tv Bloomberg Markets Bloomberg May 11, 2016 3:00pm-4:01pm EDT
vonnie: markets taking a turn it soul in ar, having to few moments to see us to make managers -- to see what top money managers think about this. in brazil, the country will determine if the president will face an impeachment. the vote could end with her immediate suspension from office. gap's poor after results, macy's also has a glum outlook. they are looking at consumer companies in general. are one hour from the close of trading. let's go to the markets desk. remy has the latest. ramy: i am looking at the numbers, we are at session lows across the board are three major indices. the dow is down more than 200
points, 203 points. 1.1% accelerating losses we had day.over the course of the the s&p 500 down 0.8% as well as the nasdaq. the big weight on markets is and continues to be corporate earnings, in particular retail stocks. earnings growth i want to point out is down 8.7% year on year from this time last year when earnings growth is a paradox. let's hop into the imap function. what to show you the sector health of the s&p five sectors. we can see eight of the 10 sectors are in the red. energies of the most by 0.2%. this had been higher in the day, 0.33%, but it has paired with some gains. prices fall in the u.s. crude supply down 2.4 million barrels. we see consumer discretionary down the most, to present nearly. that is because of retail stocks
and earnings pulling things down. let's look at the s&p 500 for the past two days. i shown this because we know what happened yesterday. result of the best rises in two months for the stock market. all,hey rise, we see this so it is like it did not even happen. we are up a half a percent you are so, as if they canceled each other out. but one i want to show you is with amazon, and there is no doubt in your mind we know where this one is heading. 2%..3% here, just more than that is also at the record high share price, past the $700 mark. your data is up by 50%. there are also negatives. biggest point losers on the s&p are behind me.
disney, you know what has been happening, down 4%, missing revenue, axon falling despite the oil supply. home depot down 2.44%, and walmart down 3.3%. that is potentially off of retail votes. vonnie: i with the exception of amazon, it is tough being great. peopleraders are worried are not forking out the money they were hoping they would this year after the downturn of last year. let's take a look at the biggest department stores in the past day or so and how they have been performing or the lack thereof. macy's down 14%. we know that some stores were down 6%, indicating in in terms of revenue. they fell short by hundred $60 million. for the one year, it gets even worse. years is down 52% the past
, and with nordstrom also down 40% to 50%. vonnie: we talk later on with the analyst. let's go to the first word news. mark crumpton is in the newsroom. mark: north carolina's bathroom log could cost the state i billion dollars annually. -- $5 billion annually. that is from a new ucla law school study. they could lose federal grants and contracts. in addition to the $40 million in business investments already withdrawn. the u.s. senate wants to undercut the nuclear deal with iran. fetters stopped and amendments that would have prevented the u.s. from buying anymore heavy water, which is not radioactive but does have research and medical applications. it can be used to produce weapons and make giant. surge prints.
they saw him on april 7 and april 20 before he died. they prescribed medications but it is unclear if prints took them. they came to the day of his death. federal and local authorities searched his basement. a threat from a top aide to turkey's president rest of air to one -- air to one. it is not allowed turner's construct -- travel. they will agree to take back refugees. the european parliament debated the issue today. a group of italian students presented pope francis with a prosthetic hand today made out printer, caps by a 3-d a total of 60 of these have been made. the first will go to uganda and the congo to make prosthetic limbs for children.
news 24 hours a day card by 2400 journalists in more than 150 news bureaus around the world. back to you. vegas: let's go to las the sky bridge alternative conference. erik schatzker is standing by with the founder and ceo of and the advisors. advisors. eric: this company does a lot of this. you are here at the stall conference, it happened earlier today. i want to share with the audience worldwide. your predicting what? we are seeing a bear market in stocks and bonds that will lift up to 30 years. this is a real basis, not an anomaly. eric: so on inflation-adjusted
basis, investors that put money in go to sleep and wake up 30 years from now will have made no money. >> writes. began in the 1940's, you added 20, 25 bear markets going back to 1989, this is the most overvalued market, there is more leverage. thanks have lost all of their ammunition, and there is so much credit outstanding throughout the world. and it is a bear market. there is always an upside and downside. eric: he's in a couple of things i need to follow up on. the most overvalued? milton: we are definitely at the most overvalued. the ratios in the new york stock exchange are just above the be .atio from 2009 markets are way overvalued.
yields are low. we were 30 years ago when you have 5% on stock. now you get 1%. yields is way overvalued. eric: and you mentioned central banks. what if mario draghi's whatever it takes really is whatever it takes? milton: if it means hyperinflation in germany, stocks will do well, but not relative to the rate they will create. stocks are beginning of their markets. -- itl terms, and not could be a 3000 present in the next few years. eric: there is no inflation. milton: your question was what is draghi had to do that? eric: we have not seen any -- it is extraordinary. milton: there is so much credit in the system. disallowing people to borrow more and more money does not
help the system. -- it causes a greater bubble. when i got into business, there were many bubbles. each individual had its own trouble. united states inflating a bubble while germany was deflating. is one big bubble. all of the central banks are in unison. so when it pops, it will be terrible. eric: pretty terrible means what i don't know the answer. it is one of two major things. --her acceleration in place or they will turn to real inflation, which is no printing. helicopter money. it is disastrous either way. eric: a lot of people will disagree with you. some already have. why is this a bear market first 30 years? it a massive direction
like we were discussing had things get back in track? milton: you can always go straight up the next 30 years. most people here believe in long-term buy stocks holding for 30 years and make eight cents per annum. eric: is that what you are saying? juliette: you buy the stocks and hold for a long time. milton: it was never correct. it is such average prices overseas three, on average you make 10%. if you are about average, in the , two present a pricing, you make 1% per annum in the future. in 1932 he made percent over a long term. it is not average. you are getting to an important points. even if people disagree with you on the 30 year bear market, you are about how to make money. how do you?
the typical -- milton: the typical investor should wait for a crisis to be over. a market timer, but usually you can see when they are doing well. wait for the next crisis, but your money under the pillow. and by the lows. it may not be long-term. but investors must maintain flex ability or the market will be volatile. volatile been pretty the last four years. i measured the s&p trading range. we had the lowest, greatest number of days with the range since 1928 over the last year. so there will be volatility in the future. we see declines capitalizing on volatility. he speaks oflients are the world's biggest hedge fund managers at milton berg.
that is according to nhk. nissan invests $1.8 million in the automaker. they are blaming overly ambitious your economy targets for the cheating on tests data. they admitted overstating fuel economy at some models over 10%. lawmakers looking to bring relief to flyers this summer. richard blumenthal and others are urging airlines to drop back fees during the busy travel season. they say he would reduce long airport security lines. but something was misguided. -- some say it was misguided. pizza hut is celebrating a new store in tanzania. employees and the general manager of pizza hut africa climbed to the guinness world record pizza delivery, 1003 to
48 feet. 9348 feet. and it was a slice of pepperoni. but as the bloomberg business update. ramy inocencio is standing by with the markets right now. ramy: running for today's options insight is scott bauer from trading advantage. he joins us from the cboe in chicago. let's talk about the market overview. we are seeing markets their session lows, the doubt tutored points -- the dow down 200 points. you think this is something for the first quarter or something we can look ahead at the concern for the rest of the year? definitely, i don't want to save the start, not one and done, but retail across the board is awful. it is hard to find any bright spot.
hard to see any immediate pickup. hopefully by the end of the year, by q4 and christmas time, we can see even if the economy picks up, we see an uptick. over the summer months, retail is in for a long, long period. ramy: i can see your eyes bugging out. [laughter] this has been down for the past month, but for the first time today, up 5%. what you feel? that two had asked me or three hours ago, i would have said the market was trying to buck the news from disney and the retail scale, the awful news we are seeing. as the market goes down considerably during the day, the vix is up 5%. i'm not seeing a rush, but i am seeing put/call ratio elevated from where we see in the past. we still don't see the huge
climb, getting to 17, 18 handle, but 15% is notable. it is accelerating during the the buying is accelerating during a day. we will see the follow-through tomorrow officially on friday. ramy: and with the theme of retail, you are looking at falls for a trade. walk me through what you are looking at this in the spotlight. >> we have hurting coming out tomorrow morning. bugged out my eyes earlier, retail is so bad. what i am saying will surprise you and everyone else, but what i like specifically about kohl's is the stock has had a natural 2-for-1 split, trading 80, down now 39. that is not great. they have lowered expectations, analysts have going forward. so if they come out tomorrow morning and kohl's to report
sales estimates in line with the reduce guidance already and not reduce any further, i think the stock is ripe for a pop. not a massive pop, but the upside call spread from reward to risk standpoint are really cheap right now. if we get any sort of news, i want to take advantage of that. what i am looking to do is going 240o june, i want to buy a -- i can use that for $.40, which is extremely cheap from the dollar standpoint and from volatility based on with the market is seeing as a potential move in kohl's. june, about after five dollar move. that could be to the downside. that is not saying if it is up or down. if we get the projected move to the upside, my reward is phenomenal. $.40.e risk i have is
i know with the risk is. ramy: thank you very much for that insight. we will have to leave it there. vonnie: thank you. still ahead on bloomberg markets," until a all day rousseff going out of brazil. and as we head to break, take a look at the u.s. dollar versus the brazilian ray l --iyal. we are looking at a strengthening riyal. back down to 3.44 right now. ♪
dilma rousseff. lawmakers are debating impeachment. she will be required to step down temporarily. then she would face a trial likely to lead to permanent ousting. we have an androgen live in brasilia. garton live in brasilia. what is going to happen? need ar: they only simple majority to open the impeachment process and eventually and the full trial in the senate. they will need a 2/3 majority within the 180 day margin. vonnie: could we start fresh? well, it is unlikely rousseff is going to be able to come back when she is forced to temporarily step down. if we get 54 senators to vote in favor of impeachment, that would of majority, it is
unlikely they would change in the future vote inclusion of this process to allow rousseff to come back vonnie:. what kind of opposition to we expect from the workers party? reporter: the workers party has made it clear they are not going to accept this process, they will resist measures presented by the government. they will be looking forward to local elections in october of this year, trying to secure as many mayor ships as they can. and also looking at 2017 to recover. the pcp is a shell of what it once was. it has been hurt by this candle, and normal brazilians have lost hope the party would be different. and there is some rise of the right wing as well. that is interesting to have happen in a country like brazil. reporter: it is.
also on the social side as well, is aconomic side, there recognition that brazil needs to take care of its budget, get fiscal accounts back on track. that is the first thing the economy needs to take -- to start growing again. the viceo if we say president takes over, does he have what it takes to do what it and outsideazil investors? reporter: he has a very difficult job ahead of him. he is a political operator, he will call upon his political skills in order to get unpopular measures through congress. he is not popular, there is not a lot of love for him in the brazilian population. but he can rely on political contacts. he does have a solid base in order to at least present a few should measures that
work to improving the economy. vonnie: is the general population fascinated, are they carrying on daily business? yeah, in brasilia, it feels really calm, it is different than the voting in the lower house last month. it is a very important thing for something that is going on for months, the process opened in december. in herrecently reelection in 2014 we had this political crisis that has captivated the whole country. vonnie: thank you. it will be a late night for you i have no doubt. live from brasilia in brazil. making sales, falling for a straight quarter. ♪ we are talking to analysts
donald trump has -- against likely democratic nominee hillary clinton. today donald trump told fox he is making about setting up a possibly commission head up by form a or rudy giuliani. secretary clinton draws a 41%, trump wins from 40% of likely voters. clinton --mrs.. clinton -- endured intense rainfall. san antonio was hit particularly ind with cars submerged floodwaters. the justice department will not seek the death penalty for the chief suspect in the deadly attack in benghazi.
he is awaiting trial after pleading not guilty. for americans died in the 20 oh that including the u.s. ambassador. federal prosecutors provided no explanation for their decision. in italy, the lower house has granted legal recognition to civil unions. inflation stopped short of authorizing gay marriage but it is significant because italy was the last holdout and western europe to extend some rights to gay couples. global news 20 for house today powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. markets close in 30 minutes. we have been looking at a bit of a selloff here. it is down more than half a percent. all this has snapped a three
date winning streak. the worst is health care, led by biotech. and no international is the worst performer today. on the year down more than 75%. today is down sharply that prosecutors are demanding information from endo international around his migraine drug. sayinge complying but they cannot predict the outcome of all this. tough break for a stock that has broken on investor concerns. the worst point dragged on the nasdaq is apple. apple is attracting fewer first-time smartphone buyers. resultsion, supply suggest there will be a continued slide in the smartphone market. thathis tends to cement things could get worse for apple before they get better after the
company's march report, well below. all of this as shares of apple arch struggling -- are struggling to support by support. certainly helps to explain some of the movements. arts, thelectronic company is searching after the company reported a strong fourth-quarter report, beating estimates. we have a bullish response from the street. they say the beat was driven by strategically important areas like star wars and mobile to games. suggesting electronic arts could trade higher by more than 40% from current level. stock that really hung in there to reclaim its long-term uptrend. vonnie: thank you. eight 4.5res fell to year low today.
it has missed analyst estimates. is senior analyst oliver jan. what can macy's do to improve? there are external forces they can do nothing about what is it taking care of the internal things they can work on? oliver: there are some things macy's can do. it needs to rethink the department store. the need to generate store traffic. maybe health and wellness initiatives come exclusive brands. but there is a problem with the state of malls and macy's. less foreign tourism and store traffic is been a problem. vonnie: this idea that a stronger dollar has not helped, and that is for sure, tourists are not spending as much. but surely a lot of macy's sourcing comes from countries where currencies are weaker and it has been helping. discovered that
tourists just did not come this year at all. last year they came up spent 20% less. their numbers were down 3% -- 20%, and 5% of revenue is from for tourists. promotions are a big deal, they are very over inventoried at macy's. this is in part due to the weather as well. vonnie: what can macy's do about fixing the idea that the mall or the department store is dead? oliver: it is about the instagram generation, generation z. what does this young shopper really want? wellness, a juice box, a medical appointment, a supermarket at macy's. it is about bring traffic, bringing fun, making something customized. making the department store a cultural institution again. vonnie: it is not pricing? is that things like inventory or whether -- weather?
both.: it is probably it is the technicals of promotions and what you're getting but it is also a broader question about how can that person who is assessed with instagram and snapchat be excited to go to the mall? but we are seeing lots of promotions. 40% of online traffic is mobile. phenomenonultural that is becoming a shopping phenomenon. customers today expect the same experience in store as they get online. and macy's is having to adapt. vonnie: after the results this analyst your amazon came out that amazon took over for macy's in terms of market share. i loosely online is growing but is amazon really getting all of the pie? bever: we think they will number one by 2017. millione 40 to 50
amazon prime members. amazon gets you what you want when you want and where you want it. is a factor ine driving success. the question is brand. macy's has relationships with vendors, they have exclusive brands, and they are edited. it is the shopping experience you look for when shopping experiences. can amazon match that? we'll see. amazon there is exciting for everybody. vonnie: beers people have been resisting the idea of monetizing the real estate. due to parma source have to do that. how much will macy's have to look into doing that? oliver: macy's wants to be careful. they are running the business for decades. the not want to make a decision that deters the near term in terms of taking on leverage. we are in a fashion business and
sales can be volatile, so it is something to consider. hudson bay has done a good job with joint ventures. but there is a new executive in place. he came from the real estate arena. oliver, thank you. we'll have to have you back in time. the performance is down 14%. a very bitter pill to swallow today. less than a half an hour left in trading. let's take a look at the major averages. , 190 points.1% the nasdaq down .8%. s&p down a key points. ♪
♪ this is "bloomberg markets." a quick check on markets now. we have a look at the major averages. the dow is down 1.1% with just about 20 minutes left. a down day all around. for our bloomberg business come a look at the business news right now. it has sold to fight resources -- the company is working i number of smaller deals that will raise $780 million.out coexecutiver former
don blankenship want to delay his entry to present. whethert has not ruled the former ceo should stay free until his larger appeal should be decided. he was sentenced to a year in prison and $250,000 for explosion years ago that killed 29 people. topacex capsule is returning earth after a one-year mission. the dragon left earlier today. it has been at the station since april 10. dropped off supplies as well as an inflatable room which will pop open in two weeks. items were packed into the dragon including gloves and urine samples. and that is your bloomberg business flash. the now to head back to conference.
bloomberg's accessor is back with more. erik: his firm, which manages billion, but principally structured products, that is where i want to begin. and sellument you buy are backed by cash flows. they are supposed to be uncorrelated with what happens with risk assets. february,uary and structured products were trading like oil. what happened? clay: i'm glad you point out that it should trade quite a bit less correlated. listen, i think over the past few years these markets have experienced a tremendous paradigm shift in the provision --
providers which trade in these products are now related by dodd frank, the plethora of relations. the result you have seen is they are reducing their economic capital, and most recently political capital. to effectively try to understand and do what is right with respect to these cash flows. the liquidity provision mechanisms that had been there --yes, it is think gone over 50% of the past three years. erik: the withdrawal of the banks from markets means that when there is a selloff, you kn ow, there's nothing to stop it? clayton: certainly banks have
now seen themselves in a business --matching buyers and sellers. i think that is what he saw mid-february. spreads widened out where buyers wanted to step in and participate in the cash flow. if the fundamental cash flow is beename and you haven't curated the projection of default or prepayments on a protracted basement -- basis, yield has gotten wider. part of that is natural and parts you tuesday. the required -- the repricing of the liquidity provision. erik: you should get paid for a better. clayton: i think we are now. spreads will not see compressed to print january levels. clayton: our market has been training wider for the past six
or seven months. i think spreads will stay wide. there is great opportunity in the market right now. quite frankly, we are in a sort receive cash flow business. we have increased current carry-on or assets to prepare somehat we could see increased volatility in these markets. you run a hedge fund, your investors do not allow volatility. what you do to minimize volatility in your returns? clayton: we have increased our cash, we are now running at a short position which is the highest we have run since inception. importantly, on the long side, look for uncorrelated streams of return that throw off a significant amount of carry in a very short duration. erik: the holy grail. clayton: that should minimize the volatility of the portfolio
on a go forward basis. which we are ok with. erik: what kinds of things are you doing now? clayton: we are doing more lending through this cycle. a trade where we have allocated maybe 10% of the portfolio of the last few years. we are in partnership with nine -- nine of the largest commercial mortgage originators that are underwriting commercial mortgage loans under a commercial guideline program. the way it was, we get to look at these assets and we get to effectively underwrite the individual loans at the time of origination. we will balance sheet it, basically that 0-10%. erik: this is way before securitization. clayton: i think this is part of this paradigm shift in the weight you see capital get treated now. thes the -- before
organization. -- we want to get paid if we do the credit work. we do not want to get paid if prices go up or down. we want to get paid for doing the appropriate yield on that cash flow for the duration, be it three or four or five years. there are some questions and doubts being raised about the durability of the credit rally we have seen since february 11. how do you feel about that? clayton: i have probably been on record a few years ago thing that spreads will not continue to tighten ad nauseam. we think that beta has for the most part let the market if you use ago. we are taking a big bet on ofing long assets with a lot spread duration and seeing those go tighter. we have done the opposite. we want to increase the current carry-on the book, want to buy cash flow that has a nice
profile. if you buy assets that should pay off our in four years that are now trading at 80 something dollars, it is hard to see those. they should go up in price. at the end of the four years, they are either going to pay off for they are not. irrelevant of credit spreads, those are cash flows that we like. erik: great seeing you and thank you for taking time for us. funny, back to you in new york. -- vonnie, back to you in new york. tuned to bloomberg to the -- tv. of the big short. coming up on "bloomberg markets is over in just
♪ is "bloomberg markets." markets close in less than 10 minutes. it looks like we are headed towards session lows were now with just a few minutes less. the dow is down by almost 210 points, down 12% nearly. and the s&p 500 and the nasdaq down almost by 1%. earnings are basically the biggest weight off of retail stocks we're been talking about through the course of today. this equate being a huge weight there. let's see how the s&p performed over the course of the day.
generally it has been a race right to the bottom. let's take a look at the 9:30 open. we had some earnings, macy's came up and took the s&p down. we saw the fall. it was down all the way to the bottom where we are now. i want to show you a final check 's 10 sectors. nine of the 10 sectors are all in the red. just utilities are in the green. energy had been up for most of the day after that surprised u.s. little surprised -- oil supply data. let's take aetail, look at macy's because it has been one of the biggest brands we have been talking about. down by 50% today. -- down by 15% today.
that was really good news ended. sales fell by 6% and revenue million short of estimates. office depot as well as staples, these two companies were the $6.3 billion deal that never happened. office depot think it will now not appeal a court decision that would block a deal to combine the copies. that deal with officially be terminated may 16. 212 points.own what does this say about the future of retailing that this deal fell through? to understand, in part,
this is a response from staples and office depot to what is happening with amazon. they have raised the possibility that amazon business, which is only been around for a year, is going to grow and be a real competitor. it is the bricks and mortar versus online argument which is playing out in retail. just look at the decline of macy's shares in other retails. amazon may be the biggest u.s. apparel seller by next year. vonnie: if amazon is going to become addition to this bigger staples, office depot combo, then why did they decide against this? what if one of them doesn't survive now? david: that is the risk. it is a matter of where the business is as opposed to where it is going. if you are running a company got you want to refocus on the next few years. we have seen the explosive growth of amazon overtime. years ago, this company was a little niche seller of books
movies and music, and they have taken over one category after another. if you are staples and office depot, you definitely have to worry about the possibility that they are going to wait -- make real inroads into your business. it is understandable they want to make the deal, and also understandable that it would not go through. vonnie: it seems like a place right into amazon's hands. if you want to check out dave's charts, just send him an e-mail. that is it for "bloomberg iskets." "what'd you miss?" next. the dow down 1.2%. the nasdaq and
>> u.s. stocks closing low this afternoon and retailers low. joe: the question is, "what'd you miss?" >> we look at what is next for brazil's financial markets. joe: plus the new american home. shrinking inside and buyers want more density and less long. that is according to a new report. we have a chart you cannot miss. >> and the next step in the greek aside up. - debtbout that relief - relief? >> it has been a steady seller through the date with a net at their session lows. the dow falling more than 200 points. nine out of 10 major s&p 500 groups are lower