tv Bloomberg Markets Bloomberg May 10, 2016 2:00pm-3:01pm EDT
david: stocks rising today, but are they entering a consolidation phase? our guest believes that will be elected -- a reluctance to buy. oil down to two-week low, and gold dropping to a one-year high -- from its one-year high. campaign officials visit cleveland. markets close in about two hours. stocks at session highs. julie hyman is standing by. julie: falling is languishing a little bit, but we see the recovery continue today. the dow, which was the burst performer yesterday, has been leading gains today, now up i
nearly 200 points. -- the dow, which was the worst performer yesterday, has been leading gains today. value across the board, a broad-based rally. materials and energy leading as we have underlying commodities rallying. industrials, financials, consumer discretionary, technology, all those groups up by at least 1% in today's session. if you look at energy stocks, some of the percentage standards, crude oil up by more than 2%. concerns about supply disruptions in libya and nigeria. thehwestern is one of biggest percentage gains today. financials are doing well. they are raising as we see little bit of a bump up in treasuries to not a big one, but enough to see an upsurge in the financials. bank of america leading percentagewise. broad-based rallies.
any hidden movers? julie: agriculture. alix steel would not say they are hidden, because she was excited about the usda crop forecast for the globe. the indication is that the global glut will not be as bad as feared. , potash, agri-them all trading higher, along with wheat, corn, and soybeans. and some other beverage-related movers. stream shares surging after their earnings came out ahead of analyst estimates. revenue beating estimates. must turn -- monster beverage selling some new shares. interesting. a gain on that. pepsico shares are at a record today. drink it, i guess. david: julie hyman, thank you very much. now let's check on the bloomberg
first world news. mark: hillary clinton leads bernie sanders nationally, but in a hypothetical matchup trump, theald vermont senator fares better. that is according to the latest nbc news survey monkey poll. by 13s leads trump points. mrs. clinton leads mr. trump and a head to head match it, but the race is much closer to john kasich still on the list of top choice is to become donald trump's running mate, even though the ohio governor and former republic presidential candidate continues to express no enthusiasm for the job. trump poses staffers have checked kasich's interest in being on the ticket. will become the first sitting american president to visit one of the cities where the u.s. dropped an atomic bomb here the white house says the president will travel to
hiroshima while on a trip to japan. in the past, there has been concern that a presidential visit would suggest the u.s. is apologizing for dropping the bomb. it is said that you can pose a prime minister may consider a similar visit to pearl harbor. several demonstrations against the impeachment of president dilma rousseff blocked highways and roads across brazil today. in são paulo, tires were set on fire near a highway that leads to the airport. late last night, the acting leader of the lower house of aazil's congress reversed decision that would have an old a key vote in the impeachment process against president dousseff -- would have annulle a key vote president rousseff is accused of illegally using state banks to lug a hole in the budget. 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 or david: concerns about economic growth, that it is slowing him a continuing traffic markets. i outflows of about $1.3 billion last week. bank of america merrill lynch has the longest uninterrupted 2008.g streak since you are looking at cumulative outflows year to date. my next guest remains bullish. joe bell joins us from cincinnati, a senior equity manager. talk about why you are feeling as optimistic as you are right now. main reasons is exactly that sentiment, one of the hallmarks of able market is generally climbing the wall. how low to how high or it is set for the market. when you look at the u.s. stock market, it is up near all-time ofhs only about 3.5 percent 50 two-week highs.
but there is still skepticism. a survey shows that u.s. equity fund managers were underweight, near the lowest levels in eight years. overall, we think negative sentiment combined with the price'sicture of strengths, that historically has been a bullish combination. david: i know you are looking at the 2100 number, one of great psychological importance. why is that so important to you? : as you mentioned, during the past 13 months, or 13 months ago, the u.s. stock market reached a new high. at that time, it was any other level, 2100. since then, it has reached a ceiling at that level 13 separate times. -- eight separate times. if we rally back up to this in the next couple weeks, we could see the ninth time. the more times we hit that level
and then fall off and keep getting near that level, if and when we break that level, perhaps the buying will be pretty explosive to bring now, we're seeing selling pressure. once it is broken, perhaps the floodgates will be open and we will see a breakout, a historical pattern you see. bloombergre seeing commodities index rebound from the biggest drop in six weeks. is that what will break it? joe: we will see. that is one of the more interesting factors. you mentioned the u.s. dollar has been on a very strong run the past week or so. that has put a little bit of a halt to the energies, materials, industrials. those have led the past several months. the u.s. dollar strength the past week has led to weakness the past couple weeks. during this pullback today, a broad-based rally, u.s. dollar rally, flat, a little bit negative today, that will benefit those stocks and
sectors. if you look at last years, some utilities, we're seeing broad-based leadership. it is hard to say which individual sector will lead when you look at staples and utilities, still all-time highs. energy rallying. perhaps that u.s. dollar can rollback over. we will seek per dissipation, but right now, it is broad-based. david: what are you particularly bullish on right now? view companies i like. xs, technology, ct company. weakness inmarket past couple weeks, one stock has retraced and filled a bullish gap, coming back to a round number. technically, it is a strong up. short sellers target the name. i like progressive insurance, pgr. strong financials, improving fundamentals that are little bit better than expectations.
strong price action, but we continue to see negative sentiment to it i think that is fuel for a strong rally. david: what is your read on earnings season? you look at the pure numbers, it is not good. passwe look back to the four quarters, this will be four consecutive quarters of negative year-over-year earnings-per-share growth for s&p 500 companies. you have to go back to the fourth quarter of 2008 through the third quarter of 2009, where .e saw similar poor performance one thing to keep in mind is the fact that the stock market is a forward-looking mechanism. when you look back, during that timeframe, that is when the market is carving out the bottom. even 12 months after the four consecutive negative earnings seasons in 2009, the market was able to trend higher more than 10% the following 12 months. that is kind of how we find ourselves from an earnings
season for mental perspective. it is not always negative. sometimes it can enhance negative sentiment towards this market and when it ultimately breaks out, you can see higher prices in the coming months. david: what is the biggest thing you think bears are wrong about in this market right now? joe: the big call i have seen the past week or so is a lot of people calling for the u.s. .ollar bottom i saw a lot of sediment talking about that leading to the energy and commodity levels rolling over. it is probably a critical level, looking at the u.s. dollar. if it breaks down, it will be strong for the company. a lot of people calling for the energy and commodities levels to rollback over. a key thing. i see a lot of sentiment that is bullish on the u.s. dollar. perhaps a rollover will help some of it, specifically the ones people are bearish on right now. you foroe bell, thank
joining us from cincinnati. coming up in the next 20 minutes anbloomberg markets, not easy quarter for easyjet, but sinksrolyn mccall brighter skies are head. she will tell us why. they start up in silicon valley in the midst of a nightmare. his gold about to rally higher? the hsbc chief commodities analyst will tell us why he sees gold as a long-term insurance policy. ♪
corporation not to use appear of its drillship spirit it is part of an effort by freeport to cut costs. the company is scaling back its energy business, looking to sell oil and natural gas assets. guildgreed to start the for 35,000 there's in new york. it will give members new protections and benefits. under terms of the 55-year haveact, uber drivers will a higher standard of protection and support ban other independent contractors. friendly's restaurant chain has sold its ice cream manufacturing and retail business for $155 million. it is sold to the largest distributor of milk another very products. -- the transaction is expected to close late in the second quarter. that is your business flash update. moving to the airline industry,
u.s. airline stocks are rising today. that airline stocks are still down about 14% year to date as concerns over a sluggish global economy and too much capacity overtake low fuel prices. it has taken a toll on carrier'' bottom line. first-half loss of $35 million or they expect to see recovery this summer and are boosting dividends to 5%. ceo carolyn mccall said its cash position is strong. have done ahink we rigorous review, as you would expect. we do that on an annual basis. we have cash to do this and we would not be raising the ordinary evident to 50% if we do not believe in the long-term success of this airline. we have confidence in prospects ongoing. we can do this.
we have done a couple raised it.nd we have it is the right thing to do. >> capacity, talk a little bit about that. everybody. the amount of capacity coming on in europe right now is i watering itis eye how do you cope with that in deal with this situation? it will be a tough summer. the environment is being driven largely by -- low fares. year -- isup to 8% a easyjet is growing up to 8% a year. we think that is the right level of growth to take advantage of opportunities in the u k in europe. we're still growing organically, but there is a lot to go to it we still only have 9% of the
european market. so there is a lot more space for us to grow. we're doing that in a very organic, a risky way, actually. it is a very tough environment. making itnot capacity tough. we're used to capacity and competition. it is not completely out of sync. if you look at our loss this year, constant currency is coming in the same as last year, but 5 million profit. it is the foreign exchange movement that affects us. so despite paris and brussels, we have done very well in the first half. i think that shows our customers like us spirit we do the right things for our customers. focused on our passengers here at we have a very good business model. it is the business model in airlines that will win in europe. david: that was carolyn mccall
on "on the move." julie hyman is checking on amazon, a company flying. it is at a record today. that is after an analyst at sanford bernstein was the first to put a $1000 price target on the stock. monday's7% higher than shares were up 3% today. he sees that the company has a lot of possibilities out there, and it almost has too much money on hand. it will have a hard time figuring out what to do with it all. he is breaking from the pack when it comes to amazon, especially as it relates to alphabet. here is his estimates for amazon and then for alphabet. it is different than others who are expecting alphabet, or 1000 dollarst to
before amazon. it is interesting, the divergence. another way to look at the consensus forecast for amazon, look att anr. the bars are the number of buys, holds, and no sales. the sentiment is positive, but here is the average price target. $809. here is the stock price. there is a gap. like to track we for amazon is the status as a retailer. cap, it is at market the largest retailer. that is because it is bigger ofn walmart, again, in terms market cap. not in terms of sales. this is the spread between amazon and walmart, market cap, so subtract walmart's market cap from amazon. capon was smaller market wise until august of last year, when it surpassed it, and amazon is now about $115 billion larger
david: this is bloomberg markets. safe to say not all unicorns have fairytales. zenefits on this everything from health entrance to payroll, and members of the sales team allegedly sold insurance without a license. the company is trying to survive a pr nightmare. claire suddath joins us now. what does zenefits do?
claire: online software. a small business can put in employee data, and it helps select health insurance plans, keep track of payroll, all sorts of stuff. id: the insurance part is right for destruction. the company had bold ambitions. claire: everyone said this was a genius idea. brokers felt like zenefits was taking interns benefits away from them. if you are a small business, 10 employees, you do not have combne designated to through the hundreds of different insurance plans and pick what you need. zenefits will do that. they grew like gangbusters in silicon valley. he made $1 million the first year. $20 million there next year. the third year, they wanted to
make over $100 million, and then things started to fall apart or were growing way too fast. david: the guy behind this did not have a background in insurance. how does his plan fall apart? claire: he picked an industry right for destruction and an industry that is regulated. you have to be licensed in each state to sell insurance. you can apply for a license and another state. so fast andgrowing had other managerial problems. they seemed to not be able to keep track of who was licensed where. david: i guess there was a genius thing he did, maybe not genius, created sort of a macro within the chrome browser they would try to license people. the mosthat got him in trouble. it takes a while to get licensed. in california, were the company is based, you have to take a 52
-our online training course. it is just a training course. zenefits says he created this extension that would allow you to appear as if you are logged in and going through the 52 hours when you are not. it was a state-mandated course, and they did not do it. sachs comes on and tries to turn it around. what is the state of the company today in light of the regulatory stuff? claire: they are facing millions of dollars in fines. there are investigations and hintedy a few more being at. the one good thing is this is such a good idea that their customers do not seem to be leaving. people are frustrated, but everyone i have talked to have said there is not really another option for me and my small business, so i will stick with them.
david: a cautionary tale for other companies that grow quickly -- what is the biggest take away? scale up, order to you have to have a plan in place to figure out how to do that. people andjust hire hope the company will stay the same. david: that is claire suddath spieth thank you and you can read that on bloomberg businessweek. still ahead, the commodities close is coming up. oil up 2.3%. more bloomberg markets after the break. ♪
headlines. mark crumpton as more from the newsroom. mark: hillary clinton and donald trump are in tight races and three swing states. survey, mrs.a clinton leads trump in florida and pennsylvania while trump leads in ohio. statistically, all three states are too close to call. since 1960, no one has been elected president without winning at least two of the three states. struck a north syrian town today and at least 10 people were killed and several others wounded. the dome of a mosque was knocked over according to activists. this came hours after a limited wasfile -- cease-fire extended for another 48 hours. climbers are making good progress on mount everest and the first group to reach the debt could reach the summit as early as thursday. it comes after two years of
disasters. killed 19 climbers and injured 61 others at a base camp last year. guides, 16 guidance -- were killed. appears to have won a seat in the philippine senate according to unofficial results. more than 15 million votes with 90 million precincts reporting, place him eighth among candidates for 12 senate seat. nearly 3 million votes ahead of the candidate. powered by 2400 journalists. back to the studio. a look at's take biggest movers starting with agriculture. big news after the usda released a report on supply and demand.
the highlights, soybean futures surge after 6% after reports of global inventories will be smaller than analysts expected. prices reached the highest since august of 2014 and well above 15, 30, and 45 a day moving averages. futures today after world wheat inventories may rise 5.9%, a record in 2017. it may be at a record 4.4 main pushers in -- bushels in 2014. also spiked on the news. two-week lowom a today. concerns that supplies from nigeria and libya, holders of after's largest, selling today at 4467. gold seems to have shaken off the eyes of march. hsbc's chief commodity analyst says -- gold is still holding up as a -- an insurance policy.
glover surveillance seen this morning, starting by asking whether gold has peaked or will churn even higher. >> i think it is even more likely to go higher and we do not have the dislocation we have seen. we got up to $1300 level. quite a bit of resistance there, not in the technical sense. gains in the etf this year and they have leveled off. we have high net speculative interest, historically high. it will be difficult to power much beyond that. >> what is your message to those who have in the bedroom and dresser drawer? >> i think the best thing rather than to look for outright depreciation in any month or year, is the portfolio diversification value. it is not correlated to other assets, really where the strength lies. as far as whether it will go up
or down soon, we are bullish but in the long-term, i think it is the diversification argument that is the most powerful. it is an insurance policy. the driver at the moment mainly? interest rate, emerging market weakness? >> it is a combination of until recently. those two things, the perceived policy, declines predicated on two rate rises last year. for this year, we got one last year and we may only get two this year. it had already declined based on a series of rate rises. a combination of a shift in fed
policy, the weaker dollar this year. and some weakness in the emerging markets. as everyone says by gold by gold it is relatively small. it is a barometer of not only the economic and financial markets but also wider geopolitical and even social markets. it is always a sign. tom: let's bring in jeffrey. >> one of the most important points, if you talk about the real interest rate impact, chart almost looks the same as the
gold impact. while we're waiting on the chart, a question for you or we pull back a lot of expectations for the fed. let's just say that is wrong and we get a strengthening. what happens to gold if market expectations for the fed are wrong and it delivers more this year than what we are expecting? >> i think the market will then be under pressure in the 1200 level. below 1200, say we get three or four great runs this year and we go back to the recent weakness we saw last year, when we penetrate around 1100, that is when the physical market tends to respond. we usually get a good bounce in chinese demand which, between the two of them operate 65% of the gold demand in the world. >> a shift from london, real signet -- real buyers in the
emerging world. david: that was james steel. tomorrow, we will have an andrview with the chairman ceo of bp capital to discuss oil, who joins us from the conference in las vegas. check out shares of solar city today down 25%. wall street is going more worried of the consistent shift in strategy raising broader russians about its business model. the company pulled back of the installation for the third time in seven months. the shift as part of the effort to become cash flow positive. the company has lost money in all but three quarters since the initial public offering. it is not just solar city feeling the pain. of all solar companies are down this year, many performing even worse than stocks despite record demand for clean entry -- energy. it slumped more than 30% this year. in the next 20 minutes coming
up, donald trump is prompting to put a little showmanship in the republican convention in july. new details about the trump planning process. is boston a better place to start a tech company in silicon valley? we will start that coming up. you look at yield and treasury bonds today, largely unchanged. more bloomberg markets is coming up. ♪
he see the stock price is up 10.7%. some of theook at biggest business stories in the news right now. allergan plans to buy back as much as $10 billion in stocks. that comes in the wake of -- 13%.tock has come allergan is focused on the sale of its generics business. volkswagen closing in on a fix for those tainted engine cars in the u.s. according to people familiar with the matter. part of the vw emissions testing scandal. it reduces the risk of an expensive buyback program. just in time for the race to the white house, it will rename its beer america this summer. alreadyetitive market foamy with craft beers. america cancer and bottles will be available starting may 23.
that is your business flash update. >> trump is set to be named the party's nominee and has previously said he is reported to have some show this -- now fromr joins me washington. who is going on the trips. and aa campaign manager large part of the apparatus? who is going? >> it is some of donald trump's top most trusted staffers. strategist.ief one of paul's associates, a guy named rick, and trump's political director, as well as other staffers. those are key people, and michael, the deputy campaign manager. they are going out there later in the week and are getting a full briefing from republican
national committee leaders on what is going on. design forike the the stages done already and they know what the perimeters going to look like. they know the hotels everyone will be assigned to, everyone from the campaign down to the state delegations. it sounds like details are coming together. >> there are a lot of cooks in the kitchen. we are hearing from ted cruz's camp that they would like to have influence on what happens in the convention. try as the trump campaign might, others want to get involved. campaignhe ted cruz wants to do is influence the platform. we are expecting many of the delegates from around the ,ountry will be at the event those conservatives who supported ted cruz. they really want to keep the platform intact. they want to make sure donald trump does not get his fingerprints on the platform and that is the blueprint for the republican party. the document they say they face their future proposals on, does
it really matter, some people argue no, but for activists within the party, the document is really crucial and the convention is every four years, it is the activist chance to imprint on the document so they can say to members of congress and local folks, this is in the platform and this is what we are to be a working toward. david: members of the trump campaign and the rnc, what do we know about that meeting? >> it is one of the first tests of the trump campaign working closely with the establishment. trying to make progress working with the establishment. it is a three hour-long meeting, every director from each of the rnc departments gave appreciation to the trump campaign, saying this is how we can help you with the campaign. know who exactly, and
now the flood gates are open. every director's anglican help you with data, your website, website securities are you do not get hacked, financing, communications, research. they said they had a database of opposition research on hillary clinton that includes a so ifable video database they need video, who clinton doing just about anything going thatyears, they can find in the database. it is all of bees helpful things the rnc is saying to the trump campaign, how can we help you? this is what we can do, let's be friends. >> this will no longer be a self financed campaign it sounds like the >> that was a big shift when donald trump started realizing everyone else was trapping out of the race, he had crushed his hisetitors, he had shifted dance spirit all along, he had been saying, his calling card was, i am self financing my
campaign. you all know i will not doubt his actual interest. i'm in no one passing pocket. he views that as an argument to argue against rivals. he him to switch and say will now work with big donors, especially donors donating to the rnc and his own campaign, we asked a lot of supporters at rallies in the last couple of days, this really is a big reversal. it surprised them why the wealthy billionaire who could finance his own campaign, why raise all the money from others? a lot of people said we believe donald trump cannot be bought, we believe he will go in and clean up the wicked ways of washington, d.c., and if he ,eeds to help raise money lower-level races throughout the country, we understand that. there is a meeting on thursday, perhaps the biggest thing they have to bridge is the relationship with paul ryan.
what can we expect? >> a good question. maybe a softening of the relationship and bridges being billed and trust being built there. it is not clear what to expect out of that it was donald trump, anything goes. thank you. catch with all due respect we. tonight, political strategist mark. let's head to the markets desk were a julie hyman has a look at retailers this afternoon. julie: i want to reiterate the headlines, a billion-dollar company, maker of marketing software. bloomberg says it is working with morgan stanley. might not end up being anything but the shares are definitely reacting, up more than 10%. are looking at the spider retail etf. it is little changed but we should point out among the etf's , youhe sector it -- etf
look at what is dragging it down, gas out with preliminary earnings that missed estimates. sales down 7%. bit here down a little that company reports earnings thursday. downgraded today and jcpenney which reports its earnings friday, options heaven very active on that stock and that indicates pessimism going into that report. why isn't it down more? the slide is always interesting. these companies are also in it and doing well. amazon at a record today. todaydvisor, it is hired has a groupon. the composition of the etf's does matter. if you look at the one-year chart, it is down by about 12%. we have seen it underperformed
the broader market. i also want to point out and reiterate a data point we got today in the wholesale inventory report. it is the inventory to sales ratio. , 1264, the here inventory to sales ratio is the highest on record. when you see a lot of sales signs in your local stores, it is because they want to clear out the inventory, not good news for gas. it would seem to have negative invocations for retailers as a whole. ofid: coming up, day two bloomberg west exploration of the boston tech scene. we checked with emily chang coming up next. ♪
david: boston is still working to prove -- prove itself. why would i pick boston over silicon valley in this day and age question mark emily: first of all, there are 40 plus incubators around these many universities here in massachusetts. of goodlem is a lot ideas start here but do not stay here. we have talked to a number of different startups and public companies and investors. they are trying to change that and really believe that if you are starting a company today, boston is the place to start a company. he wouldr once said stay in boston because he thinks silicon valley things a little too short term. i spoke with a guy who runs
accelerator, a nonprofit accelerator and they have invested in hundreds of startup companies, many of them right there in the boston area. here is what he had to say about why you start a company in boston today. best.ton is the oris not as friendly overfished as silicon valley and new york. broader in -- industries we support. nonprofitry including spirit also, boston itself has strengthened all of these areas from health care and biotech all the way through retail and consumer goods. a diverse group. they do not take any equity in the startups they invest in. if a startup does well and adds to the community, they benefit as part of that community. they are not trying to take a
slice of the pie. they are trying to take a bigger pie for everyone. it sounds good to me. i do not have to give them anything in return. it may be an interesting selling point for companies in the area. view of theis the potential for a bubble out there in boston? emily: there are not as many unicorns if any at this point. trying to create that billion-dollar technology company to achieve unicorns status. one thing that was interesting in talking to venture capitalists, i asked got the perspective in the funding environment. do people think silicon valley is in a bubble? does eating in boston give them a different perspective on the overall market? i spoke with an early investor in twitter, tumbler, take a
listen to what he had to say. >> we have a fund where the , public tech companies, it has a downward negative effect on private evaluation. we are in a correction now and it will probably get a little bit harsher before it gets better but overall, i am optimistic. emily: what he had to say is that the in's and billions of dollars in venture capital have been raised. there are so many great ideas. the problem is the o's not being deployed because everyone is a little nervous about what is going on. goodse there are so many ideas out there, he thinks it is a matter of time before investors started point the cap roll again and we go back in the cycle. david: you spent time in both places, so culturally, how does it feel different? what is it like that is different than silicon valley? biotechhere is a big sector here, a cluster of pharma
companies that is really predicated on the strong tradition of these universities. i believe some of the seats for the biotech community were planted in the 1950's at harvard and m.i.t.. their ideas developed and it let the area be at the forefront of biotech investigations. if you're in the biotech community, this is the place to be. to hospitals.s culturally, i do think there is an ability to put down your head and work. thank you. guests on the show include the 6:00n mayor coming up at p.m. eastern time and 3:00 p.m. pacific. ♪
♪ betty: good afternoon. here's what we're watching at this hour. a thirdre rising for straight day. energy and industrial shares leading the gains. will the rally last? , he's portfolio manager keeping his strategy simple in the meantime. >> know what you own, make sure you understand, because getting it wrong has folks learned, it will remain very expensive. what are investors thinking about the timing of the fed rate hike? reporting their earnings in just one hour. do we already know the story?