tv Bloomberg Markets Bloomberg August 23, 2016 3:00pm-4:01pm EDT
>> we're live from bloomberg world headquarters in new york for the next hour. also covering stories in san francisco and washington, d.c. are higher but investor sentiment is shifting back and forth, trying to figure out if and when the fed will raise rates. >> on the heels of a tweet from newsmusk, expecting some from tesla. monitoring the headlines, of course. to launch gearing up drive willis cars in pittsburgh in the next few weeks. we will hear about what the mayor thinks about this plan in .n exclusive interview we are one hour from the close of trading. let's head to the markets desk wherein he has more.
>> we are still seeing markets in the grain. we're comparing them earlier from oil off of that iran report, in addition to best buy coming out with better-than-expected earnings in addition to u.s. july home sales. the s&p 500 2188. we are two points below the record close of 2190. .e have paired those gains the nasdaq is two points above its record close. the dow did not get close but it is still up in record territory. first off, let's head on over to best buy. what we're seeing, it is on pace for its biggest gain since january of 2000 and one right now. 38 $.98 -- $38.98 per share.
in terms of july home sales, we are this effect in terms of home builders. up nearly 8% here. this is the highest since the order of two or 3% there. let's look at what is happening with oil. the iran report regarding the potential willingness to play in freeze, crude is up on session highs. $.10 per barrel there. we're monitoring what is happily -- happening with tesla. shares of earlier today along with news that elon musk says there will be an announcement california time. solar city jumped to the same. we will monitor the bloomberg until that comes out. >> thank you.
mark crumpton has more from the newsroom. mark: heartbroken is how president obama says the nation feels following devastating flooding in louisiana that left 13 people dead and destroyed thousands of homes and businesses. said now is the time for washington to do it part. president obama: we know how much permanent housing will have to be built, when we have enough sense of how much infrastructure has damaged, what more we need to do in terms of mitigation strategies, that is when congress may be called upon to do some more. cohen the federal government approved more than $100 million in assist. hillary clinton is leading donald trump by 16 points in virginia. the college coal has clinton with 55% and trump with 36% in a
two-way race. clinton leads 48-32% in and expand and poll, libertarian gary johnson at 18% and joel stein at 3%. tim kaine accused mr. of using his campaign money to make money for himself. he pointed to reports that trump raised the monthly rent. his campaign pays to headquarters here in new york city. disagreed with the claim. vladimir putin will meet with anglo merkel and france while on the sidelines of next month's g-20 summit in china. the spreads -- the prospects for the continuation. tension in the region has been soaring with russia accusing the ukraine of using terror tactics and crimea.
the irish have started to return home now that the economy has gotten better. it would migration for the first time since the financial isis. people moved to ireland in the year ending in april, if or 10% increase. the number of people leaving ireland fell. global news 24 hours a day powered by more than 2600 journalists in at -- and analysts. this is bloomberg. david: thank you, mark. uber self driving fleet arrives in pittsburgh this month. dozens of tracking sensors. supervised by humans in the driver seat by the time -- for the time being. collie, emily chang, standing by with the mayor pittsburgh. over to you. emily: thank you. joining us from pittsburgh, thank you for joining us.
did your talks with uber start? how did it come together? >> the initial conversations happened almost 18 months ago. travis and his team had been looking for a city that basically create innovation center for autonomous vehicles. advancingen driverless cars in limited areas of the city and over the course of the past few weeks, it took the next level, the ability to: up on your app and be able to use autonomous vehicles as part of your uber experience. why do you want pittsburgh to be the innovator of this? it is exciting but unproven. >> it is but it is not. it has been over a decade since using driverless cars in the
city of pittsburgh. uber has been all over the city with it. i got to be the first person to use the vehicle itself, ending a night and having travis's team take me home. there is no difference in the car and at the same time, safety is coming first. we already have a driver in the drivers seat. the technology has been there for some time. it is now time to take it to the streets. pittsburgh done to prepare for this? have you changed anything about the roadways? on it.f bridges he hard for self driven cars especially to navigate. >> i would say the challenge is in pittsburgh, including the weather. we have more bridges than any city in the world including venice. idea is those challenges are the opportunities to show that technology can work anywhere.
was chosen because we have one of the leading robotics industries, not just for autonomous vehicles but for every type of automation. the other part of it is the challenges that uber will be facing and showing it can work year. the vehicles do not travel more than 25 miles an hour. they are outfitted and work with pittsburgh police in being able to also do safety concerns. remember onant to an annual basis, 1.2 5 million, 1.2 5 million people were killed in automobile accidents around the world. the leading cause of death for people 15-29. we can do much better and we can make our streets safer and make mobility safer. as we look at this as a global trend, the three areas where is shared, moving electrical, and autonomous. i think everybody wants
safer driving technology. the question is how do we get there. it is one thing to be the person who calls the self driving uber yourself, and it's another to be the person on the road and do not agree to drive next to a self driving over. how do residents feel about this ? have you talked to them or pulled them? >> i have not. we're working not only with uber but the u.s. department of transportation. secretary fox and his team, a key issue is cyber security, utilizing a lot of cyber thatity expertise pittsburgh provides. the pennsylvania department of transportation again mandating and putting requirements on that look at safety first. whether it is inoculations, mobility were now with and autonomous vehicles, there is always a test time and that has both positives and negatives that come with it. , is anythingis
failproof? no, obviously, the 18-year-old texting and german down a two-way street at 60 miles an hour provides an obstacle to safety as well. us legal clarity on exactly how this will work. how does the city sete luby's cars today? president lee, there are autonomous vehicles on the streets. be duringence will september when you use your app to have an override pick you up, the autonomous vehicle will be on the streets of pittsburgh as well. given the option to take it. if you do, the ride will be free and it will be the same as any other driver picking you up. there will be two drivers, one with the hand on the wheel and feet on the pedals. if the car does not recognize exactly what is there, a light
will go off, there will be a sound, and they will take the wheel and the person sitting next them in -- next to them is monitoring basically in a computer all of the sensory detection that is happening. interesting to understand, every car being produced, every car out of detroit and around the world, eat -- is being equipped with sensors. those will have the ability to speak with each other. the future of the next few years, the vehicles will also be talking to traffic signals. be sensors that cities will put up and the whole idea of mobility will shift and this is just the first step of what will be the next 10 years, a radical change in the way we view urban transportation. emily: you mentioned there will be two drivers in the car, a main driver and a safety driver. at some point, do you see this as a job killer or job creator?
>> pittsburgh is now employed over 500 people from around the world to an -- to anticipate the project. as you see the transition from a heavy industry city 30 years ago, they went through economic collapse. new city emerge where cooper, google, disney, of thesepple, all companies are creating a global innovation center in pittsburgh. the cities that get out in the front will be leaders in the industry, where other companies will locate. talent will locate. what i want to see happen in pittsburgh is that we not only build the technology but we start manufacturing the parts as well. advance many factoring being another part of this, a critical component in billing -- building industry for all. emily: it is a fascinating experiment you are running. bill, thank you so much for joining us. i will send it back to you,
-- 10%. mark is the u.s. equity strategist at any of america merrill lynch. to have you. you have been in the headlines today. foring about the potential some kind of volatility. what do you think could be a potential catalyst for this? >> we had a sell off at the beginning of the year and sentiment got low, expectation for growth. loyal rebound back. trading rich. extremely elevated.
people are expecting this economic recovery to continue to grow. aboutsus is expecting twice of what we are expecting. night -- not quite sure were all of this growth will come from. >> a lot of people look at that and they say, this is a good sign because investors want to be in the companies that will benefit on the back of an economy. are you in essence making a referendum on the growth of economy. support thell not financial type companies? >> we're looking at 1.5% gdp growth this year. 800 news articles on stimulus.
>> what are you seeing there? >> absolutely. it is at a four-year high. because of that, even though we are cautious on the market here, there is a lot of opportunity within the market. if you are looking for yield, a better place to get it rather than utilities, if you are looking for growth, we like technology a lot. health care trading to the market, and energy from a structural perspective, we continue to like energy here. >> one of the indicators you had in your note this morning, a lot of great charts in there, i want to bring up betting on the vix. we look at speculative heading on the vix turkey will are short on vix. there has been a lot of talks about to what degree those are out right bets or institutional
traded to the exchange products and funds. they need to have the futures on hand. how much is an actual bet? >> i think part of that is technical, playing on the volatility curves and stuff. out right is not as bearish as it would look. there are technical aspects in there. volatility coming down significantly, especially heading into a contentious election season. you typically see volatility increased. you would expect volatility to , especially given the global growth expectations that investors are starting to feel now. >> thank you for coming in. bank of america merrill lynch equity strategist joining us in new york. this is bloomberg. ♪
oliver: it is time now for options insight. take it away. you very much joining me for today's options insight is the chief strategist who joins me from the cboe in chicago. good to speak with you. the s&p today punished above its record close of 2190. it has since pulled back. do you think we could do it again? >> of course we can. marker looking at a right now that has become over complacent. the s&p are new highs. at some point, forget about anything off that you would think about. at some point, those have to come back in together. to 205 p no limit to how far we can go but the
power will not be very good if it continues to the upside. see the high s&p, you will more of a convergence the other way for a while. data if you weeks ago, when the official start of fall comes in after labor day? >> when you just looked and you heard, last week, jackson hole on friday, so if we're really serious raising rates, i think that would be the information you are looking for. i think again because of the volatility and where we are, i think there is a better chance to work its way back down. to go ahead and put on a spider trade and give myself an opportunity to make money on either side of the trade so i will use a ratio sell septemberll
16, i will buy six to 17, i can do that for a net credit of $.70. market is higher and i get to keep the credit. if it goes way down, i get the market. really way i get hurt is if it stays in the middle. it will move significantly higher but i think we will move significantly lower which make this trade go down. that.all eyes will be on fed chair yellen speaks them. any thoughts as to where she might go? some dovish and recent bullish comments especially from fisher this past sunday, right? commentsk the hawkish contain the market from going too much further, seriously. i think there is no way we will see interest rate hikes before the election. i think the election has got enough of its own stuff in and i do not think they will raise rates going into it. possibly the end of the year but
more lip -- more lip service right now. we will be data dependent. we have not raised our rates yet. >> looking at fed fund futures, a pricing in at 28 percent or so. dovetailing with what you are saying. we will have to leave it there. thank you as always. david: thank you. we appreciate it. continuing to monitor that news. shares of tesla on the move. call -- nasdaqe conference call. this is boomer. ♪ -- this is bloomberg. ♪
word news. mark crumpton has more. mark: the obama administration says it received a formal request from turkey for exile cleric. onming july's coup attempt google and who lives in pennsylvania. tonight any connection to the coup plot. is unrelated to the failed coup. florida has returned five new nontropical related cases of the tampading one in bay area. gov. rick scott says four new cases are connected to mosquitoes in the arts district. he says the fifth was diagnosed in a resident who has not died -- traveled internationally. linked andwere threatens homes on california'central coast.
the blaze has charred nearly 58 square miles of brush in monterey county. the fire is about 35 percent contained. hillary clinton is proposing new tax deductions for small businesses. billsad costs like phone and would also call for a quadrupling of tax deduction for new businesses. her of that would be paid previously announced overhaul of corporate taxes. news 24 hours a day powered by more than 2600 journalists than analyst in one of 100 and 20 countries. back to you. close in just under 30 minutes, let's go live to the aztec to see -- the nasdaq to seaworld the action is. what is going on? abigail: it looks like the index is on pace to finish at a new record high. we will know in a few minutes if it can close back above 6252.
breaking news out of tesla. earlier today, shares higher around 1123 ones the elon musk saying thereet would be a product announcement later today. it just came out and the headline says the new versions will have more powerful batteries. we will break it down more as time goes on. ceo elon musk really being a vase -- a visionary and having the enthusiasm of investors as the new project comes out. can they did -- continue to deliver on production targets? the targets this year was about 80,000, lowered slightly back in july. the more vicious target is 2018, whether or not they can deliver five 8000 units per year, up significantly from last year's unit delivery of about 50,000. plus there is a cash burn issue but you have to hand it to elon musk, a true visionary who really does have enthusiastic
people for this story. the stock is up, simply huge from the ipo back in 2010. matt: i am a little distracted. this is an unbelievable amount of torque and power that this car will be able to deliver. a time of 2.5 seconds. it is faster than any ferrari or lamborghini in production. it is faster than a dodge challenger. an unbelievable amount of power is being delivered. the most important thing if you are a tesla owner is to get stronger wheels. you will put so much power down that you will be skidding out. all right. the nasdaq, let's do away from tesla. what could propel us to a record high by the end of the trade? >> that was a good breakdown. i'm sure you will be in line to get one of those vehicles. sounds amazing.
the biggest loser is now the biggest gainer of the day. this is on a report from the new york post. apple could take a stake in the ridesharing company lift. the terms of the potential partnership are undisclosed. nicely aligned with a $1 billion investment in china and earlier he says this makes a ton of sense and it is a big opportunity as ridesharing really leads to opportunity around self driving cars. they have the budget to do it and the people to do it and it could make up for slowing revenue around the eyes on. and says itagrees is all about the ecosystem, that this will help apple build out the ecosystem. matt: thank you very much, abigail doolittle at the nasdaq. >> you have tesla announcing that it is adding a 100 kilowatt battery to the model x and it will bring down zero to 60 2.5
seconds. is a lot of jargon in here which i do not understand which you do very well. saying it will be a powerful car that will appeal to enthusiasts. matt: it is aimed at someone who cares about numbers. you already had so much power at tesla. 700 horsepower for all wheel drive. no other production power you could buy offered that much. already, the previous been, except for the dodge challenger, and that was only rearwheel drive. this will be more powerful than that and still the all-wheel-drive. it will be able to propel the car more quickly than i can with a motorcycle. if you could understand the has got toeight, it be more than 3000 pounds. it is incredible they would he able to do this.
>> we knew that elon musk would make this announcement. he said it was a product that pushed the stock up. you can see this -- the stock took a leg lower and is now kind the unchangedound line, up 1%. certainly a lot lower. strikes meg that watching matt get excited, a lot of people criticized tesla and elon musk in they say it is all built on government subsidies and government picking winners and all of that stuff. it is an impressive technological engineering feat regardless. matt: it is unbelievable and one thing that elon musk is doing is winning the battle of renewable power versus carbon fuel. a lot of times, gearheads like concerned about solutions that i want to put power to the wheels you can do it in a more efficient way with
a battery that does not weigh as much as the entire car. it is an impressive feat. the news ont of tesla. i am so happy this is what we >> somewhat gloomy overall outlook, but he thinks the fed should raise rates as early as september. joining us now is the chief economist and one of the top bloomberg ranked economic forecasters. you began your career at the new york fed in 1980. we.
>> tell us about the juncture the federal reserve faces. about theo much talk re-think of the framework and a lot of assumptions about what caused inflation itself or the are still relevant. where do you come down in these debates? >> the fed has been rethinking its framework in the last 50 years. it only difference is in recent years, they felt compelled to lay it out in extrusion detail -- excruciating detail. there have been floating estimates of what the long-term fund would be as long as i have been in the business. with -- we would not be paying so much attention to it if they had not insisted on putting that down. matt: to be clear to everyone who is not an economist, there will never be a fixed mutual rate. it is not like anyone could ever point to a number and say that is currently the root -- the mutual rate. i know that to be true.
theycept the fact that fell to the trap of pretending that is true during the year when they would rule all monetary policy debates. we knew it was. it was 2% everywhere. >> you're looking at a chart trying to get us closer to mutual. you have horizontal redlines at 3%. everything is below 50 basis points right now. you look at the rate and where it should be, where do you think we will be at the end of the tightening cycle? >> two different things are the fed has been talking about where we will be in the long run. five or six years. the way they describe it, the conditions we will converge to with five or six years with no further economic shot, i do not anticipate a five-year stretch in the remainder of my career. you used to be able to pretend you could do that because the
u.s. economy is more insulated even though we traded with the emerging markets, we had an industrial mix. into theot as tied business cycles. we have a broader range of shock that can affect us and it all just keep happening. want to hear from janet yellen on friday? >> i hope i will hear things that will be of interest to mainly just me that will not have a lot of market impact. at the beginning, the one year into a long-term research project, to try to figure out what the policy frameworks look like in the long run, after we shrink the balance sheet, once the new match regulations are she will be, talking about what is in the toolkit and she may be talking that the day to day tools are, if you are a fed junkie, of great importance and great interest. i hope they will talk about that. falling or leaving
action? >> is the narrative the fed wants to push leading? think the markets narrative is driving price action and the fed and the market have had very discordant views for quite a while now. >> i agree. >> the fed is coming reluctantly. >> but we have has and speeches , price stability, the fed has other masters in led i things that are or should beary tertiary considerations, like market pricing. >> i think the fed is fully focus on those but they have made a very important transmission, that they no longer are thinking of for employment and inflation as the scale or numbers.
lookare taking a nuanced to see what the texture of the economy looks like and things like financial conditions. >> one of the huge things now with the us economy has to do with productivity growth, whether that is something the fed could help accelerate by running the economy hotter or whether the independent thing thinks the economy would generate inflation due to the lack of activity growth. how do you think about this question? >> i do not even think of running the country would get is out of inflation. it would create a boom that would ultimately lead to another crash. it would send us the to a place we cannot afford to be right now. consistently is fending off that line of reasoning, not consistently because john williams has talked about the possibility of getting inflation higher, and everyone's response to the market is that you cannot even get it to 2%.
is usinghe tools it now, could the fed even affect the economy that seriously that it could overheat the economy or get the inflation to run high? >> there is a lot of evidence that central banks could move inflation rates at multiples of 1%. no evidence they could find to infections at 1%. crushd can always inflation stability confidence. any central authority could really crush confidence david wants to. get seriousyou inflation. the fed will never go there deliberately so no, it is not a realistic option for them. >> all right. lou, thank you. fascinating stuff. scarlet: coming up, tesla adding a more powerful battery tax a company says makes its model s the world's quickest production car and gives it a range of 300 and 15 miles on a single charge. this is bloomberg.
having a more powerful battery pack. the company says this makes the model s the more quickest production car and gives it a range of 1500 miles as well. joining us now is keith. i'm sure you would guess, i am very excited by this. tireswearing out a set of in one day is an easy thing to do. how do you think investors are
reacting to the news? >> you are right that you could burn serious rubber in the car. investors are not quite as fired up. midday eastern time today saying there is a big announcement coming. the stock soared. came.he announcement matt: this is something i think about all the time with electric cars. i do not know the answer. five,ad a tesla p.a.d. that i take it to the tesla store and say i want the 100 kilowatt battery, can they switch it out? >> not sure of they could switch out powertrains, you already had the lower mode, you could pay next to 10 grand to get the extra speed. matt: well worth it. i know p90 was a 700 horsepower equivalent with all-wheel drive. >> it is certainly ludicrous and it lives of just lives up to the
name. it is the fastest car in the world according to elon musk, production car, non-racecar. section --from 2.8 seconds. you have to be discerning to realize the difference but there is an improvement. >> they watch this incremental progress of the electric car industry -- what does this mean -- my microphone matt: you're asking what this means for the electric car industry and i think it is a great question. elon musk can brag now that he has the faster car than any other internal combustion engine. >> it goes over 300 miles on a angle charge. so it eliminates all of the stigma if you think about it. electric cars are supposed to be dowdy and this is the ultimate cool. they are supposed to leave you by the side of the road stranded
because they have run out of the jews. you can go 300 miles. it takes away a lot of the things that keep people out of electric cars. if they could just get the price with a $35,000 electric car, we would be all set. >> is the idea here making such a powerful car with all of these things either eyes are so -- if you are a power car buff, there is no reason to get anything else from tesla? the sedan and the suv, the whole market is moving to suv's. you have everything in suv now. if you really want to get out of the beautiful sedan, you can get the suv and have with a market seems to want these days. matt: if i could chime in with a little editorial gearhead, i would say there are a few things, but they are most really
tomostly nostalgia appeared hear the engine roar and go through the gearbox myself. it is about the joy of driving. i do that with a miata, 150 horsepower, or i could not do it with this tesla because there is no way i could get a manual gear shift. no real performance reason that i would want another car versus this. >> no. you should have been here in detroit this weekend for the cruise. you could have wound up all you wanted. that is an amazing feeling. >> could this mean a racing car? e, andhere is formula
electric racing series. it does not get as many viewers. part of the joy of going to a event, a live motor feeling the engines creating all that power and keeping 100% right. what a lot of car manufacturers andpushing for his porsche for ari and lamborghini's instant responsiveness to her you touch the gas pedal, you go. you can get pretty close to almost instant. with electric motors, you automatically get a torque curve that looks like this. that is the exciting part. >> you cannot feel it in your chest. it is cool to not hear the engine. not as cool as hearing it and blowing your eardrums out with it. thank you so much for joining us. keith there on the breaking tesla news. scarlet: coming up, we will show outa chart illustrating the
scarlet: this is bloomberg markets. matt: we will take you into the bloomberg terminal to look at some interesting charts. i am focused on oil. had such a fastball run in the first couple of weeks of august from the beginning to last friday. and dipped below 40. today, down, and back up again. the interesting thing with a sprint and quick bullish at the beginning of august, investors, you can access this 2977 is weekly inflows of -- and outflows of the world's's
largest oil etf. see the last column your shows you an outflow of $300 million. last week, the tail end of the bull run, such a bullish and momentum move for oil. investors worth buying it. >> there is one of many things you look at. that is a pretty striking outflow. matt: i was showing yesterday with scarlet and open interest in crude. you can see the short bets have really decreased. getting out of usl, they were also decreasing short that, meaning maybe they
were bullish on oil, but now there is not as much cushion to catch it. scarlet: part of the reason people are more or less bullish on oil has to do with demand from emerging markets. equities have been on a tear but timing has trailed. we have created a portfolio to look at companies that derive revenue from china in the first half of you -- half of the year. that is the way line. versusve outperformed bloomberg rolled index. they certainly outperformed chinese equities, down 13% so far this year. metals, texas instruments. that does it for bloomberg markets. major averages closing near the session lows as we head to the close. ♪
u.s. stocks closing higher after reaching record highs. oil increasing. joe: the question is "what'd you miss?" faces tothe fed separate paths. we have the chart that explains their approach. how much longer can the housing run continue? matt: is climate change magnifying the dangers for housing. 36 u.s. cities could be completely lost. we begin with market minutes. and x is setting record highs, .losing nearly