tv Bloomberg Markets Bloomberg May 9, 2016 12:00pm-2:01pm EDT
>> sumner redstone wins a suit against his ax. the ridnning the fight of a former girlfriend. the judge threw it out. the second day of the trial. it has a little bit of everything. trying tolfriend manage his money, she was helping him with his health. him and a fight between his daughter and his ex-girlfriend is well. >> it helps stop the public infighting of the family as well. it throws out the competency
case. the headline is the judge has dismissed the competency case. the winds that fight. chairman of a company that is privately held. he is also on the board for cbs. good afternoon. >> i am alix steel. the great fed disconnect. there is a chance of a rate hike in june. they are warning to not cannot the fed. torlet, there is a new vote impeach the brazilian president. crudethe world's largest exporter must find a way to compete against shale. head over tos
julie hyman. it's been a mixed day so far and i please. julie: there is not any reaction to the news about sumner redstone. he is 93. let's look at the major averages. the dow is down a quarter of percent. it turned lower mid morning. it has not recovered. fluctuate, averages it's been in a tight range today. we bounce back from two weeks of losses. s&p, we've at the seen that bouncing around a little bit. here is not ae very big one. we've been talking a lot about how investors don't have a lot of confidence in the rally. one of the ways we are measuring it is defining volatility. what are investors buying?
this is one of the top charts of the hour. you can see the one-month volatility. the one-month implied volatility is in blue. see there is a gap here. this is the widest it's been since august. you've got a lot going on. berkshire hathaway is out with its earnings late on friday. railroad net income is down 25%. that is weighing on that particular stock. we've got oil prices down quite sharply today. they are down 2.6%. those losses have been accelerating. the wind has shifted in alberta away from the oil sands.
it does not seem to be threatening that production is much. you should be of the backup and running in terms of production there. scarlet: let's check in. north carolina is suing the federal government over so-called after mopping it limits protections for lgbt community. the department of justice gave the state until the end of the day to scrap the law or risk losing millions in federal funding and donald trump has named chris christie the chairman of his transition team. they will take over the white house. insti endorsed trump february. firefighters battling that wildfire in western canada, they may get a break. a cold front is moving through the area and it a ring rain. the fire is east away from the
oilsands operation of canada's weakest entergy corporation. peopleso lead to 80,000 fleeing the city of fort mcmurray. ferguson's first african-american police chief is taking over. they are introducing reforms. he is being sworn in today. he says he hopes to date -- diversify the mostly white department. global news 24 hours a day journalistsr 2400 in more than 150 news bureaus around the world. back to you. scarlet: do not count us out so fast. they say the fed is likely to
move this year despite friday's black duster jobs report. june isot so sure that completely out of the question. you're unlikely to get a hike is going too far. >> they will probably wait for june. they will probably start with one or two hikes by the end of the year. we think they will go a little faster than the market. >> i am thinking one or two hikes. williamse heard from and san francisco. they seem to get it. alix: they say to fed hikes are
possible this year. joining us now from chicago is the president of the onkyo research. what do you think? jim: zero hikes this year. we respectfully disagree with them. i respect their opinions. the fed has not raised rates without the market pricing then. june is a 4% chance for and a 30% chance for september. the market can change its mind and pricing in. if it doesn't, they won't move. that's been the history of this fed. they came to market expectations time and again. take -- alix: look at the functions on bloomberg. we don't see over a 50% probability of a rate hike all the way out through february
2017. scarlet: that's not the first time this is happened. what do bill gross and others get wrong when they say the fed will likely move? jim: i think they've got a different view than me. i think their view is the economic data will get better. it will move the odds up and justify a hike. i just don't see that right now. i think the economic ada will stay mixed at best. i think it will keep the fed on the sideline. in the economic data i think there are two schools of thought. if you look at those three statistics, you would think the economy is doing good. in total, if you look at all of that, you think the economy is a bit of a disappointment. i think it's been a bit of a disappointment.
: you talk about the labor data being robust or at least reason for the fed to move. jim: i think they are signing price stability. way,ey were leaning that it was three years ago this week that bernanke first said it. we have had one rate hike. we don't have any other rate hikes for the rest of this year. we would have had more than one rate hike if they had the mandate. alix: here are the good parts of the county. the average hourly earnings came in strong. dollaro have the stabilizing. we're in for a disappointment in the last hour.
those are two key factors that might not be a drag on stocks. jim: i think it's more of the same. we've got the employment report and a couple of the statistics come off the. all of that is good. one set of data looks good. it's not confirmed by anything else. goes, today might be a significant day. we have a huge outside reversal downward in oil. that, if youond look at the week gdp manifesting productivity, i think all of that data tempers what you see in the employment data. the economy is not as good as the employment data suggest. scarlet: there is tracking global development. thatould make the argument
there is a to taunt between global central banks. weakerveryone wants a dollar to stabilize growth elsewhere. if you are so pessimistic on the rest of the world is teetering, what is the chance were negative rates here? jim: i think that's very low. practically zero. the reason i think that is because of the financial system. if we go to negative interest rates, it won't destress the money market funds and other funds that handle short-term debt. they don't want to go there. they don't stress those instruments. in japan that is not as egg of a concern. remember the height of the financial crisis was when money market funds were taking the box. if you have negative rates, you increase that breaking the but. most think that's the sign of
reveal of our stock of the day. i've got to make it easy for you sometimes. trade data today. it's proving to be a tough thing for many of these steelmakers today. u.s. steel had a big run today. that's the context we have seen. if you look at chinese trade data, steel exports rose 37 metric tons. that was the first four months of the year. that may have implied that demand is weak if they are exporting steel. this the trade on stock.
it's down 14%. u.s. steel is not alone. we are seeing product selloffs. you've got allegheny, steel dynamics, i want to transition into what has been happening with zillion assets today. we had the lower house chief calling for a new vote on the impeachment of the brazilian president. that is at the request of the attorney general. it's confusing as to what that is going to mean. the stock market dropping sharply. this has had a big run of this year. a similar movement we have seen is real. you can see the dollar is climbing. those headlines came out.
they are nearly 2% lower than the u.s. dollar. scarlet: thank you so much. we're going to stick with the brazil. alix: we are trying to figure out what this means. what is the significance of this court ruling? ask this is a surprise. long process. we are mostly trying to figure out and investors are trying to figure out what does this mean. juliet: does he have the authority to do this. is this the next step? with supreme court intervene. we are trying to figure out what this means. scarlet: the lower house chief called for a vote. -- request met attorney general's office. is that unusual? did people think this would result in someone calling for
new vote? julia: they filed several records with the impeachment committee to try to stop the process. not every day we have an impeachment. this is all a little. he filed this in april after the vote in it had just been sitting there. now this interim chief took over. they are 40 hours away from having to step aside if the vote went through the senate. she would have been on the sidelines for six. what she saying now? julia: she was speaking at an unrelated event. she said i heard about it. it's not official and we are not sure. but even the president knows what this means for the process. it's likely just noise. we need to keep an eye on it. people pushing for her
to get out, they will be pushing that for again. what he hearing about market moves? this uncertainty means the rally is unraveling. it's not as people are saying. julia: after the lower house passed the impeachment, the rally cooled off of it. and a strong reaction to the headline. it came back a little it. investors are telling us this is a roadblock. none of the people we have heard so far think this is going to bring profits back to zero. they think this is just going to maybe delay the process a little bit. alix: thanks so much, julia. 4 we'll be back with more bloomberg markets after this. ♪
scarlet: this is numbered markets. raise interest rates. as we have seen, it has failed to provide the desired economic effect. alix: that's an important lesson to the fed. unintendedbout consequences on bloomberg go. rates, theed heights could be real fears. if this is working, i do think there could be a confidence coming from lifting rates. mark: we have been fixated on the jobs situation. had we compare with europe? u.s., it's 5%. in europe it's around 10%.
if those trends are going down, that's good. the question is who is responsible for moving it down. where does the burden of proof a line? in both areas, the unemployment level is moving down. mark: are we at full unemployment level in the united states? see price ability. ise you get there, there price ability. we are not at all in the euro area. jonathan: we are close to it. with theember communication messaging out of the fed say this is a positive thing? why has that changed so much. of questions.lot
was that a one time event? could it be that every time they height -- hike rates we will say we can't do it further. it's a very important debate. a uniqueee this as situation. important part of that turbulence was china. tell us about that. i was surprised at the migration from urban to rural areas. slowly moving into a managed process. slowing down is continuing. one unique feature is there are fewer people coming from rural areas to urban areas. there are fewer jobs.
>> we get this amazing statement in the people's daily. what message do they hope the world takes from that? usthey are trying to tell they are aware of the problems with debt levels across the board. i think it's an attempt to try and tell the market and the imf and regulators everywhere that we do know these things are important and we do know that we need to deal with these things. what can they do? can they do a lot? can they do it quickly enough? there are many questions about that levels. bloomberg go. u.s. equities and derivatives at ubs identified a few indicators. one of them is m&a.
typically you see a volume spike in a big fall off you see the cycle slowdown. but we saw in 2015 was higher than in 2007. scarlet: you have sector rotation as well. the first ofaround april. it's reminiscent of the last stage of the 2000 bull market. months. can take 41 you can look at these sector rotations as a sign. scarlet: more bloomberg markets is coming up after this. ♪
you can never get enough of it. 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. alix: live from bloomberg world headquarters in new york, i am alix steel. scarlet: i am scarlet fu. this is number of markets.
let's start with the headlines on bloomberg first word news. mark crumpton has more from the newsroom. mark c.: donald trump is backtracking on a statement that he would renegotiate u.s. debt if the economy turned south. he said he intended only to signal he would use advantageous market conditions to save money on refinancing with longer-term bonds. mr. trump called suggestions he would favor a default ridiculous and added, you never have to default as you get the money. the money.t it is david cameron's latest attempt to convince voters not to leave the european union. he said that a vote to leave would have serious consequences. i understand why some people's heads and hearts are torn. andnderstand the respect --
respect the opinions of those who think that we should leave, even though i think leaving would inflict real damage on our country. mark c.: the british referendum 23rd. eu is june 2 brazil's lower house is calling impeachment.ote on the senate was scheduled to vote later this week whether to put president rousseff on trial and temporarily forced her to step down. for mayorly rare move gray. it appeared as a tiny black dot on the sun. it is expected to last until about 2:30 p.m. new york time. the last time this happened was in 2006. it will happen again three years from now and then again not until 2032.
global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. back to you. scarlet: thank you so much. turning now to the global oil market. crude is turning lower now as saudi arabia names and new oil mister. alix: meanwhile, in canada, wildfires knocking out about 100 barrels a day of oil production. we want to welcome have javier blas-- hav now. scarlet: what do we know about the new oil minister? >> more recently, he has been a chairman of a company. he is very close to the new king. he is also very influential to the deputy crown prince. .e is an insider, a technocrat
some worry that he will carry on the current policy, fighting for market shares. alix: that is kind of the rhetoric i was getting from the research notes. was this transition of power -- what this transition of power means is that saudi arabia will use oil as a geopolitical weapon instead of a supply and demand balancing factor. what do you think about that? mark b.: certainly the -- have javier: certainly, when asked oil,udi arabia could use the old minister said, if you have questions on iran, go to the minister of foreign affairs. he was a technocrat. he ran the industry almost like a corporation. prince, princen
mohammed, has been willing to use a mix of foreign policy and oil policy. whether saudi arabia will use it as a weapon, i think certainly we will see saudi arabia using more politics, or mixing more politics with the policy of the oil market. scarlet: it is clear that he is a known entity and influential within the royal family. what level of influence does he have a month opec producers? vier: that will be a big unknown. the first time we will see that is in the end, june 2, with the meeting of opec. since he does not have the relationship that the old minister built over the years with fellow ministers, that will be a problem. sometimes at the opec meetings, a lot goes to the personal relationships with the ministers. however, the deputy minister of the principal remain there.
he has a lot of experience. he is a diplomat. i think he will help the new minister to navigate the comp needed -- complicated waters of opec. alix: they do very much. scarlet: let's get more insight on oil markets and m&a. joining us is the head of global -- why now? >> first of all, nice to see you again and the kuiper having me. i think this is a natural regression in the change of guard of those who run saudi aramco and play important roles in the saudi government. it is a widespread program,
beyond just the oil and gas industry. i think the kingdom is very focused on this. i cannot comment specifically on why now but i do not think it should he a surprise. are you buying the rhetoric that this means higher exports and higher production going forward for the first table future? >> i do not think it is a particular change. i think the kingdom and saudi aramco, what they are currently embarked in, will continue for the first table future. i don't think the change in personal are you has an effect n the agenda. scarlet: one of the plants was aramco public. what impact would be up its books to everyone, to the banks, have on the rest of the middle east producers? with they do similar things?
>> i don't think any decisions have been made yet on if they will take saudi aramco public. i think there are a number of initiatives that they are examining in terms of what particular assets would go into it -- scarlet: either way, they would have to open up a little bit, right? >> you will have to provide reasonable disclosure, by don't think decisions have been made yet. it is a very important initiative for the kingdom, and a terrific company. when it goes public, i think it will receive a lot of investor interest. i think it will cause other oil producers to think about their alternatives as well. i think it is early to determine what exactly they will do. it is a serious undertaking and . bona fide effort
i think it will receive a tremendous amount of investor interest. alix: i'm glad you brought up investor interest. in the u.s., there has been a lot of independent expiration companies going out and raising capital in the market at a time when oil prices, toy six dollars per barrel, when everybody thought the capital markets would close -- how did that happen? >> we have talked about it before, not everyone has similar access to capital. i think the companies that are in relatively good position to have access. i think they are doing it for offensive and defensive reasons. and, i think there is a judgment as amount of investor interest because these are very good companies that have good balance sheets, good capital structures. they are not broken companies.
investors see opportunity to come in and accumulate stakes at reasonable prices. they do expect the recovery to come and are continuing to show a lot of interest. pioneer you can see natural resources, devon energy, hess -- these are not insignificant amounts. we also sought to equity , no matterstock up what. does this mean we will see more m&a? >> it is very likely that we see more transactions close to what eqt is doing. companies that are well-positioned have the ability to acquire them.
it is not the only repeat issue. there are number of others. scarlet: does the delayed the inevitable? we talk about how banks keep lending to the energy companies, at least enough to keep them surviving. what wees that delay need to see to see sustainably higher prices? >> the companies we are talking about do not have financial issues. scarlet: they just got caught up in the bad news. >> these are still -- the companies he put up on the screen -- are very good companies. there are number of other companies that are over leverage do not have access to the market. there will continue to be a number of restructuring and bankruptcies. there is a clear division between well positioned companies that have substantial thess and others where
ability to fix the balance sheet is unsure. alix: we are at like 60 deals through the second quarter, despite the fact that oil has fallen so much at the beginning of the year. despite the fact that we hear there is a lot of money on the sidelines for m&a. why have we not seen a huge increase yet? >> i think m&a is clearly coming. alix: i have been hearing that for over a year. >> i understand, but we have been in a serious rough patch. the reason i think we will see more of it today, going forward, is because buyers and sellers are more conditioned to the environment we are in. .ower for longer expectations are more matched. they will also see companies that are more likely to use their balance sheet and use the equity as acquisition currencies. you will see more mergers, and
things of that nature. m&a isally generates confidence and having some stability in the market is helpful. also, access to capital. it demonstrates that people can raise capital. what we will not see is highly transactions. high leverage and volatility are not a good commendation. alix: thank you very much. good to see you. scarlet: coming up on bloomberg markets, north korea announcing its first five-year plan since the 1980's. what will it mean for the economy. ♪
scarlet: you are watching bloomberg. i am scarlet fu. alix: i am alix steel. this is your global business report. scarlet: here is what we are watching. check out disney's new park in china, set to open soon, but already drawing huge numbers of visitors. alix: plus, germany's economy, and what was buzzing in march. scarlet: plus, elections in the philippines. we begin with the european central it will do what is necessary to reach the inflation grows. speaking in london, the central bank president says they need to allow for some time for the measures they took in march to work. the headset at 2% inflation target. france, and
agreement to buy a battery saft.y, the european bank sector has been under fire this year. regulators around the world are making clear that they want things to change how they do business to avoid another financial crisis. the chair of j.p. morgan securities tells bloomberg news that things have made major adjustments. >> certainly the capital regime is different, the liquidity regime is different. of things andards ceos look at things is much more circumspect than it was at the height of the financial crisis. i think there have been changes. alix: factory orders in germany rose more than accep expected in march. the effect of low oil prices and
a boost in spending may be starting to fade. disney's new theme park in shanghai is already a popular attraction and it will not have the official opening for one month. kicked off a six week trial run to make sure the restaurants and attractions work properly. scarlet: time now for our bloomberg quicktake, where we provide context and background on issues of interest. for the philippines, the last six years have been marked with stability and economic growth. but, the company may be veering off to a new course as voters prepare to elect a new president. in an election campaign that irrors the u.s., there is a straight talking candidate. he is tapping into middle-class frustrations. the race for five resident, who is elected separately, is the
son of late to date her. after years of spanish and u.s. rule, the philippines got to determine its own fate after world war ii occupation. the current president is the son of a former president whose ended aower revolution corrupt 21 year rule. under him, the country has averaged 6.1% growth. also on his watch, the philippines secured its first creditvestment rate rating. the candidate has named one area in which he is willing to accept
abigail doolittle. she is looking at apple. abigail: today, apple is the second against boost to the nasdaq. analysts say that afternoon 11% drop out of the march quarter results, he sees the shares of apple as oversold, especially in light of work increasing. there's a 25% of the potential. alix: we know you love to analyze all check cards. it basically means the stock will rise? abigail: it is not the easiest conclusion to draw from the chart. when you look at a one year .hart, we see a flat trend the selling pressure has
intensified. sellers have more conviction as time has gone on. nonetheless, shares have held quite wells adjusting they could trade back up. $120 still well below the suggesting that game changing information would have to come out for sellers to reconsider their current position. scarlet: the case against governor redstone's mental competency has been dismissed on day two of the trial. joining us from l.a. is chris miere. it seems like l.a. was closing in, why did the judge dismiss it so quickly? chris: you have to give it to governor redstone.
he knocked it out on friday with his 18 minute long video testimony. the judge said that he is confident and once the woman out of his life. alix: what was actually at the heart of the trial? ofis: and ex-girlfriend governor redstone claimed that she had been his health care agent, responsible for his health care, if he could not make decisions in the future. he kicked her out of the house in october, took her out of the health care directive, and disinherited her. she said it was always about the health care, she was concerned about his position. today, she filed suit against sherry redstone and her family. this will go on. scarlet: this will go on. talk about sharing it stone -- sherry redstone. out of touch with
her father. sherryhe said he wanted to be the ultimate decision-maker about his health care, and was happy about that situation. scarlet: when it comes to governor redstone, he is chairman of his own company, but cbs.of viacom and what impact does this dispute have on those companies? chris: had the judge found him incompetent, it would have put him in a position to lose control. that could have put control into a seven-member trust. it would have been sort of new owners. that is not likely to be the case now. alix: you also mentioned that now the ex-girlfriend filed suit against sherry redstone.
what is the next step in the saga? chris: i guess she will have to argue that the redstone family cheated her out of the money. right now it is all dependent on his mental state, which the judge has said is sound. scarlet: thank you very much. there was actually another girlfriend -- ex-girlfriend too. alix: you really can't make this up. scarlet: that is why it will be a made-for-tv story. from jimwill hear coulter. ♪
scarlet: from bloomberg world headquarters in new york, good monday afternoon. i am scarlet fu. alix: i'm alix steel. here's what we are watching up as our. hour.s two fed rate hikes are still possible this year. scarlet: the lending club ceo resigns abruptly after comments of $2 billion in loan sales. alix: wildfires in western canada turn away popular areas and cooler weather slows the spread. oil prices falling as traders assess the impact on canada's output. scarlet: let's head to the markets where julie hyman has a look at natural resources. there's not a whole lot going on in equities and indexes where we are.
you stuck in this unchanged mode. julie: we can look at the interplay with stocks. you not seeing much movement as we were alluding to. there's not a lot of direction when you look at the major averages. we are seeing volume than the lower 20 day average as well. most of the groups in the s&p 500 are seeing the drop versus the 20 day average. , tech volumee down down, discretionary volume down. overall, not seeing much volume today. look at what is going on groupwise in terms of movement here, yet health care gaining the most and materials weighing the most. that is what is going on with natural resources and the pullback we are seeing. we are seeing this on the back to what had been a substantial rally. if you look at the rally from the lows on february 12, we are
seeing it up by 15%, even with the more recent pullback, the materials index has seen a similar move. movement has been bigger even, up 22% despite the little pullback about seen recently. the underlying commodities today are seeing some weakness. their movement has mirrored that of the producers, but in today's session, not only are you seeing oil down as we see a bit of a shipping forecast for that fire and canada, but we are seeing gold, copper, iron ore, all slumping today after we got chinese data. alix: they bought a lot of oil at the end of the day. it is also the dollar putting pressure on commodities. julie: the dollar is higher today and that is not helping commodities if you're looking to be more on the bearish side of the equation. merrillank of america lynch technical analyst saying that oil is due for a downturn.
the dollar is up by 6/10 of 1%. we have seen a bounce for the dollar if i can find the chart here on the bloomberg. we have been seeing -- i have too many charts. here we go. the upturn in the dollar recently here, but analysts think it is not going to last. are they right or are they wrong? that is something that is hard to call this year. if you look at volatility in the fact that has had on currency there is an index that tracks currency managers returns and it is pretty bad year-to-date. scarlet: thank you so much. julie hyman with the latest on the markets. we have a quick check on shares,on climbing 3.6% at last check. you can see that leg higher. this is the san francisco-based biotech company on reports that they have signed a nondisclosure agreement with pfizer and amgen.
you can see medivation climb even higher as we continue with this report from reuters that it signing a nondisclosure agreement with pfizer and amgen. said to benies were interested as well, but it does appear that this report clears it up. alix: pfizer was one of the companies rumored to get in on that deal. it looks like that was indeed accurate. we will be following this news as we get more details. let's check in with first word news with mark crumpton. mark: sarah palin is promising to defeat house speaker paul he announcedafter last week that he was not ready to and doors donald trump. -- endorsed donald trump. sarah palin says ryan's political career is over. most americans would have problems with donald trump nominated someone to the supreme
court. that is according to the democratic leaning public policy polling. 38% trust trump. president obama beats donald trump on the same issue. hillary clinton leads trump by a similar margin. brazilian for president dilma rousseff. on an last month's impeachment vote, citing procedural irregularities. the senate was ready to vote on whether to accept the impeachment process. the senate is sending it back to the lower house for a new vote. secretary of state john kerry is in paris for talks on the conflict in syria. he will meet with the french foreign minister. representatives from other eu countries and other officials tomorrow. he is set to meet with the german foreign minister in paris before heading to great britain. , security officials are
releasing an harmless gas and to part of new york city som subway systems. the test will last five days and there is no health risk to the public. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world, i am mark crumpton. back to you. scarlet: recent u.s. economic data has been pretty soft, but there are some hawks out there . build dudley said, "to seems like a reasonable number but it could be more if the economy is stronger or could be less of the economy disappoints." ,lix: despite the hawkish talk the dollar is down 5% on the year. joining us now is stephen engle i over at citigroup, the world's biggest currency trader could we are seeing a little bit
of a dollar rally today, but overall the trend is still lower. why aren't the fed hawks moving the needle? stephen: one issue is that we have not heard from janet yellen since the end of march and we have not heard from stanley fischer since march 7. i think you are waiting to see what the heavy hitters are saying. at dudley's remarks, he qualified them in my mind by saying that he expects gdp to pick up to 2%. he thinkshappens, labor markets will tighten and wages will begin to go up. that is when the fed can start hiking. he do not exactly sound like he was laying out a concrete timetable for hikes. even though he did keep two hikes it was rather tentative. scarlet: all data is not created equally.
we talked about aggregate hours worked as a bright spot in the jobs report, but unless we get confirmation from other parts of the economy, it seems like the fed is willing to let the labor market kind of improved gradually without doing too much about it. steven: i think that has been one of the ships and the said. even though earlier they focused on the labor market data and the improvement in the tightening of labor markets, 160,000 is by everyone's estimate above potential for labor for jobs to be created. i think a number of said --akers have added to that their desire to see gdp growth 2.5% beforetw they make the next move. it looks like we have a soft gdp target as well. alix: half a percent for the first quarter -- ouch. an interesting note out this morning saying any kind of fed
hawkish speak will be dollar negative because it shows the central bank has penned of them into the corner because the markets are so hesitant of a rate hike that everything will be dollar negative. what do you think of that? steven: i think they are painting themselves in the corner in the other direction. markets have taken out so much of the rate hiking path that they anticipated earlier in the year. when the fed sounds dovish, the markets say that the dovishness means they would like to be able to take u.s. policy rates into negative territory, but they can't because negative rates are so unpopular and so unfeasible. i think the corner that they have painted themselves and is that now when they sound dovish is that the market gets worried is that the market likes
negative rates that we know we can do that. scarlet: anytime janet yellen or any fed official has asked about negative interest rates, they make it clear that that is not something anyone actually expects. i want to go to the bloomberg for a moment to show you what traders are counting on here in terms of a rate increase. there are no odds of 50% or higher for this year all the way out through early february. fort now, no one is looking a rate increase above 50% until probably the middle of next year. alix: based on that, how much more downside to you expect for the dollar? steven: i think if the markets are right the dollar is going to face difficulties. i think the dollar cycle is predicated on the divergence trade and this is very much a divergence trade. so far, it looks like the europeans are keeping to their -40 basis points floor. i think that the disappointment
that the market is right in its path will be on the u.s. side and on the dollar side. get youri want to thoughts also on what happened with the bank of japan. a lot of people were expecting a surprise. they came out with nothing. they are waiting to see how the negative interest rates playing out. what is that due for the set of expectations next go around with the boj? steven: the first and most immediate impact was that it told the market was the next meeting was not for another six weeks, so they could do whatever they wanted with the dollar yen and the boj would not react. theythe boj viewpoint, were in a tough position because there were a lot of moving parts to any policy ease. right now, think the market is skeptical that they can go deeper into negative rates and i think that would be one of the major hurdles that they would have to surpass to get an effective stimulus climb put in
place. alix: road quick, talking about the yen and the stimulus plan. what currencies are going to rally the most against the dollar as it continues to fall? steven: what we have been seeing right now is that the dollar is rallying against emerging markets as a risk off trade. if that continues to be the mood , the only currencies that can rally will be currencies like the euro and the yen. you will not see others take the --on and that kind of market in that kevin market. kind of market. alix: much more coming up on "bloomberg markets" when we come back. ♪
alix: you are watching "bloomberg markets." i'm alix steel. scarlet: i am scarlet fu. let's move to julie hyman's with an update on medivation. julie: they signed nondisclosure agreements with pfizer and amgen as the company explores putting it up for sale. acquire andied to then medivation rejected the offer. you can see the spikes that happened on the headlines. medivation has one marketed medicine to treat prostate cancer and oncology projects in clinical development. larger what the
drugmakers are seeking with the acquisition of this potential company. we are not seeing a lot of difference from where they were before the headlines came out . we will update you on this continuing situation, but definitely analysts has said that other bidders would emerge for this company, just a question of what price it could potentially happen. sticking with the pharmaceutical industries, teva shares are soaring after declines in generic pricing were likely to get worse. there has been some concern about the generics industry and how badly pricing was going to affect the makers of these medicines, but the company's head of its generics medicines going ats the company almost an incredible rate and has not seen any fundamental change or worsening. what it boils down to is each individual companies business model, which is
interesting given the decline. the generics business has shrunken at teva to some degree. mylanta is also trading higher today. interesting movement in the drug industry. one other mover is krispy kreme. shares were up 24% as it has fored to an acquisition $1.35 billion at $21 a share. it is by jad holding. it is an investment vehicle for a billionaire family and austria that controls coffee assets like keurig, so this is expansion of their coffee and now in donuts. scarlet: time for a look at the bloomberg business flash. sumner redstone's fight to get rid of a former girlfriend was granted by a l.a. probate
judge. he will also avoid a further public airing of the infighting among the redstone family and the nurses to take care of the former viacom chairman. according to the national association of realtors, the median price of any existing single-family home was $217,000 in the first quarter. that was up 6.3% from a year ago. scarlet: that is your business flash update. alix: still ahead, we go from china to india to mexico. we will hear from a top real estate investor in emerging markets. ♪
steel. time to go around the world with bloomberg radio. dataet: disciplining trade from china and higher interest rates are stopping the demand for riskier assets. where in the world is the yield? let's handed over to carol massar in new york and cory johnson in boston. we welcome everyone on bloomberg tv. ofare talking with joe wells alpine sun could talk to us about what you're seeing. corey and i spend a lot of time looking at markets getting hot and there's a bubble and there are over price, but what you guys seeing? >> real estate is a very local business. weryone knows that could have to look at things at our investments at alpine from the ground up. , starting with
the macro environment. seeing the strong policy management teams? we also want to see what the demand and supply dynamics look like not just on a country level but a city level and neighborhood level and then breaking down asset types. obviously we are not just looking at housing. we look at hotels and malls what have you. carol: the commercial and residential side. joel: we cast quite a wide net. cory: you got the search for yield though. it starts to matter. real estate is local, but on another level, you have this rate environment that makes any kind of return attractive because you're not going to get it from the debt markets. joel: i think you are right there. that has caused the squeeze and pricing across the real estate assets. in select markets, in our view,
that is not a healthy thing. we have to make sure the supply demand dynamic is a fundamentally driven dynamic and is not something underpinned primarily by the search for yield or some form of credit bubble. carol: do you see that happening? joel: in certain markets, we see too much capital chasing too many assets. the flows that are coming in at the asset level are typically more institutional, so you're looking at the private equity coming in to india for example. in the developed markets, of course we are seeing it. carol: in terms of the emerging markets, you're beating most of your peers over the last five years. the long-term track record is there. the always talk about transparency issues when you look at various emerging markets. where the field most comfortable where you do feel like what you are seeing is what you're getting? joel: [laughter] we always wrestled with that. corporate governance is a big issue. it varies by market and by
country. the local market in china is not as transparent as we would like so we play through hong kong. we have to be very adaptable and flexible looking at corporate governance. are we comfortable? well, we have grown comfortable by being on the ground come a visiting the sites, and meeting the management teams. degree, but it is always front and center in our investment process. cory: you talk about certain markets. i'm at the edge of my seat. which markets are you talking about that you think are overvalued or in a bubble? isabella tolued relative term, but i would say that we are seeing cap rate compression, which is a real estate term for the other side of valuation. marketsof the developed , the transactions are occurring in japan for example. you are seeing some very tight
capitalfrom a cost of perspective, even though the cost of capital is extremely low. carol: you are staying away from those areas? joel: we see opportunities, but we are very careful. we do not one value under tens only capital appreciation. we need to see the russell growth. cory: what about domestically? joel: i focus more on the global markets, but if you look at the earnings from the new york office companies, whose demise was a bit premature from the investment environment, they have had pretty strong numbers from the rental market. i think it is not going to happen. it is a very slow process. you do not just fall into it bubble immediately -- a bubble immediately, but we are seeing rental tension. carol: india, brazil, mexico -- these are emerging markets. is there favorite? joel: we really like india
because we have hit the fatigue point of monetary policy stimulating demand. i want to see somewhere where we have fiscal retrenchment and in india, those opportunities exist. carol: thanks for stopping by. joe wells, stopping by our studio. scarlet: thank you so much, carol massar and cory johnson. alix: lending club ceo shakeup has shares plunging. how does that impact the lending space. ♪
are watching bloomberg markets. i'm alix steel. scarlet: i'm scarlet fu. let's go to mark crumpton. mark: north carolina is suing act room so-called " law." nce doj had given the government until the end of the day to scrappy lot. rory: they send letters to the department of justice and to the university system, suggesting having government employees use the bathroom, locker room, or shower facility that corresponds to their biological sex is in conflict with federal policy. mark: u.s. attorney general thetta lynch will discuss action in a news conference scheduled for 3:30 p.m.
washington time. senator bernie sanders is telling supporters in new jersey to keep fighting, despite his long odds. he said "don't let anybody tell you this campaign is over." win 66% ofld have to the remaining pledged delegates -- so far he is just winning 45% partyails even more with insiders known as super delegates. treasury secretary jack lew is headed to her puerto rico to deal with the effects of the island's $70 billion debt crisis. house republicans are expected to announce legislation that would implement a control board to manage puerto rico's debt and oversee restructuring. investigative journalist who reported on -- 220 --ing the names of
entities available. they highlighted the use of shell companies. said it washas hacked. 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. alix: thanks so much, mark. turning to the big corporate news of the day -- an internal review indicated that the business practices were violated. the lending club ceo defended its business and it's falling share price back on bloomberg in march. revenues, doubled our tripled our possibilities for the company operation. the performance has been
outstanding since the ipo. longnk over time, over the run, it will take care of itself. scarlet: for more, let's bring in our correspondent who covers the boutique thanks for bloomberg news. we talk about how they work internal business practices that were violated. can we get more specific? what happened? two things happen. he failed to disclose a personal investment in a fund. it was a fund that lending club invested in as well. it is his responsibility to show he was invested in that as well. john mack of oh has also invested along with that as well. the other thing is he helped create $220 million of loans to jefferies and a lot of the criteria for the loans were not met.
jeffries eventually sold back those loans to lending club. what are the criteria for the loans that were not met? >> right, it's not clear -- were they subprime, near prime? criterianot meet the they wanted. alix: they thought that they were getting a, and instead they bought be? banks getting into a mess? >> the demand is clear. people want to borrow from these companies. they originate $2.8 billion in loans. but the people willing to fund these investments -- last week, in thea very big seesaw shares win on deck capital, a similar company, they reported that they could only sell at
about 60% of their ones to be marketplace. lending club, the story of who is investing in these loans, a lot of funds, hedge funds invested -- also in the first quarter, they made them step back so they had to go more toward the banks and other financial institutions. demand from borrowers is huge. the question is will investors keep up with that demand. what does this mean in terms of regulators coming in and taking a closer look, sonali? sonali: there were two different story suggesting that washington might have a closer eye on these companies. internal control is a different thing, right? so many of these companies are traded as well. is it a securities and exchange commission problem? who is watching?
michael: i think the treasury is supposed to come out with a white paper, right, discussing the whole industry soon. scarlet: it's a pretty competitive space. in your column, you talk about -- there are how many companies and a? michael: there are a lot that are not public. home depot was supposed to go public last year and they looked at some of these share prices and just cancel be ipo. so, it is a big competitive space right now. alix: use of the borrowers are there but the end manned for the loans might not be in that is the -- and demand for the wants my not be in that is the issue. but that confuses me. it seems like the search for yield will succumb to any risk, but not when it comes to these peer-to-peer loans? michael: there's a lot of investor demand, too. keeping up with that robust environment -- there's a lot of background concern about will
the credit cycle turn and how will these companies who use algorithms to determine who gets loans, how will they perform in a deteriorating credit situation? obviously if the economy weakens, people will still want loans. the question is, how will will they execute in that lending environment? isolated event or a lending club problem? a peer-to-peer problem? we do not know. scarlet: thank you, sonali and michael regan from bloomberg gadfly. alix: tpg capital has $70 billion of capital under management and its portfolio industries ranging from financial services to retail and health care. pretty much everything. as for where tpg is headed, a number of industries general manager.
he explained to jason kelly. >> i think many of them are areas that would surprise people and are different from what the industry looked at before, and in some ways, that is our challenge. i am fascinated with live events. that is something that came out of the seat i have on the board at caa, where we see a lot of events in the portfolio from coachella to sports events. i have a personal. on yen,the world we are moving to the digital world, when they want to connect in me that world, they want to gather in some sort of community, and if they are not in that community for the live event, all of their friends immediately see they are not there because of instagram and snapchat. as a result, you are seeing a massive growth in things from comic-con to sxsw. participate into
that boom. one example would be cirque du soleil. they sell as many tickets each year as all of broadway and various life events around the world. how can that evolved to meet the needs of millennials to connect? jason: we are in los angeles, the media capital of the world in many ways. content is an industry that is completely turned upside down, whether you are talking about talent or distribution. how do you invest into that? we havee -- guest: greatly increased our dissipation. -- our participation. there are discontinuities. what technology has done is essentially shakeup the industry to the point where distribution is losing ground to contract. used to be the only way to get
your show on tv was to make a deal with cbs, nbc, or abc. today there are thousands of pounds to the market. content haveeate many more options to get it to the market and be successful. we are looking at investing indirectly through caa, but also directly through a startup studio that is going from zero to 60 movies over 18 months. that would not have been possible in the old world. then: is there a part of world that you were excited about now? you continue to hear big ideas about it from your team? guest: i don't think geography is how we like to define the world. identified by opportunity. on a global basis, i am fascinated by health care in asia. we are very active in micro-finance and health care
where there is a two leg system being developed of private and public hospitals. you will see that we have invested in hospitals in china, india, sri lanka. cancer centers in hong kong, singapore, india. we are trying to play the emergence of the agent economy in sectors that are less volatile than someone might jason: you started this as a young man. you're still a young man. guest: some days. step forat is the next the private equity business? what happens in the next 10, 20 years? it is a grown-up industry. it has to do with grown-up problems. when i first entered the $10 billionu had
under management. that number is well over 500 today. the entire industry is a $4 trillion industry. equities,t five it not alternatives. to give you a sense -- that's just private equities, not alternatives. sense, we should not be surprised we are getting political attention. we should not be surprised there are reporters like yourself and know a lot about our industry and are willing to write about it and we should not be surprised around the world people are paying attention. how can we continue to deliver what we traditionally have to our clients, which are things that are new? value-added services. like all industries that have grown up, we have to continue to evolve and innovate, and that is a challenge i am pretty excited about taking up. that was jim coulter, the
there was a bid for the company. that was at $52.50 a share. continued to climb today. if you look at the other companies that have bid for medivation, they have an increase, too, does not seem to be specifically linked to a medivation offer. a 60 7% surge -- in fact, $10 above the offer price. this is from bloomberg intelligence. this looks at similar recent deals in the biotech industry, and particularly the analyst is focusing on the enterprise value to sale. 10.9. the analyst says if you look at 2016 sales, estimated sales, it would be priced at something like $62.70.
rising, it is getting closer to that level. who will be the most likely takeover candidate, we crunched the numbers and look at the cash file companies. amgen is at $31 billion. pfizer at 23 billion dollars. we will see who will prevail. there were a number of names mentioned, too, that were not in today -- hyman, thank you so much. it is time to check in with our colleagues in canada where firefighters are fighting a wildfire. alix: canadian prime minister justin trudeau said that there is no need to accept international assistance for the fires. pamela ritchie joins us with the latest. what is happening right now? , there wasyou heard
glad a mere putin's offer of lending some water bombers. the trudeau government has not responded to that -- they just have. we see temperatures a bit cooler today, even a little light rain over the weekend, and generally winds moving away from the town of fort mcmurray. the overall optimism for firefighters and water bombers is they might get control of the fire. it is expected to burn for weeks, as you probably know, but the control is lending a little optimism to the story. alix: how quickly can oil producers get back to work and restart production? pamela: the discussion today, the reports from ihs, mackenzie, ihs saying 40%- has been shut down. the can probably get to resumption pretty quickly here at goldman sachs taking a look at the numbers, saying if access can be made to the site inside a week, they will ramp up over the
course of 10 days, it looks like 660overall loss will be barrels a day or 14 million barrels in total. all of that a little better picture than expected. get theserting to estimates on -- i guess, not so bad how it looks on the oil side of things. it's still a devastating human tragedy. alix: and there are inventories to make up. scarlet: pamela ritchie, thank you so much. pamela ritchie, bloomberg tv canada anchor joining us from toronto. been there has increasingly a lot of pain in the credit markets. we break it all down, next. ♪
scarlet: plenty of pain in the credit markets with the number of companies defaulting on their debt the highest since the financial crisis. the blackrock ceo told us that the risks in the credit market are continuing to grow. access to the credit market, the assets are incredibly rich, but you are part of the market -- whether it is materials, energy, retail -- where we will see more systematic risk, more defaults going forward. i think when growth continues to be slow, it means second and third tier companies will default more and to some industries, when technology changes, you will see more defaults and that is going up. i have been in the business 30 years now. i have never seen a greater dispersion where you have part
of the market that is extremely strong and part of the market were people just do not want to touch it because the risk of default is so much higher. but it is a more bifurcated, more polarized market. scarlet: what have you learned from this latest earnings season? i know in general you are looking at the earnings contraction and thinking this leads to job changes, changes in the earnings market. what does that do? guest: it's a great question. sensitive to be that in terms of what does it mean for the credit markets. one thing i would say though -- .ou have to take it step back multinational companies are taking on more and more debt to grow. revenues are declining. the place they started from was really, really good in terms of they were sitting on a lot of cash, free cash. this goes to leverages, picked up significantly.
the place that you started from was not that daunting to start with. but no doubt, every time you see a slowing in the economy, companies put on a bit more leverage to keep there are a we -- their roe. alix: what keeps you up at night now? guest: i don't sleep a lot. [laughter] guest: i think china is extremely important to follow going forward. there was some activity in the first quarter -- the percentage that china was up in growth, it was a little over 40%, growth in the world came from one country. china has been this extraordinary engine of growth. why are u.s. companies, why are revenues declining? you have to look at how much was driven by trade over the last few years. china was the driver of trade and emerging-market growth. china is getting bigger and the liquidity, the liquidity and the leverage to grow the economy and
how durable is that in the market? will we continue, the traded a, the reserve data out of china? fedlooking many times the mentioned at the last couple of statements. china has become a very big part of the investment suite of how you think about things and will be going forward. our "what'dg us now cohost joe weisenthal. joe: i'm really excited about this. the idea is four years, we've been talking about how workers have been losing out in this economy. more of a share is going to profits than the worker. we see that changing. when you look at broader
composition -- compensation, they have been trending up lately. there a long-term decline on this. before -- thes, data did not materialize, because we possibly see a sustained shift so workers get a greater and greater share of the national income? it's a huge question, especially for investors worried about the margins. scarlet: a lot of people look at inflation as well. alix: inflation -- corporate profits are already rolling over. that will not make you happy if you are a cfo. watch at 4 sure to p.m., as we will talk about the resurgence of labor bargaining. 4 p.m. eastern time on bloomberg television. -- a reprievep for brazilian president dilma rousseff. ♪
♪ david: from bloomberg's world headquarters in new york, here is what we're watching at this hour. strauch's trading mixed as crude oil the wind and declared energy shares the worst performers of the day. brazilian stocks falling after motion to impeach the president is an old. meaning she will be staying in office for the rest of her term. donald trump, wanting to raise taxes on the wealthy. does this have any chance with republicans and the presumptive nominee? the turnover to the markets desk for julie hyman. stops -- stocks have not been doing much of anything, kind of muddled. the nasdaq has been steadily the best performer of the three major averages today.