tv Bloomberg Markets Bloomberg August 22, 2016 12:00pm-2:01pm EDT
scarlet: from bloomberg headquarters in new york, good afternoon i'm scarlet fu. matt: i matt miller. here is what we are watching. stocks struggle as investors parse signals from stanley fischer about a rate increase possibly. will his comments keep markets on the edge? medivation for $14 billion. we will cover what medivation has that everyone wanted. matt: donald trump thought it was a good idea to start a mortgage company in 2006, a year and half later of course it went bust. we will to you why it was risky business from the start and how it conflicts with his image today. withet: as always we start the markets. halfway through the u.s. trading day. rainy in a sense you has the latest. ramy: the fed as well as pharma
are the wins that are blowing change agents. looking at the dow s&p and nasdaq we saw the dow and s&p slip into positive territory but we have seen gains fade away basically. the s&p 500 down about 2/10 of a percent. this is after stanley fischer did say that the u.s. economy could see some growth later this year. potentially putting another fed rate hike on the table. let's see what is happening in terms of the imap functions. --did see more sectors utilities of about 5/10 of a percent. health care still a little afterve but pre-much flat .hat happened with pfizer what stick a look at plays in
terms of speculation. these three stocks in terms of rid general denver text up on the order to about 3.7% especially after speculation that one of these others might be in play. one commodity to talk to about is also pulling on the markets, oil breaking a seven-day winning streak down your session lows down 3% here. chair fishero fed talking about hawkish comments we are seeing the baker hughes count. increasing production by about 5%. thatdition we can see knock on effect of the oil movers. 7%.thon oil down you mentioned fisher, what
impact have we seen from his comments on the market? ramy: let's take a look at what's happening in terms of the yield on the 10 year because we are seeing an impact on that area you can see down at session lows in terms of the yield. 1.54%. i want to talk about interest rates and fed funds futures. this is the w.a.r. p function. fisher's comments do a number in terms of a couple of percentage points on probabilities in terms of september, october, november. september is a 26% chance of a rate hike. december, we are still above the 50-50 mark. 52.3% just on friday. it was around 51%. scarlet: thank you so much. we will check back in and about an hour. matt: let's check in on bloomberg's first word news. mark crumpton has headlines. mark: a new poll shows hillary
clinton is extending her lead in one of the battleground states. the cbs news survey has clinton with a 46 to 40% lead over donald trump in ohio. clinton and trump are tied in iowa. former secretary of state colin powell is pushing back against hillary clinton's assertion he suggested she use her private e-mail account for nonclassified information. people magazine reported in a twitter message that powell said "people have been trying to pin the e-mail scandal on him. " according to a frankfurt newspaper government report says people should stop pile -- should stockpile five days of water in 10 days of food because of what the report calls "a development that could threaten our existence ar." recent attacks are good germany
on edge. nicholas sarkozy wants his old job back. sarkozy has announced he is running for president. his republican party hold its primaries in november three at sarkozy led france for 2007 to 2012. a tougher stance that he has urged a tougher stance against terrorism. francois hollande has been sinking in the polls. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. mrs. bloomberg. scarlet: -- this is bloomberg. scarlet: big news in the pharmaceutical industry. let's start with pharma. thehave pfizer clinching purchase of medivation valuing the company at a $14 billion. the deal gives pfizer a blockbuster prostate cancer treatment that is available for sale. mccracken now is jeff and julie armstrong -- and drew armstrong. i will start with the function on bloomberg, bu ip which is
buyer profile, showing you just how many acquisitions pfizer has made recently. for 2016 we can count seven purchases so far this year. most of them, not so large. --million, 12 million, point $4.6 million. this is all part of a strategic approach to growing for pfizer which is through acquisitions. >> the big deal is allergan. 100 plus billion dollars last year that would allow them to locate outside of the united states. that deal, they pulled that deal in april because of the treasury. that left them a lot of money well beyond what -- three or four other companies around medivation and the one who kick it off was sanofi. their bid was 5250 per share -- 52.50 for share.
you are way off on your expectation of valuations and what others would bid. pfizer came in and really blew them out the door. almost $14 billion all-cash bid. matt: i saw in a story that oncology is one of the hot areas that buyers are looking for targets. why is it now? we then looking for a cure for cancer for long time so why is oncology hot now? drew: two things going on here that are very separate but very important. oncology is going through the scientific period where we are seeing a lot of work that was done at the basic science level understanding the genetics of .ancer showing -- you have seen a lot of that stuff in the biotech space, the backbone of new cancer therapies.
the second thing, the dynamics in cancer and how you can price those drugs. one of the few places, along with a handful of rare diseases, genetic driven diseases, where you can go to a health insurer and say we are going to charge a lot for this drug and you're going to pay for it because it's the only thing that works year and is not a lot of generic medicines or other treatments. you can still command a price premium from customers in cancer and a handful of other disease categories making this really big assets for pharma to acquire. scarlet: pfizer has mentioned it is looking to split up into two at some point. does this purchase make that more or less likely? there was skepticism. jeff: one of the interesting things about pfizer is that they are so big that even when they go out and do an almost $14 billion deal, analysts saying this does not really move the needle for them. that's not going to really affect the decision to split.
anybody else, this would be -- for these guys it is a nice piece for them to tack on to various parts of their business but it's not good to be the differentiating factor in any way for whether or not to go ahead and do a split. looking drugmakers are for companies with possible oncology solutions or others with growing blockbusters, what are the other targets? jeff: if you look at the share price going to sell out. -- they have been speculated a lot. bio moran and insight are two names that people expect a sanofi or gilead or who knows, pfizer, could make a run at. those are popular names especially the cancer spac for everyone is trying to build portfolio. matt: we are showing stock prices. 6.6%. is up already a market cap bigger than
what we are seeing with medivation. arin: both insight and biom would be 20 to $30. scarlet: jeff mentioned sanofi and how it has left -- how it is left there wondering what to do next. where does that leave a company like sanofi in terms of how it can catch up with pfizer in terms of making these deals? drew: they are in a tough spot. it's obvious they started this process, brought everyone else in and lost. one of the issues they are having a problem is they have a lot of older drugs, especially in diabetes has been the backbone of the commercial side of the company for a while that are fading, approaching the end of their life lines in terms of being able to command high pricing and they have not yet figured out where they are going to turn next. we have heard them mention in a number of deals, they said oncology is where we might go. i think the expectation for everybody is they will have to go out and keep shopping to find
one of these midsized assets that has the potential to bring in near-term revenue or at the very least involves late stage clinical trials asset close to generating. the cannot go out there and shop for risky pipeline stuff. it does not appear they have the time. jeff: some difficult conversations for morgan stanley and goldman sachs. matt: they will still have clients. scarlet pointed out the story about nomura looking to hire more bankers as they think m&a and ipos are going to pick up. it's going to be hot area again. -- cubbieschina based in china and companies based in japan want to do deals in the u.s. and for all the flaws of our economy even 2% growth given our gdp looks really attractive when you're based in china or japan or other emerging markets. number is making the move it makes sense because so many european banks like critics lease or barclays have been coming back so there will be a
lot of bankers on the street looking to get hires. scarlet: does that mean japanese companies will be doing the buying? jeff: japanese and chinese companies. good news on the syngenta ag a was 15% or 20% below the offer so it jumped quite a bit. matt: we saw at least a 15% jump in early trading today. jeff: the expectation is the european union will sign off on that deal and eventually -- later this year that deal should be done. scarlet: do you fear anything about chinese drugmakers buying u.s. drugmakers? drew: one of the things we saw a number of years ago was a lot of the u.s. market went into china and try to invest and do a lot of deals and every thing like that and that really cooled off with the cooling of the chinese economy and it's something we are hearing more about. one of the things going on in the biotech space, for six months of the year we had a cooling-off in the biotech market in the u.s. and it seems like maybe now we're seeing expectations come back a little
more in line with reality. there is speculation that there will be more shopping around in the biotech space now that the market has settled down from some of its highs at the end of last year. scarlet: thank you so much. jeff mccracken and drew armstrong. matt: coming up, howard marks, cofounded of oat tree capital group talks politics -- oaktree capital group talk politics. ♪
marks cofounder of oaktree capital. in a stinging memo he explains why hillary clinton is the better choice for president of the united states. he spoke with erik schatzker earlier on bloomberg . howard: my family and i concluded that this is the time to speak up. that the stakes are too high for me to remain the ivory tower professor. it's extremely important to as to who will be our next president. erik: why are the stakes so high? why is it important for you to stay something -- to say something? howard: as president obama said in a recent speech i would go further, all the people who ran for president during my lifetime i believe were basically competent. while i have a preference it would not have killed me to have the other guy. this time, i don't think both candidates are equally competent and up to the job. i think it's very important that we make the right choice.
erik: it sounds as though you have cast your vote before november. howard: i'd like to think i'm subject to change but it's unlikely. erik: help people understand -- i don't want to put words in your mouth so why don't you tell us who is it that you think would be the more competent president? that hillarynk clinton. i disclose that i'm a lifelong democrat but i think hillary clinton has the experience and resume to bes the a president and to make the country run right. erik: she has faults. howard: she has several pronounced faults. erik: which one concerns you most? hasrd: i think that she skirted the rules from time to time. i think that she has done things
that are not to the standard i would like to see. erik: so this -- so despite that fault if you will, she to you is a more preferable alternative than donald trump? mike bloomberg at the democratic national convention president elect a pleasan hussein, competent and has international experience. i've best -- elect a sane, competent and has international experience. let's say he has a credential to be president, what is it? most would say his business success. erik: he would say that. howard: and his supporters would say that. a brilliant businessman and that proves he can run the country. i don't think that anybody who is serious in the business world great he is a
businessman. i do not think anyone who is serious and eight new york real estate community believes he is a pillar of the community. he has been in 3500 lawsuits. he is the subject of a car/action -- class action law complaint at the time he's running for the presidency. he has an unmatched string of bankruptcies which he is proud of. -- how that shows how to strategic he is. no one ever succeeded by going bankrupt. bankruptcy is a way to make failure less painful. with that was howard marks erik schatzker. scarlet: coming up, we will be onaking with margot gabelli what he thinks is going on in the economy, the markets and politics. the conversation at 2:00 p.m. eastern time.
scarlet: this is "bloomberg markets." matt: today's news, cycle seems to be all about foundation as the clinton foundation is under 's reald donald trump estate brokerage and ever seem to rely on shaky foundations before the housing collapse. .et's bring in sale kapoor thank you for joining us. let's kick off with donald trump. people click on any story with his name on it. you got a great one up today about how he had a mortgage brokerage in 2006. butously that is about idea what else was bad about his business in 2006? >> it's part of a string of stories that have come out about donald trump. he's had a very complicated and expensive business career -- and expansive business career.
on hillary clinton's side, she is facing a different kind of issue with her charitable foundation, the clinton foundation, which has been accepting money from foreign .ountries from corporate donors the clinton campaign has said if she does win the election they're going to stop accepting money from foreign entities and corporations. she is facing renewed pressure to do that right away. the question is if these people can donate now doesn't it appear to be a conflict of interest in the cap pain does not have a great answer for that. still facing pressure to do something immediately. scarlet: some clinton supporters have mentioned that they should shut down the foundation with effect immediately and not wait until she was the election. sahil: she is facing pressure from the left and the right on
this. democrats are frustrated at her inability to shake the story about the clinton foundation. revelation's the fbi uncovered about 15,000 new e-mails that the state department and her campaign did not turn over just this morning. there is an ongoing drip on these stories about hillary clinton not being able to shake. matt: she's not turning over her e-mails. she has not shut down foreign donors of the foundation. we got her tax returns last week. over $10 million she made and she says she gave 10% to charity which is fantastic. is it true that most of the money she gets to charity she actually gave to the clinton foundation? sahil: that's not clear. i have to look at that element of the tax returns to know for sure. i'm not in the position to say specifically where the amount -- what specifically she gave to which charity. scarlet: it does speak to the idea that there are all the these potential conflicts of interest between what hillary couldn't and is doing is a candidate and hillary clinton as
the spouse of the former president bill clinton, they are doing in terms of charitable work. matt: it can be as opaque as donald trump's tax returns which we have not seen those. is there any timeline as to when we are going to get donald trump's tax returns or he has he categorically refused to give the amerco people a look at his returns? sahil: he has refuse. the first presidential candidate since richard nixon who would not release his tax returns and he holds to his refusal to do so. there are various theories about why he would refuse to do it. the two that are gained a lot of traction, especially from his critics, he is not as rich as he says he is and second there is evidence of links to some sketchy sources of funding or sketchy sources of loans he has taken, given all the bankruptcies he is filed, making it difficult to get loans for
more traditional sources. people speculated some of that may be from russia. it is opaque. he's not going to release those tax returns and he has insisted he won't. he will continue to get pressure from the media and critics elsewhere for that. i don't see any signs of him shifting. matt: thanks so much for the web -- for the wrap up. sahil kapur in washington. scarlet: stagnant salaries and ballooning student debt dealing a blow to u.s. retailers. we have some numbers for you. ♪
garibaldi, and aircraft carrier. these leaders are meeting in trying to discuss the future of europe without the united kingdom. you can watch this event on our life go platform. scarlet: francois hollande just speaking. we will keep you updated on any more headlines. meanwhile, the headlines from first word news. mark crumpton has more. mark c.: donald trump is calling be the clinton foundation to shut down. he says it is the most corrupt foundation in history and should be shut down immediately.
tosident obama travels louisiana tomorrow to get a firsthand look at the devastating flooding there. .e has been criticized a taurus vote nears think of poor, indonesia saying. 50 people were killed. the search and rescue effort was hampered by highways and strong currents. russians began attacks last week. earlier today, iran's defense minister criticized them for using iran a basis calling get showing off and ungentlemanly.
this is bloomberg. scarlet: thank you so much, mark. what is the extent of the burden and how are retailers to cope? what do we know about the student debt load besides the fact that it has been growing rapidly, much faster than debt on credit cards and auto loads. can you tell us about the duration of the student loads and who it is affecting the most. >> you can stretch the payments out over a long time. in the piece we use the 30 year payback. it is going to keep going. it will keep growing. we have seen a roughly double in the last five years, which is kind of scary. college cost is not decreasing,
so which way will it go? it is tough to imagine when it will end and what the end game will be as far as the dollar amount is concerned. scarlet: everything people in their 40's and 50's are still struggling to pay off student loans? >> absolutely. there have been cases of people carrying them into their 50's. while you are still in school, you can do for them, then you can put them on a payout, if you want. you have to pay a little bit while you're working, then you go back to school, so the clock stops. at least the repayment clock stops, the interest continues. you can be into your mid-50's before these things go away. scarlet: of course the total amount is more than one point $3 trillion. you think about how much retail -- revenue that retailers generate.
>> we can imagine that student that will reach the same size as mortgage debt in about 10 years. it will get up to about $5 trillion in 10 years. geometricsuming progression. that is kind of tough to deal with. matt: it could be sooner if they continue to raise cost as well. what are you seeing as a result of this? we have a reporting for years that we have people going back to work. we have wages increasing and the savings rate has decreased. yet, retail sales does not get much help. is that because people put more money into student debt? >> it could be. $80 billion paid in each year. that is home depot. ,hen, the principal payments
you get to 160. that is more than amazon. what is the punchline? the punchline is there is leakage going on right now in retail. that will get worse. it is tough to say. out of cells are high. not be.point, they will at some point you will see the and people notgh buying cars because they cannot afford it. matt: the beauty of an auto loan is you can file for bankruptcy and is gone. if you file for bankruptcy, you can not every student debt. >> they are extremely difficult to discharge. a story of ae was 20-year-old person killed, and the agency was looking for his family. passedhe borrower
away, the debt is forgiven. if s someone cosigned the loan for the student, and they are still around, they are liable. matt: that was then your time story that showed that. what retailers are able to make it through this student debt storm. you mentioned auto loans. are there other retailers that have been resilient? ati think you can look this through the same lens as a recession. -- no one isly waiting here. are shopping at macy's, you go down one notch, to save some money, and you keep going .own the line
that could stay around for a long time. scarlet: on top of that we are not in a recession. matt: we have been talking politics for most of the program. >> i think getting into the political part of fiorina is something we should avoid. that is why we are focused on scarlet: whatce if you are one of the middle level stores?
you cannot trade down really below a dollar store. you may alter the mix a little bit. if you are selling furniture, for instance, let's look at an isolated example, you saw nothing but futons and you are in a market where a lot of college graduates settle, you will not sell futons because a lot of them have to live at home because they can't pay the rent. what are you going to do? if that is your product, how do you move away from that? when you talk to retailers what did they say? are they aware that? >> absolutely. when the number went over one trillion, it got more attention. my wife and i sit our oldest
child to school in 2006. you really get to know it when you are experiencing it. when you see the debt balloon, it gets a lot more attention. you see isolated retailers calling it out but there has not since then.olesale it is a lot of money. it, roughly 4%, is going out the door. scarlet: thank you so much. matt: a quick look at markets right now. i want to point out that we are seeing a mixed trade. if you look at s&p, the dow jones, the nasdaq, all are trading pretty much unchanged. energy is down. sbs, it is ap fascinating look at the volume
in the markets. what you see on the grass, the green light here is the average volume over the past 20 days. the blue line, that goes into yellow, is the bloomberg projection. we're not keeping up with the 20 day average there. on one specific index. abigail doolittle has more. nasdaq: we do have the trading ever so slightly higher this morning. the question is if it turns back down slightly, will be index put in its first decline since june? one answer to this question could come from apple, the biggest drag today on the news
that they are making a small act with action -- acquisition on a small company called glimpse. of bigger interest to investors is the iphone. we have the launch of the new iphone seven coming up. it is expected to be on september 7. the question is whether or not they can turn around apple's couple, putting up a quarters of declines. they have not had the ability to grow until march of next year. a lot of uncertainty around that. it shows this range of follett tilly. more recently we see them out of this range. it is unclear if it is a
pullout. as long as they are above the core, it is ok. we have not seen them put in a higher high yet. be answer will probably around the new iphone seven. some m&a thereis with apple. what can you tell us about the effects on the nasdaq stock stu? abigail: certainly a big deal. we see medivation trading higher based on the acquisition from pfizer. the medivation shareholders probably feel this is a good deal, as do other biotech
business report. folk flag and has shut down production of its best-selling car. nayra: list may be putting lyft may beo sell -- e.tting itself up to sal david: we begin with oil. talk about a potential deal from opec pushing oil to $50 per barrel. many of the member companies are producing at maximum capacity and ahead of italy's oil company. a huge start in terms of crude and products.
ahope they can find stabilization in the production without increasing farther. haltedvolkswagen has production from the golf .atchback the supplier of seed and transmission parts is reporting breach of contract. the two sides are reviewing on monday. they shut down on monday with the production of a thought. the largest real estate broker in the u.k. predicts the london housing boom will come to an end next year. countrywide says prices will drop a little more than 1% in 2017, the first decrease since 2009. they say the vote to leave the european union has unsettled the economy. executives from uber have told
executives the company would not pay more than $2 billion for its main u.s. rival, lyft. ceo said privately that he would not buy lyft at any price for antitrust concerns. david: time now for our bloomberg quicktake, where we provide context and background on issues of interest. introduce into the u.s. on black monday, circuit breakers cause a timeout from trading as the market tumbles. can backfire. here is the situation. circuit breakers lasted just four days in china. it is blamed for deepening trade panic. in the u.s., limits for individual securities were deduced as a direct response to so-called flash crash in 2010. regulators would acquire circuit
breakers from 2015 as part of a broader effort to control systemic market risks. the background. following the 1987 crash, the officer brought circuit breakers. single security limits are widely used in the u.k., spain, singapore, and india. here is the argument. they can restore calm and even build confidence in the market. the main concern is to set thresholds. produce littles evidence that they cut panic. they can counteract erroneous trades that send markets into a tailspin, particularly as
matt: this is bloomberg markets. not every company profiled in our small to take serious follows a straight line of success. there can be serious setbacks, like, for instance, a global financial crisis. faster 360 has had quite the rise since they opened their doors. the ceo tells the tell. >> it is an experimental marketing agency. you have the taste, touch, and
feel of the product. i had been working for number of years and corporate america. entrepreneurial itch of my own. lump bonus1, i got a and thought, it is now or never. the first year was great. people were having meetings with us. we had some small projects. then, september 2008 happened and it collapsed. it was like holding a boat in the eye of a hurricane. we were forced to be really creative. by 2010, we could see that something was shifting. starting to loosen up a bit. we could see the light at the end of the tunnel. ebay, lyft. paypal,
silicon valley used to be they lived online, they traded online, and people came to them. their action having to go off-line to grow online. if we had to really compete with so many other industries for great talent. for us to keep running the business, we are constantly recruiting. we have ads on so many different articles all the time. we never stop projects. we want to meet people out there, we want them to meet us. it works really well. to 45t from two employees employees. we opened an office in san francisco in 2014. we have gone from $200,000 in buildings to over $10 million. we would like to double the revenue in the next five years
at least. we would also like to open more offices in the united states and broaden the international circuit. really the sky is the limit because this industry continues to grow. we are excited about the future. that was factory 360 ceo in our small to big series. torlet: coming up, uber said put a low price tag on lyft. matt: we want to show you live pictures from the press conference in italy where leaders are speaking about a europe post brexit, striking a hawkish tone. if you look at the headlights coming you will see that france all longed -- francois hollande is talking about the need to provide defense. angela merkel says one of the
key challenges is the fight against terrorism and protecting europe's borders. a lot of talk about defense and protecting borders here in a post brexit world, considering that this protection of borders is one of the reasons that the u.k. voted for brexit. it is kind of ironic. scarlet: speaking of irony, they are speaking on the garibaldi, theh usually patrols mediterranean, to save shipwrecked refugees. matt: you can follow this on our live go platform. it is a very global, multilingual broadcast with german, a tiny, or spanish. ♪
live from bloomberg world headquarters in midtown manhattan, i'm matt miller. scarlet: i'm scarlet fu. we are covering you from san francisco to mumbai this hour. the dollar is gaining in strength as stanley fischer boost speculation that u.s. interest rates will increase this year. and that uncertainty is definitely being felt by investors. howard marxanager spoke exclusively to bloomberg about being cautious in current market conditions. scarlet: the battle in ridesharing is ramping up. uber says it would not pay $2 billion to buy rival lyft. matt: we are halfway through the trading day. markets deskthe
where ramy inocencio has the latest on equities. we are seeing the impacts of what the fed is saying today, as well as impacts on pharma. we are pretty much on the flat line. -- dayile days the past the past few hours. we are now back in negative territory. the nasdaq is unchanged. let me show you what is happening in terms of volatility against the 20-day moving average. this is volatility against a 20-day moving average. is that volumens is less than a 20-day moving average. sector.the health care generally down by about 20% against the 20-day moving average. this. is pfizer, making news because of medivation.
they are up by about 50% in terms of volume. generally speaking, we are seeing negative volume. take a look at the five-day moving average. are seeing a close range in trading over the past five days. we are down .4%, but take a look at the range. range in a 20-point the last week. these are the dog days of summer, of course, so people are holding back on their traits. we will see what happens when people come back after the holiday. scarlet: what specifically is holding things back into equities? ramy: chief among them is oil stocks. take a look at wti crude. near are at session lows. $40 and some change will get you a barrel. you can see the knock on effect of oil majors.
halliburton down the most, 3.7%. in addition, retailers also giving up gains, after what happened last week with profits. now we are seeing some profit taking. kohl's down 2.6%. scarlet: thank you. let's check in on the first word news this afternoon with mark crumpton. the state department says it is reviewing nearly 15,000 previously undisclosed e-mails recovered from hillary clinton private home server. the first batch should be released in october. that raises the prospect that they could become public just before the november presidential election. campaign may be wavering on whether he will call for deporting 11 million immigrants who were in the united states illegally. the washington post says that trump made it clear to a panel of spanish advisors that his
position is not final. his came manager says that his stance was "to be determined." turkish president recep erdogan is complaining about the election dining of an islamic cleric. the president says the u.s. position on the individual is overshadowing the country strategic partnership. he plans to discuss the situation with vice president biden who is scheduled to arrive on thursday. the u.s. says it needs evidence that he did something criminal. sweden is mourning the u.k. not to drastically lower corporate taxes as it prepares to leave the european union. the swedish prime minister says a big tax cut would make brexit talks more difficult. the british chancellor of the exchequer indicated he would like to reset fiscal policy through tax cuts and other measures. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg.
thank you. we will get a second reading of u.s. second quarter gdp on wednesday. it comes as widening revisions and changes in technology are undermining confidence. former imf chief economist olivier blanchard wrote in a note this month that the single focus on gdp is misleading. distortions affect the composition rather than the size of our outlook on current policies may be as important. our economics reporter is with us now. also joining us is in joe weisenthal. , let's go into the problems with gdp. the numbers are revised dramatically every couple of months. , athey are revised often the second, third, third print and onwards, due to trade data.
the revisions are getting larger and larger to the point that investors are wondering, should we be trading so aggressively on the first print when it comes out? at the same time, there is a lot of information on the economy, so you have to wonder if this is the motive -- most accurate picture of what is happening in our economy, chiefly inequality. joe: we measure inequality in nations around the world partly by their gdp growth, but there is so much talk these days about spreading growth across the country, whether growth within a country is distorted are concentrated. what measures do people look at the see if a country's growth is evenly distributed? it is hard to say. some say you should look at social progress indexes. others say we should go out to cities and regions and measure happiness because there is a high correlation between happiness and gdp data. matt: that is interesting --
happiness -- but it does not seem as cold and hard as the numbers of gdp. why isn't gdp a good measure for the economy? i know you have another story on the terminal about the increasing income inequality. is that one of the main reasons, are there other statistical problems with the measuring of gdp as it relates to the economy? inequality is one side of the conversation that has really been missed by looking only at the gdp. you have seen this sort of issue , listening to donald trump speech, or what has been going on in the u.k. gdp was established after the great depression, when we had a very manufacturing-based economy.
now we are looking at a lot of technological disruption, innovation. $10 15 years ago but you a cd. today, that same $10, you stream music online, movies online. how that is being captured is different in gdp. matt: i know that we talk about a lot about how productivity is measured. i was messaging with someone on , this probablyg is not in the productivity measurement. a lot of things cannot be measured today the way that they could have back in the great depression. like one of the issues. how much of this is an inability -- say the premise of gdp is sound but we cannot measure a lot of the economic activity? right. you are we are expecting gdp to tell us more than it actually can. it was never designed to capture things like inequality or productivity. we have to hope that the g-20
leaders, who are meeting next month, look at a water birth of statistics, when they look at what each economy needs. scarlet: and central banks as well. posited that maybe they should look at different metrics, including perhaps .ominal gdp that has been suggested as a possible metric to target. if gdp is so problematic, the notion of a central bank targeting that would just create more issues down the road. saleha: that is right. last week, atlanta fed governor lockhart said that of the gdp core accounts, looking at the real final sales subset is something to look at, at least to capture what is going on in the u.s. economy. joe: how much of a problem is this in practice? i get there are a lot of structural issues with gdp, but on the other hand, we have a whole lot of economic data
coming out every day. employment is broken down by region, wages. is the issue about fixing gdp, or getting policymakers to make sure they are looking at, as you say, a wide birth of data? i think it is the second, looking at a wide birth of data. maybe not a replacement for gdp, but trained economists and central bankers, heads of state, finance ministers could look at more than just a gdp. this is a problem not just in the developed world, but also in the emerging markets. china has transition from an industrial-based economy to one that is more consumer driven, also seeing the limitations of relying on a gdp number. saleha: in japan, in 2014, they had marked a contraction for the year, but looking at the data after revisions later on, we saw
there was actually growth in 2014. something similar happened in the u.k., and even india, you have investors looking at gdp but hedging the way they interpret the data by looking at vehicle sales, electricity sales, and other data. joe: you mentioned one possibility is serving people, asking them how happy they are. ultimately, what is the point of this other than to increase human happiness and welfare? simple as asking yes or no, is there a refined approach to measuring that? gallop does have a survey looking at happiness, judging where it is great to be a man, woman, scientist, but i don't know if it is as revised -- refined as gdp data. scarlet: fascinating conversation. one that needs to be debated within politics and economics.
you are watching "bloomberg markets." i'm matt miller. scarlet: i'm scarlet fu. stanley fischer says the u.s. economy is already close to meeting the central bank's goals. wealthy give no mention of a specific rate increase, his speech to send the dollar soaring today. mohamed el-erian gave his take on the message. here he is this morning on bloomberg . first and says the fed has progressed quite a bit not just on the implement objective, but also on the inflation object is. the fedit recognizes needs other policymakers to step up and do their responsibility. fed isit tells you the as worried as others are about structural issues and not just cyclical issues. put that together, yes, it is somewhat more hawkish relative to markets on interest rates, but as you know, i have felt for a while now that the markets were underestimating the
potential for a rate hike. you have a market condition by experience. the fed wants something and then does nothing. get a handle on market expectations in a material way? we may have edged up in terms of probability but not in a material way. isn't the job of the fed to get a handle on the market again? mohamed: it is a hard issue for the fed because the markets have been conditioned to believe that when push comes to shove, central banks in general are going to be dovish. you rightlywhat said, the bank of japan giving a dovish signal. youmarket does not believe can have massive central-bank divergence. that is the reality. at some point, you will have to break that conditioning. i don't think the market will break it on its own because it has been an incredibly profitable trade to believe that
it can leave the fed over and over. at some point, it will be the fed having to leave the market. feel like dudley and fisher, who you could argue made the more hawkish comments, speak for yellen on friday? mohamed: it is hard to say. we will hear what she has to say on friday. jackson hole tends to be more academic. the markets will have to work hard to see what is coming out. carefully at the ballot between cyclical and structural issues in chair yellen's speech. and more focused on the headwinds to growth the less effective growth rates are and the higher the collateral damage of low interest rates in a protracted fashion. scarlet: that was mohamed el-erian. matt: it is time for the bloomberg business flash.
in the u.s., most business economists, 55%, say hillary clinton would do better with the economy than her opponent, according to a new nabe survey. libertarian candidate gary johnson was second with 15%. donald trump was in third with only 14%. the survey also found 62% of business economists say uncertainty about the election is hurting growth at least somewhat. next, uber says it will not pay more than $2 billion for lyft. is it actually considering buying their arrival at all? we have the details. this is bloomberg. ♪
a potential buyer, according to people familiar with the matter. point $4 million in cash and an investment from general motors, they have a valuation of $5.5 billion. but it's competitor uber will not pay $2 billion. let's go to bloomberg radio. >> i want to welcome our bloomberg television watchers. notre talking about uber purchasing lyft. to tell us more, we have eric newcomer, our technology reporter from san francisco. eric, tell us a little bit about this story having to do with uber saying they are not interested in buying lyft for antitrust reasons but also putting a low price tag on lyft. can we think of this just as slinging mud at the competitor? >> i have to be careful about
how i relay, but i got this from sources. executivessome uber were saying to their investors, they only think lyft is worth about $2 billion. that is the price they could see paying for it. that was the first part of the story. ceosecond part, the uber does not think -- regardless of whatever price they would be paying -- would make sense to buy because of the regulatory scrutiny from the federal trade commission that uber would likely face. atis a little strange that the same time they are saying we think it is worth $2 billion, yet we are not going to buy it, but that is sort of what was happening. uber executives speculating about what they think the price is worth. on the other hand, the decision made by the ceo privately about whether he thinks it would make
sense given antitrust concerns. >> lyft did respond and said essentially that this was mudslinging directed at them. i wonder, do you think uber took the time to evaluate what the work is of lyft given the antitrust inserts -- concerns? is one ofue of lyft those things that is constantly being speculated among investor types. i am confident that executives at uber have thought about what it is worth, how much cash lyft has. situation.y specific what would uber gain from acquiring lyft? i am sure they have talked about that calculation and waited the antitrust issues. on the other hand, i can see their point. itself, looking to sell
there were all sorts of price positioning around what lyft would be worth. this $2 billion number coming out is frustrating for lyft. recode reporter that they were looking for $9 billion. certainly a lot of positioning around what they are worth. uber's investors and executives have no incentive to put out there that lyft is worth the time of money -- 10 of money. that was pimm fox and lisa abramowicz. you can listen to bloomberg radio. i listen on sirius xm every day. you can also check it out on the app. usually on the commute. matt: everywhere. fishing, kayaking. scarlet: speaking of, let's turn
to the olympics, which wrapped up this weekend. i did not realize this, but throughout the olympics, throughout much of history, the goldman or is almost all sold or. 6% real gold medal contain gold and the balance was made up of silver. it is still one of the more valuable metals awarded at the games since st. louis. the 2016 real gold medal is worth $551. the 2012 gold medal is worth six hundred $80, so that is a 19% drop in value. the reason is because you have , silver, and copper prices because of a stronger dollar and waning demand from china. matt: i feel a little bit jet. i thought a gold medal was pure and solid gold. scarlet: that has not happened since 1912 in stockholm. that was the last time gold medals were made out of gold. matt: i want to show you a quick
chart that i have. is open interest in crude futures. that is the histogram, the white bars. the tank line is money managers short positions. that has come down as well. what this suggests is that the rally that we saw before today in oil -- and we have seen it come to a bull market -- has been mostly due to short covering. if that short covering has been finished, any drop will not have the cushion if oil prices fall too far. we will speak about distressed debt next with howard marks. this is bloomberg. ♪
hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business.
news with mark crumpton. breaking news today, comments from former president bill clinton about the clinton foundation. he has released a statement saying the foundation's work should continue its hillary clinton wins the presidential election. the letter goes on to outline the foundations ages if mrs. clinton is elected. this comes after the republican nominee donald trump released a statement today calling the clinton foundation -- calling for it to be shut down immediately. "theid the foundation is most corrupt enterprise in a political history" and accused the clintons of lining their own pockets and taking care of donors instead of the american people, in his words. saysois senator mark kirk ebola hold a hearing in september on the obama administration delivery of $400 million of cash to iran.
republicans have criticized the administration since it admitted the payment of the money from a 1970's a running account connected to a prisoner exchange. the administration denies the money was ransom. france,ers of germany, and italy are meeting at sea today to discuss exit, economic growth, and the threat of terrorism. angular merkel, france wall on, and antonia renzi are aboard the italian aircraft carrier garibaldi -- giuseppe garibaldi. former french president sarkozy wants his old job back. he has announced he is running for president. his republican party hold their primary in november. sarkozy let france from 2007 2 2012 and has urged a tougher stance against terrorism. a wildfire in central california is chasing more people from their homes. the blaze has destroyed 47 structures and forced the hearst
castle to close. the fire has burned 43 square miles of timber and dry brush since it began august 13. it is partially contained. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. turning back now to the markets, oaktree capital co-ceo and cofounder says it is time to be cautious, unless you are willing to take on a significant amount of risk. howard marks talked about the current interest rate environment with erik schatzker. the normal yield spread has been between 350 and 550 basis points. >> we are now around 500. howard: we are now in the upper portion of the historic range.
if you bought high bonds in the upper portion of the spread range, you did quite well relative to treasuries over a reasonable holding period. with theroblem is not relative return. you cannot eat relative returns. the problem is with the absolute return and central banks have brought all interest rates so low, even if we have a nice spread on high-yield, it is still at a low absolute. that this is the chart illustrates the point you have been making. let's remind everybody. with interest rates here almost at 0, 25 basis points, interest rate in europe and japan negative, investors are being incentive to chase yield. how does that same investor prepare for calamity? it is very challenging
today. we are in a low return world. those are the three most important words to remember. how do you go about doing business in a low return world? low returntle for a with characteristic safety, or you can pursue a high return. how do you get a high return in a low return world? the answer is you have to take significant risk. erik: are you comfortable taking that risk? howard: i am a professional. do not try this at home. we have been doing this for 38 years. we have operated under a mantra, move forward but with caution. a cautious we are investor, so that means more caution than usual. increased our caution, our selectivity and skepticism. all of those things i said earlier that were in short supply we have increased. you are willing to sacrifice short-term return in order to protect the margin? howard: we have a safer than
average portfolio. normally, we goes will make a lower return than the average, but that is the price you pay for having a safer than average portfolio, which we think is important at this time. when we say we cannot predict but we can prepare -- one way you can prepare for the future is by increasing the representation of caution in your portfolio. at the creditook market, is there anything that is either attractive on absolute basis or relative basis? howard: high yield on a relative basis. if you buy high-yield bonds today, i am confident that you will outperform traders with recent high grades. that is attractive in relative terms. there is nothing which is absolutely cheap. there are no bargains in absolute terms. there is nothing being given
away for less than its intrinsic value. bringse central bank down the risk-free rate, the base rate, that is like pinning the tail on the donkey. all returns proceed rationally from that base, but at a low level. i wrote this memo, going back in history, in november 2004, the first cautionary memo of the last cycle. i said that we were in a low return world. i described in there the steps one would take once one recognized that. howard: would howard marks ever by a negative yielding instrument? to say it would be easy no, but what are the alternatives? another memo i wrote, close to 20 years ago, called "it is what it is." the investment environment is a given. we cannot say i want a different environment.
reality. talking about political reality -- this is economic reality. if the environment were extremely risky and the returns for taking risk were paltry, then i think it would be better to have a negative return and lose a little bit of money every than to take high risks to try to do better. how many rate hikes would it take to dampen demand? at what point would investors be deemed sent to buy to chase that extra marginal return and trade for something safer like investment grade corporate? jim morrison had a song, been down so long, it looked up to me.
haveder for people to their need for high-yield reduced, they would need to get a good yield without resorting to high-yield bonds. erik: what would that be? howard: 2007, treasury yields were 6.5 for the five-year. everybody says today, if i could get six .5 on a treasury, i would ever own a high-yield bond. the point is, if the five-year or the 10-year treasury yielded three, when they care less about high-yield? borderline. if it yielded 4, 5, people would say, i will pull in my risk. that was howard marks in an exclusive interview with erik schatzker. scarlet: coming up, a big name in american business hitting a milestone. what a big deal it actually was. this is bloomberg. ♪
scarlet: this is "bloomberg markets." i'm scarlet fu. matt: i'm matt miller. a big name in american business hit a milestone last week. we will show you what a big deal it was. let's go to the markets desk ramy inocencio has the reveal. is not as entity company, so i will give you a hint. actually a person. the market cap is actually bigger than these other companies. honeywell,89.4, 88.4.
this happened just this past week or so. it is one of the richest people, persons in the world, if you can take a guess. matt: bill gates. top charts every day. of course, they have the news because bill gates is $90easing his riches, now billion. you can see that here. this is his net worth right now. continuing to pop for the last five years. someis, in part, due to gains in holdings he has, including canadian national railway up 8% year to date, as , a watercolab treatment company. both of those companies near a 2016 high. --bill gates were a company
he basically makes up half a percent of u.s. gdp. you can also go into the bloomberg terminal to look at function, the bloomberg billionaires index. $90 billion follow closely behind -- matt: it is all a matter of perspective. and bill gates had the biggest one day change as well. terminalyou take my right now, i have bill gates page. you can go down and see relative value. 401.6 thousand harvard undergraduate degrees,
and most importantly, 231,000 438's.y -- ferrari maybe gdp is not the way to measure economic rye grass. thank you. a cool story. scarlet: now it is time for bloomberg business flash. itsdo has dropped endorsement deal with ryan lochte after he admitted to lying about being robbed at gunpoint in rio. speedo says it is now donating $50,000 from his sponsorship fee to a global charity organization in result. the first to drop their sponsorship of ryan lochte, the other being ralph lauren. att: kobe bryant is now venture capitalist. he is unveiling a $100 million fund that will invest in technology, media, and data companies. he is partnering with jeff stable.
coach target is buying the brand for almost $4 billion, expanding their footprint in texas and canada. the offer is valued at $4.4 billion including debt and represents a 42% premium over the cst closing price. that is your bloomberg business flash. to stay with canada and the government is hoping to have an economy that encompasses more than what it is largely known for, commodities. canada has always been known to be heavy relied on commodities. move of leaning on manufacturing has not really worked, so what is next? danielle: we took a look at this in a story, hourly reporter was
part of that story. the root of it came over a debate that you referenced which has been going on for my entire life in canada, this idea that we are a rich country in natural resources and we are a net exporter of those raw goods, and nothing that we have managed to do in the past has reversed that trend. we have tried to support the manufacturing sector for a while . we had a strong manufacturing core, but we have always been a net importer of manufactured goods, even with the week canadian dollar. what is needed is obviously more diversification, economic transition. it is not easy. if it was, the country would've done it by now. , going for the simple solution, taking stuff out of the ground and selling it as cheaply abroad as we can is not a long-term solution because , and are finite resources
has not done the economy much good lately because there has been a global downturn in many of the things we sell. long-term is the solution, does the government have something up its sleeve, isn't getting any traction? danielle: maybe a little bit of traction. the hope is for more of an holistic approach. from thehear a lot trudeau government is a focus on service sector jobs. if you look at the statistics, they have been growing twice as fast as manufacturing. it seems as if we are getting some there, which is a good thing. however, as energy prices have fallen, we have all -- lost more in terms of oil exports than we have gained in terms of exporting services. so obviously not the entire equation. peas, we interviewed a famous architect here, jack 80's, fromman in his south africa originally. he has been here about 50 years. he was talking about this holistic approach in which you
reinforce and support industries , which as they move overseas, have the opportunity to provide correct real benefit. you have an architectural firm bidding for a contract overseas. it is not just that you are exporting architectural services. they will also need the raw material brought in, they will work with the air conditioner manufacturers they like, all sorts of expertise. it seems like there is a more holistic approach being advocated. a key part of that is the idea that canada has such an immigrant rich population and increasingly that population is coming from parts of the world that are still growing. so we should be taking advantage and looking more outward, developing the context that those people have. scarlet: to what extent is the key in government backing this approach? they are certainly behind it, a lot of skepticism
they are facing as well. there has been a bit of a debate going on on twitter. deputy minister for innovation pointing out that we cannot all be architects. i think that kind of misses the point. in the past, there has not been a lot done. i reference jack diamond, he has been here 50 years, he talks about arriving in canada in the 1960's when we were happily sending prefab wooden buildings to the caribbean where they would immediately be eaten by termites because we knew nothing about the market and we were a very inward facing country. that has changed. we have a government in ottawa that is globally focused, focused on welcoming more immigrants to canada. wave thate next everyone is aware of is to try to capitalize on, a kind of globalization which is kind of a bad word now, but a globalization that is based more on building ties from your mother country, if you can understand that, rather than exploitation. scarlet: capitalizing on the
but if you are in the mood for a last-minute holiday on a super yacht, there are several ultraluxury option still available. nikki eckstein is here with all the details you need. what are we talking about here? everybody things you need to book six months ahead in order to get a beautiful super yacht in st. tropez. when i was speaking to a lot of charter agents, they found they are getting more last-minute requests than ever before, and it is easy to arrange. that means that you and i can look online today and the sailing on friday if we wanted. matt: we would have to invite some other people. scarlet: what is a super yacht versus a regular yacht? nikki: it all comes down to size. the standard of length of yacht is 25 meters. 50 meters and longer is a super yacht. maybe the two of us could
split the bill ourselves. how much per day? nikki: this is a full-year salary for a lot of people. some of them i've found, the starting point was 95,000 euro for the week including crew. the most expensive was 650,000 a week for the crew -- including the crew. you are getting a lot of rooms and service, but split that 12 ways and it still a big one. scarlet: who are the owners of these super yachts? nikki: they are usually privately owned and chartered through firms. one company has some great, modern design yachts. fussyf the ones have interiors, but the ones i found were particularly beautiful. fraser has a huge variety of inventory and a lot of availability. bbi sometimes,he
the british virgin islands, and i sometimes get a catamaran and people will say, that is richard branson's yacht, but he is not on it. somebody is renting it. can these guys build a super yacht and then break even by renting them out? nikki: i did not run the numbers because personally that is not viable, but that is a lot of what you see. so theyho own yachts can take them out one or two weeks a year, and then make the money back by chartering them out. scarlet: let's say we want to go on a last-minute trip. what kind of deals are they? nikki: mostly inventory in the western mediterranean, st. tropez, monaco, a visa. there is one caveat. ,hile the inventory of boats you can see it is beautiful and broad and caters to any taste, you will find some limitations in terms of the berths available
and the destinations where you can park. so you may need some flexibility there. looking through your story, we could take the 1111. 650,000 euro. much cheaper than i thought. nikki: a week. it comes with 16 crew, if that makes it better. very good for the billionaires that you just revealed on the ritualist. matt: thanks for joining us, nikki eckstein. to read her stories, check out bloomberg pursuits. coming up, we will be hearing from mario gabelli. chairman and founder of gamco investors. this is bloomberg. ♪
david: over the next hour, we will be covering stories from los angeles, san francisco and washington. here is a take on what we are watching -- the redstone's have taken back control of viacom. viacom shareholders --viacom shareholder, mario gabelli, is here with his take. oliver: stanley fischer says the central bank is closed to meeting its target. investors will look for more queues at jackson hole this week. turn to thee will 2016 presidential race, donald trump calling for the clinton foundation to shut down immediately. will this move help narrow the gap in the polls? markets close in about two hours. let's had