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tv   Bloomberg Markets  Bloomberg  May 31, 2016 12:00pm-2:01pm EDT

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from world headquarters in new york, good afternoon. this is what we are watching. endks are on track to higher with the s&p 500 near a six-month high. economic data could support the case for higher interest rates. icahn decides to throw his weight behind allegan. have they demonstrated enough evidence of a sustained turnaround? politics are front and center again. speaking about donations. why he is raising -- falling behind raising money for his campaign. we are through the trading day. let's get a check of the markets with julie hyman.
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low volume was a hallmark of trading. we are seeing that again. julie: you get low volume in the summer months. it is about 14% low the average. you can see there is not a lot of movement in terms of one direction or another. the dow is pretty deeply in the red. the s&p is not falling nearly as much. we have this recalibration of what the fed may do. they may raise in june or july. the personal spending data is coming out ahead of estimates. leadingstops have been gains. consumer staples are lagging today.
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that is a counterbalance that we are seeing. let's check in on the first word news. taylor riggs has more. taylor: president obama is being pressed to speed up efforts to help syrian refugees. the administration had promised to resettle 10,000 refugees. eight months after the program started, only 2500 have an admitted. jerry brown is endorsing hillary clinton for president. brown says he believes clinton has the best shot at stopping donald trump. says while he is impressed with how well bernie sanders is done, he believes hillary clinton is the only path forward. a bite out ofing the puerto rican economy. the virus has led to the
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cancellation of more than 40,000 hotel room reservations. that translates to $20 million in lost revenue. rico has been hit harder by zika the any other part of the u.s. death.00 cases and one forecasters warned there could be more flooding in texas. crestoncos river may three-putt above the record. flooding has been playing for six deaths. global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. scarlet: economic data will determine how the fed approaches raising rates. numbers wereding the first piece. tomorrow we get manufacturing numbers plus labor market reads
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including the payroll report on friday. it culminates in janet yellen's speech june 6 in philadelphia. scott around. a he is the chief economist at raymond james. it's great to see you. on friday, she did not push back against the hawkish narrative. theare markets taking prospect of a higher rate environment so well? scott: that's a bit of a puzzle. i think we've seen the markets react adversely to fears in the past. there was little response in december when they did raise. there are a lot of concerns about the emerging market economy. i think the fundamental suggestion, the fed is very much in tightening mode.
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they are leaning in that direction. it's very simple. what you see is what you get. it's going to be data dependent. that makes things a little bit more likely. there is some downside risk. you might see some overreaction in the market. with the fed is doing now by talking tough, they're testing the market to see how well they may be able to handle raises in the next couple of months. scarlet: that has led to a stronger dollar. we have seen how financial conditions have loosened as result is the dollar weakened on the dovish fed. again,e dollar gaining
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where we see the damage done to the economy? scott: it's more the speed of the adjustment of the dollar. the dollar had overshot on the way up. you seeing a bit of a reversal. it's been unhelpful for u.s. exporters. canada and mexico account for close to 40% of our exports. that's a big deal. they will be watching very closely. we saw this overreaction and lot of markets. the dollar should strengthen has the fed titans. they overreached as we were starting this year. it's fallen back. it's a bit of a concern that you may see this overreaction in the markets. scarlet: there is the data that would art -- argue against the
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fed raising rates. it's pretty much stayed in this range. corporate profits have come down. high point is the third quarter of 2013. is there any outlier for that to improve. scott: a lot of the weaknesses in the energy sector. that's not going to contract forever. if you account for the strong dollar effect, businesses are very cautious out there. they are reluctant to expand. they do have the means to expand. they are sitting on a lot of cash. they have had plans to expand in they delayed those plans. they are hoarding cash. this is likely to be temporary. you have the june referendum
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coming up in the u k that will be behind us in three weeks. you do have a presidential election here which is a bit of a concern. the consumer drives the bus for the economy. growth tostrong wage propel the consumer in the second half of the year. hopefully that will encourage as this investments turnaround. it's difficult for the fed to tighten when overall it's trending down. it's still nothing likely from the fed anytime soon. they are considering it later in the year. dataet: we have a major point with the jobs report. got workers who are striking against verizon. that's going to the debt in the payroll number. i want to get your sense of whether aside from these strikes we are at full employment.
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are we looking for job numbers to decelerate? to what extent is the fed ok with that? expect jobmust growth slowdown. we really only need about 100,000 jobs per month to maintain the growth of the working age population. we are running twice that now. job growth is going to be slowing down. it's largely because it's going to get harder for firms to hire qualified workers. we're having some anecdotal evidence of out now. -- that now. scarlet: will that be enough to keep the fed on track for a june or july rate increase? scott: that would be enough. i think you want to focus more on the three-month average. there is always going to be a little but of noise.
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you can factor the strike activity out. labor department should tell us what that impact had on the numbers we get on friday. you are looking at the pace slowing down. 150,000 is not bad. we need about 100,000 to maintain the path of growth in the working age population. we expect that slowdown. you look at the economic surprise index, we are at the highest since 2014. we're almost back to the zero line. this is relative to expectations. this is where economists had expected to come in. to what extent is this recovery we have seen a reflection of the first quarters data coming in weaker? scott: people need to be careful with the stronger numbers we are seeing for april. there was an early easter.
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a lot of the economic data it is adjusted. it's hard to get that right. we had an unusually mild winter. temperatures warmer than average. you did not get as much household energy consumption. that contributed to stronger spending in april. you take march and april together and its moderate. you want to reserve judgment and see what the numbers are going to be for may and june. we expect things will be better than the first quarter, but not really knocking the cover off the ball. scarlet: scott brown, thank you so much. or bloomberg markets is coming up after this. ♪
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scarlet: you're watching bloomberg markets. let's check with julie hyman for a quick limbs on what's going on in global markets. julie: i am taking look at gm. across asset classes what's on the moon. this is a standard deviation from their typical move. we don't have much movement in stocks here. these are among markets that are open. it does not show china.
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it is now deeply in the red. in the americas, we not seen much movement. candidate is down about a quarter of 1%. brazil is down by about the same amount. the pound has seen quite a bit of action today. that is because it's been moving a lot on various polls. that 45% to support a exit from the european union. 13% are undecided. we saw the pound swing hire on a poll showing the majority of people did not support an exit now. we are seeing a swing lower now. markets, i wanted to point out what we saw in japan. there was a bond auction in japan. bityield moved a little lower as we see buying of that 2-year note.
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the big move today is in crude oil prices. there are various supply constraints around the globe. according to our report, saudi arabia is considering a $15 billion on the sale. gold is up today. copper is lower. scarlet: great job. our better-known functions here at bloomberg. julie mention what happened in china. let's look at the biggest business stories. stock index futures in china plunged by the daily 10% limit. contracts cap by as much as 10%. the futures exchanges now investigating. carl icahn has taken what he calls a large position in allegan. he is very supportive of the
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ceo. that is your business flash up eight. let's bring in our health care reporter drew armstrong. icahn, talk about carl he has bet on a lot of big companies, apple, other names. he pushes the move that he thinks will raise shareholder value. what does he have in store for allegan? does take pains to say brent saunders is a great guy. he has a long history with him. he supported him when icon was fighting with forest labs. by octavius.ught these guys go way back. icon believes in this guy.
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that said, it's not as if carl icahn has not said take a look at apple. he took a stake in apple. he said he likes tim cook in the management strategy. he demanded that they use their cash to pay back shareholders. that does not necessarily mean that he isn't going to want something or have a role he thinks he can play in the company's future. it's at april point right now. scarlet: we should not assume this is a friendly situation. friendly.ight be there is a broad spectrum on how activist carl icahn can be and could get in a situation like this, even when he supports the election of the company. scarlet: how well are they with their scuttled takeover with pfizer? : there wasn't going to be
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drew: there wasn't going to be in allegan. it was going to be part of pfizer. they are selling off their generics business. alleganw, you have an that is levered in a position to go out into deals and has shown its willingness to be bought by somebody else. it leaves a tremendous number of options on the table. i'm sure the carl icahn may have a couple of ideas about what those should be. scarlet: thank you so much. he is covering health care for us at bloomberg news. we are going to speak the cofounder of crescent capital about why he was to contribute to turbulence in the jump credit market. we will be back. ♪
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scarlet: why would they want to
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use investment tools? ship -- erik schatzker sat down with him. erik schatzker: >> it affects everybody. we were affected here. our portfolio managers were concerned. we are fiduciaries. reacted emotionally as everybody did it. we did not take action. when the market backed up as far as it did, the sharpness of the volatility was a benefit to us. that itsharply back up allowed us to focus on buying opportunities rather than trying to decide whether the was a
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fundamental challenge in the market that we had to address. erik: are we going to see more of that volatility for the same reasons? what do you think? mark: it's the new norm. ofon't know about that sharp a backup. a eger, etf's are percentage of our trading volume. -- bigger percentage of our trading volume. -- payingare playing attention to credit spreads. it's a function of what's going on in the world. we are positioning our portfolios for less liquidity in the markets and more frequent sharper swings. erik: how do you do that? mark: there is an art to that.
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we are trying to stay true to our credit discipline. we try to be in more less volatile names. some are private investment strategies. you have to mark your private positions with a valuations. you don't have to have the day-to-day transparency of the they areo that area trying to look at benchmarks and trying to find names within those sectors that are better risk rewards for our clients. it's always been 10% of the high-yield benchmark. 11%he end of the year, it's and we were at 4%. investmentadding --de into our portfolio to
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we saw the wti frothing. we pushed it up to 10% now. the benchmark is probably 14%. that's a combination of price appreciation and fallen angels coming into our market. it's not as simple as looking at the rebound. markethe high-yield really seems as though it's primed for a correction. it, wehe way we approach are trying to break the market up into its component parts and address each of the component parts. we want to step back and look at where we are. we increased our energy exposure by buying names and some split investment graded names. for those names fell into our benchmark, we were able to buy
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paper and now it's trading at 90. we added some duration to the portfolio with that. it's a potential for interest rate increases. is a lot for portfolio managers to consider. it's a lot more complicated than it used to be. was erikthat schatzker. coming up, our mystery stock of the day. it is going for the adult market after its shares is about over the last couple of years. they hope the new approach will be bottoms up for it shares. ♪ get ready for the rio olympic games
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by switching to xfinity x1. show me gymnastics. x1 lets you search by sport, watch nbc's highlights and catch every live event on your tv with nbc sports live extra. i'm getting ready. are you?
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x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. scarlet: live from bloomberg world headquarters in new york,
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i am scarlet fu. this is bloomberg markets. let's head to the market desk where julie hyman has the big reveal on the mystery stock. it is going for the adult market after the stocks sure will out. they are hoping that it will be bottoms up for the shares. i'm saying that it is going to be coca-cola, pepsico -- julie: it is the adult market because it is beer. now you will be able to make it at home with a soda stream. shares have been rebounding recently and i rebounding even more in today's session. the company has released what they called the beer bar. the first thing they will be selling is called blondie, a lighter beer. you will have sparkly water made through the soda stream machine, and then you add concentrate, it
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beer concentrate, to beer. if you look at today's session, you are seeing a list, a tel aviv listing, where the company is based, rising. soda stream.pe for elsewhere in carbonated beverages today, if you look at some of the other companies, a decline. a couple of things have been putting pressure on the soda makers more broadly, including a number of ordinances around the country to regulate sugary beverages. in addition, there was a ruling having to do with the word, word "coca-cola
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zero." it will have to be litigated in individual courts. getting back to beer -- does this sound appealing to you? alix: i don't know if i would go for it, but i prefer rose anyway over beer. julie: i like beer, but i'm happy to leave it to the experts. scarlet: let's also get the headlines from the first word news. donald we start with trump. records show he has traded 100 trump trademarks into a delaware corporation. they do not tax royalties on intellectual properties. his best-known properties hold his name. 38% of americans say they have little confidence in the democratic nomination process
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according to a poll by the associated press. 44% say the same for the republican party process and 40% say they only have some confidence in each parties nomination process. the u.s. supreme court ruled that land owners can go to court on properties covered right the clean water act. it potentially streamlines the federal approval process from companies seeking to develop wetlands. and, russia has declined involvement in a wave of late-night airstrikes that killed 23 people. monitoring group that relies on reports from local activists says that at least seven children were children.
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global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. scarlet? scarlet: we will stick with the global scene and turned to japan. closing at a one-month high. weakness of private consumption is the reason that provoked the hike. i want to bring in scott. it seems that the prime minister has been looking every which way to prevent the increase. at the g7 meeting last week, he leaders to comment on the rising risk. he felt ultimately. has he succeeded in getting the sales tax delay? on track. definitely as you mention, they have been parsing through every piece of data available on the economy,
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picking and choosing the data that will build the case. this is a done deal, as far as i am concerned. be will announce his decision tomorrow and it will move forward with legislation in the fall. scarlet: what impact does this have on the debt picture over all? >> clearly, this is not going to improve the view in the market and elsewhere that the government's commitment to debt restructuring or consolidation is very strong. stick withd he will the fiscal consolidation targets that he set a few years ago, namely to reduce the primary budget deficit to 1% of gdp and down to zero in 2020. it has been a very long time before anyone has been crunching
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the numbers and believing that is possible. g7, what everybody did .alk about was the strong yen the u.s. to the other stance which was there is reason to be cautious about intervention. does any of this matter now that the dollar has recovered? >> i think it does. the fundamentals and external pressures that the economy is facing as well, weak demand at home, none of that is changing the basic picture that we see where the doj is not on track to hit the 2% inflation target. intervention is essentially off the table. i think that is something that the u.s. has made a strong case against. japan is likely to refrain
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against doing that. that does not rule out the possibility of the bank easing. scarlet: of course, the fed 60.s on june the doj meets the day after. where does it leave them? >> you can look at it two ways. goes forward,ke as people think it is likely to do, that may present the boj with a tougher road to more easing just because it will get up on to the ends. the other way to look at it is if momentum is pushing the yen weaker, maybe it is time for the bank to step in and help ease the momentum. scarlet: what room do they have
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that does not involve weakening the currency directly? >> not a lot. certainly there is huge survey over what options the bank has left, which ones are the best. i think more purchases are probably not top of mine. more asset purchases are of course an option. there is a question about whether the boj can purchase in volumes to really have a big impact. they are facing a lot of tough choices. negative rates is something they introduced in january but received a lot of blowback. i think they need to do something. they know they need to do something. it remains to be seen what tool they use. that youi like the way say that. one other element that they have dependent on is the element of
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surprise. there is limited maneuverability. isn't there? yes. he has moved when no one said he would, and he moved when everyone said he was unlikely to move. it is hard to put a finger on what he might do. the potential bomb out there is they engage in helicopter money which has everyone abuzz. i don't think that is likely, but this is a governor that is capable of shocking the market and seems likely to do it. japanesewhat might helicopter money look like? outorolla has ruled it saying it is illegal for him to engage in that type of activity. i don't know whether or not that is true.
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i think what they're looking at fiscal side,om the wo fiscaling t budgets. it is a way to boost demand and get the economy on a stronger footing. scarlet: thank you so much for joining us from washington. next up, we will take a look at how global food prices are impacted by india's monsoon season. ♪
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scarlet: you are watching bloomberg. businessour global report. here is what we are watching. just how much of a hit is
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take aim. saudi arabia said to be weighing on a bond sale. monsoon like rains are hitting southern india. it is a big factor into determining food prices. allyart in europe where an of angela merkel says the u.k. must cast off old dreams and resist clinging to its material past. elmore brock chair of the foreign affairs community says all the political and economic arguments favor staying in the block. if the british people vote, we accept the vote. scarlet: the emissions scandal hurting volkswagen's
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bottom line. they did maintain their full-year outlook saying that revenues will drop as much of 5%. in europe, opec's cheap oil strategy is leading people to buy gas guzzlers. sports utility vehicles outsold every other type of vehicle for the first time. may sell as many as $15 billion of bonds this year. that is according to people familiar with the matter. it would be the first bond sale in international capital markets ever. the slump in hong kong property values will have to get worse before they lift measures to rein in prices. they estimate that half home prices will have the drop another next percent before the government intervenes. prices are down 13% since
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september. david: time now for our bloomberg quicktake, where we provide context and background on issues of interest. well, india is set for the highest monsoon season in 1994. the storms are a radical he is the situation. when monsoons disappoint, food prices soar. populous indian state are experiencing severe drought. planting.ons delay twoe is some optimism for 2016. a strong el niño is often followed by lending you -- la niña.
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months begin when moisture fronts are pulled in from the indian nation. the present efforts to fight the dry period involves relinking .orkers to parched areas the drought will persist unless they start addressing the drought more directly. that is your global business report. for more stories, visit bloomberg.com. scarlet: coming up, hillary clinton is reaching out to a new kind of fundraiser. we have the details for you. ♪
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scarlet: this is bloomberg markets. i am scarlet fu. after three-day weekend, we come back to the markets, but the volume is not there. in the dow and s&p, the volume is below the 10 day average. we're looking at declines. the nasdaq is still clinging onto gains, but yet, if you look
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at how they are performing this month, the dow was up just barely. basically little changed. for the month of may, the best-performing group, technology. financial ande technology sector and check in with abigail doolittle, who is taking a look at a few names, including tesla. abigail: we have tesla trading flat. fewstors are expecting very updates to come out of this meeting which means the story boils down to whether tesla can deliver on their promises. can they deliver 80,000-90,000 vehicles this year. will they be able to produce model threes in the second half of 2017, as promised.
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third, will they meet the huge goal of producing up to 500,000 vehicles or more per year starting in 2018, basically boiling down to whether they can produce for math markets. the bears would probably say no, but the bulls are more optimistic and signing with elon musk. scarlet: speaking of short sellers, they have had a tough time, depending on when they go short. abigail: that is true. we see the stock is up 1200% since 2010. unless he went short near the top orange line, you are probably losing now. all of the uncertainty is reflected in the trading range over the last couple of years reasons inechnical
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the range. it all depends on the annual shareholders meeting. thank you so much, abigail doolittle, reporting live from the nasdaq. the gloves are off in the race for the white house. hillary clinton is expanding the ranks of her party operation to people who are new to fundraising. will that help her? we ask bill anderson who joins us from washington. great to see you. tell us about some of these new fundraisers that hillary clinton is sinking out. >> she calls them hi llblazers, people who have promised to raise $100,000 for the campaign. she has individual from the tech groups and 114 of
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for who have never raised present shall campaigns -- presidential campaigns. there is a whole new group of people who are individuals -- you know, a lot of politicians. i think she has the mayor of los angeles, the head of the california senate. she has a lot of california politicians raising money for her. she also have folks from the tech sector. executives.ook someone who raise $500,000 for the 2012 campaign. she now has a diverse group of people in her corner, raising money for her. scarlet: people cannot help you compare her fundraising effort to of course barack obama, but time ofnie sanders this
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around. how does her campaign compare? >> one of the really interesting things -- obviously, bernie sanders is something we have never really seen before in politics where he has funded his campaign almost entirely from small donors. generally speaking, candidates like to have something of a mix. in the era of super pacs, you had the super pacs supporting, medium, and small donors. hillary clinton so far has only had about 20% of her money coming from small donors. a couple of folks i talked to said that she has not tried to raise money from small donors the way that bernie sanders does. he sends out constant e-mails when he is on the campaign trail, or on tv, he says, make a competition, tway seven dollars is the average one. hillary clinton has not made that ask yet.
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her plan, we think, is to wait until the general election. theas pointed out, after new hampshire primary in 2008, she raised $35 million from small donors online after the victory. she does have a lot of potential to raise that kind of money. withet: let's contrast what donald trump is doing. we are waiting for paul ryan to give his endorsement to don trump. $100 billion have been pledged to help donald trump. he is a little bit out of the box here. >> a really remains to be seen what can be done. the number of you p/e donors have started to say that they will start supporting him. we have been tracking people down and trying to find out -- there are number of people who
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have also said that they will not be big trump supporters. i think it will be a challenge for him. a couple of things that people have said is one of the difficulties he will have is because he was a self financing candidate, he has not built the network that hillary clinton has. he is slow in outreach. it is a question whether he will be able to raise as much money as they want to buy election day. scarlet: thank you so much for joining us from washington. coming up later on bloomberg markets, we take a look at politics on the other side of the world. we sat down with a key member of the opposition party in australia. ♪
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scarlet: it is 1 p.m. in new york, 6:00 p.m. and london and 1 p.m. in hong kong. welcome to bloomberg markets.
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from bloomberg world headquarters in new york, good afternoon. an exclusive interview with the yale university professor robert schiller and what he -- and how he thinks the fed rate increase would affect the housing market. onexclusive interview with of the first business leaders to back donald trump. he says the gop nominee and house speaker should soon be joined at the hip. what's not in the world of retail and why you should or should not care about the things you buy. first let's go to the markets desk with the julie hyman. we are looking at a market that is meandering. it's due to finish higher for the month? the third straight month that the s&p 500 would have seen again which has not
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happened since 2014 but the direction today is my meandering a little bit negative. it's down slightly. a negative bias today. it was earlier characterized by low volume. we had a lot of economic reports today and the biggest was probably the personal spending number because it was such a surprise coming in at its highest and seven years. this shows the year-over-year increase in personal consumption -- in personal spending. we saw a gain of 1% unadjusted. gives something that would material to folks who think the fed will be more aggressive in the summer. it's not giving a lift to areas that you might think it would. we are not seeing again in consumer discretionary shares with this gain and personal spending. lower.r staples are also
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on an individual basis, look at the personal consumption companies that are down. --e, expedia, home depot this is not being reflected in personal stocks nor is it being reflected in homebuilders even as we got the case schiller home price index continuing to show relative strength. the homebuilders are not showing as much weakness but still weaker today. scarlet: the nasdaq is holding on to gain so clearly, there are bright spots? julie: amazon is one of the bright spots helping the nasdaq. the shares are trading at a record on a closing basis today, up 1.73%. it has been on a winning streak so that is continuing. the other winner would be oil. prices continued to go higher, up about 1% at one point going
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above $50 per barrel. there have been supply constraints and that has helped boost oil prices even if it's not helping energy shares for the stock market. the correlation recently seems to have broken down. scarlet: as we wait for the that it may be after they do nothing they will come right back. we want to check in on first word news. aylor: an angry and irritated donald trump outlined the charities that will receive millions of dollars from a fundraiser to help veterans. >> i never thought we would raise a million dollars we started. doing almost $6 million. i have to tell you, the press is so dishonest and so unfair. a lot of the people behind me and some of the people over here helped in vetting the various
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request for money i want to thank all of those people. helor: donald trump claimed raised the money from pledges from wealthy friends and the public and $1 million from itself but they did not disclose which charities receive the money. hillary clinton has a 13 point lead over bernie sanders in california. that's according to a new hoover institution golden state old. she has 51% support among likely democratic riemer he voters. andfor bernie sanders california hold its primary next week. a new development in the flint water crisis -- scientists said the water is now safer handwashing and showering and bathing. the water became tainted with lead and other pollutants after officials switched the source to the flint river in 2014. flint resumed using detroit water last october. a refugee organization says at least 1000 people have died or are missing and presumed dead in
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the deadly crossings over the mediterranean sea. in the past week alone, there were nine incidents on the central mediterranean route between syria and italy. 24 hours a day, powered by our 2400 journalists, in more than 150 news bureau's around the world. scarlet: we turn now to the u.s. economy. home prices in 20 american cities climbed more than forecast in march as the spring selling season began. the case schiller index rose 5% from the year before. spoke schiller exclusively about how the market is. not enough houses out there. the inventory is low. it pushed the price up. it's a modest price increase, nothing scary or exciting. this could go on for some time. continuingdds to the
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narrative which is that the economy is improving. it looks like we are setting the stage for a rate hike in the next few weeks. i want you to listen what janet yellen said friday when she was withng -- giving a talk her harvard colleagues. >> it's appropriate and i have said this the past, i think for the fed to gradually and cautiously increase our overnight interest rate over time. and probably in the coming months such a move would be appropriate. betty: all signs are pointing to it being appropriate in june? >> i think so. it's not clear what this will do to the housing market. we have already seen a 25 aces point increase in that had no
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impact on the market. if the titans substantially, it might change people's feelings about affordability. interest rates have been so low that it creates a wonderful option. homeownership looks great when interest rates are low. it might change. i don't think we really know how the psychology will react. the other piece of data that stood out was the fed has preferred measure of inflation, 1.6%.urt year on year, if you look closer to where i am, there is no inflation in the eurozone. inflation fell by .1% last month. why is inflation picking up in the united states but we are having problems in the eurozone and the u.k. and japan just to mention three of the world's biggest economies? >> i can only guess.
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this is psychology. on this pathbeen for more years than europe. we started to feel confident and think that rises should be going up. i just has not sunk in yet in europe. mark: yellen did not mention any international developments. do you think the fed is calmer when it comes to international developments? more calm than the start of the huge boutse saw that of volatility in january and early february? >> right at the beginning of the year, we saw big stock market drops. the factpeople thought that we were starting off on a bad foot was very significant. people were edgy then. since then, it has not repeated. sometimes, big drops like that and lead to a cascade of other
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drops but it has not happened. i think the confidence in the market is more stable now. , substantially. betty: i know you have written before about the psychology of the consumer and psychology of the investor and how powerful of not onuence that has predicting recessions but ontainly a huge influence recessions and the economy. where do you think we are now? are you surprised that the consumer is feeling more confident in the u.s. and whether that is a buffer to any further worries about a slowdown? have investorwe inattention to the markets. we are more focused on the election right now. these things distract. in wartime, you would think stock markets would be volatile
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but they are not, not particularly. i think public attention gets dragged away. i am more worried about the election outcome as everyone else's i think at this time then about what the next move of the stock market will be. scarlet: that was robert schiller. look atp, and inside the craft movement from beer to ice cream, is it ramping up or heating up or ramping down? ♪
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scarlet: you are watching bloomberg markets. let's go to the markets desk and
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julie hyman. julie: let's start with allergan. carl icahn says he has taken what he calls a large position in the company. the shares were higher earlier and are now up only half a percent. he is supportive of the ceo, brent saunders who helped carl icon at forest laboratories. bought by what is now allergan. we don't know exactly what the division is. typically when a fund manager reaches 5% of a company is when he or she has to disclose so we can suppose it's smaller than that. we are looking at intercept. this company shares are surging after the fda approved their first publicly available drug. it's a treatment for psoriasis when used in combination with another treatment. this would be the first approved drug a market for this company and the shares were surging more in premarket trading and now they have moderated the gain lower. they are up 3%.
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an update on monsanto and bayers. bayers is said to aligned up financing and should make a revised did as soon as friday. an insider's citing an unnamed person who has knowledge of the situation. bayer made a bid for monsanto but it was viewed as the beginning in the negotiation process. scarlet: the opening gambit, thank you so much. a new bloomberg podcast is launching today called material world. every other week, they will dig into the things you eat and drink and smoke. we have a sneak preview. congratulations. what is on the first episode? >> it could be things you buy on espy.
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it's bounced politics and clothing but the first thing you think of when you hear craft is beer. >> or food. we talked to people who aren't eating things, everything from popcorn to ice cream to anything you put in your mouth. gore are craft versions to against the bigger companies. scarlet: what constitutes craft? how can you ensure people that what you're selling them is a craft? a meaningless marketing term and secretly a company owned by a bigger brand? things you may think our craf could be owned by coke or pepsi. they are trying to get in on the game. sometimes do we even care? do the consumers care that it's a small independent brand or is it something else? is it a feeling of authenticity? it's really interesting. >> than there are the craft bounds trying to grow aggressively.
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they might be successful and a successful business gets bigger. if you are getting bigger, are you still craft? hills which ample is an ice cream company in brooklyn and they are opening a factory. can you still be true to your roots? >> they are very well-funded. they are branding themselves as craft. >scarlet: you also have an interview with hansen? >> yes, the musicians. they still make music and they also own a craft beer company called the hanson brothers brewing company and they brew a beer called m-hop. scarlet: aptly named, did you try it? >> it's hard to get outside of oklahoma which is part of craft. it's local and true to its roots. in terms of products that are craft, how do you determine that? has the market died down a little bit?
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>> it seems like it's hotter than ever. what you're are looking for as a consumer is something with a story behind it that maybe is more transparent about what in it. the big companies are trying to get in on this and saying we out some of the artificial ingredients or by a company known -- annie's got bought by a big player. that was a way for them to keep growing. they say they will not change with they do. scarlet: the story is critical because people want a story to relate to. even if the story is not real. part of theat is reason why it will only grow. even the bigger companies -- they all have stories as well so they are trying to seem smaller while the small players are getting bigger. it seems the consumers are just getting more choice. >> you've got more options than ever. when you go to a bar, it's not just of wide or bud light or
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cores. you have this world of beer and it's true in every part of the grocery store now and true online with clothing. there are more options. scarlet: final question -- on clothing, you have an episode of how fashion executives hate skinny jeans. youquestion mark >> probably have been wearing them for 10 years. you may love them and they look great on you, you are probably not buying different outfits. the fashion industry need you to keep buying close. jeanslothes and skinny don't make you do that. scarlet: thank you so much. newcan subscribe to the podcast on itunes or find it on bloomberg.com/audio. ♪
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scarlet: this is bloomberg markets. shows consumer spending rose 1% in april, the lowest in almost seven years.
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personal income which is wages and salaries climb for a second month giving consumers a need to make purchases but when it comes to pay at higher levels, that is stalling. that's the key finding of a new report. for more, let's turn to carol massar. tool: welcome everybody bloomberg radio. isid is with us and he talking about executive pay. the headline that caught my attention from research you guys sent over his ceo pay is hitting a new low and the smallest pay increase in five years. talk to us about that and put it into perspective. >> there is no shortage of interesting years for executive pay in the last five years. this one was interesting because it's the first time in five years we actually saw increases temper down a little bit. that made sense given the fact that company performance was mixed. we had come off of a bull market
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for five years straight and companies were returning double-digit returns to their shareholders making more money every year. we did not see that in 2015 and you saw that show up in the pay results. carol: is it salary and bonus? thing, the whole base, the bonus, and most importantly, the equity. in the united states, the way that ceos make their money is not to much on the basin the bonus that on the equity. fundamental difference how we pay in the u.s. relative to the rest of the world. cariol: so if the company does well in a publicly held entity in the stock as well, it's a more responsible way of paying executives? you have seen them in the past to anything and everything to shore up the stock price and that does not necessarily make good business sense. >> is an important question. right now, the entity that has the power in the executive pay discussion in america shareholders.
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with the passage of dodd frank, they got this advisory vote on executive pay were every year they tell the company that this is how we felt about how you paid the ceo and the top team. it's very powerful because it's an advisory vote but there is no such thing as an advisory vote because if you lose that vote, directors may lose their seats and you could face lawsuits. it is really shareholders that you play for when you are thinking about how to design executive pay. in terms of the pay for performance, has a gotten stronger in companies? you can grow earnings and do different things but when you look at growing revenue, there are better metrics out there. important issue because one of the big shifts we have seen in the last five or six years is it used to be about shareprice. it used to be about earnings. the dominant vehicle today in executive pay is the vehicle
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best inerformance shares. if you hit your goal, you'll get your shares and if you exceed, you'll get more shares. if you don't hit it, you'll get nothing. what company's are doing is not just tying though share plans to shareholder returns. they are tying it to the metrics i need to execute my strategy to create value for the long-term. that's a fundamental difference. ceo's areeel like getting packages in the door that take care of them going out the door no matter what happens. i feel like the tenures are getting squeezed. there are activist investors putting on pressure but you still have ceo's being taken care of on the way out. >> you will always see some of that. if you speak to shareholders which is the entity that has the power this discussion today, they will tell you what they care about is if the pay has aligned with performance.
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if the performance is there, shareholders are willing to pay the ceo what he or she is worth. is when you don't have that performance and you have that misalignment that company's can get into trouble. you track executive compensation. what evidence do you have that the pay packages are more aligned with all of the shareholders? at a packages from seven or eight years ago, they were different than they are today. there was a lot of focus on stock options. they were pretty big bonuses, fast forward to 2015 -- the dominant vehicle as i said before in the executive pay program are these performance vested share plans that can be triggered to anything that will create value. that's for compensation committees and boards are focused is what will create value in the long term and how do we do that for all of our shareholders? carol: what about the gap
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between the ceo and the shareholder? is that getting more aligned? >> we will learn more about that in 2018 when the statistics come out. they could be largely meaningless because it does not give shareholders much to act on or impact the company. carol: thank you so much. scarlet: thank you so much. ahead, kent donald trump unite the republican party before the convention? we have an exclusive interview with one of his top fundraisers, the founder and chairman of colony capital. ♪
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okay, ready? whoa! [ explosion ] nothing should get in the way of the things you love.
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♪ get america's fastest internet. only from xfinity. scarlet: from bloomberg world headquarters in new york, you are watching bloomberg markets. let's start with the headlines. killed 10 people were
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after a telegram attacked -- a taliban attack the bus in northern afghanistan. they have a presence in different districts and usually target afghan security forces in their attacks. donald trump is getting closer to hillary clinton in a new national poll. hillary clinton leads donald trump only slightly in the latest poll. it's a two-point game from trump from the previous week. bernie sanders leaves trump by about 52-40 2% in a hypothetical general election matchup. jurors are deliberating in the murder for hire trial of a former suburban chicago police officer drew peterson with closing arguments held earlier. he is accused of trying to hire an inmate's uncle to kill the state attorney. the prosecutor helped convict
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him in 2012 in the killing of his third wife. he is serving a 38 year sentence for that killing and faces up to 60 more years in prison. the nfl is moving the pro bowl from honolulu to orlando for the 2017 season. that's according to the associated press. the game will be played at the world stadium, formerly the citrus old. bowl. powered by her 2400 journalists in more than 150 news bureaus around the world. scarlet: thanks so much. to court trump begins deep-pocketed donors, tom berri anis helping him by hosting event last week raising more than $5 million. erik schatzker sat down with him on more on why he is backing trump. >> in the midst of the most
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complicated negotiations, the most difficult consensus building, he at that -- he adapts. individual, i'm not political. i'm taking all these political points of view. who knows what he will do? but he's practical. what he will do is get it done, whatever the right thing as. he will surround himself with the smartest and best people and he will get it done. can his opponents to the same thing? sure, it's supporting athletes in the field and saying i know a little bit about aside the people have not seen -- competency, tenderness, kindness, compassion, not this harshness that appears. may be my point of view helpful if people are deciding what are their options. think thedo you
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republican leadership is having a hard time getting behind donald trump? >> i think rightly so. they are unsure. they are uncertain and is threatening. if you think of politics, i don't think there has been a president who has made a payroll or received a payroll since herbert hoover. president bush owned a baseball team. terms, the organization of politics are political. take people out of their walks of life and say i will turn you into a political operative. you already are. that's what you are. organizationsse have bread over time grapes. they have bread political candidates up through the ranks
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for years and years and everybody has invested. when something from the outside comes into challenge that, it's frightening. they don't know what it means for them. again, when i look at the republican party, and i have been a lame republican all my life, very little on social issues -- more on fiscal issues and the republican party was the tyrannosaurs rex before donald came. what's happened now is voter registration for republicans is the highest it's been in history. ryan i think is actually right. there is no benefit for him up until now. donald still is not the candidate until he is at the convention. he needs the 1237 to be there. i would do the same thing as
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paul ryan. paul ryan has to worry about what's right for him and his constituency. that is a trade, that's a negotiation. erik: but the candidate you support is offended by the fact that paul ryan does not want to get behind him. >> he is not offended by anything. the candidate i support is setting a negotiating poster where there will be a dialogue and the two of them will be bound by the hip and will have made a deal. the things that are important for paul ryan to have as part of the program in the platform from the republican party -- they are two big dogs walking in a doggy park and getting ready to have a serious conversation but it takes a while. scarlet: that was the founder and chairman of colony capital. let's get more insight on our exclusive interview. you just heard the comment on
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how donald trump and paul ryan will be bound at the hip. are we seeing movement toward unity in the republican party? >> it certainly seems that way in that big story that has come out of the recent general election polls ever since ted cruz dropped out. what we have seen in general election poses a significant movement among republican voters in terms of accepting donald trump. he is no polling as well as republican voters as hillary clinton is with democratic voters. this is a remarkable and surprising development for many people who did not think he would be able to unite the party in the way the democrats have been united. seeing 85% ofre republican supporting donald trump in the polls and 85% of democrats supporting hillary clinton in the polls and that's the real story. the party is sort of unifying. scarlet: that's an incredible move.
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what was the catalyst for that? >> the single biggest catalyst is that republicans don't want hillary clinton. it may not like donald trump but most republican simply hate hillary clinton more and that most unifying factor for republicans. bnarrack was talking about how donald trump adapts. how was hillary clinton adapting question mark >> she technically has a primary challenge on her hands with bernie sanders still a candidate and racking up delegates and winning some states. all that guaranteed to clinch the nomination a week from today when california and new jersey vote. she is far ahead in pledged delegates and the popular vote. even if she loses all the states voting a week from today, she will still have enough delegates to clinch the nomination. she is trying to fight a two-pronged war. she is trying to fend off bernie sanders on the left and try not
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to alienate and anger his supporters because she will need them and she is trying to move toward the general election and lay the groundwork for battling donald trump. it's a difficult adaptation process but that's what she's dealing with. scarlet: some would argue she is losing control of the narrative. you said she could lose the states. next to the including california basilica once the nomination how would losing california complicate the road to the white house? would be aalifornia strong feather in the cap a bernie sanders. he would have the argument into the convention that he is with millionsates and millions of democratic voters and it would complicate her message of democratic unity and complicate her argument that she is definitively the one to put bernie sanders away. bernie sanders can see the writing on the wall. he is not playing so much to win the nomination as playing to negotiate the terms of the surrender.
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he wants to stop her from moving to the center in the general election and he wants her to carry on with this progressive message that he has pushed her to make whether it's trade like and trade deals highlighting income equality and supporting a $15 minimum wage. that is his endgame and it's a tricky balancing act that hillary clinton has to keep his supporters and go after donald trump. scarlet: you wrote a story about how the california governor jerry brown has endorsed hillary clinton. what does that mean for bernie sanders? should he press on until the convention or will he concede after the tuesday primary? >> he said many times he will take it all the way to the convention. it's plausible he will not concede until the delegate votes are counted and hillary clinton gets that number in philadelphia at the convention. the jerry brown endorsement is not surprising because hillary clinton has picked up
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overwhelming support among andcratic elites, governors senators but it is important that it helps her. jerry brown is well-liked by progressives. he doesn't have a relationship and he is a good one and is popular among democrats in california. it's hard to get your message out in a state that big with that many voters and jerry brown is a known quantity and has big approval rating with democratic voters in california. it's a significant boost for hillary clinton one week before the primary. the california polls are very close right now. the most recent poll shows only a two-point race between hillary clinton and bernie sanders. scarlet: thank you so much. coming up, the switch to digital banking is taking a toll on canada's bank of nova scotia so what does that mean for other banks in the country? ♪
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scarlet: this is bloomberg markets. let's go to the markets desk and julie hyman. let's start with micron which is rising again on an analyst upgrade. we saw this last week in the stock, up another 4% today. robert w baird is upgrading the stock from a neutral looking at improving gross margins and a price stabilization in d-ram which is a memory chip that they make in a positive flash outlook for the rest of the year. thes curious to look at analyst sentiment because we have these two upgrades over the
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past week or so. here's the stock price and here's the target price and here you can look at the bars to see and theres and sells has been an uptick in the buys but not significant in terms of changing sentiment. ato, let's take a look cliffs natural resources. that stock is up the most ever in a single a, 39%. j.p. morgan chase raised its recommendation. the company announced an agreement to supply iron ore pellets through 2026 which is lifting the stock. some of the analysts who have commented on that deal as well as the j.p. morgan chase upgrade have said the company's price estimates for steel are with a lag so it still doing business though steel is lower than it is now. we have seen an uptick in the type of iron or to which it supplies for that type of steel. deere is moving higher and has
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been upgraded from a neutral. analysts are looking at higher corn prices having a positive effect on the sentiment surrounding the shares and also hot and dry weather ahead may lower corn yields an increase corn prices. they are up 2.5%. with the themes of commodity prices giving a lift over all. the most global of canadian banks has reported a 12% plunge in second-quarter profits. it's bank of nova scotia. it blamed restructuring charges and bad energy loans. the shares are about -- are down about3/4 of 1%. we have more from toronto. that energy about loans, that's to be expected, but the restructuring charges on something unrelated? >> the restructuring charges -- we can start their. they are what most banks are trying to do which is to digitize their services and
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transactions. the bank has been involved in that for some time. they took a big charge on that side and that eight away of profits -- that eight away at their profits. some of their brands are rebranded to advice centers. people go in for a chat about mortgages or wealth management. they are not going in for the daily transactions which is a global movement. . lots of investments on that side thatnstance, rbc and cibc have reported recently announced that apple pay is now available on their platforms. we have not seen bank of nova scotia do that but they are busy in the restructuring side of things. scarlet: let's talk about oil and gas. the falling oil prices has been a drag for most of these banks in canada. things look to be improving in terms of the outlook because energy prices have stopped plunging. who we will have join
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us in a little while is saying that what we have seen on the provisions for credit losses has pete and the bank has put a lot of money aside, $752 million for sour loans for this quarter which is up $448 million one year ago in this quarter. it's a huge jump in those provisions. this is canada's most international bank, in 55 countries around the world. on the international loans and protect early energy, a big loan in colombia has soured and that's what most of the provision for the international side of the bank are being provided for. the ceo says that's a one off event. if you look at the banking side of the business in canada, it's up about 18%. that includes wealth management and the assurance side of the business and margins are increasing and the international side of the business is up about 18%.
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-- up about 15%. but it's the provisions that are pulling down the numbers. scarlet: thank you so much. let's get you to the bloomberg business flash. cuervo is looking to raise $1 billion. it is working with morgan stanley. their net revenue climbed 48% last year following the purchase of bushnell's irish whiskey. there is a line of credit happening for uber drivers. ber says the financing programs will put more than 100,000 drivers on the road and americans are less confident in the economy of courting to one survey.
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the index of consumer confidence declined in may for a second month, reaching its lowest since november. lastly, the university of michigan sentiment rose to its highest rating so colicting reports. that is the bloomberg business flash. wasng up, a new brexit poll released and we will discuss the next. ♪
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scarlet: this is bloomberg markets. billion loss from global gdp and that's a much the world has lost since 2008. this chart shows the number of trade restrictions in g 20 country since 2010. there are over 1000. last week, the head of asset allocations at hsbc discussed the rise of global protectionism. it's the political economy for a lot of people, economic growth has been a spectator sport. you have seen wealth dispersion increasing. isple are perceiving that not to be free trade but unfair trade, as it were. it's easy to find scapegoats
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with other people around the world. very easy it becomes game scoring to say that it's all the other people's fault. we need to ensure that we can employ people at home and those type of arguments. it's loss of gdp. scarlet: it plays well to local audiences. what is the economic case to be made to restrict cross-border trade? if you want to protect a certain group of workers or you want to protect a strategic industry but for the vast majority of people, ultimately, if you put in restrictions, you will end up having higher prices. what's good for everyone is bad for a very small set of people and they tend to be vocal about these types of issues. >> i was going to ask how this plays into a market perspective. the asset allocations can speak to that. let me bring up a high chart looking at your latest recommendation.
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your bonds stand out and there 66% on recommendation of the three-month outlook. sideveyed seven other sell hangs in the average is about 33%. is this a reflection of that? >> yes, this is part of the story. the reason why we have -- the pie chart hides the underlying story -- 31% of our asset allocation is in the emerging markets. that's not necessarily same thing as owning treasuries. we had a fairly high weight in high-yield credit. thinks not really -- we where we find risk premium is not in the equity market. there is much better risk-adjusted return opportunities in fixed income andets in credit emerging-market rates. scarlet: joining us now to discuss the focus of this is joe
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weisenthal. you are taking a look at the latest brexit poll. joe: there was a new poll out today but within the polling, there has been a consistent blip where the telephone polls have people and opted to remain in the online polls are leaning toward leaving. scarlet: isn't that demographics? that's the theory that more young people participate online. you're looking at a phone poll conducted by the guardian and it has leave winning. there have been a number of lea ves this caused the pound to have an instant tumble. remain people are feeling confident going into this and i think this poll has shaken this up. scarlet: george osborne had claims that this -- that leaving
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the eu would lead to cheaper energy bills. the rhetoric is heating up. joe: they are trying to hammer this in the closing ways that it's bad for housing and taxes but i don't know if that will do it but that seems to be the key argument. scarlet: today, we will look at the s&p 500 which is within spitting distance of an all-time high even though it does not feel like it. katie stockton will come equipped with charts to talk about it. coming up in the next hour, the centers for disease control director joins us for a look at the zika virus and the possible impact on the olympics. that is next. ♪
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david: it is 2:00 p.m. in new york, 7:00 p.m. in london and 2:00 a.m. in hong kong. >> welcome to "bloomberg markets
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." from bloomberg world headquarters in new york, i am david gura. u.s. equities on pace to close the market in the green. what will drive trading going forward? bei think china is likely to risk factor in the shorter-term, but over the medium-term, the greatest risk factor is monetary policy exhaustion. shery: $50 a barrel as supply disruptions continue. should the olympics go on in brazil with the zika virus? we were asked tom frieden -- we will ask tom frieden from the cbc in just moments.

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