tv Bloomberg Markets Bloomberg August 11, 2016 3:00pm-4:01pm EDT
welcome to bloomberg markets. we are live from bloomberg world headquarters in new york for the next hour. plus we are covering stories out of seattle and china. stocks are once again pushing past record levels. we are monitoring the movement in equities for the final hour of trading. vonnie: and it is the one-year anniversary since china rocked low bull markets. we are looking back at the roller coaster ride. shery: retailers are once again in focus. macy's stock is surging as the inre plans to close shops response to online shopping. let's head to the markets desk where julie hyman is looking at another record high. julie: all three major averages are set to close at new records for the first time since
december 30 first, 19 99. it has been quite a wild since that happened. up,three major averages most at the highs of the session as the dow jones gained 122 points. a lot of the gains having to do with consumer discretionary and energy stocks will stop if you look at the gains they are near the highs that it has been, bumping around near the highs of the session all day. the trade fourth straight session in which we haven't had a movement of at 500. 1% on the s&p let's get to look at the earnings related winners. a lot of them are in retail or consumer discretionary. macy's beating analysts estimates as the company says it's going to close 100 stores. kohl's, gross margins expanding. chilies -- owner of chili's beating analysts
estimates. alibaba increasing revenue in its diversified division, including cloud services, much like amazon here in the united states. that's the consumer side. then there is the oil side. on ae oil surge today report that saudi arabia and oil minister said there could be in algiersf progress where opec will be meeting to stabilize oil prices. whether that comes to pass, we are seeing that push oil prices up and oil stocks as a result as well. if you look at some of the best percentage of formers within the oil complex, you see different .ypes of companies chesapeake announcing it's getting rid of some of its assets in the barnett shale. someted to check out
movers that are non-earnings and non-oil related. goodyear tire and rubble -- goodyear tire and rubber rising. under armour announcing some mid-level management changes today, saying it will be good news for the company. and yahoo! rising along with alibaba thanks to its stake. we will check back in just of little bit. let's get check on the bloomberg first word news with mark crumpton from our newsroom. mark: hillary clinton is promoting her plan to invest in infrastructure as a way to create more jobs. in an economic address in suburban detroit, clinton says she will put people to work by "unleashing the power of the private sector to create more jobs and higher pay." mrs. clinton: we will put americans to work building and modernizing our roads, our bridges, our tunnels, our railways, reports, our airports.
[applause] we are way overdue for this, my friends. mark: secretary clinton promised to improve schools and what are systems, expand broadband access and invest in clean energy. meanwhile, donald trump is promising to limit what he called horrible regulations in the homebuilder industry and discuss the difficulty of buyers to get mortgages. mr. trump: it's impossible for you people to go get mortgages. it's so hard to get mortgages today, unless you have a lot of money in the bank and unless you don't need money, you can't borrow. trump also said he wants a major simplification of the tax code and added that h&r block won't be happy about it. in sweden, prosecutors will be allowed to question julian assange about rape allegations. the interview will take place at location and london.
he refused to go to sweden, saying he would be extradited to the u.s. russian tv showed a humanitarian aid convoy loaded with food and water driving to the syrian city of aleppo after the russian military said there would be a three-hour cease-fire beginning today to allow aid supplies to go through. between syrian government forces and opposition troops in and around the contest to the continued despite the cease-fire. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. this is bloomberg. to the let's get back markets. it has been a historic day for equities with the dow jones industrial average hitting a record and the s&p 500 hitting an intraday high earlier this afternoon.
the major averages could close at records on the same day for the first time since 1999. joining us now is an equity and derivatives strategist rum bnp paribas. -- from bnp paribas. the trend is up generally for stocks but one thing that we have seen that is interesting is the appreciation of the s&p 500 above the wall street consensus estimate. the median analysts think stocks will be at 2150 at years end versus 2185. it is the first time in a few years that has happened we think the market is likely to be range bound and there are a couple of key risks that have not come to the market, such as the fed. what is your target price right now? guest: 2150 by years and.
shery: will you have to of dated? guest: we don't like to update things and we have had that target since december of last year. everything is going as expected. one thing happening in this latest injured -- latest iteration of economic data is the data has been more positive than we expected. we see real pce. we think that's going to moderate a little bit at the back half of the year and if the fed hikes, that should bring equity prices down with it. it could be the same coming down. what about things in the productivity that we rebuild? guest: we saw a jump up in inventories in q2. is of the reasons for it
that we are surprised by the strong consumption in the second quarter. they have to build these inventories up by the end of the year. things like that activity are likely to keep rates low relative to anything else and we will see this secular stagnation persist for the next year or two. shery: bnp paribas is one of the few seeing a rate hike. that goes against a lot of other market analysts. we are seeing only 24% of a of it being put into the fed funds future. what is the reasoning behind you anticipating a fed rate hike as early as september and what does that mean for the markets? there has been a shift, with williams saying a rate hike is appropriate.
expectations have increased -- weof number, but that think the reason for a september hike is because q2 data was so strong and given that employment has been so strong over the last few months, it is the optimal time for the fed to hike. startinghe market is to realize there may be a hike in 2016 and you could see the front end of the yield curve selloff and financial stocks and stapleshe year and telecoms have rallied this year. vonnie: where does that money go? does it leave the u.s.? shery: it is already. flows out of u.s., if you look at the treasury data, flows of u.s. equities have been the strongest this year. i think that trend is going to
slow, but it's about other developed markets and emerging markets. another milestone erase all of its losses post the brexit vote. what do you anticipate for u.k. stocks and stocks in general? guest: one of the surprising things is how the u.k. has rebounded so strongly after the brexit vote. part of it has to do with investor confidence. italian bank nonperforming loans being overcome with some deals made to restructure loans. thing we arene key looking for is the italian referendum and how that plays out. apart from that, we don't see anything else that would be a negative. shery: always great to see you. the equity and derivatives
strategist from bnp arab off. vonnie: it shocked the markets one year ago -- china pasta regulation took investors by -- china pasta regulation took investors by surprise. we will look at where things stand right now. and macy's got a big boost today. it is lifting the whole sector after it announced it will close 100 locations. isry: the time in new york 3:11. we could see a historic day for u.s. markets with all indices closing at record highs will stop for the first time since 1999, since before the dot calm bubble. m bubble.t co the nasdaq also gaining that much. this is bloomberg.
vonnie: you are watching bloomberg markets. i'm vonnie quinn. shery: i'm shery ahn. vonnie: time for the bloomberg business flash. leaving leggs mason after more than three decades. the stock picker is known for beating the s&p 500 index. buying legg mason stake in the fund company he now runs. income looks at -- related strategies. vonnie: delta says a small fire is to blame for its collapse.
some 300 company servers were not wired to back up power. delta canceled about three -- canceled about a thousand flights. ofry: the cancellation southwest airlines flights will cost $54 million according to -- "alice morning news." "dallas morning news." that is your business flash update. this is the one-year anniversary of china's stock devaluation of the yuan. the recent stability comes at a cost. our bloomberg is anchor, betty liu. i want to start with you because of this shock devaluation. if you look at the bloomberg, you see that we have had -- we
had a diwali ration back then. the second worst performer, weakening more than 6%. markete we saw that panic in august but we are not seeing it now? george: a large component back and was whether the government was in control of everything, where they could stand the capital outflows. of had a couple of sessions the circuit breaker being triggered, so the market was afraid of any large-scale outflows that might impact stability. past couple of months, we have seen a devaluation of the yuan, but the market has been much at ease with that. theie: what do you think consensus is?
betty: i think volatility is at the lowest since november and it appears as if the pboc is in control. foreign-exchange levels have stayed pretty much level. we saw that in the data that came out of the weekend, so they are not having to spend that much to intervene in the currency markets. it seems as though all the moves ofy made from the middle last year seem to be headed to a more stable currency right now. we are weeks away from the imf basket of currencies. along?progress coming betty: mixed. that is going to be the key and gettingic part is
toward a freely traded yuan is going to mean a sharp devaluation of that currency. it's going to mean a rocky situation for the currency markets. but that is what we are looking for. shery: it seems that they are not rocking the boat enough. vonnie: there are trade weighted baskets they are looking at to give us a better sense of what the yuan is doing. what should we be looking at to tell us where the correct level should be? there is the weekly basket index published why the foreign exchange system that gives a sense of what the yuan is doing versus a basket of currencies. butas been slipping slowly,
at a more controlled pace. i think that's a way to look at it. if you look at the recent inflows data at the chinese government bonds market, and data is pretty promising in the short-term with foreign investors putting more money into china in july. think in the short-term, that inflows from the market is getting some support from the currency as well. all currencies. the central bank of mexico cap rate steady. reacting to then what happens to donald trump in the election. george: the main theme for china is a lot of money in the developed world is looking for better return and r yield.
you look at the mexican bond yields, it is yielding 6% versus 1.5 percent. i think that's a lot of money looking for opportunities. i think investors are getting less concerned about that. to george's point about yields, we saw new zealand and australia cut their interest rates. for yields isrch causing central banks a lot of problems. vonnie: they think they can dictate to central banks and perhaps they can. our daybreak anchor, betty liu. major averages heading to a record close. in today's options insight, this
vonnie: this is bloomberg markets. i'm vonnie quinn. shery: and i'm shery ahn. it's time for options insight with julie hyman. julie: joining me is the lead option strategist at delta derivatives. he joins me from the cboe in chicago. it looks like all three major averages are going to close at a record. we have some vix falling back once again and oil prices up, so that correlation is back in effect. notice about what the flow of options looks like on a day when we are seeing these records? tim: this is all really based on the back of that stronger oil
which higher oil, now bringing the oil up and it's kind of the market we've seen over the past next relation -- next expiration cycle where flows have showed up measurably for stock value at low levels as well, but really everyone is on a wait and hold. andt of fear to buy in here the shorts are afraid at any time this could retire. julie: and it has been more like creeping higher day by day. i want to get to your trade because this seems to be an unusual trade. you are looking at an sp why whereut it is a put above the sp why is now. now is trading above
218. tim: these are slightly in the money puts. they have a 50 delta which means line one of these will cover about half of your portfolio. more importantly, you alluded to the vix at about 1150. these are about the cheapest we have seen in a year and a half. it only takes a 1% pullback to it these paid for, so i like as a trade on a pullback. it allows you to get more aggressive on the lawn site because you have that more aggressive in place.
julie: so this is more of a protection trade but directionally, do you have a view as to whether we are going to grind higher or whether there is more of a drop mark -- more of a drop? tim: i'm probably little more errors than bullish given that we have just been creeping higher. get paidip a coin big more for tales and four heads, you have to that on tales. cheapestions are the and if they get moving, they will get moving and time. we will be right back. this is bloomberg. ♪
scarlet: let's begin with a check on the headlines with mark crumpton the newsroom. mark: the presidential race and i was too close to call according to the latest poll from suffolk university. 41% of likely iowa voters support donald trump. 40% support hillary clinton. in a four way race, trump leads clinton. 17% are undecided. the fbi has high confidence that u.s.ussian government fact democratic party groups according to a person familiar with the findings. the investigation it has expanded race on evidence other groups were targeted in addition to the democratic national committee and the democratic campaign committee. comment fromn no the fbi and moscow has repeatedly denied involvement.
the atlantic basin in the united states one of the most named storms 2012 with between five and eight strengthening to hurricanes. and four storms could be major hurricanes with wins of 111 miles an hour. so far this year, five storms have formed in the atlantic. the bbc reports to bombs have exploded in a resort village in thailand. broadcasters southeast asia correspondent has said one person was killed and 11 were injured, including foreigners will stop there were reports explosive devices had been placed in potted plants. we will bring you more details as they become available. the president of turkey has the highest ratings since he took office two years ago. in the wake of last month's , two thirdsary coup of turks approve of how he is doing his duties. it is the first time he has had a rating above 50%.
global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. the markets close in under 30 minutes, so let's go live to the nasdaq where abigail doolittle will give us the skinny on what is going on with the tech stocks. stocks.n just the tech the nasdaq is more than that. abigail: we have a lot of different sectors here but we have a lot of tech to talk about. the skinny as we are having a very good day. on pace right now to close at a on likelosing high, but the dow and s&p 500, the nasdaq has not carved out a new all-time intraday high. but with the nasdaq at this record high, near the size, our team thought it would be interesting to take a look at
the nasdaq in the context of one equity index which is not at a record high, and that's the dow transports. dow transports in blue and we see a huge the virgins. the transports are nowhere near their record high. we do have the nasdaq up quite sharply and this i virgins could resolve either way. we see more mild divergences have resolved with the nasdaq following the dow transports down. something to keep in mind. now, getting to the tech winners, the nasdaq is all about and -- yahoo!, apple microsoft, shares are nicely higher for apple with a big used , at pace to close up highest level since june as the stock it's a nice tailwind from that alibaba first quarter report.
will be one of the primary once the verizon deal for the core operating assets closes in the first quarter of next year. investors are cheering this on. so big tech is leading today. tell us about another stock moving higher. abigail: apple shares are not at their highs but boosting the nasdaq. commenta mid bullish thinking that apple could see a million the range of 5 two 6 million iphone units due to the fact that the quarter has next week. members may not take this into account. that proves interesting, we
have had year-over-year declines in growth, that has been the big story on apple and that is expected to continue into that first quarter. the year-over-year declines are very small, so if there is a bump to numbers, maybe the growth will return sooner than expected. doolittle down at the nasdaq. joe: retail earnings are in full swing. macy's reported this morning. the retailer surged the most in more than seven years. after it announced its closing of about 100 of its doors, will the strategy work as brick and wanes andt traffic traffic switches to online? our guest has a hold recommendation on acs and nordstrom. macy's and nordstrom. investors liking the fact that
macy's is going to close about 100 of its underperforming stores. how long will this hold last to the stock? is this a one day high or did anything you see indicate the beginnings of a turnaround for the company? bridget: i think there are two parts to what happened today. the first part is the closing of the 100 stores and i think that's a sustainable upside to the stock. you are saving a lot of cost in terms of rents and headcount when you shift toward shrinking the base and making it more profitable. and it's likely some of the stores getting close our stores that they own and sell and that could drive cash and i think that's a legitimate change in the story. saw the same store sales start to improve from the first quarter, i think people may be a little over exuberant on that
one. there are two trends that have an impact in them. short term trends like whether the fact there have not then new apparel trends, that has definitely improved but same-store sales were still declining, meaning they are losing market share. scarlet: the operational side of the business teams to be a less bad kind of story. it seems like the idea where they're going to close down these stores and do something with the real estate is the growth driver. aside from property, where else does a company like macy's extract value? bridget: they have brands like last call and they are trying backstage, so they are doing various things to drive higher margin sales. seeairness, you started to some of those play out and the margins start to stabilize and that will help them in the long
run. matt: macy's is the seventh biggest internet company in the world. that struck me as a shocking figure. is it strong enough? bridget: they are still working on it. they have a strong form to build off of and by closing some of these stores, they can direct the investments they are making to more profitable returns. e-commerce will be one of those was so i'm excited to see what added capabilities they can add with the extra cash they are getting. joe: one story in the economy lately has been broadening out of the economy to workers at the low end. restaurant workers seem to be getting higher wages. what does that do to stores like macy's and their margins? definitelyey are
beneficiaries. bet customer still seems to very price sensitive, so i think they will demand lower prices. you have things like housing and medical expenses going up, so some upside there getting through wage boost is being transferred to other areas. matt: i was thinking about macy's employees. do their margins get squeezed because they have to pay their markers more the then they would -- there workers more than they would get paid at mcdonald's? bridget: absolutely. on that taking the hit but will get more as the cohort certs to take that -- -- start to take that. seems to me that it has the potential to be rand destroying because it sets up the expectation for this to
happen annually. which of these retailers are in a position where they don't have to promote so aggressively in the quieter seasons? bridget: i think that would be nordstrom. there's -- they never really have competed on price. they have stayed true to their value of providing excellent customer service and the consumer is willing to pay up for that. i think they are the least dependent on discounting. joe: obviously investors liking the closing of the stores. what about international? are there places where they could do more to accelerate growth? bridget: i haven't learned much about international. i think they need to address issues in the united states and north america first. i'm happy they are focusing on rightsizing that in getting their price points corrected.
only then do i think it makes sense to expand. joe: thank you very much. scarlet: macy's having it rest day in almost eight years, resting up 18%, having it day ever going back to 1992. coming up, hillary clinton rips donald trump's economic plan is a boon to the wealthiest americans. we will review her own proposals, next. this is bloomberg. ♪
is buying a streaming service. game service gives viewers the ability to watch and play along with their favorite games tremors in real-time. russia's national regular fining google six and $8 million for rules on antitrust tablets and mobile phones after a complaint was filed last year. the regulator found google violated laws by requiring mobile device makers to install its services, including search. dow chemical and dupont face three more months of haggling over their merger with european union antitrust regulations. the deal would create the world's biggest chemical companies. that is your business flash update. matt: hillary clinton announced her economic plan today,
attacking donald trump's tax proposal. when it comes to creating jobs, i would argue it's not even close. even conservative experts say hold ourgenda will economy back into recession. she was speaking at a michigan manufacturing plant and said the republican nominee's proposals are aimed at helping rich people like him. to help break down her speech, want to ring in our bloomberg politics reporter from d.c. speech spent more attacking donald trump or presenting her own proposal because we have come to expect the wonky details from hillary and less aggressive attacks and mark -- attacks and mark guest: she attacked donald trump about
half the time and in what policies. she has talked about what she has talked about on the stump, talking some of bernie sanders' policies and also taking apart donald trump's policies that he laid out in a speech on monday. joe: you mentioned some of her ideas seem like they could come from bernie sanders, but other times her rhetoric sounded moderate or conservative. she talked about cutting red tape and unleashing entrepreneurs. these are themes we have heard from republican campaigns in the past. do you think she accomplished what she was going for? guest: a good chunk of the speech was targeted at people on the fence about donald trump. they can't quite get themselves to support hillary clinton just yet, but they are thinking about it. she's trying to reach out to independents and republicans were not happy with donald trump being the nominee.
she saying i support policies you have supported in the past, including a private sector that is robust and policies republicans can get behind. scarlet: when donald trump spoke earlier this week, we heard lots of booing and protesting and he did not take the bait. i wonder to what extent there was any kind of protesting or interruptions during hillary clinton's speech today? for the most part, the speech went off without a hitch. she was able to get most of her speech, there were animal rights protesters who tried to get on stage, but she was able to lay out her policies and plans and she spent a good amount of time attacking donald trump as being temperamentally unfit. reaching out to people who believe donald trump is not a steady hand. lines or seems
got the biggest applause? guest: she got the biggest applause when she was attacking donald trump, saying his support -- his policies were outlandish and she spent a lot of time talking about her policies, that people have heard a lot about what she said and did not get a lot of applause for that. when she was attacking donald trump and going after his temperament, she got the applause and the laughs she was looking for. joe: on the issue of trade, she sounded trump like. she said she was not into the tpp but she prays free trade and talked about how manufacturers in michigan are selling billions of dollars abroad. how difficult is it for her to thread the needle on that one and not go as protectionist as trump that acknowledge the anxieties people have? that's what she's trying
to do. she was in president obama's cabinet and president obama is supporting the tpp deal. she wants to inch away from him without raking that tie, saying trade is important and we can't pull up the drawbridge. she has tried to make it clear she's against it now and will be against it after the election. there have been calls that she may change her position after she is elected, but she wanted to drop that right line that she is not going to support tpp but she is in support of globalization in terms of making sure we are not pulling up the drawbridge and cutting ourselves off from the rest of the world. i wonder how realistic her promises are. there were some pie-in-the-sky promises there. she says she will make the wealthy pay their fair share.
everyone says that all the time. she says she's going to make workers share incorporate profits. in sharing free college tuition, it is almost an irresponsible promise. how can a president do something like this in this economy? guest: we have seen both candidates offer policies that will be difficult to get through and congress has been gridlocked on so many simple things. it would be very difficult for hillary clinton to get a lot of these policies passed through the congress as it is right now with republicans currently in charge. to,he senate goes back kratz we would still likely see the house stay with a republican leader. of's laying out her vision what you'd like to see in an ideal hillary clinton administration, but given the gridlocked congress, it would be
tough. democratic had a house, democratic senate and hillary clinton in the white house, could we get college education for free? guest: she would work with states and their governments to get college tuition set a low-cost. she was to make it free for the people who are low income and middle income. taxes,ts to raise some so she has put forward a plan all she wants to work with state governments to get them on board. cheaper beef at supermarkets is hurting her joints. we have a look at how cheaper prices at the grocery stores are crimping restaurant sales. ♪
time to look at some charts that illustrate today's market news. nordstrom will be reporting earnings after the bell today and it and other stores have been investing in their off rice stores. the orange ours are quarterly same-store sales at nordstrom proper. the blue bar sales at nordstrom rack. brick-and-mortar sales turned negative in 2014. in the last three quarters, you can see they have turned. nordstrom continues to plow more money into new rack stores. it has twice as many discount rack stores as it does for price doors. joe: we will see after the bell if they are throwing good money after bad. matt: yesterday, we talked about how people are spending more money eating out and fewer dollars in department stores. our producer doug into this and found food at home or grocery store food inflation is negative. burgers cost less and food away
from home, dining out colleges the white line, is getting more expensive. wendy'sd chains like and whataburger are complaining about this and saying we are losing business because people are able to drill at home at a lower rate than they really were. scarlet: and they are paying more to their employees as well. matt: i hadn't done about that, but that's a very good point. joe: here's a sign the economy is chugging along. initial jobless claims out every week now at the longest stretch of initial jobless claims. we are well below 300,000 -- give me one second and i will show the other version i like to do. at their lowest level in post
crisis. that literally took you one second. scarlet: this is a consistent story no matter how you look at it. in order for it to get worse, it would have to be disastrous. joe: in january or february, there was a lot of anxiety, but that has stated quickly. scarlet: that does it for bloomberg markets. up next, "what'd you miss?" all three major indexes headed toward record closes, the first time that has happened since 1999. this is bloomberg. ♪
>> all three u.s. stock indexes at record highs today, for the first time in 16 years. >> the question is, "what'd you miss?" >> we will break down the results from nordstrom in minutes. by onere joined professor who outlines the three ways the european union could unravel. >> u.s. retail sales probably will rise in july. we have the three charts you can't miss and tomorrow morning's release. we begin with our market minutes. u.s. stocks rising and climbing towards record hgihs. -- highs. all one mark the first time three indexes have closed at a record high since 1999. >> it is a remarkable