tv Bloomberg Markets Bloomberg May 19, 2016 12:00pm-2:01pm EDT
>> from bloomberg world headquarters in new york, good afternoon. i'm scarlet fu. an egypt airplane carrying 66 passengers and crew disappeared en route to paris to cairo. the country's aviation minister says do not rule terrorism. scarlett: a german drugmaker is 45 billionpay dollars to acquire monsanto. it could be the big steel ever bygerman comforters -- german companies, but the proposal is being met with plenty of skepticism. phil mickelson agrees to repay profits he made on trading tips from a gambler. we will hear remarks on the case any moment from now. we're halfway through
the u.s. trading day. julie hyman is tracking the all-out from the surprisingly hawkish fed minutes yesterday. julie: but we are having a delayed reaction. yesterday, stocks came down afterward but finished little changed. also, as we hear from other fed members who have been making comments this morning, saving to support again that june is on the table, july could be on the table. , s&p, and nasdaq are all trading lower, up off the lows to some extent today. yet, when you look around at other markets, they are not necessarily supporting this narrative. you could look at the two-year as well as the 10-year, and yields are actually lower, which is not what people would take if .nterest rates are going higher
i'm looking at world bonds and two-your notes around the globe. the u.s. and canada at the top. as you go down, that blue column, you see a lot of negative numbers, so you are not getting yield elsewhere. the yield still at least relatively by comparison looks attractive. also look at how the u.s. dollar is trading today. we are seeing a little bit of a game, more in line with what you might expect, but not a huge one. only .1%. what about m&a? we are getting news on that front as well. julie: the maker of armand hammer baking soda, the stock was up yesterday and then came down because there have been reports of speculation about .otential takeover attempts pierce and write out saying and theyot no approach
don't know what everyone is talking about. we have to deal in the an injury -- in the energy industry. an all stock deal will create a $13 billion company, so essentially, it is a stock swap. deal nowa potential that we talked about last week with buyer making an unsolicited deal for obstetric. investors concerned about what they might have to scarlet: do to finance scarlet: such an acquisition. we will continue that conversation with ed hammond later on. alix: mark crumpton has more from our news desk. mark: egypt and france are trying to figure out what caused and egypt air jet to disappear over the mediterranean.
the airbus a-320 was on a flight from paris about 30 minutes from whening down in cairo advantage from radar screens. 66 passengers and crew were on board. three salvage crews have spotted debris that may have come from the plane. officials are saying at this hour they cannot rule out terrorism. phone fromd on the cairo. is there any more you can add to the story? >> right now, it is still a very much in the air. officials are very much relet it -- reluctant to say with any kind of confidence what may have happened to the plane. the egyptian aviation minister said he was not ruling out any possibilities, but does not want to point to one incident or another. mark: we have heard in the past of security concerns regarding the egyptian aviation administration, regarding that
airport. have we been hearing anything from the egyptian government? >> was nothing to indicate that there was foul play involved as of yet with any measure of confidence -- what they have been doing since the crash over sinai in october is stepped up security measures and brought in outside consultants to oversee on security preparations at the nation's airports, but we are still not clear what brought it down, so if there was a possibility that there was a bombing, we do not know if that is something that happened on the plane in cairo or even its previous destination, which had been tunis. right now, there's nothing clear on what was going on. mark: do we know anything about the structural integrity of the plane, how many years it had been in service, how many miles
it had flown? >> it was a relatively young plane, certainly by the standards of the egypt air fleet. the plane had logged around 48,000 hours. off the top of my head, that's what i remember seeing. the pilots were pretty experienced, having logged -- the chief pilot had logged around 6500 miles, while the copilot was in the range of 2700 -- i'm sorry, hours. so they seemed to be experience. nothing you to indicate that there was any kind of trouble on board the flight. our bloomberg news reporter joining us on the phone from cairo, egypt. thank you very much. we will continue to follow this story again. 66 people aboard the airline
that crashed in the mediterranean. at this point, officials in paris and egypt say that they are not ruling out terrorism. that's the latest from here. back over to you. scarlet: we are going over now to lower manhattan where we have life teachers of the u.s. of southern manhattan speaking. >> ultimately separated in 2012. on april 9 2010, at a meeting in ,as vegas, davis, we allege tipped walters about how dean foods had engaged in investment bank to explore a spinoff. that tip was provided on the same day walters arranged a $625,000 loan for davis. the very next business day, onel 12, walters purchased million shares of dean foods, followed by another 510,000 shares on april 14 and 15.
[indiscernible] scarlet: of course, that is the u.s. attorney for the southern district of new york, again, presenting the government's case on this insider trading case involving the former chairman of dean foods. has been covering this story for bloomberg news. tell us a little bit about how this has unfolded. winnie: it is a remarkable story, actually. it has been in the headlines for a couple of years now. tom davis, who was the chairman, and billy walters, a gambler and
golfer of his, -- golfer friend exchanging trade secrets. it seemed prosecutors were particularly annoyed that not only did they rip off shareholders by trading inside information, but they then lied about it. now also pled guilty to perjury at this point. walters was also arrested. the third prong of this is phil mickelson. s.e.c. is suing the pro golfer -- i'm going to back you up. he is not actually being sued. a complaint was filed. he has actually agreed to pay back the profits he made, but mickelson says it vindicates him . he's not being charged with anything. he's going to pay it back and he feels completely vindicated.
what is unusual about this is they ask for someone to pay back money and did not sue them. that is really quite remarkable. winnie: i think it goes to the heart of how the definition of insider trading has come down to a bottom line these days. on the other hand, the guys who were charged clearly both benefited. davis got the loans, walters got the tips and made a lot of money. mickelson made money, but as to if he knew he was getting information from the inside, none of that was clear. i think in this case, it is the brazen nature of the whole thing. got a prepaid cell phone from walters, and they reached an agreement on how they were going to exchange information. to call dean foods dallas cowboys. when members of the grand jury
were investigating, he tried to throw the own away and cover up what had occurred. scarlet: the idea is that walters tried to get him to make these trades. we have to-- winnie: be careful what we say because again, mickelson has not been charged. the gossip and walters knew each other. mickelson got information and profited. the motivation is not clear. what happens next? how does this proceed? mickelson owes money. davis it pled guilty earlier. insider trading has had a long history of different ranges, if you cooperate or plead guilty, we do not know yet if davis
reached some kind of agreement. we are waiting to hear more. the government is also probing a different situation where there is trade. winnie: no charges have been brought in that case, so i think we will leave that totally aside. some of the players were reportedly the same according to one press report. talk about the distinction of how it is so difficult being able to charge and get a successful conviction when it comes to insider trading. very murkys is a world these days. recent court decisions have made it clear that both sides had to know something improper occurred and had to benefit, and you had to show that benefit. that is often hard to do in a world in which maybe people exchange information on a golf course or out to dinner with friends, without knowing that their friend is going to get something particular in return,
but in this case, it is blatant. walters had loans, and then walters made a lot of money. it is the motivation part that gets really tricky to prove. knowing you were doing something you're not supposed to know, that is really tricky. winnie: we are waiting to hear what prosecutors are doing next. scarlet: thank you so much. a liveou are looking at shot of lower manhattan. we have just heard from the u.s. attorney of the southern district of new york. we will be right back on the other side of this break. ♪
scarlet: this is "bloomberg markets." shares of buyer plunging today on news it wants to buy the number two seed producer, monsanto. alix: the news could set up the farm to farm chemicals business. looking into the merger between dow chemical and dupont. bring ininsight, let's and hammond, who covers m&a for bloomberg. specifically on this deal, it is unusual for us to hear this from monsanto, correct? ed: it's unusual to hear them
come out with the numbers they came out with yesterday. in this country, in general, it's very unusual to hear them come out like a number like they did. from everything we understand what hass deal, happened is an executive saidrday at a conference ,he reports have been out there but the report was dismissed, they said there was wild speculation and there was nothing to it. know, monsanto has the board of executives in a panic because they are now publicly on the record saying there's nothing going on. his statements, even if they do not with the market usually did not the stock off slightly. this is a pretty massive deal, but we also know
bear has a pretty massive amount of debt. how might that complicate the deal for monsanto? they will have to raise a huge amount of money. $60 have been talking million, so they would have to go in raise a lot of money in the markets. they have already talked to banks about how they could do this, how much they can raise and how that would look. there's also obviously concerned , and i think that's one of the reasons you are seeing so much pressure this morning. we reported this morning, as have others, that there are a range of things that they are getting rid of. among them, animal health. we would need to make a lot of divestitures. alix: delray $20 billion, so the debt market is out there for some companies, for sure. areaet: what about this
right now, the chemical feed market that is so hot? it is almost like a snowballing effect. monsanto sort of ticked this off. they were the ones who originally came out and made this very strong case. this is a global industry, and industry under pressure from various different things, particularly swings in commodity markets, and having global scale is something they wanted to do. i think this is a logical .ollow-on basf? scarlet: what about how do they fit into this? moment, we think they probably do not. there was a report last week that they were looking also into monsanto, and we think now that
is not true. we would be interested to see how shares react. thank you so much. we do have more breaking news at this hour. mark crumpton is here at this hour. mark: thank you. cbs news reporting today that broadcast giants of journalism has died. he was a correspondent for 60 minutes. he began there in 1970. he rose to prominence during the 1950's for his reports on the vietnam war. one report chronicles a u.s. torching of a vietnamese village according to what cbs had been .eporting president johnson was so insistent about it he called cbs news and tried to get him fired.
scarlet: you are looking at a live shot of a press conference in lower manhattan about an trading case with the former chairman of dean foods, who pleaded guilty today, as well as las vegas gambler william walters, who was arrested last night at a resort near las vegas. also, mr. walters was charged in a las vegas federal court today. scarlet: investors in retail
stocks are breathing a little easier today after week numbers from bellwethers like target and macy's. walmart today beat analyst estimates. shares are rallying the most since 2008 on the relief. itst, walmart stock -- yes, made a comeback in 2015, but over five years, it is trailing the retail pf, and it all comes down to the slowdown in revenue growth. walmart's cfo said the company is not changing its all your forecast of relatively flat growth this year. net income is seen falling in 11% this calendar year because of spending on web operations, rising labor costs, and the strong u.s. dollar, which brings us to overseas markets, which make up a quarter of walmarts half a trillion dollars.
walmart has been struggling outside the u.s. the strong dollar is expected to shave 12 billion dollars off sales. food is also an issue. walmart is the biggest u.s. grocer, and that category accounts for more than half of its revenue. walmart is extending online grocery two more locations. when it does expand, it is opening smaller stores. walmart's neighborhood store is a smaller version of its supercenter with a size averaging just 42,000 square feet. sales of comparable size stores were up 7% this quarter, outpacing the chain-wide average of 12%. thanks so much. let's get to abigail doolittle, who is looking at some tech movers today. abigail: we have the index down 1% at this time, really being dragged on by both technology and biotech. on the biotech side, the biggest drag is and gin.
one analyst is talking about a continuation of the ongoing bear market. a lack of real news out there. in fact, when bloomberg intelligence analyst says he thinks it is the macro weakness in technology overall, citing oracle, ibm, and engine among others. he sees microsoft as a top pick for the long term, but relative to the near term, he would like to see the stock really consolidate before putting new money into the shares. alix: thanks so much, abigail, for joining us from the nasdaq. doeset: coming up, what the plo environment look like? ♪
mark crumpton has more from our news desk. mark: the white house says it is too early to say what caused today's egypt air crash, but eb -- agent aviation minister says it was more likely caused by a terror attack than a technical problem. the plane went down in the mediterranean sea halfway between crete and egypt's mediterranean coastline after taking off from paris. the greek prime minister telling reporters it suddenly made turns and lost out to two. zakaria is a belgian national and was one of two people picked up during the police raids in the brussels neighborhood of mullen b. donald trump has announced american companies that have moved jobs overseas. he still likes to invest in
them, though. the likely republican presidential nominee blasted the companies. ashas received as much $75,000 from the companies' bonds since january last year. the campaign has not commented. 60 minutes correspondent morley safer has died. he has been a fixture on the show for all but two of its years on the air. he was 84 years old. global news 24 hours a day followed by our 2400 journalists in more than 50 news bureaus around the world. thanks so much. the one thing to watch at a credit market right now -- collateralized loan obligations. the issue debt from investors and by leveraged loans. last year, they but more than
60% of the market, but this year has been dicey. the market has dramatically slowed. the fear is issuance remains scarce, the leveraged loan market will seize up, but at the goldman sachs conference earlier this week, i had a chance to sit the heads of goldman's american leveraged finance team. >> since the end of february, we've had about 16 billion, still down 60% year-over-year, but there are signs of life in the market. monthly trend has been positive since february. in the meantime, alternative buyers have stepped to the four. in the leveraged loan market, clo issuance was slow. it is still slower than last year, but it is picking up steam. >> keep in mind, we had a real dearth of transactions, so we worked through backlog. even though we had a slow clo
machine, a lot of payments are coming through and investors are able to put their money to work. does the economy really need to see 3% gdp, 2%? christine: these markets are very large and very significant asset classes. the loan market, like the high-yield market has had year to date negative outflows. said, the market right now, leveraged buyout. are seeing incredible demand. the order book sizes are in the billions of dollars, so i am pretty optimistic large transactions can get done, and even though there's signs of concern over various sectors regarding the economy, people feel pretty resilient. talking to clients who were at the conference, i think people
were feeling pretty good about their businesses. alix: we want to get more perspective from someone in the trenches. all of her, great to meet you. great for you to be here. do you agree? oliver: thank you for having me. yes, it has been a tepid start to the year. things are looking up, though. fromoan market has rallied february lows. we are very constructive for the second half of the year. do you feel like it has rallied too far too fast? >> it has been a nice rally. loans have definitely received a strong bid, and it has really been a function of the new issue market being as low as it has been on the low side that technical have driven prices higher. not enough supply or not enough demand?
oliver: there really has not been. alix: what kind of sectors or areas do you feel that you are seeing this value? oliver: it has really been quality driven, not sector driven. even some of the weaker credits him are now catching a bid. with weaker energy prices, certainly that complex, too, has had a very strong run. i think it is more true outside the noninvestment grade market where we have certainly seen that within the noninvestment grade market. we have a very strong investment base and returns are very compelling on a risk-adjusted basis. after the selloff in january and
february, the value proposition has been very compelling. we think total returns for the year could be in excess of 6%. after the run up recently, would you want to kind of take a pause? oliver: certain names have run up a lot. we certainly would not want to take a directional lead there, but there is still value to be had in a market that is almost $1 trillion in size. value? ere is the oliver: we think there are weaker names that are not correctly valued by the market. it is really a credit-pickers market and we continue to see good value. alix: here's the thesis -- if clo's do not issue enough debt, they will not be able to buy secured loans.
have seen 16 billion to date. we think 40 billion or 50 billion is doable. what we need to see happen is liability prices need to improve. clo liabilities have sold off, and we need to see those titan to make for a more attractive transaction, and we think that is in full force. some have said that the decline was good for the market because there was so much in it. did you see it as such? oliver: absolutely. with a very modest new issue, there, investors bought the secondary market, and that is really what rot prices back up. importantly, crossover markets have been key, so high-yield bond managers that also have the ability to buy loans. it is not just that loan investors have been bidding up prices, but a portly, high-yield bonds have recognized the good
yield value. i have been hearing that for months now. oliver: we're a little partial, but we have like the relative value proposition for some time now. alix: does that mean from where you sit, the leveraged buyout could still have been this year? oliver: no question. there is a lot of capital waiting for well structure and reasonably leveraged transactions. alix: what is a reasonably leveraged transaction? businesses we would value at eight times. seems reasonable to us. let's go to the one part of your business that must be really rough right now, and that is the risk retention rules. at the end of the day, this you have to keep 5% of
your loans on the books. what is the fallout going to be from something like this? oliver: you're absolutely right -- this is the hot topic. the good news is we have had a lot of time to prepare. for have been with us now 18 months, so there has been tremendous progress made setting up specific vehicles that will management to continue to issue. it is a function of raising investment capital into majority-owned affiliates, of elliott's spread up to full scale. there's a lot of investor interest in that capital and a tremendous amount of progress has been made in setting up those vehicles. does that mean banks fund raise for you to help you navigate the risk? oliver: if the banks are
focused, absolutely. otherwise we do it ourselves. gox: doesn't that kind of around the rules? oliver: not necessarily. it is really going around the alignment, and we think these structures do allow for the right alignment and are set up in such a way that they are compliant with the rules. on theou are not taking risk, are you? oliver: you are funding these vehicles, so you are absolutely long the risk and for the duration. institutional investors see this as an opportunity that is compelling. rights a way to trade the alignment and create attractive, long-term returns on an adjusted basis. of the rhetoric out there say if this does take effect in december, you would see this market collapsed by, like, 75 percent. aiver: that does seem like fairly draconian picture.
the market certainly will shrink, but we do not need as large a market as we had. we do by about half the new issue, do, but that assumes a regular new issue calendar. in an environment like this, clo 's do not need to have a repeat of what they had last year. in 2010 and 2011, there was a lot of consolidation. we expect to see it in 2017 and 2018 as well. are you buying? oliver: for the right price, yes. alix: what are you looking for? looking for good management in the right size. this is what we did in 2010 and 2011. we think it is an interesting investment opportunity. ashave a small balance sheet a public company, so we are certainly prepared to consolidate when the opportunity presents itself.
we can always raise more capital for the right opportunity. there is certainly a lot of focus on this space and a lot of institutional investors have been looking toward the forecast for the opportunity. like to go outt there and get money right now? oliver: as a clo investor, probably better than it has been. prices have been so depressed. we had a real catalyst for institutional investors committing capital to the secondary market to pursue clo opportunities. in hindsight, the selloff in the early part of the year really was very positive for capital. alix: great talk. thank you for being here. up, we talking
this is your global business report. apple ceo tim cook is in india for the first time, inaugurating the company's new office. aomi sees industry sales peaking as growth matures. and a new debt deal has been revealed. that's the policy says it is not a bailout. we start in india where apple ceo tim cook is developing a new
-- is opening a new development center. they plan to create about 4000 jobs and are planning to open first retail stores in the country, although it's not clear if that will be part of the agenda on this trip. apple phones currently have about a 2% market share in india. xaomi sought to the top of the chinese market by selling inexpensive smartphones to consumers. others have adopted the model and one of them has now overtaken xiaomi. samsung electronics is in talks with entertainment companies to sell an online tv service. the south korean company has asked media companies how much they would charge to carry their tv networks and a bundle of channels over the web. samsung is evaluating if it could offer the same collection of channels on a global basis instead of just the u.s. scarlet: a house panel
.ddressed a proposal the house democratic leader, nancy pelosi, gave her blessing to the legislation. : we have a bipartisan agreement now, the bill that has been dropped. of course, it would not be the bill as written, but it does contain a restructuring that could work. it calls for the oversight board to treat everyone equally. by that i mean pensioners and the rest. it is not a bailout. scarlet: it is time now for our bloomberg quick pic where we provide context and background on stories of interest. some countries give people easy
access to cheap services that would otherwise go unused. here's the situation -- venture capitalists have invested heavily in the sharing economy, which has inflated the values of the companies involved. has a valuation of $62 billion. airbnb is valued at 25 billion dollars. meanwhile, cities and countries around the world are working on new laws and regulations for businesses. defeated san francisco an effort to limit the growth of airbnb. here's the background -- the idea that sharing const that shoots a distinct economy goes back to the publication of a 1978 academic paper about car sharing. what turned it into reality was the rise of the smartphone in the latent to thousands -- 2000's. cloud computing helps along with economic circumstances in which
more people are looking for work . the financial crisis helped to fuel that expansion. ideological components say the sharing economy creates employee serfs, who go without benefits like health care and job security. supporters say sharing services make it easier for poorly paid workers to supplement their incomes and that time and resources are put to better use. that is the global business report. for more stories, visit bloomberg.com. alix: coming up, our mystery stock of the day. today's mystery stock had a percentage gain in the teens. the irony -- the stock is getting more support even as product are offering less. teen retailers? is this an urban outfitters situation?
scarlet: let's head over now to julie or the mystery stock. alix: the irony is the stock is getting support. i have one word -- bralette. it is the new hot underwear item, but it is not victorious secret capitalizing on it, but rather american eagle and its -- it is not victoria's secret capitalizing on it. it is unchanged on the year because of the game we are seeing.
aerie,ore sales up 6% at in particular, the underwear chain. it is attributed at least in which ishis bralette, an undergarment. elsewhere in what is going on in retail broadly and team retail specifically -- urban outfitters also coming out and topping estimates. also benefiting from some of the new trends. you can see those shares were up by 10%. france not doing so. their shares are down. goods, despite cutting its forecast, is actually higher today as customers look ahead -- or i should say analysts and investors look ahead to capitalizing on the bankruptcy of the sports authority. we have it, dick's
sporting goods up 7% today. scarlet: american eagle has a division that sells bralettes? we are learning also at the new things today. >> it has been easy until recently to collect big sums from investors, but that is starting to change. desert: the current ipo could spell trouble for tech. dried up, andhave that could spell trouble for the whole industry. just one tech company has gone public in the u.s. so far this year. it is practically unprecedented. the fewest tech ipo's we have ever had in a single year was six. in 2008, through the financial crisis. if this year keeps going as it has been, we could set a new record. people in silicon valley could
start to worry about the drop-off in tech ipo's, and here is why. onestors have that -- bet tech companies. this is happening already. the amount of money invested in startups has fallen from a peak about six months ago, so why are we in this ipo desert? for one, about half the tech companies that went public in the u.s. since 2010 are trading below their ipo price. .ust look at twitter or go pro it is hard to sell investors on new stocks when too many got burned betting on the last ipo 's. 150 unicornse than -- silicon valley jargon for a orrtup valued at $1 billion more. many of these companies would be worth far less if they tried to go public now. so many are waiting to try to improve their business and ipo
scarlet: thursday afternoon. alix: here is what we are watching. the investigation into the missing egyptair continues. it was en route to cairo from paris with 66 people on board when it disappeared from radar over the mediterranean sea. scarlet: shares of cisco are rallying after quarter reports topped estimates. we will be talking about how acquisitions are starting to pay off. qualitys the largest gem- diamond found in north america. mineirefox's journey from to market. scarlet: let's head over to the markets desk were julie has an watching the fallout from yesterday's fed minutes.
this is a little bit of a delayed reaction. julie: it's not that unusual because sometimes we sort of take the cue of the echo chamber as a goes around the world and we saw a negative reaction in international stocks overnight. the nasdaq is falling more than 1%. all three major averages are down. look at the bloomberg to see what is doing the worst today. we have industrials in the bottom spot, followed by the financials, reacting to what the fed said. generally we have seen the financials go higher with rates in the perception that rates are going to move higher. that is not the case today. health care intact experiencing declines. over the course of the day it did not start out that poorly. down about one half of 1% and then it bumped along the lows of the session. also a check on what is going on. commodities in the dollar-wise. we have been seeing a selloff in
crude, although it has abated to some degree. that will put pressure on commodities stocks. the dollar is gaining but not by much. just barely hanging on. alix: travel also a downward pull in the market. julie: the airlines are in the industrials index. this goes back to the missing egyptair flight and concern over what caused it. if indeed it was terrorism, what that could have for global travel. and even though these companies don't get much revenue outside of the united states, they are still reacting the unity -- negatively. even jetblue is down. and hotel stocks also taking a hit in today's session. all of them are lower. an online travel stacks are also participating in this pullback we are watching today. companies like expedia,. visor and rice line are taking
hits as well -- trip advisor and priceline. mark: new headlines on that crash. the egyptair crash they were telling you about. egyptair says it found floating materials. likely it is the wreckage from that flight. egyptair is working with greek authorities to identify the materials. this as egypt and france try to figure out what caused the jet to disappear over the mediterranean. the airbus a320 was on a flight from paris around 30 minutes from touching down in cairo when it vanished from radar screens. 66 passengers and crew were on board. salvage crews has spotted debris that may have come from the plane. officials say they cannot rule out terrorism. bloomberg news reporter caroline is in paris. she joins us with more. what are we hearing from authorities? caroline: the message at the
moment from the french authorities is similar to the message you hear from the egyptian authorities. no scenario can be ruled out. it could be a catastrophe, technical failure, taken be terrorism. placed at the airport before it took off around 11:00 p.m. french time from paris, or even a bomb placed at a different stopover because the plane in three different routes between europe and north africa in the past 24 hours. we have heard from the egyptian air minister in the day that said the terrorism scenario could be more likely than a technical reason. french president francois hollande at a crisis meeting today and he also said that nothing can be ruled out. >> no hypothesis being rolled out. not our favorite.
i put everything at the disposal of the french and greek authorities and egyptian authorities. find debris to find the truth. when we find debris, we will draw conclusions. caroline: the investigation is taking place. egypt will lead the investigation with coordination with greek and french authorities. identifiedey have some of the debris according to information we recently have, they could maybe try to identify the location of the black boxes. they are the devices that contain all the information happening inside the cockpit. that could bring much further information. until they find the blacks boxes -- black boxes, which could take days or weeks like the air france crash a few years ago from rio, it's of two years. we could also hear if the
terrorism scenario is confirmed. that could also take weeks or even more than that. mark: we have about one minute left. let's focus on the aircraft. what do we know about the model involved? caroline: the a320 is basically airbus' best-selling model. it came into service in 1988. is competing with the boeing 737. there are more than 6000 in the air as we speak. it has a very low fatal crash rate. about 1/10 of 1% in the past 27 years have been -- it has been operating. one of them recently, the russian airline metrojet that was shot down over the egyptian sinai back in october.
in total in the past 27 years, the a320 has had 13 fatal crashes. caroline, thank you so much. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. including paris and in cairo. scarlet, alix, back to you. scarlet: deutsche bank is holding its shareholders meeting and john kline is reassuring investors saying they can carry out the overhaul with their own funds. alix: the shares have lost about one third of their value this year, partly concerned that investors will have to tap investors for a fourth time since 2010. joining us from london is lionel . he recently wrote about why they need investors on their side. first, breaking news concerning unicredit. the company is considering ace stake inle of its
an online bank. they are also reviewing holding in poland and turkey. it bought the state back in 2014. unicredit needs the cash. is the second worst performer in the bloomberg european financial index. scarlet: pretty dismal showing so far. repeatedly ruled that a share sale. would be enough to raise capital sufficiently? >> i don't know. i'm not sure yet. there has been a lot of pressure on unicredit. there is a big italian bank crisis. big banks like unicredit have been asked to contribute to try to solve it. it's all that investors are also putting pressure on management changes that could include the ceo being replaced. it sounds like the bank is trying to come up with solutions
to avoid raising capital. i think that has a lot of bank -- that is what a lot of banks are trying to deal with right now. scarlet: there is a huge base of nonperforming loans it is not been dealt with and now i taly is stuck dealing with it. what is the difference between european banks versus u.s. banks? essentially --re they look a lot cleaner and stronger and they been taking market share from the europeans. the europeans are still dealing with problems from the financial crisis that the u.s. banks have seen to have really solved. banks like deutsche bank are essentially having to fight on two fronts, the current market volatility and also the incredible onslaught of the u.s. banks on their own turf. i think he was banks of the upper hand right now. scarlet: you see that in the way
the european banks respond. credits we says been cutting coxswain aligning business is. john kline at deutsche bank is slashing jobs. is he doing enough to grow revenue? it always comes back to the main issue. >> absolutely. he is still winning investors over for now. they like his strategy. it's more a question of execution. he was very careful to stay on the one hand of the bank does not need to raise capital and it could cut costs aggressively. on the other hand he was committed to the markets unit. is that balance line between revenues and the franchise and cutting costs. it is too early to say. and you had different analysts trying to look at the banks. jpmorgan has cut earning estimates for the nice for 2016.
they actually like deutsche bank because they say it could cut costs faster than the other banks, faster than investors expect. alix: cannibal outperform macro products -- it will actually outperform macro products. what is one good thing going for deutsche bank right now? >> i think the best thing it is simply having a lot of room to maneuver. it has a really big balance sheet and it has a lot of enthusiasm from its -- it has honesty for cutting into that. i think time will tell as well as the market. this year will be a rifle basically. they have been prepared for the worst. he said jpmorgan like deutsche bank. they are one of the few. it is still early days yet for this transformation. scarlet: think you so much. -- thank you so much. from our commentary, check it out on burke.
♪ alix: you are watching "bloomberg markets." we want to turn out to the latest blow to elizabeth holmes. the blood testing start of says it is corrected tens of thousands of data from its devices. scarlet: at one point they connect -- commanded a nine p -- a $9 billion valuation. we are now joined by caroline and san francisco. this is not the first time sarah knows -- theranos has come under scrutiny. what is different?
>> i think this latest news is the first time we are directly getting information that theranos'problems are impacting patients. they sent corrections other patients now. this will be affecting patients and doctors. scarlet: have they been harmed with this at all? what is the impact on patients from this? >> if you have your blood test results taken by theranos and you have a potential misread, this could be bad in both ways. if you're told you are fine or not fine, that can lead to health problems. or if you told you are not find when you are, you can have unnecessary tests and medical issues. scarlet: this disruption is incompatible with health care overall. what other options from here? point, theat this
company's reputation has been hurt and it will be really hard for them to come back and be able to convince patients and doctors to trust them in the future. i think one big question that remains is what going to happen with walgreens. they have a big partnership with walgreens. most of their stores and places you can get their tests are within walgreens right now. the question is if walgreens will keep of the partnership. if they walk away, theranos doesn't have any more outlets. scarlet: and the president/ceo resigned last week to retire. they had to reconfigure their board as well. alix: what can elizabeth holmes do? >> the company has said they will present data at a conference, a medical conference in august. i think it will be a lot of eyes looking at the data. it will be the first data they have on their devices and seeing
whether or not it's legitimate. if it is, you will still have questions as to why they had this report sent out the patients. i think the company really needs to be incredibly transparent and explain what happened, show us the machines, and really laid out for the scientific community. scarlet: give us a bigger picture. what does this mean for not just s, butas, -- therano silicon valley and private companies? >> i think there is a lesson that can really be learned. in silicon valley there is often a model to move faster break things. that does not work for health. you just have to be so careful and transparent. these are patient's health your affecting. you can't put out something that is a little buggy and hope to fix it later. hopefully this is something other companies will really take home and take a hard. scarlet: 90's so much.
-- thank you so much. you can read her stories on bloomberg.com. alix: we have breaking news concerning the egyptian airline crash on its way to cairo from paris. we have a tweet from egyptair declaring the finding of the wreckage of the missing flight. i'm pulling it up right now. is from the twitter feed. they are in cooperation with the greek counterparts. they are searching for other remains of the missing plane. scarlet: family members and passengers and crew have been informed. as we continue to follow theytweet from egyptair, are saying they believe they have found the missing plane. the timeline started earlier today. that flight left paris.
it was en route to cairo, egypt. it was in egypt air airbus a320. it suddenly vanished from radar. there were no reports of that time of any suspicious activity. we have been reporting earlier that egypt's defense minister said that terrorism cannot be ruled out, saying it was probably likely that was the cause as opposed to some sort of structural or mechanical failure. then, egyptair tweeting investigation team in cooperation with the greek counterpart in saying they believe they have found part of the wreckage of that playing. we will continue to follow this story and we will bring you more developments as we get them. back to you, ladies. the minister of aviation says the possibility of a terrorist attack is higher than a technical failure. because yourtant see what has happened in continental europe since late last year with the paris attacks
and the belgium attacks. that is what is on everyone's mind with this first broke late last night. alix: egyptian air saying in a tweet they confirmed discovery of the missing aircraft. they are still searching for other remains of the plane but this is a tweet from the egyptian ministry of foreign affairs declaring the finding of wreckage of the missing aircraft near a greek island. teams are in egypt and greece are searching for the remains of the airplane. they do say the family members and passengers and the crew have been informed of the new development. scarlet: in the u.s. various government agencies are keep an eye on this. the tsa says it is monitoring the investigation but has not issued any specific new security warnings. this is according to david, and agency spokesperson. department of homeland security has also not issued any statements or directives, at least for now. alix: for now we want to turn to
something different that has to do more with the markets. we are looking for a filing the was unemployment benefits declining last week from a one-year high. primarily due to fewer friends in new york after research from the previous week. scarlet: and the gains in jobless claims has raised worries about layoffs. >> that he so much. welcome everyone. this is the bloomberg advantage. this is the president and founder of training the street joining us in new york city. scott, when you came in i mentioned the headline about ubs chairman positions. what is the hiring environment among financial firms right now? >> it depends what you mean. there is a constant hiring at the junior levels. the new grads coming out of college and the mba classes are still in demand. that does not go away. think about the treadmill. there is usually a two-year analyst cycle.
people roll off and there was a lot of attrition and they are replacing those. as a junior levels, even in the depths of the financial crisis, they were so hiring. the headlines are laying off as many more than that. the senior levels, it's more driven by market conditions. market share gains, replacing expertise. or in the case of ubs, they are going to a restructuring. there will be a lot of local stories when it comes to the senior level. >> there was a time when every newly minted mba want to go work on wall street that goldman. tot is drawing that talent investment banking or to those firms or computing industries that were not there? >> historically it's always what opportunity. be it from a financial fit him -- financial standpoint. wall street usually gives people high-paying jobs, and they still do relatively speaking, but also
a lot of great work experience. getting a lot of deal flows. over the last few years there have been pull to silicon valley and technology. these are growing companies. think of google, amazon. people are excited about the growth potential. carol: where are you seeing demand? within of positions other looking for? >> we specialize with the new hire analysts and associate level. right out of college and right out of business school levels. -- it is in their industry groups. everything from telecom to advisory. typicallyckle it -- be with m&a, leverage demands in the product areas. traditionally it's people that have advised corporations on transactions, specifically emanate, and then equity and debt capital raising side.
they will constantly be a demand of junior levels for that. >> we are talking about students and former students, i wonder how the resume differs from the traditional. >> you want to inspect my resume? [laughter] carol: lay it on us. >> i was a liberal arts major. i would to princeton and was an econ major. i took one financing class. what we see now, it's usually about half to two thirds of the populations are business and accounting majors. they are consciously taking decisions to consciously better themselves and those areas of the fundamentals skills they know they will need from business. the other one third to one half are what i would call the nonbusiness, the liberal arts, sciences, math. right people. -- bright people that can pick it up and learned. they have not been schooled in those areas.
carol: tell us about the applicants in what they are looking for. millennials in the workforce -- the banks of been trying to respond that by protecting saturdays and balance the quality of life. it is still a client-focused and transaction and services field. you have got to be there. you think about the junior attorney. >> that's like wanting to work at the restaurant or work -- >> not wanting to work a happy hour shift. there is a lot of flow. it is still driven based on a transaction dynamic. i think a lot of people with their resumes are looking for wanting to learn about the capital market. carol: from what you are saying, there an overflow of these junior level workers. what is it soluble the wealth of wall street -- health of wall street? >> the higher numbers are relatively flat compared to last year. -- right now it is
bloomberg first news. mark is an update on the egyptair flight. mark: egyptair says flooding materials have been found. they are like the records from today's crash of flight 804. the airbus 320 went down in the mediterranean about halfway between the greek island of crete and egypt's northern coastline after taking off from paris. insurers in new york are among those seeking rate hikes. they want to raise the amount customers pay for individual health care plans by an average of 17%. this acre shock could cause political problems for the affordable care law and its supporters. the chairman of the house committee on benghazi says the pentagon is lagging on providing the names of all the pilots who send drones over libya on the night of the deadly 2012 attack. congressman trey gowdy says an incomplete list was provided
five weeks after the committee's request. he cites the delay as a major reason why after two years the investigation is still incomplete. 60 minutes correspondent morley safer has died. they said goodbye to him less money with a special tribute program for his retirement. safer has been a fixture for all of two of its 48 years on the air. he was 84 years old. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. scarlet: shares of cisco jumping the most in three months after the company reported fiscal third-quarter results that beat estimates. the new ceo is determined to expand the company software capabilities rather than rely on his traditional hardware products which is seen declines. alix: this morning he said company is rapidly transforming
its market line. >> security is what he continue to grow for a very long time. i have challenged the team to biuild an aggressive plan over the next two years. we should see growth and i believe it will only continue to be a greater percentage of our business. see multiyear growth in that business. >> i know your goal is to resources go to double-digit growth going forward. how close are you to this now and how much of a drag is your hardware switching business on that goal? >> david, if you look at our switching business, it falls into two different categories. we have our campus switching, the sort of bread and butter. about two thirds of the business. that business is highly driven by technology refresh cycles. when you see uncertainty in the macro environment like we see today, customers tend of paul's on that.
when you look at the other third, the data switcher portfolio, our orders grew in double digits. our security revenue with 17%, collaboration business which is over $4 billion annualized grew 4%. we had some real bright spots. in this switching space in particular i think the data switching performance says customers really buy into this notion of hybrid cloud world, they are taking advantage of public cloud services but they continue to build up private infrastructure as well. >> the center of growth has decelerated? >> if you look at our data center switching portfolio, it's actually accelerated over the last few quarters. if you look at our compute platforms with ucs, our compute in the data center, there is a transition going on that we are addressing with some new technologies over the next few orders. -- quarters.
hour switching business has been accelerating over the last few quarters. >> decided weaker growth globally as a headwind. where is this coming from? lots ofl know there are geopolitical dynamics going on. the other brexit vote coming up. we have uncertainty that continues to exist in brazil and russia. inhave seen great strings china and mexico over the last few quarters. you have the interest rate discussion you are having earlier. there are a lot of dynamics that our customers are trying to digest. what we see our customers that are actually moving on very strategically because they know this technology transition that is occurring is not going to way for anyone. they all believe that technology will allow them to service their customers better, know more about their customers and give them tighter relationships with their customers and give them a competitive advantage. they are still moving but there
is a lot of caution in the system based on these dynamics. down andwill can you ask an unfair question. what isad a good one, the one that bothers you the most? i said it was unfair. >> no, it's not unfair. when i look at the dynamics, i think the overall global economy in general and the growth rate of the global gdp is probably the singular issue. that has impacted lots of different things. i think that is the issue. i sat on a call that we executed well in a very uncertain environment, but we are very nicely positioned to be a beneficiary of any recovery in the global economy. scarlet: that was chuck robbins today. alix: much more coming up on "bloomberg markets." we will be right back. ♪
♪ let's over to julie was the details on the headlines. julie: we're looking at your been publishing and get that -- ganette. politico is reporting that tribune is looking to turn the tables and make an acquisition offer for gannette. they are telling a gathering of some of the l.a. times sales staffers he's working on a video takeover gannette. and attorneys are also preparing this potential bid.
a little head scratching about this. right now to be in is about a $418 million company well-connected -- while gannette is about a $1.8 billion company. though shares took a leg higher on these headlines. it went up by about more. of about 1.4%. definitely a spike on these headlines. we will update you when any more news and developments forget. alix: we spoke to michael ferro just a few weeks ago. no way, no how. he's like, i don't care what is happening, he will not be selling in this particular circumstance. scarlet: we asked about that. alix: thank you so much. scarlet: we have new developments on the canadian wildfires. a fire official in alberta just announcing that the threat the oilsands has diminished. it is burned around crude sites.
let's go to danielle in toronto for more. tell us about the fires. what happened? danielle: obviously, there has been these massive fires. i think everybody has in the pictures of the way they devastated for mcmurray -- fort mcmurray. as a result of that, the big oil producers had to shut down. the good news we are hearing today is that there have been some rain which is fantastic. more rain is expected for the next couple of days. the temperature has also dropped which is key in terms of battling forest fires in this part of the world. some really good news there. the hope is that that combination is going to reduce the risk. the fires are also shifting to the east towards saskatchewan and away from the installations. of the area surrounding the oil fields, the oil soun --
-- the otheretting thing we are hearing is that possibly on june 1 we will start to see people being able to move back into fort mcmurray. scarlet: what is this me for how quickly oil production can restart? danielle: that is still an open question and we don't have a date or an eta for that. the longer everything is shut down, the longer it takes to get it back on stream. it is certainly days, possibly weeks. obviously it's a very positive news that the damages being contained at this point. it looks at lisa's of the worst is over. -- at least that the worst is over. scarlet: and can you put in terms the damage done to the alberta economy? danielle: i don't have an up-to-date number. the insurance numbers i have
seen in the billions of dollars. it is quite remarkable when you look at the city and you see the devastation in some areas where houses were literally burned to their foundations. then across the street you will see something that is utterly untouched. the firefighters did an amazing job of battling the blaze. they say the huge part of the city. that will be helpful. there are so many things you have to add in. one million barrels a day of supply being taken out of the oil market because of the shutdown. you have got the insurance cost of the damaged houses. it all adds up. alix: thanks very much. danielle joining us from toronto. scarlet: it's time for the bloomberg business -- alix: two thirds of american would have trouble coming up
the money to cover a $1000 emergency. financial conditions are as precarious as ever. even among the nations wealthiest 20% of households making more than $100,000 a year, 38% say they would have difficulty coming up with $1000. divinity raising is hostile bid for a french maker of global games. ndi now owns 25.4% of gamekkio -- gameloft. alix: unicredit is considering a sale of its online creditor. that's according to people with knowledge of the matter. they are looking at measures fineco.g selling 50% of unicredit is among europe's least capitalized banks.
. scarlet: let's head back to julie hyman. julie: looking at consumer staples. walmart is a part of that group and is doing a little better today. 9%, the best about one-day performance going back to 2008 on the back of the company's better than estimated earnings. we're seeing other consumer staples do relatively well today. grocery store chains are seeing a little bit of a live today. whole foods, kroger, they are rising as well today. and have the product. consumer product makers also rising in. the session procter & gamble, kimberly-clark and clorox. not huge gains but gains in the last. have somelso we utilities doing better.
interesting here because even as we have this expectation the fed will raise rates sooner than the market was pricing and, we have yields going lower and we tend to have utilities trade inversely with yields. take a look at the terminal. at thisooking flattening yield curve we've been talking a lot about recently. on the bottom we have the changing expectations for the june meeting to see if there is an interest rate increase. that the bulk of we saw yesterday. and we have the price to earnings on staples and utilities. they tend to go inversely with these interest rate expectations. they have been rising this year, two of the best-performing groups. scarlet: like you so much. alix: some people are calling this most important chart in the world. a huge surge in well over the past 20 years for people at all different levels
of income, except those in the 70's to 80's percentile. the x axis is the percentile of people in the y axis is how much their income has actually increased. those in the 50 percentile and 100 percentile saw increased almost 90%. scarlet: the middle class has been carved out. he figured out this data for the chart and we asked him what of the ramifications, except for those in the developed middle-class? >> there are many ramifications. is squeezedlass between the resurgent, the guy who can actually work for much less doing the same job today. and their own national top 1%. you can also see will happen in the future if the same situation continues for another 10 or 20 years. how will it play out politically. scarlet: you can up with five
forces driving inequality. which are you most concerned with? --i would say that probably i think i would say the linkage between wealth and political process. i think is the most important. and the fact that capital income and labor incomes are affecting the same people. is difficult to do with the politically. speaking of politics and when you talk about the middle class in europe and united states, we seem to see this resurgence of populism. do you think there is a connection? people feeling frustrated, angry, and then you see this collapse of the traditional political power structures? >> i think that is the case. there are two thoughts. -- plutocracy is somehow
a counterpart to populism. you can see it quite well in europe. the presidential elections in austria. both are middle parties it were wiped out. we see it in the u.s. we see it in sweden. is a general phenomenon. peoplethe professor sees who hold high paying jobs also have significant income from their investments. they hold both, right? they tend to benefit from a perception that they deserve it because they are high degrees in education as well. >> are there any historical examples for you have the elite and the snowball and the separation? what this history tell us about how these things wind up? >> that's a good question. what is new is that we have a combination of labor and capital income. youou look historically, can go to the roman empire, the french revolution, the english
original booking relation of capital and so on. you have generally had people that have that land or clergy or aristocracy. they were significantly different from the others. scarlet: that was franco milunovich. alix: an interesting conversation. scarlet: what could be the largest gem-quality diamond found in north america was in new york. it is called foxfire and it's all most 190 carats. we go to the unlikely place for it was discovered. -- where it was discovered. >> 130 miles south of the arctic circle, a land blanketed in snow and ice, the landscape is more water the land. beautiful, pristine and 60 million years ago a scene of utter devastation. >> the tundra had ash everywhere. you look like the apocalypse. there are these holes down to
the bowels of the earth. inhe's a geophysicist northwest territories. the holes where maven molten rock squeezed their cracks in the oldest rock on earth and exploded spectacularly. >> it was drunk lawmakers up in the air. if a white everything out and then it will stop. >> when conditions are just right, diamonds will hitch a ride. one was a walker. it ended up where most diamonds in the subarctic and of after glaciers scour the land, they need the lake. >> we need diamonds were under their but we need a dry conditions. the only way we could do that was by building dykes around them and then draining all the water. >> 2 million metric tons of ore our process annually. it yielded 6.4 million carats.
since the mine began there only been one foxfire. >> how long before there is a diamond? >> every minute at least, every half a minute. there will be a diamond coming through. the chances of a large diamond, you would have to stand here for a week. >> in the case of foxfire? >> 20 years, exactly. >> foxfire is 187 carats. it was considered so unlikely to be found the mine is configured to crush anything over an inch. foxfire escaped to crushers, turning sideways and slipping through a screen to end up in one of these buckets. it is a long way from a bucket in canada's north to fifth avenue where new york buyers are getting their first glimpse of foxfire. >> we have clients very interested in this diamond. one is interested in keeping it in its current form. the other one is very interested in making it into a pendant. >> of pendant they can be more
than 100 carats. uncut, it's inspected offense between $5 million and $10 million, a fraction of the $63 million this 813 caret dimon -- diamond sold for earlier this month. but with only a handful of diamond migh -- mines operating in canada, its hopes that buyers will pay a premium for a piece of north american history. as diamonds like foxfire destined to be a beautiful indulgence can be found here that he thought frozen lake on one of the harshest landscapes on earth, it is something of a miracle. odds are it will not happen twice. scarlet: keeping a diamond in the rough like that just looks like -- i'm sorry. alix: you don't like it? scarlet: i don't really like it.
from bloomberg headquarters in new york, here is what we are watching this hour. markets tumble, stocks decline in a broad retreat. the fed moves closer to a rate hike. here is new york red president william dudley. convinced that my own forecast is on track, in thethink a tightening summer, the june-july timeframe, is reasonable. david: will crude c $40 a barrel? and golf champion phil mickelson hits plenty of green with some stock trades on dean foods. he will have to pay that $1 million in an sec settlement that has led to criminal charges for the former dean foods ceo