tv Bloomberg Markets Bloomberg August 3, 2016 10:00am-11:01am EDT
matt: live from the town manhattan, i am matt miller. barton.am mark this is bloomberg markets on bloomberg television. ♪ >> nonmanufacturing index, the measure of the services economy coming in at 55.5, about in line with the 55.9 that economists had estimated. this lowdown from june passes reading of 66 and a half. from 56 and ahigh half from prior month. anything above 50 does signal expansion. still seeing an expansion. we are still seeing a mix, little changed market. the dow had been down seven sessions going into today.
the longest losing streak since mid-june. though today is sideways-on the past couple of days have in sideways, the more recent uptrend in stocks made the s&p 500 is trading above the forecast. take a look here. the s&p 500 is in white. the average forecast in blue, it was awfully back in 2014, the saw the s&p very barely above the line. more significantly above at this point. historically, strategists tend to be more bullish. prices, 10:30. a rebound in oil today. up by 1% at the moment after industry data, we will see if
governmentfirmed by data today. aig has been leading some gains within the insurance stocks after the company announced a $3 .illion stock buyback continuing to do a lot of asset sales. prudential and metlife also on the rise. the financial work is the best performing sector today up .4% followed by energy, although energy is not up much. defensive groups under pressure today, consumer staples, telecom, utilities trading lower. i want to mention some of the tech movers. corvo coming out with growth margin outlooks in the case of pfizer, isics, coming out with sales that missed estimates. those are tech movers heading downward today. third day of declines, the
longest losing stretch since july. from europernings off his biggest lenders. thanks lagging over the last couple of days. let's cut to the chase and talk about hsbc, the biggest rise since april. it will buyback $2.5 billion of it will keepo dividends at current levels for the foreseeable future. standard chartered rising as much as 11% earlier, most since 2010. showing farther progress under , costief executive plan increased by 10%, cutting wood risk-weighted assets, earnings missed estimates. a lovely chart showing how vendors have fared since brexit.
emerging market lenders like hsbc and standard chartered, up by 11%. all down by a minimum of 20%. let's talk about france's second-biggest lending stock. second quarter profit beat estimates, capping a strong set of results, all the three big ones beat estimates. the reason these companies generate earnings from consumer businesses, yes, low edges rates are not good for the consumer business, but the securities, battered by volatile markets, france's third-biggest bank , second quarter profit rose better than expected at 26%. helping offset a drop of revenue at the consumer business, really
quickly, before i run out of breath, ing, the dutch lender, rising as much as 90% earlier, biggest rise since 2012, more than tripling, beating estimates in benefiting from a boost lending and lower provisions for loan losses. bank ing.he lisa has more from the newsroom. >> donald trump is doubling down .n criticism trump is ignoring advisers and party leaders who want him to just move on from the feud. he told the tv station he has no regrets about his clash with the family.ly -- kahn a meeting this week in wisconsin. he spent several weeks for deciding to endorse him.
trump also withholding his endorsement from two republican critics facing primary. .enator john mccain crash landed in dubai and everyone on board survived. it burst into flames after landing on a flight from southern india. all 300 passengers and the crew were evacuated safely. the world's's largest airliner by international traffic. closed for was several hours but has since reopened. north korea fired a missile that landed in what japan considered an exclusive economic zone. fell 160le launch miles from japan's's coastline. a serious threat to japan'security. news 24 hours a day powered by more than 2600
journalists and analysts in more than 120 countries. this is bloomberg. shares of aig are rallying 7%. months of investor anxiety with second-quarter results show progress. for more, let's get to betty liu, standing by with aig ceo peter hancock at the new york stock exchange. that: great see you again, peter. you must be feeling good about the quarter. proud to weng very avert very hard to make these results happen, executing a plan we laid out in the early part of the year. timepany the size takes but the speed of execution is .omething i feel very proud of
we met the goals and exceeded them in a way that makes me proud -- >> are these earlier than expected? >> earlier than most expected. we are two quarters into a planning time that we laid out. we do not want to declare victory. we want to keep people focused on execution and clients and continue to invest in the long-term. it has certainly been a good start to a long road. betty: let's talk about what works and then i want to talk about an area investors are focused on. you did quite well. >> we have operations all over the world and we are focused on 16 core markets. to reduceen able costs, which led to a seven
point improvement in our expense ratio, a good sign of rye grass. tremendous growth, double-digit where our risk expertise is really valuable in a differentiated value proposition. they are bigger and getting more and more aggressive . is that a risk at all? >> they consolidated three that weand i noticed have been growing quite well relative to them. early days again. this is an area where we feel we have a distinctive value proposition, one of many things we do so the mix of business we , the mix ofs better earnings, then it was a year ago. i look at where we are growing
and coming back, it is shaping earnings mixed to a more sustainable mix. betty: life insurance has been one of the areas, when carl icahn came on the scene, it used to be aig, his whole premise was that aig is too big to manage. life insurance is considered something that should be separated out. the business did well in the second quarter. did that quell any separation speculation? >> the life insurance business has protection products and we look at the business in its entirety as having different issues. the new business grew quite nicely, an increase in the year on year on the term life. the annuities and fixed variable annuities, slower growth as the interest rate environment -- but the portfolio of the legacy of
many years past uses p are actively looking at ways to reduce the amount of capital tied up in legacy portfolios, capitalnt with reducing allocation on old business while at the same time growing new business, adding value in the future, using our skills. it is a shifted emphasis of the business rather than any exit. betty: you mentioned the legacy portfolio. where are the other opportunities to do that? listed the mortgage company. we have a comprehensive list of things in the legacy portfolio which we are actually negotiating.
some more complex is liabilities. this is all part of the overall plan to reduce our reliance on onatile earnings and focus sustainable, client driven business. issue isngs mix something that will be improve the faster we are able to reduce as well asthe, economic measures of success. year on year, we have been able to improve our return on at the by to put -- 200 basis points. capital.ur it is important you need to divide how you manage it. the balance sheet today versus the new business. betweena good match
asset duration and liability duration. if anything, a rather launcher -- longer duration asset but others, it is the other way around. the company is well-balanced for interest-rate moves. for the amount of moves, we estimate about a 5% impact on our intrinsic value. we have to be careful to design our products to adapt to the new shape of the yield curve to ensure we have a good return on new money invested. we ingest -- we adjust our volume over fixed annuities from a high of $12 billion a year to a low of two penny on interest rates. happened.xit has i'm curious if that means adjustments in your business in the u.k.?
thee have a big business in u.k. and across all toys have and countries in europe, and the good news is we have a structure that long history positions us very well to continue to serve our clients. shiftswer is we need to the way we allocate people and isital to whatever ultimately negotiated between the u.k. and the eu. and agile tole whatever outcome may come, but most importantly focused on our clients. betty: peter, thank you. good to see you again. i will headed back to mark. very after we ended this on the u.k.. mark: yes. great to have you on the show again. we have missed you. coming up, we will hear exclusive comments from the incoming chief executive of france's's biggest insurer, the, we will dig into
matt: you are watching bloomberg markets. mark: this is bloomberg television. let's get to france. a positive results string. a second-quarter profit but with a number of crowding -- here is what the deputy chief executive told bloomberg earlier. >> when and where it would be stabilized. , but the decision is
creating additional uncertainty. just revisited, lower than in the past. p riddick could last for a long. mark: what is behind the beats for the big three in france? course, there has been a chorus of investors saying this is very encouraging. you can see it is very high. exclusive interview, things remain very -- around the environment. these results are solid,
even if you have pressure, the wrist control is -- for better loans, actually improving. the message is that actually, they are keeping up and delivering quarter after quarter. guideis the past a good for the future? what is the outlook for the rest of 2016? >> that is where it becomes tricky. the jury is out. banks in france and across europe, that there is prudence, a wait and see from investors on the market side, things remain uncertain. the effects of brexit are still out there. but it's -- investors were pleased of them floating in results from the french banks, is there actually adapting to the new normal of very low rates, and actually, they are delivering high profit given the
environment. to be a newms normal of giving money back to shareholders as well, or at least they could get back to doing that again. are the french banks keeping up with british and american colleagues as far as returning cash? >> as far as these reports, no, no such plan. there is another story now for the french banks. >> the dividend, yes, the that respect,, to we are probably seeing dividends are still the same. there will be some rewards, the message quite clearly from the french banks. matt: we talked to the incoming ceo earlier. i want to play some of that sound for you. have a listen. >> we are operating in a challenging environment with low
interest rates. to issue we have to take is inlly focus on getting moving up in a difficult environment, but at the same time, transforming the business. about, thee ask you ecb is getting concerned not only from banks but insurers as far as the low interest-rate environment. do you think mario draghi is listening to the ceo's? making a plea? of course, bargaining going , and in a way, the industry is giving us a message, you know, from the central bank. the rates are what they are, you know, and the message, if we listen to the ceo, the mess is it will be a transformation
and business of large insurers. now taking over, major change, and actually there to also transform the company. there will be an adaptation to the new environment. so in a way, the companies will adapt over time. mark: thank you. mark? mark: the earnings season remains in focus. this is bloomberg. ♪
watching is falling by so much, down 21%. the company coming out, cutting its forecast. its new forecast is for earnings per share as much as 70%. it had been at least 70%. sales last quarter rose in north america by 16% internationally. sales may be rising. cost me -- cost them more getting into stores. that appears to be a lot of the problem here. we are also seeing a pullback in those stocks, not nearly as large. the company second comparable falling.xpectedly theysts expected a gaining
company is forecasting a sales drop for four years of those shares. down 19%. we're seeing department store retailers decline yesterday. are dropping once again. macy's, jcpenney, all lowered again in today'session. mark: still ahead, wti trading higher today ahead of week the inventory data. out in just a couple of minutes. yes it is in a bear market and yes we will have reaction to the data here this is bloomberg. -- data. this is bloomberg. ♪
we are seconds away from weekly crude oil inventory data. the vti just below $40 per barrel. let's get to julie with the latest. what is it looking like. couple of seconds to go. in a bear market now and below $40 per barrel. we are seeing unexpected build in inventories. maybe we will see an extension of these declines. 1.4 million barrels. the forecast for a decline of 1.4 million barrels. last nightta out showed a drawdown as well. it was a decline in pushing oklahoma, down 1.1 million barrels. gasoline inventories down. desolate inventories, 1.1 5 million barrels. overall, a mixed report. the headline number is a surprise and you can see the immediate negative reaction in
pullrices as we see them back only by about a quarter of 1% now. dramatic downward. we are seeing those prices. oil is trading below all of its major moving averages. technical levels technicians tend to watch in a baylor -- in a bear market pulling back more than 20% since the june 8 high. we talked about extending those. we tend to see oil bounce around a little bit of people go through the numbers. we saw the move downward and we will check back in at 11:00 and see if things have remained that way or of oil and the outing back a little bit. unexpectede number, 1.4 billion -- million barrels. mark: thanks. a strategist talk about today''s inventory data.
you.el, great to see inare expecting a drop inventory. an increase of 1.4 million barrels per day. will oil inch back downward again? classy us. it will be important to look at the underlying figures but certainly on the face of it, i would say this is a second disappointment for us during a season when we expect -- seen this time of the a for at least three decades, oil has come down far and fast from the $50 per barrel levels. we're in a bear market here at what is next? >> one thing that may have helped to trigger that was in particular a very strong 12 weeks ago. we want to look at this friday, what is the production data underlying, what the imports are
parting -- part of what was helping to drive inventory as well. over the medium-term, the view has not changed terribly much. represents adata short-term deterioration we want to pay particular attention to what is happening in drilling activity and how that changes 2017 production estimates for the u.s. matt: i could pull up a recount for bloomberg and i have here, the baker hughes rig counts look, youyou take a can see it has flattened out a little bit at 463. if you dried out to five years, the big drop we had off a cliff in 2000 -- do you see a recovery in rig counts? are we looking at a recovery or does this hold that back a little bit?
i would expect $40 to restrain the drilling activity build we have seen. there is a bit of a lag in the behavior and secondly, we are counting a oil directed per week through the end of the year would not be inconsistent with the 2017 expectations. where we get in trouble is where that rate goes much above five and stays there. we did have 14 added two weeks ago. was an alarm bell for us. i would be looking at whether the addition rate stays substantially above five and that is where we see a danger zone. below five, we do not think that would be a problem. matt: are there geopolitical disruptions that way on your long-term price target or do you
think those are short-lived and not as severe as they could be? >> we are certainly building in nigeria and canada coming back and we have already seen canada come back substantially. i think the one troublesome , libya. to the picture i do not know where consensus is on that. bewill probably continues to difficult for political and infrastructure reasons. if we are wrong in libya makes a substantial recovery toward the end of the year or even early next year, that would be a downgrade to our fundamental balance. says the analyst figure could reach $1 trillion by 2020. this analyst talked about a wouldg time bomb that eventually push prices higher. set to give aor kick to prices in 2017 and 2018
as we go through the next few years? thats, i would agree with assessment we build out a longer-term balance where we see a supply gap definitely growing with a rate of investment goes into the market. assuming any further, new investments committed in terms of final investment decisions. so yes, i would agree with that assessment. ?ark: is that about right good to know the exact figure. deutsche bank strategist, michael. let's check in with the first word news today. more from our newsroom in new york. that theis a report obama administration secretly airlifted $400 million in cash to iran. according to the wall street journal, the airlift coincided with four americans last january.
u.s. officials deny any link and thethe payment release. critics say it amounts to ransom. exploring options if donald trump quits the presidential race. believe trumpthey is so unprintable, they might withdraw. donald trump says there is great unity in his campaign tooth -- despite growing turmoil among his fellow republicans. trump tweeted the campaign unity is perhaps greater than ever before. this comes after he continues to face criticism from republican lawmakers for attacking muslim armycan parents of u.s. parents. largely unarmed and
toe recently, just 6000 could carry weapons. the expansion of armed police is taking place alongside amplified military contingency plans. harry pottern a book and is still selling like crazy. the script to the lenten play sold more than 2 million copies in the first two days it was available in north america. based on a story by the harry potter author jk rowling. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. matt. matt: thank you. samsung reportedly in talks to buy fiat chrysler for more than $3 billion. what does the electronics maker want from a car company? we will tell you. this is bloomberg.
mark: i am mark barton. matt: i am matt miller. this is your global business report. are there too many thanks in europe? the ceo says yes and he has a solution. mark: a room in rio for the summer games? get ready to fork over a lot of riel. matt: we will examine the debate over the so-called sharing economy. is it good for you, -- companies and bad for workers? emerged as one of the biggest,
best capitalized lenders in the eu, it does not mean the bank will buy -- executive officer tells bloomberg there is no industrial rationale for tesla to make the deal. he still thinks other banks within europe should consolidate. >> in my view, there are too many banks. countries,thin the you can exports energy. if you want to make a merger, you have got to create value for ,hareholders and the only way synergies. within countries, it is supposed to go to explore synergies. a $2.5sbc announced billion share buyback to try to revert the stocks slump. the british bank is acting away from annual dividend increases and also removing its target after passing a 10% return on equity by the end of next year.
the bank says quarterly profit fell 45% from year ago. hsbc is dealing with slowing growth in china and the prospect of a recession in the u k. mexico is making a big push to reduce air pollution. auction $8 will billion worth of bonds for energy projects. mexico city opposed a driving ban and forced factories two/production. slash production. rio de janeiro. the summer olympic games. the brazilian city pushing to the top of the charts, a place to's day in rio and airbnb will cost an average of 200 six dollars per night. only a 15% discount for the average hotel room. 42% cheaperng the than hotels.
the bloomberg for quick take where we provide context and background on issues of interest. flag bearersmy like uber and airbnb and home joy get people easy, cheap access to products and services that would otherwise go unused, free the burdens of ownership. venture capitalists have invested heavily in sharing economy companies despite little evidence of progress toward profits. $17.9illion in 2014, billion in 2015. riding ailing company, in july of 2015, raised $1 billion in a valuation of about 50. by december, $62.5 billion in valuation. in june of 2000 18, airbnb, home sharing, began a new round of fund raising at $30 billion. challenges have ranged from a
new york lawsuit that accuses uber of running an antitrust game, to a san francisco law meant to flesh out illegal rentals in the airbnb, challenging in courts. kind of setback, cooper in july sold its china operations to a rival, ending an expensive price work. here is the background. today''s sharing economy got its start in 2008 when apple introduced its app store. it was suddenly easy to summon a business partner in minutes. founded that year, he became one of the earliest sharing companies protecting people looking for work with others looking to avoid doing chores are with a smartphone, it is easier than ever for companies to manage a workforce using sophisticated mapping logistics and communication software. to monitor the performance of workers throughout a rating system exists there.
ideological opponents say the sharing economy provides employees go without benefits or health insurance or job security. on the flipside, sharing companies make it easier for poorly paid workers -- it also offers an escape from life and rigidce work our spirit you can read more about the sharing economy and all of our quick takes on the bloomberg. that is your global business report. head to bloomberg.com for more stories. shares surging and a time trading today p or bloomberg news reporting that samsung wants to buy some or all of the , a deal valued at more than $3 billion. electronics maker one with the auto parts. theing us now, you help break the story, well done. why do they want to sell the business and why is samsung interested?
sell, he could sell the business quite clear. thert of obsession, making 2019 national target, one of the most important targets is to go from 5 billion to at least 4 billion of cash position in 2018 , selling the auto part business , if you sell it toward $3 billion, you get really close to your target. my samsung is interested, you know, it's all about tech companies and the car companies going together. it was set in the past, he was the first to sign the deal with google, in talks with uber. samsung may be interested in entering the car business. we heard they are particularly interested in some unit, including the conductivity
business. it looks like they both have an interest in the deal. matt: i know the company because they make the gauges for mike duke a remote or cycle spirit i thought it was a little odd that samsung, a smart phone company, wants to come in and buy what i think of as an old economy business. into,, samsung is getting looking to diversify into other businesses that are not necessarily consumer electronics, right? >> exactly. that is it here at wants to diversify away from consumer electronics and you have to take into consideration that the samsung family are already somehow linked. the samsung family has been on the board of the holding company , 2012. obviously, he is the vice-chairman, so this is where the connection between the two
of them starts. .amsung is already supplying [indiscernible] developing more electric cars. there is a rationality behind this and have -- as you have seen from the movement in the market, the are moving quite positively today. company arether they talking to? just remind us? a they are the first to sign deal with google in april. we reported that they are in talks with uber. they also have talks with amazon. -- re now hearing quite clear on this, we do not have to compete with the tech companies, we do not have enough knowledge, but we have to partner with them. we are doing something, opposite, then gm.
hsbc's biggest rise since april, a $2.5 billion share buyback. shares jumped as much as 11%. credit agricole among the french lead, the ernie estimates. continuing the spread started, all french lenders have beat earnings estimates. mixed performance for your's benchmark. a look at what is happening in the currency market, the big one tomorrow is the bank of england. today, we had pmi services, the weakest since the height of the financial crisis. will that lead the bank of interest -- the bank of england tomorrow -- tomorrow is the big one. matt: i am weighted wit -- waiting with bated breath. a return to business. on the heels of the success of private social clubs and
high-end fitness chains like a fusion of those two ideas. high court is a selective, luxury wellness club set to open in new york city as early as 2017. welcome and thank you for joining us. let's talk about this because i fashion and you was culture editor and the other one was raising money for private and 80. how did you come to the idea to meld these things? >> my lifestyle is working in banking and private equity, i was very stressed and looking for ways to take more mindful breaks during the day. would have great experiences and hotels and i wanted that for a third space outside of my home here in the city. so you knew that these kinds of experiences could not necessarily be replicated in
your local gym but you wanted to bring it to the city. >> right here you cannot just put a relaxing environment inside of something that is already so high-energy. you need to start fresh and have membersnew space that really get to kind of decompress and be themselves in a different way. matt: what do you offer than two members. yous really a place were can eat and drink and play billiards? >> yes. a 6000 square-foot loft. a huge hotel living room area. -- practiceatz mindful fitness, yoga, pilates, meditation, grab a lot of tea and coffee and juice, bring a friend and experience socializing differently. matt: can anyone apply? do you have to know someone? >> totally. it is just colleen and i if you want to become a member with us
right now. we ask natural things to get people to buy like where do you live and we ask for your instagram handle, and we will meet with everyone and have a coffee and see if our vibes match and kind of approaching this like a dinner party. matt: famously banished all the bankers. >> we are fond of wall street and we welcome them. news for uss good here at bloomberg. thank you for joining us, colleen and haley brooks. cofounders. very interesting concept. coming up on the european close, a huge day for european banks who are bringing you the interviews and ceo's of tesla and socgen. this is bloomberg. ♪
you are watching the european close on bloomberg television. ♪ mark: we are going to take you from washington to new york and tell the stories out of italy and the u.k. in the next hour. there's what we are watching today. european banks rebounding in today's session but breaking down the earnings from everyone including hsbc and k-fed. hearing from the top executives. matt: real reporting the worst profits since 2004 as the price for metals rose at the second-biggest mining company. ceo talks' new strategy. and pmi drops in july ahead of the super