tv Bloomberg Markets Bloomberg August 18, 2016 3:00pm-4:01pm EDT
vonnie: we are live from bloomberg world headquarters in new york for the next hour and covering stories that of san francisco and brazil. global -- the dollar at an eight week low against the euro in keeping u.s. stocks near record. its cuttingannounce 7% of its workforce. advanced micro devices are calling its new chip a breakthrough. we will hear from the ceos of both companies. vonnie: walmart stock rising after a faster than expected sales growth. we will dig into the secret to their success this quarter. there one hour away from close of trading in the u.s. let's head to julie hyman.
julie: quite a comeback for oil and in a short time. we were just talking at the beginning of the month about how oil entered a bear market. not even three weeks later, it's already back. oil rising again today above $38 a barrel. has been helping speculation about some kind of action on production to stabilize crisis. a simple chart but i think it's amazing the magnitude of the moves oil has had. through earlier in the summer. a 23% drop through august 2. a multiple bear and bull cycle compressed into the past year for oil.
we are not seeing much of a roller coaster in terms of magnitude. today from thee high to the low in the s&p 500 is the second narrowest we have seen all year. .e are looking at the range this just looks at the daily and low.ween the high the dotted line is the six-month average and the range has been getting smaller and smaller. less than a 1% move by the close in the s&p 500. and it's been a relatively quiet day for stocks in general. >> if you look at the individual
movers, more action underneath. we are seeing a little bit of onion here for the chevron the rise. and we have earnings related movers as well. and the jobd cisco cut although that is much less than the 20% reported on yesterday. walmart raising its forecast. lisa: thank you so much. for the rest of the day's news, let's get a check of the headlines. officialsenforcement telling the associated press that two security guards pointed guns at american swimmer ryan lochte and three others during a dispute at a gas station.
you are looking at a live press conference right now from rio de janeiro full's that that change in the version of events came after police interviewed a security guard today. it deepened the mystery of what truly happened and that often international dispute. we will continue to follow the story and bring you more developments. month, president obama becomes the first commander in chief to visit laos. he will make what is expected to be his last official trip to asia beginning september 2. he will participate in the g-20 summit in china. he will attend a pair of regional conferences and discuss beijing's territorial claims in the south china sea for that the justice department plans to end its use of private prisons. the facilities are neither as a safe or effective at providing correctional services and those operated by the government and they don't save substantially on
cost. the attorney general said they will decline to read new contracts or reduced their scope . contracts will be a forward will over the next five years. in brazil, the suspended president owning up to two mistakes she said she made during her presidency. she said she made a political error choosing the current acting president as her vice president and set another .istake was imposing tax cuts she also tells reporters and investigation into her obstruction of justice is based on a legal evidence. inbal news 24 hours a day more than 120 countries. lisa: one benchmark rate is already rising quite a bit.
the fed is taking note. what does this mean for markets going forward? with us to break it down as brian edmond, head of interest trading at fitzgerald. people are wondering when will the fed to raise rates but here is this key benchmark raising quite a bit. >> the rate is more closely tied itmoney market reform and as has been implemented, it has forced assets out of credit short-term interest. that flow has meant if you are not a top government credit, you have had to go in the marketplace and pay more on your rate to attract investors. around 18 basis points. tied to a still. quite it will affect mortgages
to offs, any benchmark that. also for individual credit borrowers, and added cost to borrowing. >> an unintended consequence from the change in money market funds. say it is benign. even still if it is persisting, it will raise borrowing cost and have a tightening effect. >> we push interest rates so low that a modest rise in rates will not jump things all. i don't see it as being any kind of problem for the markets.
>> the yield will go to 90 basis point by the end of the year. >> we think the rates will be range bound that we can see 1.25.going down to we do have tremendous amounts of supply that still come. we are finding our deficits so we continue finding ourselves a healthy, robust market and a fed the says they want to raise rates at least once this year. lisa: i was something by something allen said on morning. radio this he said interest rate has to start moving up.
ton they do move, they need price us with a degree of rapidity in which they may occur. do you think this is really stick? >> when interest rates start to move, they will move quickly. we have been in a bear market its the 1980's. watching rates now plummet to all-time lows we thought we would never see. it will go quickly and a lot faster than people expect. lisa: thank you. coming up, the cisco ceo talks earnings. their transition to software.
lisa: this is bloomberg markets. we are turning to cisco because they reported the latest earnings after the bell last night and shares are lower after the company says it plans to cut 5500 jobs. talked aboutbins the earnings and the company's new focus on software earlier normalize theu box business we sold about six or seven months ago, our revenues were up 2% in we had record earnings per share of 9% so overall, i was very pleased with the quarter. a lot of areas served very well for us.
as we look at the transition we are going through as a company, the first thing we have to remember a 75% of the engineering resources here have been software. the way we present it to them in a way that they would like to procure it more as a prescription in the data pointed out again for the fourth quarter revenue, are deferred balance from software and subscription services were up 33% so we are making that transition. >> at what point will the growth from the new substitute for diminishing growth from the old? if you look at what we have done in our security portfolio up 16% and the different revenue
grew 29%, almost half that business is coming from software and prescription. different revenue grew 13%. a high percent of that now is being sold to software .ubscription we are making that transition. when you are working on that, how do we take that same methodology and apply it into our core technologies, we take david get claire who architected this transition with his team to take on both security and the networking. our teams are working very hard on it. , security satisfied is up 16%. an advanced threat was up 80%.
you made a big acquisition there. are you looking for other acquisitions that would speed up this transition? we will understand them will make this transition. we need to understand what are the implications on their business and what does that mean relative to innovation and acquisition needed. it was a combination of really strong acquisitions and incredible innovation. gottention on that has us to where we are today. as both lovers in addition to strategic partnerships.
let's turn to wall street and the shakeup at jefferies. the bloomberg thinking and wall street's of -- reporter laura keller has been following the story. >> the 99% was the first quarter and in the second, they dial that that end are down 2% full's that they have been cutting and one of the things they're doing is try to pull back the confrontation line on some of these higher paid mds so we know and hetleman who was cut was head of their cash equities trading business. there are also some changes in the converter will as well. is it because these people have started to get paid too much?
>> it's a bit of both. business has been declining across wall street. banks do have a lot of highly paid individuals. that chart you showed is amazing. 27% decline in year over year. >> historically, jefferies has and of a fixed income shot but as they have become more reliant , on equities, they're trying to have more and more happen and the last couple months have been pretty bad in terms of volume.
you saw the june number there before brexit. some of the revenue seemed to be pretty good. i do think jefferies is indicative of what might be happening across the street. least thate signs at is working? >> before when they had the 99 handler, oneries he was talking about what happened the previous quarter, he signaled that things would be pretty good at a nice pickup and this quarter, we haven't seen as much commentary. i think they said there has been positive momentum so maybe we will see a bit of a pickup. how important is equity to jefferies?
>> it has become more and more for last quarter, they start out a little more. it has been shifting over time. six income has come down every years ends 2012. more and more reliant on equities. vonnie: what about the recent stock rally? >> it's great for the value but we need to think about volume. we kind of have to see. thanks to laura keller. let's go to the bloomberg business flash. apple has hit a major snag and connecting its watch to cellular networks. this is according to people with knowledge of the matter.
the company still plans to announce new watch models. showtime has joined the list of stations planning to meet communications in court. the premium cable and satellite company using its recent acquisition of time warner cable to/licensing fees. harley davidson was accused of violating air pollution laws by selling the engine turners and will contribute another $3 million to mitigate air pollution onto the deal. and that is your bloomberg's
vonnie: this is a bloomberg markets. it's time now for options insight with julie hyman. you.: thank joining me for today's options insight is scott bauer. he's joining me in chicago. obviously there's not a lot of activity in stocks today but there's a watt of activity in oil where we continue to see a rally there. is there anything going on with oil that might tell us about how sentiment is question -- is?
>> if you look at the u.s. oil fund and a lot of upside called by carrie and we are at about 11 40 or so in there. at least in that regard, the market has taken that as this rally is not over yet. push our oil prices over $50. that is what that is suggesting. >> the momentum is certainly on the side of the bowls. where we seece action is an individual stocks. , you're looking at dear set to report its earnings tomorrow. this has been a very immediate
trade. describe to us what you're thinking is. >> the stock has been a laggard. it's only up a couple percent for the year and it's been really poor over the last 12 months. guidance has already been lowered the over the last few weeks, we have seen analysts come in and sabine opportunities are there. what the options market is projecting is about 4%. that would put the stock right up here. i like this upside call spread here. i will pay somewhere between he and $.55 for it. if we get the projected move, this thing will max out at $200.
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check of the headlines. mark: hillary clinton and donald trump in a statistical dead heat in nevada. back by 44% of likely voters compared to trumps 42%. -- poll also note 73% think of voters think america is great. chicago's police superintendent plans to recommend firing seven officers linked to the death of laquan mcdonald, shot 16 times at close range. video footage showed macdonald was not a threat at the time of the shooting. the inspector general recently determined the officer filed false reports. spain, the acting prime minister will face a competence vote at the end of the month.
he once to establish the government as he moves closer to breaking the countries eight-month political gridlock. japan is considering eliminating a long-established taxed adduction that will encourage houses to limit paid work. the tax advantage works when couples are less than $10,000 regardless of how much the other makes according to people with knowledge of the matter. the deduction is likely to come up before a government tax panel next month. global news 20 four hours a day powered by more than 2600 journalists in more than 120 countries. >> about 30 minutes until markets close.
clerics it's been a relatively benign day for the nasdaq. we have had the index trading around all day. we are looking at shares of the storage company on track for their best day in more than 16 years after posting a blowout fiscal first quarter. there are at least two upgrades this story well ahead of this blowout. our team was fortunate enough to speak to him today and said what we want to focus on is in the beginning of next year, we should see 61% of revenue coming from high-growth revenue. he thinks he can this -- he thinks this can help estimates it could have a little more room to run.
turning to a big blogger on the day, the biggest rock on the nasdaq, cisco systems. come out of the report with the idea the company will be cutting up to 5500 jobs or 7% of the workforce. this reflects the fact cisco is transitioning toward software from hardware. the reaction on the street is a bit mixed. it was a very good quarter, better than expected. , we see some look of the mixed views on cisco. suggesting we don't know whether is for realbreakout
yet. time will tell. >> advanced micro devices crude when the weather -- amd is intel's only rival and struggling to regain lost market share after a series of unsuccessful products. amd president and ceo joins cory johnson. >> i don't know if you have seen the stock chart. nearly a 3% gain in a company. glad to have you here. the stock performance underlies a significant change at the company. talk to me about what you have done to change things and change the portions of this company. >> thank you so much for having us. when i think about amd, we are a
technology company at heart so i took over a little less than two years ago and my focus has really been on returning our focus to building great products. wehave 6000 engineers and are focused on high performance computing because that is where we believe the market is going and that is in our focus. >> you have had great success over the last few years but really been out of the server market. the pc market. deciding to go back there up against intel has got to be a move taking some trepidation. what is goingat on in the market, we believe high-performance computing is critical for the new things that need to be done.
so we decided to do a clean sheet design starting from scratch for a new high-performance microprocessor -- microprocessor. >> such a high-stakes game. you put up some stats showing how the chip compares to the very best of the intel desktop offerings. works -- >> we showed some of our zen products for the first time. then is designed for many different markets so it will go to high-performance desktop, notebooks, the data center. and we had very ambitious goals. in microprocessor land, that is really hard. so we an ambition goal showed a demonstration of our
zen processor running against the latest generation processor and we did very well. >> not as impressive as mess -- matching the best intel has got to offer. >> zen will be in the market the first half of 2017. >> will then get better even between now and then? >> zen is a foundation for high-performance computing. we are very pleased with where it is and we are right on track with where we ask acted to be. we have some more work to do but from our standpoint and from our customers, we are really pleased with where we are. >> here you are entering a market that will have many outputs. but how do you see the pc market
that is shrinking? >> i think the thing is to think about which pieces of the market are growing. gaming, game consoles, virtual reality, anything that requires horsepower, those are areas that are quite profitable. >> as you look out, you surely are already planning for subsequent versions. the cycle toxpect be for upgrade to going forward? >> i think it depends on the market. -- pc market tends to key is is ins, the gives us an incredible foundation.
>> it sounds like you are focused on the heavy processing. >> we need to pick the places we believe our the highest growth segments. in terms of high performance computing, we think it's a huge market. more than enough areas for us to grow and i think that is totally ok. joe: cory johnson. coming up, ciber dime sees its talks plummet. we will hear what andrew lusk us
at the bloomberg business flash. a big first for labor. robotic cars hit the street in pittsburgh later this month. customers will be able to summon self driving cars from their cell phones. we will be supervised by humans and the driver seat. the vehicles are specially modified with dozens of sensors, cameras, and radar.
a proposed deal for a british bookmaker has fallen apart. the group confirmed they will not make a formal offer. william hill already reject it a $4 billion bid. in california, regulators order pg&e to pay nearly $26 million for violated record-keeping rules. the commission voted unanimously to impose the fine. gawker is shutting down. nick denton, the founder, told the staff the site will be down starting next week. company was driven into
bankruptcy after losing an invasion of privacy lawsuits to hulk hogan. and that is your business flash of date. -- update. scarlet: andrew less looking for opportunities to profit off what he calls depends -- japan's inefficient market. fall as muchlues as 11%. the company says his report is wrong. earlier today, andrew less joined us by phone. >> i found this name by initially listening to some of the presentations at the conference and saw oasis management when they put out theirdie in an saw credentials.
it was a hallmark of complete inefficiency and open information in the market. in my report, i took it a step further. what they're doing to information and there is no other word i can say but promote. i published my findings into think it extremely interesting. japanese so it into the local retail investors will have an opportunity to see the other side of the story. have youto what extent been contacted by any japanese investors? quotes i received wonderful responses. many japanese investors say they have sold the stock. willurse as always, you
get people who don't want to hear it. but that is par for the course. >> and we need to mention the cyber. course as well. they said the use of her evocative language may mislead investors. has company contacted your directly? >> they have not and as for misleading information, the misinformation is there. language, i'mtive sorry. it just goes with the territory. scarlet: for you able to speak with them before you publish for the report? >> no. everything i should be able to find should be public information. i don't want to speak with them. i will go look at their competitors, do research into their sector, look at their
filings over the past four years and see if they have delivered on anything. that is what i want to do. >> what do you think should be the response from a company that is accused of perhaps taking advantage of this information or is not presenting the full story to investors? we talk about japan being an inefficient market. smart opportunistic management respond to the arrival of u.s. short sellers? >> there will be more accountability. before you make promises, you have to ask your self can we deliver on these promises and make sure when you say something to the public, it is true. what you can do to prevent it is just be more transparent.
>> talk about the risks and rewards. it's not japan. let me make something clear. we live in a global investment community. money, thank god there is no racism in money. it is what it is. this particular stock happened to be in japan. .'m right now working similarly any investment banking firm. >> there are inefficiencies you
spot in japan's market. i wonder what those are specific way. in this caseciency was the lack of information on both sides. states, we have seeking alpha, a wonderful addition to the u.s. markets, which has allowed individual investors to offer an opinion deion the investment banks and that open information exchange we have had has changed everything and that is what they will need in japan. coming up, what is causing the storm in the financial markets. one portfolio managers take next. this is bloomberg. ♪
investors are increasingly moving away. the fed is following the market rather than leading it. conversations says that is what is causing the storm of financial markets and rights the fed is deferring to real-time economic data rather than its models, a shift that has large implications rather than markets responding to changes in the economy. the causality may flip with the economy and policy makers reacting to changes in markets. connor joins us from atlanta. explain how the fed has changed its approach and what does that mean for an investor in this market? >> investors were really uncertain because they were worried about a double-dip. the answer is always more stimulus.
as the economy has gotten better, we may or may not be close to full employment. i think it is a positive thing in terms of the progress the economy has made but in terms of fed watching, it makes our job a lot harder. >> when you look at the reaction by equity markets, it seems like there was the initial kind of pairing where they thought the perceived dovishness would he good for markets. i thought that riskier assets would do well. where do we stand on that right now? >> the progress continues to be steady and 2.5% growth is frustrating to a lot of people but more than what we need to close the output gap. the fed is less certain how inflation works and even know the economy is making progress, they are not convinced it will lead to a continuation and they
are willing to back away. scarlet: one thing you know in your essay is the market structure has changed. >> the extreme explanation of what was going on was big money hedge fund. over the past decade whether it's due to regulation or underperformance, a lot of that has gone away. retail investors saying i have done pretty well so it's this continued flow making things more driven. joe: there was a line that stood out to me.
the are talking about flattening of the treasury yield curve and one of the factors they cited was expectations for more common data in monetary policy. this is the fed citing a market signal. this is the potential huge feedback loop. how does that ultimately end? -- we have seen in the quarterly fed estimates, they continue to project fewer rate hikes in the future and the market will fallout, treasury yield will fall, and we hit a point where they increase their economic projections so maybe we get the feedback going the other way. >> since the crisis, there have sayingrtfolio managers the fed is confused, is in being clear enough.
is this what you are doing or is it different? >> there's probably some of that. nobody really believed they will hike in september so they always want to keep the market on guard but they keep pulling the football -- pulling the football away. we will see what happens when that does. joe: thank you very much. scarlet: that does it for bloomberg markets. the market closes next. green arrows all around. the s&p 500 up. this is bloomberg. ♪
mark: and i am mark. stocks closing higher this afternoon, edged higher by energy shares. stocks,ighs across u.s. but is this still a heated bull rally? we will give you the evidence and let u.s. -- let you decide. joe: plus, a new kind of globalization. mark: and we will look at the results for walmart mean for retail. scarlet: we begin with our market minute. oil and heard a bull market. if you look at equities. it was kind of meandering for much of the day. joe: meandering is right, but i would say it's a continuation of what we saw during the fed meetings yesterday.