tv Bloomberg Markets Bloomberg August 24, 2016 12:00pm-2:01pm EDT
some bloomberg world headquarters in new york, good afternoon. matt: we are covering stories from los angeles to washington to sydney. here is what we're watching. stocks circling in a holding pattern as investors await friday's speech from janet yellen for clues on when to expect higher borrowing costs. shows thatgovernment oil stockpiles dropped for the month. matt: political risk is haunting emerging markets with investors selling assets in south africa, turkey and south korea. halfwayscarlet: through the trading day. ramy inocencio has the latest. ramy: we have been flat for most of the day. we are not scraping the bottom here.
a is definitely commodities/energy story in terms of the dow. as that's the nasdaq off by .2%. we are talking about falling oil as well as falling commodities as the bloomberg dollar index also rises. you can see it is definitely a very broad decline. it is also a mild decline. materials is down the most by .7%. we are seeing commodities in terms of gold, silver as well as copper all often the order of one-month or two-mudflows. flows. two-month with oil on the downside, financials also slipping into negative territory. it had been the one lone positive earlier today, hoping that rates might rise as we head
to jackson hole. we have to wait and see. of theake a look at some biggest s&p point losers right now. these are where they stand. apple is down about .8%. lowest sincets august 11, about 10 days or so. waiting for the new iphone, coming out in about a month or so. ibm down 1.2%. and verizon done about .5%. generally speaking, cross the s&p, stocks from positive to negative in terms of the ratio, for every one stock that is up, three and a half stocks are down. space, the commodities steals are also on the downside. as well as nickel good u.s. steel down 3%. ak steel down almost as much. in large part, it's because of china. china imports of nickel or as well as refined metal dropped in july by 34%. we can see that knock on effect here.
also sticking with the china some let's take a look at casino stocks, specifically ones that have a good base in macau. -- wyyn resorts is down 3%. visitors to taiwan are now down. this could be a bad omen for mainland chinese visitors going elsewhere outside of the country, and specifically to macau. we've been talking about how macau gaming revenue has been falling for the past for five years. now it's down for you row. matt: we are going to have to go over there. thanks very much. with bloomberg first word news. mark crumpton has more from the newsroom. mark: the president of the american university of afghanistan in kabul says the militant attack is underway on the campus. marking this tells the associated press that security
forces are on the scene after the attack and that "we are trying to assess the situation." witnesses say they heard explosions and automatic gunfire. it wasn't immediately clear if anyone was wounded during the police and intelligence agency personnel are on the campus on the outskirts of kabul. the police believe there is only one assailant. the attack comes two weeks after wereniversity staff kidnapped from their car by unknown gunmen. their whereabouts are still unknown. an earthquake has rocked central italy, a small mountain sounds into rubble. at least 73 people were killed. it was centered about 27 miles from the town of rieti. crews are searching building stratify who was trapped. matteo renzi plans to visit the area later today to louisiana -- later today. louisiana officials are speeding up the removal of flood debris.
the emergency order covers 20 parishes and ends at timber 30th. ohio's elections chief has cleared the way for libertarian presidential nominee gary johnson to p are on the fall ballot. the axes had been in question after party activists cemented paperwork and voter signatures on behalf of a different candidate. they said they plan to swap in johnson's name. scarlet: thank you so much. foil continues to decline after industry data showed that u.s. highest in thee, seasonal level in three decades. discussed his research. that is is a market
going into balance. we have two imbalances in the market at the moment. we have a huge oversupply in crude inventories. we have an oversupply in petroleum products. they are in high-frequency areas like oklahoma. we believe that crude oil inventories are actually pulling down. and yes, today's fall in prices was a data released last night which showed a big crude build. alix: you're talking about the more opaque areas. we are tracking floating inventory. floating inventory in crude has been down since the first week of june. saudi inventories, they publish them with a three-month lag. january through may inventories were down 300,000 barrels a day. that is a big chunk along with the floating inventories that
shows you that the market is really moving into balance. that, we areond really underestimating what the new working inventory number is for the u.s. the u.s. used to be a very large importer of crude. we are not a large importer of crude to the degree we used to be. if you are kind of a coastal you havealero, inventory on land. you report it. fury -- you also have a pipeline of inventory on transit on ships at sea. you don't reported to anybody. they are not on your books. a big we move from importer to a minor importer, actually, a net exporter of products in a very big way, and inventory has to go and probably buy a hundred million barrels above where the new -- where the norm is to be. balanceld is really a -- a rebalancing in the u.s. market. scarlet: that was ed morse from citigroup. morse seemed more
constructive. alix: longer-term, he still isnks the rebalancing intact. they are building but in a much slower pace than they have been in the past. thehe downside, we see inventories number reflective of a products blood in the market. as a refiner, you have too many products and your margins go down. it backs of crude supply elsewhere. then inventories build in the short-term, prolonging the rebalancing. that is the theory behind the call. matt: so what is his call? he is famous for the $20 call on oil. that was a year ago. alix: it was early. but we did get to $26. matt: what are his numbers now? alix: third quarter, you're looking atalix: $47. he is looking $50 for the fourth quarter. still differently different than the market forecast. matt: 50 is above the median forecast.
alix: let's take a look at the board curve of oil. the market does not see oil crossing $50 until the first quarter of 2017. $50 is right here. that would be the first quarter of 2017. i, ed morris, barclays sees it right here. they see while in a range of $45 to $50 through next year. rallies going to stall. this is more of what opec is going to do. iraq is going to export more. nigeria could see a cease-fire. so the extra supply and a market is still weighing on it overall. cpsc forike i used commodity price forecast. where you can see year is come even though the market is 56, 49 in 2020, the immediate forecast is for $46. the forecast is still 10% higher
than the market. click onook -- you can the heat map and see how the bullish and bearish sentiments balance out. right now, only 29% of the market is bullish. 42% of the market is bearish. 42% of the market is bearish. alix: part of the reason why is the longer-term projects that have been delayed will eventually come into the market. we haven't seen that piecuch yet. --n it does, that will turn we haven't seen that supply crunch yet. i brought a chart of my own, guys. questions the bigger that analysts are trying to answer for when we are going to see the big rise in oil. rises. the white line are u.s. oil rigs here in the u.s. the blue line is u.s. oil production. u.s. oil production started moving up, especially in the permian. do we need that oil? we needed. non-opec, non-us applies rolling over so quickly?
or will it prolong it and add to the global supply and delaying that $75, $80 called it -- call? or will it prolong it and add to matt: bring the chart back up again and take a look at when we saw the rise in rigs, in the white line. it takes a while for production, the blue line, to get up to that level. and then you see this dramatic drop in the rig count, but you don't see the actual production coming down as dramatically. is that because of the shale nuances i don't know much about? alix: technology has gotten so much better. you can literally produce the same amount of oil for the half amount of rigs. you can easily fill a few million dollars and that's an easy way to get production up. so do we need it or is it too much oversupplied?
it has been dragging on for monson months. but at the end of the day, does jacob zuma trust prime gord on or does he not? ce: i don't know if he trusts him or not. i think it is whether he wants and spending and whether the finance minister has to go back and control the budget. matt: but will he arrest the finance minister in order to get what he wantsmatt:? vince: i guess he could. the people i talked to say the charges are trumped up. this is just a way to get him out of office so he can install someone who will do what he wants. there was a period in which finance ministers came and went. there was a revolving door in south africa. vince: he's fighting this. he's going down swinging. he just announced that he would not report to the police. so that will escalate it again. when that was announced, the
rand weakened again. the dollar is close to the 50-day moving average. we will see how it goes from there. matt: were people well set up for this? ? we've been talking about the sunday times report that came out in june about these allegations of espionage in the finance ministry. you could've read the tea leaves. vince: i think it was not priced properly, to put it politely. i think you are saying asset managers talking about this anecdotally who generally invest in the development markets and now have moved into emr gets because they are chasing yield. scarlet: indiscriminately. vince: it is certainly not smart money managers. they are just not versed in how e.m. can take away and get away from them. i think that is what we are seeing right now, a bit of a panic. august vines are a bit low. .att: volumes are low
outside of the rand, everything is quiet. vince: it is very quiet. matt: we are waiting for janet yellen to speak at jackson hole. but it's not just janet yellen. koroda is going to be there as well. vince: i think that will be the fly in the ointment. i think janet yellen's speech will be very academic. i guess it will be something along the lines that this is the monetary toolkit when the fed does exit the bond market and cuts back on the quantitative easing process. is the one who could be interviewed and really shake things up. is a pairollar yen you are looking at anchor be the most sensitive to any kind of commentary. vince: i think so. a into theh korod mix and that throws more weight on it. month.ot a meeting next if he should in any way shape or form outlined some specifics as to what he is looking to do, one
would think moore the kiwi, at a marquee week, maybe more etf purchases. that might do it. scarlet: you've been looking at the technicals for dollar-yen. you pointed out that there is this head and shoulders neckline support for dollar-yen at 99.50. matt: what is that? the head and shoulders is a trading technique that is primarily used in it we markets. it's went come in this particular case, the dollar goes up, comes down, makes a new high, comes back down again and can't quite get the momentum to go back up again. when it comes back down and mates that line, it is considered a very sensitive line in the sand, so to speak. if yellen says nothing where hawks are looking for some push for closer ready -- fed rate hike and koroda doesn't add anything for the conversation, they may ask ago for that. matt: we see the pattern right in the middle of june, around 99
.50, which is where i guess that shoulder line has been drawn. -- and by theat or 99.5 yen 9950 per dollar. scarlet: 99.5 per dollar. matt:matt: it's going to be hard to break through that level. obviously, it is a very low level. vince: it has had a hard time breaking through. there are a lot of reasons why. if you are a corporate treasurer or a cfo, you are not going to get troubled by a yen under a hundred. there will be some dollar demand below that level. if there's absolutely no indication from yellen that a rate hike is forthcoming, and there's no indication from corona that there's more eat -- daom corrode a -- from koro that there is more coming.
new zealand, australia come even japan and the markets are so complacent right now. scarlet: they just shrugged it off completely. matt: all those currencies you want to be watching right now. the want, it strikes me, if it gets hit, because of the north korean chest beating, is that where you guys? vince: it is really just a knee-jerk reactionvince:. i think hurry a trademark with japan. scarlet: surely, it is a relief to the government as well because it has been saying they wan strengthen, strengthen, strengthen and they don't need that. for themu want to see, anyway, week against japan. it is their major trading partner. matt: thanks for watching us. coming up on bloomberg markets, we are going to take a
scarlet: this is bloomberg markets. matt: sales of existing homes fell in july. that newerday showed home purchases unexpectedly surged, reaching the highest level in nearly nine years ara have spoke with mania and -- ara hubnanian. ara: the key measure is affordability. affordability index that measures average house payments compared to median income. it is a very good ray show.
and there is opportunity for both a little more house price appreciation and mortgage rate appreciation, so to speak. before it gets into troubling territory. and there is opportunity for both a littlemark: can we talk n company what you are doing right now. you are forgoing revenue gains come essentially to pay down debt. tell us the rationale behind the cycle. the high-yield market has been a little it more off $320ng, we paid million of debt over the last six or seven months that we were planning on refinancing. were turns out, we planning on paying off even more debt. but now we are able to do some refinancing, putsch out -- push out maturities. although we do think it is the right time to be leveling off our dead, leveling off our revenues, and continuing to focus on repairing the balance sheet. at thewhen you look
united states as a whole, what are the regions you find the most appealing? interestingly, the texas market, which everyone has been understandably worried about, continues to be very strong including houston,. texas is very strong. southeast florida is very strong, a lot of demand. and we are seeing california firming up as well. david: you have a diverse portfolio. as you decide where you are going to allocate capital and resources, are there particular sectors that are of greater interest for you, the entry-level, perhaps? ara: we play the whole field and that's part of our strategy. we are focused as one of our boomer,n the aging baby the market that is over 55, which is a rapidly growing segment of the market. it have is to be a good news for us. we have a lot of expertise in that area.
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mark: the president of the american university of afghanistan in the capital kabul says the militant attack is underway on campus. mark english tells the associated press security forces are on the scene after the attack and that "we are trying to assess the situation." witnesses say they heard explosions and automatic gunfire. it wasn't immediately clear if anyone was wounded. and intelligence agency personnel are at the campus on the western outskirts of kabul. the police believe there is just one assailant. the attack comes two weeks after to university staff are kidnapped from their car by unknown gunmen. their whereabouts are still unknown. authorities say 73 people are dead in central italy following an earthquake that flattened small towns. the 6.0 quake was centered about 27 miles from the town of rieti. trying to finde survivors and victims who are trapped in collapsed buildings.
is inresident biden turkey trying to patch up shaky relations with a key nato ally. turkey has demanded that the united states extradite the islamic cleric that erdogan blames for last months coup attempt. he lives in pennsylvania. talks have become the -- have begun between turkey's justice ministry ambulance officials. heating --rs to be hising calls to soften tone on immigration. says that he would do the same thing as president obama, make the deportation of criminals living in the u.s. a priority. a new report says that. donors to the clinton foundation met with clinton washing the secretary of state. according to the associated press, more than half the people outside the government who met with secretary clinton during that time gave money to the
foundation. the clinton campaign called the ap report a distorted portrayal. this is bloomberg. scarlet: thank you so much. quiet trading right now with s&p andon the dow and nasdaq down by 17% from the 20-day moving average. matt: the volume, you mean. scarlet: yeah. last keeping track of the time the smp moved by 1% or more. matt: exactly. the trading range has been so tight. . we haven't seen it more than 1% in 32 days. let's go down to abigail doolittle. abigail: it is a quiet trading day for the nasdaq and it's ironic considering this is the one-year anniversary to the big selloff last august. also ironic for the fact that
yesterday the nasdaq put in another new all-time intraday high. but since the big selloff last august, the nasdaq has recovered about 16%. so a huge recovery. theingly, at one point, nasdaq was down 8.8%. as for the recovery, it's pretty interesting. much of it has been made up since they brexit selloff at the end of june. when we go into the bloomberg a two-year chart of the nasdaq, to the right of the vertical line is the last year. we see the nasdaq is above its 200-day average by 8%. time was actually last july, right before the august selloff. that is not to say that we will see the kind of selloff. but our team did reach out to the chief technical officer at
the ig. she does expect a near-term pullback. she would be surprised if the nasdaq would hit the 50 happen day moving average. but a pullback after all of the calm you are all just talking about. matt: so even though we don't see that much of a swing, it's mostly on the downside. what stocks are holding us down? abigail: one stock isdingabigail: down all day pax. -- did offer a thinks that this tops the and of a good fiscal year 2016, 1 that won't be repeated this year. scarlet: thank you so much. the kansas city fed
jackson a whole -- jackson hole symposium begins tomorrow. dominic: in the grand scheme of things, things are pretty stable, from the historical perspective of the crisis. things are even pretty good from a more recent perspective where some of the former fed officials have worried about excessive lending and credit standards dropping. but there is a new sort of financial stability, emanating from some fed officials low so long. do you get people getting into other asset classes and making them excessively rich and then vulnerable to downturns?
thermometerl was invented by michael rosenberg. this is the bloomberg financial conditions index. you can see the crisis. this is standard deviations. what you are talking about is the little rollover within what chairman greenspan would call a quiescence as well. what could be the catalyst to knock this off our stability toward instability? dominic: i think it would be -- there are all these catalysts. we get shocked by inflation being higher and the idea that interest rates are supposed to be low for a long time need to adjust very quickly. are you predicting that? dominic: not at all. and i think the fed has finally given up on predicting that as well. the concept of where the mutual fund reaches. i think we can be prone to some mini shocks, whereby the hunt
for yield and the financial repression that pushes investors into certain asset classes, they may have to take a breather every now and again. and the way they take a breather is the fed wakes up and says maybe we should raise rates because this has gone too far too quickly. now with ang us preview of the jackson the whole symposium is the executive editor for economics. safely welcome cocktails, right, a little reception? the real action is on friday. dan: the real action is friday and to some extent saturday morning. but you're right. the key focus will be on the chair. by the way, the chair and her predecessor have not always attended. and when they have given the keynote speech, they have not always signaled a major policy intent.
so that is probably the first thing to get out there. it's hard to see how it is in chair yellen's interest to take anything off the table. but it is not in her just to taper hat in terms of policy direction. scarlet: what is the theme of for speech? sometimes that gives away what she's going to focus on. will basely what she for discussion on. and then she can be rock and any direction. time, it gives her that leeway. chair have been able to say whatever they want. sometimes it can be academic. sometimes it can be a bit more hard-core. back, therea step are quite a few buzzing issues hanging around the global central banking at the moment. one of them relies -- relates strictly to the u.s., the issue of decline in mutual interest rates.
how do you reconcile that with the idea that you can still have a couple of dots on your forecast for increases this year and next year? the answer is, even though neutral is coming down, we are kind of here. so there's a lot of space to make up. the other more globally is should central banks be stepping back and fiscal authorities do more? and in the case of japan, what review?th koroda's is it a cover for stepping on the gas even more in september? matt: we were just talking with since who said maybe koroda' presence there could be more interesting than janet yellen's speech for currency traders. is scheduled to appear on a panel discussion on saturday. he generally attends the conference.
the fact that he is going is not new in and of itself. but vince is someone who has been around the fx markets for decades, so he has seen a few things come and go. what could be more interesting is does koroda do anything else around jackson hole? to andes, on his way from imf meetings, he will stop at the japan society, the asia society. that could give him some opportunities. scarlet: so everyone is looking for whatever he does or doesn't say. when it comes to japan right now, the debate is to what extent has the bank of japan run out of tools in the government needs to step up with some fiscal spending? seem to misunderstand what we look at the fiscal stimulus coming out of japan versus the monetary stephanos. dan: the fiscal authorities have done more. they are doing more. but compared to what the bank of japan has done, the boj really dwarfs it. discussioneen some
and koroda has released this review. as easily come out of this and say, look, i have reviewed it and i've decided my way is the right way so here we go. matt: i wanted to point out to viewers using the terminal. there are great functions in this machine for looking at central-bank policy. just the basics, boj go and fed allow you to get so much information, deep, deep data digging. go, what'sd ecb interesting to me is what draghi boe go, to do or what carney is going to do. dan: neither is scheduled to appear. if you are draghi, you are probably welcoming this time out
of the limelight. everybody's talking about the fed in the boj this month. if you are draghi, you're probably, like him a thank god i am not the focusing more. thing they have dedicated that is on their mind, for the eurozone, you can't think that brexit has been a complete catastrophe. scarlet: not yet. that has not been the case yet. matt: as much as we want to. dan: i'm not going there. [laughter] matt: it is interesting -- it is going to be an interesting couple of days starting on friday. scarlet: cocktails tomorrow. we will have full coverage of the jackson hole in economic symposium beginning tomorrow. have the breakdown of janet yellen's much-anticipated speech at 10:00 a.m. eastern. don't miss the biggest voices on the network starting friday. we have james bullard, robert kaplan, and kenneth lockhart. this is bloomberg. ♪
david: you are watching bloomberg. mark: this is your global business report. david: glencore widens its plan after its worst first-half profit in five years. will it be enough to whether the commodity storm? declines are sending tourists to europe -- tourists to written on a spending spree. david: airlines are turning to twin-engine planes, like boeings dreamliner, for long routes. of the runway for the famous 747. it has been a rough seven months for glencore. half profit fell by 66%.
glencore was heard by lower prices for metal dan cole. if plans to sharpen its debt cutting plan. is scrapping its dividends, cutting costs and spending $2.5 billion in stock >> copper, their biggest commodity, still hasn't bounced all that much. it is below what we think is is normal, natural price. we think at this price, especially given how glencore has transformed itself from a balance sheet perspective, valuere offers excellent today, despite the fact that it is up well over 100% since its lows. mark: here in the u k, consumer credit rose at the fastest in over a credit. british shoppers hit the stores for summer goods and took advantage of low interest rates.
however, mortgage approvals declined. the british bankers association said it is too early to tell whether the borrowing patterns have been affected by the brexit vote. the sterling post brexit slide made the u.k. an attractive shopping destination for tourists. the biggest spenders are coming from the middle east. last month, it was visitors from qatar who spent the highest amount. they were followed by tourists from the uae and saudi arabia. russia and china round out the top five international shopping in the u.k.. it rose 7% in july. pimco is concerned about a slowdown in china's real estate market. it is turning cautious on chinese property bonds and has reduced its exposure. last week, china said new home prices rose in fewer cities last month than in the month before.
david: it is time now for our bloomberg quick take. jets seems of jumbo to be fading. the boeing 747, the model that opened intercontinental flights 40 years ago, is being overshadowed by twin-engine aircraft's that burn less fuel. the plane makers have struggled to sell giant aircraft. their fate rise for now on single customers. the a3 80's fortunes are tied to emirates. the plane maker decided in mid-2016 to more than half output, 12 jets annually within two years. without fresh interest in the 747, boeing may have to end the
program. toew fleet is expected appear in 2023. thehe 1960's, they created 747 to cross oceans and redefine luxury. airbus built its huge airliner boeing's lead. that it backfired. skies and runways become more routed as air traffic is inspected to double in the next 20 years. airlines worry about filling 600 seats through every economic swoon. the world will need 550 new freighters. burgeoning traffic and the difficulty of expanding and building airports will one day
fox's news division is facing a problem that has nothing to do with roger ailes. the average age of a prime time viewer was 68 years old. while the election is turning into record ratings, the long-term outlook is not quite as rosie because of these demographic challenges. the backdrop here is that fox is having his best year ever. so why is an older demographic necessarily bad? advertisers are after younger people, especially ads with cable news. audiences are dropping away as millennials cut the cord.
oldest, at least 68 -- i have seen some suggestions that it could be older -- it's hard to guess public data on that. in the next few years, you have a question whether they will be around to watch fox news. fox really has to think of ways to broaden its audience, make it younger, without really losing the thing that has become so popular, which is conservative leaning pundits and a distinctive voice. rupert murdoch has celebrated and mated number one in news. matt: it's the number one cable channel for news. where is it overall when looking at the political climate or all television viewing networks?
myles: it is actually -- anousha:anousha: it is actually amazing. it beat espn and others. anousha:anousha: it is actually most of it shows -- the keli beat mosty all competitors and generates about a quarter of 21st century fox's profit. compared to cnn, which generates .bout $500 million in profits you can see his closest competitor, cnn, is much less profit of -- less profitable. cnn has managed to reposition itself more effectively than fox has in terms of accessing digital
viewers and broader audiences. that is something that fox has to think about in terms of how it reaches new viewers. scarlet: so digital is one way to do that. not all conservative viewers are 68 years old and above. you can reach them millennials who are tilting toward the conservative end of the spectrum. what has fox done in response to cnn's push? its average age viewer is also fairly old, around 60 years old. has cnn become more creative and innovative while fox has stood still? would tell you that they have differently done things. for example, the introduced a new panel show several years ago. and there are female-led shows. megyn kelly has really come into her own this year with her
public feud with donald trump. so they have younger personalities on their roster and they are appealing to the 25-54 demographic, which is what advertisers want. some of the anchors appear on snapchat and facebook, but they have not planned as much money as seen in digital. scarlet: -- as seen in digital. in digital.as cnn scarlet: thank you. this is bloomberg. ♪
from bloomberg world headquarters in new york, good afternoon. scarlet: we are stories from chicago and london and hong kong. u.s. stocks in the dollar is in a quiet trading session as a isline in the oil prices happening for the time is ripe for janet yellen to preserve her options. matt: glencore posted its lowest profit in five years as the public company. we will talk with one shareholder was still holding out for a recovery at the mining giant. all bad news,not canada's biggest lender come rbc posted a stronger profit after his purchase of city national. more from toronto in this hour. we are halfway into the trading day so let's go to the markets desk. ramy: right now, i am looking at
a rebound in our markets. we had bottom at 10:45 a.m. wall street time but we are coming back to the flat line with the dow and the s&p closing in with the nasdaq similarly there. it has been a commodity as well as a food kind of story. commodities were falling as well as crude oil after that beta that came out earlier today. i want to talk about some of the winners over the course of the past several hours. losers but lot of let's take a look at the s&p 500. 8's still higher since july despite a lot of volatility. since july 8, we're up by 2.5%. 33r the course of the past days, we have seen movement of less than 1%. over the course of that time, we
see that gradual inching up. let's take a look at some other gainers. , the world'sing biggest maker of all trackers, up by 2%. this is its highest in the past week with the news that the u.s. international trade commission has ruled that tidbit did not steal trade secrets from its rival jawbone. i the judge said no party was shown to misappropriate any trade secrets. let's take a look at a drug distributor, lenetco up 15%. jump since september because it be earnings as revenue for the fourth quarter. roth said its thyroid drug was anotherupside and analyst says it's capable of double-digit revenue can let's take a look at the grocers.
they are generally up. 5.2%.hoads foods is up we were looking to see why this was happening. all these three stocks saw a pop at 10:30 a.m. when the oil numbers came out. the oil price fell and potentially there might be more disposable income there and there is a report on the government buying up more cheese. that, $20 million worth of cheese. is more cheesere out there and there will be a run but the grocery markets are popping. more i think we have cheese officially stored this month in any august of all time. but the government is buying that to give to people less fortunate. that's an interesting story, thank you very much. scarlet: let's check in with first word news and mark crumpton. gunmen attacked the american university afghanistan
in kabul today with explosions and gunfire reported inside the campus where foreign staff and hundreds of students are reported apt. a senior interior ministry elite afghan forces had surrounded the university compound and the gunfire was continuing. earthquake rocked central italy turning small mountain towns into rubble. at least 73 people were killed and the quick at a magnitude of north of centered rome. rescue crews are searching buildings to find anyone who is trapped. the italian prime minister has arrived at the scene of the devastation. in brazil, the olympics are over but another high-stakes competition is about to begin. the country's senators will soon decide whether to permanently remove president dilma rousseff from office. the final phase of her impeachment trial begins thursday with the definitive of vote expected next week. she is accused of breaking fiscal rules and managing.the
federal budget is. swimmer james fegan apologizing for the serious distraction he and his teammates caused at a gas station during the rio games. in a statement posted on his attorneys website admits he left out key facts in his statement to police. he maintains the swimmers did not force their way into a bathroom. he stands by his earlier statement that the four men did have a gun pointed at them. 20 four hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. matt: thanks very much. glencore reported a 66% drop in profit for the first half of the to its lowest profit, $300 million for the half in its five year history as a public company.
last year, and rolled out a rescue strategy that includes scrapping its dividend and cutting costs and selling off $2.5 billion in stock. due to hisest as position in glencore but is still long in the company. this is david neuhauser at livermore partners. we want to mention that the is aman of bloomberg lp senior independent nonexecutive director at glencore. you about the ironic part of this. glencore recorded a loss of i think almost $400 million from hedging in its coal business. butprice of coal has risen because of that hedging strategy, it has missed out on the rebound in the commodity. >> that's correct. i think that was essentially -- being prudent in the
current environment we are in. unlike bhp, glencore is a traitor. given the current state of the market in the past several months, that was our understanding that that was a hedge and they were trying to make sure they lock in the price. scarlet: glencore posted its lowest profit in its five years as a public company. do you believe this is the bottom? do.es, we our position initially started last september at the extreme lows of the session. in aommodity market was four-year bear market and glencore was getting crushed and many people were anticipating its demise. i believe we were the only hedge fund that took a long position believing there would be a newer version and the company would get ahead of things and be aggressive in terms of their cost-cutting asset rationalization.
they have done just that and it's been on the nine or 10 months. the equity is up like 175%. we have done well with that. scarlet: but you have reduced your stake in the company. you say your next move is likely to be a build in the position again. one thing that is holding you valuation. what metrics do you rely and what it to valuation for glencore? >> glencore is unique in terms andalf its trading division half as a mining division we don't think the stock is expensive by different metrics. we look at the equity and look at the fact that we would like them to take that further and we would like to see commodities rise further especially copper. with further deleveraging, we see the company next year a dividendbe more of
-- reinstalling the dividend and providing some yield. over the next few years, we are more bullish on commodities overall. that's where livermore has a lot of exposure long and short. we think glencore still has room to run on the equity if that occurs. therefore, we have shaved our position down given its run and given the fact that we are an active manager. we are looking at locking in profits but we think the future of the company looks much brighter than it did last year. with regards to their plan to reduce debt, what do you think? this shows glencore has total debt of about $36 million. i know they want to reduce that and how they have a new target by cutting $500 million, down to $16.5 billion. how long do you think it will take them to get there? will they be able to do it on schedule? actually, they were near $30
billion in debt last year and that has been reduced to about $23 billion today. that has been through cutting the dividend and selling assets and cost cuts. the company generates free cash flow today. we feel that we will see that down around the high teens sooner rather than later. they have been doing a very strong -- a great job in terms of moving swiftly. wants.what the market the issue last year with the market when we got involved in the stock is they were losing credibility in the market and prices were really crumbling. in the fact of the last several months, they have been able to get front and center and get ahead of the curve and sell assets faster and show the market that they can stabilize things in the underlying commodities like nickel has improved. obviously, their future
remains stronger and the results will soon reflect that. scarlet: i'm glad you bring up the dividend. you can see that the company basically got rid of its dividend back in september of last year and had continued to amid a payout. the forecast right now is for no pay out come next february. glencore said it will decide whether to restore dividends in march. how important is the dividend to you? is it a top priority for management? >> we think it's a top priority for management. youof the things we like -- know this from our past as we tend to be more activist inestors or at least we are event driven and are trying to find opportunities where there is a dislocation in value. we thought that would glencore ist year but the reality that the company is aligned very
well with shareholders where they have a lot of skin in the game from the top management team and that has always been something we have obviously embraced. i think the dividend payout would go a long way in terms of continuing to recalibrate the business in investors eyes and show there is further growth ahead for the company. does not which i hope happen anytime soon, i can envision the company being more opportunistic and looking for acquisitions as well. but we don't expect or hope to see any of that anytime soon. we think further report a balance sheet is warranted. matt: you have said that carl icon to you is one of the greatest investors of his generation. i wonder what you think of his best practices. not a lot of people have used those two terms in the same sentence. scarlet: tom and i have done that. hindsight, how icon
appears to have made the right move if you look at ebay and ebay and paypal or the time warner deal. executives act on his advise begrudgingly and then it turns out to be the right thing for investors. what do you think he does write that other people don't see? you where he takes of he is looking -- he takes a view where he is looking through a fresh set of eyes were aboard and management team are truly looking at the operations day-to-day or month-to-month. looking at it from a different perspective, you can see what ultimately the true intrinsic value of certain entities could be. if you spin him off or sell them or buy back shares, he has been doing this a long time. i have said he is a meant to me.
we obviously are activist investors as well so we are trying to have a constructive approach management. we are not just beating down the doors and saying you better do this. dialogue, there comes times when it becomes a bit contentious because you have been inhat have organizations for a long time in terms of their tenure and they don't want to see change or have someone come in and tell them what to do. i think his track record is a on shareholdern value and shareholders rights as far as corporations are concerned. we hope to carry the baton and push that along further at livermore. matt: excellent stuff, thank you so much. we have some breaking news -- hillary clinton's campaign is calling on mylin to cut the price of the epipen.
it's a popular allergy shot in this follows the ama urging mylin to rein in the exorbitant cost. it's following the announcement from the clinton campaign, mylin shares are taking a huge leg down. it's not a big moves in terms of a percentage drop but it is a noticeable move following the comments from the clinton campaign. a senate panel has also sent a letter to the mylan ceo over the price hikes of this drug which it had acquired and probably rate prices. to the senate,es maybe she will see her dad there, joe manchin, asking questions. this is bloomberg. ♪
matt: we have breaking news on mylan who puts out the epipen and charges $600 for a pair. when it started putting up his pen that's necessary for people stings orgies to be peanuts, the cost was only $57. it has raised that price by more than 10 times. the clinton campaign is calling that price hike outrageous and theng mylan should cut price and the senate has called for a briefing from mylan and is the of that company daughter of joe manchin, the
senator from west virginia. it will be interesting of this comes to fruition on the senate floor. ipo activity has all the ground to a halt after the stock market route that began in august. let's check in with our reporters on bloomberg radio. i want to welcome all of our viewers from bloomberg television. i want to bring in my cohost and colleague of bloomberg and it when it comes to the world of initial public offerings, alex barinka. the roughell us about 8-12 months that initial public offerings have been facing. what's been going on? if youeen a rough year go back to august 24 of last year when we saw the big market route for sponsor backed deals. you saw a lot of risk aversion injected into the market for equity investors. that has caused this pullback. the first quarter of this year, backedprivate equity
ipos went out in the u.s. which is less than double for the same quarter of 2015. of the fear of risk your companies and want for better fundamentals has played into this trend. a lot of the issuer side and the sponsors hope this will turn around post-labor day. pimm: in your story, you mention u.s. foods. wide you think this is the case? is it because the private equity firms have loaded the companies with so much debt that they are not going to get the deals done or is it just a general market that is not receptive? there has been a shift from the investor side. debt theymuch of that can stomach, that seems to be playing into it. 215 from midt
august of the companies that went public in the u.s., the 7.6age debt to ebidah was and this year it has been 4.1. you saw a number of deals earlier this year get pulled where investors were not quite willing to buy into the equity of a company with that much leverage. areeems like investors finding more of their stomach for risk and we are past the halfway point in the year and they are looking at their returns saying we have not done much. what i hear from the buying site is the appetite is coming back. maybe after everyone gets back from this labor day holiday, there is quite the pipeline of companies ready to go but you need the demand for these companies to actually get out the door. pimm: the demand also exists when it comes to other corporations buying companies that may have gone public, for example, blue coat systems being purchased by symantec.
they were planning to go public but a corporate buyer comes in and takes it off the hands of private equity investors. >> that's right, they are dual track processes has become more pop -- prominent this year. that company was just weeks away from actually starting a roadshow and symantec came in for a price that was above the market valuation. if you are a sponsor who owns these companies, think about that a creation. -- you either lockean you can think about that equation. you can either lockean a price and pay a down over time. if there is not a lot of conviction around returns going into the future, if it were a standalone company, a private equity firm might push to flip these companies and get a
guaranteed return lp's at that moment. that was bloomberg radio and you can continue listening to that conversation on bloomberg radio or the bloomberg radio plus app. this caught my eye -- in hong kong waiting for two hours for a customized jar of new tele-is cushioning the city's retail market. tella is setting up pop-up stores in hong kong laws. it has been a sluggish retail climate of people have been waiting in line to buy nutella for $10. so you get a normal bottle but you have your name printed on it? nutella it might say underneath but the backdrop is
that retail sales in hong kong have been falling for six months and that's because the number of mainland tourists have been dropping for 13 months that is the white line. the blue bars are the following commercial results. luxury brands as are closing branches so other brands are popping up and the factp these matt: that they were hit so hard in asia and people are desperate to get in on these before it's over is a cultural phenomenon. scarlet: it's a little bit of mock hysteria. matt: i love new te - nutella.
person is dead and several people wounded after a militant attack at the campus of american university of afghanistan in kabul.an associated press photographer says he was in class 15 other students and you heard an explosion on the southern side of the campus. he is quoted as saying i went to the window to see what was going on and i saw a person in normal clothes outside area he shot at me and shatter the glass area the students barricaded themselves inside the classroom. the university president for the associated press that security forces had arrived on the scene and that we are trying to assess the situation. minister of italy says 120 people are now confirmed dead following an earthquake. he visited the area and pledged government support. the mayor of the 10 which took the brunt of the earthquake said the town is not here anymore.
arer foreign tourists visiting paris and the reasons include the deadly terror attacks last year and a season laborikes and violent actions and exceptional flooding. it was especially high among japanese, russian, and chinese visitors and the french foreign minister has called a meeting for early september to find ways to revive tourism with rep is that which represents 7% of the french economy. the former u.k. independent leader will appear on stage a rally with donald trump tonight. the spokesman confirmed the plan for him to appear at the event in mississippi after it was good by british media. he is thought to be the first this politician to address the republican presidential rally in the united states. day,al news, 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. scarlet: this is bloomberg. scarlet:thank you so much. these are live pictures of vice president joe biden was holding
a bilateral meeting with the turkish president. they are speaking right now. joe has said that that turkey who coup -- attackers were terrorists. test thetands this world was slow in response to the turkish coup. he labeled the plotters as terrorists and we will keep an eye on these headlines. matt: let's get to the presidential race. hillary clinton goes after epipenblasting their price hike and amending the company cut the price of the product immediately. we go to washington alive. thank you for joining us. this has been a controversy brewing. obviously, it started with a valeant and concerns about ice hikes in a company. where is this going to end?
the ceo of this company is the daughter of a u.s. senator. >> that's true, there is injury and hillary clinton's recent statement is that the price increases are outrageous. she is not holding back and there is a question of what will happen on capitol hill. the ceo of the company has ties to u.s. senator and is making it awkward for members of congress to decide what to do. in previous cases we have seen, the ceos get hold up to capitol hill and forest to explain why they hiked prices on life-saving drugs. we will see if that happens in this case as well. scarlet: the senate special committee on aging has asked the for a briefing no later than two weeks from today. that would be before the election. matt: it's important to point out that the price of these epipen's when mylan took over the distribution was $57 for a two pack and now it's $600 for a
two pack and we are talking often asicine that necessary to save the life of someone who is allergic to have the sting or allergic to peanuts. what have we seen so far when or have had martin shkreli others hold up before congress? have they responded with price cuts? most of the ceos of cap their present the same and fought back. -- have capped their prices the same and fought back. in this case, it may be more difficult because this company lobbies for their product to be put in all public schools and elementary schools and high schools. the federal government complied and congress passed the bill allowing them to do that. since they raise their prices, it has made a lot of congress members a little upset about that. that may make them push back harder on this idea that they may be able to continue at these
high levels of prices. erik: scarlet: the clinton campaign has been vocal in the past about price hikes from these drugmakers. has the donald trump campaign said anything about this? >> we have not heard from the donald trump campaign. i imagine this is something they are formulating a response over. the trump campaign wants to paint itself as sticking up for the little guy. in the next 24 hours, i expect we will hear from them but they also have to balance their response with being pro-business and business friendly. it will be interesting to see how they respond. matt: we have heard from nigel on the similarities of brexit and the donald trump campaign. he is the leader of the independent party and he will speak at a donald trump rally. he will speak wednesday in mississippi? right, he is coming
over the pond and deciding to weigh in on the donald trump campaign. this is someone who was successful in his effort in the brexit campaign and donald trump is made a direct parallel between his campaign and the brexit campaign, saying that no one thought it would happen. that's what he is hoping to do in november. he is a supporter of brexit before it came out so he is hoping to get that support from across the pond and have nigel farage who many in england say is the british version of trump, come out and support him and say they embrace similar themes like nativism and anti-immigrant sentiment and this idea of america first. had a british first sentiment so we can expect them to have similar statements when they speak together later today. after they got the brexit vote, nigel farage
stepped down and said -- matt: a lot of people felt a little betrayed. expected ton, many take the prime minister position. they expected i'm sure it nigel farage to stay on. both of them seemed to have turned their backs on voters. i don't think any u.s. voters or donald trump voters will be too concerned about the nuances of the united kingdom and politics. yeah, the u.s. electorate did not follow the british ins and outs before that vote. i think what trump wants to do is explain that brexit was down in the polls before the vote happened and there was an upsurge of people were not may be included in the polls and at the end, the underdog ended up winning and donald trump wants
to chattel into that and say i may be down in the polls but there is a silent majority and november 8 will be an opportunity for them to have their voices heard. scarlet: they are waiting for the pixie dust to rub off. donald trump is also proposing a large tax cut that would benefit silicon valley. what has been the response? because silicon valley has so many overseas, it will help those companies repatriate that money? >> it's one of the biggest parts of the donald trump tax plan. he was to bring back that money and bring it back at a low tax rate which will save companies like apple billions of dollars. the ceo of apple is holding a fundraiser for hillary clinton today so we are not seeing much love from silicon valley for donald trump. a lot of them were turned up by his rhetoric and a lot of them are not in support of his comments on immigration and other policies. even though they receive a large tax cut, they are not donated to his campaign. who: outside of peter thiel
spoke to the rnc but he has not actually given money to the donald trump campaign or to a super pac? >> that's right, we have not seen a lot of money coming from silicon valley towards donald trump and we have not seen him make a large outreach to silicon valley. he is in the south raising money in additional republican states with donors and he is not reaching a to silicon valley and maybe he will do that in the future but so far, there is not a lot of love lost between silicon valley and the donald trump campaign. scarlet: our thanks to you. coming up, it has been a rough day for commodities but that is not taking the shine off of one metal. in fact it is peddled to the metal and stockton is predicting there is more room on the upside. this is our mystery chart and we
scarlet: this is bloomberg markets. matt: let's go to our markets desk. we have the big reveal a mystery chart. it has been a rough day for commodities but that's not taking the shine off one metal. the other clue is it is pedal to the metal. ramy: that was written just for you. at thetaking a look chart. the yellow line here is auto sales in china. metal andline is the china auto sales are falling.
the big reveal is -- palladium futures. scarlet: you are right. ramy: you said it in the break. because palladium is used in catalytic converters. exactly, pollution control devices, top producers all over the world and your today, it's up 26%. year, second have of this it's up 17%, beating gold and silver as well as platinum. we have been talking about commodities which are down today and palladium does not escape that narrative. right now, these are all the commodities. palladium is down by about 2.5%. basically, this is the story across the board including minors like freeport mac moran
and newmont, down on the lowest by about one month. matt: one of the best ways -- often times, commodity prices are traded on different markets and they are not easy to remember the codes off the top of your head. you canype in glco, find a list of commodities broken down. then you can just click on the commodity you're looking for. i click on palladium and i look at the today gip and it's down 1.5%. scarlet: this is your go to page. is a simple shortcut and is down on the single day 2.25%. tracy: thanks. matt wins. scarlet: thank you. let's look at some of the biggest business stories in the news. ford is recalling more than 80,000 cars in north america.
there is a fourth problem. scarlet: dealers will replace a control module at no cost to owners. matt: royal bank of scotland has of its clients. time is running out to find a new bank. rbs acquire the business and it still took over abn amro in is getting out of that business. that's your business flash update. scarlet: let's turn to the latest results from the biggest canadian bank, royal bank of canada, topping earnings estimates and announcing it is raising its dividend. pamela ritchie joins us from toronto. give us a sense of power and the
u.s. operations of rbc through this quarter. important, one of the ones to note is city national bank. it's in the united states and rbc close its acquisition of last november. rbc has been helping to lots of cross platform worked the bank to help bolster referrals and different lines of revenue. the contribution from city national to the rbc overall picture is a huge reason it has seen a nice pickup and profit. the other big piece on the earnings is fixed income trading. they noted a shift in the conversation. ande has been such concern readiness to pounce perhaps on any provisions that are put aside for energy related losses for the last several months. that is being heard back a bit. -- that is being pared back a
bit. conversation perhaps is less about the energy losses and more back to the house and discussion. it's taking from one and moving on to the other. the bank is careful to say they are not concerned about a step down in the housing market in canada. they have top rated credit across the board in the vancouver and toronto markets. in the probably a shift discussion of what's going on with the canadian bank. scarlet: rbc raised its dividend this quarter as expected. given at this low rate environment and how that is not helping margins, how married are investors to these payouts? >> it's a huge question because the banks of and study a growing their dividends since 2010 after they climbed out of the financial crisis.
they're dividend is at 2.5%. it's up to $.83 per share and they have an active share buyback program going on. the loss of capital being returned to investors. the concern is that they look a bit expensive and part of the reason that perhaps investors are married to it is because they have nice dividends. , this ist this chart the share price of rbc to the p/e ratio. said there islyst a concern that the bank stock becausehe board is up the oil prices better and canada reacts to that. the inflows of international investors are seeing canada as one of the safe haven plays and perhaps there is something that has to be there ultimately. he said it's a fine set of earnings from rbc this quarter. set: how does this result
up the earnings for canadian banks this season? the second one, a big bemo was out of the gate yesterday. it's a similar story in that their u.s. operations were contributing largely to that beat as well as trading revenue. toronto dominion is tomorrow as well as cibc. matt: thank you so much. coming up, vice president joe biden is currently holding in his conference with the turkish president following their meeting inankara. he says they have become a model partnership under the obama administration. this is bloomberg. ♪
matt: this is bloomberg markets. scarlet: let's turn to the housing market where we have been getting data this week with existing home sales dropping for the first time since february. sales of new homes in july unexpectedly jumped to a new high in nine years. on this withterday bill mcbride. he correctly predicted the housing bubble in 2005. >> i was say we are in a solid recovery. sales have been increasing subtly over the last five or six years. we're still at 650,000 which is one data point. the 800,000low what was that we expect. there is further growth ahead. the argument people make is one reason to be
optimistic about the economy is that the housing cycle has a long way to run just to make up for lost time during the crisis. is that still your view that we are under housed? >> we deftly have a ways to go. i think we will get to at least 800,000 the cycle and maybe more. another 20% or 30% from here and that's a good time for the economy. how quickly do we get to that? if the fed raises interest rates by the end of the share, does that make a difference? >> i don't think they will raise rates to quickly. it probably will not make a big difference. the growth has been slow but steady. to get to a hundred thousand, we don't need toll brothers as much as we need the builders who build the lower end homes and we did not have in the early part of this cycle. there were so many foreclosures that there was no reason to build homes. you only have so much develop
the land. they just built the high end. scarlet: that was bill mcbride from yesterday. matt: joining us now is joe weisenthal. you are looking at emerging markets including south africa and turkey. e: there has been such a big rush into emerging market assets partly related to some of the yield. the seemingly easier fed stance as opposed to the beginning of the year have up to emerging markets. over the last several days, we've got married reminder about the risks -- we have gotten a reminder about some of the risks associated with em. currency got hammered yesterday concerns about the finance minister and turkey getting slammed today. emerging markets get hammered on this idiosyncratic risk. scarlet: you mentioned south
africa being interesting in the former finance minister came out and spoke as well. he spoke in an interview with a local broadcaster. he said the current finance minister could destroy the economy so that's a strong statement. joe: i think it was earlier this year when the administration went through to finance ministers. the current finance minister is the one that investors seem to like, he seems to the about -- serious about protecting the currency. there is a perception that he can do his job and he came out with a statement saying just let me do my job. -- ifis a perception there is a perception that he can't, that would be a blow to the economy. joseph zuma has less confidence in him. matt: is this more about the relationship between those two? joe: that's a possibility.
we don't typically see something like this. we need to ask our guest today from black about turkish equities and bonds. ankara speaking with the turkish president but we saw how stocks and bonds tumbled by the most in three weeks because of the new military campaign against syria. has been a huge rush into turkish assets and we will see if that gets derailed. coming up later today, the blackrock fund manager will discuss the emerging markets turkey, china, and south africa at 4:00 p.m. this is bloomberg ♪
david: we are live in bloomberg world headquarters in new york. stories from san francisco, chicago, and washington. stocks circling in a holding pattern as investors await write a speech from janet yellen for clues on when to ask that higher borrowing costs. then a big surprise on the housing front. raise borrowing costs. does not have many fans among silicon valley -- silicon valley leaders. talking to an early investor in twitter. about twoose and hours. update.want to get an the news with hillary clinton and her