tv Bloomberg Markets Bloomberg August 12, 2016 10:00am-11:01am EDT
we are going to new york and cover stories out of the u.k. in china. this is what we're watching. sales at u.s. retailers were little changed in july. that's not stopping big department stores for making strategic moves in order to boost the bottom line. we will look at the u.s. consumer and results this week from macy's and nordstrom. a tale of diverging economies. germany's economy grew better than expected. that is helping the euro exchange -- maintain its expansion. retail sales at a mass -- missed. its a guestng for weekly advance since april after saudi arabia's sick old it is
prepared to stabilize the market. talks next week. about 30 minutes into the trading day. julie hyman joins us with breaking data. julie: it's rising less than estimated. it came in with a rating of 90.4. this mostly reflects what happened in the current condition. that part of the index is falling to 106.1. picked up aans little bit more than estimated to 80.3. overall, it looks like the consumer is not feeling very good about their current state of personal finances. in this like optimism report as well. it has already been a pretty
busy morning. we got u.s. retail sales earlier in the day. we saw a little change overall last month. we did see when you strip out autos, there was a decline. auto sales were more robust than the rest of the retail or. we got ppi as well. that fell 4/10 of 1%. the average is pulling back on those record levels where they closed yesterday. that goes back to the end of 1999. economic data that we have this morning has a sharp effect across the market. take a look at bonds. this is the reaction that we saw. the yield is sharply downward. that is down seven basis points after that decline earlier. you see another downward tick after this university of michigan report. the dollar had a sharp reaction.
you can see it here. it's only down 4/10 of 1%. you can see the reaction to the data when it came out. with bond yields in the dollar lower, we have pressure on banks. they are putting pressure on the overall averages. these are heavily weighted stocks. finally, we have to talk about retailers. the individual stuff is doing better. nordstrom has earnings that the estimates. jcpenney is narrowing the loss. they are down just 4/10 of 1%. dillard's is down a little bit after yesterday's gain in the wake of its earning support. about 90 minutes away from the european closed and let's look at where equities are right now. we are softer on the stoxx 600.
i just want to refresh it for you. we are down to tenths of a percent. retail stocks are leading to gain. if we take a look at individual stock, one of the biggest gainers is up 4.8%. that is gaining after bank of america raised it. higher oil prices might be playing into this as well. denmark's biggest company. it has a sickly met punishing market conditions with cost cuts to create a leaner business. there was an 80% drop in profit. the oil business suffered from falling prices. those cost cuts help there. the shares are actually moving higher today. those were some of the best
performers on the stoxx 600. this is year to date. 600erday, we saw the stoxx recoup its post exit losses. lagging europe doing that. it is still down more than 5%. for the first time in three years, investors are underweight. if you look at volume, there are some signs of performance. i wanted to show you sterling. this is the worst performing currency year to date. this is sterling over five days. we are still below $1.30. now let's check in on the bloomberg. alisa has more. alisa: donald trump thinks the news media does not get him. he repeated lee called president
obama the founder of islamic state. today in a post on twitter, he called out in an for reporting the story so seriously. he said they don't get sarcasm. former assistant football coach jerry sandusky is back in court today. is trying to prove he was wrongfully convicted for years ago of sexually abusing 10 boys. he was convicted of 45 count. he is serving a 60 year sentence. in brussels, the police are on an anti-terrorism case. they have arrested three people for west tuning. a judge will decide how long they will be cap in custody. global powers are calling for calm in the latest confrontation between russia and ukraine.
vladimir putin said those debts would bring a very serious response. the u.s. is calling on both sides is tensions. in 2014.nexed crimea global news 24 hours a day powered i more than point 600 journalists and 120 countries. this is bloomberg. shery: let's get back to the oil market. crude is heading for its biggest gain since april arian it is trading at $44 a barrel. there is a flurry of positive headlines from saudi arabia. where will it go next? our guest says higher. kelly is at janus capital. it's great to have you with us. higher because of a rebound? we had a huge number of short positions.
chris: i think it's going to be fundamental. the saudi information is interesting. that they just want to stabilize production here, it doesn't matter much for the fundamentals. opec is producing at an eight year high. what we really need is a declining rate to take hold. that will put supply in the mind back into balance. shery: that is the key word of the week, rebalancing. we heard from the international energy agency saying it will happen this year. the u.s. energy administration said the same thing. we are starting to see supply and demand rebalance. think oil markets on a global basis are going to be much more balanced. how does it play into
that? chris: they of cut their runs a little bit recently. margins of started to at least find the floor. up,hey get utilization back they will drop down to crude. since that have cut some runs, we have seen some of the product start to come up. take: what is it going to for the oil price to come out of the range of $50 or $60 a barrel? chris that's a very interesting question. a lot of people don't seem to think that's possible. the market is very tight. opec does not have a lot of spare capacity. if there were something geopolitically to occur in the middle east, that could send oil fighting it higher. if the market is balanced and you dropped crude inventories.
talks,ing ahead to these the thing we have heard in the run-up of it moving the price recently, don't we get disappointed when we get promises that are not lived up to? what impact did that have on the price short-term? chris: they can always lead to some softness. barrels of5 million demand. that is a lot of oil. the natural decline rate just to replace 4 million barrels a day every year. you can go from $50 to $40. theer-term, as long as market balances and you draw inventory, you should get some stabilization and some move up. seeing them go through this flurry of deals.
they can't keep production. the market is so bad. privatearing that equity firms are ramping up their investments. are we going to see more of a surgeon these deals? chris: i think it's possible. when people get more comfortable with the price of oil, that is key. dailye have seen is production and daily supply starting to meet. inre is a lot of oil inventory that needs to be drawn down. process,rt the healing companies get comfortable with $70. that is the natural path for oil over the next two or three years. had to china figure into all of this. some of the latest data shows a
slowdown even further. tell us how that dynamic fits into the oil market. chris: it's an important dynamic. they are a big element on the demand side. what some people miss is the fact that their suppliers off as well. supply can soften a little bit. the fact that they're not reinvesting in their oil fields suggest their supply will continue to come down. they are matching their own supply and demand dynamic. >> thank you so much for joining us in the studio. coming up, germany's economy grows faster than expect it while italy is a points. we will discuss the mixed growth story next. this is bloomberg. ♪
americans flocked to car dealers at the expense of other merchants worried excluding autos, it fell 3/10 of 1%. the deep-fried twinkie is jumping to the home freezer. they will be lot today. the cream filled snack in vanilla or chocolate is the result of a year-long collaboration between hostess and walmart. that's the bloomberg business flash. dive into my bloomberg here. germany continues to be europe's powerhouse economy. it is slowing less than affected. italy unexpectedly stalled after expanding in the previous quarter. let's bring in david powell.
david, it's great to have you. are we yet seen the impact from brings it? we're looking at the second quarter. does this give any hint of what happened going forward? david: the second quarter data won't have anything to do with brexit. we have some survey data for july in which one would expect to see some preliminary signs. there are no signs of brexit having an impact on the economy at this stage. this divergence we are seeing, what explains this? is quantitative easing exacerbating the? david: we are where we are today because of divergences in the
european economy. germany has been the strong powerhouse for years. italy is the laggard. when you look at the euro area as a whole and the aggregate of these numbers we received today, it is expanding nicely at 0.3%. that is in line with trend. it follows a very strong first quarter. year, first half of the the economy grew above trend. should narrowing and it support stationary pressures. nejra: we had a slew of data out of china. everything missed estimates. could you attribute this to the volatility in july? david: there was some slowdown. there was some seasonality.
slowdown going on. we are seeing that only in the month of july but it's looking like the third order as a whole. it's nothing to be super concerned about. they had a mild slowdown. the chinese government has plenty of ammunition in order to combat that. to useoes decide stimulus going forward, it will be more physical sinless. doesn't really -- it does not suggest that's targeted or unreachable. mind asething keep in we move into the second half of the year. nejra: thank you so much for joining us and for more economic analysis, go to your bloomberg. etf landed in the hot
nejra: live from london and new york. shery: you're watching bloomberg markets. it's time for our etf friday segment. let's get over to julie hyman. julie: many-- traded below fair value in the market tumbled. debacle,, het that covers etf for bloomberg. we've been talking about this issue as we get into august and volatility is very low docs are going up.
that was the setup last august. let's refresh our memory as to what exactly happened. was a selloff brooding all we can. futures were down as the stock market open. there were some liquidity futures and some halts. they were not used to the new you rules bit. you had stoploss orders from investors being put in that were triggered low. the market was down 5% in retrospect etf's traded at 20% below that. they had these triggered stoploss orders. market makers were not able to have their models working correctly. they had to widen their spreads. julie: i think we have a chart from that day.
it showed the actually saw that day. there is that dip at the open and then it came back up just a little bit. it finished down 4% on the day. anc: all of this happened in hour. the reason i brought this up, this is an etf mom-and-pop. it speaks to another point in this. it wasn't the etf in broken. when you look, fixed income traded fine. international equity traded fine. it was just u.s. equity etf's. it did affect about 1000 of them. billion struck below value. that is out of $200 billion in etf trading. we are talking about less than 2% of the trade. it still matters.
julie: what we seen happen in the last few months? did they fix the plumbing so to speak? eric: they got some good feedback. some of those are hard-core competitive's. themcame together and told what they thought should happen. the sec run a postmortem on that. they had no policy suggestions. they haven't really done that. this could be the bigger problem in terms of market structure. the exchanges have all come out and they are planning. they are planning a proposal with the sec. least this won't happen in the same way again. hase: nothing has -- there and no action taken yet. eric: there have been some
tweaks. brings it happened. we were looking to see what happened. some of those weeks held. some of those of work. the industry is really concerned about this. other changes would only help. julie: all right. we're getting closer and closer to august 24. nejra: thank you so much. will examinet, we the wealth management industry. this is bloomberg. ♪ [ hip hop beat throughout ] [ fans cheering ]
♪ olympics 2016, let me get you on my level. ♪ ♪ so you never miss a moment, ♪ ♪ miss a minute, miss a medal. ♪ why settle when you can have it all? ♪ ♪ soccer to wrestling. track and field to basketball. ♪ ♪ fencing to cycling. diving to balance beam. ♪ ♪ all you have to say is, ♪ "show me," and boom it's on the screen. ♪ ♪ from the bottom of the mat, ♪ ♪ to the couch where you at? ♪ ♪ "show me the latest medal count?" ♪ ♪ xfinity's where it's at. ♪ welcome to it all. comcast nbcuniversal is proud to bring you coverage of the rio olympic games. ♪ is a beautiful, sunny day in new york. at live from the bloomberg world headquarters in new york and london, i am shery ahn. nejra: i am they are change.
you're watching "bloomberg markets." let's get to the first word news. in thailand, a series of bomb attacks targeted the country's tourism industry. bombs exploded in two resort towns. foreign tourists were among those hurt. the thai government says it does not know who was behind the attacks. russian president vladimir putin fired one of his closest allies. he says he is replacing sergei ivanov as chief of staff at ivanov's request. was a former russian defense minister, once considered a likely replacement for putin. the u.s. reports chemical weapons have been used in syria. at least two people were killed with chlorine gas in an airstrike on akeoo 00 aleppo.
syria denies the allegation. on south puts pressure korea to not use a u.s. missile defense system. beijing may install some investments in south korea. global news 24 hours a day, powered by our 2400 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. wealthting to the management industry. it has been under fire for not turning -- not providing the returns clients expect. so how are wealth managers competing? of thed rick hough, ceo independenty traded wealth manager. great to have you with us. the wealth management industry is very mature, with lots of
challenges. just the ones we mention. why did you decide to go public? rick: we thought it was one of the best ways, at the time, to maintain our independence to assure that our shareholders have liquidity. that there was access to the capital markets. currency to do acquisitions. it also freed up cash for investments in the business. both technology, professionals, and future growth. >> we are seeing third-party manager platforms. how do you differentiate in such a market? rick: money management has become something of a commodity. the best way to differentiate yourself is with value added services that look at a client's entire balance sheet. still with the handholding needed in financial planning and other, additional services. and it is important you have -- proprietary
products that can deliver either the diversification people need in alternatives or yield or can customize the portfolio around other operating businesses. your client retention rate has run at psalm 90 & the past five years. that is pretty impressive, -- your client retention rate has 98% the past five years. that is pretty impressive. about the-erian wrote degree of long-term financial security. he says the degree that can be assured depends on future returns, correlation among different asset classes, and volatility. how do you navigate an investment environment where meaningful returns are harder to come by? do you increase risk, and if so, how exactly? rick: people seem so of -- averse to risk, they may be undermining their financial
future. one of the key things a wealth manager like ours can do is to keep clients invested through volatile periods, so they can realize the returns certain asset classes promise. but you will not get them if you are selling at the bottom and buying of the high. >> take us through how you then approach the environment. does this mean that you like it when there is more volatility? how are you navigating back, especially where we have equity indices at record highs, but not necessarily the growth to back that up. rick: what the world lacks is a growth agenda. the indices may be at an all-time high in recent history, but that is talking about equity indices. if you look at the multiple where fixed income is, it is more like a 67 times multiple.
they look very expensive. the world is risk-averse. helpinghe things we are people understand is while cash, fixed income, and some returns may be abolished against volatility, -- bamay be a ballast against volatility, it is important for returns. >> the media has been talking about $30 trillion of returns. that is something the wealth management industry can capture? rick: money in play or moving around creates opportunity, but it is the same money. that $30 trillion is being managed somewhere after state taxes, other donations. the splitting of that amount of money in multiple people in a given generation. the money may not move the way people think. and with money moving so much longer, it will play out over a
long period of time. it is not as if $30 trillion is suddenly loose. you have said that the becomingrisk is affected by sameness. how does silvercrest differentiate itself, specifically? rick: we have our own manufacturing products internally. most of our advisory competitors are what is called open architecture. they use third-party managers, whether etf's or other managers, outside of the firm. we can customize portfolios at the security level in a way other firms cannot. and we are avoiding a second layer of and can deliver the value added -- second layer of fees and can deliver the value added services.
lot smaller firms cannot do that because they are outsourcing. >> what are you recommending? rick: it depends on the clients. it is completely customized. there is an interest in reaching more for yield and finding income producing investments. and alternatives that can help clients with that, as well as non-correlated investments to ride through some volatility. but it is so customized, it is hard to answer in a blanket way. >> thank you, rick cofco ceo of silvercrest asset management. jcpenney is on the way to recovery, but will investors -- , ceo ofu, rick hough silvercrest asset management. up next, we talk to the former ceo of jcpenney. ♪
nejra: you are watching bloomberg. i am nejra cehic. shery: i am shery ahn. we are watching more brexit follow in the u k construction shrank a second month. there are signs of worse to calm. -- to come. >> germany flexes its economic muscle. slowed, signaling that -- growth grew better than expected, signaling that it may become -- >> >> we begin in britain, where
construction shrank for a second month in june. .utput -- building up a decline companies have started putting spending plans on hold since the u.k. voted to leave the european union. slowedermany, growth less than predicted in the second quarter. german gdp rose 4/10 of 1%. a signal that europe's largest economy may be able to handle the u.k.'s decision to leave the eu. by italy's economy unexpectedly stalled a the jobless rate is above 11%. >> auto sales soared in china last month, up 26% from one year ago. general motors and ford reported record demand. sales were up 47% for utility vehicles. >> time for our bloomberg click take, where we provide
background and context on issues of interest. for aes have looked chemical edge for centuries, dating back to the ancient greeks, who used alcoholic concoctions and hoses and it mushrooms. but thanks to new technology and whistle brothers, -- whistle blowers, cheats are getting caught years after they meddle. we look at what is being done to catch them. ststricken mean, heroine -- richnine, heroin. all of these have been used to cheat. whether lance armstrong, or russian everything, it has been proved that athletes have been trying to get an edge in sports, even if it means getting caught.
here's the situation. the international olympic drug makingohibited beginning in the 1960's. because of advances in pharmaceuticals, doping has thrived. the most popular methods include blood transfusions, or taking human growth hormones. russia's olympic track and field team and its entire paralympic squad has been banned from the olympics, from the whistleblower uefa nova -- yulia efimova. agencyld anti-doping called for an entire band of the russian team. will not stop in rio. more than 50 athletes from beijing and london were caught four doping years later, thanks
to a prolonged storage of test samples and advances in technology. of the testing system say that the anti-doping crusade failed. agencyld anti-doping would not have even caught the russian conspiracy if it were not for a whistleblower. some say athletes should be allowed to take drugs that posed no health risks. but anti-doping supporters say that would reduce sports to a competition of who had access to the best stimulants. they say that in order to catch them, support is necessary. >> you can read more about doping and all of our quick k on the niqui bloomberg. u.s. retail. jcpenney, which seems to be making progress in its rebuilding efforts. the retailer posting a smaller
loss in the second quarter, showing that while consistent not possible,is the department store is making strides in turning around. shares up thiss week, including at macy's. for more on the retail said there -- sector, we are joined by allen questrom, the former jcpenney's, barney's, and neiman marcus. great to have you on the program. i do not think it is exaggerating to say you are considered a turnaround don. macy'sooking here at jc,er sales decline, with things narrowing. is this things being less bad for the companies or his improvement? allen: all of those stores had
minor sales increases and, in many cases, losses. penney's was the exception. they were positive by 2%. but given the fact they dropped around 5% from around $19 billion down to 12 alien dollars. but they are slowly but surely putting back the pieces to make the company a stronger operation, more appealing for customers. their team's case, is doing many things they have done over the last year that mr. lundgrum has been there. they are trying to keep their business viable with the customers. that is a lot. but why does this has been tough is many issues. a lot of people laying it on the internet. -- blame it on the internet. but it is also the dollar value has gone up, reducing terrorism. -- reducing tourism.
many people have not adjusted to the millennial, who is a different customer. they are maturing later in life. needs change. as she is moving into the 30's, you will see more of those changes. i think macy's, nordstrom's, kohl's, penney's -- they're working hard to figure out what to make their offerings more attractive. >> what do you think is the answer to that question? be a, it always has to when a customer walks into the store, she has to be inspired, motivated, excited about what she sees. have beene stores trying to get their sales bigger, so much promotion, that stores do not look exciting. there is lack of new and innovative product. the presentation is not inspiring. this is a business of theater.
if you do not conduct a good theater or entertain the customer when she walks in, she will have an interest. then she goes to the internet. the other factor is the internet, if you're going to use a cell phone, they do a lot of socking before they buy, they do not go into stores. you have to have the internet in your business, but you still have to have the store do over 90% of the business. they have to be exciting. >> talking about stores, how do you feel about macy's closing 100 stores? is that enough? do you think the incoming ceo can bring enough change, given that he has spent most of his career at macy's? allen: that is a good question. this is a company that is not broken. this is a company that has done many good things. they have taken over different companies, changed the name to macy's.
jeff has been in the company 31 years. he has been under that two lives. i do not think you want to go from left to right. i think you will have mr. nextren helping him the few years. he is smart and well. that is a positive. if that fails, they will make another change. i would rather take someone who knows the culture of my company, understands the business, has done a lot of different jobs and done well in all of them, i would rather that than someone from the outside. outside hires generally do not do better than inside people, if inside people are qualified. >> you have also been involved with walmart. you think walmart's acquisition of jet.com is a good idea? allen: it's a good idea for jet.com. be in are not going to positive direction for a long time, if ever.
thed on the strength of walmart people, they see they need an outside idea person. that is not their strength. i think their internet business to $15 $12 million million, versus amazon over $100 million plus. so i think they think this is a person who could bring ideas and inspiration. i do not think jet.com, based on one year results, would have been successful. but the top management team at walmart -- it will help walmart and jet.com stay alive. i think the walmart people will be inspired by a different type of leadership. great talking to you. thank you for joining us. former ceo of jcpenney, allen questrom. still ahead, is being called them -- it is being called the burning man of the hamptons. this is bloomberg. ♪
♪ you have heard about burning man, but what about discover watermill day? in the hamptons outside of new there is a benefit. amanda gordon attended this year, and is here to talk about the upcoming event. tell us more about what this entails? amanda: first, let's take a step back. we know the hamptons is where people go to play tennis and golf and go to the beach. there is a lot of development. eger and bigger houses going up everywhere. the fact that this space for artists, this eight acre campus exists, iss, miraculous. thatis an opportunity
watermill-ers make available to cine -- come see artists at work. some of the things they prepared are really amazing. into ap off the street bamboo forest. one of the first thing people will see is copper angel wings fluttering on podiums with actors wandering. >> i have unfortunately not been to the hamptons, but i hear there are so many things to do there, especially for wealthy wall street people. why choose this one? amanda: i think the uniqueness of it, which is driven by the founder of watermill, bob wilson. many know him for einstein on the beach. the people i spoke to, which was to week's ago, they talk about how being in this artists' nirvana opens their mind.
it helps them look at things and think about things differently. that is what people are drawn to. the opportunity to see things they cannot imagine. for example, there are some bumpers of cars that are the forest. or a sculpture of a man covered in hot dogs. or edgy.whimsical it runs the gamut. >> great talking to. you. i look forward to those installations. amanda: it is sunday for free. >> you heard it. amanda gordon talking about the free discover watermill day's. you can find more out bloomberg pursuits. nejra: coming up on the european close, the pound regains the crown as the world's
worst-performing currency. here's a look at where european stocks are now. let's look of indices. stoxx 600 down 2/10 of 1%, after it recouped post brexit losses yesterday. ofalmost snapped six games -- six days of gains. let's look at the bond markets. the pound the worst-performing currency. worst-performing d10 currency as well. the 10 year gilt yields down three basis points. a little lower on the german 10 year yield as well. the euro higher against the dollar. this is bloomberg. ♪
nejra cehic. you are watching the "european close" on "bloomberg markets." ♪ >> we will take you from washington to frankfurt and carver stories out of the u.k. and china -- and cover stories out of the u.k. and china. today, a pullback stocks have you raised post brexit losses. major averages in the u.s. closed records together for the first time since 1999. an equity had a blackrock joins us any moment. >> it is a global economic data.. germany's economy grew more than expected. china's momentum wavered. investment missed