tv Whatd You Miss Bloomberg May 5, 2016 4:00pm-5:01pm EDT
[closing bell ringing] scarlet: u.s. stocks turning ther as a short rally in market is invaded. the s&p 500 extending three weeks lows and investors waiting the big jobs report for clues on the strength of the world alix: 's biggest economy. gopro and others reporting this hour. the prime minister of turkey is expected to step down. we have a special guest host today, welcome back. marketegin with the minutes. not a lot when you look at the movement of the indexes. moved within a narrow range, the s&p closing at its narrowest range.
energy was the best performer. initial jobless claims moving up a little bit but there's no direction to come with tomorrow's jobs number. the dow was up 85 points, so that slide was a bit dramatic. volume was terribly light, this time of day, it was a very light day. oliver: if you look at stocks, a few things jump out. look intoe a deeper what is going on, few things have popped out. alibaba andclose to you have a few other measures if you look at what happened with financials and look at what is happening in terms of their momentum, the 200 day moving average, they have been down there for two days. of the s&p. part
you have to keep that in mind. index.ut the volatility if you look at the curve, it is interesting to see how futures are priced in. spot realized volatility. a reflection to give you an idea of what people can expect on the road. alix: and that's not the only sector testing that level. definitely something to key in on. i'm looking at the bond markets -- two different indicators. yieldrkish five year spiking today on the news. increasethe biggest since january and spiked the most at the end of the chart there. i want to look at something that
is kind of on related. the largest etf that lies junk bonds. seen 2.6 billion dollars in redemptions in just the last four days. you are looking at shares outstanding. the longest week of losses since february 11. is it good or bad? are you putting it into something else or is it a bearish signal? scarlet: maybe it is a sign of more movements to come. politics causing convulsions in the currency now that the prime minister is stepping down as the leader of the party. , it is rebounding. is it a dead count -- dead cat ounce? the selection of a new party
leader and prime minister are unlikely to lower the temperature. that means a 6% depreciation in the dollar. alix: and the last check on commodities, looking at west canadian select and the discount . we have the canadian wildfires there and the difference has really narrowed from 15 dollars two weeks ago. they are taking production out of town. oil prices are reacting to do to that. scarlet: dreamworks animation reporting fiscal first-quarter of $194and revenue million, higher than the contestants -- consistent -- confesses estimate. for now come we do have
earnings-per-share of $.15. once you rounded up, it is about a penny. better-than-expected results for dreamworks. we're watching it carefully because comcast is buying it. alix: kind of flatlining in after-hours trading. i'm looking at chesapeake debt. up and thistock is chart is a huge reason why. this is how much they have been able to reduce their debt as natural gas prices have fallen. pretty dramatic slide and today, we got news it's going to sell some of its drilling rights in this prolific area of oklahoma. sales just this year, 1.20 7 billion. they have done a lot of work to
get that down. oliver: i'm going to talk about corporate squeezes. it's always worth revisiting, especially as they start talking about inflation and wages this week. hereis the lou line tracking data from the fed in terms of cash coming in versus what is going out. think of what they are spending on dividends and capex. the white line here looks at hourly warnings -- hourly learning -- hourly earnings. companies have more money going out and you can see it has been negative's march of 2015. it lets them think about what they are doing in terms of outlays with cash and it has been very creative to the
market. scarlet: for mine, i am looking at the u.k.. the u.k. is holding regional elections today. --e is the economic backdrop starting the second quarter with a loss in momentum. the manufacturing pmi is white line. it doesn't really matter -- let's do this again. here -- it's the difference between expansion and contraction. it is that direction causing concern here. the u.k. economy is near stalling because these measures indicate a growth rate. alix: that does not feel good if you are in the u.k.. --n earnings coming in
revenue coming in a touch light, just under $1 billion. the lightnessying in revenue is because of a decrease in their macau operations offset by .7 increase. by macaus live and die here. macau hurting them here and a stock is up 3% after hours. scarlet: square also reporting. this company founded by jack dorsey, boosting its sales forecast. now looking for as much as $635 whereasin revenue earlier, they had anticipated $620 million.
before, they were looking for anywhere from a range of million dollars to $12 million. basically just under $10 million. that is the outlook here. oliver: i want to bring in the cumberland advisor chairman and earnings officer. corporate america showing off it like in thet, energy sector, citing more downside. talk about your positioning and tell me why the changes. david: we got out of the energy sector. probably -- i don't know how many months ago. ago.ong
reentered because of an oil price of 30 something was , iractive and natural gas member scarlet chastising me for being favorable about natural when it was about $1.80. now we see the backup in prices. you see the contraction of supply and we see refinery outages, movement in saudi arabia. the world is changing and our view is this is not going to go back to $70 or $80 a barrel. too much supply and the players in the oil patch, you just reported chesapeake doing a balance sheet and reducing debt.
we see other issues with exxon. even that giant headache credit rating drop. we back doubt and we are underweight the energy patch and we want to take our time before we realize and go back in. do you seet happening in the tech space? is it a gross versus value dynamic? david: the shift was triggered by apple. apple was a very large weight. exister etf's, it doesn't or is not a large weight at all. 13%, microsoft is about 10. we owned by gn and took the weight up.
allow that to be roughly the weight we wanted but weight and that increased amazon and facebook, which is positions we want to integrate into the tech portfolio. alix: much more coming up with you. we will preview tomorrow's job report and talk about japan. scarlet: breaking news -- paul ryan is speaking right now, saying he is not ready to support donald trump as the nominee as the presumptive nominee of the republican party, but trump should be congratulated for winning the nomination and the nominee should advance the principles of the gop and adds republicans can still beat hillary clinton. we will be back with more. ♪
crumpton.mark let's get to first word news. the white house says president obama has commuted the sentences of 58 federal convicts, including 18 serving life sentences. in march, the president commuted 61 sentences for drug related offenses. the obama administration has commuted 306 people in the last six years, more than the last six presidents combined. clinton is urging democrats to unite around her presidency. she told community leaders in los angeles that her lead is much wider than the advantage.
she is more says -- 3 million votes speech, the prime minister of turkey said it was not his choice to cut short his term as mayor and party leader. the decision cap a power struggle between him and the turkish president. 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. scarlet: we have breaking news from gopro -- reporting a first quarter adjusted loss per share of $.63, wider than what analysts were looking for. when you look at the top line revenue for the quarter, it was higher than the most bullish -- most lush -- most bullish
forecast. this fiscal fourth-quarter revenue beating the consensus estimate as well as its own forecast. gopro reaffirming its full-year forecast and we see the stock up 6% in after-hours trading. david, we were talking about your calls -- a recent call is you are bullish on japan. has that changed? david: it hasn't helped matters. it certainly set us back. there's a nuance -- he did extend credit in the banking system after the earthquake at zero interest rates for long-term. markets ignored that and my sense is part of the debate at the bank of japan is whether stimulative act or
not and it certainly was. if i lend you money for a long time at a zero interest rate, that is stimulative. japan to weaken the an end do more to add fiscal stimulus and not raise the tax raise defense spending because of what is going on around them, these are an enormous pressures and we think they will come to bear. in that light, it would make sense the bank of japan would decide not to do anything ifpt old and wait and see this would have the desired effect. oliver: that's the big surprise here. japaneseart here is demographics and that's not something that changes rapidly. how concerned are you that the roots of the problem are too ingrained?
if this is not working, what will? will, we don't know. the only policy that exists is to have very long stretches at no cost to finance. in the demographic, you need to have high defense expenditure when you have a neighbor, china, and another neighbor, north korea posing existential threats, and they do. in thisld we do demographic if we were in charge? have highly productive defense technology at work and they are going to do it. amending their budgets and they have to defend themselves. scarlet: let's turn it over to jobs. a lot of people call this critical because we see a multi-quarter deceleration that has extended through the first quarter. what are you looking for to determine if the fed can go ahead with an increase?
surprise we get a number, that would surprise us. we think we are in a slow growth environment. not. continue, the fed is weakerkets will like numbers and say that postpones things into the fall or into the winter. if it is robust, markets will like it because that will give the fed cover to act. corporate profits keep going down, but the job market is going up. the question is how long can that gap be there? oliver: i think that is going to be an important issue. we know what the employment picture is, but one of the things here is when you look at the jobs, is there a certain
inflation level that would send a yellow or red flag to you? david: you could have it but the fed can't get the inflation rate up to their target. at this very banks low interest rates still cannot get the inflation rate up to a target. how do they act in a slow growth economy when they can't get the interest rate up? if we were to accept for a minute that we were going to have these low interest rate for a long time, would you revalue stocks at higher levels? why do we have to be bound by old metrics of price-earnings when in fact we are at very low interest rates for a long time havei think asset prices an upside and then up word bias. alix: good to see you.
guest: among emerging market economies, turkey is not doing that that. instability is taking center stage right now. the concerning thing is related to what's happening with the central bank. there's no new central bank governor in place. is whether the central bank is going to maintain the fight against inflation. alix: isn't there a reason turkey is not doing oddly is because you had a prime minister who was seen to have closer ties to the west and eu? guest: that's right. the prime minister was seen as something as a reformer and was respect to the in international markets -- respected in international markets. the low oil prices have been a
boon for turkey because turkey imports oil. they had a recently good fiscal position and was benefiting from the increasingly favorable view of the markets at least in the short term. but this political instability overrides all of that. oliver: you had commerzbank reducing the gdp expectations and nomura saying the chances for a downgrade have doubled. are these reactions out of place? it's going to be difficult in the coming months because the market is losing confidence that turkey will go in the right direction. succeeds in capital , in order to pump up growth, that creates uncertainty and instability. it's going to be a rocky few months for turkey. i think political instability will keep things rocky for a little while.
does the president listen to or who is he beholden to? guest: he seems to be largely beholden to himself and is accreting a lot of power. tohas shaped the military his liking, so there's nobody who can stand up to him right now. thank you. we will be discussing china and the yen next. alix: cheniere energy reporting a first-quarter loss of $1.41 a share. estimates were for a loss of $.32, so i'm not sure if these are comparable. this is the first liquefied natural gas exporter terminal in the united states that began exporting lng just a few months ago. profitve not turned a since 1998, so the stakes are high for this company.
mark: house speaker paul ryan says he is not ready to endorse donald trump for president, at least not now. presumptive the republican nominee needs to do more than unify the party. he needs to show he can share our values on conservatism and limited government. republican says he hopes to be able to support trump, but says to be candid, i'm just not there yet. we learned mitt romney is planning to skip this summer's republican national convention in cleveland according to the associated press. 2012 republican presidential
nominee has been one of trump's fiercest critics, delivering a point by point indictment of him in march. the us trillion central bank has named a new governor. he is replacing glenn stevens who has run the federal reserve bank of australia for 10 years. he won't have much interest rate ammunition to deal with as rates are now at a record low. in syria, a -- an airstrike has hit a refugee camp near turkey. it is not clear who carried out the airstrike. the camp is home to hundreds of people who have fled from the surrounding provinces. dayal news 24 hours a powered by our 24 hundred journalists in more than 150 news bureaus around the world. let's get a recap of today's market. we had a rally underway earlier today at around 1:00.
then start -- docs started to slide in closed relatively neutral on the day. volume was quite light. tomorrow's jobs report. we had the initial jobless claims move higher last week. at gold --king looking at gopro, they have had a rough year. they did beat on the revenue, which clearly the market takes pre-well. for a company that has had as much trouble as it has, it might take a little more to get the stock moving higher. scarlet: news corp. has just come out with its results -- revenue slightly lighter and analysts were looking for. this is the old-school part of that is miss, the newspaper business, not the new media assets from news corp..
that was spun off into 21st century fox. adjusted earnings per share was four cents. not much of a reaction in after-hours trading. alix: looking at should near energy, that company reporting a loss -- estimates were for $.42 a share. loss forlike a severe the first quarter for the first u.s. lng terminal. their processes has commenced, they are one step closer to shipping out liquid natural gas and it's a good sign. but once again, a loss of $1.41 a share. scarlet: what kind of indication did you get that things would go on as planned, given the volatility we have seen in oil prices over the past year? alix: in terms of what is constructed, it is good.
wait for a little while, but as of now, people have commissioned it. it's like a juicy dividend. scarlet: "what'd you miss?" capital outflows from china are tapering off. it's a sign of stabilization. still with us is the former head imf china division. what do you look at to determine if this kind of capital outflow stabilization is legit? guest: the sentiment about china has shifted since december or january when the sense with the chinese economy had no way to go but down. it can manage the outflows since they walked off a lot of the capital flight and some of the carry trade related to corporate debt and foreign currencies. surplus running a trade and still getting good inflows.
there is now a sense that they can hold the line. the weakening of the dollar has helped as well. i want to bring it to a macro capital markets look and dive into bloomberg. risk freet the return. china has a pretty high risk premium. that has happened as the return on the 10 year yield has taken a dive. what is this telling us in terms of macro sentiment? guest: the important thing about china is the chinese economy and chinese financial markets and the two don't often moved together at all -- don't often moved together at all. when the stock market was rising up, the economy was not doing that well.
then the stock market crashed in the economy was weakening, but not to that extent. defaultsr of corporate are rising and some of the things you see in the fixed income state. the market problems in terms of debt are beginning to come to a boil. scarlet: what happened at the end of last summer through chinese officials for a loop. they thought they had a handle on things and it spiraled out of control. what did they learn from the august valuation versus what did investors learn? guest: it was a desperate measure to prop up the economy. i think china had the right intentions, but the implementation did not go well, starting with a 2% devaluation. it said exactly the wrong signal to the market and the lack of communication 36 hours later was
a big problem. have done, they better but they have a long way to go. the charts looking at showing the volatility we have seen versus what has happened with the dollar. the fixing moves, so you have the volatility picking up that has nothing to do with china. oliver: i think the currency storm that has taken off in the past year is important because of the dollar and i'm curious what happens if the fed goes in june, what do you expect that reaction to be? that's going to make it much harder for china to manage. and if theyoes move get more aggressive, that could lead to a strengthening of the dollar. d-link it, ito
would be a problem. it becomes part of the basket. they have asked they're not be too much volatility until then. i have a question about the g-20 that's going to come up soon and japan. there are noises japan wanted to --ch out and discuss some what do they have to gain from each other right now? there were some very interesting statements that china should enforce some capital controls. if it up -- if it does -- over thethat
alix: time for the bloomberg business lash. shares of gopro are rising in extended trading after the camera maker posted first-quarter revenue that beat estimates. the company reporting a loss of $.63 a share. its 2016ffirmed square forecast to stop is reporting first quarter revenues that exceeded projections. sales were up 51%. the company's quarterly loss was $.29 a share. 's united guarantee corp. is between $700ise million and $800 million in shares for the public. the offering would give it a guarantee of $4 billion.
aig is facing sustained pressure from activists to shrink. network is the subject of a negative research report. that's according to people familiar with the situation. the investment management firm says it holdings are undervalued. was it was overvalued. business flash update. scarlet: "what'd you miss?" north korea's most important political meeting and 36 years. the congress starts tomorrow and along with choreographed pageantry, look for some new policy decisions. joining me now is the founder of geopolitical futures.
kim jong-un is expected to announce rolling back the military first policy of his late father. are the younger kim's priority here? one, he's trying to industrialize the country, but it's a 1950's sort of attempt. nuclearr is to use capability. pursuinghow does nuclear capability advance their economic development? : there's a synergy between them because the technology you have to develop frequently works elsewhere, but it is a limited synergy. sure they havet
the technological capability to do this. it depends how you define it and he may define it at this meeting, but he has not talked about what he envisions north korea's economy to be. he has not talked about what is going to be in relationship to the rest of the world. scarlet: who is kim jong-un communicating to? is it significant to the north korean people or is it significant to neighbors like south korea and china? important to the legitimacy of the government and its people. it's a way to protect north korea from attack. interest and north korea wants to survive, so it
takes on this nuclear program because it feels that has even one nuclear weapon, the south aryans, the americans are not there to do anything about it. north korea looks at the united states of incredible -- as incredibly and predict the ball. they see us as crazy the way we see them. in that situation, having a nuclear weapon deters. u.s.,t: oftentimes in the people write him off as a crazy man. is that a mistake? a tremendous mistake. when an analyst doesn't understand what a politician is doing, he decides he is insane, but he is not. he's vulnerable and trying to protect his regime, so he's doing things to develop the weapons and the economy and frighten people that he's
capable of using them. his credibility depends on him appearing crazy and the crazier he appears, the more careful everyone is around him. scarlet: let's talk about north korea's economy. what constitutes the economy? is it food reduction or is there private enterprise to speak of? : there is some private enterprise that may or may not continue. that is permitted. based on 1950's industry that is barely's reeking along. even that, they have to import or have gifted to them. ofrlet: and a lot agriculture gifted to them comes from places like china. of political leveraged as china have in this or is it dependent on kim jong-un's
george:eorge kola -- china uses north korea. every time they have an economic dispute with the united states, the north koreans do something bizarre, the americans run to the chinese and say you've got to get them off their back. big they say we did you a favor, why don't you get off our we decide they are breaking apart from north koreans and the chinese use them a lot. scarlet: which presidential nominee do you think kim jong-un would favor? who would he be able to manipulate the most? cares. i don't think he i think he sees american presidents so much as the same. all he wants to do is intimidate them and frankly, was people get
intimidated by nuclear weapons. workers party is still hold its conference every five years in the last one was 1980. why is this happening now? george: he's been in power for a few years and he has made it clear he is the boss. killed reportedly his uncle with antiaircraft guns. up andis time to stand announce what he's going to do with the country. scarlet: thank you so much. alix: coming up, we are going to focus on the three questions that need to be answered in the u.s. jobs report set to come out tomorrow. we will be right back. ♪
alix: i'm alix steel. "what'd you miss?" it's jobs day tomorrow and here are three questions that need to be answered. alan ruskin is looking at 10 services versus nonfarm payrolls. over on the right hand side, temp jobs have fallen below nonfarm payroll jobs and he points out that when this happens, the broader payroll market can see some weakness. worker andpart time you could hire temps before you hire full-time. so what does it mean?
it seems everyone is out there looking for signs of rollover in the labor market. about business investment and how it has been struggling compared to nonfarm payrolls. domestic investment is a white line and it's just stabilize. it peaked around 2012 and has been steadily dropping. asks can this keep decoupling? what would be the catalyst for their move in unison once again? alix: the productivity we are used to from the manufacturing sector, as you see with the investment in capital businesses is not really strong anymore. the productivity is just not
that good across the board. withet: you and i spoke kevin logan and the all caps is this investment there is tied to the collapse in commodities. it's actually not so terrible. withr: let's keep payrolls. if you look at that orange line, that's looking at corporate profits. it's most clearly evident around 2000 where you see the orange line move down quickly. payrolls than follow that. we've talked a lot about this deterioration in earnings growth . it's been here for several quarters and is projected to last a couple of more quarters. what does that mn for payrolls? that comes to whether or not
companies view earnings as transitory or not. right now, negative earnings growth is poor and if it's an indicator that works, you can see it come down in transition. scarlet: one thing everybody is focusing on is the use of -- the youth unemployment rate. what he says is we have seen this drift higher and that allows janet yellen and the fed to maintain their dovish stance. that supports the thesis that there is still some slack in the labor market. maybe they would not have to move. lower u3that sense, a
tomorrow means the fed may have to act sooner. alan ruskin is looking to see if jobs can hold up, particularly when gdp was so soft. scarlet: bill gross will be on bloomberg television and radio right after the jobs report tomorrow morning. coming up, what you need to know to gear up for tomorrow's trading day. ♪
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john: i'm john heilemann. mark: and i'm mark halperin. "with all due respect" to speaker paul ryan, we have a feeling a brand-new nickname is about to come your way. ♪ leading our show, a latebreaking political bombshell. speaker of the house paul ryan in an interview a short while ago that he is in effect not on board the trump train. when he was asked if he would back trump, he said this. speaker ryan: to be perfectly candid, i am not ready to do that at this point. i am not