tv Bloomberg Markets Bloomberg August 17, 2016 3:00pm-4:01pm EDT
julie has the latest. julie: it was like the split means rates are staying lower. earlier today, we saw futures -- for and -- pricing in the first times since the breadth of them. and then down -- back down below. we see stocks reacting somewhat positively. in the green barely for the obvious and the and barely read for the nasdaq. you look on the course of this session and you see the bouncing around that occurred in the wake about minutes. the s&p about one point and a half. the bond market, it is a similar reaction here.
as for the u.s. dollar well, it is holding from a three day slide. still considerably lower than where it was you will get those minutes came out -- where he was before and it came out. where it was before when it came out. we're watching retailer today. big reports have not been positive. lowe's is coming out showing the latest trailing the 01 again losing momentum. staples also coming out and missing and target as well cutting is or cast for the year saying it will struggle in the second half of the year. ont helmet is playing thoughts even as investors are still a out.
oliver: great stuff. what is going on with the market, let's check the headlines on bloomberg hussey first word news now. mark is in the newsroom with more. clinton --ry earlier, clinton said trump to hire or fire anyone he wants but he is still the name man. mrs. clinton: there is no new donald trump. this is it. hope you willi talk to any of your friends flirting with the idea of voting for donald trump. friends don't let friends vote for trump. [applause] mark: meanwhile, trump tells the wall street journal he will run the last three months of the campaign his way and he will do whatever it takes to win. receiving anma is
update to the flooding in louisiana as relief efforts in this date continue. the white house says the president spoke with a fema administrator today and more than 70,000 people registered for assistance under a federal disaster declaration with at least 9000 filing flood insurance claims. the head of ireland's national olympic body, also a high-ranking member of the international committee has been arrested in rio de janeiro. accused of scalping tickets to the 2016 games. a 71-year-old was arrested after a wider probe into illegal ticket sales, which have resulted in the seizure of more than 1000 tickets. defense secretary chuck hagel will become an ivy league or this fall, going to harvard where he will be one of two visiting fellows at the school's institute of politics. ,e will meet with students faculty, and staff as part of the efforts to encourage interest in public life and increase interaction between the
academic and political communities. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 100 and 20 countries. this is bloomberg. back to you. vonnie: thanks. let's get back to the fed minutes. erik schatzker has been covering this story in washington. you know i battle is the way it has been described to her that sounds dramatic for fed minutes but there was indeed a disagreement on the arrow reserve. k: i am tempted to describe the minutes as hot as the weather here in washington but that would be an overstatement. it is warm here and the minutes do not give us enough of a clue as to what the fed will do in september. as you point out, they do reveal a whole lot about what is going on inside the fed, and it is truly fascinating. there is a growing contingent and in -- increasingly
frustrated contingent of officials. i use the word officials instead of policymakers deliberately inside the fed who clearly felt in july and presumably feel now that the fed needs to do something soon about interest rates. tighten monetary policy, raise interest rates, 25 basis point, prism, there may be some inside the fed that need to go even further than that. why do they feel that way? principally for four regions. the labor market -- reasons. the labor market is already at full employment. tighterjustified a policy, inflation could set the rate and the fed would have to fast, let's and too say, and finally, leaving rates where they are at a quarter point, we know what that does, encourage people to take risks.
in 2008 and 2009, the economy as well. so far, the people are a minority inside the fed and certainly on the federal open market committee which has 10 members and it sounds a bit like criminology but in my read, these minutes suggest there are members, four of those 10 members, who feel a rate increase would be justified soon if not already. oliver: i will jump over and take it. we cannot have a conversation without minutes without having -- i'm glad you are pointing out the tension that has risen in the ranks here because we saw bill dudley saying we need to get closer to raising rates and then jim saying pretty much really need one of the next year or so. we have seen the takeaway as being a little more dovish. what do you think, that makes market participants the -- bet that ultimately they will not go that way this year.
>> we knew at the very least that it was 9-1 because only -- just send it at the last meeting. if there were other members who felt a rate increase might be wanted soon, they did not vote for in july but make deal that given the jobs report we saw on august the fifth was 255,000 jobs created for the month of july, that there is enough evidence to warrant a rate hike in number but will there be enough to get a majority of those 10 members to vote in favor of a rate increase? it is not clear because the , and i hate to go doves versus hawks but it is convenient, the doves said back in july that there was not enough evidence that the jobs market was strong enough and there was not enough economic data to justify it and they are concerned about external risks, negotiations and what is going on with china and the currency policy in the build up with debt and also european banks and the principle of the european banking system.
stuff covering the fed. let's look at in particular the equity market. stocks are fluctuating today and are now a little more positive and so unchanged. -- still unchanged. let's look at joe. we know this has been a bounce around, negative market today and now slightly positive he flat. what is the takeaway? joe: fact that we raised earlier losses is an indication that he will are looking mostly at the division within the fed. has been minority that pretty vocal about wanting to move, possibly at this time or maybe the next meeting. so peopleo consensus are taking that at a slightly hawkish tone and ultimately, you look at other asset classes, the dollar, and you look at bonds and you are seeing that people are viewing this as pretty dovish. we are basically flat on the day
so it is kind of in the middle now. vonnie: fed policy and its affect on rfid -- corporate profitability. are there some that are obviously more effective and would be looking at today or the companies exposed to international revenue, companies that would do more than 75% or so of the revenue overseas and you look at a company like qualcomm, the company has been up 25% this year and has tracked the dollar passes weakening and what happens when these countries repatriated the revenue? they get a break on that when the dollar is weaker. you look at all, and it is up qualcommyou look at and it is up today. nvidia,t income is like you also have skyworks solutions, all companies that have benefited from a weaker dollar, a direct extension of more easing monetary.
>> that is interesting. the fed moves and higher rates have not so much manifest themselves in rate but maybe the dollar to some extent and what you seem to be saying is it has been one of the strongest. >> yes, maybe the hidden hero of the rally we have seen since you reached that low on june 27. you can slice it a lot of different ways but ultimately the extra money coming in, though we got a mixed signal today, the continued dovishness more raise rates until after the election that will it helping those companies. vonnie: the vix dipped back below 13, so we are above 13 and now the dividing line, 12, and now we are lower by not even 12 and a half. looks like the market is pretty calm. >> yes, when you see a big event like this, people will try to get ahead of a potential move,
position a little bit for volatility, just as a worse case scenario, something we saw before brexit and it saves a lot of people tied. saw it is not that surprising after the relatively monday minutes that it would go back to the levels it has in in the last couple of months. vonnie: thank you, joe. to showp, steve lynn is off the most expensive casino of his career to date. the $4.2 billion palace opening its doors next week. a steep tumble of the revenue. this is bloomberg. ♪
>> timeout for a look at the biggest business stories in the news right now. russia, no decision yet on when the proposed $5 billion deal will happen. russia's biggest deal in a decade, planning to steal more than 60% as early as next month to help plug the budget deficit after helping to tip the economy after its longest recession in two decades. vonnie: bitter takeover negotiations continue to go down to the wire. permitting buyers selective access to confidential information. it says it has not yet signed a confidentiality fact.
>> top executives at deutsche bank may have to go without for a second year in a row after germany's largest bank put dividend payments on hold. the consumer banking chief said the consumer advisory board should consider scrapping bonuses if the bank would not pay shareholders. they posted their first annual loss since 2008 last year. that is your bloomberg business update. vonnie: a big year for wynn , shares of 46% as -- as investigators anticipate a recovery in the industry. steve wynn will open his latest palace -- thend wynn palace.
>> a chunk because the demand went away and customers went away. it is not the impression i have. i think the policies of central government in beijing had the effect of reducing consumer high-end and it fell into that category. more aggressive have beeneem to constrained by the atmosphere in central government and that has certainly impacted the amount of activity that these operators are up to the table. then they shrunk and disappeared. vonnie: joining us now with more is betty liu, following this
story. this is a huge gamble. betty: i think his comments are interesting, and to say the least. he has been doing as much as he could to not criticize government policies that were taking aim at those facilitating into the portuguese enclave. indeed as we have seen, revenue in macau is at a five-year low and revenues down consecutively for i believe 26 months all because of beijing policy crackdown on corruption. it is not the sort of, oh, there is a slowdown in consumer spending. it was actually targeted toward is not turning
into the gambling den that it has for the last several years. >> i think that is a first thing that pops into my mind. biggestes, it is the cash driver. >> yes. but this is a different kind of resort in some sense. betty: it is very much more high-end. he is not going toward the mass-market gambler. this is a place where the rooms on average are $300 or above. $50 -- get a 400 and $450 facial with gold dust. that would be good for you. mass-marketr the like some of the competitors, so i want to play for you part of what steve wynn was saying about that strategy. steve: diversification means it is not just the place for a player, but a place for people who want to stay in beautiful and lovely hotels and be well of thein the sense
hospitality industry. roomsnd more money on the .n the food and the restaurants that is a diversification. it does not mean adding a roller coaster or a ferris wheel. betty: he is kind of calling plus -- bluffs on the people. >> hoping hit -- a highroller will come back because margins are not going to places like vegas anymore. they keep leading someplace new to go and he is also doing a big rock check in vegas. betty: despite the declines, remember that the revenue is in vegas. times more it is still a big cash cow to be had. it's just that it is slowing down and there are questions of how exactly they will make money.
adelson,e on sheldon oh ending up in other resorts in a months time and gm as well. you have got local players and they have opened or are planning to open more and that raises the question, there will be so much more supply, where is the demand? that will be a ". -- a big gamble. >> very interesting. i love talking about this. liu.s, betty options insight is up next. this is bloomberg. ♪
that came out almost an hour and a half ago. was a split within the federal reserve, the markets are reading it as a pretty positive, that rates will remain low. >> that is right here the knee-jerk was hawkish, equity lower, dollar stronger, but really at the end of the day, it is a dovish response to the fed. pull that to volatility terms, it is very similar. you have the fed coming up next week and otherwise you have low and stable usa the volatility which bodes well in the next few weeks. still warning about the seasonal peak and volatility in mid-october. julie: one of the groups where we have seen more volatility has and retailers. we have been hearing from them in the earnings season though
surprisingly, retails actually outperformed the s&p 500. are you broadly looking at retail or really zeroing in on individuals talks to play on here? jim: you have to zero in. urban outfitters had earnings of 14% or so. down six plus percent. looking at the group broadly a think is tough. it ranks third among industry groups since a february lows but you have to dig below the surface. you have amazon and other names in here that are not miss surly some of the retailers we are talking about. you really need to be of the single stock level. julie: specifically the one you're looking at, closes tomorrow, what is the trade here? jim: it is a name we like. over the longer term. but they had issues in the first quarter and we think that carries into the second quarter. expected to be up about 12 -- 1%
or 2%. we see limited upside. , we wanthe other stock to manage downside risk. it looks like a solid quarter, but stocks still could be in and that is what we want to manage. sell -- a 65 call, someone who is already along the stock, you do that for flat and you are protected after the close tomorrow. julie: thank you very much. back to you guys. >> thanks, julie. coming up, a wave of redemption coming up. and job cuts. we will give you all the details you need to know. this is bloomberg. ♪
let's begin with a check of the headlines on the first word news spirit we had to the newsroom where mark crumpton has more. mark: more presidential polls are out today, all good news for hillary clinton. the latest swing state survey shows clinton with a double-digit lead over republican rival donald trump in colorado and virginia. secretary clinton leads 49% to 39% in colorado and 50%-30% in virginia. same survey puts clay not a three-point advantage in iowa, or he 7% and 44%. new details about donald trump's campaign chairman and undisclosed foreign lobbying ties. $12.7 million in secret payments from the pro-russian party of ukraine's former president. -- it is not confirmed that he has received
the money but he has to tonight working for ukraine's government. players faces donsion this week if they not talk to the nfl concerning allegations about banned performance-enhancing substances. commissioner roger goodell's office says they are obligated to cooperate with the investigation. arose in aions report last year by al jazeera. notunion says they are required to submit to interviews. the father of an olympic swimmer says his son return to the u.s. yesterday, hours before a brazilian judge ordered his passport seized. the order also applies to a fellow swimmer. an investigation into an alleged on robbery between the two athletes is underway and a judge says there are contradictions in their respective versions of the u.s. -- versions. by more thanowered 2600 journalists and analysts in
more than 100 and 20 countries. this is bloomberg. back to you. matt: thank you, mark. let's go to that factor abigail doolittle has the latest on equities. abigail: it looks like it will be a down to the wire day as to whether or not the nasdaq will put in its first today just -- perhapssince june 27 or the nasdaq could follow the s&p 500 to trade slightly higher. we will know soon. as for a bright but for the nats that, we're looking at herbert -- urban outfitters. shares on pace to be the best in five years. very strong second-quarter beat both earnings and sales estimates, earnings by 20%. there are two downgrades, or two upgrades, at least two. roxanne meyer saying looks like
urban outfitters turned a corner, that there are several reasons to be optimistic including a -- including a big improvement but myers remains on the sidelines with a neutral rating saying she is somewhat disappointed by recruitment at stores. really interesting is the fact that we take a look, about $36, the stock is above that level, suggesting maybe this stock will cool off, perhaps not appropriate for new money per -- considering shares are now up with a 55% this year without much upside potential seen, at this point even on the back of that strong quarter. matt: the nasdaq down for most of the day, traveling around what, we're looking at a loss of 51 hundredths of 1% right now. what is holding you back? >> i love the number, the precision and the detail there. ciscoing has been systems.
the port first quarter today after the close come looking for adjusted earnings of 60 -- 6% on $12.6 billion in revenue. the number represents a small year-over-year decline, the third in a row here it was dragging this stock down today cisco couldsaying reduce its workforce by his many as 14,000 workers, or 20% of the workforce. we have read a lot of notes and spoke with analysts to figure out what this all means. a lot of mixed news out there, and one point of agreement is the size of the potential reduction of workforce is large. some analysts seemed to think this makes sense around the company's transition toward software away from hardware that -- weill need a different spoke earlier today with erik, a market performing rating or basically neutral he thinks it could be a sign that the transition toward software is a
little bit rough, that the current quarter they will be reporting could come in and he thinks it is likely they will reduce the outlook, something that is like to put pressure on the shares of cisco, a stock he says he is pretty surprised to see up this year, more than 10% in fact. >> minutes for the fomc's july meeting came out and showed members were split last month on whether to raise rates soon. members generally agreed that before taking another step in removing monetary accommodation, mores prudent to accrue data. they also prefer to wait for more evidence that inflation .ould rise to 2% joining us now is matt down in d.c. thank you for joining us. what would you say is the number-one thing we learned from the minutes?
>> i thought the most interesting thing was there is obviously a lot of disagreement at the fed right now over whether to raise rates are not. it seems a lot of people are in agreement that there is little risk inflation will run away from them. there was a split over whether to raise rates because the hawks wanted to raise rates to reflect gravity the most of them seem to agree that a strengthening labor market will not put a lot of upward pressure on inflation and it gives more credence to the idea that we are also seeing pop-up that maybe we should wait a longer until we actually see inflation rising on a sustained basis and that reduces the urgency to feel like this passo hike at meeting or the next for example. >> yes, the market's interpretation, we see equity markets turnaround after the minutes move higher and yields move lower. it generally looks like that is
the market not seeing much impetus to move. >> that is a good point and we lot hasthe minutes, a changed. the retail sales number came in weaker than anticipated. brexit seems less of a dire concern that it was three weeks ago here what has not changed? >> one thing that was interesting was the assessment of the labor market. we got the bad jobs report going into the june meeting and then we got another good jobs report going into the july meeting that we just got minutes from. job with a big rebound in gains that we saw, a big split as to whether the slowdown in jobs games is just because we're getting close to full employment or if it is broader economic slowdown. fact that you have lingering uncertainty, even though we had a strong rebound in the data, it kind of speaks to the idea that while in the near-term uncertainties we had in june were resolved in july, it is
almost like bigger or longer-term questions have been introduced to that they now need to grapple with and it is the same thing on the brexit vote. said near-term risk to economic outlook has been diminished and that is in part because there was not a big financial market reaction but in the minutes, it's that however, there is a lot of new medium and longer-term uncertainties that brexit has injured his and we do not know how that will play out and it could take a long time. matt: it seems like the market is taking it as a sign that an interest-rate increase will be further off because at these rows and the dollar fell here and on the other hand, financials are still big gainers among at it is and when they fare better if rates were increased? >> yes, that is an interesting question. historically, rising rate environment and good for banks that there are a lot of different things about this
cycle and the way the last several years and there was a big discussion on alternative monetary policy and the way the interacts with markets to conduct monetary policy. stead -- new york fed staff to the monitor policy in the meeting, the upcoming symposium that janet yellen will be speaking at next week, these are all very front and center and stop -- top of mind for fed officials now. we will hear more interesting things on that next week. >> an interesting thing inpening now is the rise libor, people associating that with regulations coming up. how do they see what is going on there? >> the fomc does not sound concerned about that right now.
a lot of the parts where they talked about financial conditions, they pointed that those have actually altogether eased instead of tightened. we have stocks at all-time highs in the dollar has come down and that was a part of the minutes that was interesting as well. concerns about stocks being so high and several noted there might be financial stability risks they worried about, so it is a kind of counterbalancing point to weigh against the lack of concern about inflation but it is not clear how much that has risen in the debate at this point. been a lot of fed officials speaking lately in addition to what has been released today. which of those seems the most rush and given what we have learned in the fed minutes? whatll was interesting was phil dudley had to say yesterday. possible.rate hike is
of tightening that the fed will have to do over the next year or so, those were his words, over the next year or so. todoes not necessarily speak an idea that investors are underestimating the likelihood of a rate hike in september or even this year. it could be maybe there is not a lot of urgency to hike in this term. looking at his comments in that light is interesting. we will talk to him again tomorrow. >> thank you for bringing us this update. coming up, how one strategy made a big impact in a bad way on the hedge fund industry. this is bloomberg. ♪
scarlet: it is time for a look at some of the biggest business stories and news right now. premium content ranging from game of thrones has helped the company defined investor expectations and the slowing economy. profit beat estimates as users served an online ad revenue swelled 15%. topped estimates for profit and sales in the last five of six quarters. new nikkei says jim a will take over operations and then eliminate the unit. expected to take place sometime next month though terms have not yet been specified. it is said it is to attract customers.
shares gaming -- gaining the , aircraft leasing visit -- billion,exceeded $4 --ch cited and identified reporting on their jerseys it after the upcoming season. advertisements according to the familiar.am launching the initiative with a pilot program in the 2017 and 2018 season. generateorships could $150 million in total revenue per year. that is your update. matt: a wave of redemptions rushing -- rocking had funds. we reported paul jones was said
to be the -- 15% of his workforce. according to one source, redemption notices for 400 play million dollars this quarter after being hit with $1.7 billion of withdrawals in the first half. not alone. here with insight on with -- which strategy led to the most asset withdrawals industrywide is mike regan. we talking about hedge funds, so which has been the hardest for investors to stomach? >> it focuses on macro, making a bet on the whole country, whether it is on, currencies, and stocks. most of the redemptions have been centered around the longshore at it is strategy, kind of what we -- what we think thinkditionally when you of a hedge fund. matt: that is essentially a hedge fund. >> it is but obviously all
strategies can be long and short at times. are talking only about one third of all the assets. there is about $2.3 trillion invested in hedge funds. about one third of that is in long short. say you have $1 billion, you will be 100 and 20% long and maybe your 20% sure and that is your strategy through thick or thin. you can see what a bloodbath of this has been for the longer equity areas. is this a symptom of the bull market? the essentially market neutral , overall, your hedging, is this a symptom of people essentially not wanting to hedge , underperforming around this rally? ,> a longshore to an extreme split between short and long.
most are mostly long but there -- but you are absolutely right, we have had a seven-year market everything you read that explains how difficult, it is the usual suspects, the fed keeping interest rates low and keeping the bull market intact -- in fact, equity funds are another. funds do over the last he does bear markets, they do notice they outperform and , --better >> it is clear what is going on there. >> yes. that is a ratio of longshore index in the s&p 500 and you can are going up,ines way up to 2009 when the market ended, since then, it has really underperformed drastically. argument going into
passive investments. >> it is. a longshore manager would have been argument against that -- would have an argument against that. there is a lot of nervousness about how long the bull market will last. if you go back to at least the last couple of bull markets, they really outperform in a bear market. whether it be pension funds or insurance companies, they have all been looking at returns and saying, why are we bothering? that is really what is hitting this. $6.6 billion in july alone, $18 billion in the last three months, about 93% in hedge funds. >> if that is not what hedge funds do anymore? >> there are all different ways to hedge.
i like the stock for its fundamentals. i'm worried about the stock, they're worried about the accounting or something like that. you find about a stocks go along numbers.king up the you want to be more long than short. it has not been really cooperating in the last few years. matt: thank you for joining us there. gadfly on therg web. scarlet: coming up, the steepest rally since 2009 in emerging markets which has worked is now under threat. hr you cannot miss next. this is bloomberg. ♪
markets. time to look at trends in the market through charts and i want to look at cisco because there has in a report here as the company gets ready to report earnings that cisco will cut as many as 14,000 employees, about 20% of its workforce. companyput in the ticker ahead of it. in this case, it is cs, co equities. we have a tabulation of the different job cuts that the company has announced since the start of 2008. you can see there have been 27000 and 800 and 50 jobs cut. that is 37% pay cut. cisco actually has not given a job cut announcement or made one since 2015. february. you can see her at the bottom a chart. i know it is hard to see her and maybe i will pull it up, which i know matt likes so much, we will highlight when they made these
announcements and what actually happened to this stock at the words. there have been quite a few over the years and there we go to a 15, nothing has happened. matt: 2008. we are saying that might the another one. you could argue the child cuts led to an ever-increasing stock. it would be interesting to look while you are on just to see to their salesed and earnings at the same time. i like that function. your terminal sessions are off a little bit. cohen ahead and take a look at my bloomberg and what you will see is basic earnings or share in green and revenue and white.
can take it back to look since 2008. that has been a climb there for shares as well. all right. do you want to see what i have? so many people have been interested in this, emerging itkets chart that i think was probably put in this morning and maybe alice or julie put it , you can if you look find all of these things that we look at. chart forthe price the emerging markets index and every time he gets to 70, technical analysts will call that overbought. every time a gets overbought, you see the price comes down here the question is will that happen again now as we are >>rbought and then some?
definitely something to watch and something else to watch, we get the latest property price it out of china tonight and i always loved this chart that bloomberg intelligence created, the map showing the number of cities in rising and declining trends here the more green there is, the more cities with rising month over month races, the more red, the more decline. a little bit of a fade lately. once again maybe some of the momentum is coming out of the chinese practice -- property or is measured by prices. we will get data tomorrow and update this chart. scarlet: take a look at the major averages, the dow was little changed. the nasdaq is little changed as well. ♪
♪ closing mixed, treasuries are rallying after fed minutes. joe: "what'd you miss?" scarlet: u.s. stocks near highs. with one technical strategists who says a 4% to 5% pullback is likely. fed staffer breaks down the language of the fomc statement. cuts up to 14,000 jobs, earnings out in minutes. scarlet: we begin with market minutes. u.s. stocks finished higher. they were bouncing around after the release of the fed minutes. we have overcome earlier