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tv   Bloomberg Markets  Bloomberg  August 3, 2016 3:00pm-4:01pm EDT

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>> over the next hour, we're covering stories in seattle, and tokyo. here is what we're watching. a message for investors, avoid stocks and bonds. when he joins us live in a couple of minutes. walmart is considering buying amazon's competitor. the retailer could pay as much as $3 billion for the company. david: autopilot technology and criticism of its recent deal at solar city. >> we are one hour from the
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close of trading. let's head to the market desk with julie hyman. how are we looking? less: little change, even than when we talked an hour ago. very slightly to the upside but the dow is getting four point. the s&p up 1.5 and the nasdaq up 11 or .2%. it is indeed going to be the 18th straight session. that is oil, oil prices marching .teadily higher today of 3.5% a couple of things are going on here. -- the ideanventory that we have now seen a huge slump in oil. despite today's gain.
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as you might expect, stocks little changed, a mixed picture, a lot of red and green. followed by financials. on the downside, a lot of groups falling today. care, of course, still earnings season. a lot to talk about within the financials. it part of this story, the company earnings beating estimates. time warner, same situation even though the film studio revenue fell and saw gains in its other businesses and humana. out with numbers that beat estimates. one stock, biogen. afternoon, a report in
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wall street journal that our get had expressed interest in potentially acquiring the company, although they were still in early stages and nothing might materialize, there have been multiple reports from new sources and analysts today saying they think jen is an unlikely target in the stock is now going back more than 3%. david: when you will look at what is traversing today, it is not just stocks. >> that has come to an end today. not up as it was earlier, but still a quarter percent versus the yen today and gold has been rallying and in recent days, now pulling back. not to such a degree, but they were down over the past couple of days. let's turn to one of the most read stories on bloomberg --ay, bill gross, a bit of a he says he does not like bonds or most stocks anymore. he does not like private equity
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much either. scarlet fu is standing by now. scarlet: great to speak with you again. you made it clear you are waiving the white flag. you have given up on markets. with years of central-bank distortion behind us, how do you determine the value of real assets versus financial at its? correct thet is eyests have been financial and pushed higher in terms of price and lower in terms of central banks and their policies. usually does not pay to fight the fed or to fight central banks. we get to the point of negative interest rates or low levels that we have now, we should begin to be the other way. you do not buy it with the central banks are buying. you start to buy things that they have not bought.
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central banks have not taught a lot of gold. they bought some. that is not the thrust of the policy. they had not taught real estate to this point. we want to begin to look on the other side of the screen. stamp, a a postage black that might be on your shopping list. right. let's go back to sovereign bonds and how risky they are. be the triggers for the catalyst and yields to rise quickly? radical shifts in monetary policy? i do believe that would be faster than expected growth or faster than expected and -- faster than expected inflation. >> two things, one is price. what that price is is hard to determine. we have seen in the last week or two in the case of japan, up byst rates have gone
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25 basis points from significantly, negative levels. year, it is now around zero. that has influenced global bond markets. prime minister they has had 40 -- by mr. abe has had 40 of them -- prime minister abe has had 40 of them. proposing abe is millionck cash to 30 citizens in japan. that is truly helicopter money. japanese yields are not going down anymore, but perhaps they will be relatively stable, other global bond markets, you take notice. fiscal policy in the u.s. will election,r the
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distressed fiscal policy and asrastructure spending opposed to the resistance we are seeing for the past several years. >> to you by the argument that governments that large are making the shift over to fiscal policy and monitor , canada, theon u.k., is it convincing to you? >> it always has been. i think it was convincing to president obama. trusthas in a significant for the past 10 or 15 years. of favor.n the policy governments are beginning to understand that monetary policy , the fiscalg itself side of the equation probably has to be brought into the mix.
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in china, we have seen that as we mentioned in japan. rules and germany has a balanced budget law basically. the eu tot expect follow very quickly but i think other governments will. >>'s realization underscored by the government bond auctions we have seen as of late? or bond have a 10 year yield that saw less demand. what should be the take away from political leaders from that? >> that is relatively short-term. the ecb still buying $180 billion worth of ons every month , which is a significant amount
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of money. you have these counter forces which produce lower yield for .iscal thrust for the future i would ultimately say because yields are negative in many ines, relatively low history. be cautious.uld in japan, and investor have lost eight or nine years of income in the space of 25 basis point increase. it is a dangerous time. if we start moving in the other direction. quite do you blame janet yellen and the other central bankers for the misplacement of assets and the intangible assets and all the other things we're seeing in the economy? models.follow old
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that are 30 or 40 years ultimately they failed to realize that low interest rates have produced and in balance in the real economy and certain financial business models. spreads were tight. ultimately, if interest rates, it will be destroyed at the perimeter and ultimately affect the real economy in terms of investment going our it have seen that for the past several years but i do not think the fed has recognized it. >> what is it helping to achieve by cutting interest rates another 25 basis points as traders have basically priced the near certainty of that happening? think the same thing. chaos and currency
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markets. they move along with the fed in the boj. ultimately, low interest rates. in the u.k. rates are 150 basis points lower than ever in history. approaching zero in terms of the u.k.. it is hard for me. i accept it but it is hard to me -- for me to believe that the central bank cannot figure this out, once you reach a certain interest rate, that the economy instead of improving perhaps goes the other way. >> let's talk about what you can do in the meantime as we wait for them to figure this out. how much of your portfolios cash now? cash, that is the conundrum.
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that you should or have to buy something. we have a lot of 122 year corporate bonds, 2%, so that is something. investors can look at a relatively safe candidate, linkedin is bought by microsoft and he closes in six-month. they cap is perhaps 3-4% return to that time, but it is better than cash. there are relatively safe situations in stock market i can add a 2% return and produce something as safe as a 5% return , an exampleed funds of what can be done in a relatively's eighth manner. >> do you think the flow of money into -- into emerging market bonds is justified? >> only developed economies can real growthlanced
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inflation. in other words, if they could boost nominal gdp growth, at ultimately transfers to the benefit. you can choose a 4% nominal gdp growth and now it is about three. there is relative overflow into emerging markets and they do better. up to a developed economy in order to do -- to improve their theytion to the point, have been anemic in terms of the thrust and that is raised on monetary policy that i think is getting to fail. are not looking into emerging market bonds or cash or gold, how can you invest in stay liquid in some of these assets, plant equipment, or the beaten path assets? >> i think that is a real problem. been -- everything
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has been done over the wire. estate,invest in real invest in the gold market, etf's, i think you can get there, in real asset base, but it is more difficult and less than a portfolio stock and portfolio bond. >> thank you for joining us. bill gross does not like most stocks were sovereign bonds. scarlet: -- sherry: thank you so much. coming up, the latest on a developing story. walmart said to be in talks to -what could be in talks -- look at be behind this deal with ♪
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david: walmart is said to be in talks with amazon rivaled we had these reports all day. what do we know? >> we know it could be a fallout of acquisition or could the buying eighth take in jet. jet was out trying to raise more funds. they approached walmart as well as other retailers to get them to put in $100 million. it might not be an all out be a portione makes more sense. sherry: despite the fact that
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walmart has its own online operations? >> yes. a a way, jet and walmart has bulk buying system where the more you buy, the lower the price. off or youy started can see it may be a different animal than walmart. reasons walmart might buy them out right -- might not buy them out right. they have got interesting analytics they used to figure ordering, also this tradition. -- they have an interesting algorithm worked out. they are not public. not know what makes them profitable. that is the big question. a company like walmart cares about profit, even a big country like amazon is not as focused.
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>> a company like walmart seems to care more about its online presence. we spent millions of dollars to try to improve that. it has been difficult, not easy. what are the challenges of making that move? sett is like amazon is for -- four steps ahead of everyone. they have $14 billion in online sales. a big chunk of money, about 3% of walmart sales. one fraction of what amazon does. amazon is faster, a bigger selection, algorithm to suggest crisis, so the back and technology operating this. walmart is trying to catch up here the real investment started, of course they argue it is going on for a while, who has been there 2.5 years and who has really been pushing online heavily. and -- yearsyear
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and years lead ahead of them. that is tough to do. thank you for joining us on this developing story from walmart. david: a look at how to trade the news in that on the options report coming up. ♪
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david: this is bloomberg markets. it is time for options inside with julie hyman. alie: joining us is david, strategist at into coghlan the cboe. see you as always. yesterday, i know for you that options traders and volatility guide, a little bit of hope sprung up that we were seeing a return to volatility. that hope seems to have been
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theed today because volatility is coming back down to it was that a false start? are you still seeing any signs we will see a return to some of --t volatility mark volatility? >> i think yesterday, we heard a -- aboutt of about auto sales softening a bitter. that is getting people concerned about the u.s. cymer overall. i think you saw that in some of the consumer stocks yesterday and that trickled onto more volatility in the market. the vix is down. not too much is going on in the carry through on volatility right now today. trade.s get to your you're looking at tesla with its ofnings after the close time.g, a busy
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doing auld be complicated walk me through what the trade looks like here. >> a fancy name but it is not to complicated. what you are doing is you are going short foot spread out of the money. i'm hoping tesla stays in between the navigational buoys pretty much. 240 on the upside and 210 on the downside. as long as they can stay between there, i will be able to pocket all the premiums i am selling which amounts to 235. my thesis is elon musk is great at moving the stock price around. he told us everything and we know what the deliveries will be and we know about the solar city there is not much else he
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can tell us now, slat them around. quite a few do not think there will be any surprise or any report today. >> i managed to position myself on either side of the move. that is why i'm putting the trade out to august 19. a couple of weeks to get the butterfly jitters on tesla. julie: that move my not be sustained during a time. getting it back to broadening it out, i've been looking at the streak we have been seeing in the s&p 500 where we have not seen a 1% move going back to report.hth josh
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we will start to see a little more options activity perhaps and stock activity. >> we could. it coincided with the nasdaq out.g when you see a higher beta trade on the good days working out for you, that will eventually -- as long as we can get these and jobs in the numbers, that might push us in the right direction. in the slow time we have here, the dog days of summer. julie: thank you. sherry: thank you. we'll keep talking about tesla after the short break. that conversation is coming up next. this is bloomberg. ♪
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scarlet: you are watching bloomberg markets. let's get a check on the first
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word news. mark crumpton has more. mark: mike pence is breaking with the republican presidential nominee by endorsing paul ryan primary fight. comes a day after trump said in an interview that he is just not it comes tohen backings bigger ryan, who at times has been trip -- critical of donald trump us the comments. the campaign raise it million dollars in july long with the republican national committee. visual and direct mail donations, more than 16 million from fundraising events. the campaign finance chairman spoke with tom keene this morning. >> we got more cash than we need and we will continue raising money. i think people were shocked when they saw 50 last month. shocked when they saw 80 what next month. we will raise as much money as we need.
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hillary clinton raise $90 million last month. taxes agreed to move restrictions on voter identically -- voter i can -- voter identification rules. people can still vote if they -- ide all voting restrictions in north carolina, wisconsin, kansas, and north kona have all been blocked in recent weeks. the united nations to carry council scheduled in emergency meeting this afternoon on north korea's latest test. it comes after the north fired a missile landing in what ben considers its exclusive economic zone. slaughter's 160 miles from japan's coast. a serious threat to his country's security company calls it. great athlete in the limbic history will carry the flag and the opening ceremony of the real games.
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michael phelps was selected in a vote. he is heading into his fifth 22mpics with 18 gold and metal overall. far more than any other athlete. 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. back to you. matt: markets close in under 30 minutes. abigail doolittle is standing by to tell us about all of the action. abigail: we have the nasdaq gaining a small amount of steam into the close of the trading day. it has been a wait and see trading day with the nasdaq opening slightly lower and trading ever so slightly higher for much of the day. perhaps investors are waiting for the big jobs report on friday before more of a directional cue. beneath that is a lot of
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movement pier 1 of the big losers of the day, shares of the apple supplier to happen down more than 10% all day on pace for the worst drop in more than a year after a fiscal first-quarter growth estimates, fiscal growth quarter markets, all of this by a very solid sales -- he says the growth margin miss is masking sales and related aroundre outsourcing and says the sales beat could find you a rant for business,related perhaps a positive. turning now for the winner of the day, a company up nice the on paper, more than a year after a modest second quarter. it looks like what analysts really like here beyond that solid quarter is a very good
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third quarter booking side somewhathis being impressive on the relative view. raisedf analysts have price targets. $81, it suggests there is room for them to run any year and then it is already up 10%. the stock could run by 20% or more. a good want to keep an eye on. matt: we all know tesla we want to keep an eye on today. what might that mean for tomorrow's trade? >> probably for tesla it at least it means week volatility. afterock has moved 7.5% each of the last four quarterly reports that could influence the nasdaq overall. as for the court itself, tesla largely pronounced back in july targetd they missed the
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around vehicle delivery by about 3000. 14,373 vehicles. most of the data, analysts look at operating loss of the 98 million. the rig intelligence analysts said they would be surprised if anything new comes out of the quarter to really shake the need or -- the needle. not to maintain full-year guide of delivery units around 80,000, will they provide the ambitious goal to deliver 500,000 in 2018? kevin says who knows, maybe they will make some other strategy announced met that the market will love. we will know soon. >> thank you very much for that. >> for more on tesla, the electric carmaker already announced a miss on delivery. plan that requires tens of billions of dollars of
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investment. the next guest has shares trading at $226 right now. minneapolis is a senior research analyst. thank you for joining us. tell us why you are so optimistic on tesla and what are you looking for and what we are about to get? >> thank you for having me. i would concur it will be an uneventful quarter. we have heard the solar city announcement with multiple conference calls on that. we had the master plan come up from you on -- elon musk. , and what we out see in the long term, we view tesla as a market share play. autos, two volume of point i percent roughly of enterprise value of the entire industry. we see them becoming a much larger player on autos and
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recently on energy. we have a bullish view in terms of their chances to exceed in those -- succeed in those plans. matt: i have got this here on the bloomberg terminal. you have reiterated your by rating three time since may. you had this based on 2025 earnings. you are bringing it back to the current price target. what do you expect as far as annual production? would look for them to be similar in size to what an audi or a bmw is today, call it a million and a half units roughly. we look at the early reservations a got on the model three, a long time from now until then. wewill take many more, but think with a leading technology to have, that they can get to levels like that. forlet: when you look
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earnings per share, profit at that measure since the third 2014, seven straight quarters of losses, is that important to investors? how patient are they willing to be when it comes to profitability in the bottom line? >> so far, i think the market has been remarkably patient. you come across a company at the losses are indicative of the fact they are building their businesses, they have to invest, build capacity, that is the reality of where they are. you look at the master plan. there has been a lot of bad news but the stock is held in. most investors take a long time view with tesla. heard people say you can justify tesla's share price. the scenario to lay out, or they
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grow rapidly with a product rollout, but how much margin for error do they have? a range of theoretical possibilities, so what happens if they don't? >> we would adjust estimates and adjust the view. if the stock market -- today, the market is significantly discounting. 2018, about a half million vehicles. as estimates are at least a couple hundred thousand units isow that, today, the market assuming they do not hit those goals. that is probably the prudent way to go. -- e not assuming we get scarlet: whether it is a car company or a tech company and how you value it, you can now add in it is absorbing solar
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city. what is your answer? we need to -- to us, it is a great growth company. you it is hard to find growth like this and that is how we look at it. do you expect the solar panel business to be a huge part of the revenue? battery to be huge part of the revenue or are they mainly a car company? >> a much smaller percentage of the price target bill out is the energy portion. we have not combined it yet. we do expected to clear up. you have to get from here to there. that would be a significant portion of the business. -- a car plus solar and battery backup.
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that is something we will all have to grapple with wanted -- once it is on the roof. if you are confident in your targets nine years out, what about the fact that as you said yourself, elon musk has a history of missing every single one of the targets. he makes it there but late every time. does that make you nervous? >> yes, that is true, but i would say if you were to go back expectations, where we are today, i would suggest again through 2018, most of are now assuming it is 500,000. the marketing -- the market is discounting, the expectation. matt: good point, the product does exceed expectation. just mind blowing.
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thank you, charlie. senior research analyst. scarlet: aig beating analyst estimates, and we will hear from the ceo, peter hancock, on what the vote might mean for his firm. this is bloomberg. ♪
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scarlet: this is bloomberg markets. time for a look at some of the biggest is in stores in the news right now. samsung is in talks to buy some or all of auto price unit according to people familiar with the matter. a deal could be worth more than
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$3 billion. for the first time, mexico will auction $8 million bond for clean energy products. mexico has begun a push to reduce air pollution. ban andty enforce a forced factories to cut production because of the worst smog in decades. apple is mostly white and mostly making progress. now mostly female, with percent higher than last year. 9% is black and 12% is hispanic according to the annual diversity report released today. the company has narrowed the wage gap for female and minority workers. the owners of the taj mahal casino say it will shut it down because -- after labor day weekend. . donald trump opened a casino back in 1990 but it now belongs to carl icahn. that is your business flash
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update. matt: aig posted its first profit pool -- profitable period -- early and yet -- in the new york betty liu asked peter hancock about the influence on his company. >> they consolidated three players. we have beent growing quite well relative to them. it is early days again. is an area where we feel we have a distinctive value proposition. it is one of many things we do. the thing we have today is a better mix of earnings. it is more reshaping the
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earnings more sustainable mix. betty: his whole premise was that aig is too big to manage. life insurance is something that is considered to perhaps be separated out. i know the business did quite well in the second quarter. did that quell any sort of speculation? insurance business has retirement products, protection products, and we look at the business in its entirety as having different issues. our new business a grew quite nicely, an increase in the year line.r term 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
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reduce the amount of capital tied up in legacy portfolios, consistent with reducing capital 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. monetized to over $4.3 billion. where are the other opportunities to do that? >> we have listed the mortgage company. we have a comprehensive list of things in the legacy portfolio which we are actually negotiating. some more complex is
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liabilities. this is all part of the overall plan to reduce our reliance on volatile earnings and focus on sustainable, client driven business. the earnings mix issue is something that will be improve the faster we are able to reduce the leg of the, as well as economic measures of success. year on year, we have been able to improve our return on at the by to put -- 200 basis points. recycle our capital. -- that is a close as we have been able to reduce our capital and recycle our capital. betty: how are you managing lower interest rates? >> importantly, you need to divide how you manage it. the balance sheet today versus the new business. we have a good match between asset duration and liability duration.
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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. eddie: brexit has happened. i'm curious if that means adjustments in your business in
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the u.k.? >> we have a big business in the u.k. and across all toys have and countries in europe, and the good news is we have a structure and a long history that positions us very well to continue to serve our clients. the answer is we need to shift the way we allocate people and capital to whatever is ultimately negotiated between the u.k. and the eu. we are flexible and agile to whatever outcome may come, but most importantly focused on our clients. matt: that was aig ceo peter hancock talking with bloomberg and betty liu earlier today. coming up, how will the removal of roger ailes impact long-term operations question mark we will discuss. this is bloomberg. -- operations? we will discuss. this is bloomberg. ♪
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start with 21st century fox, a parent company of fox news and rockies is its cash cow. the dailyoking at viewers in the thousands. millionou have a 2.2 roundup. it is the most-watched primetime cable network. a lot of different estimates have come in. of first --22-25% 20% reflects -- it is incredibly thick about it. matt: you have got to like an election year. scarlet: it is so important rupert murdoch have to take over in the meantime until it is a replacement. matt: as long as donald trump is running for president, it does not matter who is watching oxen
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-- running fox news. people will watch it. a new function just went live this week. equity, i have got tesla typed up, you can type the keyr the equity for insights or basically a quick view of the most important tidbits of the company. the cool thing is you have got here earnings release obviously after the bell, the price uncertainty,gh revenue estimates, you can click into any of these blue links and it will give you a look at the accompanying chart to each of those things. if you want to seems -- smart and get a quick view of a company and pull out the most are thet tidbits, k-i two letters you need. definitely a way to do less work for a person and make bloomberg do the work for you.
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joe: a quick thing that got clobbered over the last .4 hours, bitcoin got really crushed. 14% lastee it down week and yesterday evening, got destroyed. the hong kong exchange got or so about 65 million bit -- bitcoins were stolen. marketh the total capital is in the billions, a huge interruption in the markets. that does it for bloomberg markets p are what did you miss in the market closes next. than performance to go before the close, you have everything in the green right now and the dow is up 25 points. this is bloomberg. ♪
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♪ we are moments away from the closing bell. i am scarlet fu. i am joe weisenthal.
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"what'd you miss?" matt: i am matt miller. ♪ scarlet: oil rebounding to $40 a barrel, stocks going higher. media earnings take center stage. 20th century fox out in minutes. joe: credit showing signs of weakness. is that a signal of concern for other asset classes? matt: hillary clinton will be u.s.ext u.s. president if consumer confidence continues to rise, according to our guest. scarlet: we begin with market minutes. the dow ended its seven-day losing streak, s&p 500 also climbing. s&p rebounding from its biggest lost in four weeks. we are trying to weigh different things like the latest jobs data and corporate earnings. joe:


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