tv Whatd You Miss Bloomberg August 23, 2016 4:00pm-5:01pm EDT
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
janet yellen may or may not give an indication of what the fed sees as the next rate move. joe: very quiet market ahead of that meeting. utilities and staples lagging on the way up today. take a look at the winners and losers for the day. best buy, massive winner. believe it is up $6.43. scarlet: up 20%. toll brothers also gaining after beating on earnings. reports thating on the m&a action could come through. , also want to show you mylan
which shows you three drops. congress is getting serious looking into this pricing issue. they have drastically boosted .he price pair. is 600 for a you need a pair everywhere. matt: $1200 is the least you can spend if you have one of these new allergies. been deadly allergic to peanuts my whole life. looking at government bond markets, higher yields across the curve in the u.s.
yields,or high your very quiet action and u.s. treasury markets ahead of janet yellen's speech on friday. you to keep want your eye on is portugal. look at that. 3%. that is pretty juicy. are ongoing concerns about a potential downgrade, so keep an eye on those yields. scarlet: a big mover today was the south africa rand. there is a local news report the a police unit ordered finance minister to report to its offices. this report raise concerns of a rift between the finance
minister and president jacob zuma. matt: we have been worried about this for a while. have committed the treasury to spending caps off and debt reduction. joe: check out oil. we keep getting these headlines. step ine producers will and do something about overproduction. perhaps something with iran this time. we ended up just over 1%. scarlet: let's take a deep dive into the bloomberg. i'm looking at treasuries. ahead of janett yellen speech? before the movement speech. this is the tightest monthly
trading range for the 10 year since 2006. in august, it's at 16 basis points. in july, 31 basis points. in june, 41 basis points. june forto go back to a smaller trading range in 2006. matt: 32 consecutive days without a big swing. joe: it's quiet. let's take a look at the u.k. it has been two months since that vote. we still have not seen the economy fall. some data is not that bad. the blue line on this chart is the economic surprise index for the u.k.
that could be a function of the data holding steady, but data way better than expected. why do manufacturer export orders pick up? that's because of the week pound -- weak pound. apocalypse.n't an at least not yet. joe: there will be one day. matt: i'm having a look at stocks. what it shows you is that u.s. stocks, the white line -- sorry, the blue line track very closely global tech stocks, the white
line. is that the pink line, ,hich is all global stocks doesn't track either one. techstocks are tracking stocks better than global stocks are tracking tech stocks. here with us to discuss the stock market and today's action is oliver renick. i think the chart is pretty interesting. as the first time i am seeing it. there is a lot to be said about tech companies right now. matt: this chart comes from charles schwab posted in the blog earlier. due.t where credit is
stocks,looking at tech a lot of interesting stuff. when you look at valuations, the stocks,in tech comprising 21% of the benchmark. that number does not vacillate a huge amount. since the run up, they are 21% of the index, so there are starting to be some questions. they are calling into question some of the earnings and valuations. when you look at the earnings backdrop, it is very strong. one of the themes of the
market is how little volatility there is. here, s&p 500ave and implied correlations at since brexit.evel >> this is a bloomberg function everyone should use. you can track this. if you are out there trying to make money in stocks, this is as important as any indicator that there is. up.as not gone back
the problem is whether investors can go in and pick the right stocks. it's a correlation between the different companies, not asset classes? oliver: correct. ,oe: i charted against the vix when you see the surges in volatility, everything moves together. declines, stocks behave in their own ways. stocks might be moving in their own separate ways, are the sectors moving in their own separate ways, are the factors moving separately? at that can be a harder thing to navigate, especially with a turnover. than 400you seen more
million dollars of inflows into the momentum etf's. it is pretty small, but everything else has been significant. >> one of the big stories in the equity market is the emergence of this smart data types tragedy , passive and active at the same time, capitalizing not on a sector or style or factor, momentum is one of those factors. we know which sectors have been doing well, defensive, utilities, consumer staples. what those flows are telling you is that the momentum stocks are those defensive type companies with the dividends. are not only seeing gains
in the sectors, but piling more money into it. speaking of the different sectors. this is the relative rotation graph. speaking of the different sectors. within the leading sectors, technology at the top, followed by health care. maybe consumer discretionary moving up, but a lot of defensive plays. >> i like this function. it is the jackson pollock of market moves. everything has its own story. tech is a shift toward cyclical companies.
some of these economic oriented companies will do better. time, specific stories going on with consumer discretionary. the few groups where earnings has been doing well. as we pivot back towards positive earnings, that can provide lift to the market. you will see some of the sectors do well. joe pointed this out to me earlier. you mentioned passive investing. someone at bernstein put out a note that passive investment is worse for society than marxism. there is a lot of vocal debate on both sides of the data, how long can smart
is investigating a cyber attack targeting reporters of the new wear russiand to intelligence agencies are responsible. federal authorities investigate a breach of the democratic national committee that outside experts have attributed to russian intelligence agencies. times spokesperson would not confirm the attacks of investigation. billy clinton leads donald trump by 16 points in virginia, 55% to 36%. to 32expanded poll, 48% percent, gary johnson getting 8%, joel stein with 3%. joel stein says she could win the presidential election if she could just get more public exposure. she says voters deserve to hear from all the candidates.
candidates must have the support of at least 15% of voters to be included in the three debates. she has been polling in the single digits. tropical storm getting stronger over the atlantic, maximum sustained wind increased 15 miles per hour, u.s. national hurricane center says strengthening is forecast and it is expected to become a hurricane by tomorrow. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> thanks. a number of deals taking place in the private equity space, 4600 this year. steel setday, alix down with the copresident and debt market >>e
and tech violations. what drives valuation are the credit markets. when credit markets are robust debt is cheap, prices go up. theree have seen is that has been a significant increase in the byway should multiples. sector has seen a dealsicant move and many are priced at levels of multiples of cash flow that are out of whack with their growth rates. look at a business, what are the fundamental values that make that business a sustainable grower in its industry because it is the growth rate that really provides that strong underlying fundamental value for a multiple that you pay for that company.
in certain sectors, the multiples are exceeding what the math would tell you about the intrinsic value of the company. >> in the public markets, technology is the only sector where analysts have not been cutting profit forecast. how does someone like you make and eggxit. over the course of the last 10-15 years, we have become much and bring a much more intensive operating approach to our companies. things we have to do in an environment where values are at the higher end of the historical range is to drive significant improvements in the operating performance of our companies, and that leads to two higher earnings even at
constant multiples of allowing you to drive strong rates of return in that 20% range that we in the private equity industry are looking for as a compound annual return on money we invest. and secondly, he even higher multiples. the world is cyclical. think that somehow the world has changed and we will never see another down cycle and multiples, then that the flies -- i've been doing its for almost 36 years -- is going to happen again. >> it has been hard to offload some of the. >> the debt markets are robust. it all depends on the specific situation. the singleemium for
b's shot up, and now that has come down and the spreads have narrowed significantly. the base rate upon which that spread is added is at all time lows. is cost of debt significantly lower than it was in 2007, which is the last time we saw some of the same kind of value multiples and debt multiples on these companies. sperling withott alix steel. scarlet: hillary clinton lays out a proposal for small business owners. this is bloomberg. ♪
philosophical questions about whether the fed needs to rethink about how it approaches monetary policy and saying the neutral rate is lower than anticipated, but that does not change the fact that the fed is trying to determine when to raise interest rates next. we are still looking at an interest rate increase, but it points to the fact that the fed needs to look at long-term and short-term issues and balance that out. rate, if youment look at the unemployment rate versus what the fed has said is the full employment rate, you can see it right there. >> this is the neutral rate. what is interesting is the long-run neutral rate, the median rate is around 4.8.
the u.s. unemployment rate -- sorry, i'm wrong. you are right. there are huge gaps between what the market things might be the neutral rate of interest on the unemployment front, it looks like were close. scarlet: the other mandate is inflation. core pc is 1.6% in july. fischer's said it is within hailing distance, moving in the right direction, trending higher. joe: i love that, hailing distance. scarlet: stanley fischer for coming up with new terminology. >> flirting with natural made me think of the neutral range. we will discuss hillary clinton's new economic proposal for small businesses. this is bloomberg.
>> let's get the first word news. obama is in louisiana, where he got a view of the damage caused by flooding that killed 13 people and forced thousands from their homes. >> this is not just about property damage. this is about people's roots. can these things happen, it seem too much to bear, but you are not alone on this. even after the tv cameras leave, the country will continue to support you and help you until
homes folks back in their and lives are rebuilt. >> the federal government has approved more than $120 million in assistance for residents affected are the flooding. an american soldier has been killed when their patrol was struck by a roadside bomb in afghanistan. -- afghans shoulders soldiers were wounded. this comes a day after 100 soldiers were sent to the area. tim kaine is accusing donald trump of using his campaign to make money for himself. in denver, tim kaine pointed to reports that donald trump raised his campaignent on headquarters in trump tower. the obama administration says it has received a next edition request from turkey.
blamed thent has coup attempt in july on a man who lives in pennsylvania. the man has denied any connection to the coup plot. says the department extradition request is unrelated to the failed coup. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. "what'd you miss?" president obama visited louisiana today, confident the state will rebuild. according to a recent report from zillow, rising sea levels could affect 6% of the housing stock. nationwide, almost one point 9 -- one point 9
million homes are at risk of being underwater. joining me now is the chief economist from zillow. absolutely eye-popping numbers. anyone prepared for the economic and geographical damage that rising sea levels could have on the housing market? i don't think so. i don't think we are at that point yet, especially given that the horizon is not 100 years into the future. you were projecting out 90 years, but what have you found about the pace of the rising sea level over the last 5-10 years? if you look at what inentists have released terms of how fast sea levels are slated to rise, it seems like a
fairly good estimate. if you're looking at 10 years or 20 years into the future, sea levels will perhaps only rise by a foot, maybe two feet in some are lower. it is such a short time horizon there that the real impact will come in the future. given that it is such a long horizon, i don't think people are yet prepared for how much damage water will cause to communities right by the ocean and how much money will be lost in all of this, especially given that our estimates are conservative. were looking at the current housing stock in the current dollar value. if you think about construction into the future, we will tilt more homes and more expensive
homes, especially along the coast, and more people will be affected by this. >> 100 years is a long time horizon. is it safe to assume that mother nature will give us a few hints? absolutely. louisiana right a reminder that global warming is happening. it is possible that it is one of the side effects as temperatures are rising. in the future, we can expect more of these things to happen. there is another example of how much havoc rising water level can cause in a community, how
many homes affected, and how many lives affected. >> we show the top five cities with properties most at risk. louisiana floods easily. , boston,le, new york miami, fort lauderdale, huntington beach are all on here. these are populous areas with incredibly expensive properties. you don't typically see floods affecting apartment buildings in new york city. a top state that will be affected, but other states will be even more so affected. hawaii.ey, florida, of eighta, one out cities will have to deal with cities across300 the u.s. will lose more than
half of their housing stock to rising sea levels in the future. populous areas that will be affected, therefore we will also see a trillion dollars worth of damage here. scarlet: what kind of ramifications will this have? flood insurance as become something much more critical than it had been previously. >> right. we are starting to pay more attention to this. it is a very contested topic. are we over insuring, under insuring, is the cost capturing the whole cost of the system itself, where people should be paying more and flood areas. this it makes sense to rebuild where we have just seen
devastating floods? all these things need to be addressed in the future. up next, theng state of u.s. housing. toll brothers says it is recovering, but not what it was a decade ago. we are not in a boom. we are in a strong, solid, improving market. mortgage money is not easy. builders are not building too much spec inventory. we don't have buyers coming in who are investors. right now this is a steady, solid market, but does not compare to the market of the mid to thousands. ♪
bloomberg business flash. alkswagen has agreed to pay key supplier to in days six days standoff that halted production. below $66 is well million. the suppliers sought the money to cover factory alterations in preparation for a in order that gw canceled. has reached a deal for enhancing services for customers visiting cuba. sprint announced a roaming agreement last fall. more problems for louisiana, suffering from record flooding and the collapse of the oil market. the state may sell $500 million notes,nue anticipation the state no longer has the reserves to pay bills.
that is the bloomberg business flash. sales of new u.s. homes jumped in july to the highest level in nine years. >> purchases in the south where the strongest. discuss thenow to state of housing is bill macgraw mcbride.ill what do you think about this growth of that we have seen in housing. we were talking to toll brothers earlier, who has done quite well. he said it is not a room, but a strong recovery mode. >> who i would say we are in a solid recovery.
there is further growth ahead. one of the arguments people make is that one reason to be optimistic about the economy is that housing cycle has a long way to run to make up for lost time. that westill your view are still significantly under housed? get toink we will 800,000 this cycle, maybe more, another 20% to 30% from here. do we getow quickly to that 800,000. i don't think they will raise rates to quickly, so it does not make a big difference. the growth has been slow, but steady. to get to that 800,000, it's not
so much toll brothers that we need, but the lower into homes. there were so many foreclosures, there was no reason to build. doug from toll brothers was telling us the uber luxury housing market is feeling some pain. the builders are finally starting to get the land and labor necessary to build lower tier housing. >> or has pushed towards that. they are getting most of their growth at the lower end of what we call new homes. >> they are one of the most highly valued homebuilders. risk of what is at
changing next, demand or supply? there, so it has to be supply. for us to get to 800,000, we will have to see significantly more supply. one of the big discussions in housing is that there is so much interest in top-tier cities. they are seeing incredible booms, bay, los angeles, new .ork are there are signs that it is spreading, growth outside those markets? havee coastal areas started to recover the worst when we have downturns, then it spreads inland. joe: what market strike you as interesting? >> one of the things i do look at it our previous distressed
markets, inland empire in , nevada -- phoenix they have a long way to go because they still have a lot of foreclosures there. rake down a regional the bloomberg terminal. there has been real growth in the south and west. the midwest is not doing as well as those two regions. the northeast is below the zero level. >> some of that is peered demographics. >> this is normalized. muchwould not it spectrum pick up in the northeast. the south has the majority of the land, and some in the west. lots than halfe the country together just .itting there there is a lot of growth potential down there. >> the further west you get, the
less affordable. i'd like hawaii, san francisco, san diego, portland. these are expensive places to live. >> they are. some of the inland areas are not that ridiculously expensive. are.red to the south, they boom.t: we are not in a we are just in a strong recovery. what do people get wrong the most when they look at this housing cycle? >> i think the first thing they got wrong was that thought it would recover quickly. hadink this is what we expected with a slow steady recovery. i'm not sure what else people are getting wrong. >> they may have expected more
foreign buyers? >> there are areas of the country with tremendous foreign .uyers chinese buyers are important to california. you look at the broad , ise of economic indicators there anything flashing yellow in terms of the overall economy? >> manufacturing, of course. that you think could tip us into a recession in the next year or two? >> no, i don't think so. good explanations of why certain segments have struggled, stronger dollar, lower oil prices. oil to drop expect another $50? banks, youse central
the questions are how is she going to achieve this, making easier thanaims setting up a lemonade stand, and how was she pay for that? she is talking about a standard eduction akin to what has been available for individuals. trying to setn herself up as someone who is understanding of small business. she is trying to contrast herself with donald trump and as has hees such stiffed contractors or subcontractors.
there would need to be bipartisan support to understand who this would affect and where the money will come from. that is all still to be determined. scarlet: the clinton campaign would love to focus on that rather than deal with the clinton foundation. of stories about how the donors met with her at the state department. the people were donors to the clinton foundation. how much of an ethics issue is is going to be for hillary clinton? campaign as long planned to continue to hammer away at this issue. this gives them more ammunition to do it. it's possible you could hear some of the advocates say that
itproves the opposite, that proves how widely and globally wasclinton foundation something that people wanted to give two. it feeds into this ongoing problem, is there enough transparency? did people really know what she was doing as secretary of state and how it was connected? a difficult thing to do is prove, especially with the continuing disclosures. there are another 15,000 e-mails that were not previously turned over. like this is a good moment for donald trump, if only because he is not the focus.
we are back to talking about the problems that hillary clinton has to deal with. the trump campaign has to like this. sure, but certainly they do. this is a focus on her and questions that would continue into office if she were to be elected, the future of the whaton foundation and about the donors who gave to the clinton foundation. is they are buying access to the state department, right? gave $150 million to
the clinton foundation and got a private audience with the secretary of state. >> one is the idea of access, and the other is the idea of favors. reflect theclearly access and linkage. if you were a friend of the clinton foundation and wanted to get that meeting, you would get that meeting. resulted in something substantive that, that will be under the microscope. scarlet: what you need to gear up for tomorrow's trading day. this is bloomberg. ♪
were scandal for hillary clinton. what is she do? tonight, on "with all due respect", a special investigation, one woman, one nation, one pickle jar. was the lead loosen? were there even pickles inside? i must say i have trouble. >> what kind of pickles are we talking about? tonight, all your vehicle questions