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tv   Bloomberg Markets  Bloomberg  May 16, 2016 12:00pm-2:01pm EDT

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-- disappointing chinese data fueling concerns about the largest data. scarlet: and the market seeing a rebalancing act. there could be $15 oil -- if the dollar oil by the fall. alix: and sitting down with mahindra and mahindra founder. we will get his plans for international expansion. first, we are halfway through the u.s. trading day. we check in with julie hyman. indexes are at session highs.
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a rally that gives building as the day goes on. which has been a leader all day long, it is now better than 1%. 5%.dow and as the -- snp it is commodities given. -- driven. todayals are also rising as the price of underlying commodities are going higher and technology and industrials contributing to gains. a pretty broad-based in utilities. utilities are the only down right now. let's take a look at the underlying commodities. you heard daniel juergen's $50 forecast. your hearing more strategists come out and raise their forecast for oil. goldman sachs, they have the latest. the oil is going to a deficit sooner then they had predicted. now $47 67 a barrel.
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as bigures not seeing again, but we will see inflows into gold. let's look at copper. gold is the best performer in the s&p 500. it is raised to a $15 over cap one. analysts are saying the company will make more moves to the .ight side of the balance sheet those moves are coming soon. it has already been paring down its assets. an apple is a part of what we are seeing today as well after berkshire hathaway disclosed estimates. that became 9.8 million shares stake in the company, nearly $1 billion. those shares arising three print 5% just 3.5%. and speaking of berkshire hathaway, it is backing one of the many bids for yahoo!. the effort led by dan gilbert of quicken loans, but berkshire is
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involved as well. pfizer today, it is acquiring and a core, a maker of -- annacore. it is surging on that. and a deal in the energy industry. the range of resources requiring memorial development. this $3.2 billion or $4.4 billion if you add in the debt, these resources have surged heading into today. i know that is one of your topics, alix steel. he talked about, there has not been much dealmaking in energy. companies have debt, why would another company want to take that debt on? good stuff. scarlet: thank you so much. let's check in with the first word news. shery ahn has more from the newsroom. shery: voters go to the polls in
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oregon and kentucky tomorrow. hillary clinton is as that eight training center in louisville. bernie sanders is also in the state. he is talking about the worsening debt crisis i have the primary coming up on june 5. donald trump says for to senator marco rubio is not on the consideration to be his running .ate the washington post reported him, chris christie, and sarah palin being considered possible vice presidential picks for donald trump. he tweeted that this is wrong and most of those mentioned are not being considered. the supreme court has compromised in the affordable health care act. contraceptives case. to sended unanimously this back, saying both sides may be able to resolve the dispute. religious groups challenged the requirement. this coverage being included in employee and student health plans.
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the campaign backed by a billionaire environmentalist is trying to gather signatures for a ballot measure that would make more -- it would raise california's tax on cigarettes. this comes less than a month after california's legal age to buy tobacco was raised from 18 to 21. global news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world, i am shery ahn. scarlet: thank you so much. is the usa income giving up on dividends growth? perhaps. last quarter companies raise to dividends at the slowest pace since the start of the global market. this comes with incomes at shrinking. alix: the next guest says investors need to focus on companies bucking the trend and .ctually growing dividends he is the portfolio manager at black which manages $21 billion
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in assets. you like this story. what is the number one for this? >> reading about income growth, reading about companies that provide a healthy, competitive income that can grow that income over time. that is very appealing to today's low interest rate environment. scarlet: our growers more prevalent in some sectors? >> we are finding across many sectors. to that i would point to our health care and financials. alix: having a high quality growth sounds awesome. i can imagine a lot of portfolio managers are looking at something very similar. do you think it is crowded? >> no. since the onset of quantitative easing and zero interest rate policies, investors, a lot of investors looking for income have bid up the current high-yield. so this is trading at very high
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valuation. that is risky. on the flipside, companies that exhibited high growth, they had been ignored, almost left for dead. they are trading at valuations with a standard deviation. scarlet: so companies with high yield are crowded, but others that have the potential to grow quickly are the ones you would focus on. >> we are focusing on the competitive deal. .he average is about 6.5% that is for dividend growth. alix: so yields relative to forward power ratios are high, versus the orange line which is quite low. >> exactly. that is empirical resources. alix: as we are in a proper rollover, you see quarter after quarter, hundred companies keep paying out dividends and growing them when profits cannot keep up? >> that is a challenge. we are in low gdp growth
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environment, and that is now lower earnings growth. so we focus on companies where we think their unique specific stories, they can grow their origins regardless of the broader macro outlook. we also look for companies with strong balance sheets. it helps the dividends capacity. we look for low pay out ratios so we can grow them. scarlet: how much you look at active investors like carl icahn? they would agitate for some of those necessary things. >> we do this totally independently from what analysts look for. we usually come back to a company or stock, but not because we are looking for assets per se. alix: you mentioned health care and tech. why are those two where you see them owner you see them in the stability bucket, and they are more representative. -- macro sensitive. health care is growing, good
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revenue, the top line, dividends growth. the valuations that are attractive compared to other stable growers like staples and utilities. that is what we are seeing on that side. with the economic census side, we see financials. and banks particularly. historically banks had equity before the financial crisis. we think they can become that again. they have been dividend constrained for a couple of years were they had to use free cash flow to build their balance sheet. they are such a point they can return, increasingly return that capital to shareholders. scarlet: they had been restrained by regulation, need to get approval before they can do a lot of that. and what about m&a in health care voter --that increased dividends how does that increased dividends? >> we talk about companies with self-help opportunities, some of them have margins.
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others allow you to acquire weaker competitors and grow your business that way. that is what we are seeing in health care. scarlet: thank you so much, blackrock portfolio manager. alix: still ahead, erik schatzker is sitting down with on of mahendra. they will look for the future of the company. ♪
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♪ alix: you are watching bloomberg markets. scarlet: let's go over to erik
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schatzker. he is sitting down with anand mahindra. eric: a pleasure to being here with you. let's start with your company. it generates the vast majority of $17 billion of revenue in india on a consolidated basis. i want to ask you about the economy. public and private forecast have economic growth at 7.5% on a poorly higher in india. .s that -- partly higher is that realistic? anand mahindra: i think it is. india has always been pregnant with potential. it is one of the most common phrases you hear. i think this time it is possibly for real. the current government to continue the metaphor is going through hard labor, and people are wondering whether this will result in any output at all, if you will.
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but i think things are very propitious right now. there is one part we are watching, and that is the monsoon. after so many years of modernization, we are still looking up at the sky to predict what the view will be. if we are blessed with a good monsoon after two years, then agriculture will take off, consumption will take off, and india will surprise on the upside. eric: i want you to fall in the blank. growth could be faster if prime minister modi did what? anand mahindra: there is no syllable bullets. i wish there was one blank. there are things he has to do to get out of the kind of slumped india has been in. he is getting a lot of flack for not doing something really big. i remember when i was interviewed right after coming in and people asking me, is there too much hype, too much expectation? i said finally, there is hype
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and expectation. he brought a lot of energy and expectation. there is a downside to that. but what has not been communicated well by his government to be honest, strange because he is a good communicator, is how many things are going right. how many pieces are being put together. so i'm happy to go into some of them, but the fact is the number of the small pieces of building a foundation, and i think that when added together, india is going to surprise. eric: what else stands in the way of economic expansion? anand mahindra: right now, it is getting the benefit of transparent business and transparent into price down to the lowest -- enterprise down to the lowest level. what i give him marks for is bringing in transparency and big business. companies like me, this is an unbelievable time to do business. happen is like us that do business the right way are finally seeing your miss transparency.
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i have not even been to new delhi to meet mr. modi since he got elected. there is no need. i have no request. when people tell me, you have not met the prime minister? i say, or what? a call us, they asked about the impediments. eric: seachange. anand mahindra: that is not being credited globally. the problem is, if somebody asked me, has everything become transparent right down to the bottom? no, that is what he is working on. he has a wonderful acronym called jim, which is mobile. he is try to get subsidies and benefits directly to the moon people -- modern people. eric: what about central-bank policy? are you among those people that say they should be ready -- cutting rates faster? anand mahindra: no, but the man
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has been one of the biggest treasures of the u.s. economy -- indian economy. when i come to wall street and you talk about who is the best finance person in the world, they always throw around his name. he is very respected. he has been his own man. he has reigned in animal spirits at the right time. and he is beginning to ease up on rates at the right time. eric: what is your read on the chinese economy? it ismahindra: interesting. for many years, the entire world , economic and business community have been telling china, you have to change your model, cool off your growth rate, go to consumption. they are finally doing that. this was a figure they came in for industrial production yesterday. eric: if you believe the figures. anand mahindra: i have no knowledge to disbelieve them. even if you punch back a reasonable amount, you have 37%
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growth after all this time. if that becomes 6.5% as they make the transition, is that not what we asked them to do? eric: so you are fine with that what is going on. it does notra: worry me. what might be a question is the political season. how is the new regime perceived, what is the climate for doing business in china? that is a far bigger question. it was seen as a machine until 2014, and then revenue growth stopped. what happened. anand mahindra: it had to some of the economy. we are still very dependent on the indian economy. they went into a little hibernation, if you will. and due to the monsoon ritual, the bad two years, there is another interesting reason by the indian economy lost the ability and steam.
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there is a story behind it. i'm international magazine once said crony capitalism is a type of quantitative easing, which i thought was interesting. crony capitalism out of an economy, you are also sucking out a lot of oxygen. until a government can step in and replace that private capital with its own and for structure spending and that picks up, you get a lot of this. given the dependence of the indian economy, we also went into a bit of a lull. eric: so how do you become less dependent on the indian economy? you want to become one of the most admired brands by 2021. how do you do that without doing business outside of india? anand mahindra: that is a leading question for me right now. .he goal is to diversify when we become as large as we are, we are not enormous, but we can be looking for alternate
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sources of revenue generation around the world. that is the goal. interestingly, we look at the havest-growing company we in terms of product and brand right here in the u.s.. the ad tracker business. i don't think you look like somebody -- eric: i have not lately driven attractor. -- a tractor. anand mahindra: but you would know what demand was. eric: can you grow the international business organically, or in order to achieve your directors, you have to buy something? anand mahindra: it is a mix of the two. you can acquire organic growth. we have acquired a very significant stake in mitsubishi tractors, which interestingly fell through the mahindra brand in the u.s. so we are doing both organic and
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inorganic. eric: i have not looked through your last report. the next one is coming soon. this is fiscal 2015. you look at corporate responsibility pretty seriously. anand mahindra: absolutely. eric: i need to talk about promoting gender equality. in the same report i came upon a figure that suggested mahindra and mahindra employs 20,000 people full-time, is that right? anand mahindra: the total group? eric: mahindra and mahindra. only 527 are women? anand mahindra: it is not something we are proud of. eric: what do you do about that? anand mahindra: there is no simple bullet. if you say i will mandate a kind of affirmative action, you raise also other issues about their talk mercy, the feelings. eric: but this is what makes it so complicated, which it is.
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anand mahindra: we founded a place where we succeeded the most in the group is the real estate division. woman.leader is a and we find a lot of the top management are suddenly women. there is a phenomenon there. ceo,you don't have a woman you get an answer that they are looking and they cannot find anyone who is adequately competent. the case,f that is can we count on mahindra and mahindra to put in more women? anand mahindra: yes. you are seeing leadership of many with women. you don't get it by affirmative action and mandating it. eric: thank you so very much. anandt, alix that is mahindra. scarlet: thank you so much. eric with this chairman of mahindra and mahindra.
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alix: today's stock has lost altitude this year but it is flying higher things to some delayed rivals. ♪
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scarlet: breaking news from the treasury department, saudi arabia holds $116 billion in the u.s. treasury as of march. this is according to data in response to a freedom of information act. alix: reason if it is significant is the new york times promoted that started officials had threatened to sell $750 billion of treasuries and other assets if congress enacted a bill allowing the kind -- the kingdom to be held accountable for 9/11. the figures do not add up. we are looking for this figure from the treasury. scarlet: more to come as we get
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in details. let's bring in julie hyman with the missing stock. it is flying higher things to delayed arrivals. julie: so it is delta airlines. alix: i thought delta. julie: say what is in your head next time. so they had been down, itching percent. hurt by recovering oil prices and a drop in passenger available seat miles. they are now turning their planned growth for the rest of the year. they will delay delivery of four jets as they attempt to reverse revenue decline. essentially near capacity cuts. scarlet: daniel juergen of ihs says ricky things oil is going next ♪
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alix: five from bloomberg world headquarters in new york, i am alix steel. scarlet: this. let's start with the headlines
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on bloomberg first word news. sherry and has more from the newsroom. : the justices rejected an appeal from a man who said he had the right to stage a protest. 's action says that the court can bar protesters from the plaza without violating the constitutional rights. hillary clinton's super pac is apparently planning to launch an anti-trump add pledge. they will start airing the general election ads on tuesday. they will spend $6 million on virginia, florida, nevada. nearly 60% of americans support replacing the affordable
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for all.buy a plan that is a plan backed by bernie sanders. hillary clinton once the aca to stay in place. donald trump wants to repeal the legislation. terrorists have been trying -- bloomberg news reveals scores of attempted attacks on railroads, bus lines in europe and the united states. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. back to you. scarlet: thank you so much. if the global oil market ready to make a turn?
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some say yes. it will push oil prices to around $50 per oil. alix: we are joined now from washington. good to see you. you are not alone. i got a flurry of reports. you have goldman, barclays, all going out saying, we are to see the market turned faster than we thought. what happened? we have been saying since february that we thought the second half of the year would be different. we saw projection -- production going down in the united states. that production is now accelerating. we have also seen a series of disruptions that tell you, as the market tightens, disruptions would be more significant. our notion of around $50 in the second half is based on no major disruptions. if you have been a swing that blowup with fear, then we would be looking at a different situation. scarlet: how different? >> it would obviously be higher
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prices. at this point, i cannot say what it is. you have seen a million barrels per day. nigeria is down to a level it has not seen in several years. already, there are disruptions in the market. we have had enough supply to offset them. it is going to change. downturns do not last forever. happened 18-20 years ago. alix: many of the big things have changed their forecast for the short-term. goldman happened sachs sees weas in 2017 because they think more supply will come online. what do you think? think there are two sources of supply that will come online. one would be a recovery or stabilization. the other thing is a new stance led by saudi arabia.
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they are sending a different a surge. their sending a message about putting more supply into the market. -- ourse, iran was to wants to put more supply into the market. we really think we see the balance in the third quarter. charti have a great i want to share with you. it is the forward rate of oil. currentge line is the curve. what prices are now, and what they will be. the green line is what the expectation was just one month ago -- no, we do not have the chart. the point is we have really seen the curve flattened. i think people still see the short cycle
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come back. you start said to me, to see production stabilize again. in the last month, the new energy miniatu minister and thef ofdi aramco all talk increasing production. those are the factors that way on that site -- weigh on that side. expectations are one thing and what happens to the market is quite different. scarlet: absolutely. production being the swing barrel. it he in april 2015. it has been falling. we have any indication of where it will bottom out? >> we think it will bottom out in the second half of the year
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about 1,000,000-2,000,000 lower than the peak that you have. that is at the point where we see it stabilize. we think of it as a short cycle. we still have to find all the people who have left the business and gone and gotten other jobs. i don't think you will see the kind of growth we have had in the period before the price collapse, what you will see a steady increase. they can operate at a lower level. uber drivers. and youe left the rig have to put them back to work. what is the longer term replacement cost for oil? >> i think there is not a single
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price. it varies. cost is the low mideast. the mideast producers are much more focused on the fact that a are low cost producers and they build on should that. show oil was thought to be high cost, it turns out it is low-cost range. ultra-deepwater are the investments where you have the big cuts, bi and you can't turn them on a dime. scarlet: doha came and went to will anything interesting come out of the june 2 opec meeting ? >> russia is talking about the freeze, and they are in talks with qatar and others about it. the saudi view is that they are
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not going to cut back, freeze, or do anything while iran is increasing. meanwhile, the iranian oil minister said we are in an undeclared oil war with saudi arabia. they don't even have diplomatic relations with each other. it is hard to have any deal at this point. the producers may shrug and say, we don't need a freeze right now. the freeze was february, which was the bottom of things. alix: and saudi arabia really picked up after that. said?need opec if they will not be using it to balance supply and demand globally, what is the point? >> there have been many epitaphs .aid for opec its role changes at different times. it is a framework when producers want a framework for things. i think, right now, the clash between iran and saudi arabia
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makes it very difficult for opec to do anything. i think the times when they decided it is in their interest to have a framework, that is when you see it be more active again. it brings them together and gives the opportunity to talk to each other. alix: maybe. >> or not. scarlet: you mentioned how saudi arabia and iran to not have relations with each other. there are obviously tensions. what do people get from the most when it comes to saudi arabia's willingness to cod go toe to toe with iran? >> one is the market share with iran. the other is the impact of the four strategy which will change not only saudi arabia, but also the oil market. i think they have a much more competitive strategy than in the past. what westriking is maybe don't see here is how deep the rivalry between these two countries are.
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the saudi's and other gulf countries will leave they are surrounded by a militant iran and they regard the new year deal -- nuclear deal as possibly -- a threat. up,: i just want to wrap it talking about nigeria. you mentioned venezuela and other oil outages. take a look at the bloomberg. you can see what we are talking about when it comes to nigeria. this is oil production currently. analysts that it could even be lower. look at the unbelievable deep decline. are we in the kind of scenario, like in the early 2000's where nigeria is shot for a long time due to all of the disruption? two countries with disruption started in the early
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thiswords nigeria and for way love. maybe we will see of repeat. this is a tough situation for nigeria because revenues happened coming from or. prices are down, and they are losing supply. nigeria is a country with a lot of problems. nigeria has moved to the for with dennis whalen and the oilsands in canada as one of the factors of disruption, as well as continuing disruptions in libya. all of that has to be balanced. your $50 call does not factor in those estimates. if you call them in, which you fact -- would you factor in $80 oil? i would not put a figure on it. nextd could grow over the
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five-six years. you need a lot of investment on top of it. $50 is awaiting station. it is not a permanent destination. scarlet: got it. thank you so much. we will be right back. ♪
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him him scarlet: you are watching global -- bloomberg markets. this is the global business report. with google in hot water european antitrust authorities. the largest search provider is facing a record fine.
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scarlet: changes may be underway for over france. -- uber france. alix: lonmin said it was cash positive for the first half of the year. they are the first minor to implement a cost-cutting plan to save the business. 40% sought to survive a drop in the price of precious metals since 2011. they also cut 5400 jobs. the ceo spoke with bloomberg on the money saving measures. >> it is amazing what you can do in top times. we have done a lot already. whichst program is 57% means we are ahead of schedule. working veryng -- hard. we have removed high cost production. we are moving some high cost production as well and what we
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promise is a high supply market. finish crane maker has abandoned a plan to buy all terex.n terex has the right to terminate the deal by the end of the month . phillips is looking to raise as much as $1.1 billion in the ipo of its lighting unit. the dutch company is offering a 25% stake after they failed to find a buyer. phillips will focus on the global health market and consumer goods. google faces a record antitrust fine in europe. according to "the telegraph" the british could should plans to fine them.--
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france wants to be classified reclassify were drivers as employees. that would cause the company to pay millions into the french welfare system. they say they are independent contractors. alix: welcome back to bloomberg markets time now for our bloombg quicktake, where we provide context and background on issues of interest. governmentackle corruption. it keeps billions of people in poverty. cracking down on corruption can be costly. in china, a so-called anti-graft campaign is underway with far reaching effects. it has caused a slowdown in height and spending, and rattled the security market. officials try to steer clear of trouble. over in brazil, a pro-revealed a
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decade of kick backs. don't forget panama papers. the trove of documents exposed politicians and other figures around the world were using shell companies and offshore bank accounts. corruption and the fight against it goes back centuries. some companies have cleaned up corruption. hong kong and singapore set up powerful watchdogs in the 1970's showing how cracking down can be as the board -- a springboard for development. have joinedompanies the united nations convention against corruption. caner delivery of services provide incentives against cheating. there is a question about whether shifting cash from envelopes the lobbyists has
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solved the problem or made it worse. that is the global this is report. for more stories, visit bloomberg.com. scarlet: up next, amazon said to labelut its own private plan. we will explore. ♪
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alix: this is bloomberg markets. i am alix steel. scarlet: i am scarlet fu. alix: amazon branded db food. it may actually be a reality. amazon is that to be rolling out its own private label for everything from nuts, coffee, to household items. scarlet: who is already feeling
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the pain from amazon? department stores, for one. let's bring in a bloomberg gadfly columnist who has been following all of this. let's talk a little bit about amazon and its private label initiative. items.ousehold this is kind of like what cosco does with kirkland. >> exactly. amazon has been dipping its told in this for a while, and it looked like alix: they will make a bigger effort. what is the impact on that? grocery will be the biggest issue. they are already becoming a bigger leader in online grocery. this is a way to make it more profitable by selling their own goods. scarlet: there has already been a little bit of these private-label goods being sold. it is just an experimental
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phase. has it been enough to move the needle for amazon? >> not yet. they have done private label far, notbut so really. amazon likes to dip its toes, tried out, step, and then go full force. alix: what does that mean for basic retail stores who have their own labels? >> they have been doing well, depending on which we tell her it is. kirkland does really well for cosco. that is something that people get really attached to. depending on the category, it is not always do well. particularly clothing. people would rather by the -- buy a brand that they like. scarlet: that is where department stores have been moving, their own private label closing. doesn't that blow up in their face at some point? >> kohl's said that last week
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that they would go back the other way to increase the national brand. retailern a rea makes the brand, doesn't offset? >> they don't have to pay more for and pass it along to the customers. they can charge over prices. that is what consumers are looking for a t shirts, sweaters, basics like that. where it is heading department stores the hardest is in the rack, se consumers are going there for the brand. scarlet: what does it mean in terms of a store like nordstrom, which has been very aggressive expanding its off stores?
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e-commerce,ke out they are still growing. i do not have any numbers to back us up because they do not disclose, but i have heard a lot from people who say there are too many private labels. scarlet: macy's has been slow to the off-price conduit. they're looking to build it up. >> they are really behind on the game. their backstage store, their answer to nordstrom's rack, if it takes off, they will open 200 or so stores. it is not the time to talk about opening new stores. alix: with nordstrom, you need the mark town. >> exactly. and macy's, they are putting their store sometimes inside the regular store. scarlet: it sounds like an
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aggressive game of catch-up. ,, terry,ca go to god flight on the bloomberg. stay with us. ♪
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>> is 1:00 p.m. in new york. scarlet: welcome to bloomberg markets.
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alix: good afternoon. here is what we're watching at this hour. oil leading a rebound in commodity and stocks today as goldman sachs upped its forecast saying the markets moved in the supply deficit earlier than expected. scarlet: steel and coal output dragged. her new to support its economy. ready towarren buffett embrace internet stocks? the investor is said to be backing a group bidding for yahoo!'s core assets. julie hyman has been tracking the latest, including the implications of oil passes rally. julie: applications for at least today when it comes to stocks. we see a rally in part because of the strength and energy though we are seeing industrials and other shares
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doing well today. technology is also part of the story. .ur -- all three major averages we see a study trend up through the morning. we reached the highs of the day and then we have stayed there. we will have more on that in about 10 minutes. ,il is part of the story goldman sachs upping -- saying they underestimated how long it took the deficit to come back to the oil market in terms of supply. you see oil at 4756 per barrel. this is a commodity price forecasts, the consensus forecast. forward on current oil. here is the fourth quarter of 2016 and where we are seeing oil prices, around $50 per barrel, just shy.
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the forecasts are a little below that for the fourth quarter of the year end then they start to trend upward. we are still seeing a consensus for oil prices a little below $50 per barrel is -- by the end of the year. it does seem to be shifting more of a recovery positioning. here are stocks benefiting from that today. alix: can i assume the dollar is weak or if oil is rallying? no, not necessarily. that is interesting, right? very little change though it is true if you're looking at pacific -- specific currencies and specifically the commodity driven currencies. the dollar is down versus them. -- and ahe norwegian canadian dollar, all of them are gaining steam versus the u.s. dollar as we see the gain in oil
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prices. scarlet: let's check in on the news this afternoon. more from the newsroom. >> president obama is honoring 13 law enforcement officers who risk their lives to protect others. the matter -- medal of valor was presented at the east room. honored, a 2013 rampage response at a community college. to give money to donald trump have a problem. where do they spend the money? because trump condemn super pacs during the republican primary, he is far behind hillary clinton of having a network of big-money allies. off an preparing to kick $135 million advertising campaign in three weeks. thunderstorms in southern texas have dumped up to one foot of rain and led to rescue us.
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emergency management officials reported high water rescues from vehicles. the national weather service rain all week. the u.s. coast guard is suspending the search for a cruise ship, a passenger believed to have fallen in the gulf of the mesko. surveillance video shows a woman falling about 2:00 a.m. on friday. search for more than 20 hours, covering 2300 square miles. global news powered by our journalist in 150 news bureaus around the world. scarlet: the chinese economy granted down a gear in april. down from 1.68% in march and missing the estimate.
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retail side it was also week, missing estimates at 10.1%. scarlet: estimates for 11% growth. alix: we are joined by darren in washington a resident scholar and chief economist. it seems the rhetoric is that notstimulus led growth is here anymore. do you agree. i did not believe it was there in the first quarter. i think people over interpret wheremovements where -- the margin -- the margin of error is much bigger than that. more interesting than retail e-commerce draining from conventional retail. do not make sense compared to the real numbers. i think people can over interpret the change.
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there are two factors that hold true. scarlet: there is a lot of confusion as to where policymakers stand. there was an editorial of unauthorized officials telling about how there is a need to focus on restructuring reform rather than sustaining growth. where do you stand on this debate? >> i think that anonymous person , first of all funny and second, i think it is a sign we are having a battle between the reform camp and they are going back and forth a when you see forward,dit going saying that leveraging is accepted and the real danger is china is not collect and growth. debt and debtr is accumulation continues. bit inave seen quite a
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the big issue is raising rates and that really takes off. when does the bubble burst? to see there anxious bubbles bursting. bubbles are bursting in china all the time. that burst.ble before that, the bond bubble burst. it went into commodities futures and now into property. about the talking macroeconomic bubble, china can keep this going for a long time. i would look for property to inve again as money pours and that will pop at the beginning of next year. the boonyou're saying we saw on home sales is only just getting started and we content -- we can continue to see it in the rest of the year? >> the dominant factor is where the money is going. was in stocks and it left
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stocks and then it was in bonds and i left bonds. the obvious choice is property. money pile that moves around the chinese economy, ghost property, then yes, nine months of rapid property gains because that is where the money is. futures, prices really hit the roof and then came down quickly and stepped in and really tried to clampdown on speculation. scarlet: when you put it all together, what does the turnaround in property tell us about how fluent dutch fluid these trends really are? maybe they are not as well entrenched as they appear to be? >> follow the money. money was forced out of the futures market by chinese regulators.
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to see where the economic activity will be concentrated in china, where does the money go? it is going somewhere. meantime, what kind of stuff do you think we will see from the government? >> every time the money moves from some market, they regulate. always behind the curve. governments cannot keep up with the market including the chinese government. the only solution to the merry-go-round is for china to deleverage. if we won, we would not see money growth in the double digits and the case of high double digits. if you are looking for a telltale sign of a real change in china, it would be that the credit creation would come crashing down.
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i do not think that would be the winning political position. >> what does your work tell you in terms of the labor market? you have noticed evidence of weakness there. >> the economy has been weakening. most of knowledge this now. it has been kind of weakening for five years. what is interesting about the survey, 3000 firms, we did not really see labor market weakness until years into this. the labor market was fine and there was no reason for the party to panic as a result. and we do seeue the labor market weakening over the course of the year, we might get a move toward much more aggressive apology making. the labor market has been fine.
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it just started to weaken in the fourth quarter. alix: derek, thank you very much, thank you very much. scarlet: still ahead, china is just one of the factors the fed needs to consider at its meeting next month. wrong to doubt a rate increase next june? ♪
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if we are right about the economy and the global economy,
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that is an important element to the story. it will of course create a repricing in the short end of the u.s. curve. that is the chief economist at jpmorgan earlier on bloomberg surveillance. scarlet: let's head to the market desk or julie hyman has more on what we're talking about all week. alix: it is monday. really. the past month, berkshire hathaway is taking a 9.8 million share stake in the stock. it is unclear whether it is driven by fun members at the company or warren buffett himself. certainly giving the stock a boost up 3.5%. how important is this exactly to apple? this is a listing of top shareholders for the company. you have got to scroll down quite a bit. about 57 where berkshire hathaway is on the list. the 57th largest shareholder of
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the company. if you look at how apple has done, you see a sharp decline. the selloff is really selling in april. carl icahn said, it just kept going down further and further. is apple now a value stock? take a look. here is the forward ceo of the company, price-to-earnings ratio. at ausly, it is trading steep discount, something berkshire hathaway tends to like historically. ahead, increase productivity per we will talk about that when we get back. ♪
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>> smart watches, smart glasses, and smart clothing are becoming
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increasingly popular. more than doubled since 2014, 20 1% to 49%. what are the implications for other industries? what's handed over to our radio colleague. for joininus. we are joined by our partner. wearables study. i am rocking my fitbit, a basic part of my existence. you guys talked about what they are using and what they are doing. what you find it? we are looking at all clothing and accessories, and that includes a computer and electronics. fitbits and we're finding predominantly health, by far the largest. one things -- one thing we just
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conducted back in 2014 is that the number of people now has risen significantly. as -- we have seen astronomical growth. have first seen the study, it was information technology. move to theg it mainstream. we are seeing watchmakers and wearables companies themselves. you mentioned one just now. as well as interesting startups and companies offshore is. carol: i'm in between my wearables right now. that is why it is not on my wrist. i have now got a new one i have got to get up and running. what do people like and what the -- what don't they like? >> a good question. you are describing what affects many folks. we -- abandonment has been
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washed talked about in the industry. since 2014, abandonment has fallen. is a cool there factor. they appreciate the opportunities to monitor health and drive better hader. we have been struggling to find the killer app. the fact that you are down on the wearable and waiting to replace it is indicative of consumers and people broadly who could survive. it does not pass the turnaround test, would you be willing to turn around the car? >> i have done that to i have walked out the door and then gone back in and got it. to track every step i take, i want a record of it. >> terrific. an indication that we are now starting to move to the mainstream and people are starting to see the value. >> i thought the run did not
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count. you suggested there is some application that has not happened yet and that has been a egg discussion around the apple watch. i would say better battery life would be the killer app. as potential?ng >> good question. in the consumer space, electronic payments is one that is making it useful. something they can do with a smartphone, the request is what can they do with smartphone, and that is one of the challenges. we will see smart watches in particular become core independence as well as smartphone functionality. one of the other areas will be at the enterprise space. a lot of the study was around the consumer space. the enterprise will offer significant opportunities in the future. augmented reality is a great
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example. imagine you are working at a production facility and are able projected on the --tection you wear anyway, turned itself, change the valve and that will allow you to perform tasks perhaps above what you are trained to do. companies are absolutely trying this. carol: isn't this going to be a low-end and morse -- more simplistic wearable or will this be a high-end apple watch? question. i think it will be at the higher end. lower end, you can buy devices so.ne for $20 or i think the really exciting asas, high-end smart watches well as virtual and augmented realities, i think that is where there is a huge opportunity. greater andint is
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the potential at the ecosystem is larger. cory: thank you very much. we will keep rocking the fitbit. -- tosso toss it black it back to you guys on the tv side. >> thank you. >> still ahead, oil markets moved into a deficit will earlier than expected. more insight the hind is at the back of that call. ♪
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>> you are watching bloomberg markets. scarlet: let's start with sherry. >> the u.s. supreme court issued decisions and new orders today. a compromise in the case of copper -- contraceptive -- in obamacare. they rule that investors can , itst security lawsuits decision seen as a setback to the financial services industry. the court rejected an appeal from exxon mobil, leaving intact a $236 million reward to the state of new hampshire. againstmillion reward -- the money goes to the estate of a smoker who died from cancer. elected president, he says he is unlikely to have a very good ,elationship with david cameron
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the british prime minister. last year, david cameron called trump's proposal to ban muslims from the u.s. divisive, stupid, and wrong. divisive ore is not stupid, calling himself a unifier. congress is meeting with the new , the drugmakeray offers rebates of 10% to 40% of two hard drives. the company says in a statement that the plan is a small step in the right direction but comes nowhere close to fully addressing this critical problem. the u.s. secretary of state, john kerry, met with -- about conflicts in syria, yemen, and libya. there have been violations on both sides. john kerry will discuss syria again tomorrow with the russian
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foreign minister. dayal news 24 hours a powered by our 2400 journalists in more then 150 news bureaus around the world. allison scarlet? scarlet: thank you. we got disappointing data out of china and forget about it. it has no impact when it comes to u.s. equities. up by better than 1% as oil prices climb. alix: let's go to abigail doolittle looking at some tech users on the day. >> we have the nasdaq in full rally mode. shares of the chinese internet stock up sharply. the entire sector of the chinese internet stocks trading higher. we will dig into that. , yahoo!nternet stock
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on theare up sharply news that warren buffett is said to be backing a group of investors who will be hitting on yahoo!. this group includes the quicken loans founder, dan gilbert. it is perhaps a new thing for berkshire hathaway, moving toward technology after sitting on the sidelines of two internet once. perhaps we are seeing a nascent trend in positions. >> this is pretty bullish. what does it look like now? >> it is still very bullish. of yahoo! is up more than 10% on the year. it did recently -- the big day moving average moves up, signaling lots of lush momentum and a lot of buying interest. the last two proved very bullish. from a fundamental analysis
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standpoint, laura martin, she for ahe saw the potential 50% upside for the shares of yahoo! based on her some of the calculations. shortlyhoo! will trade -- sharply higher. scarlet: thank you. alix: i want to bring in alex sherman following this story for us. does this do to open the race for yahoo!'s core business? >> i am not sure how much it does. it is a little surprising that yahoo! is up 3% just on the news of another bitter. that might you little bit of the warren buffett premium. if warren buffett is financing a deal, he probably know something. so maybe yahoo! is not a complete mess, which is what i think the general consensus on wall street has in over the past three months. others pressure on the
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bidders even if he is not successful that they need to up the bid and that might be why yahoo! shares are arriving today. we really do not know how likely or not likely the combination is to eventually win yahoo!. away from my reporting on the sus -- on the subject, so i would not be surprised if we heard anything in the intermediate about who will come forward. i think verizon makes more sense as a buyer because it brings all of its synergies. you would imagine they are willing to spend money on yahoo!, a bigger version of aol. in the bid, it is hard to see where the synergies lie. it is not nearly as nice of a fit as a well and yahoo!.
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alix: one buffett says he wherey avoids industries he does not understand how things work. maybe that indicates it is just an old-fashioned media company as we struggle to identify what yahoo! actually is? >> there is the paradox. we struggle to identify what yahoo! is and yet one buffett is willing to finance the deal. it is difficult to figure out what they are and warren buffett usually strays as far away as possible from companies where it is difficult to figure out what they are. there must be a piece of yahoo! that warren buffett is comfortable with. i would step back here and say he is just financing the deal. yes, they think there is a portion of yahoo! comfortable enough to say, i want to get my as an investment. i do nothing can it is a turnaround story for warren buffett.
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he is not jumping into yahoo! and saying i will own this thing and turn it around. i think it is an important point to make. >> you mentioned we are still weeks away base in your reporting. what do the next few weeks bring? what is the process? >> i have not been told there will be a firm deadline for final bids. it sounds more nebulous. it may happen but it seems like yahoo! will keep talking to the wide net of buyers in the second round. that is still a couple of private equity firms in their. of course verizon. as they talk to them and figure out exactly what they want to to paywhat they want for, it is possible we just get down to a final bitter here and at that point, we try to report that. there is no real timeline
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because yahoo! and the activist reached a settlement. it was important because it pushed aside the annual meeting where the yahoo! board theoretically could have an replaced as a deadline for something to happen. without that, there is no real necessity for yahoo! to come to an agreement with any buyer anytime soon. now thatot matter yahoo! and star board have reached an agreement. kind of world does marissa mayer play here as yahoo! looks to trim down the bid? >> i do not think her some are has a clear path forward even in the new bid. it sounds like from our andrting that dan gilbert buffett are getting some advice from former yahoo! executives who would likely be involved in church -- in choosing the new
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leadership of the company. we have not enabled to figure out his marissa mayer has something with any other bitter. sounds like she will be on her way out if the sale in fact happens. alix: thank you very much. scarlet: we have more coming up after this. ♪
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scarlet: i am scarlet fu. alix: i am alix steel. a look at some of the biggest
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business stories in the news right now. the supreme court rejected an appeal from exxon mobil. they have claimed the gasoline additive contaminated the state's groundwater. exxon argued the new hampshire theeme court improperly let state use statistical evidence of contamination to make its case. scarlet: citigroup is the latest to back away from equity market making. bloomberg had first reported last week that was in negotiations, which citigroup then bought in 2007. goldman sachs and bank of america have exited similar businesses. alix: disclosing specifics about how much has been held from saudi arabia. it is being released in response to an open records request. put just under 117
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billion dollars since march, making saudi arabia the third among foreign nations holding u.s. at behind china and japan. and that is your bloomberg business flash. scarlet: let's head to julie hyman pier 1 have you got? at the s&pnt to look 500. mmr one. what are the movers today? as i was looking at this, the company that popped up on the top of the list as the best performer it is something i have never heard of. and i thought, what is in jeopardy? it is a spinoff from west rock, itself a result of a combination . what has happened is those two companies combine and created a packaging arm and on the other, this company, more the chemical side of the business. here is how they are trading on
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the session. when you seehe company's, you know what they are. as an introduction to these companies in the s&p 500. i am also watching globalstar, a company that is trying to allow access to mobile networks to be used over its satellite networks. it is something the federal had notations admission frequently allowed. there are reports it might get closer to it and it looks like that is progressing. tom wheeler had recommended on friday to four feller commissioners to allow the plan to go forward and begin offering multiple broadband service. what is interesting is it claims the change could expand u.s. wi-fi capacity by one third. we're talking about potentially a big change here.
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staples, office depot, no longer going through as we know. office depot shares trading sharply lower today. the hedge fund trimmed its , today, -- in addition presumably impart to talk about where it goes from here and now that the deal is not happening. >> with antitrade sentiment rising in the u.s. and europe, new urgency to we know can a's 10 providences have constructed a high barriers to trade internally. does that trade under the government? alix: we're joined now from toronto with more. pamela, how worried are canadian business lenders about all this anti-trade talk? >> america first approach being communicated by both presumptive nominees in the presidential election, one a little more
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freely and one perhaps being pulled into this rhetoric a bit, it is a concern, and any disruption to the north american and trade agreement would be part of the overall direction in the united states in terms of policy, it is a huge worry to canadian business leaders. it does not mean it is perfect, but to interrupt the status quo has people nervous, not to mention the effort into the transpacific partnership. that has been going on for years. it is still probably a couple of from reality. all comes down to a nervousness and of course canada's a trade partner. >> what sort of barriers are currently in place in canadian provinces? >> there are a series of barriers, truckers going from ,ne problem to the next
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interrupting goods getting across the country and that sort of thing, bidding on projects in a different province will often have more trouble, and an bidding onal company a similar project. worker compensation is also an issue. trade accreditation. josh is writing about this today for bloomberg and says the liquor law has crystal -- crystallized the issue. it is illegal to bring liquor across the border on your own. you have to go through the liquor control board of your province and that is how it is legally meant to go. is laborst impact mobility. if any country wants to grow and hire a lot of people and draw from a bigger pool, they have a lot of trouble because of employment laws that are different. it is also procurement, a big issue. pamela, if the barriers were
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lowered, what kind of impact would we see on gdp? >> in the report today, gdp could stand to be boosted by about 3%. if you look at that another way, just in's fiscal stimulus could be tripled in its effect in some of a boost to gdp if of the barriers came down. there is an overall thought that it is just wrong, the internal trade across the country should be much easier than it is. many federal governments have tried to crack this and have had a rough time. perhaps the antitrade sentiment will lead to a catalyst of getting that together and seeing that happen. >> all right. thank you. >> coming up, the latest on rising oil prices and why goldman has raised its targets for crude.
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alix: this is bloomberg markets. lots of big news today about oil. crude is rising to a six month high. goldman saying the market moved into a deficit earlier than expected. the global head of commodities teamrch was amongst the writing the physical rebalancing of the oil market has finally started. headet: we spoke with the at bank of america merrill lynch. he thinks $60 per barrel next year. >> we are seeing supplies coming
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down quickly and demand is strong. in the u.s. so far, we have seen gasoline demand growth over last year. last year was a bumper year for demand and people said it cannot get better. it did. now we have and running pretty strong consumption growth. balancesto us that the will return and we will go from a surplus to a deficit into the and the prices will start moving higher. we are calling for -- average for next year. i am a little worried because generally every year, prices tend to drop. we see a pullback to $39 per barrel and in the next couple months. i view it as a buying opportunity before we start to go to a multi-quarter deficit. love this chart. it is basically looking at decline rates.
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how quickly a field loses its oil. that has been moving up, and that is part of the issue. opec is around 5%. that is sort of the issue. >> we see saudi arabia has been concern about u.s. shale producers. then.bout the positioning how are investors position for oil given your call? >> positioning, it is funny you mentioned that there it has been stretched to the upside. from the 26th dollar range to the 47 and $48 range. we have seen a rapid shift in position. here at this juncture, the markets pricing in, what will happen two months in advance -- in advance. we're trying to price in what the p demand will be in july.
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i think once we get into september, that position will get lighter. typically, investors will use their positions. we are arguing it is a very seasonal effect, that investors will train those positions. again, that is another factor we think will put some pressure on prices. to cementt is going the recovery in oil prices throughout next year. franciscohat was talking to us on friday. today, we have goldman sachs jeff coming out on oil prices hasalso saying the deficit happened a lot faster than he had anticipated. alix: his call was two-sided. he is cyclic the bullish and long-term bearish. aat means short-term we have
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supply disruption to he sees oil prices moving higher faster because of the deficit. longer-term, a tremendous amount of oil coming online in the first quarter of 2017 and the lowered his forecast that year. a little bit of both. scarlet: short-lived. >> a lot of folks talk about how quickly we have gone out -- nigeria, the finance minister talking about how it could go down even further. the macro long-term picture is not changed much but surprised at the speed of which we seem to have gone. know hasagency you been saying it over the last few days. the deficit. it happened. i will be talking with jeff tomorrow in los angeles. do not miss it. p.m.ll talk at 4:30 eastern. it will definitely be interesting. scarlet: later today, we are talking about resume with the finance minister of the country,
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the cfo of the world bank. a lot of things to talk to him about because he was in the front seat of what was happening in brazil. that should be a great conversation. not many people have a deep understanding of it. there is so much anxiety about whether they have the room for that. it should be a great conversation. up, greg abbott will be sharing his plan to unify the republican party. that is coming up 2:40 p.m. eastern time. ♪
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>> welcome to "bloomberg markets."
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david: from bloomberg world headquarters in new york, i'm david gura. oil surges, hitting a six-month high, this after goldman sachs has security issues have worked out the surplus. how is texas doing with the fluctuations in oil prices the governor of texas greg abbott joins us in the studio to talk about that and the state of the republican party. $17 billion holds in u.s. treasuries. providing some answers but raising more questions. stocks are at session highs. ramy inocencio has the latest. ramy: the dow, s&p, and the nasdaq at 1% higher or so.

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