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tv   Bloomberg Go  Bloomberg  August 8, 2016 7:00am-10:01am EDT

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the rally continues. it is risk-on following friday's blowout jobs report. david: china's red flag. the central bank promises to reuse innovative monetary tools. alix: trump tries to reboot. he unveils his new economic plan. will his proposal distract voters from his recent setbacks? jon: a very warm welcome to "bloomberg ." i am calling today the day after payrolls, and the rally continues. outd: really strong numbers on friday, and you see the markets reacting right through the weekend. alix: jeffries out this morning saying what can actually derail the rally, what will put bonfires on strike? what will lead a rushed out of high-yield? weid: the question is, can keep this going? does it keep going or is there a turnaround coming up? alix: we will discuss this, as
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well as what it means for the treasury were market. -- the treasury market. we will talk about the health of the global ipo market and what is in the pipeline with jpmorgan's head of global equity markets liz myers. the global rally keeps going. jon: it keeps going off the strong labor report friday. firmer ahead of the open with the s&p 500 and the nasdaq at record highs. in europe, the dax up .9%. marginally in positive territory. dollar.ata, strong for a fourth straight day, you bloomberg dollar index is stronger. there is a weaker japanese yen story. in terms of the data, fast-forward to friday. it is that kind of delicate dance that we have been talking about.
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the record low yields elsewhere. five-year, belly of the yield curve today. onis the front end treasuries. it was a selloff on friday that we will be talking about throughout this program. looking at treasuries today, we come in about a basis point. there is a ton of supply coming into the market, and there will be a big debate. the worlds go around and check in with her bloomberg team for in-depth coverage of all about top stories. all of her rent in new york -- oliver rarenick. will preview trump's speech. oliver joins us now. what i keep hearing is earnings per share will -- not at record highs. stocks at record highs. how does this wind up making sense?
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brexit, there is pretty much the rally we have seen since the bottom of the late june. we had in basically what we're looking at is the market has driven a lot of liquidity. we have had social bank expectations pullback after the record vote. you had more stimulative measures, more tapered than expected. then you also have earnings. beenngs per share have hit. companies are not doing great. we have another quarter of negative year-over-year growth. but at the end of the day they are beating expectations. it seems that is what wall street's game is. investors buying up shares afterwards. that has helped a lot of the rally. that does not necessarily mean that -- there may not be something clear in the short term that can derail it. alix: one of those bear cases is low.ix, now at a two-year
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are we seeing too much complacency in the market? vix does have the floor. there is a level where it gets low and we need to think about some kind of mean reversion. just go ups not because it is low. unless there is some sort of a very clear kind of catalyst to , it cankets selling off stay as low as possible. when you look at the futures curve, there is more volatility expected on the horizon as we get closer to some of the central bank events. alix: thank you so much, oliver renick. up today andu came you saw the weakest numbers out of china, you would have thought you would have had global equity markets responding in kind. jon: it is not january. it is certainly not february. it feels like a different world right now. enda curran, let's begin with
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the data. imports,ubdued, and people are spending more time talking about. what is the story? was a softer reading out of china today. on the exports side, we saw shipments still falling to keep markets like japan, the eu, the u.s., even after a 5% -- even after a 5.6% fall in the yuan in august. on the import side, we are seeing a softening in goods being bought in china. that is perhaps the sign of a weakening domestic economy, a weakening consumer base. there are some mitigating factors. exports are holding up ok. the trades are doing quite well p altogether, it is a pretty soft number for china. it is not bode well for trades in the coming months. it is one of the world's most important central banks, probably one of the most
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difficult to understand. they are promising signaling more use of innovative monetary policy calls. what does that mean, and what can we expect from the pboc? enda: they are opening up the toolbox, looking around to see what options they have to try and get things going. one of the key issues in china has been a failure of the traditional monetary policy, the rates getting much traction. policymakers are trying to channel credit in specific ways to parts of the economy that need it most. that is with the pboc are talking about here. should they be adding more fiscal stimulus, cutting interest rates? they are saying we can do this a smarter way. joining us outn of hong kong. thank you very much. david, i remember one christmas, christmas day, when the pboc moved on rates. the pboc has moved on to medication.
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communication. david: we also want some came indication donald trump about what he is going to do in the united states. he will be laying out his economic plan during his speech at the detroit economic club. marty schenker joins us now from washington. how much do we know about what mr. trump is likely to say at noon eastern time today? marty: we actually know quite a bit. the story was on bloomberg this morning, laying out specific details about what he is going to propose, which will include a repeal of dodd-frank, reduction in regulation, the end of the estate tax, and a lot of other things that are meant to appeal and broaden his base. is this really an initiative to try to seize the agenda again?
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marty: what we're watching over the last 96 hours or so is a reboot of donald trump. he has behaved himself quite well over those 96 hours. andas endorsed speaker ryan endorsed senator mccain, and he has not tweeted anything outrageous. so he is now taking his economic policy to the nation, and i expect him to use his teleprompter, stay on scripts, and try to reset his campaign. david: a lot of us will be watching. thank you very much, marty schencker. alix: allergan reporting earnings moments ago. $3.35 a share, a little bit light when it comes to revenue, and its revenue forecast is lighter than estimate. it is going to be about what the company does with all of the money that it made from selling teva.
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smallermake the acquisitions boost the company? u.k. fraud office opening an investigation into allegations of fraud. airbus already flagged some problems many months ago, and it is already -- it is all about the backstop financing. what this might mean for competitors like boeing. take a look at delta. if you are flying delta, check in with them before you leave your house. takeoffs worldwide had a computer failure. this is no longer unusual when it comes to airlines. we saw something similar in terms of travel with american airlines. andhwest had to ground 1000 cancel 1000 flights a few weeks
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ago. so definitely watch the stock and watch your flights. for what you need to know outside the work of business, and the chandra is here with first word news. akihito said in a televised message that he will step down because it is difficult to carry out his duties. he is 82 years old and it has been in the ceremonial role for 20 years. he will be succeeded by his son. it hangs infirmed nuclear scientist accused of providing secret information to the u.s. in 2010,ed to iran claiming that he had been kidnapped and held in the u.s. for 40 months. in istanbul, turkey's president erdogan has vowed to keep fighting whatever powers seek to undermine the government.
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his government has detained or arrested almost 18,000 people, mostly from the military. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am an muchtries, andra. jon: coming up, $62 billion of u.s. bonds in the market this week. as demand for treasuries soured after friday's jobs report. richard clarida weighs in on that and more next. from new york city, this is bloomberg. ♪
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jon: this is bloomberg.
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treasury yields are holding to a four-month high as we face a week supply coming up whether out 3, 10, and 30-year debt. joining us now is richard clarida. we will get to the auctions in just a moment. what we saw on friday with the re-prices right across the curve. was that a repricing based on where yields were, too low, repriced fine or repriced aggressively to where the fed may actually do something? richard: i think a little bit of both. we got strong numbers with payroll, two strong numbers in a row. we are still talking about very low treasury yields, much lower than they were at the start of the year, reflecting on rates abroad and people seeking out those returns. i think the fed is on the sidelines. we heard that from -- we heard that a couple of days ago. they have to be tengion -- they have to be paying attention to
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the data flow. what has janet yellen got to say? richard: the chair has really had a couple of messages. in may she was signaling a hike, june 15. my characterization is that it is wallowing in uncertainty. communication has been garbled. jacksonst speech in hole is important, if she chooses to seize the opportunity with a big fed meeting in september. david: when you have the bank of england headed in the other direction, the bank of japan headed in the other direction, we sought to divergence last summer and it did not work out so well. richard: new york fed president dudley alluded to that last week. divergence strengthens the dollar, hurts exports and potentially hurts the inflation outlook. as jonathan has been pointing out all morning, you have weak treasury auctions and a lot coming up this week as
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well. are we going to see a bond buyer's strike? richard: i am not predicting a strike, but we could see some upward movement in yields. we think now that the risk on yields is to be higher, not lower from these levels, the options will be an important signal. -- the auctions will be an important signal. jon: it has been a big story over the last year. everyone is saying that the -- what, eurozone debt do you expect the story to be there? richard: that has been a key factor in the market. at the same time china has been selling treasuries and not buying, you have support in the market. the real driver in the treasury market has been the negative yield policies and the collapse in yield in europe and japan. that is a powerful force holding down u.s. yields. i do not see that abating in the nurture. we have a great article on
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the bloomberg talking about this, saying that there are the highest yields of the bunch, but if you add in hedging, that is a different road. david: it actually goes negative. you also have to look at what are the effects of the dollar? the dollar has already strengthened since last friday. how concerned does janet yellen to be about that? richard: it is a matter of magnitude. that asllen understands the u.s. economy recovers and they start to hint on the next hike, you will get some move in the dollar. they are clearly concerned about an excessive move in the dollar. bill dudley was making that point explicitly. they are looking for some movement in the dollar but not a big move. what is the yield on the 10 year that will have the rush out of stocks, having a shakeout to cross global markets? richard: another scenario is that we continue to get better data on the u.s. economy.
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it is not necessarily a clavicle is make -- it is not necessarily a cataclysmic event. jon: everyone is nervous about where we are trading at the moment, quite clearly. the rates are going down on the u.s. 10-year. you look at a said that could potentially move toward easing. what does it take? what is the catalyst for everyone to have an aggressive repricing -- not the way we have been traveling but the opposite direction? think the simplest way to get that would be if we get an aggressive message out of janet yellen in august, if they start to signal a september hike, which the markets are pricing in well below 50%, and then in the context of perhaps stronger than in -- stronger than expected inflation data, with those put together, you will get a significant repricing of data.
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alix: the s&p is entering the day at a record for the eighth time in the past month alone. with the u.s. economy stabilizing and central banks lending support, what should investors be fearing? we will find out next. this is bloomberg. ♪
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alix: this is "bloomberg ," i'm alix steel. question is, what could undermine the rally? richard clarida of tim: global strategic advisors is with us. -- of pimco global strategic advisors is with us. in the u.s. and the u.k., we probably got a bit of a goldilocks scenario, not to buy hot, not too cold with the bank of england. what could make the story sour would be some surprise out of
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china. a year ago, that happened. i am not predicting it, but if you are saying what would be a worry, that would do it. the other would be a replay of the taper. we had a big selloff in bonds and we had a big hit to equities. athink those would be surprise move out of the chinese and another taper tantrum could clearly change the dynamic. right now it is positive for equities with decent growth and central banks either supportive or in the case with the fed with a gradual liftoff. you had a big repricing of the yield curve, but it did not have the knock on effect one have -- one might have expected. david: i want to keep coming back to the u.s. dollar. another issue for earnings number for u.s. corporations that could affect equities would be dollar strengthening. that could really constrain it.
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richard: that is an excellent point because we have four consecutive quarters of earnings. that in a scenario with a strong dollar, especially strengthening with the weaker global economy and a flight to quality -- my question to you would be on the goldilocks. the good news is good news. to a certain extent because maybe people truly believe the data is good. is that the story here? richard: that is exactly the story. remember last year when i did your show, there was the talk about one and done. here we are in august. they want and done crowd certainly has had a better fall right now. you are absolutely right. i think it is goldilocks because
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they see the fed on the fine lines with stronger data, and that helps the dynamic. if we have a yellen surprise. the world equity rally is not based on growth but on central bank liquidity. would you agree with that? richard: absolutely. build of the with specific on this bill they are focused on financial conditions, lower rates in many parts of the world. investors are going into equities because they are a relatively good alternative. , you make such a good point. you really wonder at what point does it come back and bite you if you do not have those earnings. you have to own uncorrelated assets because you do not have that growth, and you had then kind of shakeout, and everything is going to be taken down at you have to hedge your bets. richard: the other factor on equities is the discount factor. low, theeeps rates
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discounted cash flows can go up, even with average earnings. but the dollar is the key part of this, the strong dollar and a weak global economy. jon: bill gross -- it is buy gold, buy assets, and he is not the only one saying this. we heard it once again on friday on this program. what do you make of the argument at this time that i do not like stocks or bonds given where they are trading, and that real assets is what i like? way too markets are relaxed about a modest overshoot of inflation. because we have had low inflation, markets are pricing in breakeven measures. that is a bad debt. -- that is a bad bet. the fed has an incentive to overshoot. i think they are running a policy which they think will overshoot, and we could be talking about higher inflation next year. that is the case to have real
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assets. my present -- my reference is to price in inflation bonds that are relatively cheap week is markets are too relaxed alix: thanks very much. good to see you. richard clarida, with pimco. coming up, the search and hunt for bargains. our guest will reveal how he is finding returns for his investors next. this is bloomberg. ♪
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alyx: this is bloomberg . we have some big movers in the market, kicking it off with mattress firm, and doubled in price, they get a takeover offer
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from steinhardt. they did indicate a premium, so watching the stock potential for m&a. also another potential interesting deal comes from walmart, very close to buying jet.com for about $3 million. has been trying to ramp up competition with amazon. walmart wants to beef up the e-commerce site of its business and looking to potentially make a by. pay attention to berkshire hathaway, reporting after the bell, second-quarter operating profit up 18%, revenue up x percent. the stock is slightly moving higher. we will be dissecting these numbers live iran in the show. those are some of the individual movers. warren buffett is
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bullish on the america -- let's call it day to the payroll rally. and the nasdaq at all-time highs with the dax up about one full percentage point. the ftse coming into negative territory. the fx markets, that wave of positive data going through the asset classes and it means a stronger dollar. -- that stronger dollar story, by the currency pair. a ton of treasury supply coming into the market, $62 billion worth of 31030's after aggressive repricing after the payroll numbers. yields coming in at the long end of the curve preterm, going up about half a basis point. and of theabout --
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end of this week, the main event for anyone interested is going to be u.s. retail sales. before we get there, we will break down the markets ahead of that data point. hero the headlines. atlanta hasutage in led delta airlines to ground passing flights all around the world. the outage triggered a shutdown in delta's computer systems. no word on how long it will last. planes already in the air were unaffected. donald trump once to draw a sharp contrast between his economic policies and those of hillary clinton. in detroit, the republican candidate will propose a temporary moratorium on financial regulations and propose cutting the tax rate on businesses to 15%. his speech is at noon, and we will have live coverage on bloomberg. russia's president, vladimir putin may be on the verge of a
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significant victory and syria. russian forces are backing syrian troops. if they can capture the city, it would make it much harder for the u.s. to achieve its goal of ousting syria's leader. david: the morning must-read comes from the land of the rising sun. japan's emperor addressed the nation, indicating that he is ready to step down. the expressed concern about whether his help with let him carry out his duties as the head of the japanese state. he said he is now more than 80 years old and there are times when he feels areas can train. he is buried in may become difficult for him to carry out his duties as a symbol of the state with his whole being as he has done until now. story, butimportant i wonder if there is a larger issue, which is the reform of the entire culture.
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has been traditionally a very conservative culture, but there is talk about changing the law to allow a woman to become emperor. jonathan: that once in that speech that he mention abdication, because he can't unless they change the law, but he can suggest a change because he has to be political. to your point about how important his position is, he spent the last 20 years basically apologizing for aggression.time the government and all day in particular has a very nationalistic town and would like to build up the japanese army and help allies abroad. -- they have -- important if they were to make a shift in that direction. david: think of the demographic
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issues. alix: the reason why that is front and center, is if he abdicates, his son takes the throne, but his son only has a daughter, so if the line passes down, she would be up for the throne at some point. david: at some point, women will have a much more prominent role in the workplace. that is one way to address the group -- the demographic problem. alix: they are trying to. it is the unity before -- between reform and -- jonathan: a delicate dance between the emperor and the government in japan. starting to europe for the u.k. has opened an investigation into airbus's civil aviation business, specifically the third-party consultant. joining us live from berlin is the managing editor for bloomberg european business.
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give us the background details on this program and how expensive it is -- on this probe and how expensive -- expansive it is. >> -- for they have less of an established presence like southeast asia, parts of the middle east, maybe india, so for example if you are an airline in southeast asia and you don't have a relation with airbus, then you might involve some middlemen who will help you get that deal across the line and that is what is being probed, what was the role of these whate, what did they do, were the potential kickbacks being offered to get that deal across the line? airbus did not tell people in the u.k. about these dealings, at least not in at each other they should have and that is what is being probed. we don't know what kind of fines might be involved.
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this is a multi-year process and at the beginning, airbus has said they will hire forensic analyst to look at their accounts and try to weed out areas where they have not followed protocol. jonathan: there might be some echoes of the pharma industry in china, looking at this area, so airbus and boeing specifically, how important is this channel of revenue that comes from these middlemen? not particularly important. this financing tool has diminished in the last couple of years. it has become more expensive. there is a more readily available cash and you can navigate this avenue to find other ways to finance your deals. only about 7% of the deals that they do right now are directly linked to this kind of financing, so there is something that can easily observe --
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absorb the reputational damage that is at greater risk, maybe if financing works -- were to become more constrained going forward, this would become a big issue, but for the time being, not a big fallout. the stock took a little bit of a dip, but did not fall off a cliff. people are not too spooked about it. bloomberg managing editor for european business, thank you very much for joining us. david: global central bank has created -- one investor create -- calls from the credit markets and that led to a search for alternatives including private equities. the president, ceo of z capital is with us now. welcome back to the program. you just expended your exposure in the casino area and you have
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an interest in restaurants, so you have plugged into the consumer market. we have seen robust retail sales butth, some good numbers, we see gdp lagging, business investment lighting. how do you reconcile those points as you think about investing in consumer businesses? it is obviously diverging trends for sure. we have several companies that are consumer facing and fortunately, all of our businesses -- day, thed of the consumer trends are very much value-oriented. there is no question about that. it is very competitive. i think a lot has to do with gas prices. i think gas at the pump is a little over two dollars a gallon and that is a tax relief for the average consumer.
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we have studied these trends and gone back to look over time and a lot of it has to do with gas prices. alix: they may not go get a washing machine, but they may get some yogurt. especially with these sort of minimum wage increases we have seen, i'm not sure those increases resulting multiplier affect to the economy. they won't go buy a house or a washer and dryer, but they will treat themselves to something that they did not have two or three years ago. saying assche bank is you have profit manager -- margins getting squeezed because of wage increases and having to cut back on your workforce, do you notice that? great headlines will say you want to raise the minimum wage, but employers at the end of the day, especially for those industries with a lot of labor,
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they will try to find ways to count our count -- hour or headcount, it is just a consequence of that phenomenon. nice, butap credit is it drives up valuations. youdo you find bargains if are doing private equity investment? jim: it is a great question. put an offer on the table to buy minority shareholders of affinity gaming. this time around, we are in a much better credit environment and we also got committed financing for the transaction. we could not have gotten that seven months ago. the credit markets allow us to obtain financing to do acquisitions. it has pushed up prices, but if
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you look at what we have done we tried tot 18, find situations that are off the grid. we bought two assets in the hospitality sector, both of which were bankruptcy auctions. we bought a growth platform. we are buying the minority stake buy thetempting to minority stake in affinity gaming. we are in the process of buying a corporate spin off of a metals and mining company. it is a function of our deal flow and being off the grid a bit. alix: how much money do you have on the sidelines? is there a timeline for when you have to put it to work? approaching half $1 billion and that gives us a big advantage in finding deals. have elongated private equity funds and we are
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under no pressure. we have been very disciplined over the past couple of years in deploying capital. ared: there is a reason you -- you are buying assets out of bankruptcy, how do you avoid making the situation worse? jim: it is called making sure you don't catch a falling knife, which we talk about a lot. we try to buy good assets that have been mismanaged. we like to think that our investment team and operating partners, we can be the agent of change to transform the assets and create value over time. david: thank you so much. of the capital management. jonathan: global markets tracking a return of hungry investors. markets, payroll data day
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to. -- day two. ♪
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david: this is bloomberg . coming up bank of america's senior u.s. economist joins us to talk about the economy and the thanks next move -- and the fed's next move. -- up 5% away from record highs and this could have significant repercussions. in the first half of the year, the global market saw only a $4.5 billion worth of ipo's, less than half the amount we saw in the first half of 2015. i caught up with liz myers,
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jpmorgan's head of mobile equity capital markets and what she saw in the ipo pipeline. liz: as we look at the first half of the year, there is a difference between q1 and q2. ofhave seen that trajectory what is called a trajectory toward normalization of the ipo market, continuing in july. i am optimistic that we will see that trajectory persist through the fall and into year and. -- year end. in the larger ipo category, asia will have a larger number of ipo's at the end of 16 and that will be a segment to watch for sure. alix: why? liz: there do happen to be a number of them, whether in the industrial sector, initial services, etc. alix: -- alix: do you think they are
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playing catch-up with the other countries. -- other countries? liz: concerns about economic growth and that started to lift a bit, and reception for deals has improved, and we see more deals come to market and test that sentiment, so there is an eagerness to put some product out there and investors are eager to put some money to work. you have the desire way should, last august and the recap across all markets. what is the impact of those kinds of macro situations on the ipo market? of how is a matter quickly can the market assimilate change? when you think about the frexit situation, i think investors say this is a two-year stories you play out, so it is hard to act on some today when the rest of the story has yet.
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to be told the ipo market has the ability to digest information as it is more surprisesd tend to be the disruptors. alix: so the brexit is a long period of uncertainty versus the immediate evaluation. liz: exactly. -- come and and easy again, does that have any affect on the ipo market? liz: monetary easing will be positive for the equity markets and we are seeing that today in europe after the boe decision. it does tend to be positive, but is not always a natural offset. we believe at some point, the u.s. will continue -- we will see the fed begin to raise rates in the u.s., but it is not tomorrow's business, so it is not a disruptor. i can't speak for janet yellen, but whatever happens will be
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well telegraphed, or we hope it will, and we can observe the fed fund future as a way to assess where the market is assimilating and what the market is expecting. it is more a question of balancing expectations and reality, and the more that the ultimate action of the fed is anticipated by the market, the less impact you will have for the equity markets. alix: that was my interview with liz myers. we will have more of my interview later on in the next hour. we take that last thursday on the day of the boe decision, but i asked her about the fed and markets, and the fact is -- thee is a huge gap between two and that is when it gets difficult for the ipo markets. david: it is not so much brexit, it is the sudden surprise, though that might -- might not affect when you go to the market. once the markets took a
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breath, it was actually ok. jonathan: it defines when you go, and that is exactly what happened. the first quarter for ipo activity was dreadful. we are missing that big flagship moved to go public from airbnb or cooper, but those guys raked in money and the private markets with absolute ease. uber has done $15 billion worth of debt, equity with no problem at all. a lot in the pipeline for the coming years. the question is, when we will -- when we -- when will we see the next billion-dollar deal? david: jonathan says the pressure may be somewhat less than it used to be. coming up, currency hedging costs are soaring. we will show why that may have led to a big illusion in the bond market. that is next.
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alix: this is bloomberg . a big question in the treasury markets, the big illusion has been revealed. a lot of money coming into u.s. treasuries because yields are so low, but that return is slowly eroding the more that you hedge. this blue line is the 10 year yield. the white line is u.s. treasury's debt if you hedge it. the difference between the two in the beginning of the year was about 1%. the difference now is about 1/10 to pay to lend yen out, get dollars and return and that swap is the most expensive it has been for five years. here is another way of looking at it. this white line is the 10 year yield, this orange line is the
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10 year yield after currency hedging. you can see the returns are actually -- the yield is actually below zero which brings analystsion, are accurate when they are warning against buying bonds? there is so much demand for dollar assets because the u.s. is considered the best house on the block. the third way of looking at it is if you look at 10 year -- in relation to the u.s. treasury yield if you hedge in euro terms. this return right now is right around zero, you that only get subzero returns on treasuries for the first time in history if you are hedging the euro. the question now is, does this stop the low in treasury's, or at one point does it actually reversed the blows that we have seen in the treasury market because it no longer makes economic sense if you need to
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hedge your currency exposure? david: the thing i find interesting in this chart which indicates the cost of hedging, that has changed more than the yield has changed and i wonder -- i guess because there are so many more dollar assets, it is more expensive to hedge. jonathan: high-yield in nominal terms compared to jgb's and they will keep dying, but they are buying hedged and if there is no pickup hedged, are they going to continue buying? it makes those auctions this week all the more interesting. we will be talking about the foreign markets in the next hour. coming up, pockets of opportunity in the bond market. ♪
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david: the rally continues.
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risk on an global equities and commodities extending their games through friday's blowout jobs report. jonathan: disarray after a computer outage grounded flights worldwide. shares are down in the premarket. alix: trump tries to reboot. the republican nominee unveils his new economic plan in detroit today. will his proposals distract voters from his recent setbacks? david: welcome to the second hour of "bloomberg ." i'm david westin with jonathan ferro and alix steel. it is the day after that blowout jobs report. jonathan: the rare occasion. good news is good news, but it is goldilocks news. is goode idea that it news, but it does not really mean much for the fed and the coming months. that is the perception leading to this risk on we have got. alix: we've options in the treasury markets that have been lackluster in the past.
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do we wind up with a bond buying strike? do you see a washout in stocks? david: we will have a much better read action on the appetite for those treasures. alix: other markets like the ipo market and more of my interview with j.p. morgan's head of global equity capital market. she will reveal what is ahead for ipo's in the tech space. across the board, you will say it is the risk on feel from friday at 4:00 p.m.. jonathan: the wave of optimism going t right through asset classes. in europe, a positive tone in the mainland of europe. the dax is up 8/10 of 1%. a stronger dollar story for the fourth straight day. looking at the bloomberg dollar index, capturing that risk sentiment is the weaker yen and stronger dollar. in the commodity market, a sign
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of optimism as well with brent crude above $45 a barrel for the first time in weeks. or willt class digital be the treasury market. in today's session, two-year yields up again, just a basis point. alix: by the way we begin with u.s. equities and another record high for the eighth time in a month following that jobs report. renick joins us now. , or islooking at a rally this still about central bank liquidity. ? oliver: we are looking at a little bit of both. has certainly helped stocks get off the lows that we saw earlier at the beginning of the year. what is interesting as we have friday where we had a good number here. we've had two good jobs reports
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where perhaps that sort of economic strength is what the market is looking at. numberse may have been that were a blip, but you have gdp that was mixed, but you had a day like friday where he had numbers that the estimates by such a large amount and stocks staying afloat afterwards. that is a novel thing and what that tells you is that you have a market here and investing community that is ok with the prospect of a rate hike. moving after good jobs numbers is one thing. if there is talk of a hawkish expectations the next fed between now and the september meeting, that could put an interesting blend on things to figure out whether or not stocks can move through higher interest rates. alix: it really beg the question -- do correlated or uncorrelated assets?
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bill gross is trying to find uncorrelated types like gold. from a but we have seen lot of asset allocators despite the market going higher is that i followed a group of investors and strategist who have gone more bullish on the real assets. they're staying a little bit away from commodities were most people on the street are fairly bearish. the bottom line is that when you have low yielding assets around the world, there is still this case to be made that we're going to continue to look for yield and stocks. we have a article today on why that is a bit flawed, but at the end of the day, when people searched for yield, if you are an investor overseas buying u.s. treasuries at this point, you have hedge at what is happening. you are essentially looking at negative yield. this that big part of the market right now figuring out where to go to get some time of he return. alix: 100% commodities. i love the commodity jargon.
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as investors look for deals, so do actual companies that look for deals to get that growth. david: it is mergers monday. jeff mccracken joins us now. across theekend now wire, walmart looking for online growth. why is this important to walmart? jeff: walmart had a market cap of $300 billion and amazon was $150 billion. those may have flipped. that will tell you what has been going on with walmart. they have been slow or slower than they want to be to gain online sales. roughly $14 billion of walmart sales online, but they were hoping that to be much higher. they go after jet and they hope to get technology and the customer relationships. solduy who founded jet amazon five or six years ago. he is seen as the genius in the
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internet space. they want to get him, but not for a little while could they . they want to sign up for years so he will not leave like you left amazon back in 2012. david: the other thing was bayer-monsanto. where does that stand now? jeff: they are conducting due diligence. they bumped to $125 a share. point $5d a one billion termination fee, which is very important for monsanto. we're going to figure out whether bayer is going to bump their bid or again talks of due diligence. that's a deal in the right direction that could be on at the end of early august or september. david: are there others waiting in the wings? jeff: we know that basf talked to monsanto, but that was not for all of monsanto. some assets together and pieces of monsanto.
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at this point, it looks like this is the only one right now for monsanto. a mother -- a lot of other ideas have gotten done. this has consolidated for the rapidly. david: jeff mccracken, global managing editor for mergers and acquisitions. jonathan: big day for the bond market on friday. yields are higher. suzanne barton was very busy on friday. a big week for supply with $62 billion coming to market. what are you looking for specifically in those auctions? suzanne: we have seen on repricing of treasuries and we have seen yields climb the most since the brexit vote. there is still a scarcity of high-quality liquid assets around the world. there will still be demand for treasuries, even the looks like the economy is getting better.
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ofre is still a scarcity high-quality liquid assets and people want treasures. jonathan: the delicate dance between what has happened domestically in united states and abroad -- how does that factor into the big speech we are waiting for at the end of the month from fed chair janet yellen at jackson hole? susanne: the fact is employment is still solid. there are other aspects of the economy that have improved. we have seen an improvement in retail sales and industrial production. the u.s. economy is still going ok. rest of thethe world, which is more sluggish. we have seen results from the ble and the ecb and the bank of japan. everyone else is sort of implementing new stimulus. janet yellen will be talking about the economy still moderate. it is still going ok and there is still room for at least one
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rate hike later this year. jonathan: potentially. susanne: potentially if we look at the data, there is. jonathan: retail sales comes this friday. let's get some pre-market movers with alix. alix: delta stock is down after grounding all flights globally due to a computer glitch. also taking a look at jpmorgan as citigroup moving the stock to neutral. it is calling bank of america a better place. this is something very interesting about not owning banks. m&ading it out, talk about monday. tiaa-cref is buying this company for $2.5 billion for it comes out to $19.50 a share. this is primarily an online bank. jonathan: the greenback is
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coming off its biggest weekly game in the month. with traders increasing their bets on a fed rate hike at some point maybe this year, could the games just beginning started? we will be talking fx. for viewers worldwide, this is bloomberg. ♪
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jonathan: from new york, this is "bloomberg ." the u.s. employment report on friday, an upward revision to growth expectations has helped push up interest rate expectations in the coming year maybe. we may see some additional support for the u.s. dollar as well. looking at the bloomberg dollar index and this is not the back end of last year. certainly some strength is building. a global strategist runs us now. looking at what has happened
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with the dollar, we also have this pressure system in the fx market. the dollar get stronger and then backs off because the fed will back off ultimately. how much further strength can we get before that process begins again? >> as we look at the differentials and try to get a sense of where the dollar should be, we think based on interest rate differentials, it should be 2% stronger than it is right now. i think it is that uncertainty as the fed goes forward. we think the fed does want to raise rates this year. these two employment numbers, if it is followed up with even 100,000 in august, it gives them the opportunity to move in september. i would say that because in the past, they have set themselves up for a rate hike only to have something come along and derail them, whether it be market volatility, a bad data point, whatever. if you start with the assumption that they really do want to raise rates this year, if they get the signal out of the
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employment data for august, even if it was 100,000, the question is would they go ahead and do it if they do not get derailed again come december? that would be logical, but this is the most dovish fed in the history of the federal reserve. i think that thinking and the uncertainty of the fed is what is keeping the dollar from responding as aggressively as it would if the markets were looking at interest-rate differentials. alix: we have that great chart for you. take a look at the u.s. dollar versus interest rate differentials -- no, not that one could never mind. ift would bridge that gap you have the dollar mentor the interest rate differentials they should be telling is it goes to? robert: what would probably do that is fed commentary. i think it is a combination of
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said commentary and that august employment report, which begins to narrow that gap between the interest rate differentials and the value of the dollar. as i said, i think it is uncertainty about the fed. the interest rate markets have adjusted and the dollar has not quite gone up yet. part of it may be because it's the middle of the summer and people are not taking aggressive positions. there is fairly significant upside for the dollar over the next few weeks. fedd: as powerful as the and janet yellen is, she is not the only game in town. just to pay some attention to the ecb and the bank of england. does the market anticipate that as a constraint as to how far the dollar can go? now forthe theme song the federal reserve and other central banks is "running on empty." i think central banks are pretty much done and there's not much more they can do. we saw that out of the boj.
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the ecb -- maybe they will do something in august, but i'm not sure the have much left. mark carney is a very smart central banker. he is pretty clearly indicated that his view is that negative interest-rate are not a good idea. both the eurozone and the ecb are coming to the idea that they are not cranked up to be. think the fed wants to get the said fun rate higher this year and they are looking for an opportunity to do that. jonathan: if we can draw distinction between the ecb and andboj, the bank of japan ecb -- there was quite clearly a trade often negative interest rates. the bank of england does not need to worry about the currency. they do not have to get that currency weaker. really is just the financial system. would it be a mistake at this point to say the boj is done in terms of rates? robert: i do not think it's a
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mistake. i think the boj is looking for ways to try to get the economy moving forward, but i think increasingly we are going to hear around the world that has to be from fiscal policy and not monetary policy. i would not be surprised that the boj is done in terms of breakups. alix: you pointed out in a recent note about the turn account surplus in japan and what that might say about the yen. why is it safe haven currency? this chart tells you what. y. robert: japan historically had a current surplus. accident nuclear embassy not in a manner quite, they had to import a lot of oil and they lost their current account surplus. it was a fortuitous time because they were able to ease policy and the yen got much weaker. but we have seen is with energy prices coming down, their cost of oil imports has come down. there trade balance is back to a
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tiny surplus. at the same time, they have a big income surplus. yields relatively subdued, you're not getting all the capital outflow from japan to the rest of the world. that puts the upward pressure on the yen and they have to figure out how to resist that, particular in a world where the g-20 says we do not want intervention. that is the real difficult part in japan. jonathan: the eurozone, because of germany almost exclusively, runs a current account surplus as well. david: with the nikkei in japan or in germany, at some point, if your currency gets too strong, you're going to have a problem. it is going to self correct. is borderline recession again with a potential growth rate around zero or slightly less than half a percent. it does not take much to get them toward recession. absolutely japan still relies a bit on exporters and the strength of the yen is squeezing
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them. is that enough to get that current account surplus down or enough to encourage money to leave japan? and going to other markets? we have not seen that. traditionally the force that did that would be the ministry of finance through intervention. they are put on the sidelines in this environment. it makes it very tough for them and for the ecb and trying to get the euro weaker. jonathan: we would say 99 is like the pressure point for the bank of japan. if they get to 100 and break it, they have to come out and do something, but they didn't. there has to be in agreement in china but the major park its to say no more fx or do they do it because there is nothing left in the tank? robert: i think they did not intervene because the currency really did not get under 100 this time. you say who are the winners of the strong employment report last week? i think the biggest winner was the bank of japan and the ministry of finance because it
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got dollar yen a little bit of breathing room above 100 and we think it will stay there. certainly i think there's going to be another round of discussions about what is acceptable in terms of unusual moves in the currency. what do they expect japan to do? i think they want to intervene. jonathan: the date is set for some sort of coordination. alix: taken that day off. david: i do not think that we would be to jackson browne already. well done. jonathan: robert, great to have you on the program. alix: coming up, the presidential nominees turned their attention to the economy , welch fronts. will trumps team of economic advisers pay off or will hillary handle him handily? this is bloomberg. ♪
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david: this is "bloomberg ."
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donald trump has a big speech today at noon eastern time in detroit. he will lay out in detail his economic plan. joining us to this guy why it is so important for the truck campaign is megan murphy. what do we know about what mr. trump is likely to say. ? megan: one of the things will be putting a halt on financial regulation. that has been something that has dogged the obama presidency and perception was fall banks -- with small banks. it's that he overregulated sectors of the economy. one point that trump wants to is making iternoon really impossible for new businesses to get capital to start their businesses -- that is a point that has gained traction and a vulnerability on the obama platform. david: it is a simple big message that everyone can get their head around.
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there's a lot of people of the business community who would be very receptive to this. megan: they will certainly be receptive to kim about -- peeling back regulation. it is talking about potentially scrapping estate tax, which is hugely unpopular. they will be talking about how corporations can repatriate tax profits into the country. there is a trillion off-shore that has long been a linchpin for a fight for some reform in the u.s. that could be a sweet spot for him in terms of business owners and undecided voters who are really middle-class and want to see these reforms get on. alix: my weekend was dominated talking about trump across the board. does this change the conversation from what he has been trying to get out from under the last couple weeks? megan: he is been try to get out from under a lot. this has been the first two weeks of his campaign since the convention.
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many have been stunned and flabbergasted by some of the self-inflicted wounds over the past two weeks. turning to the economy is a smart strategy. if he is disciplined and stays on message, he may be of the score back some ground. he is down by as many as 10 points and some of the holes. -- in some of the polls. in the wake of the convention, he was actually up by two or three points. david: this is not the only a, speech from a candidate this week. it is not the only one in detroit. why detroit? what is the symbolic significance of detroit? megan: it has traditionally been a home of the speeches, but the detroit has played such a fascinating role in this campaign and the obama presidency and the legacy he wants to leave. not just donald trump but jeb bush was really using detroit as a hallmark of failed economic policies. hillary clinton and the president have used it exactly as the flipside of that as a story of american resurgence, not only in small business and
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autos but manufacturing. to use it as the flip side of the economy is really going to play out over the next week . david: from a battlefield state to about a fiel battlefield city in detroit. thank you so much. you can watch the speech at noon eastern time on bloomberg. jonathan: volatility is low in equity markets in the united states at record highs coul and we will talk the fed and the economy with michelle meyer. the market is risk on. futures rallying in mainland europe. from new york, this is bloomberg. ♪
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alix: this is "bloomberg ." let's look at some of the stocks on the move today. movementseporting with botox really helping sales
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surge. the company did come in with its full revenue guidance a bit lower than estimates. it's all the money it's all the money is going to do with its tell the sale. holding mattress firm up by huge amount with a takeout offer with $64 a share. premium from% friday's closing price. it gets toy 5% of its u.s. share from specialty mattresses. is anng up hi interesting earnings story because milk sales are falling. we are not eating as much cereal in the u.s. and not using as much milk. that is really weighing on dean foods this morning. those are some of the individual movers to watch. all across the board, it still has the risk on field. jonathan: the blowout jobs report and united states and equities at all-time highs on the s&p 500. the nasdaq futures firm as well.
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you can see the spillover effects with the dax up by 7/10 of 1%. chinese trade data really not disturbing the risk on feel free for european equities. in the fx market, what you would expect with a stronger dollar for a fourth straight session. the dollar yen capturing that mood. a weaker yen and then the commodity market with brent crude back to $45 a barrel . alix: breaking news for you -- it is official. walmart is buying jet.com for $3 billion cash. it will also pay about $300 million in shares over time. buy the company, one of the fastest growing e-commerce companies. i'm trying to find out if walmart will get mark with the deal. he has been at the forefront of really trying to fight amazon in
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the e-commerce world. that is why walmart wants to buy jet.com. it is official -- $3 billion in cash. looking though quick at the premarket label for walmart and it is moving slightly higher. for what you need to know outside the business world, emma chandra has more. led: a power outage has delta to ground flights around the world. no word on how long it may last. planes already in the air were not affected. the airline has 3300 departure schedule today. vladimir putin may be on the verge of a significant victory in syria. russian forces are backing syrian troops that are there in the city of the letter of. it would make it much harder for the u.s. to achieve its goal of ousting the syrian leader al-assad. turkey's president has vowed to
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keep fighting whatever power seek to undermine the government. he spoke at a giant rally and to demonstrate turkish unity after last month attentive to. it arrested thousands of people since then, mostly from the military. global news 24 hours a day in more than 120 countries, i am an much andra. jonathan: to today's morning at bank michelle meyer of america merrill lynch joins us with what is next for the nation's economy after another blowout jobs report right here in the united states. just beginning with the hangover from friday and a strong payrolls report across the board. as you sit there bank of america cap have yo, have you recalculated expectations in any way, shape, or form on what the fed will do? michelle: we did not change our call. we have been in the december camp and we are just as confident on that.
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the six month moving average was running at 190,000 for job growth. the gdp numbers have looked a little bit softer. we have seen some weakening and some survey data as well. to me, i think they're going to continue to monitor the data. i think that provided things come in as expected, which is low 2% gdp growth, which is a little bit better than where we have been, i think the fed will go ahead and hike in december. jonathan: if december is the call, how does janet yellen communicate doing nothing over and jackson hole where the data has evolved the way they anticipated over at the fed? michelle: i do not think she is going to communicate doing nothing. i think she's going to communicate that the fed is on a slow normalization process, which means that they will hike before the end of the year. that is more than what the markets are actually anticipating. to me, i think she's want to sound a little more hawkish than
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she did in her last prepared speech in june. she is also going to make it very clear that the said is and aware of what is happening in terms of global risk and other policy responses. second, i think she's want to talk about how they want to see these trends developed in the data. i think that means waiting a little bit longer before going ahead and hiking. jonathan: one trend that has developed in the data is business spending week, consumption strong. can some some strong -- you see it in payrolls. we are likely to see it again at the end of this week. do you expect that to catch up with consumption or does it reconcile the other way? michelle: you hit on something really important, which is the fact that business investment has but soft and pretty persistently weeak. we are seeing rig count pick up
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an oil prices should bounce back the second half of the year. minimumbably would at take away the drag from energy investment declining, but it executes start to be a net positive. ,utside of that oil trend roughly speaking it has been fairly sluggish in investment capital and structures. we think that will continue into the second half of the year. we have seen some slowing in profit growth and an uncertain environment in terms of policy response into next year. i think that that theme is probably going to persist. jonathan: michelle meyer, head of u.s. economics at bank of america merrill lynch, thank you very much. they are sticking with the december cap. ount. david: i suspect it will right through december. right now, it is all about risk on in the markets. that takes us to u.s. equities. specializes in stocks. he is joining us now from boston.
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welcome, mr. perkins. tell us about your theory on large caps and why that is the place to go in now. which ones should we be looking at? we hit new highs on the s&p 500 and the nasdaq on friday. this bull market continues to be despised by professional investors who have been underweight risk and carrying very high cash balances. the result is the market continues to climb despite good jobs numbers and a reasonably healthy economy. i think large caps give you that balance between some defensiveness but also some exposure to a market that continues to want to climb higher. valuation question is and why they are not fully valued at these record levels. how do you find bargains in this market? eddie: it is very hard. i think a lot of the yield
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oriented sectors like utilities and telecom look very rich to a us. that is the consensus view, but certain investors and eps continue to buy the stocks. you have to look for defensive stocks that have lagged in the market. one area's health care with the overhang of political uncertainty. the health care sector has not done as well as expected, so we think from here forward that a number of health care stocks look interesting to us. quality cyclicals, companies with good balance sheets, are also a place to look for ideas. alix: the question goes to the stronger dollar that david has been bringing up all morning. the large cap play is a weaker dollar play. how do you reconcile the stronger dollar we have seen? eddie: that is a fair point. you do tend to get more multinational companies when you invest in large-cap stocks.
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those companies more domestic facing tend to be in industries like regional banks, which are more domestically focused. utilities i mentioned a moment ago are more domestic we focus ally focused. there's a lot more in equities than the dollar and the fed will be reluctant to allow the dollar to climb significant we hire. you can take that call off the table and focus on the fundamentals of the company. relative value could it is hard to come by real bargains these days. david: health care is not the only sector where there might be risk. you think the market is over reacting to the uncertainty about the election? eddie: i do not think the market is reacting at all to the uncertainty of the election. the fact that we are hitting new highs on the market tells you the market is taking a very sanguine view of the election.
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as we get past the olympics and into the fall campaign, you'll start to see more focused on potential outcomes for the election. i think there is a general consensus that as we get into 2017, regardless of who wins the presidency and what the makeup of congress is, you likely to see some kind of fiscal package . yeah donald trump talking about softening regulations in the financial services industry. i think those things will be more pro-growth oriented. whether clinton or trump wins the election, we can expect more support out of washington than in recent years. david: that is eddie perkins from eaton vance. alix: back to the breaking news of walmart buying jet.com for $3 billion in cash. we will discuss what it could add to the retailer's online presence. this is bloomberg. ♪
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jonathan: this is "bloomberg ." coming up tomorrow, director of market research and strategic advisors joins us. alix: what is next for ipo's? lastly, i sat down with liz myers global equity head at jpmorgan. i asked how receptive this market is when it comes to new deals, including those billion dollar ones and the companies that carry a lot of that. >> we have over 20 ipo's slated for launch on the jpmorgan calendar and some point in september globally. alix: this is the back half of 2016 event? >> correct. we have a full pipeline for toy 16 and 2017.
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it is financial services, consumer retails, so a pretty broad swath of deals ready for lunch. alix: speaking of tech, we did see duels in japan and the u.s.. we have seen -- do you think we have seen the next multibillion-dollar tech deal or was this it? >> the question is when will they come. we have over a dozen technology ipos expected before the end of the year. the size of the larger ones that many think about probably more in 2017 and 2018, but there are a number of interesting segments. i think this year and early 17 will be around software and disruptive internet. as you get into 2018, more of the virtual reality and artificial intelligence, robotics, etc.. alix: robot ipo's. in terms of other sectors, where do you see the most ipo action
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in the back half of this year? in our calendar, in addition to technology, financial services, health care, and consumer retailer. alix: is there another trigger with these companies waiting to go public? where do they look at to make that call? liz: they look at are there things that i should be worried about to slow me down? the back half of the year looks pretty hospitable. i do not think investors are overly worried about the election outcome one way or the other. the fed concern that we have seen at different points seems to be much more of a 2017 focal point for investors. for issuers, it is a function of seeing more and more deals, and be received well. as we look at the deals that have priced in 2016, two thirds of them have priced within or above the range and u.s.. the average aftermarket performance is over 20% in this year's class of ipos. things are working well for both the insurer and investor.
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issuers will feel comfortable addressing the market and investors should continue to express demand for deals. alix: tell us more about the sectors. you mentioned insurers and consumers, but why are these the place for ideas whe ipo's right? --: companies will each able reach a level of maturity and they are eager to access capital markets. are there sectors that issue rs deal are not well received and right now, the perception has been good across multiple sectors. there's a point where companies will be to leverage but not in ipo market like 10 years ago. liz: i was spending a day in boston and i would say that appetite or even resistance to leverage is at a pretty mild level right now. mosttors are
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focused on seeing quality deals and deals that make sense in terms of the co-package. the price range in the overall cash flow profile, the growth rates and opportunities for merge and expansion, leadership, those perennial themes persist. every ipo is not perfect. there are some things that are advantages and some things that are disadvantages. if the package works together, it is a success for both sides. alix: there's economy that you brought public that did not have a lot of leverage but had offsets to make accountable. liz: the most recent sponsored levered ipo was the paintintheon ipo. the expectation was that within a year or so it would be back down to the four times level. it's a very reliable revenue stream in terms of contract-based revenue profile. it was cash flow generation that help investors get comfortable with the strategy. alix: it is ok if you pay down the debt.
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it's just a plan to pay down. liz: it does not constrain you from other things such as acquisitions or other priorities for capital. alix: that was liz myers, global head of equity capital markets at jpmorgan. so great to get her perspective. jonathan: q1 was terrible and what we found out as the years progressed was that the fears of q1 -- many of them have not transcended through the rest of 2016. it was this general fear that the class of 2014 and 2015, the performance of those ipos were terrible and the appetite would not be there. things have turned around and quite a remarkable way. alix: she was one of the inspirations for the new movie "equity," which is about an investment bank powerhouse woman that brings a company to the public. and accuracyinary a very pivotal in making that movie. david: i want to see the movie. alix: it is good and we will discuss it more in the program. david: breaking just a little
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bit ago -- walmart has agreed to buy jet.com for $3 billion in cash, giving the world's largest retailer a stronger online presence. the u.s. consumers reporter joins us now. you cover walmart and know it well. nine month ago, they said they're going to take on investigation and invest in online. is that what this is? >> i think it shows the desperate situation walmart is in. i do not think desperate is too strong of a word. they have poured billions and their online operations and hire thousands of engineers and yet we have seen quarter after quarter of online growth slowly ball amazon is growing at a breakneck pace. everyonelly think overpays for deals, but $3 billion for a one-year-old company that everyone would be shocked is making a profit -- it is something if you like they
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have to do. why when youn see look at that chart and what their online sales growth looks like. that's been a lot of money and are not getting it done. can a $3 billion deal really turn that around? shannon: i think what they are getting is the founder. i think they are paying $3 billion for mark lord. he is now the $3 billion man. david: you got a couple of lieutenants. shannon: this is a people play. they have got a great algorithm and great customer relationships, but i think it's about the people. if anyone can take on amazon at this point, it is probably mark lord. david: they only went public with their site or two months ago and it's worth $3 billion. billion ofhad $1 growth merchandise run rate in little over a year. is there one thing they did than other companies to get that? shannon: i would be shocked if they are making a profit. some people could say that you can sell a lot of toothbrushes
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if you're willing to sell them for a dollar less than everybody else and take a huge loss. how much of this has been buying customers with great deals and not worrying about profit? when you get to a company like walmart, they're not making money online, but they do care about profit. eventually they will have to report a profit. the business they're are getting from jet is included in that . they have a smart algorithm and they have come up with some quick ways to get merchandise people and dissertation centers. there is good technology behind that. david: they have competed on price, so we will see how that works out in their new home. thank you, shannon. coming up, we will unveil how china's fx reserves have played a part in the s&p's record run. this is bloomberg. ♪
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david: this is "bloomberg ." time now for battle of the
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charts. olivergoing to go to al taking on alix steel today. of the biggest proponents of stock market bulls the summer the past six months or so is that one of the cases a lot of people is making relies on something called the fed model, which basically posits that stock earnings yield should somein tandem, but at point get a little bit closer to each other. the problem is it does not line up historically and is not fit a lot to medically -- does not fit the medically. this is the inverse pe with earnings over price. the blue line is a 10 year yield and the bottom is a spread. you can see the long-term average over the past 30 years or so, which we are quite at or above. the bond yields, which is very low, has widened out.
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you can see that these to move together over the longer term. when we got to the.com bubble, that do not really happen anymore. we had earnings yields and bond yields moving inversely to each other. there's not a lot of historical precedents to know how these to move together. to say they need to converge at some point is a little bit of a fallacy. the other issue is that you have a lot of ways the two could revert and then all good for stocks. that is the family something to think about. alix: i'm looking at why the global rally could have more likes to go. this white line is china fx reserves and this is the msci world index. as you can see the china fx reserves roll over, you did see a declining global stocks. roll over here, declining global stocks. selling is that china accounts for quantitative tightening. fx reserves have really stabilized with the data we got
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overnight proving that. in some corners of the world, that means the global stock rally could continue and have more legs. i was talking to see the group about this and he says this is a potential reason why stocks have rally. jonathan: my vote is when to go with oliver and i'm going to say what. it bugs me when we compare dividend yield to fixed coupon payments. one is completely up the mercy of what a company does and the other is fixed. they do not convert historically in any way, shape, or form. david: i want to go with alix steel because we do not worry about china anymore. alix steel ones. jonathan: coming up, we count you down to the market open with barclays equity strategist. ♪
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david: we are just a little over 30 minutes away from the opening bell in new york city. this is "bloomberg ." i am david westin, here with jonathan pharaoh and -- jonathan ferro and alix steel. a risk-on kind of day today at our guest thinks the breaking ball market is not out of steam. jon: it is day two out of payroll. futures firm on the s&p 500 all-time high on that particular index. as we go into the opening in the united states, a rally in europe, financials leading the gains at .6%. that positive sentiment is the weaker yen. , tooes from equities commodities as well. brent and wti firmer on the day, brent crude trading $45 per
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barrel. over one wti up by full percentage point. it is that front end of the curve on friday after the payroll report. debate -- thee fed rate hike debate continues. broad asset class moves, i want to get across to alix. alix: unbelievable. we keep hitting those. walmartal stock movers, is buying jet.com for $3 million -- for $3 billion per this would be the largest buy ever of an e-commerce company. it is really all about the founder of jet.com and grew sales by over $1 billion. walmart getting that talent as part of the deal. ground stopelta -- has been lifted, limited departures are allowed.
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at 2:30 a.m., there was a power outage, all computers went down, and all airlines have been grounded. delta is guaranteeing a waiver on flight changes. alibaba confirming it is not taking a stake in netflix. netflix up over 6% each of the last two weeks. with disappointment, little lower premarket. we want to head over to abigail looking at another deal today. abigail: the m&a monday streak extends to the nasdaq for a name not typically associated with the nasdaq, mattress firm shares set to more than double on the news that steinhoff international holdings and internet discount retailer is buying matches firm for $2.4 billion. what has a lot of analysts loss inhere is valuation. the premium is a great thing for shareholders considering that
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mattress firm performance has been weak bank recently. it is said that this will put upward valuation on peers, tempers ely and select comfort. we're looking at horizon pharma, more recognizable. the company put up a nice second this morning before the bell, beating earnings by 23% for 59% growth. the conference call started at 8:00 a.m. we will report more details as it goes on, along with whether or not the nasdaq makes an all-time intraday high. alix: thanks so much, abigail. i want to go across the pond to nejra cehic. a little bit of a rollover in the euro stoxx 600. at the stoxxlook 600, heading for its biggest three-day gain in three weeks, if we look at the daily move, we're pretty much unchanged,
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edging into negative territory. still, we have insurance companies and banks leading the gain on the stoxx 600. we saw barclays gain after b.n.p. paribas upgraded it. -- toed to highline highlight the dax, because it is heading toward its highest close of the year, up .6% at the moment, after we got industrial production data out of germany for june, which was better than expected. gain -- ite biggest has risen up as much as 12%, the most since december, this after it forecast resuming its dividend in 2014. jon: it is all about aligning the levels we are testing. here in the united states, the s&p 500 and the nasdaq closed at record highs friday. will we continue to be more on the upside? believe does not
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current conditions can support a prolonged rally. lesson.the history you guys at barclays all the way back to 1980. what have you learned? jonathan: that was what we wanted to learn. can you get a prolonged rate cycle rally. we did every history lesson -- we did a history lesson. we looked at other periods where we have had the long, strong rate cycle rally to see consistent trends. we found a consistent set of fundamental trends you get just about every type your you get expanding profit margins, accelerating dividend growth, and higher leverage. the problem we have right now is we do not see any of those things for the s&p 500. david: that make perfect sense. there is one other thing that you do not see, and that is the central bank accommodating monetary policy around the world. i wonder if history can be a precursor to what is going on now. is this a different sort of thing? bp review youould
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put up that chart a few minutes model.the fed ma with interest rates this low, stock prices can be higher than they are right now. we have never fully believed in that. our view is fundamentals always drive the equity market higher, and there are some missing ingredients. one of the biggest ones right now is a lack of accelerating dividend growth. we do not see that necessarily changing in the near term. we think dividend growth is going to continue to decelerate. can you get a prolonged rate cycle rally with decelerating seven -- with decelerating dividend growth? alix: you charted in your recent notes the payout ratio, buybacks and dividends, at 128%. we have that chart, if we could bring it up. what typically happens when we have buybacks and dividends so high at this level? jonathan: the payout ratio is a
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little bit of an overlooked indicator, but we found strong evidence that you can use the payout ratio to guide you in foreign returns to the s&p 500. when the payout ratio is high, at 128%, if you exclude the financial crisis, that is the highest it has been in 40 years. when you have a payout ratio that is over 100%, you get lower returns out of equities over the next year. in addition, you get lower dividend growth over the next five years. we think it is a good indicator that returns are going to be low in the short term and in the medium-term. jon: barclays are not coming out and saying that we are outright bearish for you are basically saying you would get these 3% returns for a long time from here. why is that when historically the need for a rally, all the ingredients are not there. why do you not get a retracement in any kind of an aggressive way? our price target for
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this year has been 2200. we just think you stay in this environment where you are earning low returns on equities. why do you not get -- why are we not in that there camp? the buyback piece of it is an important part of it. there are record buybacks right now. we think companies can continue to fund the record level of buybacks, and when you have this buying force in the market, this buyback force, it is going to drive stock prices back up when we get these corrections. one of the critical reasons the last three corrections have stopped at down 10% and have not gone further is because companies have come back into the markets, bought their own shares, and drove prices high. --would be worth it to see is it going to be driven up by a backup in yields driven by a fixed income? jonathan: i do not think that. we you can see a negative
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correlation. if interest rates back up, you some of these see bond surrogates that have done so well, but not necessarily the overall market. i think you would get more of a sector rotation. one of the sectors we highlighted in this recent note that we like is consumer discretionary. it is not normally thought of as a good lead cycle sector, but your -- a good late cycle sector, but you're late cycle sectors are very good right now. trades have already happened. consumer discretionary has all treats you would want right now. it has expanded profit margins, good dividend growth, the ability to leverage further. we are looking at nonconventional sector picks, and something like two discretionary makes a lot of sense. how do you find the
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uncorrelated investment thesis? david: some people are projecting earnings will pick up. especially if you are -- one thing that could prove you wrong? jonathan: it is. just to be clear, we're predicting earnings are going back up. we predict profit margins will increase by 40 basis points. the only thing driving that is a rebound from the energy sector. it is not the other sectors pushing that higher. you are getting a rebound out of energy earnings because oil prices have bounced back a little bit. one of the things we found in our note that was interesting is whenever you have gotten these prolonged late cycle rallies before, profit margins were at a new high. we are predicting a little bit do notbound, but we expect profit margins to go back to a new high. it is really a recovery from energy, not a core improvement like we would like to see. david: what is in now, 21.84? 21.80 two, the intraday
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high and close. david: jonathan is barclays' u.s. equity strategist for now we go to emma. emma: delta airlines has resumed limited departures after a computer crash caused grounding. ground stop has been lifted but cancellations and delays will continue. joy sharpmp wants to contrast between his economic policies and those of hillary clinton. in a speech today in detroit, the republican presidential nominee will propose a temporary moratorium on new financial regulations. he also will call for repeal of the state -- of the estate tax. his speech will have live coverage on bloomberg. terrorist attacks have slammed france's tourism industry.
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overnight stays have fallen 10% this year through july. , bookings arece down 50%. global news 24 hours a day, powered by more than 2600 journalists and analysts in more i am aemmauntries, chandra. alix: opec is saying it will hold formal talks next month. it was a weekend of record-breaking in rio, but not for nbc. we will dig into the plunging ratings for friday's opening ceremony. this is bloomberg. ♪
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the future in
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focus. traders are so unbelievably short on the commodity. these blue bars are they combined short positions of wti and brent, now at record highs versus the oil price. look at what happened back in january. we had oil hit $26 for wti. at $41.prices are only short positions are even higher. how does it make sense? how does it wind up playing out? bobby is the chief market strategist at trading partners. than we wereorter back in january and february of this year? >> it is interesting. good morning. the fundamentals point to a short position, but i think we do have to work some of those shorts out of the market. it is difficult when you run out of sellers in a market that is so full of speculation, as oil is. even with the rising rate town's
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you're still seeing domestic production at very low levels. -- even with the rising rate counts, you are still seeing domestic productions at very levels. with the u.s. being the marginal producer, it is tough to see rallying anywhere above $50 in the next six months or so. alix: we did the headline today that opec will be meeting on the sidelines of international energy forum next month. it is an informal meeting. there is a potential freeze talk in the market. bob: opec reminds me of the fed three or four years ago when they had the ability to talk the market in a new direction. i really think that is what it is. opec gets pumping and drilling for out. they do not have a lot of marginal process left, crude oil left. anywhere other than iran.
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will seek talks, have the talks, but that is about keeping oil in this new range. the u.s. is not going to ramp up this year unless we get sustained price action above 50. alix: give me the range per you do not see oil above 50. what is the range? bob: i think we are going back up to 46, 44 in the short-term and then 46. then oil will grind sideways. the new ranges somewhere between $40 and $48. you will see dips below $40, but i think as we get out of the summer driving season, which we are in the peak of now, and refineries turnaround for winter blend, you will see the stockpiles build. and probably sometime in the next six months, a move back down toward $30. alix: appreciated. -- appreciate it. coming up, why is walmart spending $3 billion on a one-year e-commerce start off?
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one word. amazon. this is bloomberg. ♪
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david: this is "bloomberg ." i'm david westin. walmart shares are up premarket, as the company agrees to buy jet.com for $3 billion. jeff mccracken joins us now. we talked about it earlier. rumor tohas gone from fact. david: 3 billion dollars -- they have only had the site up for 13 months. jeff: it is not making any money. in fact, it is burning cash like amazon used to. this is a desperate move by walmart. walmart, a year-and-a-half ago, they were double that of amazon.
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amazon is $360 billion. they are just desperate to catch amazon or be more competitive in online sales. so you're pretty desperate if your walmart. they have $14 billion annually in online sales, which is not bad but nowhere near what they thought it would be. so jet has been growing rapidly, and they were out looking for money like a lot of big private companies that are growing. they were trying to find andstors to invest in them, walmart came up with a good premium. david: they are really after an individual. jeff: mark lori started a company. andas a pretty big name, eventually it was acquired by amazon in 2010 for $509 and something. -- for $500 million and something.
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they are not only buying the technology and the customer relationships and the website. they want him. they are going to have him for a few years. what is it that this gentleman can do that walmart cannot do themselves? jeff: this goes back decades. big companies have some little that they cannot fill. he is the guy who may be able to develop -- he has a theory that most of what has gone on with online shopping has been higher net worth people, upper middle income, upper upper income who will pay extra because they want as soon as possible. he has been good at going after people who are willing to wait a little bit longer but with david dime -- but will save a dime or a quarter on a tube of toothpaste, which walmart always wants to add another to boost
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toothpaste or a shirt to your order. david: is this an offensive deal or a defensive deal? is walmart trying to transform the company into a true rival for amazon, or are they trying to stop the hemorrhaging of sales to amazon? the answer is both. they will never be the same as amazon. they are a bricks and mortar store with stores on every corner in every city. they want to be the more relevant company. a want to be more of a competitor. jon: the guys that want to improve walmart -- that you have this small deal comes to health -- the u.s. is kind of the only place to be right now for the consumer. jeff: it is all about the united states.
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we live here and we can take it for granted and we see gdp growth of 1.2%. but on the other hand, friday we had 255,000 jobs added. that is a great number off a great number the month before. for all its flaws, it is the biggest economy in the world. 1% off that number is still pretty impressive. the 1.2% can get adjusted down the road. jon: you are going to see a premium? you are going to see a premium. david: what is the deal with ever bank? jeff: we have seen a lot of withlidation this special the retail banks that are located in florida. you have seen deals -- not a ton of deals, but the deals you have seen have been in that $1 billion to $3 billion range.
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this fits snugly into that space. jon: we talked about ipo volume coming back in a big way. are we expecting m&a bonds to develop in the back half of this year? and: we topped 4 trillion m&a was the best ever that year. i think this is going to be a year like 2013 or 2014, $3 trillion, 3.5 trillion n dollars. but i do nothing we will have a record year. a lot of times they have to follow those regulators with what happened. but until 2015 came along, 2013 and 2014 looks good, and they would have taken it. jon: and that 2015 does not look so good anymore. david: thanks to jeff
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mccracken. the s&p market, the record closed on the s&p 500 and the nasdaq, futures positive in the united states. .&p 500 futures , the00 and the mainland payroll rally continues. it is risk-on. here we are in the other asset class. a weaker yen and yields creeping up. ♪
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positive with three days of gains and a record high on the s&p 500. futures up by three points, dow futures up by 31. the dax continues up six tens of 1% as you hear the opening bell in new york city. of repricing of the treasury curve after yesterday's or fridays blowout jobs report rather. the dollar yen capturing that risk sentiment. three quarters of 1% and a stronger dollar weaker yen story in the fx market today. will we make another one to? today? alix: the answer to that question is yes because we made a record high on the s&p as well as the nasdaq. the dow is still off from its ,ecord high and record close but 2183 is not the level to be. this is the ninth record for the s&p that we have seen in the
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past month. we have taken a look at what a month it has been. it has jumped from this level and really catapulted higher just in the last few weeks. we have had earnings revenue and sales beating estimates, but thertheless the question is rally led by underlying growth or central bank liquidity? this is a very different stock market than we saw last august where it age five years. this is what we saw in august of last year, this huge decline in the s&p. it was able to rally and climb back since then. that trigger the selloff in equities with not only the weakness in china but the weakness in the fx market. in terms of individual names, walmart is definitely want to keep an eye on. it is buying jet.com for $3 billion. it is all about buying the talent behind jet.com to compete in a e-commerce with amazon.
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allegan beating estimates, but it did lower its revenue guidance versus estimates. it's all about what they do with the money they made from the teca sales. the other group you have to pay attention to is oil with wti getting a nice boost today. the expectation is that opec is going to be on the sidelines of an energy forum. there is talk of an opec freeze now circulating in the markets helping to boost crude of it. positions are so overextended to the short side. lifting all the big oil names from exxon down to, cap. -- conoco. david: warren buffett has gotten out of the derivatives business, reportedly paying $195 million in july to wind down the last of his credit default liabilities. for now, we turn to noah in seattle. for some time, warren buffett has said he does not like
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derivatives, but he has had a bunch. is he getting consistent with himself? noah: it was always an irony that they had this derivatives book. for years, he would try to explain why his were different and he was managing them differently and over the long haul it would be a good thing for berkshire hathaway. at the same time, he has been taking a number of steps over the years to either wine them down or let them run off. news not been adding the positions for a number of years. but we saw in july is that he actually unwound the last of his credit derivatives. he still has a few tied in the stock market, but what you are seeing is a winding down or simple of this part of berkshire's balance sheet. david: does he give that up now? noah: he always talked about them in terms of insurance
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premiums, that they were like insurance policies he was selling. moneyt has made a lot of by selling insurance and using the premiums he collects to make investments. he really looked at these derivatives in a similar way. he was getting payment upfront while he had to reflect on the balance sheet the change in the value each quarter. it wasn't really real. it was just an accounting thing. but we are seeing here is that he is getting rid of them, so you're not going to see these fluctuations on berkshire's income statement. he is also got less of this money to play around with for his investments. david: we've also got earnings at a berkshire hathaway on friday. what do they tell us about the state of the economy, particularly with respect to his railroad? noah: i think the railroad -- a lot of people expected it posted decline in earnings. berkshire as a
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broad cross-section of the economy. what you saw were a lot of things in line with her. there. ir peer group. their insurance subsidiary has rebounded. geico has bounced back pretty well. it was a little bit different than what we saw from the peer group. some other auto insurers had a tougher time in the second quarter. david: thanks, noah. to fly this you try morning in united states, you'll be familiar with this one. deltar outage grounded flights worldwide early today. the company sent out a tweet saying that ground stop has been limited and limit departures resuming following a power outage in atlanta. joining us with the latest is the bloomberg aerospace reporter in london. is great to have you on the
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program. i would assume these guys spent a lot of money trying to prevent these kinds of things from happening. what happened and how long is this the last? the limited departures have kick started again thomas a we will start to see some of the flights picking up. i guess we expected it to be quite a long delay, but going back to the cause, we are not really sure yet what the actual cause of the power outages was. we do know that there was a but we do not know what caused it. but could account for such a long delay for this to happen? passengers are able to move flights and rebook tickets on different flights, so it really has a global impact across the world. we know that they were meant to have about 3300 flights. that is just today.
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we are not sure how many of those have been delayed or canceled as a result of the power outage. we should get an update soon . jonathan: no drama and equity market with delta trading higher by about 1.3%. in the newsndustry today because the company that makes the plane themselves. what is happening with the ac quiry around airbus? benjamin: we had news last night that the sfo and the u.k. has decided that they were not going to investigate the airbus actions in the emerging markets. what we know at the moment is very little. airbus said they were disclosing that there was this issue about easing salespeople to get connections in some markets. they were kind of disclosing.
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the biggest issue that it comes down to is the impact it has on government guarantees for its potential customers. the u.k. ef, a government agency that backs the funding of customers purchasing airplanes, says they will not resume the financing until there is a result from the investigation. we will still have to wait to see what happens. jonathan: no drama in the equity market and not much on the airbus story, but down by 1.2%. benjamin katz, thank you for joining us. alix: from planes to harry potter, you have nbc universal. they are in a packed with the harry potter franchise tv rights. it is been called the biggest television rights acquisition history.
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what is the price tag in the timeline that we are hearing about for this? >> looks at the price tag is a big 1 -- $250 million being reported here. disney has the right to this content through 2017. what it means for nbc universal is that they are recognizing that as they think about the television business, one of the things that they know and other television operators know is what works in a fragmented tv world big programming. you think about the super bowl and the olympics for example, but there's also a big movie franchises that are still big enough to really resonate with audiences years after they first come into the theater. i think that is what nbc universal is saying. this is must have content and it has a long shelf life. alix: disney holds onto the right until june 2017, but an era of netflix and hbo now, why do you need it for tv? paul: nbc universal is saying that only did we have the nbc
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broadcast network, but we have a whole host of cable networks is as well. this is eight films now, plus that new films that are being created as a sub genre of the harry potter franchise. i think they see a lot of content they can spread over a lot of their broadcast and cable networks. let's remember that nbc universal and comcast has an ongoing relationship with the harry potter folks with their theme rides that have been very successful for nbc universal's theme parks in orlando. alix: comcast is down by a tense of 1% in the market. olympics ratings -- how do they do on front? paul: the overnights have been very disappointing, down 35% for the first couple of nights. but we have recognized in this new world of television is that overnight ratings are not what they used to be. we still have not seen the time shifted viewing ratings to come in. there's also the digital viewing. i think there's a lot more viewing out there not being
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captured by the overnight ratings. if you are nbc universal, you've got to be a little bit nervous because you have locked in advertisers, guaranteeing a certain audience. you need that timeshifting viewing to come in so you can make your audience delivering numbers. alix: it was like a 90 our opening ceremony. paul sweeney, thanks so much. coming up next, liz meyer, global head of equity capital markets at jpmorgan, was the inspiration for a new movie "equity." we discussed when we come back. this is bloomberg. ♪
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david: this is "bloomberg ." i'm david westin and the hewlett-packard enterprise greener.
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tom petri, chairman of future partners, later on bloomberg television. coming up at the top of the next ."ur, it is "bloomberg markets how long can this equity rally continue? a: that is one of the things that we are going to be talking about with the head of asset allocation at the frankfurt trust. we want to talk to him about equities more broadly and globally in europe, but he has interesting thoughts on the dax index as well. that is what i'm going to be focusing on a little bit because we are seeing the dax heading for its highest close for the year. that is one of our guests. we are also talking to jeremy cut. we will be talking about the dollar. we spoke to him a few weeks ago and he was very much a dollar bill. we will also talk about the
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sterling because the pound is on its longest losing run since brexit. part of that is down to the quantitative easing and other stimulus measures we got from the bank of england last week. a lot to talk about. finally looking at one corporate story, we are going to be breaking down what has happened with airbus as well. alix: thank you very much. a busy day. jonathan: record highs on the s&p 500 and on the nasdaq as well. let's cross over to the nasdaq where abigail doolittle is standing by. abigail: absolutely on this record highs, all eyes on whether a new record high can be set for the nasdaq once again at this early time. it appears that could happen. all these record highs could have some investors wondering what are the most crowded trades out there. several nasdaq stocks are very crowded trades. as for an under owned trains, we are looking at apple.
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it is a stock according to ubs that could have some room to run if institutions become more interested. turning to a chip stock that has been trading up and holding on to gains slightly is nvidia after the price target was raised to $69 pressure -- per share. analysts are saying that the products have momentum and he sees big upside potential for the estimate over the next 6-18 months. definitely want to keep an eye on. alix: abigail doolittle joining us from the nasdaq. we have shown you a bit of my conversation with liz myers, head of equity capital markets. in addition to the new stock offerings, liz was also an advisor on the new film "equity," about women, ipo's, and wall street. sarah megan thomas joins us for part of that conversation and they told me that there was a key man behind the movie. i wrote a letter to jimmy
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lee, who want to williams college. find vestmentd to bankers to meet with me, i thought that connection might help. alix: this is like a cold letter. >> i went to williams and he met with me. he was just that kind of guy. the film is in memory of him. he was the one who introduced me to liz and liz took the meeting. alix: why did you take the meeting? hi, i'm going to make a film and i want to talk to you. what was the inspiration to you? liz: if jimmy lee recommend someone, it's always a good idea to follow through. i was intrigued by the thought that there was this woman who is interested in portraying wall street with a different lens, the lens of powerful women who were successful and dealing with the same challenges and thrills that men in wall street movies might have dealt with. i was not sure what the movie would really be about, so i offer myself as a research source.
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when we thought about the accuracy of the movie, it is really the research that sarah did around everything from what happened in the ipo bake-off to have is a pricing meeting go and how does the aftermarket work? all those details i was interested in sharing because i have not seen them portrayed very accurately and prior movies. stimulated an interesting discussion among men and women on wall street with things how women might feel comfortable asking to be paid for what they deserve is hard work. and getting things right for the investor clients and the insured clients and the discussion around mentorship and sponsorship. the difference between those two things and the importance to accelerating someone's career and having someone to fill both roles for them. alix: you made a real effort to
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have the main players be women on the creative team. he also mentioned that the women were paid more than the men in the movie. talk about that process as well. sarah: i think wall street and hollywood are similar in that there are not enough women in senior positions. hirede it a mandate to female producers, female screenwriters, just put more people and from the camera as women because why not? alix: it still makes a great movie. you got picked up by sony for $3.5 million and it opens nationwide in september. what is next? optioned to try the television spinoff based on these female characters. those are not women we have seen on a television screen. "billions" is was successful for showtime and i think
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we can have a successful female version. and: that was liz meyer actor producer sarah megan thomas. not only did they have that jimmy lee connection in common, haircut made the exactly like liz myers as part of the integration for the movie. david: i'm always curious because i want to know how much is the same and how much is different because of the gender and something in a different way. alix: liz meyer was not the aspiration for the underlying storyline because there was a lot of conflict between the two women. the point is that it was one of the few financial movies out there that is very true to realize. -- to realize could you watch it and it was very accurate. will liz myers be an advisor to the tbv sears? jonathan: i cannot wait for the "bloomberg " field trip.
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donald trump's speech happening in two hours time. we will have a preview from new york for viewers worldwide. this is bloomberg. ♪
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david: this is "bloomberg ." donald trump is coming off what we can call a rough week, but he ups to turn things around when he unveils his economic plans in a few hours now. anding us is mark halperin mark, what does he need to do with his speech today? mark: this is a very traditional thing for a presidential candidate. the detroit economic club host speeches and donald trump is going to show his theory of the case. there is his moratorium on regulation and some other things related to tax policy, but what
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he wants to do is give people a sense. here's my theory on the case on how to create more jobs as contrast with hillary clinton. detroit has symbolic resonance. it is a place that used to drive the american economy. despite lots of innovative efforts by democrats and the vulcans, it is still not like the economic powerhouse it once was -- and the republicans, it is not the economic powerhouse it once was. david: is donald trump reading off the prompter? mark: there is a prepared speech and their experts of things on bloomberg.com. this is a broad speech about his economic vision. if donald trump is going to win this election, i'm convinced for months that there's coverage of all sorts of things on this race. who will americans think on election day can make life better for the amazing economy? if donald trump cannot make the argument, i do not think he will
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win the race. david: he announced his economic advisers. what did that tell us about donald trump the candidate? mark: almost everyone on that list is someone he is known for a long time. a lot of people from the private sector, including the financial world. they rail against wall street and yet they are surrounded by advisers with pretty big highs on wall street. david: we have hillary clinton coming up on thursday and they will be in the same place in detroit. mark: this is a plan speech, but they plan not to just go also onvely today but thursday as well. david: haven't we heard a lot from hillary clinton under economic plan? asked,verywhere i go i tell me some ideas that hillary clinton has on the economy that intrigue you. that is probably her greatest weakness. explain your theory of the case of the economy. how do your ideas fit together? what does america stand for?
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where can america excel in a postindustrial world? david: it's going to be an exciting week. mark halperin, thank you very much. jonathan: where america is excelling is in the u.s. equity markets with stocks at a record high from friday's close. it is down marginally across the board in u.s. equity markets to six minutes into the session. "bloomberg markets" is coming up next. for myself, alix steel, and david westin, thank you very much. the new trading week begins for viewers worldwide. this is bloomberg. ♪
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vonnie: it is 10:00 a.m. in new york and 10:00 p.m. in hong kong. from new york, i am vonnie quinn. nejra: and they vucevic and this is "bloomberg markets."
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vonnie: we are going to take you from san francisco to washington to stories out of the u.k. and brazil in the next hour. here's what we are watching. donald trump is set to unveil his economic plan in a speech in detroit. he is likely to propose a temporary moratorium on new financial regulations and a repeal of dodd-frank. will it help get his struggling campaign back on track? course forpound on his longest losing streak since in the bank of england has expanded monetary easing programs. strategists who says there are reasons on both sides of the atlantic why more significant moves could be ahead. vonnie: and we are pullingac

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