tv Bloomberg Markets Bloomberg May 23, 2016 2:00pm-3:01pm EDT
♪ david: from bloomberg hospital headquarters in new york, here is what we are watching this hour. the united states repairs. we discussed this with roger altman of ever core. we will hear their views on everything from rate hikes to the most effective types of fiscal stimulus. >> buick for clues on economic data. meanwhile, oil is retreating. david: new polls show donald trump pulling even with hillary clinton. but trailing bernie sanders. will this give a boost to the sanders campaign? attend to the markets desk, where julie hyman has the latest. julie: looking at the latest
volume figures for the s&p 500 75% from the 20 day average. not much price movement, and not as much participation on the part of investors are traitors. all three are in the green. the dow and the nasdaq are up, 2/10 of 1% each. after the gain that we saw last recalibration of investor expectations for a aseral reserve rate hike, well as hearing from some fed speakers. groups on the move, material solidly in the top spot throughout the session today. you don't see any movement of 1% or more. utilities and telecoms pulling back the most. of a changing landscape here as we head into the afternoon.
stocks we have been watching, viacom has been experiencing a lot of drama. cvs, not moving much, but a developing battle going on. sumner redstone controls the company. both of them vying for control at this point. suing to block that. the redstone family is asking for that to be confirmed. it is sort of a back-and-forth situation that is continuing. just a note, those shares have performed relatively well, though some investors have not been satisfied with his performance of late. they are up 9% since he took over in september of 2006. of course, they had done a lot better last year, but along with other stocks we had seen, a pretty big downturn. david: we could do a whole hour on that. julie: yes, we could. [laughter] david: what's going on with
apple? julie: continuing their recent uptrend, berkshire hathaway giving them a boost. a taiwanese newspaper reporting that demand for the latest iphone could be higher than people have an pricing in. economic daily news reporting that apple asked suppliers to prepare production for 72 to 8 million iphone seven's for the end of the year. be the highest number of orders in years. some analysts were looking for something like 65 million. it appears to be giving the stock a boost today. suppliers as well are experiencing the halo effect. works, corvo,sky just a couple of examples. david: thank you so much, julie. first world news this afternoon? the investigation of hillary clinton's use of a private e-mail server while secretary of state is almost
over. the investigation will likely conclude with the democratic presidential front-runner being interviewed. the race for the white house is shaping up to be a contest between the two most disliked decades -- nominees in decades. donald trump with a 60% unfavorable rating. mrs. clinton's is it 53%. if these current numbers hold they will be the most disliked presidential nominees and 30 years. the lord -- the lawyer for walking guzman says that el fight extradition if he reaches a deal. rodriguez says that he may try to plead guilty in the u.s., but won't become a government witness or testify against others. his extradition was approved last week, but the appeals process could delay it for years. tom brady will appeal his four-game suspension by the national of all-league. he is seeking a second hearing
before the circuit court. if denied he could try to take his case to the lower court. that roger goodell was within his rights for his role in the use of improperly inflated footballs in the game against the indianapolis colts. day,l news, 24 hours per powered by our 2400 journalists around the world. back to you. likelihood of the united states heading into a recession anytime soon? what lessons were learned from the financial crisis? david --e former deputy secretary of the treasury in an exclusive interview talked about a recession being around the corner. we will have one. it is just a question of when.
the business cycle hasn't been repealed. recessions occur fairly regularly. or have occurred fairly regularly in modern american history. i don't think we are going to see a recession in 2016. a questioneally just of when the next one strikes. david: what's your sense of the degree to which candidates are thinking about this and planning for the next recession? fiscal policy or what to do next? roger: well, you don't hear either secretary clinton or mr. trump use the word recession very often. do hear a great deal of the u.s.t getting economy to grow more strongly, createmore jobs, and to -- to strengthen itself.
lots of ideas. secretary clinton has talked at great length about those ideas on ways to do that. from college affordability to infrastructure and so on. i don't believe either candidate is actually expecting to face a recession in the short-term and i think they are right about that. but the types of policies they are talking about to strengthen the u.s. economy, many would apply to fighting recession. is this something you are interested in reading engaging in with yourself? roger: no. i have reached a rather -- i have reached an age i didn't think about a lot until recently. that's an arena for younger people. david: the fed minutes came out
last week. what emerged was a disconnect between market makers and participant like yourself. that, do you for think? roger: i think it's a normal state of affairs. expecting broadly was a maximum of two rate hikes for the rest of the year and not before july. many in the market thinking there might only be one. now the perception is that there will be at least two in the first may occur in june. no one precisely knows. as the fed so often says, they ."e "data dependent considering this in june, it would depend on the data they had from the weeks leading right up to that date.
so, i don't think this is a big disconnect by historical standards. just the standard avenue and flow of thinking as people study the fed. it seems there is a new divide shaping up between those interested in the domestic economy and those worried about global risk. getting your perspective on the global economy, what is of greatest concern to you? roger: one of the ironic things about the global economy today is the degree to which it is so different than everyone expected it would be just two years ago. two years ago if you go back and look at the research reports, you would have seen an expectation that the big emerging markets -- brazil, russia, china, would be leading the world in terms of the engine of growth. today it's the opposite. brazil is in recession. russia is in recession. china has slowed.
that expectation has proved to be way off. they the united states has best growth dynamics among the major countries. and advanced countries. that was the opposite of what was expected a couple of years ago. if you are at the fed and involved in monetary policy, you to global sensitive factors as they affect financial markets, which have a lot to do with stability. one of the fed's several different missions is stability. so, you have to pay attention to global financial markets. underneath that you have the performance of the countries themselves. different points of view about china and different moves in their own financial markets have
driven much of global financial markets. i don't believe that you can be at the fed and be involved in monetary policy without paying close attention to global factors. there's no ability to just look at the u.s.. later in the hour i will have an exclusive interview with alan blinder. still ahead as we approach the second half of the year, what sectors will yield the best equity return? we get selections from jim tierney. they: here's a check on factors moving today. stocks fluctuating in the u.s., but for the materials index it's up 1.5%. health care stocks, down 3/10 of 1% while energy stocks remain unchanged. more when "bloomberg markets" return. ♪
♪ david: this is "bloomberg markets." it's time now for the bloomberg business flash. looking for the biggest business stories in the news right now. the sec investigating whether deutsche bank inflated the value of securities around 2013 according to people with knowledge of the matter. delayedhether the bank losses on u.s. backed mortgage bonds over an extended. of time. deutsche bank is cooperating with the investigation. --ry: the federal occur federal appeals court has reversed the finding about bank of america and negated a $1.2 billion penalty imposed after the trial. the court said there was insufficient evidence that mail fraud and wire fraud were committed by the bank units in
late 2007 and 2008. bank of america acquired countrywide in 2008. david: open-door trading as president, grillo at bank of america will start on june 1 and report to susan este. he left in march. that is your business flash update. back to the markets now, where stocks are more or less flash -- short on volume. materials are the big gainer, technology also positive with utilities and telecom lagging. shery: the market is trying to digest the fed minutes and look towards eco-beta this week. what sector showed the most potential for growth? .oining us now is jim tierney jim, thank you so much for coming in. today, health care taking a hit. down 3/10 of 1%. but it has been taking a hit for the whole year. do you think that this sector
still has potential for growth? >> it has so much upside potential. there is so much political rhetoric around what everyone will do to drug pricing and so forth with bad actors out there, but there are great companies that have nothing to do with the price of drugs, but they are all getting hit equally. david: what do you like in particular? jim: quintiles makes a lot of sense. the stock really disconnected about one year ago. david: the clinical trials? jim: exactly. merging gives them a huge leg up. shery: people are saying peak auto sales have happened. is this something that we should worry about? you are an investor in ford or gm, you have to deal with that issue. you have to worry about how much content is going to cars. they are getting smarter and smarter. even if we are at peak auto sales, a company like delphi can
do very well. david: you like priceline is well? >> we do. terrorism is awful around the world and when terrorism happens, they take a hit, but people are going to use their vacation time. priceline doesn't care that much if you travel to paris or somewhere in germany or the. as long as you are buying the ticket and, more importantly, the hotel room. do you thinkry: that investors are looking too much at dividends? >> when we look at the highest dividend payers, they are as high as they have almost ever been other than one time in 2002/2003. they are very expensive. people are starting to swing away from high dividend payers and towards other parts of the market and that spells opportunity. what was the pivotal moment
last wednesday? how much did that change are thinking? >> think that for the market the lower for ever camp really had to adjust their thinking and say -- maybe there will be a rate hike at some point and what do i want to own their? some people say that stocks of the new bonds, but maybe they are not and we need to find true growers other than companies paying a dividend yields. shery: what do you have your eyes on that will affect the markets? so much data is coming out as well. jim: very laser focused on the consumer. how healthy is the consumer? positive signals in terms of employment and so forth, but at the same time they keep loosing their savings. we want to see them spend more. we have a much better second half of the year. square that with what you
saw here during earnings season. what will it take for consumers to come around? jim: people are buying less stuff. we would rather own some brands. with brands like timberland and north face, we had other areas and traveled with priceline where it is much more about the other house. shery: jpmorgan was saying that retail investors were reluctant to jump in to the equity rally. why is that? >> retail investors have been underinvested over the past six or seven years. 2008 at 2002 are still fresh in the minds. at the same time buying a treasury is that the safest thing in the world.
that's not a great outcome either. shery: thank you so much for that, jim. still ahead, large pharmaceutical companies have an addiction to donating to charities known as the co-pay charities. leading to new questions about who winds up paying the bill for high-priced drugs. the results of a business week investigation, coming up. ♪
what is the co-pay charity, then? then: charity set up to help pay their out-of-pocket expenses. insurance companies or medicare might pick up 80% to 90% of the cost, but drugs are getting so expensive now that patient portions can be exorbitant. to helpessentially patients with their portion of the cost. shery: this sounds like a good thing, but when talking about big drug companies i cannot imagine they are doing this ultra-mystically. ben: drug companies are raising if theynonymously and get so high customers will say that they cannot afford their
co-pay to stay on the medication. what could potentially happen is they could begin to lose customers. this is a way for them to in many cases retain their customer base as they keep raising prices higher and higher. david: a number of the names new article are very timely. turing was a big donor. david: -- ben: that's right. i keep part of their strategy was up they were going to raise the price 5000%, they would have to deal with patient co-pay issues and it was the only way that this would succeed. the only thing that came to light was a couple of days after the price increase. the drug company approached
patient services incorporated and set up a copayment fund. shery: what is the stew for the system in general? does, first of all we spoke to a number of patients who were happy to have the help. they really couldn't care less about that, they just wanted help. i think a we are seeing is these donations and charities essentially enabling or helping these companies enact these price increases without the resulting loss and comfort -- customers and revenue. ist is essentially happening this charitable system is propping up these price increases. having a huge impact on medicare spending on the like. david: how is this legal?
how are these companies able to do it? ben: they cannot come up to a customer on the street and help them with co-pay. that's considered a kick and is illegal. that is really what has driven the rise of these charities. conduit, they can directly pay for this. basically it is legal, and a great area if the drug company exhibits -- exerts too much power over the charities. david: thank you so much, ben. ♪
bloomberg's world headquarters in new york, this is "bloomberg markets." shery: mark crumpton has more from the newsroom. mark: a baltimore police officer acquitted of assault and other charges in the arrest of freddie gray, who died after being injured after -- injured while in police custody. the judge found edward nero not guilty. he was one of six charged in the case. the others will have separate trials in the coming months. president obama has removed one of the last symbols of animosity between vietnam and the united states. being driven by mutual concern china's influence. egypt is sending a remote-controlled submarine to search for that missing egypt air jet.
trying to locate the voice and data recorders that could be almost 10,000 feet below the surface. french investigators say that moments before disappearing the plane generated automatic radio messages about smoke in the cap inch -- cabin. fever has fired markets cap after an internal investigation revealed he got in regular bonus payments are millions of dollars . do the payments over six years from 2008 2014 from additions to his employment contract according to the associated press, citing a person familiar with the investigation. a united nations official due to chiefwork next month as apostle permanent secretary general. global news 24 hours per day journalistsur 2400 and 50 news bureaus around the world. shery, david, back to you. starting with oil, oil
dropped for a fourth day. settling at $48.11. in canada they work to reduce operations. shery: gold dropping half of 1% today. they laid the groundwork for a great rise in june or july in speeches. take a look at iron ore prices. rising inventories in china spurred concerns of global supplies topping demand. the hamilton project centers on a new proposal by alan blinder. now a professor at princeton. with helicopter money in the fed 's next rate decision.
is deepe recession enough and long enough, especially deep enough, the federal reserve and other central banks can run out of .heir main weapon here in america that's the federal funds rate. then they have to look elsewhere. two things haven't learned. the central bank does not out of ammunition at that point. they can still fight a recession , but it is using weaker instruments than it normally has . at its disposal. david: how we given instrument is a negative rate, as you see it? of all, we haven't used them. it's america. every short-term money market is a bit different. i have been an advocate of that for a long time. let's put it this way. i would say going from zero to
-25 is probably a weaker instrument from going -- and going from 25 to zero. what helicopter money be somewhat effective? that would be, but it's a ridiculous concept because it is illegal. the grossly illegal. helicopter money means a government transfer payment will analogous to social security, food stamps, whatever you want. done by the federal reserve. the federal reserve has no power to do that. there's a feast in my paper that talks about that. it's an academic concepts. it's a kind of thought canriment that academics and do perform. it has no counterpart in reality . you can't do it. david: outlining a plan looking at taxation and spending, you
say there is in need to do that now. in washington today you say the appetite for that sort of thing has been minimal. what will it take for congressman to come around? >> said to say, a serious recession. ifwould be like that lovely the lame-duck congress could do something preparatory and get ready just in case we need these things. realistically with the congress we now have, i don't see a prospect for that. south,gs start going members of congress get religion. david: where do you think that rates should be at this juncture? >> in abstract environment not worried about the past, at this
juncture i would say that we would like to see interest rates at 2.5% to 3% in the abstract. but there is a past history. we are starting this tightening cycle, if you want to call it 15 basisthe fed from points or something like that. the last things that we americans would want the central bank to do and the last thing the central bank wants to do is bang the economy over the head with a huge amount of monetary tightening. it's not going to do that and it will go really slowly. david: with conditions present, economic conditions meriting that, looking at the landscape going forward, the vote in britain in late june, any indication that you see at the fed that they will raise rates at the next meeting?
>> i think the market had gone .razy she got a little dose of reality, but where the not -- the market is it varies from day today. a 35% chance of a hike in june seems roughly correct. i would say higher if it were not for what you just alluded to. one week after that meeting the brexit happened in england. if it turns out badly we don't the fed market reaction has not spoken about this except obliquely. shoes i wouldheir be happy or eager to wait another week and see a something terrible happens.
coming up in the next 20 minutes of bloomberg markets, donald trump is pulling in with hillary clinton and a pair of new polls. digging deeper for both candidates, they get an unfavorable from the majority. as the door open for a third-party candidate? angling to a new iphone update next year, not this year. can these improved screens boost sales? david: looking at the nasdaq, more bloomberg markets coming up. ♪
time for a look at the bloomberg business flash. general electric taking part in 3 billion dollars in investments in saudi arabia the don't have anything to do with oil. part of their plan to diversify their economy. never their will workforce to 4000 people. shery: another development in the drama over sumner redstone and the future of his media empire. friday two of his confidants were booted from the trust the controlled viacom and cbs. today they both stopped in there after. accused ofr was trying to hijack the well-established estate plan. david: dairy queen joining the coffee wars. the beverages will be featured during the launch of the hardest working happy hour.
the biggest launch ever for dairy queen. that is your business flash update. it seems the race for the white house is tightening. polls show hillary clinton with a 20 point lead, but new numbers over the weekend show the race is now and next. shery: an nbc wall street journal poll has clinton up by 3%. and a more hypothetical matchup bernie sanders leads trump i 15 points. joining us with more is the managing editor of bloomberg politics. john, how worried should the clinton camp be about this? john: i wouldn't be that happy about it. should she worry? john: yes. they are both historically very unpopular people. the republican party is now collating. not the intellectual class.
there are still people in washington talking about trump being a disaster for the party, but the actual voters are rallying around the guy who is almost certainly their nominee. the clinton campaign looks at those numbers and says -- you that this of knew be a tough race and we knew that donald trump would get the lion's share of the votes. the main thing she has to worry about is that she still in the middle of his nomination fight. it is taking a toll on hillary clinton. david: she was asked about that hypothetical matchup. let's hear what she had to say. >> i have been vetted and tested. >> you don't think this one long year of your campaign against bernie sanders has vetted him? secretary clinton: let me say i don't think he's ever had a runle negative ad ever against him. and that's fine. but we understand what it will take to win the fall. finally, i would say that polls this far out mean nothing.
david: some regret that she didn't run more negative ads? >> think so, i think this is just a talking point, that in hypothetical matchups bernie sanders does better than clinton. campaign said -- look, i've been in public life and a nationally known figure for 25 years. my husband was attacked by republicans. i was attacked by republicans. now i'm also still being attacked by republicans even the nominee. no one has attacked the sky. most of the country does not know a lot of things about she likely -- bernie sanders. she rightly points out that there's a lot of baked in positive and negative information about her. sanders people don't want to acknowledge this, but he's not nearly as well known or battle scarred as a candidate. shery: vice president on the
current? john: no. this zero chance. at least 1%ys chance, but no. she will not put an avowed democratic socialist on her ticket. she doesn't like him, either. david: bob corker meeting with donald trump, characterizing the meeting as enjoyable. john: have you been to trump tower? it's an enjoyable place. shery: i haven't been, i want to go. john: it's her a nice. david: there has been talk that he could be a vp nominee. john: it seems unlikely. at this moment he doesn't seem to be being vetted. i don't think that that is as likely to happen as some do. i think it's perfectly possible that he could be a big surrogate for trump. he's been very positive on trump's foreign policy since he gave that speech a few months ago. there is a reasonable chance
that he could end up being speculative. had to guess, corker might be a secretary of state under trump. is it is it -- shery: better for clinton to focus on the issues or just attack trump on being unqualified? i think it's a false choice. she's going to do both. she's going to talk about the issues that matter to her. she's got turnout from the voters in her coalition. she will make a big contrast on issues. if you could only one? her attacks have been pretty significant already. she called him unqualified to be president a few days ago. i'm not sure how much more attacking she could do except in terms of money, right? she's not the nominee yet. we have plenty of time for those negative ads in the billions of
money spent on them. david: thank you, john. catching tonight on "all due respect." shery: let's go to the markets desk, were julie hyman has the latest. what are we looking at? julie: obviously i have to plan a chump our visit. john: julie, you are always welcome. [laughter] open invitation. taking a looke: at the movers today, got upgraded to equal weight and it is having a big effect on the shares. analysts are saying that approval of the drug they are developing to treat high levels of potassium approval. the minor delay is a reasonable possibility. the company likely won't be positive with free cash flow on a full-year basis until 2018.
down by about 1.6%. fiat chrysler, the company appears to be battling over emissions. they felt that they did she on emissions tests. the back-and-forth continues and is sending the shares down, 5.6%. speaking of down, the worst is roper technologies, down about 5%. the analysts over at wall street initiated the stock with a cell on a price target of $118. slowing organic revenue growth in the revenue and scientific imaging unit, also perhaps disappointment and the technology unit as well.
emily: i asked him specifically at it was related to the new iphone, but they said they could not talk specifically about their culture. he did talk about broad expansion across the mobile industry. this with the 208 toeens, going mostly back the lcd. the technology is difficult and clunky to produce. especially at that size and scale. take a listen to what gary dickerson told me about the screen specifically. >> it really is the change in the mobile products to these displays. what we are going to see is a huge transition over the next couple of years that will drive a massive change going from lcd to organic led flexible displays. as he said, those screens
are more flexible and might enable something like a curved screen. the way it works is it does not use as much energy, so it's more battery efficient. covers can be seen more vividly. it's basically layers of plastic . the organics within it cap into luminescence responding to electric currents. different from what we expected to be announced in the fall, but we are expecting these to be announced in the fall of 2017. presenting an interesting challenge for apple. we have all been waiting for the iphone seven to kickstart sales again, but what if people say -- wait, i want to wait for the ixt next-generation there will see something more impactful in the change on the product.
shery: could all of these changes in the supply chain be positive when coming up this year or next year? emily: so, first of all you have applied materials saying that they are seeing a fourfold increase in people ordering the stuff that you need to manufacture this technology. or moreake three quarters to actually install and build this technology. you have samsung, lg, sharp, saying that they are investing heavily in display technology and apple is a huge customer of theirs. apple, as we talked about ad nauseam, saw their first sales decline in 13 years. course, they were coming off that bigger screen. one could surmise that you see these big upgrades and there are
these questions around whether the iphone seven will be significantly different enough to encourage a huge upgrade. they are talking about a better camera. will that be enough to get users to upgrade if their phone is working just fine? perhaps not. last week tim cook did a huge trip in india. with an indian broadcaster where he admitted the prices were too thatand they were hoping over time they came down and in india they are focused more on getting them to use preowned iphones, improving the lte network. that is how apple hopes to break into the indian market. as soon as they get the go-ahead from the government. they will then open the stores in india. the price point will continue to be a problem. once apple moves over to these screens, with a phone be more expensive? how will they manage that? this
technology is difficult to produce an expensive on such a broad scale. lastly, i agree, the new iteration is not a big deal, but let's talk about the difference in these screens. familiarity with it. using me as a proxy, is this something consumers are going to get behind? excite consumers? shery: -- emily: it's interesting, i've never seen one, and that's the question. is it going to be a game changer? david: all right, emily. that's coming up at 6 p.m. eastern, 3 p.m. pacific. ♪
thiss what we're watching hour. hovering in aocks holding pattern. higher borrowing costs may come sooner than expected. shery: then the fight for control of sumner redstone's media empire heating up. challenging the billion s on ther, the latest ongoing court battle, coming up. david: more on the rumor started to fly that apple's next iphone. will it have a bigger impact than expected? shery: we are one hour from the close of trading. .ulie hyman has the latest are we seeing a little more direction now?