tv Bloomberg Markets Bloomberg August 17, 2016 10:00am-11:01am EDT
coming, cisco, will cut as much as 20% of its workforce. meansl look at what it for the business ahead of the earnings report at the u.s. closing bell. >> the u.k. labor market shows signs of resilience. jobless claims unexpectedly fell 8600 in july. are the effects of the downturn just further out on the horizon? a new bloomberg politics poll showed hillary clinton gained ground on a day when donald trump shakes up his management in the latest sign of an uproar. first, we are about 30 minutes into the trading session. julie hyman has the latest. not been that long
but nonetheless, we are seeing some read on your screen here. all three major averages fall about one quarter to a third of 1% to a lot of investors waiting this afternoon when we get the minutes from the fed. also watching retail numbers that continue to roll out from the various individual companies. that is a slowdown from the prior quarter and it is lower than analysts had anticipated after one quarter of lows outpacing home depot, it has fallen back behind, more than normal pattern. there is the case of target, cutting its annual forecast. sales are down in the last quarter. had earlier been 540.
the company is also cutting its projections for sales, cutting like thet it looks strategy will not continue to bear as much fruit. urban outfitters are the outliers this morning. those companies beating estimates. strongeres are utilities, if you look over the past month, you can see a utility index within the s&p 500 down more than 6%. this group had been the out performer in the first part of the year and has now fallen back . it is now down for straight weeks, the longest in two years time. outside of stocks, we're taking dollar and we see a bounce in the dollar after three days of losses, up about .4%. the 10-year note bouncing around
a little bit this morning. we had seen a rise in yields initially and then you take a look to the 10-year note again going into the release of the fed meetings, there we have it. it had been higher and then took a leg lower, 1.56%. >> let's have a look at where equities are trading right now. you can see we are largely in 1.5%,d and spain, down one of the worst performers in the world along with the ftse. down against the dollar, the euro pretty much unchanged there . take a look at what is happening in the bond markets, the two down almost four basis points. if we take a look at the stoxx excuse me, this is june,
normalized. what i want to highlight here is the stoxx 600 is actually heading to its longest run without jane -- without gains in two months, four days without gains. in see what is happening here. investors questioning the recent rally that pushed the ftse 100 into overboard territory and of us investors in europe are also a -- digesting those as well. if we look at different industry leading the losses down almost .2% and finally, i wanted to show you sterling. we are seeing stronger euro and weaker sterling. see a little jump in sterling earlier after the jobless claims fell in july, better than expected data. managed to hold its games looking at the pound.
let's check in, alisa has more from the newsroom. says he will do whatever it takes to win. he named the former and -- former goldman sachs banker as campaign ceo and he has been running the conservative website breitbart news. the campaign chairman will keep his title, and he is seen as someone who can help trump rawdon his appeal. not been inclined to accept his at pfizer's recommendation. meanwhile, cap and with american to have money in the market. results, to new registered voters with investments in stocks and bonds narrowly picked trump over democrat hillary clinton, 40%. and clinton does better with investing.50,000 in june, trump led among all investors. and he is the kind where of what
has become a staple on tv, john mclachlan has died. he was a catholic priest and eight to president richard nixon . it began in 1982 and mclachlan did not miss a single show until last week and are john mclachlan was 89 years old. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. his bloomberg. vonnie: thanks. getting back to the markets, stock taking a breather after reaching a new high. hawkish fedfell as took some momentum out of the six big rally. the next guest says the recent buying of stock suggests the latest will soon be exhausted. we are joined now. ask who is buying equities
and even though we are seeing these records, you are suggesting it is not exact the retail, it is not even mutual funds. they are selling. thanks to her you have a disconnect were global equities are up 8% since mid-march but at the same time, mutual fund an etf redemptions are outflows at about 130 billion. it raises the question of who is buying and after doing some digging, you have a picture where phase one of the rally has been driven by short covering, futures buying, and rebalancing of a it is an that looks like it is largely done where we are now transitioning into phase two as to what is happening with the incremental buyer, retail and foreign owners. to put into perspective, net futures buying and short interest covering in the u.s. has then at $120 billion flow to equities and that is far offset the selling the scene from
retail -- mutual funds 50 billion. vonnie: i happened to chop -- call that up since you mention it. 279 six for those who want to follow along at home. can see that betting on higher stocks, returning more positive but they are still pretty high when they're coming to it. a soundbite from carl icahn who erik schatzker interviewed yesterday. listen to what he had to say and we will chat about it afterwards. >> zero interest and a lot of high back. think of it as a rich family , a lot of fun, we will sit around the pool, and we have got a good name. you keep doing it until you go broke. is happening in our economy.
huge bubbles. vonnie: what you think? he summarizes the current backdrop really well. did a goodhe u.s. job where you do not typically see 4% real consumption growth and -9.7% investment. i think that is driving the low interest rates. you have awkward tension or a tug-of-war for investors in your option is almost 0% in cash and moderate returns and risks in bonds and equities. choosing between the least that alternative. from the peace that we wrote on monday, the picture, the short interest getting back to the lows, leaves the market vulnerable on the wall of worry has come down so the mark it is phone herbal to these risks but as pointed out, along the way, given low growth and given
corporate stew not see the growth activities and return to cash shareholders, the buybacks and underlying bid for equities, and we did see some softening in the second quarter in terms of actual buybacks coming down and coming down in terms of announcements. >> what exactly will trigger that? could it the as early as september as some are suggesting? the narrative in the market as quickly shifting to one where folks are worried about growth and rising rates. growth coming in better than expected. that has read -- the narrative for the equities has to change by both or one of those changing. the backdrop greeley is the main
driver for equities and i think on the 26th, it could be pivotal for markets once again as number -- a number of investors are looking for equities and yield 10 the low rate environment we have seen it pick up in equities, which has meant weaker returns for equities in the past. vonnie: what about if we look at the rotation that has taken place in u.s. stocks? do you see that continuing and is it kind of dangerous for investors to look as a whole when during the market rally, we have seen certain sectors actually in the market? >> as pointed out, you have a dichotomy between the corporate world and the investment landscape, which is continuing to be weaker you see in the u.s. and the risk in china and post brexit and europe, we have been we have been adding a shift from
the investment cycle to growers such as tech and health care, which can benefit from the low rate environment. pointedthe utilities he out earlier on the show, that is down notably. think the opportunities are in those growers. vonnie: is there a better opportunity in treasuries? >> you have seen insatiable appetite for the investor for u.s. fixed income about 28 dollars per month. that is spread through the rest of the world like euro and japan, it leads u.s. fixed income as a more tractive alternative. i think investors are playing for that lower rate for longer with some lowdown pickup in the u.s. partial to u.s.
after the closing in new york. let's bring in cory johnson in san francisco, following cisco'story for years. tell us how it fits in with the wider shift in the company? cory: this would be, if it were to happen, a big deal. it is about 20% of the workforce. over the course of the last, going back to 2009, has laid off 27800 and 50 people and yet the size of the workforce has grown. they are hiring and acquiring companies. that is their way of doing things. the many cuts of jobs over the 40rs, 1000 cuts here and cuts there, has not affected the problem of a big layoff that might be expected to address. shiftings really about to software as the growth is slowing.
we have heavy earnings coming after the close. what are we expecting? cory: the company will always focused on the core business but add onto that the services that come to an end with those, software and security, a bigger and bigger focus. i've been covering the company for decades. increasingly, every quarter, software has become more and more important. more,works become networks are defined by software literally, going across networks and being divided in increasingly come in software, cisco is a big part of that but it intends to not have as many employees as hardware does. it is one of the joys of software and for that reason them where they happen and what sort of jobs are being eliminated might start making some sense.
>> when do we find that out? it is close to 20% of the workforce, not nothing by any stretch. not: bloomberg has confirmed these numbers. talking about this a little bit, it starts to lend some credence to it as people come up and say, stop, that is not true. we will see tonight what the actual plans are. we have seen a sales slowed down, and increasing pace. you look at the revenue numbers and we have got a chart, it shows you that while the company has been successful in growing sales, the last three quarters, you have seen decline in those are getting a little worse. vonnie: yes, i have been looking at the chart. it is definitely not the lowest it has ever been. stock, therms of the company has been failing in the stock has been succeeding.
that is more than double the s&p 500. despite the sales slowdown that the business is showing. cory.: thank you, this on what did you miss and do not forget here on bloomberg television tomorrow, that is at nine: 30 eastern or 2:30 p.m. london time and i want to point out an interesting function here. you go to the security, you will see the history of job cuts and obviously the charts are where they were announced. shiftsup, donald trump gears as hillary clinton takes key battleground
vonnie: you're watching bloomberg markets. donald trump's stock is dropping according to a new poll put out by bloomberg politics. u.s. voters narrowly picked 42% to 40% asnton a candidate who would be best for their portfolio. that number is down from june poll where donald trump led in an investor confidence. , let's go to the national political reporter for bloomberg news in washington. a surprise that the number is so 40%, or is this a
function of the fed that the candidate's policies are trying to almost mimic each other in some ways at least on certain things? >> there is mimicking but for the most part, trump has done well when you look at other issues, on economic issues, people see him, around many parts of the country, he is seen as a wealth the person and successful businessman. was a big strength for him in the primary and something he has played up effectively to a degree in the campaign. he has a lot of problems and he is seen negatively on a lot of other issues. shownic and jobs, he is doing well in beating clinton but this poll showing the number taking down. andie: it is a surprise more so that her number has increased so much.
>> she has run a steady campaign and tried to systematically close the gap she had. elizabeth warren is a divisive but antroversial figure lot of her ideas hold well. people like the idea of tuition free, -- college. if you consider all of that stuff, hillary clinton has tried to move her policies in the direction of where big swaths of the country is. donald trump has struggled in a variety of ways. battleground states, national polls, and on the issues, he is struggling. the fact that this is going down is part and parcel of the trajectory of the campaign. he is competitive as we have seen on economic issues. vonnie: talk to me a little ,bout what the polls show clinton for example, it will affect their invest in's?
in particular, i've seen investors are more likely to view clinton as better for their portfolio then trump. >> right. i think the poll showed people with smaller portfolios showed people they trump would be better for them. this is ultimately a matter of the demographic dividing line between clinton and trump. trump does well with white working-class voters with smaller savings. clinton is doing well with college-educated voters and well with working-class minorities, nonwhite voters. it is hard to pin this down. but to the extent that clinton or trump is seen as better, i think the trajectory has moved has been seenrump as a bigger risk. a negative risks, that is debatable but he is seen as more of a disruptor.
>> half who would make changes following a trump election say they would invest less in the market. thank you for bringing that down for us. still ahead, crude smacking a four-day gain ahead of the week data due out in a couple of minutes. we will have the breaking news for you. gold and silver ahead of the day's fed minutes. the world's second-largest silver producer. very excited about that conversation. this is bloomberg. ♪
>> you are watching bloomberg markets and we are watching oil today trading lower after hitting some of the lowest levels in five weeks. julie hyman is in the markets with a look at weekly crude. julie: we are waiting for the numbers. estimated gain of 410,000. instead, a drawdown of 2.5 million euros. again, the estimate was for a gain of 400 and 10,000 barrels of oil. instead come a drop of 2.5 million barrels. estimated 2.7than million barrels. distillate inventories rising 1.9 the -- million barrels. it was for a drop of 900 and five effect -- higher than estimated, 1.3%. that would be
inferior positive for oil and we are us in a bit of a kickoff in oil price is. you can see them starting to move up on the lows or you can look at my terminal and see oil is still off by .5% but coming off the lows. it tends to take a little bit of time for the market to digest and fully react. if you are a bloomberg user, you can monitor the analysis of this on the bloomberg. but again, it seems on balance to be a bullish report for oil as we see an unexpected drawdown. >> thank you. from oil to metal, gold and silver today ahead of the markets many minutes. maybe signaling that central banks raise rates at least once precious but the metals have had quite a run so far this year with go that 21%,
silver at 40%. so over is the second largest producer in the world, and they rise by 200%. president and ceo michael simon, thank you for joining us. a great run-up to the stocks this year thanks to the price of silver. are you being cautious? >> not really cautious. i think this is the start of the next bull run. after 2010,ugh 2011, when we hit a high of , and back around $20 right now, so i think there is much more in the tank here for silver. believe we reason to are now. vonnie: for the bull run?
applications,ial 35% investments, it really thisdes silver with behavior so that is what we see. quite a bit outrunning gold there. it is really investment demand. investing and i think there is enough in the markets to keep that going. >> just to show over the past five years, you were talking about the bear market coming in after 2010, which we can see. we see a little bit of a recovery, your argument about there being further force over to move higher, silver course is
an industrial metal as well as a precious metal. what is the concern about the global growth, really start to take hold? for that provides some downside for silver and are you hedging against that? >> no. that is very important for our investors. we moved with silver price. help, no onenot would like that, and we have no intention to hedge our precious metal production. on the other hand, that is one silver and gold actually picking up because investors are worried about that. that is the reason. the big takes you see, the peak and silver price up in the last one you saw, really up by investing demand and save haven
bank. >> we can see a chart, silver is outperforming gold and he you see that continuing in 2017? >> silver is outperforming gold and it is unfortunately underperforming gold on the way down. is why, if they invest in silver, they have a chance of investing a company like that and even bigger chance of being exposed to our great results like last quarter, additional cost-cutting, so the additional upside there is shares like pan american silver. you have seven operating mines in argentina. you see them affecting your operations anytime in the near future?
>> working in south america for a long time, the company's now have been formed in vancouver, our operations have always been in latin america. forave a lot of experience over 20 years in peru, a long time in argentina. there are times complications. >> michael, you're cost-cutting initiatives are partly what led to your earnings result, and congratulations for beating wall street on that. looking forward, talk to us about your expansion plans in any m&a that could be on the horizon. 40% compared to 2015. strides there and there is more to come because the expansion plans right now and no, we started expanding them last year to our strong balance nobody else in the mining
industry is building, which made it a lot cheaper for us and faster to actually expand the operation and to build more cost-cutting coming from that expansion when they take hold in thenext four orders, spanish gasquet expansion will be done in q2 of next year, and that will introduce new efficiencies and cost-cutting. you have a great thing for you, will you be able to hold onto it? >> a strong balance sheet, very totle debt, we're back now and million while building investing in the business, the company has been built through act visions. would normally by mine operators , so we will bring them into operation and they will need a substantial amount of cash to build them. always look at that activity.
we need to replant the pipeline. vonnie: thank you less let's check in with the news desk this morning. >> a leaked document could make relations or us between angela president.turkish according to the internal assessment, angela merkel's government views turkey as an essential platform for islamic groups throughout the middle east. it details ties between the party and groups such as hamas and the muslim brotherhood. an indication of a twisted mentality. the u.s. looking to improve ties with syria. joe biden went for talks. he says the u.s. in serbia have agreed on a new exposition treaty. also to improve his ties to the breakaway province of khost of all, one of the key conditions on a path to joining the european union.
he said los angeles, a wildfire -- received thousand people left 85,000 people, that drivers stranded for an hour. the daughter of former president vice cheney may be headed to capitol hill. her father once held that position. her nomination means a heavy favorite to win in november p republicans have a 3-1 edge of a democrat in wyoming. news 24 hours a day powered by more than twice its hundred journalists and analysts. this is bloomberg. >> thank you. now coming up, uber, london here the ridesharing service suing the city over a new requirement for its drivers.
vonnie: you are watching bloomberg. i am vonnie quinn. >> this is your global business report. uber is in another legal battle with the city of london over a language exam for its drivers. vonnie: forecasting a weaker second half thanks to a lack of demand in russia. just ahead. >> egypt's resolution may be short-lived. coakley be headed for a fall? forecasting slower earnings both in the second half of i-16 as
inflation as to costs in russia. today, bloomberg spoke with the ceo about its outlook in russia. market, weood -- big need to transport [indiscernible] costs. in the first half of the year, the market decline, 2%. we expect in the second half may be around -5%. vonnie: russia says about one third of the country's beer. iste in london, there another battle between uber and the city, suing over roles that require drivers from non-english-speaking come trees to pass a language exam and they also require uber to tell a regulator of any changes it takes to its mobile app.
applications for unemployment benefits in the u.k. unexpectedly fell in the first month after the brexit vote. jobless claims were down 8600 by 172,000ent rose in the second quarter and the british unemployment rate held at 4.9%. cathay pacific posted first-quarter profit plunged 82% , missing estimates. the largest international airline was -- by losses. plus, you'll fell because of competition from chinese airlines. bloomberg quick take where we provide context and background on issues of interest. in model for a revitalized middle east as young swept away half of a century of military dictatorship. here is the situation.
violence andlice the move to -- to saudi arabia. thousands of egyptians died in political violence. at least 20,000 supporters of the muslim brotherhood have been arrested and hundreds have been sentenced to death in trials. the brotherhood has been labeled terrorist and has been banned. enough attacks by militants including some allied with the islamic state, contribute in two tourist arrivals through october and april. foreign investment plague the economy. a -- who been kept by also see the brotherhood as a threat. they asked the monetary fund for a 12 or in dollar zone. here's the background. military leaders have shaped egypt's's history for more than 3000 years.
egypt is the arab world's most popular nation and half of 85 million people are under the age of 35. business interests -- interested in promoting their interest. --is have returned to egypt want to return egypt to the police stated was and squash the country's chance at democracy. suspending some of its military assistance with -- which averages 1.3 billion u.s. dollars annually in an effort to prod egypt. they stipulated that in the future, egypt could no longer by u.s. military equipment on credit. you can learn more about egypt and all of our quick takes on the terminal and that is your global business report. had to bloomberg.com for more stories. -- ie:
>> staying global, norway oil fund is looking into potentially trimming his $520 billion stock folio as it tries to buy more property and even move into infrastructure. returning to gains in the second quarter, put pressure on its ability to generate returns. it is showing a little bit the brexit, the world's's biggest sovereign wealth fund. massive real estate portfolio by 5% after britain voted to leave the eu. you can see a slowdown at the end. some of the property it is taking out of his portfolio the mostn some of prized areas of london'cities. it is an indication of whether the norwegian sovereign wealth fund manager will feel like
profit he -- property prices will be even softer up ahead. to plug a hole into crude prices, withdrawals from the , total 24 billion in the second quarter, up from 21 billion in the first quarter so things are deteriorating a little bit. >> they have also talked about the environment of record low interest rate, saying they are acquiring lower yield funds. still ahead, dominic chu and's us to talk about his iconic pastry as we await his london debut. what a nice thing to talk about here in the afternoon. this is bloomberg. ♪
fame when the creator reviewed 2013astry at his bakery in two long lines and customers willing to pay 20 times the retail price on the black market, would you believe. the chef prepares to open his first european location in london next to -- welcome and thank you. why london and why now? >> why not. amazing. there is so much going on and so much going and here it a lot of products. great always exciting to reach out to a different part of the world. europe also has doughnuts. what makes you think it will take off? many otherso pastries that are not as
exciting and it is something that i really focus on, to push to make sure we have a different bakery. >> if we talk about the balance between brand recognition and the desire to check your brand, how do you balance those things? do every day,t we seven customers by giving them good experience. and very conservative mindful of the business. doing amazing. eu and london and we are excited to be a part -- a part of it. what else comes next? where do you think there will be a big hike? >> always push myself to be creative.
it is always exciting not only , --me >> you have brought some things with you. we are a journalistic endeavor here. >> you will be as well in london. a nice crispy outside and flaky and tender and beautiful for breakfast. fresh inside and we drink the milk and if the cookie. >> stop right there. competesk you how you -- it is amazing in new york.
something to catch the imagination because you cannot overcharge, right? >> i do not think it is a gimmick. you have your own file. -- style. there are restaurants in new york city that are also different. everything is different. connect with customers. >> as much as i am salivating over what you are showing us there, there is a big move now because sugar has become the new evil in the diet world. does that pose any risk? >> you talk about sugar and candies, we are a small and pastries, not some
would -- vonnie: once lined outside of your restaurants? >> there are shots that are a size. side -- decent we have a lot of customers. it is important give them a good customer service and experience. we are very nice and line. we don't have any time left but do you have concerns about breakfast in london? >> not right now. i think eventually -- it will not ask -- affect a small business like ours. london, i doy in not think it will have any effect on us. very best of luck. i do not think he will need it, somehow. head over to bloomberg pursuits.
>> coming up, jobless claims in the u.k. unexpectedly fell it we will talk to the economist about the results and whether this is the calm before the storm for the u.k. economy. that's have a look at how stocks are trading. 30 minutes or so to the closed of the stoxx 600 down .8%. four days of no gains. the ftse 100 is down, down more than 1% or let's look at currencies and the bonds quickly if we can. we see a weaker sterling, the euro is unchanged. this is bloomberg. ♪
you're watching the european close on bloomberg markets. ♪ nejra: we will take you from washington to london. here's what we're watching. day 2 of hard u.k. data. the post brexit economy with jobless claims unexpectedly falling in july. we will talk to one and economist who says significant changes may be coming down the line. vonnie: employees and executives banktsche