tv Whatd You Miss Bloomberg August 18, 2016 4:00pm-5:01pm EDT
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.
essentially, it was a slow-motion continuation. mark: i think meander is a good word for stocks. i want to start with a group that led the market higher. we talked about oil getting into a bull market. here we go. the energy index has been a pretty big part of the rally. you can see how much it gained today. it was up 60 basis points at one point. higher, notmarket as much weight on the s&p as it used a have, but still an impact. we have utilities and financials. the two that make headlines every day. it depends on how the market feels about interest rates right now. right now, work expectations have gone down. financials still hanging in there. i have two coup kind of fun stocks that popped up today. stocks -- we got
news today that private prisons will shortly be no more or at least ceased to exist in the way they do now. the price of private prisons got crushed. day on the quiet government bond market, continuing yesterday's trends. and 10 yearar yields as expectations of said policy continue to ease. ease, andontinue to the dollar declined as well. the pound was a big jumper as hard data out of the u.k. showed once again the economy holding up better than expected after the brexit vote. you tallied up, inflation, unemployment claims, and retail sales have all done better than feared. the yen is currently below 100. you can see the head and
shoulder pattern out there. the neckline there, and fxording to bloomberg's currency tothe next watch is dollar-yen. joe: boyle is up 30% on the air. it felt like just a few days ago we were talking about the oil bear market. now, it is back in a bull market, up 22% from its lows at the beginning of the month. it is amazing to me how fast the story changes. just a few months ago, we were like, there is all this supply, inventory, spilling out of the tanks. saw what happened earlier this year on speculation. mark: it's a pretty big move on hope. scarlet: you just need people to believe in it. that is your market minute. let's take a deep ties into the
bloomberg. you can follow the functions at the bottom of the screen. try looking into the retail rumble. target sales disappointed in the company said u.s. shoppers are cautious. meanwhile, walmart said consumers are ok. walmart shares have outperformed target, and you can see it in the relative share valuation. , shares line goes up are increasing. right now, walmart's shares are at a 20% premium to target shares. >> each has its own issues. listen carefully when someone says consumers are cautious. mark: target is still trading below average. scarlet: good point. at initialooking
jobless claims as i do every thursday. they keep improving. the white line is not just seasonally adjusted claims. the dotted line is the moving average. moving out to get a broad trend. another post crisis low on this measure. we just don't see any signs of labor market weakness. it going to be a bigger deal when the line starts to move up or when it starts falling? joe: it ticks up from time to time, but the degree to which it is consistent is pretty astounding. mark: it looks like the world's most boring roller coaster. joe: good one. mark: i am going to look at a chart that lost, but i am going to double down, rmb on the us -- research and development on the s&p 500. i am looking at this with the help of my colleague, kevin kelly.
what happens when companies aren't spending as much as their profit margins are falling. we are basically showing profit margins getting thinner and thinner. this is a normalized chart back to 2014. profit margins have shrunk back to 14%. one thing has expanded quite a bit, and that is research and development. your balance on sheet and will eat away that profit margin. maybe companies will be reassured that they are spending a good bit on research and development. joe: moore and mccarthy joins us now. thank you. having a bit of a rally here, not huge. what did you learn yesterday from the fed and what is the correct interpretation? >> the fed is in no particular
start raising rates. they do seem inclined that they would like to get a rate hike in by the end of the year. the minutesthing in that suggested it would happen as early us up amber. there is still a wide range -- as september. there is still a wide range of interpretation about the economy. they are still trying to figure out what, if anything, brags it means for the u.s. fromhey are still smarting the spring, when they thought they would be able to raise rates, and then development prevented them from doing so. the risks of being late are not as bad as the risks of being early.
m.o.is their ammo -- new normal says the means only 80,000 job gains needed per month. does the more hawkish fed dovishn the heels of minutes three weeks ago tell you about the fed's confidence in their models? >> i think what the fed is trying to do right now is walk a fine line between being optimistic about the economy -- because when the central bank is optimistic, it's easier for people in the market to be optimistic, but at the same time, still very cautious, because they do not want 2-d rail what they have engendered that which is a recovery has lasted quite a long time. keep in mind, we have jackson
hole coming up, and it seems like the message from jackson hole is going to be that the fed wants to reset the framework it uses for implementing monetary policy. that's another reason it's a little difficult to decipher what the message is because it seems like they are changing their view of the world and consequently how they want to affect the world. are looking at a few metrics here that the fed considers inflation. average hourly earnings. everything is trending upward over the past year, getting closer to where the fed wants to be as well as jobless claims stabilizing at a lower level. if you look at now versus last year, the probability of a hike .as so much higher is there something we are missing?
>> i think the market has been learning from fed behavior. the fed told us they would raise rates faster and more often than has actually occurred. .arkets tend to learn by doing said funds futures continued to price in a rate hike through the end of 2017, which in the view of build dudley is being somewhat complacent, but on the other hand, james came out and said he thinks the fed should only raise rates once over the next two years, which is basically telling the markets they have it right. until they come up with a unified message, i think the markets are going to continue to trade off past behavior, which means the fed will implement higher rates slower than they said they will end later than they said they will. of course, there is a
lot of skepticism out there about how effective monetary policy is in the u.s. and around the world. paul krugman told us. >> there's an accumulation of evidence that monetary policy is pretty ineffective. for a while, we came into this thinking 0% rates were ineffective. then came qe. then came negative rates. it turns out there were always things the central bank could do, but they are not actually doing much. mark: paul krugman says monetary policy is not doing that much. you had william doubt a few days revisiting theut framework. that may be the theme of jackson hole, revisiting the framework. all of these people questioning whether their approach has been effective, how soon might we see this trickle through?
trickling through has to be through the political class. if we are going to have a fiscal policy that is coherent and try to call clement what monetary policy has done -- complement what monetary policy has done, it has to be something the politicians embrace. depending on who is elected in november and who ends up winning the house and the senate, there is potential for there to be some changes in fiscal policy. both parties are talking about spending more on infrastructure. some changesneed in fiscal policy. to seeow, we are trying exactly when that can happen and what actually would happen. sure. much appreciated. great conversation. scarlet: coming up, is this still a heated bull rally?
imr crumpton. let's get to first word news. hillary -- i am mark crumpton. let's get to first word news. hillary clinton said that police and communities must work together to repair the bonds of trust. president obama is set to become the first u.s. president to visit laos. he will visit laos and china next month. he will participate in a summit with leaders from the world's
top 20 industrialized and developing nations. the chinese with president. in laos, he will attend a pair conferences. in turkey, rebels are being blamed for a string of bombings targeting security forces. at least 14 people are dead, more than 220 others wounded. two of the attacks were car bombs. targeted aack military vehicle in the southeast. is the sale of a lifetime if you are a student of world war ii. a tank museum in france is selling its entire collection, some of which was used on v-day. more than 40 automobiles will be up for sale. opened in 2013. it has not been able to draw enough the visitors to stay open. global news 24 hours a day
powered by more than 2600 journalists and analysts in more than 120 countries. mark crumpton. back to you. thank you. it has been called a heated bull market. with low volatility stocks falling to the back of the packet as technology companies and industrial shares beat the s&p 500's all time highs, investors might be finally getting in. we want to start with something tangible, where people are putting their money. be a huge chart for all the viewers that e-mail me over the past year and said what is going short interest that we can cover closely? guess what, it is finally going
down. shorts were closest to their highs since the financial crisis. at the same time, investors have gone long. not only have they lowered the shorts, but this is a chart showing futures contracts, about 23% more long than short. we have not seen that in quite some time. investorsere our putting their money by asset class? bank of america had a report that the u.s. was selling treasuries at a pace they hadn't in quite some time. investors considering high-yield bonds versus stocks, what you are looking at is shares outstanding versus high-yield bond etf's. and sharesbond flows outstanding have gone a little bit lower. if you look down here at the spread between the two, they have moved quite a bit in favor of stocks.
we know the bond market has been part of this volatile market. finally, volatility. it is extremely low right now. 30 days withhave the vix trading below 15, which is not a level it is typically at. it is basically the longest we have had that drought in about a year. betting it is going to go lower. that green shaded area shows you those bars and that investors are betting it's going to go even lower. some of the data, including short interest, might even come out as we are speaking and we will see how that goes. at the same time, investor hesitation hasn't disappeared
expectations, citing a difficult retail environment. contradictory retail explanations, which might suggest that target just hasn't figured it out. >> i was trying to get to the bottom of where the consumer is at. target painted a grim picture of walmart. saying things are stable, not great. but they have not seen the market change this year from where they were a year ago. be aoks like there may difference of what's going on at target versus walmart. deep divehis was my earlier showing how walmart pe a valuation created a premium to targets valuation. it's at its highest from about four years ago. joe: what has changed? obviously, the numbers today , but hell of investors rethought this company?
-- how have investors rethought this company? >> the rest of the market was tanking. up a littleicked bit of wind from investors who were looking for a safe haven. they were reminded that walmart was the place to go. then we had relatively good numbers. we saw target and other retailers not doing so well. retailwant to be in the space, where do you look? walmart. i think investors are getting a confidence that changes we have seen over the past year or so are starting to take effect. let's talk about their earnings here since it is earnings season. target is in focus today, playing a little bit of catch-up.
obviously, the trend in the past has been downward. what is going on there? >> we will see if this trend holds. a big driver of that has been the products they are selling online. its basic math. if you have more product, you can have more sales. they have almost doubled the number of products they sell online to third-party marketplace sellers. helped drive a lot of traffic to the site. it has been a big focus. they have gotten a lot of for sales declining. i think we are seeing some investment in turning things around start to take hold. and we will see more by the end of the year when the acquisition of jet.com is complete. so next year will be a whole new
year of online sales. and an out-of-control crime problem is driving local police crazy. explain that. >> for years now, walmart has really been the major source of crime in a lot of communities. i am not talking about small towns. i talking about places like in denver, tulsa, austin. police are called to the store multiple times a day, sometimes thousands of times a year, for everything from videogameg a toy or to very serious, violent crimes, shootings in the parking lot. there was an employee killed earlier this year by a shoplifter. summary pulled a knife on an employee. -- somebody pulled a knife on an employee. there is still an issue of
shoplifting and theft going on company every year. our local communities upset that taxpayers are on the are the the policing -- local communities upset the taxpayers are on the hook for response to all of this crime? >> they are. i spoke today to a community thating board in kansas was raising this exact issue. we don't want walmart coming to town because it is a drain on the police force. it's one more problem walmart hasn't gotten around. they are trying. they are making efforts. but it is an underlying factor. story andgreat everybody should find it and read it. aarlet: coming up, building new framework for globalization.
homeland security secretary jeh johnson is in louisiana for a firsthand look at the severe flooding that has impacted the southern region of the state and the ongoing response and recovery. the federal government has issued a disaster declaration for 20 parishes. people have,000 already registered for individual fema assistance and more than 90,000 flood insurance claims have been filed. law enforced and officials in brazil -- enforcement officials in brazil are accusing four u.s. swimmers of lying about being held at gunpoint.
the athletes, including ryan lochte, were confronted by security guards carrying guns after leaving a party in a rio suburb. the associated press reported that guards pointed guns at locke d and three others during a dispute at a gas station. the u.s. has withheld a cash payment to iran as leverage. the u.s. wanted to ensure that listeners were released as -- prisoners were released as promised. an egyptian military court has sentenced 418 alleged supporters of the banned muslim brotherhood. most were sentenced in absentia for two years to life for their involvement in the storming of a police station in august, 2013.
the violence left hundreds dead. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. scarlet: we have breaking news. emerson is buying a valve business for $3.1 billion. this comes on the heels of u.s. stocks inching higher to close with gains. the s&p gaining almost five points, dow industrials adding 24. really, as you said, this is a reaction to of the minutes. dovish >> we saw markets pick up. we saw yields drop. we saw yields on government bonds continue to slip again today. >> less than 6 billion shares traded.
what did you miss? a new kind of globalization. trade havews and been a hot topic for decades, but this year the issues are back on the forefront, particularly on the u.s. campaign trail. joining us now is a professor of economics and the leader in sustainable development. thank you for joining us. obviously, trading globalization are huge topics in the election europe as well. what will it take to get people excited and supportive of the idea of global trade? >> the idea is that you expand the pie, but the pie is all going to the group at the top end so -- answer those left -- and so those left behind are not trade.ited about
inequality in the united states has been widening pretty relentlessly for the last 30-40 years. the public is not backing trade. we also have the point that hillary and trump are both against the tpp but the tosident is still pushing it a lame duck congress. there is a lot of maneuvering behind the scenes to push this through even though the public is not too happy with it. scarlet: we are all familiar with how globalization has created a lot of losers in the develop world, in the u k, in the u.s. what are the costs of globalization for emerging economies? it is easy to think that china and mexico win, but there are losers in those economies as well, aren't there? >> in general, markets create
inequality, and usually, you need government policy to close the gaps to reduce it. in china, which is the most spectacular economic development in history, inequality has also soared. are looking at the trade impacts in the united states, and we point to china took away a lot of manufacturing jobs. absolutely right. there is a lot of unrest and a china, how do in we manage this as well? to the want to go back point that there is that is a slice of the pie going to a certain group of people. or that slice gotten larger is a different type of person getting left behind and those are the people reacting now? >> the world economy has grown.
, besides 2008, falling out of bed, the economy has grown pretty well over the course of the last generation, even longer. but the inequality in the united states, especially at the very the famous 1%, are now at and in cash at an impressively high share. are now added impressively high share. so a lot of the people donald is appealing to an contested rust belt states that lost the manufacturing sector, that's where a lot of the losses occurred, the empirical evidence now, the research shows more and with chinaompetition really made a big difference. my view is that trade on the whole can be good, but if we are in a political system that says tough luck to you, you are being
left behind, don't expect people to be overjoyed about trade. unfortunately, that has been the attitude for several generations. democrats and republicans have said trade is good. now nafta, now this, now tpp, and if you are a loser, tough. that is not going to sell anymore. they are still trying to push it through in the lame-duck session. i think it's a little disgraceful to take something so important to the american people that both candidates are against, but president obama is absolutely going to try every maneuver to get it through in, what i think it is not a very democratic way, after the election. joe: you make the point that it's important to get the distribution right, that you can't have all the gains going to the top. one factor of that is that
capitalization can leave the country. there are people moving money out. there are technical aspects to distribution. what needs to be done domestically to address the ramifications of globalization because just moving money around doesn't seem like it will solve the issue. >> first, capital is a mobile factor and capital has been the big winner. when you have international capital -- which is the new world economy in the most recent there is also a tendency of a race to the bottom. we have to cut taxes because they are cutting taxes. unless there is global cooperation, you end up with the panama papers, tax havens, some big companies basically not paying taxes because there are
so many gimmicks in the tax code that you can put your intellectual property in the caymans or bermuda even though it was made in our universities. -- they don't put taxes on pay taxes on that anymore. you need global cooperation. way,also true -- by the income distribution helps. if you are in a struggling family, you don't mind having easier taxes are a higher earned income tax credit, or whatever it is, but it's also true that we have a particular problem on the campaign trail this year, which is that one way out of skills and more degrees. going for a master's or bachelor. poor kids can't do that. we have a trillion dollars of debt. the countries that have handled this best are the northern european countries. they have free tuition. that was a big issue bernie had on the campaign trail.
that requires revenue to pay for it. that requires taxation. we are back to the same income distribution point i am making which is, if you want to have trade, which i do, you need redistribution, but if you have redistribution, you need to do it in a smart way, you need cooperation, and you need to have skill development and so on. but that requires somebody paying their taxes. and it has to be sustainable. free tuition in europe, there's an underclass of doctoral students who don't have jobs. have an average income i pero, $50,000, $55,000 person, that is a sophisticated economy. you need sophisticated policies as well. really good performing
economies invest in science and technology. where did they get the money? you need revenue to be able to do that. but you have to look ahead and say we are going to build skills and jobs in a balanced way. instead letn that the top for it. it will trickle down. top gond said let the for it. it will trickle down. we've been saying that for 40 years now. mark: really poor and conversation. thanks for joining us. up, donald trump making a big comeback. we will discuss his revised playbook. this is bloomberg. ♪
scarlet: apple has hit a major snag connecting its watch to cellular networks to make it less dependent on the iphone. that is according to people with knowledge of the matter. the company still plans to launch the watch this fall. the updated version will be able to integrate location tracking. harley davidson has agreed to controlling emissions defeat devices. the company has already agreed to pay a penalty as part of a settlement. the company was accused of violating air pollution laws and will pay another $3 million to mitigate air pollution under the deal. gawker media's $135 million to univision has won bankruptcy court approval. agreed to maintain
current agreements. the sale includes all gawker properties, including jezebel. gawker.com is closing next week. bloombergur business flash. joe: what did you miss? the new plan to free donald trump and save his campaign. he has hired a man who has been described as the most dangerous political operative in america. we are joined by alex wayne in washington. freeing trump. everyone is sort of laughing at this idea that finally trump is going to be unshackled and say what he really thinks. has he not been telling us what he believes so far? >> i guess we are going to get even more trump. josh green's excellent reporting
on bannon has indicated that trump was not happy with the effort to "constrain" him. i have seen no evidence of that, but apparently, people were trying to tone him down. he has also been very angry about his polling, which of course, is sinking. mark: a question about this title, the most dangerous political operatives in america. who is this guy? >> there is a website called breitbart news. a conservative website. i hesitate to call it news, but that is what they call themselves. their stories are almost without exception inflammatory. they have long been a champion of donald trump. they have writing -- have been writing about him since he first
came out as a candidate. joe: is looking at the acquisition of bannon and saying oh boy, this will really mean something to trump. >> i don't think the hillary campaign is too worried about trumpuy joining the campaign. if trump were looking for a guy who would help them appeal to blacks, hispanics, or anyone supporting hillary clinton in great numbers, bannon is not the guy. his website does not appeal to that audience. scarlet: what is hillary clinton's campaign response to all of these changes in the trump campaign? it seems like they are sitting back and letting the headlines speak for themselves, but is there a way to be opportunistic
and redirect? >> i heard a saying this morning that when your opponent is committing suicide, there is no reason to commit homicide. they are expecting more vigorous attacks from the trump campaign and they say they are prepared to defend themselves. they have an array of clinton allies on the left who think they can go t toe to toe with bannon and trump. joe: going back to breitbart.com, even more than conservative, it has a nationalist, populist bent to it. is this an indication of what trump is about? is he a distinctly different strain of right-wing ideology? storyh green in his described breitbart as embracing of theanoid wing
republican party. there is a wing known as alt right. they have done well at towing embracing theen reddit weighing and -- wing and staying on the edge of mainstream conservatism. joe: thank you very much. the battleming up, for wireless subscribers enters a new phase. we will be hearing from t-mobile. ♪
customers. betty liu spoke with the t-mobile ceo and joins us with the highlights. gettinge is basically rid of all of these fees and overage charges and just giving you an unlimited plan. it almost sounds too good to be true, and it just might be. we have to look at the details. basically, he is saying that a amily of four can pay $150 month and get unlimited voice, data, text, and right away, sprint came out and said they were going to do the same thing for $160. so, the devil is in the details. do you get the same quality with that price point? and the answer is no. the sameu want quality, there are extra fees
added on. i don't know anyone who doesn't have a complaint about their carrier, i don't care who it is. up -- tweetsing coming out on t-mobile, at&t, verizon, the proof is in the pudding. they want to see how this is going to work. verizon is conspicuously absent. are they going to have to take part in a bidding more? betty: absolutely not. john is right in the sense that he has been gaining subscribers while others, like verizon, at&t, and sprint, have been losing. sitting back at all for any of these carriers, , but when ierizon
talk to him about sprint, he said forget sprint, i am talking about verizon. he is really going after market share. john and hisakes pink t-shirt pretty attractive, right? softbank has come out -- there was an article on bloomberg where he said he still hopes there is a merger possibility with t-mobile. here is what john said to that. of people are looking to what they could possibly do with t-mobile, and i would just tell them, it's sort of like the dmv. take a ticket and standard were there, and we will get to you. i'm not surprised you like us. i like us as well. betty: people who have trouble with their carriers wanted to be just like being online with the dmv.
they will have to wait until there is a new administration in the white house, because right now, with tom wheeler at the fcc, there is no chance at all that something like that, combining a third and fourth carrier, could ever pass regulators. joe: you mentioned that the quality would not be as good. how much worse are we talking about? depends on how much you are willing to tolerate and pay. if you want hd quality on video, you will have to pay $25 extra to get that. joe: thanks, betty. betty on bloomberg daybreak asia. scarlet: coming up, what you need to know before tomorrow's trading day. this is bloomberg. ♪
and a half hours later, time win releases -- taiwan releases its gdp. joe: don't miss this. at 7:00 a.m. tomorrow, we get the latest earnings from gear, -- from john deere, a company involved in agricultural machinery. scarlet: that is all for us. thanks for watching. mark: we will see you back here tomorrow. joe: have a great evening.