tv Bloomberg Markets Bloomberg May 27, 2016 10:00am-11:01am EDT
bluebird television. ♪ -- on bloomberg television. ♪ >> we will take you from new york to london to boston. here is what we watching this morning. llen.street waits for ye fed chair speaks at harvard university. what to listen for as the june fed meeting approaches. we will talk to elaine stokes about why she says the fed will not raise rates before november. soar after potential financing from citigroup. couldy the scandal threaten the peer-to-peer market in london just as it is getting ready to go mainstream. about 30 minutes into the trading day. let's head to the markets, where
julie hyman has a look at what is looking like a flat opening. toie: people are waiting hear from janet yellen. even though she is scheduled to talk about herself, essentially -- her achievements in her career at harvard today, some investors think she will talk about monetary policy as well. jeff gundlach -- think she will put the brakes on some of the more hawkish fromments we have heard members of the fed. you see a little lift in stocks today. revisions,latest gdp showing growth of a 10th of 1%. and in the past few moments, we got the final numbers from the university of michigan consumer sentiment at 94.7% pay the prior read was 94 .4%. this is the final revision of that number. that's look at what sectors are in the move in the s&p 500.
today,is the laggard donald oil prices, but otherwise, consumer discretionary financials coming back after losses yesterday. health care and technology trading higher in today's session. on the downside, we have energy and oil prices pulling back the second day. down below $49 a barrel as investors look at the recent lift in oil after it got about got above $50 per barrel. it could not sustain the game. apple is lower as well. .he stock downgraded to mixed it is not seeing big declines by is down about one third of 1%. analysts say in china, the company is that costs -- had iphones, but that has
large jim and through to the second quarter. that is causing the downgrade. but apple not that bad in the face of that. apple down and oil down. why are stocks not doing worse? anie: it seems it is individual story with certain stocks. consumer discretionary is the best performing group. it is getting quite a lift from -- a chain of cosmetic stores. on had a forecast above estimates. while we have seen a broad drop in traffic from various retailers, traffic was up you ever percent during the quarter. one analyst sees -- says the company seems unstoppable online, in stores, with different products, etc. -- andue pharmaceuticals fail and -- and valeant
pharmaceuticals did not accept a takeover offer. the stocks europe 600 is up 1/10 of 1% still. it is gaining a fourth day. the longest winning run since april 14. rising for the third consecutive week. that is the best run since march. a3 point -- a 3.3% gain is the best game since february. a day for philips lighting, the living -- of the lighting division of royals phillips, raising 750 million euros. middlees shares in the of the markets. investors paying 20 euros for 37.5 million shares in philips lighting. the biggest general lighting company by sales. the sales of the 25% stake before the allotment option
gives the company a market value of 3 billion euros. failing to conclude a private sale of the business. the first day we have seen a boost in the share price of 9%. this is wonderful -- this is our go.erful ipo function, ipo it tells you everything you need to know and more about the ipo market. i have gone into the western ipo market. there has been 11.1 billion euros of ipo's. top of the list is philips lighting. it hundred $64 million. the average move of all of the companies listed from their first day to today is 7.8%. just some of the data you can discover on this wonderful function, ipo .
luxembourg-based satellite servers provider funded and acquisition of the rest of the satellite provider of three -- oc three. kettler says it is risky. we do not like it, it says. it cost its price target to 18 euros versus 26 euros. we are at 19 euros. the shares today, the biggest decline on the stoxx 600 down by 11%. shery: thank you. let's get to bloomberg first ws.d nee >> president obama has become the first sitting president to visit a city destroyed by a nuclear bomb in hiroshima, japan, and 1945. mr. obama said he was there to mourn the dead japanese and americans. obama: since that day, we
have made choices that gave us hope. the united states and japan forged not only an alliance but a friendship. emma: japanese prime minister shinzo abe praised president obama for what he calls his third for coming to hiroshima. global leaders meeting in japan pledged to bolster sagging economic growth. the group of said event industrialized nations round of their summit and glossed over differences on this goal stimulus. the ivory coast says it has arrested a suspect in a deadly inack by al qaeda militants march. the suspect is described as the driver of the vehicle used in the attack. 19 were killed when gunmen opened fire at a beach. hillary clinton is bringing in new deep-pocketed donors to the democratic party's on his
efforts. clinton's campaign has added 125 finders. people who have raised at least $100,000. almost none of them were among funders disclosed by clinton in 2008 or by president obama in his presidential campaigns. and if they are debate between donald trump and bernie sanders on the horizon? news,esented as pimm fox abc, and cbs said they are interested in hosting a showdown but trump has a steep price -- a donation of at least $10 million courses.s global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. shery: thank you. the s&p 500 is in for its biggest weekly gain since march. shops have risen. could have. economy a rate hike as early as june.
the s&p rising 2%. and we have a report showing america's gdp expanded at a slightly faster pace in the first quarter than initially estimated. by julianned now emanuel, a u.s. equity and derivatives strategist at ubs. he has a 21.75 target for -- of 2175 target for the s&p. is it time now for more action? julian: it is. butnext hike is september, it is possible you will see them with july, particularly the critical votes in the u k and in spain cause markets to remain calm. the data is supported. getting better on all fronts. the gdp was revised higher this morning. housing has been strong.
confidence numbers are good at retail sales are good. it is time for investors who actually are still cautious now. they are going to realize that. the fed has taken back the narrative on rate hikes in the market. shery: is the fed looking at data or more at either at risk? data seems to be supportive of what the fed owants to do. julian: it is both. this summer, wherever, there is plenty of risk. we do not discount as a markets factor. neither does the fed. when you think about the things that drives stock and drives the economy in the long run, it is economic performance. and it is earnings. we see the runway to both of those improving. that is what the fed sees as well. this is the point where rate hikes will reinforce positive
messages. mark: why is it when investors are less bullish on stocks that we see a big pickup in the stock market, which leads me to my favorite chart -- in the aaii investor sentiment bullish readings, which you have referred to. at its lowest level in 10 years. why does this precipitate a rebound? julian: it does not always work that way, but the point is when you have this extreme level of caution, but it tells you is everyone who has wanted to sell and reduce their risk has already done so. image of whator we saw january and february. data was coming in worse than expected. there was a panic reaction. we are seeing data starting to be better than expected.
and because people are not sufficiently exposed to the potential of being better, it will drive the upside. mark: the second chart i want to bombard you with, since i am in the mood, is on the election. this shows politics is starting to influence the prices investors pay to protect their equity holdings from shocks. ,his is expected volatility often tied to the s&p, that expire through different points of the year. we expect, normally, an upward slope, where anxiety about the future gets worse. ,ut price jumps, as you can see are now noticeable around the blue highlighted line, the republican national convention in july, and the november election. what does that tell us? julian: basically, and rightly
so, given the fact we have been in this extremely frustrating two-year trading range, that people are positioning for bad news. difference is when we step away, we see the trajectory of earnings is about to smooth. and we see the economy is going to be the driver of that. what that will lead to us is the fact that volatility has the bombs around the event is probably going to be supplied to further fuel the rally as people realize less protection is necessary. this environment, what should investors have in their portfolios, looking at sectors? should they have more defenses? julian: the way we see it, very little of the last seven years of the bull market has been typical. but what tends to happen in the latter stages of a bull market, which we think we will embark and on this leg, is that people
are perched cyclically and differences reform. at near record high valuations because of the interest rate environment has been so low globally -- we think it is time to rotate out of those and towards finances. we think finances have been under owned and under love. and they do better in a higher rate environment. shery: they have been doing better. thank you to julian emanuel of ubs. a quick reminder that fed chair janet yellen is due to speak at harvard university today. you can catch our coverage of her speech at 1:00 p.m. eastern. still to come, questions are swirling around apple's media ambitions after report reveals a consideration for a bid on time warner. ♪
mark: live from london and new york, i am mark arden. shery: -- i am mark barton. y ahn. i am sherr gdp rose 8/10 1% in the first three months of the year, up from one half of 1%. damagee the flex last from trade and inventories. household spending rose more than estimates. eight automakers are recalling more than 12 million vehicles in the u.s. according to documents posted by the national highway traffic safety administration.
the inflator is a responsible for 11 deaths and more than 100 injuries worldwide. the japanese transport industry is recalling 7 million vehicles with takata airbags. and the world's largest private sell thevestor will blackstone hotel group hotels that operate under the hilton doubletree brand will be sold in europe. that is the bloomberg business flash. according to a report by the "financial times," apple is said to have considered a bid for time warner at meetings at the end of last year, which opens questions about apple's media ambitions. we heard from andrew hargreaves
, who has an overweight recommendation on the shares with a price target of $23. it sounded like a one-off comment in a single meeting that did not go far. if you look at apple and the scale of the businesses they would want to be looking at, i would think if they were looking into video, they would looking for a content rather than a platform business. byk: shares of apple down one third of 1% after oti global changed its view on apple to negative from mixed, saying metrics continue to deteriorate or the company. still to come, our weekly dive into the $3 trillion etf markets. and just ahead, while oil etf investors are getting a brutally. ♪ -- are getting a root awakening. ♪
shery: you are watching bloomberg markets. a new york with mark barton in london. let's go to a julie hyman, who is standing by with our dive into etf markets. weie: the rebound in oil have been looking for is's today. wti is up from the lows. but etf investors got less than half of those gains. bloombergr intelligence expert on all things etf. he would think if he wanted to play the gains in oil, you could one of the myriads of etf to invest in stocks pay what is happening? how to is a lesson on manage a futures decision. these etf's use futures. the $5 billion went into trying
to find a bottom in oil since july of 2014, one oil started to go down. that is insane. i have never seen that much money going to bottom calling. you are saying is this finally -- my lottery ticket has come. 9%.the u.s. is up if you look at the trading, it only trades around 8% a day. that means people are stuck. i think a lot of retail investors went in there. it is called "the oil etf," not just the oil contango etf. these products are complex day because of the way you have to roll futures every month, over time, this corrodes returns. use.oh is one people though it is up 9%. julie: you brought us a chart on the bloomberg, a cop chart of the returns of some of these
products. we have uso. what are the other two? the white line is crude oil. the bottom line is the triple oil etf. julie: so in order to triple the performance of what you see -- in this case, oil futures. eric: but it only does it daily. over time, because you're resetting the leverage every day, it gets wiped out. and you are dealing with contango in the a futures market. it takes a phd to understand all of this, which is why some of these products need ratings. i wrote a book around -- on etf's. movie ratings on etf. some of these products would be rated r. think -- td ameritrade showed
millennials' most traded securities, the vti it was number five after apple and facebook. i think retail investors are in for a surprise. julie: are all leveraged etf's rated r? eric: hard r. julie: let's talk about some of the oil stock etf. the energy select etf. are you seeing -- because it is stock and not oil, do you see a better correlation? eric: not better but safer. to play ay, if i were bottom on oil, i would say xle. but now you're marred with stock market issues. this is up 12%. not half of what oil day. in the market. i am not sure if you're happy or
disappointed, but that is one believes. julie: is there anything that has mirror the rising oil and etf's? eric: the closest thing would be something like xop. this is playing upside volatility. it is equally weighted. has more juice, but is still equities. triple the volume of the s&p and is up 18% this year. the bestones always do than xle and uso and others. julie: interesting stuff. shery: still ahead, on bloomberg television, janet yellen speaks. ♪
let's get to your first word news. emma is in the newsroom. is proposing ain way to increase military spending without busting budget caps. he wants to buy $18 billion worth of planes, ships, and helicopters. money spent fighting wars is not subject to the cap. flinthigan, residents in are being asked to flush the pipes in their homes every day for two weeks to help recover from the lead contamination crisis. paying water be bills inmate to encourage the process. experts say people have not been running enough water to read the system of lead. town lawmakers have determined that -- was elected president. narrowly defeated
the son of a dictator ousted in 1966. the international olympic committee says nearly two dozen olympians from the 2012 olympic games have failed retesting. that goes along with 31 recasts from the 2008 games in china. an italian diverse says he found the wreckage of a british submarine during world war ii, the submarine was found last weekend. it was 250 feet below the surface. aboard71 crew members when it disappeared on the last day of 1942. the royal navy says it is looking into it. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. shery: thank you.
to make anlanning early getaway for the memorial day weekend may want to put their plans on hold. janet yellen will be speaking this afternoon at 1:15 p.m. eastern time. she could get a clue as to whether the central might raise rates next month. thinkxt guest does not rates will be raised until after the u.s. election. now, herokes joins us fund has he can 82% of its rivals over the past five years, also beating 74% of this year. thank you for talking to us this morning. why don't you think the fed will act until later in the year. what does that mean for portfolios? now thehonestly, right odds are saying that the fed may raise rates not in june, but possibly in july and september.
the bottom line is that the fed is moving at a very slow pace. i think a lot of the rhetoric and talking over the last week or two has been to put the option back on the table. we know the fed really wants to raise rates. trying to make sure that they have that option when the time comes, that they feel like the global markets are stable enough that they can act. shery: an interesting point is that you are finding great opportunities in the u.s. credit markets. tell us about your rationale there. elaine: it has really been all of this -- is the fact going to raise rates or not? all of this activity has fed into a lot of activity in the market. many of the same reasons that the fed has not been able to raise rates up until this point,
whether it is the crisis going on in the commodity market, uncertainty about growth out of china, about growth in general in the emerging markets, and even the baton passing central-bank easing going on the bank ofu.s. and japan. that has created volatility in the credit market. when we see that volatility, if we really do believe the pace -- and that is probably the most important thing to think about, if we do me -- really believe that the pace of interest rate is going to remain slow and measured, then this opportunity to take advantage of that volatility going on in the credit market. mark: can you just elabote on that, where is the best opportunity? tell us which countries, which sectors. elaine: we still like the u.s.
market. we still think that the growth is still in the u.s. that one engine that is running at an ok pace, and we are waiting for another engine to catch on so we can move this global economy to a better place. we do like the u.s. within the u.s., there have been a lot of opportunities. look at the political situation. the political situation is very polarizing. whether it is hillary clinton in office or donald trump in office, it is going to mean different things for different industries. whether it is technology, media and telecom, pharmaceuticals and health care, they are on different sides. that has created softness in both of those markets. that is what we are looking for. we are looking for bonds that are under pressure because of uncertainty where we can jump in
and pick up excess yields, and hopefully as the fed is raising rates, we will see compression and have good coupons with returns on those bonds. mark: i am going to show a chart that you won't be able to see. i will paint the picture. $332ows that there will be billion worth of corporate bonds issued in may, that is the biggest may ever, almost the biggest month on record. markets continue to whether such a storm of issuance? elaine: this is a little bit of why the fed has felt so confident in coming out to say don't take the summer off of the table, we might raise rates after all. the market has digested this new issuance so well. deals, which do
not trade so great this first day or two, they are trading very well. between the amount of quantitative easing that has gone on and the lack of yields, it has made the corporate markets in the u.s. attractive. there was money out there waiting to spend. shery: is there anything that investors should avoid in this cycle? yes, i think there are two ends -- if i'm talking about corporate bonds, there are two ends of the spectrum that you need to be careful of. you need to be careful of the high-quality end of the spectrum because there is not enough yield there. even slowly paced incremental moves up, there is not going to be enough spread compression. you could end up with low or negative returns. on the other end of the spectrum, we are not looking --
losing sight of how long this cycle has been going on in the u.s. i feel like i've been talking about this or two years and it is still going on. the fact that we are talking about these hikes is showing us that. is the cost to do is on the lower end of the spectrum. you don't want to be buying triple c's without doing a lot of research and be certain that you have found specific risk that is positive. i would stick to the belly of the credit curve and because is on the two ends. shery: thank you so much for joining us. elaine stokes. janet yellen is due to speak on harvard university later today. you can catch coverage of her
hang seng rose .9%. region,story out of the prices fell for the second month as the central tank struggled with inflation and negative interest rates. tom mackenzie has more from hong kong. againonsumer prices fell in april. after dropping the same amount in march. that was below forecast, but it still leaves the bank of japan a long way from its 2% inflation target. governoral bank disappointed markets by holding off on the april meeting, saying that low energy prices dragged on inflation. it says it will hit it to present target by march, 2018. mark: have a look at what is
happening in europe with equity markets. we are 50 minutes or so away from the end of the friday session. i mixed day today. investors are sitting on their hands ahead of that janet yellen moment in harvard. look forward to that. gaining, we are on track for our third consecutive weekly advance. london is down, france's down, germany is up. resources are lower, health care higher today. genentechd news from showing superior progression free survival compared to one of its treatments in the country lymphoma- untreated area.
in the currency markets, sterling is up for its second week against the dollar. it reached its highest point since january last week. the euro is up for the fourth week since the dollar. 10 year yields up a couple of basis points. the greek penny is up a couple of basis points. this is after he declined 90 , after it agreed to hand over 10 billion euros. midtown manhattan. hello abigail. >> the index is up about .4%. if the nasdaq and finish higher, it will be the first four-day winning streak since april 1. helping the nasdaq today, alter salon. this after the company posted a blowout fiscal first quarter.
not surprisingly, we have the street very bullish. mike baker at deutsche bank he soscribed this by saying, " this is where all the traffic is going." this is in reference to the overall week retail environment. mark: any outsized winners today on the nasdaq? >> there are. pastors in a good -- it was not approved by the fda. volatile year for relypsa. mayor goldstein says this goes a long way to remove the overhang on valuation. she sees the potential for relypsa doubling in the next 12
months. club shares of lending surging in early trading in the u.s. today. the wall street journal reports that the embattled online form -- we saw the resignation of the former chief executive renaud laplanche. it seems the scandal is moving beyond the u.s. we have more on that story. is the lending club scandal moving overseas, crossing the atlantic to our own peer-to-peer lending industry? >> i think it is too soon to say it is affecting the industry over here. the scandal broke at the beginning of the month. it is raising eyebrows. it sent ripples are the universe -- industry in the u.k. mark: how big our weight relative to the u.s.?
armed with a country that invented peer-to-peer lending? in 2005.rted the u.s. industry just accelerated. the u.k. industry is about 1/5 of what the u.s. is. the main difference is the u.s. has the backing of institutional investors which has accelerated growth, whereas in the u.k. it is small retail. shery: how is this scandal in the u.s. affecting the u.k. market and what are the repercussions going forward? >> at the moment it is raising questions. u.k., people are very quick to separate themselves from the u.s. for start, they approached regulators over here to look into regulating the industry to encourage investors and establish some trust here.
they have said they want to grow at a gradual pace and slowly attract investors from the institutions. it is very retail-based. shery: how is the government reacting to that because the u.k. government back in april -- these were safe enough. have we seen any reaction so far? reporting,g to our they are looking into the u.k. industry, and they are satisfied with what they have seen so far. you mentioned the u.k. government, in april they gave the thumbs-up to the industry by creating a new asset class for their government program. they had given it the greenlight. i think it is business as usual. bad. not everyone is the former chairman of the financial markets, he does not
think it is going to end too well. >> i think the industry has moved on from then. we could not get a hold of him to see what he thinks. there are questions about it. we are talking about household money here. i think saying we can include it in the government program, that says a lot. mark: the returns are quite well. >> very decent. for an individual savings account, i think you can get a plus. of 6% that is not bad. this a decent return in environment. mark: thank you for joining us. sarah jones on the impact of the lending club scandal. time for the bloomberg business flash. a look at the biggest stories in the news right now. consumer confidence rose in the
u.s. this month, not as much is expected. that is according to the university of michigan's final assessment. on the plus side, more americans than at any time in the last decade say they expect their finances to improve in the next year. the british o2 unit, this after a plan to sell the u.k. wireless carrier was brought to regulators. while the priority is to reduce leverage, the company is better off with o2 in its or call you. earnings crush estimates before the rally, the stock was up 15% this year. it joins costco, walmart, and dollar jewelry -- dollars or change in beating expectations. it is attracting higher and retailers struggle.
we have a report. >> most people never get a chance to spend the day in the life of a top gun unless they happen to have spent several thousand dollars on breitling. >> i didn't know this existed until i was invited here, and i was like wow. swiss watchmaker breitling established its own aerobatics team as a way to pay homage to its aviation roots. >> we started making instruments for navigation, then it became swiss watch. they have air shows all over the world. last week was its first american air show. it offered its best customers opportunity to take to the sky. >> they invited me out about a month ago. these lucky customers got to
have their own maverick moment courtesy of breitling. spending the day at the connecticut hangars, hanging out with pilots, and riding shotgun as the jet team practiced barrel rolls. this breitling customer thinks being given a chance to experience five g's of vertical force first and could make in a customer for life. >> every time i look at my watch, i'm going to think about this experience. it will make me want to buy more watches. the point.exactly it's a challenge for a lot of companies because the regular way of communicating, but i think it is better for educational purposes to leave and experience.
>> breitling offered to customer days last year. this could boost breitling sales to new heights. shery: that was catherine glass. just head tomore, mi pursuits go on the bloomberg. mark: we are 30 minutes away from the close of trading today. threatens growth, trade, and jobs. we will talk to one of economist who argues why it is a good thing for the u.k. a look at how u.k. shares are trading. the european close is next.
bloomberg markets. ♪ mark: we are going to take you from new york to london in the next hour. here is what we're watching today. global stocks are the highest close in three weeks as havens like gold fall. will it hold its performance after fed chair janet yellen speaks later? shery: fell short of more aggressive language suggested by japan. we have a wrapup. we are talking to one of the most high-profile throw brexit economists in the u.k..