tv Bloomberg Markets Bloomberg May 20, 2016 2:00pm-3:01pm EDT
here is what we are watching this hour. markets are rising today. u.s. major averages on track to snap a three-week losing streak. my target at the beginning of the year was 2150. we need better second-half earnings. david: the next phase of crude oil prices may be a battle between rising dollar and supply disruptions around the globe. factors arehat affecting the oil prices in the coming weeks. ministerstralian prime kevin rudd joins us.
let's head to the markets desk. my: we are holding on to gains in the last couple hours of trading, still solidly in the green. the dow is up when 4%. -- .1%. -- the dow is up .4%. there is a broad-based rally we are talking about here today. seven of the 10 sectors are in the green. telecommunications and consumer staples flatlining here. information technology has been the biggest leader all day, up 1.1%. consumer staples have always been the laggard. let's see what is moving in
terms of information technology. what we are looking at in terms of the biggest percentage gainers. this company is the company that makes the stuff that makes memory chips. jumped torter orders $3.5 billion. micron is also surging by nearly 6% here. western digital up by nearly 4% as well. let's also think you look at what's happening with consumer staples -- take a look at what's happening with consumer staples. sales down six quarters in a row. a weaker caret caron -- hurt by a weaker
attack than a mechanical failure. president obama says congress has to get moving on legislation to combat zika virus. researchers need time to develop a vaccine and states need time to ramp up mosquito control programs. donald trump says u.k. prime minister david cameron's office invited him to visit the country days after mr. trump unlikely to were enjoy a very good relationship. the prime investor reportedly has not invited mr. trump cameron and trump have clashed ban on muslimsed entering the u.s. drew peterson is accused of wanting to kill the prosecutor -- put him behind
bars in his third wife's death. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. david: first-quarter earnings season is wrapping up. despite lower expectations from analyst, the magnitude was in line with the three-year average of 4%. what were the winners and losers and what can we expect in the second quarter? billstone joins us now -- stone joins us now. expectations are pretty muted going into this earnings season. what is your reaction to what we've seen? bill: we thought we would see a pretty good beat number. it's always a danger to strip out what you don't like.
andou take out energy honestly, some of the issues around the financials that were really tough comps -- it is worth thinking about apple. in get to a slow growth corporate earnings, not some sort of disaster as some people may painted -- paint it. earnings running at high single digit losses versus low single digits when you take out energy. that shows the magnitude of the decline -- a 100% decline in energy earnings. when you look back on
this earnings season, apple really stands out as a singular event. people were preparing themselves for apple not doing well this last quarter. saw theat is what you technology sector not looking too good. people underestimate how good they consumer discretionary sector has in. that has been. we've been bombarded with generally bad numbers were people lost track of amazon blowing the doors off of things. a bit of a surprise with walmart coming in just recently with better numbers. ,n between were the nordstrom's macy's and target that continue to weigh on it. do you expect that amazon swoon to continue?
bill: i'm a believer that they have the wind behind them and they are doing a great job executing. the hard part is valuation of the stock. we are not overweight anything in amazon. it is a great company. it is just a matter of how much you are willing to pay for it. for me, that is a tough call. david: we've seen markets a bit this week from a highlighting the disconnect between market investors and the federal reserve. long-term call be next quarter? june,we honestly thought forget about it. it was a poor percent chance of a june move. -- 4% chance. all of a sudden, we are at a 30%
chance. it brought the notice back to watching because we've recalibrated the two-year and 10 year went up by 13 basis points, the dollar has strengthened, yen has weekend. ened.ak we will pay attention to the fed speak because we have a dose of it next week. as you look at those trends we saw this week, may keep them going or close them in a bit. against that global backdrop, are you retooling your portfolio at all? bill: we are a little bit more on the domestic side in the sense that we are overweight consumer discretionary because we are a believer in the consumer despite the bifurcated
we are overweight utilities at the moment. is the bestu.s. house on a bad block when it comes the globe. we are hopeful the globe except some pace here -- picks up some pace here. the estimate at 2.5% now. we are back on the on trend. from pnc assetne management group in philadelphia. what can president obama a compass at the g7 summit? we will ask kevin rudd. how the u.s. postal service missed the boat on e-mail.
david: this is "bloomberg markets." time for a look at the biggest business stories in the world right now. general motors has spent $100 million to reimburse customers who bought 2016 chevrolet -- fuel economy was overstated by 1-2 miles or gallon -- per gallon. owners will receive a debit card or 50,000 mile protection plan.
extra on is in talks to sell itself to a chinese private equity fund. on.aixtr twitter says it will not allow the re-pricing of stock options without shareholder consent. to retain effort house as their stock right stumbles. meets in japan, with global growth at the top of they are desktop of their agenda. -- at the top of their agenda. i sat down with former australian prime minister kevin rudd. lisa: at a time of real and perceived geopolitical risk --
the natural growth of the economy is faltering. strong messages from political readers read or sing -- reinforcing centrality of growth. the global infrastructure it is set to be financed given we've got an under supply of global capital. the business model is right for doing that. if we managed to solve the global infrastructure conundrum, a lot of the global growth deficit suddenly becomes more manageable. david: i'm hearing echoes of what japan is advocating for. more unified front when comes to fiscal policy. that's when it comes to fiscal policy. what is the likelihood? mr. rudd: global monetary
various formsve appointed of easing. isre the destination point is an unknown setting. what happens in the real economy? david: president obama is headed to asia for his 10th trip there. talking about the transpacific partnership in vietnam. he has talked a lot about this. what more does he have to say about it in the process of getting this approved? mr. rudd: the international challenge, frankly, the work has been done. the process is already well underway.
which brings us back to the gold u.s. of a. u.s. of a> old opportunity for global free trade to get effective trade globalization done. it grows jobs. minister of a centerleft party in the commonwealth of australia, our party is united behind free-trade. we've seen it grow jobs in our economy with net benefit. adjustment onal the way through so you don't just trash people, through andopriate retraining
effective inventions to find people new jobs, that's the way impact.th the economic david: we will hear more from kevin rudd in a few minutes. y is looking at company movers this afternoon. ramy: the retail sector, it has been a bad start to their earnings season. positive news for a handful of them today. up by sporting goods nearly 4%. goldman sachs is upgrading the stock to a buy from a neutral. it is the company best positioned to gain market share from the closing of boards authority. -- sports authority. target raised to $53 a share.
a change at the executive level at l brands. they are up by nearly 5%. picked the former anx to leak the brand urbanecret outfitters rising 1.5% here. morgan stanley is upgrading the stock to overweight from equal weight. key sales and margins moving in the right direction. stores,come over to gap moremore than 3% -- up by than 3%. old navyclosing all said itn japan the ceo
called -- they blew a great opportunity called e-mail. joins us now. what is it that makes this organization so hard to manage? >> it is the biggest mail delivery operation in history. itwas a private company, would be number 43 on the fortune 500 list. they cannot control their prices. delivered 100 54 billion pieces of mail last year, but they cannot control prices. david: it seems incredibly cheap to deliver a piece of mail this day and age. usps ends mainhe the.s. postal service and
postal service of spain have the lowest prices in the world. david: there contracting with fedex to send packages. what does that say about where the organization may be headed? ups and fedex are outsourcing to the postal service. they put their cheaper packages through the postal service and the postal service goes to every doorstep in america. they take packages or fedex and ups. fedex flies mail for the postal it's a ups and they do some logistics for them, the oo. david: the way we stay in touch today, it is largely e-mail. was it something the usps did not have on its radar at all? it was a big surprise to me
to find this out -- they solve the threat of electronic mail back in the 19 70's and they expected it to hit much sooner. mailput a whole electronic would in place where you type of a letter and they would send it electronically to another post office and then rinse it out and a letter carrier would deliver it t. it bound up in very expensive and it lost money, so they killed it. there were gun shy for a long if anything, they were too early. reportshenever the usps financials, i always know that ads iftmaster general
they were to have more autonomy, it would be in much better shape . this is an organization tied to congress. tape.is drowning in red the whole delivery world has been changing at lightning speed and they are tied up with red tape. they need legislative change, but who knows when that is going to happen. .avid: that is devin leonard commodities markets closing in new york in just a few moments. here is a look at wti crude this week. more "bloomberg markets" coming up here on bloomberg television. ♪
on the first word news this hour. mark: three european security officials say the passenger manifests from egyptair flight known names ono the terror watch list. online and has not been officially verified by egyptair. flight 804 was carrying 66 people from paris to cairo thursday when it disappeared over the mediterranean sea. senator bob corker scheduled to meet with donald trump on monday. corker is reportedly being considered as a potential trump running mate. mr. trump appreciated the to his speechtion on world affairs back in april and stays in touch with the
tennessee lawmaker. michigan governor rick snyder setting up a new board that will eliminate to limit children's exposure to lead across the state. the governor signed an order creating the child lead poisoning elimination board. when residents are still using bottled water and filters -- hope the suspect will give them information about islamic state's strategy in europe, but today, he did not say anything. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. david: commodity markets are closing in new york. metals and mining stocks
rebounded from losses earlier in the week. aluminum gain the most in a month and copper and zinc also seeing gains, gold extending his -- oilfor a third week little changed to end the week. the second week of gains in u.s. production continuing to decline. one region impacting oil is nigeria. the delta has been rocked by we saw the impact as a dish of the country's oil industry contracted 2% in the first quarter. i want to bring in chris kettenmann. but are the company's most exposed to risk in nigeria? >> it is a big deal. this will pass. it is short-term supply disruption. shell and chevron are very exposed.
to us, it is a transient issue. david: what are you looking at more? chris: what has driven our constructive stance on crude has been the lower 48 output. the in aggregate year-to-date numbers reaching 450,000 barrels per day. it is a trend, several data points in a row. david: some wonder why that is happening now. chris: sure. we are in a lower price regime. producers have scaled back budgets if you do not spend, you do not grow. -- as longn is real as budgets remain under pressure, it will be difficult for these companies to grow.
week after week, they continue to climb -- we do not see the trend changing anytime soon. aggressive actions by the rating agencies to ground -- downgrade debt -- david: jason was talking about that relationship between wti and debt. we've seen higher prices, we expect higher prices because of all the bankruptcies and defaults, the reductions in production, the massive cuts in cap x. david: jason not very optimistic about where it's headed.
chris: there are mixed signals across assets we are analyzing. one of the most interesting is exxon five-year -- right around the highest year-to-date in investment grade rated company. david: what has the effect been on the rebounding dollar? what effect is that having on oil? >> this is something we spend a lot of time on. lurking behind the scenes of the commodity market is a big macro trade commission just rate , allics, the fed, pboc joining with crude oil prices and the u.s. dollar. we expected a rally in the dollar over may. brakes --it pump the it is a key issue we are watching for the second half of the year. a risk we want to be hedged
against going into the second half. david: opec meeting in a couple of weeks. what the human expect to come out of that meeting on june 2? that's what the ux back -- what to come out of that meeting on june 2? the market is positioned for a no change in message. saudi arabia will continue to chase market share, keep the cadence, keep the overproduction bias. volatility is relatively cheap. david: that is chris kettenmann. looking ahead to commodities, iron ore -- china has had a
-- i spoke to kevin rudd about the iron ore business in australia. i'm: i'm not -- mr. rudd: not the next birth -- i am not an expert in the iron ore market. you look at the economic reform , labor-intensive manufacturing for export to a new model focused on a burgeoning private sector from of this process will take another couple of years before it sees itself to partial conclusion. before we see a new equilibrium in the chinese economy. china is the primary driver of the art or price -- iron ore price.
we are in for a rocky road are some time to come. describe how severe the town -- downturn in china has been for the australian economy. mr. rudd: people don't have a yes, it hasation -- taken some ink off the top of economic growth in australia, but we are in 20 years plus of sustained economic growth without going into recession. through the actions of our own government, we managed to get through the global financial crisis. it is a broad-based economy. is mining resources sector an important part of the economy, but a highly diversified economy that relies on a range of other sectors.
the fact that we are still well north of the zero line in terms of growth reflects the fact that it is a strong, robust economy in a structure. with the liberalization of the the 1980's, you have the automatic stabilizers that kick in with exchange rate adjustments according to the man or australian goods and services that demand for australian goods and services. david: more of my interview with kevin rudd, former prime minister of australia. up next, bernie sanders continues his quest against hillary clinton. what he is saying too many washington insiders may surprise you. many washington insiders may surprise you. ♪
david: this is "bloomberg markets." donald trump addressing the annual meeting of the nra in louisville, kentucky. folks gathered there have already heard from the head of the nra ila. that group involved in legislative action has endorsed all comfort -- has endorsed donald trump for president. we've also heard from wayne lopp erre.-- wayne la pi donald trump: she wants to abolish the second amendment.
we're not going to let that happen. we will preserve it and cherish it and take care of it, ok? they talk about the magazines, the blitz -- bullets. david: joining us from washington -- how big a forum is this for donald trump? this is where donald trump solidifies the gun rights wing of the republican party. this election, this general election will be one of the most consequential elections for gun .ights hillary clinton on the democratic side or gun control. -- for gun control.
donald trump has embraced staunchng the nra and gun rights crowd once in terms of loosening restrictions and making it easier for americans to acquire firearms. david: if you want to keep watching that speech, you can live . whatsonance here between bernie sanders is saying on the campaign trail and what he is saying to lsu makers behind closed doors. in the vatican mother were protests there. bernie sanders was called upon to tone down his is. , there were protests there. >> he's continuing to take the
,ight to hillary clinton continuing to bring up and elevate his issues, his progressive issues. privately, he's making an interesting move calling democratic leaders and promising help against donald trump. bernie sanders has all but lost the nomination already. he needs a miracle to defeat hillary clinton. leftly have nine primaries . he is trying to maximize his leverage going into the ,onvention in philadelphia maximizing all the votes he can get, trying to take as many delegates as he can in philadelphia. david: what about beyond that?
people wondering what is next for ted cruz. does he come back with more or less power than when he left? is that calculus going on in bernie's mind as well? bernie sanders has not really been a flamethrower in the way ted cruz has. he hasn't used his grassroots base as a sword against his own party. he's been very consistent on the issues. he has worked to move the needle where he can, not attacking his party leaders in the process. with bernie sanders taking this defiant attitude toward his party, describing it as corrupt, saying they need to stop taking corporate money, people wonder if he will turn into that figure. it remains to be seen.
he does not want to become a ted cruz figure. to be the chairman of the budget committee it democrats -- if democrats take back the senate. david: barbara boxer and dick durbin reaching out -- it strikes me with senators are taking new interest in this race . >> he's doing a lot of the outrage. he spoke to dick durbin and barbara boxer. the vast majority of democratic senators have endorsed hillary clinton. they have been long-standing endorsers. bernie sanders knows that. he is trying to stay on good terms with his colleagues. he is saying what he needs to say to keep his supporters
energized. david: a great piece. check it out on bloomberg.com. for more on politics, catch "with all due respect" tonight. ramy has the latest at the markets desk. stayingaders have been in a narrow band of trade. the s&p has only been trading within a points are so -- eight points or so. the dow is up .5%. 1.25%.daq is up nine of 10 sectors in the s&p in the green, led by information technology. up 64 ofl members are its 68 members. applied materials is of the most by more than 13%.
third-quarter sales could beat estimates on surging demand or memory chips by as much as 50%. this is rallying the most since november 8. micron rising in tandem, up by 5.5%. micron making the products that make those products, those microchips. 500 a look at the s&p information-technology index. these ups and downs in the last i've days. -- five days. we did hit a session low or weekly low on thursday, but we are on track to rise the most in almost seven months. another screen i wanted to show 20, when thel
there will be viewers who say this is the biggest unicorn out there. how could there be a lack of interest? emily: i believe it is the biggest unit worn out there if you are determining that on evaluation -- valuations. there are investors who would like liquidate. liquidity. they were looking for investors invest $100,000. there was not a lot of information about risk because even share post doesn't have that information because investors would not have a vote on the company, it was simply to have a piece of what could potentially be a big thing, but sharepost has canceled this offering altogether, calling
back all the regulatory issues --rounding area offering surrounding secondary offerings. >> care should be taken to avoid these issues in the new secondary market that is emerging. largely around derivative contracts to capture the economic interest in a pre-ipo company without actually transacting in stock. depending on the structure of these derivative deals, errors of misconception in valuation could be amplified. faultyts built on valuations. has tried to limit these kinds of secondary offerings. they can distort valuations and
create certain tax liabilities. uber recalls a number of issues facebook dealt with. david: why are these so disliked by companies? because they have no real handle on who owns what? emily: it creates a market that the company itself has no control over. secondary shares of facebook became all the rage. they got close to the limit of number of investors you can have as a private company. they had to go public. when facebook went public on that day, shares plummeted. it took a long time for facebook to get to where they wanted it to be. because of the secondary offering, the valuation of faith got inflated to a point that was
not sustainable when it translated to the public market. david: emily chang, anchor of "bloomberg west." that is coming up at 6:00 p.m. eastern time, 3:00 a.m. pacific. --t play clock pm pacific 3:00 p.m. pacific. a look at the nra national meeting in louisville, kentucky. donald trump continuing to talk about guns and the second soon-to-bend his opponent, hillary clinton. ♪
david: from world headquarters in new york, i am david gura. shery ahn: and i am shery ahn. david: closer to raising interest rates. the s&p 500 rate shows a weekly decline but is now higher for the year. shery ahn: shares of john deere getting trend today. they allowed past earnings estimates -- they plowed past earnings estimates. david: what impact will the doomed egyptair jet have on stocks? americans may be reluctant to travel abroad this summer. are one hour from the close of trading. let's head to the markets desk. s&p isear to date, the now up for the year, up .4%.