tv Bloomberg Markets Bloomberg August 15, 2016 2:00pm-3:01pm EDT
we are live in bloomberg world headquarters in new york over the next hour, covering stories out of san francisco, washington, and london. stocks hovering at record highs once again on very low volatility. hy hedge funds are holding massive short positions. vonnie: big move for economic data out of the u.k. the clearest picture yet of a post-brexit british economy, and the forecast is not good. shery: dropbox is taking a big step towards going public. details on the potential ipo including white ceo it might be time -- why the ceo thinks it might be time for the company to take the next that. markets close in two hours. julie hyman has the latest.
it could be another record high. julie: already on the intraday basis it is a record high. we will get there for the major averages unless there is a directional change by the close of trading. it is lower volume characterizing the action we have seen recently and it is being driven by oil, trend that is coming back into effect after a divergence between oil and stocks. it is not seem to be as driving a factor. oil about what you five dollars a barrel on more talked that we will see discussions on price stabilization in the production freeze at the opec meeting next month in algiers. some of the very volatile stocks -- chesapeake energy, transocean, higher. what is interesting is that even as we have oil prices higher, airlines are getting a little bit of a bounce today. american airlines and delta are some the stocks participating. shery: so who is in
participating in the rally? julie: one of the groups that has not been participating recently. we have seen a leadership change. this looks at the next of the s&p 500 a group. 27,-to-date through june that was when we saw the post-brexit vote low in u.s. stocks. in the first six months or almost seven, telecom services and utilities and energy led the game. since that low we have had a switch. after being leaders, the utilities have fallen into the last spot. more of the cyclical groups have led. technology, financials, industrials if you look at what is happening in today's session and for what is moving, again, the dow jones average down more than 1%. group.down within that
interesting, the rotation we have seen as we get into the latter part of the rally. vonnie: julie, thank you. that is julie hyman at the markets desk. let's check in "first word" news. mark crumpton has more from the newsroom. ink: president obama is rubbing his vacation to raise money for hillary clinton. he is headlining a fund-raising reception on martha's vineyard. proceeds will benefit the hillary victory fund, the democratic national committee, and state parties across the country. donald trump is going to declare an end to nationbuilding. in a speech this hour in ohio, trump will say if elected, he will give up nationbuilding in favor of foreign policy that focuses on destroying the islamic state and other terrorist organizations. trump is also expected to propose a new ideological test for mission to the united states. manhunt, the suspect in
the shooting of a georgia police officer has been arrested in florida. authorities say he was discovered hiding in the trunk of his sister's car. the officer was responding to a suspicious persons call in eastman, georgia come when he encountered this is after exiting his patrol car. doctors without borders says in africa hit one of the hospitals in northern yemen. medical of issues otherwise to brief the media say the strike killed and wounded 20 patients and hospital staff. global news 24 hours a day in more than 120 countries. i am mark crumpton. this is bloomberg. vonnie: mark, thanks. getting back to the rallies, stocks at new highs. cyclical sectors, materials from industrials, they remain the biggest gainers. utilities going telecom, ples.mer stat mike regan is covering stocks
for bloomberg gadfly. change in're seeing a leadership, as julie was just explaining. people believe the market will continue? hard to say. earlier in the year when united utilities and industries such as real estate investment trust an quite wellly doing and brought the market to the precipice of another record than we had the brexit risk-off sentiment. settled, it has been the cyclical technology and commodity companies leading the way. big selloff in the defensive which is interesting, too. that is allowing us to churn higher. inch by inch we're getting there. as every day.
-- new highs every day. the economy looking that good to be cyclicals for the longer-term? shery: could be an of this rotation mean we could see a breakout from your? michael: that is what people wonder. the range has been so tight market as a move more than 0.5% except for a couple days the last month. are on the edge of their seats saying higher, lower? 2200 might cause a little bit of applause in the s&p. for whatever reason, round numbers can slow down a rally. vonnie: it seems like you can make anything to be either argument. to -- low compared shery: very, very low. i have a bloomberg terminal
chart. 2752. linecompared to the red where we see the average, 20. how predictive is vix? michael: there is a lot of information you can get from that chart. obviously, when you're as low as it ever gets. at the same time you can see how there is a rhythm to it. rhythm toort of a volatility that people are waiting for the next round to pick up. if you look at the risks to the market right now, everyone was bracing for brexit. it came at an interesting time for the fed policy. couldn't increase rates right before brexit.
now taking it to september, janet speaking at the end of august, a lot of people are assuming she will not signal a rate increase. you don't want to increase rates right before the election. you don't want to cause any sort of turmoil that would cause scrutiny on why he raised them. general thinking that would have the low volatility and upwardly grinding market for the next couple months. one of the fascinating things i've noticed is that hedge funds , even as low as the vix are -- vonnie: i was going to bring that up because you say that hedge funds are short. michael, i mean, 12 is the where itr the vix could spell doom for everything is all fine. michael: the cliché is that when
the vix is high, time to buy, and when it is low, time to go. it is a contrary and indicator. when it is too high commodity volatility is passed. all the research i have read it does not seem to back that up with data. it is very hard to predict levels based on that. vonnie: what are people testing most -- trusting most? michael: they are either the highest of this leg of the bull market since it started in 2009 or even higher going back to the dot-com bubble. a lot of people are very nervous but that is the contrary signal to a lot of people who say if everyone is nervous about it that means you have gains to go. side hologic and going feetfirst and buying. the one data point i would go
back to commercial interests being at high. it doesn't make a lot of sense that you would be that short vix. love it is based on the volatility we have seen from which has been very low. shery: mass uprising they are nervous with -- not surprising they are nervous with 20-plus times earnings. michael: red since the bull market started. shery: michael regan, bloomberg gadfly columnist. coming up in the next 20 minutes of "bloomberg markets," london properties are taking longer to sell this month as the brexit effect spreads to housing. how far will the impact spread? vonnie: wti crude continuing its climbed thanks to speculations they will revive discussions to stabilize the market. and the time in new york
shery: this is "bloomberg markets." i'm shery ahn. vonnie: i'm vonnie quinn. data will be scrutinized to gauge the impact of the brexit vote. it is the first part of data the referendum. earlier today, london bureau chief discussed what we can expect from the hard evidence. >> we have inflation data which will be interesting. we will start to see not in the headlines but in the subcomponent evidence of the impact of the weaker pound and food prices and some indexes like that. retail sales will be interesting because so far the survey data has shown resilience on the part of consumers since the
referendum which some people of put down to the good weather. we will see if that is sustained. and jobless claims. we expect an increase in jobless claims. mark b.: wages and the unemployment rate cover the months leading up to brexit. those of the key months we watch in months and years to come. emma: we have the july jobless claims. vonnie: most economists are saying we will see a pretty dramatic deterioration and pretty fast. does that mean if it doesn't come this week, we will start ?eeing it in coming weeks emma: that is fair to say, and the boe downgraded their forecast by the most on record, just 10 days ago. they'll start to come through in the hard data. vonnie: an economist has said it is a structural shift. how will we know what the structural shift is until britain starts renegotiated,
which we are now hearing might not be until 2019 by the time britain leaves? emma: that's right, there is oftainly a period uncertainty now and until the end of the year we are not want to have a clear idea of all on what the governments real priorities are. they continue to say the priorities rights bit. we still don't know on what terms they are going to speak. until we get a bit more clarity on that decision will be on hold. wisdom tos there some waiting to trigger article 50 of elections sets next year in france and germany? you could be going with different people, couldn't you? emma: that's true, but if you cannot win until everyone -- all your ducks are lined up, there are other countries to negotiate with. when we put it to teresa may's
spokesman today, whether there would be a delay because the government is not ready, he didn't exactly deny it. he did stick to the line that there would be no triggering before the end of 2016. what about 2017, what about general elections? he just said not until the end of 2016. again, while not denying that might be some delay, is that the full weight of the machinery of government -- governmentchinery of needs to be filled. this is an important point to the ministry for brexit, the new trade ministry, needs to fill the positions. going to take time. emma: fair to say that the treasuries and fully staffed yet. just anecdotally reporting out of westminster, it is trickier because -- for the civil reason that all the people are not
going to be carrying out. prices, london house the sellers are reducing the price. down to of this is seasonal factors and how much of it is brexit itself? emma: the interesting thing to , you couldt london argue, is more affected by brexit because the companies based here may or may not leave . is a brexity there component o. shery: emma ross thomas earlier on "bloomberg markets." silicom, how to reinvent artificial intelligence future. this is bloomberg. ♪
shery: this is "bloomberg markets." i am shery ahn. vonnie: i am vonnie quinn. time for the biggest is the stories in the news right now. chesapeake energy is seeking a $1 billion loan to refinance its debt load. the natural gas producer hired goldman sachs, citigroup, and mitsubishi usa financial to arrange the deal. they will buy back up to $500 million. shery: mid-america apartment forunities will buy copies $3.9 billion. the real estate investment trust will own 105,000 homes. demand for rental properties has been booming. it is the second busiest sector for a minute.
vonnie: he had a foreign-exchange trading in new york and bnp paribas is left of the bank according to people familiar with the matter. he previously worked at the royal bank of scotland. --pokesperson for the bank that is your bloomberg business flash update. shery: in an interview with "bloomberg business week," the ibm ceo laid out her plan to make bigblue and artificial intelligence powerhouse. ceos she worked her way up. she joined as an engineer in the detroit office and work on banking and insurance stuff in the early 1980's and work her way up and was promoted in 2012 to the big role. lisa: she has been at the company for 35 years, and all the company especially when compared with the facebook and the googles of the world.
how are they trying to compete, or are they? >> way older than google and facebook. what they are doing is trying to be more start of -- startupy. i spoke in the watson headquarters, an open and building in downtown manhattan. he does look like when you think of as the ibm headquarters -- it does not look like what you think of as the ibm headquarters. thingre modeling this ai and u.s. in seen the commercials where watson is talking to bob dylan and other celebrities. they are trying to be cool, i guess. lisa: i thought it was interesting, you asked ginni her political position in this election which is incredibly polarized. meg whitman, a republican candidate at one point, coming out for hillary clinton. do you think there's a chance she will change review and take a stand? max: i doubt it. she was definitive.
i asked her who she was going to vote for in 2016 and she says ibm works with all leaders. they are a global company and have to get along with everybody. i think if she were to endorse it would be a big thing come just as another prominent business leader getting into the fray. but i think it is very unlikely. she brought up result was saying that ibm had been there 400 years and worked with everybody and brazil is an especial mass. if they are not willing to weigh in there it is hard to see how she would weigh in on our election. lisa: i was struck by the feeling as i read your fantastic about how she views ibm as the grown-up company in a good way, not as a pejorative for a tech company. she says people from google and facebook come here because they want to have an impact on a serious thing. what other things?
that's what are those things? --what are those things? ibm is building these systems for companies like delta airlines and the point of view she is saying is you could work at google and work on the app or move jet planes around. that is an interesting page. the other thing is the cognitive computing platform. if it plays out the way they wanted to play out it could be way bigger than siri. review is that -- her view is that siri and the scheduling which processes we're using are not impressive compared to what they have got cooking, although what they have cooking is not in very many consumer products. vonnie: you can read the article in the latest "bloomberg and you can hear from the magazine reporters every saturday and sunday on bloomberg television. still had on "bloomberg markets ," we're watching oil trade
higher on prospects that opec meeting is going to be considering taking action to stabilize markets. we will get some perspective from stephen schork. upe a look at oil, trading 2.6%. it has been a topsy-turvy day for oil. the bloomberg commodity index has been doing a pretty well. 7% year-to-date on metals. little bit of weight to the dollar index. weaker retail sales on friday. this is bloomberg. ♪
.is speech on the bill >> commodity markers are closing in new york. julie hyman, soybeans one of the top gainers this year. and we are seeing more gains? >> there is new data out today showing exports rising the most ever for the week ended august 11. for that comparable time, we see soybeans rising once again up by 3% at the highest in one month's time. we take a look at the metals gold and silver. we look at how volatility has collapsed and interest is come down. but gold is on the rise as stocks are on the rise. it is happening. silver is gaining about .9%.
it's a different story with natural gas. gas did get a bit of a bump up on higher demand for it. if you look at the two week chart, that down's is really from a very low level. it is down 6.5%. oil prices is what has been grabbing most of the attention. oil in the u.s. rising 2.7%. barrel. we heard from saudi arabian officials and russian officials saying there is willingness to discuss a production freeze or some sort of action. officials in the past will make these sorts of pronouncements. there is optimism being reflected in the prices. rebound?a brief as with oil and everything
else, volume is quite low. -- our oilhigh prices headed higher? let's bring in our guest live from philadelphia. higher?es headed the trend in momentum is going in the bulls favor. i have been doing the report for 12 years. knowing the long-term fundamentals are great but if you are trading on a day-to-day or week to week basis, you have to follow the momentum. i told clients that we are bullish. certainly, i am not going to this point.end on
like i said, i'm bullish. but i don't believe in it. i don't have an upside target right now. i distinctly expect i will be bearish within the next couple of weeks. absolutely, i'm just writing it high right now. we have a lot of interesting parts. -- if you lookng at the data, wall street speculators are long and record short the market. now, it is vulnerable to a squeeze. it is the bears that are getting squeezed at this point. thisns do expire wednesday. open interest on the $45 put now accounts for 10% of the trading
volume in the month of september. there is a lot of give-and-take come this wednesday and next monday's exploration. there is a lot of momentum and technicals moving the market higher. >> the comments from saudi arabia and russia about a , opec andfreeze non-opec countries, it has nothing to do with a particular move? >> if anybody is seriously thinking that saudi arabia that three days ago announced their production was at an all-time russian production is at a post-soviet era high, if they think that these two are going to come together at the end of the season, mind you, the reason why i am so bearish is that demand for gasoline this summer has never been stronger. and we are going to finish with more gasoline than when we began.
by threerops off quarters of a million barrels a , if we can't exercise but glut when demand has never been stronger. saying? are we really we might get together and we might discuss this. it was a short squeeze. it is far hard for me to believe , given they don't want to fund iran's nuclear arsenal. >> we're at a time of the year with the recount usually beginning to increase. and we see a flat line. take a look at bloomberg as of last friday. rising only by two from an all-time low of 81. why is this happening when we have this in the u.s.?
>> part of it is we came into the summer with a record amount of gas already in the ground. ofalso had a record amount drill shots that were uncompleted. we're working to this backlog of inventory we already have and hence why the market is not getting to it i did. -- two excited. i don't remember seeing this kind of heat here in the east in a very long time. the injections, the rebuild for next winter a running at just barely 50% of normal. production is falling. we are being offset. surplus has been exercised out. >> temperatures could be cooler
group. we will have commodities tomorrow with the largest mining .ompany bhp billiton you don't want to miss that. let's get a check of the bloomberg headlines. mark crumpton has more. >> deliberately trying to damage a great neighborhood and a great city after another night of unrest on milwaukee's north side where they were injured in fights with demonstrators. they are upset about the fatal police shooting of a black man. the police chief says smith was shot after he turned toward an officer with a gun in his hand. thousands to flee their homes. the fire is spreading rapidly destroyed more than 175 90 miles north of san
francisco. it is one of 11 large wildfires burning in california, fueled by high temperatures and parched conditions brought on by a five-year drought. they are battling on three fronts. least fourilled at people and burned down dozens of homes and charge huge areas of forest. the washington monument has been reopened after being closed for more than a day because of problems with its elevator. the monument reopened as schedule today after closing early saturday night. of alosure was the result trip to break are caused by a voltage drop of incoming power.
powered by 2600 journalists and analysts in more than 120 countries. >> happening right now in ohio, republican presidential nominee donald trump is getting a foreign-policy speech. islamicabout defeating state and other terrorist groups. he says the obama clinton foreign-policy unleashed the islamic state and the administration downplayed islamic state threats. he says it is the direct result of policies by president obama. >> a timetable for withdrawal. it surrendered our gains in that country and led directly to the rise. ♪
and this is bloomberg markets. politics, now to presidential nominee donald has noteconomic plan mentioned entitlements. the economic advisor says there is a reason for it. erik schatzker has an exclusive interview. >> 67% of the budget. interest on the deficit is another 7%. defense is another 13% or 14%. everyone talking about what they , why does nobody talk about it?
the american public still wants more for less. it's not the american way. it's not the system that's failing, it's us that's failing. about thelk none ofnt of commerce, the 70 idea what they do. but the allocation of revenues across government are humongous. but someone has to take accountability of where is that budget. precisely why i asked, isn't this a call for donald trump to take leadership on entitlement reform? but there's not a word about entitlements. >> not yet. rulingu will see is the
out of these pieces. it is the economic issues at the top of the list. -- isement reform has got not a politically accepted act. be at if you're going to destructor, pardon me for interrupting you. are going to be a disruptor, should you embrace and champion these admittedly unpopular ideas? >> absolutely. i think you will see it. it is also part of demand theing -- dismantling bureaucracy in place. you will see it. it is a most 70% of the budget.
>> questions about the multiple positions, holding a top job advising clinton at the state department. she worked as an international consulting firm. it is raising questions of conflicts of interest amid another round of weeks linton e-mails. -- leaked clinton e-mails. there is no real evidence of any wrongdoing here. why is this an issue? see concerns about the overlapping interest of hillary clinton and the fact that she has connections to the clinton foundation founded by her husband and a slew of e-mails that came out indicating that the clinton foundation and people associated with it were communicating with her top aide while she was secretary of state. while there has not been , butnce of impropriety
there is the appearance of a --flict of conflict appearance of a conflict of interest. it is raising concern where former secretary clinton's priorities may have been. your story features the cofounder who aberdeen also works for. is there any kind of suggestion that there might have been some kind of influence, let's say, over any department or the administration given that special relationship? of governmentide were getting special access to the government because of ties between hillary clinton and abedin. in the e-mails, you'll see that have thissays that we
guy, can we talk to the point person on lebanon? and in some cases, he doesn't respond at all and in other y.ses, responds noncommittal we have not seen the smoking gun that shows impropriety happened. it looks like they ignored these messages entirely. another,s just blowing giving another hit to clinton's trustworthiness on top of her ongoing e-mail scandal. his trump failing to take advantage of the ongoing weaknesses given the controversial headlines he's making on his own? has been a continual concern that he makes his own headlines off-the-cuff and should just focus on hillary clinton and her perceived
failings. polls indicate trust and hillary clinton is extremely low. distrust overf leaked e-mails, that she used a it'ste server for e-mails, not that there was evidence of impropriety but the appearance of conflict. how could that not have resulted in conflicts. >> the overlapping jobs, this is bloomberg news. coverage,te election
competitors like microsoft push hard. it has been mostly consumer facing. they might need little bit more ammo here. >> how solid is the customer base? >> there is a question about whether he gets commoditized. it's about what you can add on next. >> having a look at how many companies have been hitting ipos
life from bloomberg world headquarters in new york for the next hour and covering stories out of seattle, washington, and japan. all three u.s. majors in green extends, therel are commodity producers. the campaign to revitalize the stagnant economy, the bank of japan is set to become the top owner of 55 firms in the nikkei by the end of this year. he doubled his buying target last month. itsamazon is known for massive spending on projects. our investors looking the wrong way?