to get access to the chinese market and chinese it's coming out of china. alibaba is arguably the dominant platform in china, it is a company you have to do business with and have to have a real relationship with.
initially, alibaba was focused primarily in china but since the 6% ofe wants to get revenue outside of china and they are definitely moving that way. would you be looking for references to continue to go? >> yes, it reminds me of the amazon story. theyg topline growth as ride the wave of global e-commerce growth. the company on a call today and management on the call today said they would continue to invest in their business much like jeff basis invests in his business. vonnie: all right. thank you. still ahead, tesla's needs up its forecast to can the company make half a million per year by 2018? ♪
taylor is in the newsroom. taylor: the justice department told carolina the new law limiting which public restrooms can be used by transgender people is illegal. state republicans are denouncing the threat, saying it is a broad overview by the federal government. jerry brown has approved raising the legal age for smoking, dipping, from 18, 221. california the second state to raise the smoking age to 21. israel said it found another tunnel -- asds of the title came forces clash along the border. militants fired at israeli troops and they responded with airstrikes. alberta has declared a state of
emergency. crews frantically held back wind with wildfire -- wildfires. more than 80,000 residents have fatalities have been reported. a brazilian supreme court justice has suspended the leader of the country policies lower house of congress. the move at least temporarily removed the leader of the effort to impeach the president. the effort has been moved to the senate or the suspension has -- global news 24 hours a day powered by two-on-one hundred 50 news bureaus around the world. vonnie: now it is time to get you caught up on a market around the world. a 3% drop today, quite a substantial drop. thanks down .4%.
the shanghai composite index is quite tech heavy there. a big story out of the region, a new concern, chinese economic recovery. >> the latest data come weakness in the chinese economy. nonmanufacturing emi, which surveys mostly private enterprise banking, telecom, property, and other service industries fell in april. or send employment showed improvement but input costs are rising. only service companies by traditional manufacturers as well. private manufacturing pmi out earlier this week and slightly deteriorating sentiment in april the march 30 economist say benefits for monetary easing fromhelp boost credit companies may start to peter out a bit. bloomberg news, hong kong.
mark: let's check on markets are doing in europe today. rising -- three out of four ain't bad. continue to dictate the mood in europe. have a look at the best and worst performing industry groups on the stoxx 600 today. bt group, the u.k. reported profit that beat estimates, telecom stocks, energy up, it beat expectations today. 1%.rers lower by in the currency markets today. an interesting move. i thought we would look at two turkish assets. down after rising the most since 2008. the prime minister will step down. he has lost his fight with that president and the bond yield is
up. inore they move upward yields in turkey wiping out last month's gain. showing turkey the difficulty in investing peerless get back to the united states third abigail doolittle has the latest line from the nasdaq. abigail, what have you got? >> flipping between red and green right now as the technology shares, especially apple. another stock dragging, tesla. it reported its first quarter after the bell yesterday, mainly in line, but the volatility we have seen in the post-market yesterday, the premarket today, and actual trading, it is very fitting to a stock was very strong views to investors. battle between the bowls in the barrister the bulls case is that tesla will turn profitable in the company will continue to exceed and raise reduction targets.
increasing debt and the company will have problems with his production. only time will tell which side is right that both sides can that elon musk is a true visionary, something that shows with the stock up more than 800% from his ipo all the way back in june of 2010. recenthat about the more you point of tesla stock? >> as you may guess, anything to what is happening today, volatility. big swings up and down between the bowls and the bears. back again today, below the 200 day moving average, it does appear to be a little bit of aligned in -- a line in the sand or middle ground between extreme thatt the last few times tesla has stiffed below that moving average, it has been bearish so there could be downside ahead in the near term. mark: thanks. let's sue tesla little more. vonnie: joining us from
washington is an analyst with a buy rating on tesla with a one-year price target of $325. the stock is down 4% and we do not want to read too much into it that there was the idea that tesla will have to raise cash. also very ambitious production goals. >> thank you for having me and good morning. we are very aware we will be in a catalyst like time for the next 12 to 18 months. you will not get the answer in terms of risk related exit issue here the core of the argument is very much related to that. we have had hiccups clearly with the model s. i think that is feeling a lot of negativity and volatility today. it does seem to us that there is often change and continue to move the focus in real-time. six months ago, the concern was
the model three launch would cannibalize the model s. it did not happen in the first quarter. there was a balance in the first quarter report. to digest the good and the back. we can to be more favorable considering the substantial growth. nowhere in the auto industry could you find this growth or kind of dynamic change outside of tesla. >> and want to point to the bloomberg and our chart which shows interest in how that is on the decline, but it is still pretty substantial when it comes to the flow scared own to ask you, the cash raised, how much could tesla raise equity and debt wise, and should investors be weighing this against what you just said, the potential for better operating cash flows in the future? yes, i think it is a difficult question to answer, to be fair. it is our speculation. there is not a whole lot he could point to aside from the fact a raise get historically and of gone to the did -- the
equity market historically. most recently, and oversubscription the equity market. it will be a combination of funding for model three production. we think in the factory as well. there are some questions you still have not heard a decision -- defendant -- definitive answer on, versus the need for future facilities. we believe there is enough capacity, but the -- to the extent they are able to raise capital, this would be an advantageous time to do it, all the -- albeit a short-term for the shares. mark: let's cut to the chase. his 500,000 call -- 500,000 cars in 2018 possible? it would be a massive shift like we have not seen since the beginning of the 20th century with word. >> we thought it would be a stretch for 2020.
it would be unfair for us to say all the sudden we are confident in 2018. clearly, there are monumental risks, but i think tesla has they can run the gamut of being a tech and auto company, they can shorten the product cycle and do a lot more and they are a lot more nimble. if anyone had the chance to do it, i think tesla has proven they certainly have a fighting chance to get there. clearly, while that is a positive if they could achieve it, it only makes it a riskier opposition at these valuations. executives, is this becoming a worry? he has lost two key executives. that was confirmed yesterday. leavinghad five vp tesla this year. what does that tell us of what is going on behind the scenes? know all of the
specific issues that have occurred. i do know from our conversations with management that there have been various departures and those departures have come back to tesla at a later point in time. to yourthe answer question is yuan on is incredibly successful but a demanding person to work for. much for axpect as company trying to target $500,000 a year inside of two years. fatigue bearing its weight and driving some of those departures. i do not believe there is a brain drain be on that. there is a lot of speculation to apple and elsewhere. i do not expect the answer is here but we going take management at their word without having deeper insights in the h r side of this. vonnie: is there an insight into howvonnie: tesla would compete financially afford decided to really compete and underprice? >> the one thing, and i will
tell you first and foremost, i have been a car guy first and auto analyst second. i feel what we are seeing is a compromised approach to fuel economy and technology in general. it is really bleeding out what made specific brands unique. if you look at luxury, bmw and mercedes and audis are blending together in people's minds. tesla has cut through that in a unique way. theirk it resembles meritocracy internally versus a bureaucracy at the bigger oem. cutink that bureaucracy, to to your question, i think the urography will hold it back. i think we're seeing it in a bmw,omised chevy volt and and the cells have reflected that with the bmw specifically. i think there is more of a head went with respect to the competition that many of -- to
it may take a couple of years. it was cut by about $600 million in 2016. purging a board to negotiate on the consulate -- unsolicited $9.3 billion takeover offer. overwhelming support for a deal. sergio marchionne expects the company's new partnership with google to speed up the commercializing of self driving vehicles. here years earlier today. anything in collaboration with google will by definition expedite the process. the combination is bound --
to develop out 100,000 prototypes. hybrid powered. vonnie: first, candy bars and hot chocolate, too. that is medicine that would go down well, i am sure. you can read all about it in the latest bloomberg businessweek. nestle and medicine? does it come in chocolate form? >> a good question. we do not know yet. making things that taste good that we want to eat, if these things happen to make you
healthy instead of making fat, as can happen if you eat too many butterfingers arctic cat bars, all the better. mark: wanting to have its cake and eat it, they are trying to your us with chocolate but try to help work your us with their snack medicines? >> there is a great irony here which you are alluding to. the world has an obesity epidemic and there is no question about it. it is the result of there being too much sugar and too many bad diets. there is a question big food companies like netflix have picked -- played a big role on that. we have a company trying to on sugar andar create a new strategy around making us healthier. visiting away from its core appeal from the scientific community, from analyst community or not?
>> there is skepticism certainly from scientists who are wary of claims and also from analyst community. it is a tough industry. there are enormous players and they will fight to defend their turf. the jury is still out on whether a company like nestle could make the vessel, but they are very good at selling chocolate bars mark's point,wo showing a chart, it has not gone anywhere. it is on the link down in terms of a trend. like selling water and healthy foods? is this just a ploy? >> i do not think it is a ploy, they're trying to change the way they do business and offer new products. -- if you liketo
hedging, if people want to keep eating french fries and butterfingers, they will profit from that. what will the bars taste like? >> i do not know. i have not tried any. they tend to be some very .pecialized food the kind of thing we probably to taste as a snack. nestle has did that it that they want to create things that people want to eat, whether that is in a fruit flavor, a chocolate flavor, tastes like a pizza, who knows. it will not just be a pill. it will be something appealing. money? vonnie: -- vonnie? vonnie: we have got a preview of
vonnie: check out a diamond the size of the castle. the biggest diamond in more than a century. the gem will now hit the auction block. million.al $70 i did not know they came in that carrot. to find their way to the company's bottom line. about $35 million after taxes. the company is laying what to do
with the cash, including a dividend, share by zach, or investments back to mining operations to the auction is scheduled for june 29. spring auction season on monday with sale. got anrg pursuits james advanced look at one of the most valuable items of her auction. ♪ >> walking through the galleries . deathillion would be sold worth of art would be sold on may 9 and may 11. the topsail is this painting by andre, which translates as the red cells. andre is associated with the movement.
it literally means wild beast. it was derogatory moniker that was applied to andre and a few his contemporaries. 1905 and 1906 and 1907, those were blowing people out of the water. it is sort of like an impressionist work. also looking at the colors, this are extremely vivid, painting is 30 inches by 39. $29, that would break down to inch. $20,000 per square let's take the signature here on the bottom of an corner. signature around
$70,000. also it makes it particularly valuable, that certainly adds to the appeal. is sunday -- it is something .ost people have not seen it is a piece of canvas with oil on it. as much if nott more in beverly hills. mark: bloomberg pursuits reporter james there. more, yourd destination for the finest things in life. hour, turkey's
prime minister is stepping out and stepping down, a decision that pass a market power struggle. we will look at how currencies in bonds are reaction -- reacting an overall european stock. it's is the first increase we have seen of the european stock market in the last five days. that was the longest losing run since the end of march. european thousand trading higher. these are the industry groups leading today's events and it is propelled by better-than-expected earnings by voice of bt group. the european close is next. ♪
are watching the european close on bloomberg markets. ♪ mark: here is what we are watching today. a political power struggle in turkey. the prime minister plans to step down as the president strengthens his grip on the country. what does this mean for the economy in the region and its repercussions around the world? vonnie: bringing more risk back to the market here we will have the investor perspective. the u.s. april jobs report is just around the corner. the snapshot is expected to have an impact on fed action through the spring. we will break it down. what to respect -- what to expect? vonnie: let's head to the markets desk wre