tv Bloomberg Markets Bloomberg May 9, 2016 3:00pm-4:01pm EDT
betty: good afternoon. here is what we're watching at this hour. markets are actuating. taking energy stocks down with it. -- about the sectors that may be poised to rise. the resilient premise or just to keep her job. a vote keeping her in congress has been an old. that has stocks selling off. a rough day for lending clubs. after aumbling, ceo out review found loan sales. deeper regulation of the industry? we are about an hour away from the close of the trade. i want to head to the market desk were julie hyman's china to make sense out of the market today. it is a little messy.
stocks are rising to the high of the session, particularly the nasdaq, the leader all day long. now up .3 -- .75%. the dow positive at this stage. we have seen in general some recovery for the past two this week of declines on a major averages. drugmakers have been part of the upswing in a major way today. in take a look at allergan, terms of the index points there contributed to the s&p 500, some of the best performance. drugis helping the industry. it should be done by the end of june. we have been drowned -- dragging down or holding back the s&p by the most and oil companies because we have got falling oil prices. berkshire hathaway reporting its
earnings late friday within the details. 25%.ng by i mentioned what is going on in commodities. take a look at the bloomberg commodity index, down about 2%, worst performance in about three weeks time for the index on a single day. the rally has been one of the things -- trade data, the dollar index now -- and, now there is. they are being acquired here. required --s acquiring it. the familytrolled by from austria, building up coffee holding's. some other smaller companies, and now krispy kreme, the price
of $1.35 billion, $21 a share. a ripple effect among other food restaurant stocks, even though those that do not have anything do coffee or doughnuts, texas roadhouse, red robin, bringing investors back to looking at these stocks to another one bouncing back is aaa again. no coffee and donuts but an awful lot of burritos. they have been beaten down considerably by the sales troubles and health troubles the chain has been having. bouncing back today. betty: thank you. let's get a quick check of the headlines this afternoon. mark crumpton has more from the newsroom. tellingrnie sanders is supporters in new jersey to keep fighting despite his long odds. mr. sanders: don't let anybody tell you this campaign is over. we will fight for the last thing vote we can-- last
find. >> senator sanders would have to win 66% of the remaining pledged delegates and so far, he is winning just 45% entrails hillary clinton even more when party insiders known as superdelegates are included. donald trump is backtracking on a statement that he would renegotiate u.s. debt if the economy turns south. trump said he intended only to signal he would use adventitious market conditions to save money on favorable terms and refinancing with longer-term bonds. trump added, you never have to default because you print the money,". roderigo has won the philippine presidential elections. he has promised to curb rising crime rates and reduce traffic jams. a mexican judge has ruled that the judge -- kingpin -- a drug kingpin has been
i did to the united states to face drug charges. days after -- was moved to a prison near the u.s. border. it's only needs approval from the mexican foreign ministry and the defense canopy. news 24 hours a day, powered by our 2400 journalists in more than 150 news goes around the world. back to you. are trading around the unchanged level today. the dollar is making a clear advance up against major peers, as you can see. currency policies best five-day stretch all year. the next guest says the dollar trajectory is the key to the direction of big markets like commodity and emerging assets. the market strategist at prudential and, manages one point $1 trillion in assets. good to see you this afternoon. do you believe where the dollar goes is where the equity markets go as well? >> at least in the short term.
if you look back at what pushed commodities and emerging markets up, it was janet yellen's very clear statement that she is not in the hurry to raise rates. asleep a boost in asset if the dollar moves higher, it does not mean it is all zero. it means you have the yen perhaps weakening, which is exactly what they want. the euro coming down against the dollar as well and that will help their markets. >> what would be lie dollar strength right now? thatything that suggests perhaps the fed is interested in sticking to the one hike or two hikes this year. also, a lot has been made out of the numbers on friday. you did see wages moving higher. you have seen the prices pay component moving higher, on a number of the surveys that we look at, suggesting that
inflation is not dead. it is moving. for the fed is the economy does not seem to be gaining. gaining the momentum it needs to have that rate hike. a word in economics is if deflation moves higher in the thinky doesn't, we do not that is where we are headed to by the way. nonetheless, the fed has to be thinking, what do we do? the other part of the story is, if you're looking at japan, and they need a weaker yen. investors, you want a weaker yen for the market to move higher. you are looking at potential of the u.k. leaving the european union, a weaker weaker the eurozone and sterling, at least initially. he gives assurance, exactly. i think depending on how it is when we get closer.
does help thet markets, especially exporters. look atowever, if you the fed funds futures market and how that is pricing in a rate hike, let's look inside our bloomberg here. see on the 4% based on the model here, based on fed funds futures trading. only 4% expect a rate hike in june. even though it seems we've gotten signaling in fed, if we will get one, expected in june. why the disconnect? the numbers came out on friday, it went down to almost zero. yield came down and everything came down. inno one is expecting it june, it is a short time from the referendum in the u.k.. is theyy in the market set the stage for a rate hike sometime in the summer or september.
the issue for the market is, wait a minute. that is not a good time. the fed does not like to raise rates before and i'll action. it does not like to do this. the statement saying the market has it wrong, market having it wrong, the market is saying, no, you're wrong. last time, said speakers are out there talking and she came out and said this is what will happen. it did to markets p are global markets, that is the environment she wants. she will set the stage and i think with the market is worried is they set the stage for a rate hike, enough to get the market to start pulling back. you have a nervous -- a nervous market.
>> we heard from cherry -- charlie evidence. you to listen to a part of his speech in london. >> u.s. fundamentals are good. after a week first quarter, i expect the economy to grow in the neighborhood of 2.5% over the remainder of 2016 and national unemployment's rate -- unemployment rates should edge down further. have heard him say this before. i saw you not in your head. again, the same as janet yellen, trying to set the stage for the gradual increase. questing's a good the question is, previously, they tried to set the stage until janet yellen came to the meeting in new york city and said, basically, no. we are holding back. she is known for not wanting surprise markets. the difficult in the path is the minute you even suggest the rate
market, that she clearly does not want. >> right. it is a tough position for her and anybody in that spot. to increasecontinue , where do you want to be in the market? dollarou have a weak against other currencies, then in essence, you want to be in industrials here they are the ones that lag and they have a nice move as the market was coming back to life. you want to be in the industrials. perhaps want to be in small and mid-cap even though small and mid-cap have been battered. they did actually perform very well. up, youconomy can hold will see small and mid-cap's do well.
we also like some of the health care names. you have got the services doing well. the other part of the story is an addition. >> thank you so much for joining us. ahead.re is after an internal review, abuses were found tied to the sale of loans. shares have been tanking all day . what does it indicate about the future of the online lending business? the come following in footsteps of activist blizzard, we have your option straight ahead of those results. the maker of madden video game series and plenty more. first, here is a look at some of the sectors and how they are performing today. ♪
betty: i am betty liu. a quick check on how the markets are trading as we head toward the closing bell. it has in a choppy trading session so far, dominated in some ways by earnings but also by oil. time for the bloomberg business flash, a look at some of the biggest is in stories in the news right now. a case dismissed challenging the mental competency of a media mogul. he wanted his daughter to make medical decisions for him if he is incapacitated, that he no
longer wanted his ex-girlfriend in his life. at least $70 million. 87% of u.s. metropolitan areas in the first quarter, according to the national association of realtors. the price of an existing family home, median, was up 6.3% from a year ago. that is your business flash update. let's turn to corporate news. shares of lending club are tumbling today after the founder and ceo has resigned. the stock has been under pressure already. falling share price.
>> the performance has been outstanding and we are just looking for [indiscernible] over time, over the long run, the stock price will take care of itself. good to see you. explain exactly what is happening. to see that the founder of lending club is gone. the man who built the industry. >> since then, it went to an 8 billion dollar company. what we're seeing today is beyond even him leaving p are we see them reporting a material weakness and internal controls, whenever you see material weakness you have to fix, it is never a good thing. a new chairman of the board as well now.
two things went wrong here. they reported a $22 million loan. loan,of the terms of the jeffries did not necessarily approve of. >> sort that out for us exactly. >> lending club matches are jeffries had decided to invest in the loan. the underlying loans were not what the terms that jeffries had asked for. that, one hand you have and on the other hand, the party transactions were not disclosed. minutes ago about how john had invested a long time -- alongside -- in these funds, that also lending club that also invested in a number of months a week -- weeks later.
betty: and john was invested as well be -- beside him. >> absolutely what happened here was it was that responsibly to let the risk committee know that the two of them were also personally invested in the loan -- in the fund rather, that he had brought to the risk committee. betty: with a acting alone or were there other executives involved? >> we do not know. not have the responsibility, according to our sources, to bring it up. however, the board found that after the fact and made the investment alongside when he also had a stake in the fund. path'sdoes john mack have anything to say about this now?
>> declined to comment. it does draw questions. we do not really know what is in the fund and what is the fund investment. invested in lending club loans for a long time. there is an interconnectedness here and that is something the committee would have liked to know. that is why is a problem today. thank you so much. still ahead, today's options insight to look at some of the most active stocks trading today. ♪
really presented a problem for currency traders this year because it has been impossible to predict where various currencies are going. elevated you're looking and index that tracks that volatility. >> there are a few different industries, specifically jpmorgan, there is one we will show graphs of, global volatility index. our point here is that, in the sustained, specifically currencies, but another measure we talk about is the index that is global across asset classes, even broader than the currency volatility graph that we showed, the point being, with that elevated volatility, it is hard as a volatility could much longer.in the longest time in the context
-- it is 2011 and lasted about three months. we have been carving this out for almost two months. we think probability favors equity volatility, moving higher, rather than moving sharply lower from here and point to cross asset volatility is one of the key metrics that drives that view. >> something else we talked about in the past that i like to check in on periodically is you're usually not the only want to hold the view and a lot of people have to pour money into various leveraged volatility vehicles this year. i would imagine they get completely crushed because volatility has not come back. are you seeing that happen in the markets? >> i think institutional clients have been relatively quiet on the volatility front as far as aggressively moving to get wong
volatility bit what you have to remember about those exchange products and to volatility is yield are is a negative fact because it is based off the futures curve. ityou buy on a daily basis, will move against you in price. you really need to be almost perfect on timing as far as when to get those promised to benefit from a spike in volatility. we still think, it is out there in front of us, weeks, not months. in our view, it might be a decent time but you need to understand these products. really is a headwind every day you on these products. much more specific on ea, the videogame company, it is out with earnings tomorrow if i am not mistaken. you are looking at an option tied to that and you think the stock will do well on the earnings.
>> we sometimes my talk about earnings as catalyst. andave got earnings investor day on the 17th. e3, the electronic show out in los angeles in mid-june. is a stock in the same place it was a year ago. it has done a lot of nothing toward the low end of the range. analyst and he sees about 30% of upside from current levels. given the backdrop of still being pretty cautious, we like options. go out to june, by 7 -- call spreads and you hate about $1.1. betty: we will be right back. ♪
betty: you are watching bloomberg markets. i'm betty liu. let's start with a check this afternoon. betty, thank you. the republican national convention, if donald trump asks him to. the milwaukee journal sentinel reported that speak or ryan said, "he is the nominee and i will do whatever he wants with respect to the convention." yesterday, mr. trump said he would not rule out the possibility of locking ryan as serving -- from serving as convention chairman when they meet in july in cleveland. trump plans to meet thursday with ryan and other house political leaders. --th carolina is suing the the federal government over the so-called bathroom law which limits protections for lgbt citizens. the justice department had given the state until the end of the day to scrap the wall or risk losing millions of dollars of federal funding. at this hour, the u.s. attorney general loretta lynch is expected to hold a news conference at the justice department. journalistsative
who report on the panama papers are making the names of 200,000 entities available in a searchable database. highlighted these of shell companies for the prime minister. officials say the fires may hit the canadian economy harder than hurricane katrina. home to oil and gas producers, including suncor energy and conoco limited. powered by 150 new spears around world.
>> off the highs but as you mentioned come out pacing the thousand the s&p. this is largely on biotech strength. we have the biotech index up nearly 3%, having his best day in three weeks, participating. but when we take a look at a chart, the downtrend, it would be interesting to see whether we prove if this would be the countertrend, the more downside in the month ahead, or the start of something new. one of the biggest drags on the nasdaq, although the stock is off of the lows, all this after the chinese online retailer beat first-quarter estimates but salesd a second quarter -- really talked about the impact of the economy. he is not buying it and said the rival alibaba is just fine.
perhaps the buyers are going to support the stock higher. you mentioned nasdaq best sector's health care and biotech and what about tech stock? what notable names are trending so far? boost is amazon? amazon. amazon will be the number one apparel retailer by 2017. on top of this, we have analysts out of the first quarter taking up estimates for the year. consensus now calls for amazon yearke $10 per share this in 2016 for a whopping year-over-year growth of 720%. this, amazon is pitting up against the recent highs, selling pressure resistance. it will be interesting to see whether those buyers could overtake the long-term sellers. betty: thank you, abigail doolittle. capital has transformed since
the financial crisis from private equity to an alternative asset management firm with more than $70 billion in capital under management. it invested in some of the top unicorns out there. spotify, jason kelly said down with the cofounder and co-ceo to find out what is next. >> the industry has grown up. it has grown up and become incredibly more complex. why started in the business almost 30 years ago now, he's been all of our time with investors talking about why private equity. as arguing about whether they should be in the industry. it is how much and how they should do it. .t has become much more complex should they do direct, buyouts, credit, there is a much more .obust discussion investor, five or six
years ago, it was a very different time as well. how has the opportunity changed for what you are investing in? i something five or six years ago, it was a risk on time. we were proud of what we did. as we got later in the cycle, the markets have leveled out. really choose where to invest. that is something that resonates with investors or to an area that has differentiated itself over time. >> the likes of uber, airbnb, growth stories. have you learned and how do you implement the strategy as you look at the broader buyout type portfolio?
>> a think investing is not about market share. it is about insight. for today, looking an environment where economic growth may be flattening a bit, a disruption or a change in the economy where we can get extraordinary growth. when interest rates are low, the discount rates apply that growth is worth a lot. we have been trying to find areas where we have sorted through those disruptions in order to create the value of suggested by growth. we lucky enough to sit in san francisco and as the economy has moved from a tech-based economy, about, could you come up with the best surge algorithm -- search algorithm, and the tech area were old come is are coming together like uber and airbnb, we have been well-positioned to be a preferred investor for companies trying to bridge the old and new world. you think about when we showed up at uber, many problems they faced going forward were more like the problems of an airline that we are quite familiar with,
or airbnb, some of the regulatory issues around hotels. the companies as they grew. >> you mentioned europe and the business for 30 years. the week also marks the 40th anniversary in the business, and yet the business is radically different than it was in the 1970's and a 1980's. it was not even called private equity back then. it may not need to be called private equity anymore. how do you define it? how do you create that landscape? >> we are in the middle of a massive shift. in the public markets, one might argue it is winning in a lot of ways picking up share, but there is still a place for active management. healthy in the area of alternatives. traditionally, people have sometimes called by us. we move from buyouts to private
equity to alternatives. our job is simple. it is not to define ourselves as any type of transaction, but to find cutting-edge opportunities, differentiated opportunities in the marketplace and bring it back to investors. as long as we keep doing that, there is a place our type of investing. you look at what broadly diversified, the big names in the business, carlisle, blackstone, and others, publicly traded across lots of different types of alternatives, howdy you fit into the definition? >> we have never define ourselves by how large we are. it is maybe a fallacy in the marketplace. it is how you differentiate yourself in the market. we have liked to define ourselves as being large enough to address opportunities across asset classes around the world.
small and nimble enough to make sure we can find ways to .ifferentiate ourselves we compete against equity firms. we want to be among the leaders but differentiated among what we do. >> many of the other names are publicly traded. knew the question would come and i have consistently answered that for almost 819 years. there may come a time where it where wese for us and are as a firm, this is not that moment today. >> the buyout boom and bust into the financial crisis, a lot of huge deals that we may not see the likes of again.
as you talk to investors, what are the lessons you take from deals like that? >> there are extraordinary lessons learned by the industry in that timeframe and we see that playing out now. late inhe lessons is the cycle, after you have been through a time of extended success, there tends to be a lot of capital available in the marketplace broadly. one of the things the industry needs to do is to make sure that does not always take the capital available. for example, the fund this time is smaller than last time. that is direct when he from what happened before. the first is, make sure that you do not lean into the marketplace late in the cycle. the second thing is in general, large deals, and they happened late in the cycle, so be careful on the larger deals in the marketplace. some are chatted but generally, the industry and anyone firm should not be overweighted large deals. , tpg capitalas jim
betty: this is bloomberg markets p ryan betty liu. time for a look at some of the biggest business stories in the news right now. not taking no for an answer. a tribune publishing is taking steps to for that $815 million takeover offer. shareholder rights plan also known as a poison pill, gets shareholders the right to buy
more shares at a discount. it is a defensive measure against a hostile takeover. one of your's wealthiest families granting out some coffee to donuts. the holding company for the family of austria has agreed to buy krispy kreme, $1.4 billion. --holdings has already built juggernaut from disney and marvel studios debuted in north america. "captain america civil war" took in $108 million over the weekend, slightly less than estimated. it had already taken in $300 million prior to its u.s. debut. earnings reported this afternoon. that is your business flash update. the events out of brazil continue to be anything but expected. vote for the new president's pitchman. is this just noise or a wrote
block that will set back any movement. team will be talking about brazil and joe is joining me now with more. this is so interesting. -- , according toone the head of the lower house, technical problems with how it is done. reaction.instant how the market wants to see the process forward, it tumbled the most it had since 2011. it snapped back quite a bit, but it was quite dramatic. snag,ew now is this is a a roadblock, that they will have another vote and they will have the same result.
it just shows how unpredictable the whole thing is. much longer this can take the people are hoping for a resolution. >> yes. you will have been waiting for a long time and it slows it down. it is conceivable there will not be a vote and there is talk that maybe the supreme court will overall the lower house or that the upper house will take the matter up anyway. you have to remember there was quite a spectacle that night and people voted were giving all kinds of seemingly bizarre reasons for voting yes. apparently, in polls, people found that to be a little strange. the expectation that will ultimately still go forward, fat that the market reacts so sharply shows how much jitters there are for the whole process. betty: there have been huge ending this impeachment. >> you are absolutely right. last year, brazilian assets were
some of the worst performing in the world. this year, we have had a combination of impeachment stories moving forward and the overall -- brazil has been a huge winner since the middle of february. it shows how much potentially there is to lose. is there a sense there is a hatred going on, emotions behind the trade, more than just this this? >> more than just business and more than just fundamentals. this happened, we are so negative on some markets that it does not take much to lift up and if there is some news that comes long that undermines it, you see some air coming out. joe, thank you. they will be discussing more, this development out of result. another development out of north carolina at any moment. loretta lynch will be holding a news conference.
betty: markets are closing in 10 minutes. julie: stocks remain mixed as we head into the close. they made an effort at recovery particularly for the dow. he did not quite make it. still down 25 points. the s&p has been languishing all day. it cut that leak in half here. we should mention volume is comeng considerably low
about 17 -- for the year to date. you can see it is not the lowest volume day of the year. it is still close here as we head toward the closing bell. where we have seen action is definitely the commodities. are commodity stocks, copper and gold with those, transocean and time and offshore all taking pretty substantial hits here. they have not all seen substantial gains since the lows in february. the other big area of activity has been within drug takers. drugsaying that generic pricing will not fall further. that is reassuring to investors who have been concerned about the drop we have in the prices of generic. at the same time also saying it expects to complete acquisition of allergan's generic is missed
by the end of june. allergan is out tomorrow, that is something investors wanted to hear about the closing of the sale to you can see allergan shares are up by better than 6%. pharmaceuticals, another volatile company out with its numbers. they beat estimates and the company reaffirmed its forecast for the full year and said cash flows should increase as the year goes on. it had been down for seven straight days heading into any's report. seeing a big gain and other biotech and specialty pharma companies are pharrell -- following suit. and pharma were two areas we were seeing a little more fireworks. betty: certainly some fireworks and one financial lending club. i just want to note that lending below five falling dollars, a record low since the ipo. it plunged through the five dollar level. this was after the stunning news to investors. the founder and ceo had resigned, owing it to some
discrepancies with loans as wellly invested in as some by the company itself. outside of that, i want to talk more about the stock market as we are heading toward the closing bell. i want to bring in danny. make sense of the reaction today after the jobs report on friday. i say bifurcated market today. there was some sense with the jobs number that there was a bit of an overreaction and we ended friday upward. at the same time, you look at what is going on, you have health care leading today, and on the other side, you have energy down. two completely different pictures there. on a day like today when you have broad losses across the commodity market, you see stocks follow suit and generally all stocks will post losses. there are two different pictures going on here between what is being reported and what energy is doing. two totally different markets. it going onot of
right now. i think some of it ends up being earnings related. company support, some are doing well and others will not. you get that back-and-forth peerage generally in the market, you look under the hood of the index and there are weird quirks going on. volatility looks very calm across -- across all stocks 30 breaking out in segments, for example, energy and volatility, that is not as low. you have to dig a little deeper to see what is going on. often, the forces will cancel each other out. betty: we have a chart here that you wanted to bring attention to about volatility. let's pull it up here. chart. a line explain the chart to us because it is showing volatility is coming down. >> yes. it is one of my favorite functions on the bloomberg. linean see here that white is actual volatility. measure price
swings, how much the s&p 500 is actually changing day today. the top one is what options traders are paying for protection against price swings. basically, traders are saying i cominghere is volatility and i will buy this to protect myself here you have a spread, the widest since right before the august correction of what traders think might happen and what they want to buy protection againstst -- protection and how much the prices are swinging. betty: where is the nervousness coming from? >> i think it is the sense that the market seems a little too optimistic for what is going on. have pain in we the commodities space and yet the index as a whole is looking pretty solid third investors are saying on the surface, everything was ok, but i'm still can earned and i am not convinced everything is fine. is anyone saying we're in
for another big leg lower? >> related to volatility, ubs analysts have looked at this and put together a study that showed what risk parity who are computerized traders, how many stocks they own, basically one volatility is lower, these guys will buy stocks. nowlevel of stock they own is similar to write before the august correction. they are saying look at this. it is a signal that there is someone out there who has the potential to sell as much as they did in august. betty: interesting. that could be a red flag, something to pay attention to. thank you so much. that is it for bloomberg markets. what did you miss and the market closes next. -- close is next. ♪
alix: i'm alix steel. -- s&p 500 inching out a gain in the dollar rising. joe: the question is, what you miss? we ask why she thinks our quality is still cheap. plunges afterlub an internal review found abuses tied to the sale of loans and a failure of disclosure. what is ahead for regulation. movie roster for the year looks strong but investors still concerned with espn. i look at the numbers ahead of earnings tomorrow. scarlet: some breaking news on lending club. the enforcement division is said toreview lending club disclosure.