tv Bloomberg Markets Bloomberg July 26, 2016 10:00am-11:01am EDT
bloomberg television. ♪ vonnie: we will take you from san francisco to detroit to philadelphia. london and paris in the next hour. first we get to u.s. economic data. julie hyman has the latest from our desk. ahead of estimates, consumer confidence index coming in at 97.3. 96 is what economists had predicted. a little bit of a decline from the prior month. home sales rising from an annual month overcrease month, 3.5% and the prior month, this was for the month of may. may, thismonth for follows on the heels of the stronger than estimated existing
home sales number that we got last week. here.trong numbers overall not a lot of change in stocks. leading gains up .4%. the focus continues to be on stocks, particularly today. apple out after the bell along with twitter. the moversa look at on the earnings number. they beat analyst efforts in particular. cars and machinery, the stock advised since 2000. united technologies saying it's 2016 profit forecast is raising the lower end of the forecast. not having to do with earnings,
, 6000 sharesorning of netflix, 8760 per share. what isears to be boosting the shares this morning. there are always winners and losers. on the downside, we have signed this point back by seven point percent. forecast for 2016. it is lower but not having a negative effect on the nasdaq. estimates at 3.1%. back, the company says stock to get. it will cut the production forecast for its indonesian operation, one of the worst forming stocks in the s&p 500 today. mark: the equities session, where up for a second day. 23rd, one quarter of a percent higher.
the komen of the today fed meeting. maker, andst big oil earnings miss, lower crude prices continuing to erode. the chief executive still facing a difficult road ahead. returning production from canada. oil maker,he big january the 20th, 64% shell, chevron is up life dirty, bp 31. rising since that day. 45 pounds from 44 pounds.
some say that is not enough. the revised number remains unacceptable. down by one third of 1%. martin wheel, the policymaker who has -- he now favors immediate stimulus for the u.k. economy. releaseafter the friday of the pmi data which showed the biggest slump since 2009. sterlingwe saw falling. the first word news. >> bernie sanders says today he is hopeful his supporters will stop booing hillary clinton and accept reality. vermont senator stressed the importance of defeating donald trump in
november. is aanders: donald trump danger to the country. i think he is a demagogue. i think, and it is not just me who thinks that. talk to some of his conservative republican colleagues who will tell you they perceive he does not understand the constitution of the night states. discord highlighted the in an attempt to laura sanders voters and repeatedly chu attention to the release of e-mails showing evidence of favoritism toward clinton during the party's nominating contest. russia is the leading suspect in the hacking of dnc computers that produced controversial messages. the fbi is investigating the breach and it resulted in e-mails of internal reports. russia is the ninth any involvement. the islamic state is claiming responsibility for the murder of
an 84-year-old french priest. and killed the priest wounded another person before the priest stormed in. both attackers were killed. they pledged to fight the islamic state. it appears the relations are fine between turkey and russia. the president of turkey will travel to russia next month for talks with client -- president vladimir putin. turkey praised -- since the attempted coup. criticized himd for his post-coup crackdown. global news 24 hours a day powered by more than 26 journalists -- 2600 journalists and analysts. this is bloomberg. vonnie: thanks. turning to the u.s. economy, home prices continued a steady decline in may. you pop in and see the miller
home price index. ago, that isear the line down by an annual gain in april. for insight and analysis, let's bring in the cocreator of the case schiller index, nobel laureate robert joins us from connecticut. let me commiserate that the other cocreator, unfortunately .assed away many times here on bloomberg television and radio. very sorry he passed. but let's move on. do.hat you you managed to the health apartment. it made it so much more transparent and trends in particular. >> we are entering the strong summer season. normally, prices would be rising in a typical year at this time.
if you correct for seasonality, home prices are just about that. they are not looking quite as strong as they looked over the last year and they have been weakening for a few years. they are still going up. they may continue to. vonnie: what do you view as a sustainable home price growth or sustainable appreciation, particularly given how much rate -- weight we are seeing. >> in the long run, home prices have not gone up. i look over 100 years and they have gone in real inflation corrected terms over the centuries. less than 1% per year. you should not be buying a house typically for the capital gains. we have gone through a big uptick since 2012. like the stock market in a sense that these things come to an end
prices hauling. in real terms, with a little bit of inflation, it becomes even more. buying people should be now they want the house and not speculating that these will continue. mark: the fed keeping a close eye on the house market. what will be the takeaway particularly when there is no press conference. would it be a conclusion at the september meeting is a live meeting? think it will be a bland statement with one or two words changed. tried to raise
rates. it seems like the world economy is a dangerous phase. i think they will say something noncommittal. that mean we will not see any rate hikes this year? >> i suspect we will not. december wass said but i dolikely month, not know. it is hard to say. i would guess we might wait until next year. you, manywant to ask 22 -- value. is yields, stocks in
europe, anywhere where there might the stress is valuations? isthe important thing to say the u.s., japan, who have high ratios. a worldwide basis, it is not particularly high. in europe, it is not high. it is not like there are no good investments in the stock market or the world at this time. vonnie: that being said, given it is a strange world of activity, is it possible to read contusions from the ratio as it was before central banking activity got underway? >> this is the troubling thing. we are in a virtually zero interest regime and in many often around the world, negative, even longer term.
it is an environment we have never seen before. in the late 1930's is, ending in the early 40's, we saw something similar but not as extreme. central banks around the world are seeing that they can keep the economy's going, but only by pushing interest rates down to historically record levels. support the stock market and the housing market, but the question is, we have been in the world for going on 10 years. how much longer will it go? i do not think there is a solid answer to that. vonnie: yell economics professor, thank you for joining us today. theng up, efforts to unify party behind hillary clinton s.re obstructed by boo
three years. mcdonnell says quotes missed estimates and sales. fast food rivals like when these andplanning on discounts promotions, putting pressure on mcdonald's to keep prices low. benefit of adding all-day breakfast in the u.s. last year. bloombergr latest business flash. -- marks day one of the democratic national convention. mr. sanders: a little drastic especially for young people who work their hearts out in the campaign and supported the campaign and we lost. they worked against hillary clinton and i was saying, we want you on board in support of hillary clinton. hill,mes on capitol people have feelings.
>> we're joined now from philadelphia. did bernie's message get across to his own supporters yesterday? the day, beginning of a lot of jeering and booing and chanting. the little bit of that easing down by the end of the day. theie sanders believes overwhelming majority of his supporters will come around and support clinton. that ist 100% happening, certainly not all of the supporters. the roll call vote, we will probably see another round of enthusiasm for bernie before this is all over before she became -- before she officially becomes the nominee. sincere in trying to move his supporters to the hillary camp? he talked about his own movements.
>> i think he is sincere in the sense that he donald trump would untenable for the issues he had the motive, the issues he has tried to push hillary clinton toward. is there areoint only two candidates who can win, they are third party candidates but it will either be hillary clinton or donald trump. a difference in terms of i amlly telling supporters voting for her so you should, that is an interesting distinction. you may want a little bit of room for him to return to the original goal. mark: donald trump feeding on the discord in the democratic party, saying a lot of these people will vote for us. do you think that is true? >> bernie sanders does not believe it is true and the hillary clinton campaign also does not hear donald trump is
saying that of course, he is trying to make most out of the window of opportunity particularly after democrats spent last week building up divisions within the republican party. the real concern for hillary and and bernie sanders by extension is not that sanders supporters will go to donald trump en masse . simply that they may vote for a third-party candidate. happens, thatthat could take away from some of the supported hillary clinton needs. tonight whene hillary clinton becomes the candidate officially, i gather it is his 10th convention speech. is his toughest task separating his own my guess is from his wife's? >> an interesting question. ago, bill years clinton was so important in terms of helping to give president obama in the general
election, not the gravitas but neededssover support he the things have changed a little bit because hit -- bill clinton's's policies from two decades ago are not as big a -- egg of an appeal. how he strikes the balance, the way he positions himself tonight and devote just promoting what his left can bring to the table in november, it will be interesting to watch and he may not give the same speech he would have given years ago. joining.nk you for , right. a revolution still ahead, dive into the $3 on cyberetf it, put security in the wake of the dnc e-mail hack. this is bloomberg. ♪
watchingou are bloomberg markets. i'm vonnie quinn in new york. mark: i am mark barton and this is bloomberg television. let's deep dive into the industry, here to talk about the etf's you need to watch is julie hyman. yesterday, we covered some of the big etf's we wanted to reach. joining us from princeton, he for bloomberg television. great to see you as always. you have fourth at some of the various events in the news and linked to various specific etf's to them. the first new etf we are looking at is the leak of those e-mails
from the democratic national committee. you are looking at potentially one beneficiary, which could be cyber security stock. >> yes. this is a high profile week. every government and every company out there just does not want this to happen to them. not only will the government probably increase spending, but the company will. they see the revenue doubling in the next four or five years, and there is an etf to play it. a cyber security hack. this came out 10 days after the infamous sony hack and it went up 33% after that event. it then sold off, it is very volatile and that high-profile event was enough to send this up into triple digits and it reached $1 billion, rare for this product. these things are usually taking money based on performance but i , you will have to check with volatility. about triple the s&p and the other thing is a overlap. not bad because it only has about a 4% overlap. in a way, if it's tracking some of these smaller securities that you are not getting in the big
etf's. >> secondly, there is a lithium etf apparently and that is perhaps in higher demand with the opening of tesla's giga factory. what is in a lithium etf? >> lithium miners and battery producers. all over the world, australian mining companies, a lot of companies you have never heard of. 22% this year. the giga factory and the electric cars, i think you are looking at etf as coming on its own. flows every week for the past 12 weeks. there is options activity, and this is not crossing over any of the mainstream etf. etf to play, if you really want electric car and
lithium batteries, this one is the right spot. >> a turkey etf, this is not won a lot of people are watching until the attempted coup in turkey. you can see the drop that happened on the news. it has come back a little bit since. >> yes. it was up 20% until the coup or nothing like a clue to run a for etf. good year went down 20% and it has seen some flows. look for this to have a rebound. >> ok. thank you for the update. we appreciate it. >> thanks. i asked the chief economics advisor -- this is bloomberg. ♪
new york and it looks a lot nicer than it feels right now. ok, the son did come out in july. you're watching bloomberg markets on bloomberg television. let's check in with alicia frenzy -- >> thank you. both presidential running mates on campaign trails in the key swing state of virginia. senator tim kaine had breakfast this morning at his regular diner in richmond. the present of democratic ex-president nominee made it stop before heading to philadelphia for the democratic convention. donald trump as his running mate in virginia last night campaigning in roanoke. the majority of the 20,000 people who fled a southern california wild fire will now be allowed to return home. the blaze burned more than 50 square miles of bridges and canyons north of los angeles and
at least 18 homes have been destroyed. angryan, a man apparently deadlyg fired went on a rampage. 19 people were killed at the home and 26 others were injured. the suspect drove to a police station after the killings and turned himself in. first round the world solar flight ended where it first took off in an epic 25,000 journey. did not use a drop of fuel. as it may -- made its first roue world solar way -- it powered by 17,000 cells. global news 24 hours a powered by more than 2600 journalists and analysts in more than 2600 countries. this is bloomberg. mark: the debate is over and the rate increases are heating up in this week's fed meeting.
there is no consensus on the timing of the neck move. coulded says policymakers signal the possibility of a hike as early as a temper and he joins us now from california. thank you for joining us. what is the way the fed will telegraph that there right hike is possible, maybe not likely for many, but possible in the third week of september? >> they will do it in the following way and note that the weakness is an outlier in the labor market continues to be found. the -- gail note how they will slightly upgrade the grated economy. the structuralt
headwinds the economy is facing right now. how long have the headwinds ?ompounded >> it is a real concern. more the headwinds, the less effective central bank stimulus is. ironic but this is a recognition now spreading within the fed and beyond, that the u.s. is having as much structural problems as it is cyclical problems, which means high-growtho financial stability is not a romance of the fed but in the hands of other policymakers and if the fed continues with interest straight being too low, you cannot risk causing collateral damage. get to thatill because that was the subject of your article yesterday. but first, i do not know if you can see my bloomberg but our
viewers can. you see where treasuries are right now as opposed to the median. a long way to go before one gets to the other. in the fed ignore the market? >> no. if any income of the fed has been highly in lawrence by the market and the fed does not want to surprise the market much. the market is underestimating the past. it will not be signaled by -- the market is too complacent about this year and next year. >> what you say we will need is the repricing. 76.two-year is up
i want to read a section if we could bring it up, global economic and political developments pointing to the possibility, they want seem improbable, but it was 76. i want to read a treated -- you are saying the longer-term diversions we are seeing a setting up dynamics that call for investor adaptation. it at someing for point this year, you? when i am learning how what is happening on the ground. native nominal interest rate territory. the list is getting longer and longer and yet the markets are caught. under 13 right now. this disconnect is explained by the role of central banks. there is a limit to which you can decouple markets from fundamentals. short-term, the markets will be , from they liquidity ecb, the ecb, bank of japan, from china and corporations. longer-term fundamentals will assert themselves. invest underyou such scenarios? you have the central bank induce calmness that you say the outlook is tested.
how should one invest with those factors facing us? >> at a tactical component to your structural position, tactical investment becomes very important in this world. second, become more by building terms of overall exposure. further out in terms of the spectrum, where central banks do not influence asset prices as much and thirdly, prepare your stakeholders to the past hillary of greater volatility in the world. so they do not do the wrong thing at the wrong time.
mark: i want to show you a chart which you may not be able to see but i want to paint the picture. the u.k. two-year, today, it has reached its widest since 2000, spread now it is the basis points, reflecting the diversion path between the boe and the fed. a lot has been said in the past about, can the fed be raising rates, when we will see loosening policy from the boe next week and possibly loosening from the boj history, and the ecb could be following suit. can you really see a diversions among the world's majors -- major central banks when it comes to policy? >> yes, but limited. i can see the fed hiking 25 aces points, you mentioned the bank of england and bank of japan and the ecb. i would add the bank of china while other central banks loosen the more and that will play out on the short end. if you were to go to the long outlookremarked the stable ands
you the fed may be able to deal with diversions under the curve, but under the longer and, investors will keep that relatively, -- constant. a chart of the german 10 year versus the u.s. 10 year, the spread has been where will we see the conditions as you are forecasting? >> we will see them first and foremost in the fx market. we are coming from a time when the market has been relatively calm. today we will cup to an over 1% move in the end. on the local media reported that the stimulus may not be as big. do not underestimate the extent to which markets have been influenced the role of central bank. most likely area of volatility will be the effects market and that will translate to other market.
the effects market is where most of the volatility is expected. >> we see below 110 and the end that one of 456. do you anticipate maybe in the u.k.? >> i worry about uncertainty facing major elements in the trading relations with europe and also the way policy will become conducted. there is a smaller threat to europe and i think the u.s. is ok. i put the probability at about 30% next year. over 60 percent.
vonnie: you are watching bloomberg. mark: this is the global business report and here's what we're watching today. follow in the to footsteps of the imf and follow its growth forecast shared what is it seeing that makes it less optimistic? vonnie: about to save a lot more money. it had to sweetness offer. mark: the concept of so-called helicopter money is being severely that's seriously debated. throwing money at consumers really fix the economy of the -- the economy. not the only organization down on the global economy. those cbe is cutting its growth or as well saying that despite some improvement, too many
economies remain fragile and they're not making enough progress to stand on their own. bloomberg is told there is little reason to be optimistic for next year. >> we are in the process of doing some revisions. you know the imf came out the revised outlook and that was down. you look at the picture for 16 and 17, it looks like once again it will be a downgrade. that is very unfortunate and we would like to be able to come with better news at these times for the does not seem to be enough on the horizon. mark: dizzy among the winners, posting profit that beat estimates. the carmaker has been cutting costs to become more competitive here they also benefit from an increase in sales in china. a slump in brazil and russia. bp is the first major oil company to report second-quarter results that were disappointing.
profit fell 45% missing estimates come -- estimates. some prospect for relief was provided. sweetened its offer for sab miller, the new price is $103 billion. that means investors would get dollars -- $1.30 per share. vote. wake of the brexit porsche would add 1400 jobs to take context the -- take on tesla in the battle of jobs. the automaker will spend more than $1 billion to develop its first battery-powered sports car in 2019. time now for the quick take, we are we provide background on issues of
interest. helicopter money seriously debated by economists. money handed directed to consumers and the theory goes they would be sent scurrying to the shop, boosting confidence in the economy. this ride interest in idea that .s half of one century old evidence previously regarded as daring have become commonplace and increasingly ineffective. european central bank president mario draghi in march called helicopter money a very interesting concept. the japanese minister move the a reportly by denying that the government was considering helicopter money. the head of the bank of japan said it would be illegal and unnecessary. the debate has been fueled by worries of low inflation, particularly in europe and japan. friedman came up with the concept of helicopter money in 1969 and the idea was made famous by ben bernanke in 2002.
he referred to it as governor, arguing as central bank -- follow the-- financial crisis stop short about printing money and handing out to consumers. supporters of helicopter money argue that it is the financial equivalent of injecting a general into the heart of a patient in cardiac arrest. lesssay it might also be risky than quantitative easing, blamed for fueling what some see as -- global bond markets. printing more money devalues the buying power of what people have in their accounts. aboutn read more helicopter money and all of our quick takes on the bloomberg. that is your bloomberg business report. had a line for more stories. mark: fiscal first-quarter earnings after the bell and particular interest will be sales of the iphone, two thirds
of apple's revenue. some analysts downgraded the company saying apple may have peaked under chief executive tim cook. others are optimistic. bethis is a time to particularly optimistic. what is unique about owning apple going into the next couple of quarters is get to shots. typically on apple, you get one shot, the opportunity to own it is a creation of members going an iphone cycle. in this case, you get low expectations for the seven and the anniversary phone coming out in 2017. levelis an added safety in terms of owning shares. it is all about what is coming in september of 2017. about the chinese smart watch going head-to-head with apple. if the chinese are behind it, the -- they can own the market and that puts apple in trouble.
>> it does. a small part of the business is the watch. call it 6%. numbers suggest it will be about 1 million and a half units. what is most important about the watch is the wearable category should have a point higher when the watch is decoupled from the iphone. that means you will be able to ultimately use the watch as a standalone to do text messages and phone calls. right now, you have to have your phone with you. we think the outlook looks gloomy for the watch but ultimately when they add some of the bigger features, the trajectory will change. tom: you can publish my take in the report. i do not see anybody ever using the apple watch. i got cash build over the last four years. 2 06, 200 33 billion. are they going to spies is time around with the use of cash? much will probably not get
of an update until a report in march of 2017. mark: gene munster there, be sure to tune in at 4:00 p.m. eastern time for a full breakdown of apple earnings after the u.s. closing bell. fans of vintage american cars will be driving to cars like theeek, 1966 for ari, a 1972 porsche 911 are up for auction. we will show you what other classic cars are available for the right price. ♪
joins us with the best. how healthy is the american vintage car market right now? >> it is exceptionally help me. fundamentally, the best examples around the world, with good history and good specification are still commanding very strong dollars. let's cut to the chase. me about the model j, i gather it is the star. >> it is certainly the star. quintessential 1920's and 1930's. of luxuryhe pinnacle in the united states and these cars are still extraordinarily strong. it is a desirable body style. many cars for sale and what do you think the total will be? >> said he -- 70 cars for sale.
$7.5 million, very strong. it proceeds our monterey offering three days later with value well in this of $100. the market is very strong. vonnie: why would you sell your car at this particular offer -- this particular auction? classics, english sports cars, we curtail that often to a client expect to see in the area. mark: what are the trends and what are buyers loving right now and what are the cars that will make us the money? when vonnie and i put down the hard-earned dollars. >> cars from the 1960's and 1970's and even newer cars from the 1990's is a 1980's. we have thrown in a smattering of daytona's and so forth. these cars are tremendously exciting to drive, but the same criteria apply.
the fine car market is no different in that respect from the final art market. marks: what is the appetite like for the european vintage cars now? >> it is very strong for the same reasons in north america. they are german and raced, and to 65,ing public, 55 have to consider the cars they were excited about in their teenage years. it is a broad spectrum and this auction of particular covers over 80 years of american automotive history. we like to offer something for every taste, effectively. vonnie: i am liking the 1957 mercedes-benz, if you are thinking. not too bad. thank you so much. the upcoming vintage takes place --
mark: coming up on the european close, bp miss estimates and forecasts significant pressure on refining market and we will talk about how oil prices will continue to weigh on the industry. plus come a raise of the cash forby over 2% to account sterling's plunge. will the company capitalize on the offer? from the minutes away tuesday close. it has been a choppy session and investors await for the conclusion of the today fed meeting. stocks were lower and then hire and they are down for the stock eccentric, and the foot he is gaining. more declines in paris and more gains in germany. the close is next. this is bloomberg. ♪
i'm vonnie quinn. mark: i am mark barton. 30 minutes left in the trading day. ♪ mark: in london, covering stories in france. in belgium, here is what we're watching today. dp shares falling on a in hong . i'm vonnie quinn. results. trouble ahead for energy producers as oil plunges to a fresh three-month low. 45% plunge in profit, the first major oil company to report vonnie: an iphone index that measures the value of currencies around the world. you might be surprised by what it said about the u.s. dollar. and sweetening its offer for s&p miller after the post brit