tv Bloomberg Markets Bloomberg August 25, 2016 3:00pm-4:01pm EDT
we are live from bloomberg world headquarters in new york. at a sanstories francisco, london, and chicago. a short position as well as shocking allegations of security gaps. >> there seems to be no love for hedge funds. redemption monthly since back in 2009. will the industry see glory days once again? be joined bye will anthony foxx who has all of the m&a activities through tech.
>> today has been chock full of news. but distilling everything out right now, we're down for the nasdaq as well. pulling more and more away from the record highs we saw. look at that. 5204 right now. i want to show you what been happening in terms of sector helped of the s&p 500. especially when we have one day left before janet yellen speaks on rates at jackson hole, wyoming. let's take a look at what is happening with saint jude shares right now. they have been falling for most of the day.
>> the senate was temporarily suspended after lawmakers began shouting at each other during deliberations about whether to permanently refuse -- remove him from office. [yelling] mark: accused of using some of the money she had all she was in office, illegally shifting money between. her opponents are attempting what she calls a coup. a car bomber detonated a vehicle. the bombers target remains
unclear. a hillary clinton leads donald trump by 10 points in a new national poll. the university survey as clinton at 51% 41%. and university poll on voters in michigan also find her ahead, leading trump 44% to 37%. michigan has 16 electoral votes. the arizona coyotes are breaking new ground. they have hired what is believed to be the first full-time female coach. she worked part-time for the team last year. has gone where no u.s. president has gone before. he is narrating a 360 degree representation of yosemite national park. up to produce the free video out today to mark the centennial of the national park service.
powered by more than 2600 journalists and analysts and more than 120 countries. this is bloomberg. >> self driving cars and smart sensors. as the relationship grows closer, regulators will have to have new rules of the road for the driverless future. is standing by with anthony foxx in san francisco. joining us. you for great to have you. they are putting self driving this month.sburgh i know you helped frame the regulatory environment for that. what do you have decided drivers and pedestrians that did not have a choice about this? >> we're at the early stages of
transportation technology. piloting these automobiles in real time, it's going to be how we learn to make them even safer . we are working on guidance that expandlp the industry from a safety standpoint. this is a burgeoning area and we are going to work hard to make sure everyone is safe. putting outill be these guidelines by the end of the summer. any concrete things you can share? >> i have to let you wait for the guidelines to come out. what we're trying to do is to try to lay out a framework that makes for the industry understands the department's point of view and what expectations are. the states have played a significant role regulating operations of cars. so we will talk about some of that and we will talk about how our approach may or may not change in places where we think it should change. guidelines rather
than exquisite rules and regulations? >> i think there will be rules and regulations to follow, but we are at the beginning point of a very quick revolution in transportation technology and it will be important to signal to industry and stakeholders where we are headed. there will be more details filled in. emily: investigating the tragic death of its has driver using autopilot at the time. do you believe these autopilot features make us safer? and if so, how much? >> we are in the throes of an investigation on that case. but i can say there will continue to be a spectrum of autonomous uses. even in many cars today with lane assist and other , there are partial automated functionalities people
use every day. every time a new advance comes up, we have to think about the human factor. people likely to use it, misuse it, and we have to think about that as we put out regulations. emily: this because people use it doesn't mean it's safe. is focused on semi-autonomous driving whereas drivers getaid confused and they are focused on fully economist driving. is one way better than the other? >> there will be a spectrum of offerings. different technologies are going to have human factors that have to be accounted for. the industry and the consumer are clear. in should notld do using the technologies and we will lose -- use a lot more over time.
emily: you think there is both? >> i don't think we have to choose. emily: can the technology make us safer? >> i definitely think there are technologies that will do better. in somew, we have had that is thetells us signal. emily: when it comes to self driving technology, what might that in tail? along with the disruptive technology of autonomous vehicles, there is the possibility. -- the possibility of driving
automobiles. emily: what are the negatives? >> there are an awful lot of positives. one of the things is that there are places where we don't know that we don't know. what we are trying to do with these guidelines is account for the fact that there will be learnings that come about overtime. we do know certain things. safety has to be thought about it the very beginning of the development of this technology. manufacturers will have huge amounts of vigilance to prove to us they can meet the standards.
emily: how worried are you about car hacking? >> it is a concern that we in government have and should have. it's a concern the industry has. i think the automakers themselves are doing a lot to ensure their systems are safe. i would like to see the industry doing more together to make sure that across the system, we get great safety. emily: anthony foxx, thank you for joining us here. i will send it back to you. vonnie: thank you, emily chang in san francisco. accelerating outflows can be a real challenge for hedge fund managers. this is bloomberg. ♪
david: hillary clinton speaking in reno, nevada, giving a speech in which she intends to align donald trump with the alt right. speaking in raynaud, nevada. check it out on the bloomberg. it just type live go. vonnie: now to more bad news for inge funds accelerating july, an estimated $25.2 billion last month according to a report. the worst month for redemption since february of 2009. total outflows to $56 billion. she covers hedge funds. but this in the context for us. it sounds like a massive number but hedge funds are a massive beast. >> they are pretty large. about $3 trillion over
also an outflow of $56 billion, you're not really cracking the overall environment. it is an existential moment for hedge funds. you look at them like an asset class. as a feet them structure of the kind of vehicle you want to invest in, they are saying, why are we invested in this? david: using the term media could to describe what we have seen the last couple of months. >> i find myself writing that word a lot. the industry is not doing super badly.
it is a very big difference from a z hedge fund. >> you see sort of the old guard. they are under a lot of pressure. the industry has changed. look at the kinds of investors. they want this stable return. that is what they say they want. how come you're not making 20% a year anymore? a lot of the old guard was focused on moving toward that new paradigm, so you are missing out on these big bank of england plays. it's not the way things work anymore. yourself, why are these
investors invested in hedge funds in the first place. david: he's taking a more active .ole how much of that will get them ahead? other firms talking about similar changes? >> i'm not sure he's getting ahead of the industry. i think the performance has not been stellar. not for the last two years. and've lost a ton of money have not made a lot of money either. at themwhen you look specifically, they are invested in a fund that is quite expensive. a little bit of the shakeup, we think, is certainly to take more
risks to bring back returns. >> it is a great idea. >> a 20% incentive fee on performance. we believe this is moving. this has been a larger trend. investors are begging for lower fees as they would. and those numbers have come down a little bit. all the things that are hedge funds, just based on a fee structure. and you shouldn't be looking at them at the same moment you are looking at equity value funds.
>> a little post brings it volatility. stable whileow and we are there. the next several months and the big ones potentially tomorrow. futures aboutd 30% chance that the fed hikes rates. points,ing by 25 basis and something we pointed out today, the treasury etf. one month at the money, it's as low as it has been. yellen did not speak at the jackson hole symposium last year. takeaway is that markets certainly on their heels. ifwill be interesting to see the commentary is on the hawkish side.
>> pins and needles, for sure. us get closer to trade. it seems to be the week of discount retail. both falling off a cliff, basically. i believe dollar general has seen its biggest fall since it has been public. >> we cover dollar tree and dollar general. a little surprised by the earnings. that part of the population seems to be doing a little bit better. big reports, tomorrow morning. big still up 36% year to date provides a nice opportunity to put a hedge on. and that is what we want to talk about here.
column.to put on a 57.5 assume your along the stock. point five strike call. anticipate earnings and stock moves up to that level. put around and have that 50 for protection in place. about $.20.ade was stocks of continue to come in. a very inexpensive way to put on protection. we saw dollar tree year to date. >> and just today, it is about 6% off of the dollar general. before the bell on friday. thank you for that insight. i will send it back to you. waitingtill ahead, a
mark crumpton has more. >> in italy, rescue crews using barehands in some cases to search for survivors from the earthquake yesterday. at least two under 50 people died and hundreds more injured. they were more aftershocks today. the quake flattened three towns and numerous buildings in the region where built hundreds of years ago and were not retrofitted to withstand earthquakes. the colombian president has declared a cease-fire against a rebel movement starting next week. it comes after the country reached an agreement with rebels to end a five decade-long war that has killed hundreds of thousands of people. the rebels will convert into a legal political party. it will be guaranteed seats in both houses of the colombian khan -- congress. they will approve or reject the on october 2. and vladimir putin has ordered military generals on land and sea. the exercises will last until
the end of the month and involve a variety of soldiers from paratroopers to the northern fleet. this is a week after the president criticized ukraine for carrying out acts of sabotage. and switzerland, the former fee fee forident is -- president is appealing his band from football. he is appealing to accept arbitration. he denies wrongdoing and authorizing a $2 million payment to a forma fifa vice president in 2011. news, 24 hours a day, powered by more than 2600 journalists in over 120 countries. i am mark crumpton, this is bloomberg. joe: markets closed in just under 30 minutes and we will go live to the nasdaq or abigail is standing by. >> after the late day selloff for the nasdaq yesterday, we have seen it recovering today to some degree.
they are trading slightly lower for most of the afternoon. if it closes down today, it would be the first to day decline for the nasdaq since the brexit selloff club -- selloff. interesting though, we've had similar similar -- something similar to yesterday. the biotech selling higher today. and earlier this afternoon, is darted to take a nosedive, more than 2% down. thingsheart of all health care right now for the nasdaq is mylan and the epipen. theary clinton blasted company yesterday for the emergency allergy shot. in response, mylan said they would reduce the price and it could amount to a 50% price reduction. the stock was higher today, but in the early afternoon it also turned down.
congress also blasting mylan, aying the price reduction is pr scheme. this will continue on and we will continue to cover it. managers, especially at the nasdaq, expressed -- for selling all day. having as worst day in eight months. the reason behind it, the mylan ceo did say the lack of transparency in regulation around the pbm that has led to the price tag. insurers gets and so much for every epipen sold and mylan only gets $274, so they are all part of this incredible, what you could call price gouging. tt: as far as economic, do you have any sense on what might influence trade on the nasdaq tomorrow?
biotech, orcould be altra salon. they will be reporting the fiscal quarter today and investors are looking for $1.40 earnings on a $1 billion in revenue. sales are expected to come in between 11%-13%. this committee has beat -- company has beat its last quarter. it could really cause the stock, up more than 45% on the year, to take a nosedive. so as we go into the bloomberg 30-42, this is a five-year chart of alto. we have the investors rewarding the company first on investments . but we also see that the stock is 33% above the moving average. so the last time it was above moving average, we see that there was a time of consolidation and suggesting we
may see a reconnection between the stock and the moving average, whether that is precipitated by the quarter to -- quarterly results, we will know after the bell. matt: thank you. joe: on the use of janet yellen's anticipated speech, the markets are playing the waving game. looking at the bloomberg, you can see this chart shows the trading range for the treasuries and s&p and you can see how narrow it has gone. a very little action over the last several days. in any major class. here with us to discuss it is all over -- oliver. do people think that the speech will finally bust us into a new direction or will it be the same? >> there is a waiting game where volume has been muted, not a lot of big moves. but there is a betting game going on where the investors --
it is not just about jackson hole, but over the past months things have become bullish. if you look historically, we do not have a whole data sentiment, but around the market any time a fed official or central bank or has spoken at jackson hole, the markets have done well. three out of the five times since 2010, they have done pretty well. feelings on the market went down in the week after that was -- the only time the market went down in the week after was it when the -- did not speak. the habit is around the bull market -- joe: looking at performance of theties post jackson hole, only time we saw a decline with 2015 and 2013 when janet yellen did not show up. every other week, they saw a gain. >> right. it puts it in perspective.
we have been able to count on dovish language from the central bank. so when you have the chairs speaking, it generally does well. and i think the people are very aware of that. so there will be some kind of reaction. scarlet: this is why people are quiet head of it, even though people tell us they did not expect janet yellen to say anything. willt will anticipate what happen in september. and we do have a short interest on the total market compared to a panic indicator. what is this? bnp, theue line is ticker is out of the u.s. it is an aggregate sentiment indicator for u.s. stock markets. take into account of it -- the v ic, and short interest, breaking news out individually. we are talking about a lot from the past year, which is short interest, the lowest in over a
year. you recall this measurement was climbing and climbing, then the peak at 4.3%. the stock it is coming -- the fact that is coming down over the past couple months, that is a big deal. we got the numbers on that this week. at numbers are going down and people are getting more worried about the market. and this is also in the negative, which is an indicator of the positive. the move up. looking from the bottom a couple months ago, the move up is so sharp. the fastest increase in four years. so you are looking at a shift as people -- it cannot be directly because of jackson hole, it could be because of the dovish tones going into it. and people do not expect a lot from janet yellen. joe: even though we have seen a couple of days over the past week where people are getting into the defensive stock, the trade seems to have turned
around. and i love the title of this chart. matt: coke is a stable we're aple we are-- st looking at. these are not all soap makers. >> right. we are looking at the staples sector. it has flattened out and we are below the 50 day moving average. this is a group that is had a run-up with utilities and telecoms over the past year. they are the biggest gainers on the of. it is important to assess and chronicle the sort of slowdown in the trade. particularly interesting about this is there is a question about whether or not the flows in minimal volatility stock staples and utilities way to make things hairy on the way down. but so far it looks like they have not collapsed, they are weakening but it is not disrupting the market. comes belowerage
the 50 day moving average six times this year and it seems to keep powering up. so i decided to check this out. looking at the technicals. we are not in in oversold or overclocked -- overbought situation. and speaking of the staples, one --ck that, i come a smuckers that caught my eye, smuckers. it got smashed, earning one of its because losses in five years. you can see it in the red. it speaks to the point that everybody fell in love with these safety staples stocks, but you could hit a wall with them. >> jelly is delicious. it is in my post apocalyptic bunker. but this is one of those companies, we are not sure about where things are going, that is where people have been in the past six months. that has been the play.
and it is starting to break down. but it is not ruining the market. joe: is it jelly or jam? jellyt: peanut butter and sandwiches, not a better and jam. joe: ok, oliver. thank you. scarlet: coming up, saint jude. muddy waters targeting the technical device maker, saying that they are vulnerable to hacking. we watch an exclusive interview. this is bloomberg. ♪
flash, a look at big business stories in the news right now. settledaniels midland in trial, a lawsuit claiming that the company had a ponzi scheme. the terms were not disclosed. it centered on the alleged role of the company in $27 million and missouri farmers. -- is now serving a prison sentence. and although subsidies for cooper drivers is adding up to losses, according to people who are familiar, the ride sharing giant lost millions in the first of the year. but the good news for cooper, they will not seek -- uber committed when i see losses from china. they have already sold the company there. and apple issuing a security update after espionage software was targeting iphones in the middle east. experts say that the spyware took advantage of three previously undisclosed weaknesses. the apple operating system
included. apple says they have fixed the vulnerability. and that is the business flash update. joe: carson block's and his research -- carson block's research firm is betting against saint jude, even though they are any takeover from abbott laboratories. sagesthey claim that devices are vulnerable to being hacked. here is an interview exclusive from davis cup. >> how much money do you have at risk? >> we did not discuss trading. >> how is the trade structure? >> it is important to understand that right now saint jude is in the process of being acquired by abbott laboratories, and part of the consideration of this is the average stock -- abbott stock. everyone share of saint jude
will correlate with abbott stock, so right now we're short saint jude and we're long abbott laboratories in a ratio that reflects 1.87. >> so you have -- it is to reflect the reality -- >> yes. it is a hedge for us. right now, the market is pricing a 90% probability that the deal completes in december. it very well might. we have seen stranger things happen before. the acquisition of economy. so we do not know if the deal will go through, but we are short. >> what could happen if a consensus develops that you are right, that saint jude's cardiac rhythmic business, including defibrillators and pacemakers, is in jeopardy? carson block: the stock price
would start to reflect that. that is why we have our position on. >> shouldn't lawyers and accountants figure this out? carson block: that is an interesting question because -- >> it is a billion-dollar deal. carson block: right. separate security is still so esoteric that it is probably not part of standard due diligence process. and it could very well be, no-fault to abbott laboratories that they are assuming that saint jude said the security conforms with industry-standard. it may be industry-standard is not where it should become a but as long as it is conforming, that is probably acceptable. so to be honest, i do not think that acquirers are yet looking at cyber risk to the acquisition
target. >> they should be. carson block: yes. and i think this is something -- we have talked about this in interviews before, at least with stocks we have shorted them a you have missed pricing of risk -- shorted, you have missed pricing of risk around the world. we live in an increasingly complex but fragile world, and it really, the risk does not reflect that. we can probably trace that some , but cyberlicy, etc. security is something that needs to be more than just -- did you read about that hack? information --st we as a society need to evolve around that and we need to start taking this seriously. we have the manipulation of an
election right now because of russian hackers. this is serious. matt: that was the founder of muddy waters, carson block speaking with bloomberg. scarlet: earlier today, we spoke with the ceo of meds that -- med sec. here is what she said in response to saint jude saying that these vulnerabilities are untrue. >> we put together three different scenarios, which we reproduced in controlled conditions. we demonstrated to muddy waters and they were produced these as well. so we verified the existence of these on her abilities. scarlet: but the attention is focused on the fact that they went to muddy waters with the findings rather than going to the manufacturer or the regulators. matt: i think people initially react negatively to this because they think there should be an ethical problem, since the devices we are talking about are
implanted in humans and people could lose lives. thatu sort of separate from the equation, then you can see this is no different than finding financial accounting irregularities and going to carson block first. you cannot separate the fact that people could die. scarlet: human lives at stake. joe: it is fascinating how the short-sellers that make a big deal out of these stories have taken on this rule because they have so much money at stake and they can move a stock. they have taken on the role -- and they have inability to raise the issues in a way that other consumer advocates cannot. scarlet: and muddy waters has a track record of holding companies accountable, instead of going to regular leaders -- regulators. they said that saint jude has a track record of sweeping things under the rug and there have been other instances where
companies can put a gag order on you and prevent you from saying much. and the information therefore is put aside. matt: on the other hand, it is similar to something that specter would do in a james bond film, figure out a way to hack into a medical device system and then short the stock. scarlet: it is part one of the homeland episode that came out -- matt: does this happen in homeland? scarlet: it did. come in a common market playing the waiting game -- coming up, playing the waiting game. and we have a chart that illustrates it. mrs. bloomberg. ♪
the one and has gone up -- index has gone up in the past few months. this is because of the golden cross, when the short-term trendline which is the 50 day moving average is about to go above the long-term trendline, which is the 200 day moving average in yellow. carson block i prefer the death -- joe: i prefer the death cross myself. scarlet: well this is the directional movement index. it actually turned positive in july. it is signaling the strongest bullish trends since 2010. and we were saying yesterday that china is not an imminent risk and at least for now the economy is stabilizing. it is a love affair with emerging markets. joe: that is right. we do not really talk about chinese equities that much in the good or the bad times. it is interesting to see this gathering steam. matt: chinese equities have a reputation of casino. joe: not really rooted in
fundamentals. i want to talk about data out of germany. we have the survey of businesses , how they are doing. check out the white bar, this is the monthly change. we of the biggest drop, the one-month drop in several years. since 2012. this is business confidence or assessment of the climate, so this is a very big drop from the previous month. and it raises questions. is the brexit story still out there? we have gotten solid data from brexit and people let down their guard. they said it will not affect anything. but this is identified as contributing to this, so maybe too soon to say the coast is clear. scarlet: the data out of the u.k. has been ok. matt: maybe it will fall off the cliff. i am going in the same direction. i showed joe my chart and he
said, you cannot use the same chart every day. i have been saying, we have not seen a trading range in equities, volume is low. at the same time, if you look at fixed income -- this is number 28. you can see the fixed income range is also trading supertype. essentially, nobody is taking risk. people are on the sidelines. we use that phrase to describe what is going on, because everybody is waiting. scarlet: that does it for "bloomberg markets." what'd you miss? is next. this is bloomberg. ♪
scarlet: u.s. stocks closing lower this afternoon ahead of janet yellen's speech tomorrow. joe: the question is, "what'd you miss?" scarlet: the waiting the speech tomorrow. and we speak to narayana kocherlakota for the next half hour. joe: plus, turkey emerging from the attempted to a stronger power. what is next for its relationship with the u.s. and russia? matt: and helicopter -- coming to japan. he sees the doj acting after the yen's gain. ♪ scarlet: we begin with our market minute. stocks closing lower before janet yellen giving her speech tomorrow morning. if you look at the industry groups in the s&p 500, five out of the 10 are higher or lower as the case may be because it finished down. materials where the best