tv Bloomberg Markets Bloomberg August 24, 2016 3:00pm-4:01pm EDT
david: we're live from bloomberg's world headquarters in new york for the next hour. silicon valley, washington, and australia. the final hour of trading but no sense of urgency for the market. titrating range waiting for news from the fed later this week. ridenuing a roller coaster waiting for the opec meeting next month. a surprise gain in u.s. stock piles last week. many airlines are struggling to impress investors this year. reporting record profits and paying dividends to we will hear from the company's ceo. just about one hour away from close in the trading here in new york. matt miller has a look at the latest. matt: yes, let's look at the majors. looking at the s&p, checking to see whether the range of trading is even anywhere approaching 1%.
now 433not seen that days when you count that session. the dow is down .2%. the s&p down about one third of 1%. the nasdaq is down .5%. we have not seen big swings in the major indexes and the s&p's civic lay for 33 days. take a look at the chart that i pulled out of the library. 2487. you can see we charted the swings and the size of them. we have not been at the size here of one point i percent for over a month. it has been very slow trading, a calm august. swings inger commodities. you will see the metal is down firmly and the miners, as a result, are down today. 13%, and downey percent, almost all of the
metals are logging in law is today. we also see once again taking a big died today, if you look at the past week, a really rough time of trading and more and more news starts to build up about at the pen pricing -- epipen pricing. the fb pen is necessary for isple -- the epipen necessary for people who have allergies to bees or peanuts. price more than 10 times and the clinton campaign has gotten in and said that it is concerned and is asking them to reverse the price hike and congress has asked for a meeting with the ceo, heather, within two weeks. it will get dicey because heather's dad is the senator from west virginia or the two of when shet cross paths
tries to explain why she raised prices for the medicine so much. david: high tension between father and daughter. barrels last week, what do we see in oils today? matt: we had an inventory buildup that was a good in the market had a elected and as a result, you see oil down once again today, off 3%, the same magnitude as the drop we saw on monday. keep in mind it is an interesting market. oil had risen to a bull market. friday, we were up more than 20% from the beginning of the month on best that more countries would come to the table. yesterday, we heard reports again that iran said it might be willing to at least talk about, i don't want to say collusion, but cooperation. sorry. holdingagain that iran said it e willing to at least in productid boosting the oil price, i should
say. we now see once again big swings. do not want to say collusion. do not want to say cartel, but i guess you can. opec go is a great function for checking out what that cartel is up to. >> thank you, matt miller from the market desk. we will have more in just a second. now let's check the headlines. mark crumpton has more from the newsroom. mark: militants attacked the university of afghanistanmark ce newsroom. today. officials say at least one person was killed and 18 others were wounded. witnesses say they heard explosions and automatic gunfire. >> and explosion happened behind the school. someone called a guy and said some of the wounded victims just died. security forces should find a way to enter. otherwise, everyone will get killed. collects security forces are still combing the campus in search of attackers. the incident comes to dudley dr. two university staff were
kidnapped from their car by unknown gunmen. their whereabouts are still unknown. central idiot -- central italy still reeling from an earthquake. it left at least 120 people dead. from a town. crews are trying to find survivors. when asked about his town, a local mayor replied it is not here anymore. donald trump again urging african-americans and hispanics living in cities to give him a chance. democratic policies have only lead to more poverty and joblessness in cities like chicago and baltimore. minority voters overwhelmingly wavered them adding nominee hillary clinton. apologizing for what he called a serious distraction at a gas station during the --
facts butleft out key maintains the swimmers did not force their way in to a bathroom. an earlier statement was that the four men did have a gun pointed at them. global news 24 hours a day powered by more than 2600 journalists and analyst's in more than 120 countries. i mark crumpton. this is bloomberg. back to you, david. david: a terrifying time for investors. now there is nothing but kong. a decadeow 40% below average. i want to bring in paul, at wells fargo's investment, joining us today from st. louis. of the chart that matt miller was referring to to look at the range of trading for the s&p over the last 33
sessions and we see the last time we had that move, it was indeed 33 sessions. before that, september of 2013 i believe. what do you make of the calm we are seeing? does it indicate investor complacency? >> yes. investors have been pricing in what we believe is stronger economic growth and stronger earnings growth and they have doing that since the middle of march. this point, it might be they need to see further evidence, as all of us do, including on what the fed will do today. david: i want you to react to the third quarter forecast that we have seen so far. i know you have said in the past that profit growth is what keeps stocks rising. when you look at those forecasts, what does it lead you to think? forecast and then there are forecast to we think generally, they will be flat by the end of the year and they look for earnings to pick up
into 2017, especially when you comparablesorable for energy companies. we think investors are really looking past the next quarter and have been looking past the second quarter for some time and they're looking toward real improvement. david: we have got the symposium kicking off tomorrow. a lot of fed presidents and governors are speaking. what will you be listening for as a strategist and investor? >> right. we have heard quite a bit of division along the members of the fed. some of them talking about september still being on the table and the economy is not really in such bad shape, and we see a rate hike. what we are looking for here is a sign from janet yellen that she is still guiding the ship in a direction of caution. we expect her to say the economy has gotten better but we are still data dependent and there
are still problems around the rest of the world, so we will take a cautious approach going forward. we hear,s the language it will confirm our expectation that the fed is really on hold through the end of year and probably longer. your target is 2290. how integral is the fed dormancy? >> yes, especially in terms of sentiment, not so much in terms of the economy. it would probably upset market sentiment, which is expecting low interest rates probably indefinitely, so a sudden increase or change in fat guidance to suggest a rate hike is very probable in september or more like the in december. either one at this point would probably be an indication to some people to take a profit in the market. >> i know you travel widely and
you have been keeping an eye on china and that china could be a are to the valley we seeing. why is a lot of investors have stopped paying attention to china at this point that mark -- at this point? >> it might be the complacency. they have been looking to us since 2012. i think investors have decided the chinese have this reform program and this year, they took -- they put the program on hold long enough to inject further stimulus into the economy when everyone was worried about it. i think that really gave investors a sense of the chinese at least for now are more concerned about stability than they are reforms. that plays very much into a more bullish psychology. there is also the currency. it was devalued a year ago last august and then again in january. it happened rather abrupt leap. since february, we are
seeing that the people's bank of china there is really taking a more gradual approach to devaluation and the initiation. they're clearly trying to align their actions with depreciation in the trading partners currency and any depreciation they might see in the dollar, that has also given investors some call. those two factors. >> great to speak to you. coming up in the next 20 minutes, strong earnings results . what are its plans for its fleet? we will year from the ceo. markets start looking for direction after janet yellen's highly anticipated speech. let the fed is focusing on ahead of the meeting. this is bloomberg. ♪
david: it is time for a look at some of the biggest news stories in the news right now. millions of dollars of walmart pressures hovered around highs for the year. unloaded 3.5 million shares between august 19 and the 22nd and those transactions $104 million sales at the end of june. the trust now owns about 170 million shares of the business. ford is recalling more than 88,000 cars and s tvs in north america. the engine can stall without warning due to a fuel pump problem.
from 2013 two 2015 model years. this --ill replace police will replace this with no charges. a four-month high. the airline had its first dividends since 2009 in bonuses. a,000 workers after posting record annual profit. here is alan earlier today on bloomberg television. >> i am very excited about the future for the group because there are so many opportunities with the delivery of the 787's to change the root network internationally and continue the expansion in asia, japan, planned, vietnam, and australia and with the program, i've always said if i am enjoying it, i look forward if the shareholders want me to continue in the job, i will continue in this role.
opportunitiesthe in the second, i want to get a on what is propelling the prophet, there is a record profit here. fuel price would have helped certainly. how much support do you get with your joint venture? factors have helped. the biggest factor is our transformation program which to date has delivered $1.66 billion in benefits to the bottom line. they would not be producing these record results. what has helped the international business, which has a record profit, a -- that is how we have structured out those and allowed us to focus on growth in particular in asia. >> you have got 45 options. how many will you exercise? >> we would love to be able to exercise all of them. it depends on us x -- showing we
can make money and deliver good returns. the reason we have those options is someday if we can make profits at the root network, we would like to exercise as many as possible. >> you must have a preliminary plan, more than 10 or less than 10? >> believe it or not, we do not are excited- we about that with the network. a lot of facilities that have to happen to make it work. we will take it from there but this way, we have the aircraft as options. return,ld make a good we will see after we demonstrated the results. >> those who injured his aircraft and tearfully signal the superjumbo -- superjumbo. i think you deferred options on that. 12 in the fleet. does it mean you might say enough is enough?
today, theyt we had operate slot worse -- slot , a bigtions connectivity. we see a use for 12. they perform really well, we do not see a use for more than 12 and that is why we will continue to push out the orders we have live airbus. we do not see a need for those last eight aircraft. that was alan joyce talking to our colleague in hong kong. on set now.ints me this is a remarkable turnaround story. alan really turn things around from back in 2009. >> absolutely. they are finally able to pay the dividend to shareholders. and it was interesting what he was saying about the switch from airbus, fate 380 two the dreamliner.
he was noting, they have to see how possible it is, i.e. jet fuel prices. can they really make money off of these routes? the airbus eight 380, a jumbo more. costs a lot it is harder to five because it does not fit into several airports. there is a lot of anticipation with the 787 that they will be receiving at the end of next year. what is the route that they will fly and how will that impact? >> how shrewdly they have seem to done fuel prices that contributed to the bottom we spoke about earlier. the partnerships they forged with china, i remember speaking about delta. so much opportunity for oath in china. a lot of chinese national airlines, a lot of americans also bridging these kinds of partnerships.
need toknow that they expand globally even further. that goes back to the 787's is with what new route they will put together and the partnerships they will have with other airlines as well. so one thing i thought that was fascinating was where will they now be present in other parts of the world? are they going to announce a london, for instance? i think that has been widely rumored. a quick question, what is the world's longest nonstop -- nonstop flight? >> south africa to los angeles? >> no. it is to divide. the eight 380. there are questions as to whether that will circuit -- getting phased out as well.
certainly on the rise right now in asia and that turnaround you mentioned is it a complete here. absolutely. i have yet to fly one but i have seen them at the airport and they are gigantic. still ahead, the nasdaq has been a nice run in the few months. it is now the time for an options strategy. we will have the trade. this is bloomberg. ♪
welcome to bloomberg markets. let me ask you about the sectors we have seen moving. text seems to be moving in lockstep with u.s. stock especially when you look at how it is running with the rest of the world. is that good? >> i do not think so. the earning sector, they have got the best balance sheets. can engage in m&a and do buybacks and increase their dividends and they have net cash on the balance sheet. other sectors, some of them tend to be over lebron and they need to require other companies to get growth. it is disconcerting sintering inspector correlations are going to one here that is not a health market that we are seeing now. see tohat should we change that? we need toneed is actually see a bunch of economies divert from each
other, especially when you see central banks of off the globe are moving in tandem and a lot of their policies are not worth now the way they have benefited. we have seen the central bank here around the united dates, and see some low trading volume. want markets to get to normalization. it will goes up, the entire market does not go up in tandem with energy. we will hopefully start seeing that once the dog days of summer are over. we will start focusing on the if sherry yellen signals that the federal reserve is ready to move or if it raises the interest rate closer to a normal level, you would be a breakdown of that correlation. think they will probably do one hike and they set off volatility, the guidance of four it -- rate hikes. nobody saw that coming. everyone was expecting a one and done scenario. the fed has lost credibility on
lookingng and they are on good guidance. they are so focused on worldwide global growth. thank you. a great preview of the jackson hole meeting there on friday. back to you, david. david: much more ahead here on bloomberg. more about the symposium taking place tomorrow and friday. this is bloomberg. \ ♪
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mark crumpton has more. in turkeybiden is where he tried to ease tensions with a key nato ally. after meeting the vice president addressed accusations of u.s. involvement in last month's into coup. biden: what possible motive could we have two in fact harbor a terrorist? why would we do that? it makes absolutely no sense. none whatsoever. we are bound by the law and the president is bound by the law, the court will decide. enough evidence will be presented to the core and in the court will decide. demanding they extradite the islamic terrorist it claims is responsible for the attacks. another high-stakes competition about to begin.
the country'senators will soon decide whether to permanently remove the president from office. the impeachment trial begins tomorrow with a definitive vote expected early next week. accused of breaking fiscal rules and managing the federal budget. on california'central coast, a give wildfire is expanding as crews fight to detain it. it has charred more than 60 square miles and destroyed 45 homes. the fire is about 35% contained. at least 2400 people are under .im -- evacuation orders most buyers of obamacare plans will not see costs jumped even if premiums increase next year because of government subsidies according to a u.s. health and human services report. the study says government contributions and premium -- premiums will mask costs for most buyers on the premium exchanges. global news 24 hours a day
powered by more than 2600 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. matt: thanks. now to the nasdaq where abigail doolittle is standing by. abigail: when we last spoke, we were all talking about how quiet the trading action was for the u.s. equity indexes. that all changed. we had the nasdaq index kick down sharply. democratic as presidential nominee hillary the 10 said that the at price hike is outrageous, saying it is taking advantage of consumers. down four days in a row and all thehis is setting off biotech sector, the index down more than 3% at this point.
the reason it matters is last summer, it was hillary clinton who tweeted about concerns around drug pricing and that set off the bear market in the biotech index here it would take a look at the chart of the biotech, going into the bloomberg and current test pulling up gtb 3012. zeroe the bear market at and roughly 29% when we were creating the chart, the biotech index was shipping so much, it was not easy to put in what exactly the number would be. a recent uptick in the green. it recently moved into the ball up 18.5%ow it is only off of that bottom. saying of that potential ball market within a bear market, he did not think we were out of the woods but he thought we could see political pressures around drug pricing concerns and here we are's that with the biotech
index having its worst -- worst basis june 24 and pressuring the .asdaq itself matt cohen on any given day, obviously apple is the biggest or addition to the nasdaq but it is interesting another big biotech name comes in second place, a really big drag to nasdaq today. >> and that is amgen. neck both of net and .1 .7 points off the nasdaq. sharply.hey are down as for apple, yes, the biggest rag what again. it does come on the five-year anniversary of ceo tim cook taking over. shares of apple have more than doubled. matches the more than doubling of revenue and profits. the question here is how does the company offset declining
growth in the iphone? a lot of analysts think this by moving forces of the software. by really extending the ecosystem, it is interesting that tim cook's tenure has more than by moving forces of the software. doubled the shares of apple over the last five years. matt: cool. abigail, thank you very much. >> we have breaking news on pharmaceuticals. stocks dropping after the company lost a patent ruling. you probably know them as a generic drug maker but it is regarding one of the company's own patents that it was due to expire in 2030. andng that is invalid cannot be patented. ruling on this. we will bring you more information as we get it. chairs are tumbling.
the fed monetary policy toolkit into get -- two days is widely expected on the path of u.s. interest rate. meanwhile, markets remain incredibly placid. is matt,s now for more who covers the fed in the u.s. economy. thege speech, basically only game in town for the entire month of august perhaps. obviously looking for clues about when the next hike is. we will probably not get much on virtually on that. they have another big monitor calls meeting coming up in a you weeks ending in september. any major news on that front probably come than here that unless janet yellen really feels like she wants to go in september and no one was able to pick up on that before now. it seems a little unlikely but we will be what happens. matt: last year they gave us the impression they would raise watch of times. they have not at all.
pretty amazings if you look at markets right now what they are pricing. september is obviously a low probability. you look at december, probably the rate hike goes up a little bit. after that, you can see in the chart that the next fix orderly meeting thereafter, investors are assigning hardly any probability to rate hike after that. it is a one and done scenario. see how there is not much faith in any sustained tightening at this right. scarlet: i was going to say 26% sticks out but even that is not high odds. there is not a lot of conviction around that. >> exactly. if they do not go in december, that will get shifted to the next one but all the rest will have a low probability. they are probably not happy about that in general because ac
rate hikes going higher faster. the same time, they can probably not be too upset about it. low rates and they are not certain what the economy is up to now. >> you say that janet yellen will we not give hints about when the next rate hike will be. there are all these debates going on about the neutral rate nature of the challenge that the fed is facing. could janet yellen'speech give us an insight into what the terminal rate will be? >> i think it will. the market is so pessimistic on where that is. it is hard to imagine her saying anything that would really change that. if anything, the risk is that the things she is talking about, the toolkit for fighting more will only reinforce the notion that low rates will be around for a long time, maybe even multiple cycles. is not clear how you come
into a speech like that and you are able to send a strong thing that gets straight to go up. matt: but that is not what she is trying to do. maybe she is trying to make them aware that there just systems a think. >> financial conditions and industries, the things going on here since the rate hike, we have had a lot of market volatility and then that has gone away. thecally, they finally had avoid of two rate hikes earlier this year at her the tough with all of the marketability we have. now we have the ability of rate had -- rate cuts. it is not really clear. >> i have a question about the financial conditions index. at least on the short and medium-term timescale am a big team to attract market. a lot of volatility in the market tumbles and financial conditions.
which one is the signal in which is the input? in other words, is the market responding to tightening conditions or is the market tumble making input going to target plants? >> this is a fascinating question. prices asthe market direct input but there is a big question about, our markets more we aree now because closer to the zero lower bound and there is a fear that if anything that were to happen, the not have to respond. willgoes to a janet yellen be talking about trying to reassure that yes they do. there is a causality that runs in both directions. economy of the market and vice versa. scarlet: when we heard about conditions tightening, it is usually asked to the stronger dollar. reasons are separate from any kind of threat from the financial market. justthat end up getting in
folded into the index? >> it does. the one component, the short-term interest rate increase that is requested in libor, these industries say that is been swamped the drop in the dollar and the high yield spread and rise in the prices. joe: matt, thank you. we will break -- be covering the two-day event over the next two days with you -- janet yellen'speech on friday. up, stockpiles climbing to we will have expert insight on the commodities picture, including oil. this is bloomberg. ♪
scarlet: this is bloomberg markets. it is time for the bloomberg business flash. plan to seeknks approval for a new form of digital cash to settle financial transactions. technology behind bitcoin. for securities without waiting for additional money transferred. it would improve transparency for regulators. for some of its acreage in the shell region in south texas. the explorer wants to raise cash to develop its best prospect. -- company is listing also offers for about 25,000 acres. expected under $500 million. investment authority buying almost 10% of empire state realty crud -- trust. the middle eastern country's sovereign wealth transition goes
to a $22 million investment. and that is your update. oil dropped to a one-week low today after a report showed u.s. crude inventories unexpectedly rose last week. head of commodities research at morris predict they will go even lower. he has changed his target by nearly 10%. why.er today, he explained >> this is a market going into balance. we have two imbalances in the moment. a huge supply of crude inventories. an oversupply of inventories, luckily in the data areas like oklahoma. we are not readily seeing what is happening in the rest of the world. we believe crude oil inventories are actually going down and the falling price, api data released
last night showed a big crude filled. >> you are talking about more opaque areas. >> we know it in retrospect. crude has been down almost every week since the first week in june. globally, theyee published them with a three-month lag. january through may, inventories were down 300 per day, a big chunk along with floating inventory drop that shows you the market is really moving. above and beyond, we are moving -- underestimating what the new number is in the u.s. u.s. used to be a large importer of crude. we are not that we used to be. if you are a coastal refiner, you have inventory on land and you've reported to the eia and you also have a pipe benefit the entrance it.
you do not report it to anybody. as we have moved to a minor importer from a net exporter of products in a very big way, online inventory has to grow problem we buy 100 million barrels above where the norm used to be. a lot of that build is a be balancing of the market. >> i will merge my world with alice's world. you have a central banker on the market who can come with a verbal intervention. they can do that and sodomized. -- and it can last about a month. governor or otherwise would be very proud of. they have got to follow it up with something. do we have the action? or -- big central bank
central banker of oil saudi arabia. we are no longer the central banker of oil. the new central banker is the u.s. it is not quick to respond. there is no spokesperson. we are 1000 oil companies with a competitive practice for one another. it is a new world and the guys who benefited do not want it to die. >> why is the market still trading on the old central bank on what is actually happening? great point. we have seen the playbook back in april. will we see this washout again when september comes and goes? >> i think there is potential washout. there is not really a meeting.
75 cause i ministers of energy around the world convening in algeria. the syrians have a good reason. they have been suffering by low prices. they need higher prices. the venezuelans, that is what they are talking about, the opportunity for another big agreement. moment they say production will go up. i suspect there will not be much happening as a result. >> that was earlier on bloomberg. matt: coming up, glencore says it will write -- widen its target by $5 million. we will show you are you cannot miss. this is bloomberg. ♪
scarlet: this is bloomberg markets p or glencore reported its lowest profit. it shows how much prices caused profits to punch. i will go inside right now to show you something on glencore. before i do, a disclaimer. lp isairman of bloomberg a senior and dependent nonexecutive director at glencore. talk about glencore, the main concern is the debt heavy balance sheet. glencore has shrunk assets, everything above the zero line here, and its liabilities over the last couple of years. it is going down here or moving down in that direction as well.
the debt load has not changed as much. i will show you can percentage. the long-term liability and the that isrm liabilities, the blue and red area. that has not changed as much over the past three years. glencore is boosting its debt reduction target by half $1 billion. by 16.5 billion dollars by year-end. that is separate from the story which has really been whipsawed by what we have seen in the commodities market. >> that is the thing to watch. investors want it delivered, theoretically. we should be keeping an eye on it, what kind of progress they are making. obviously fa go is an amazing tool for any equities. there is so much to explore and
so much data. that is the place to find what you're looking for. >> who is next? i could take it or i have got a chart i threw in here. i stole it from dave wilson. you can get his charts. this is a ratio, the s&p 500 dividend yield. we look at this a fair amount to see, the 10 year yield is low, how much income you could get from stocks. they are more of an income generator than the s&p 500. actually gave this chart bank of america merrill lynch. interesting ring is this ratio ended in july at the highest since 1958. in you are getting 1.6 times more return from the s&p 500 earnings dividend than you are from the
10 year yield. it is interesting. if i did suggest that, you could do the other thing. i am really a contrary indicator. -- joe: i amook looking at data out of china. a fascinating set of charts were put together that suggests maybe the economy is doing better than the official data suggest. this is a chart looking at industrial output of steel, electricity, and check out the purple line here. that is the lectures the end it has an kicking up lately, up 7.2% year-over-year right here. lookedong time, people at electricity numbers weaker than gdp and they said we are skeptical of gdp numbers because the electricity data is not as strong. a bunch oficking up other data.
one of my favorite things to look at, his conclusion is that a lot of the data is not so bad. maybe it is getting whipsawed, so for a while people said the underlying is not so good. it is better than the official numbers suggest. scarlet: people always wonder about electricity still to gauge how it is doing overall. of that is filled economy and not as reflective of the transition. scarlet: that does it for bloomberg markets p or what did you miss and the market closes next spirit take a look at the major averages with less than or miss to go, looking at down our rose all around. the s&p losing 13 points. this is bloomberg. ♪
scarlet: u.s. stocks closing lower. joe: the question is "what'd you miss?" scarlet: hp earnings in minutes. economy,peninsula silicon valley's growth adding jobs at more than double the national average. matt: turkey begins a major offensive in syria. blackrock says politics in turkey are more stable than understood. scarlet: we begin with market minutes, the worst they for the s&p 500 in three weeks. mores not risen or fallen than 1% and 33 days. matt: the range of 0.72%. o