tv Bloomberg Markets Bloomberg August 26, 2016 2:00pm-3:01pm EDT
inflation. it's very important to achieve that. inflation excitations are deeply anchored at 2% -- expectations are deeply anchored at 2%. we don't want to put that at risk. it is a critical aspect of our economy mike: thank you for joining us today. with: that is mike mckee jerome at the jackson hole conference. the conversation they were having about inflation, how thatnor powell thinks reiterating a lot of what we've heard from that officials. -- fed officials. very data-driven. consensus is inflation will move back up to 2%. there is still slack in the labor market.
there are people who want to get back into the labor market. these demographics have something to do with that, there are people who want to work or work more. are two hours from the close of u.s. trading on this friday. rami has more on the markets and on blackberry. i: we have news coming across the bloomberg terminal. blackberry is still declining comment on that trading halt that's been happening for the past 10 or 15 minutes. blackberry is reporting a redemption of existing convertible debt. 6% -- 3.75% in terms of those that subtractions subscriptions.
we will continue to get more information on that. blackberry shares are still halted right now. let's go to the majors. spoken atyellen has jackson hole, we are still in negative territory. near our session lows. the s&p 500 pulling away, down .3%. the nasdaq down what to buy presented -- .25%. when fed chair yellen released her statement at 10:00 a.m., we saw a bit of a dip in the market. she talked about the stronger u.s. economy and stronger jobs growth. we saw markets rise. stanley fischer came in and said
a september rate rise was on the table. we are now scraping the bottom. i want to show you what's been happening in terms of the daily trading range here. yesterday in the day before, we were talking about their lowest trading ranges. all the way on the right-hand side, are spread is at 24 points. that's our spread is at 24 points. 8is is its highest since july . definitely more trading happening here off of yellen and the fed speak. we are still on track for our 35th day of less than 1% gains. david: what are we seeing besides equities? ramy: we have to at currencies and commodities as safe havens. the u.s. 10 year, we can see the
volatility -- we were at session lows in the late morning after fed chair yellen spoke. been talkinger has about potential rate rise for september, now at session highs come up four basis points. similar thing happening to the dollar. in addition, let's look at what's happening with gold. gold is going the other way, falling because of a potential rate rise. over the past couple days or so today, itnds higher will end its longest losing streak since may. vonnie: we have to keep an eye on that. let's get to the first word news desk. problem for the
central italian region devastated by this week's earthquake. aftershocks have damaged two key access roads for one of the villages hit the hardest. the roads in the area were congested with emergency vehicles. 267.eath toll has risen to blooda wants all u.s. banks to start screening for zika virus. the requirement was previously limited to areas with active zika transmission like puerto rico and disco for the counties -- two florida counties. the united states is looking to , busesy limit how trucks and other large vehicles can travel. regulators are considering a cap of 60-68 miles per hour.
the storm's maximum sustained winds earlier today near 65 miles per hour. the u.s. national hurricane to gainxpects gaston force over the next few days and could we strengthened to a hurricane by tonight. the storm's center to 1200 miles east southeast of bermuda. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. we finally heard the speech the world had been waiting for. did janet yellen's remarks offer any surprises? not for bloomberg view columnist mohamed el-erian. : the market had to n exation for
september. the fed remains data dependent. they will take a close look at the next jobs report next week before deciding. i did not find anything really surprising and her speech today. -- in her speech today. for more, we are joined by tad rivelle. he is joining us from los angeles. a bit of market movement in fixed income and then seem to two rivers -- seemed to reverse path. tad: there was very little new. yellen reaffirmed the same old same old. september is theoretically in play. that fed is still data dependent. the case for a rate hike has improved somewhat in recent weeks.
let's really look at it in a longer-term concepts that context. -- longer-term context. has been saying for a very protracted. -- protracted period of time that it is data dependent. the idea that we are four weeks out from the next fed meeting and after 90 plus months or so of zero rates, we have not collected enough data to figure out whether we can move one quarter of 1% in terms of rates is ultimately a bit disingenuous. has a very strong bias towards keeping rates as low as possible for as long as possible. they are extraordinarily cautious and very much dedicated to principal that artificially low rates are somehow really good thing long-term for the u.s. economy. david: to what degree are you worried about systemic risk in
the u.s. and abroad? tad: we are supposed to be very concerned about it. there's a lot of different perspectives to offer on that. the most market oriented one is the central banks have attended to make every trade or every long risk trade very crowded. get everybody into the equity markets, drive them out of cash by establishing zero rates or negative rates. by artificially propping up asset prices. indicated, long-term growth in the long-term health and stability of any economy is a function of its capacity to improve activity. businesses which are combinations of labor and capital have to find ever more efficient and better ways to deliver their services. merelyt relates to increasing asset prices and
enhancing the creation of credit and adding more leverage to the system is very unclear. the fed acknowledges its ability to enhance productivity over the longer term by simply offering lower rates is not clear. if these policies are so effective, why is growth for the last 12 months still roughly 1%? why is inflation still missing its target? why has the fed essentially missed its forecast and yet continues to offer its forward guidance and to operate as if it does understand the impacts of its policies on the general economy and the financial market? it's a big experiment in the central planning of interest rates. vonnie: we don't know what would be the case for monetary conditions like this -- what are
you doing at tcw to prepare for what you obviously think will be some bombshell at some point? tad: of course, no one ever does no what the counterfactual would be. every cycle in human history has ultimately come to an end. come tonhanced cycles worse ends than the normal kind. when you look at leverage ratios, for instance in the investment-grade u.s. credit that exist stresses in european banking system, the ongoing concerns of growth slowdown in u.s. in china -- and china, if it requires this much leverage to keep the game going, you should be cautious. -- our your portfolio paradigm is think about what you own as really coming in three flavors.
the risk off flavor, the and theirflavor spendable assets -- there's bendable assets. this is a time to be cautious. avoid the breakables. it certainly makes sense to add spendable assets. -- bendable assets. oft for the inevitable end every cycle. david: thank you. chiefvelle, cheeseman a investment officer at tcw.
david: this is "bloomberg markets." vonnie: one of the world's largest -- cutting its management fees. this highlights the changing balance of power in the industry which is somewhat under attack from investors and competing money managers. mike regan has been following this powershift. what was behind the goal now? it seems a bit late to be cutting fees.
two and 20 is the stereotype. they've been coming down gradually over the years. the latest number i saw was 1.5% is the average for the management fee. that is the fee you have to paying a matter what. -- you have to pay no matter what. the 20 is the performance be. that has dropped down to 17.5%. obviously, the pressure is really mounting now. a lot of pension funds, endowments, insurance companies are big hedge fund investors, they are all pulling money out. the balance of power has shifted. investors have realized we can --h back on these fees
david: our colleague talking about the trans-we've seen -- trends we've seen. do people think a simple reconfiguration of the fee structure will reverse the trend we've seen? it, but doesn't reverse it is something you have to do. one of the more interesting stories i saw this month was new jersey, my home state, they tend to play hardball of it. that's a bit. they are cutting in half their allocations to hedge funds and saying the ones we do want to invest in, we are looking for much lower fee structure. targeting a 1% and 10%. basically half of what the stereotype is. that is a trend that is bound to some of these fees are
bound to come down even further. there's so many cheaper alternatives now. you can replicate the strategy with etf's. there's a lot of different reasons for the pressure. vonnie: who's the holdout? mike: good question. a lot of them we might not find out about right away. they will have to eventually disclosed this -- the other hedge funds, we might not find out right away. you can spot the trend from 30,000 feet. i would expect in the coming quarters that it will edge lower. david: mike regan, thank you for your time today. vonnie: time for our bloomberg business flash.
the business could expect to billion dollars -- $2 billion -- saudi arabia says -- for the world's largest oil company. the goal is to raise $100 million. that's $100 billion. david: still ahead, banking on a soccer stadium. we will speak to steven sugarman about the major league deal he just signed. this is bloomberg. shery: -- this is bloomberg. ♪
vonnie: this is "bloomberg markets." david: let's go to the west coast, los angeles, where the bank of california has doubled will pay price and $100 million over 15 years to slap its name on los angeles's new soccer stadium. let me ask you a two-part question. can you confirm the terms of that deal? to those who say that's a lot of money, what is your justification for it? steven: thank you for having me on. the deal has a lot of components and we are really excited about it. we are part of the construction financing on the project. what was important to us was
bringing a stadium into south los angeles, the focal point of los angeles, getting the team into the right part of l.a., it's been an empowerment zone we've been focused on. it's a partnership with the los angeles football club and the los angeles football club foundation and the mls. soccer is the fastest-growing sport out here in l.a. it's in our hometown and our backyard, something we are really proud of. we are excited to bring the team here in 2018. vonnie: soccer is really only gaining a foothold in the u.s. now. that will seem like a real bargain. talk about the area, the people that you serve. are you finding that the conditions are good? we just had the whole economic symposium in kansas.
arehat an area where you doing business? steven: south l.a. has seen great improvement over the past few years. concentrated on latino owned -- something the bank of california has been banking on. we started with the acquisition last year -- it's been supporting our growth. when you look at mls and soccer, when you look at where the foundations of economic growth and los angeles are coming from, when you look at our market demographic, we are excited to be in this community. it is our backyard, our hometown. david: you've acquired a couple companies. do you expect that to continue?
or are you looking for growth by other means? steven: we acquired five banking franchises in the first three years since our recapitalization in 2010. in the last two years, we've doubled in size with no acquisitions. it has been an organic growth story. a lot of banks in california have exited. they are sold to new york banks, canadian banks. they disappear from california and the private banking community has lost faith in dealing banks -- dealing with banks where there's not a lot of decision-making. , we arecalifornia trying to emphasize the commitment we make. we want to serve this market through economic cycles and we are focused on california and on los angeles. that is part of our commitment.
it's part of what is driving our organic growth and financial return. nove doubled in size with acquisitions over the last few years and are pretax income has grown even more quickly. your stock prices recovering following the big downfall here during the crisis. congratulations and much love to you and good luck with the sponsorship of banc of california stadium. --ven sugarman david: this is bloomberg. ♪
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gold. they had been volatile throughout the entire day. oil is up and gold right now is flat. oil is up by about .6% here. it was very much a seesaw day because of the fed speak. this pop., we saw from janet yellen's comments. then, vice chair fisher talked about a september rate hike. down thatit of a lake down at bit of a leg 1:00 p.m. when we got the rig count. tuesday, we saw iran coming into play saying they might be open to a production freeze. that brings us to friday with
janet yellen's comments come as well fed commentary there. gold right now has been flat on the day. just as volatile as well with oil. we are basically on the flat line right here. we've seen a pop as well. this is the biggest weekly loss in more than a month. it will endigher, its longest losing streak since may. returning to oil, it has not been all central-bank policy talk this week. michael mckee asked robert economists and context within the dallas region are telling him about the oil market. toward we are moving global supply and demand
imbalance. we still have record global inventories to work down. because we are moving toward balance, we expect prices to firm. they may not go up a lot, but i don't think you will see a big leg down. countsl slowly see rig coming back. in the shale industry, the breakeven cost is as high as $60 or more. when you see prices firm, you will see more rig count. this pulls down inflation, i suspect it will be more neutral going forward. general, companies seem reluctant to put money to work. is anybody in your district telling you that is going to
change? robert: here are the issues that are driving that. one is weak expected demand, particularly globally. half of s&p's revenues come from outside the u.s.. gettingngle industry is disrupted. amazon versus retail stores, versusrsus taxis, airbnb hotels. it's hurting the pricing power of companies. it's causing ceos to be more cautious. energy manageable, firming will help cap x. hopefully you will see some improvement in cap spending. some of this and certainty from some persistent per forces -- persistent forces that will be with us for a while. talking tort kaplan
mike mckee. stephen harper is leaving politics. harper revived the conservative party and candidate and led it to three election victories. he served as prime minister from 2006 until last year when the conservatives were defeated by justin trudeau's liberals. france's top court has ban.urned a town's burkini the ruling by the council of state specifically concerns a ban in the riviera town of -- the binding decision is expected to set a legal precedent for all the 30 or so french resort in his abilities that have issued -- municipalities that have issued similar degrees.
joe biden will appear in ohio on september 1. the president has to philadelphia on september 13. pennsylvania and ohio are both critical battleground states another record-breaking night for bruce springsteen and the eastern band. -- the ets show at street band. night's show lasted four hours. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. yellen'sfter janet speech, we heard from mohamed el-erian. he pointed to the next jobs
report as being key to whether the fed will hike september. she confirmed that the market had too low an expectation for september. she reminded us yet again that that the fed remains data dependent. they will be having a very close look at the next jobs report. i did not find anything really surprising and her speech today. -- in her speech today. surprise me that she did not move forward in terms of speculating about what other tools the fed could do. inflation?about discussed that the fed could boost its inflation target.
is there an argument to be made that the inflation target should be raised? i'm a bit puzzled by the argument that the answer to the current dilemma is to raise inflation targets. the answer is to widen the discussion to make sure we do not continue to rely on just one policy tool. this notion of the fed being the only game in town is what should be addressed. vonnie: janet yellen did admit that growth was not rapid but enough to keep the labor market growing. that side of the mandate is fine. the other side of the mandate, she says we will hit 2% with an that's within two years. did you get any clarity on that? i think they are
encouraged by the fact that the inflation rate is moving up. get a really strong report, 200,000 plus with much higher weight growth, they will find it difficult to resist a hike in september. that depends on getting such an employment report. the structural issues are well known. they are why productivity is so sluggish, why is investment behavior not responding to the pickup on the consumer side and what is ahead for globalization and trade? it is easier to identify these issues than to answer them. penned mohamed el-erian an op-ed today. you can check out on the
for more, we are joined by toluse olorunnipa. donald trump's remarks on monday or tuesday calling hillary clinton a big it. talk about the turn this campaign has taken here over the last week. toluse: it is a pretty strange turn of events. donald trump called hillary clinton a bigot. hillary clinton calling out trump over comments he's made. we are not hearing about general issues and policies. that much more been in much more of a name-calling fight at this point. this literally just
crossed a couple moments ago. henry clinton is favored to win the presidency with a 90% odds. estoril the clinton is favored to win. clinton is favored to win the presidency with a 90% odds. toluse: things are not looking so good for the donald trump campaign. they've had numerous leadership changes, they've changed their campaign managers, try to put donald trump back on message. trying to reach out to the voters who been turned off by his incendiary comments. so far, it doesn't appear to be showing up in the polls. the first debate will be next month. right now, it does seem hillary clinton is ahead. change the about the
change in leadership has made. how has the strategy changed in the last week or so? we've seen donald trump using a teleprompter and being much more on message. we have seen him sticking more closely to the message his campaign managers want him to get across. he is reaching out to minority voters more and making a direct appeal to african-americans and hispanics saying they should not trust hillary because she has not done enough. he has stephen bannon, the former leader of breitbart.com. a choice that will lead donald trump into more bare fisted, heart attacks against clinton.
-- hard attacks against clinton. david: donald trump has flip-flopped on his stance on immigration. how much of a priority is it for that campaign to get this sorted out? that is a big question because we've not seen them get into specifics. we've heard donald trump say that he is softening his message on immigration. he will not deport all 11 million undocumented immigrants. the messaging has been a bit muddled in the last couple of days. he says he will come out with a speech next week laying out his policy. that is something he will have if he wants to pull better among hispanics. vonnie: our thanks to toluse olorunnipa, joining us from washington. david: what is pitting wind and
solar against environment lists? jennifer dlouhy wrote the story for this week's edition of "bloomberg businessweek." talk about what has led to this rule. there was a lot of conversation drop president obama's term about opening up these lands to development for wind and solar. white is a team like that kind of development has moved at a fairly glacial pace? jennifer: this has been a top priority. the president wanted to unleash renewables on public lands. those best intentions ran up against federal environment loss. -- laws. these projects must go through pretty significant in my mental review.
-- environmental review. they have to do a broad environmental assessment. they have to assess their impact on eagles and other birds. vonnie: what happens next? jennifer: this rule is expected to come out from the entire -- interior department. process for ahe lot of years with a lot of back-and-forth between regulators and developers over what it should look like. the rule is likely to create this bidding process for wind and solar developers. where they have a choice of going to prescreened land, territory that is precleared of the big environmental problems but still has lots of sun and windy areas. if they go to those areas, they shorteningit by review times. regulation on the
public land for oil developers compared to those for renewables. jennifer: it is night and day. you have an entire structure built up around oil and gas feasting on public lands. competitive leasing is par for the course there. are completely new territory for regulators. eugene the interior department -- you have seen the interior department going over what tools they have at their disposal. most have gone under right-of-way permits. the same authorization for pipelines and ditches, not for broad energy projects. oil and gas tends to happen on the leases that are sold at
david: this is "bloomberg markets." time for the bloomberg business flash. the deal leading to the ouster of viacom ceo could be ehreatened by a legal battl between sumner redstone and his granddaughter. it is unclear whether the granddaughter had to agree to back the ceo. karen redstone is challenging her grandfathers mental competency.
$33 a share in cash, a $.38 premium to the stock price as of august 3. spotify has been retaliating against musicians to doesduce new motility or -- musicians who introduce new music exclusively on other platforms by making it harder to find their music. twitter has long been criticized for failing to protect its users from of postst and abuse from users have led to the departure of many celebrities. working on a keyboard-based tool. sarah frier joins us from san
francisco. explain this tool to us and how it would actually work. sarah: on twitter, it would allow you to block certain keywords like racial slurs, perhaps, or derogatory sexist words. you can block them in your feet and to know anyone who might be harassing you proactively. in doing so, makes the trolls less powerful. this is an initiative i jack dorsey -- by jack dorsey to find a technical solution to the harassment on twitter which has led people to have big issues with seeing attacks and then they quit. really bad pumps the -- really bad publicity for twitter. david: there are two reasons for doing this.
one is for twitter's bottom line. doing more to crack down on posts that are controversial, to say the least. the scrub the pressure these countries are under and how difficult it is for them to control these hundreds of millions of users. people could be making a political comment about islamic state, that does not mean they are member of islamic state. these are difficult things to filter proactively. out of fear of silencing people their mindsspeak and be part of the global conversation about something. a technical solution is very difficult. twitter has been able to find isis users and block them
permanently. on twitter, everyone can be anonymous. it's this constant lacrimal problem and twitter is reliant -- whack a mole problem and twitter is reliant on its user base to report people who break the rules. process and it is not smooth and it is not technical. way toll give users a proactively filter what they want to see. vonnie: effectively putting in your own controls. will it work? will it impact how twitter uses advertising to monetize its user base? concern isbiggest twitter keeps growing -- they've had stagnant user growth.
the revenue growth has started to slow. the company has to find a way to fix these problems that are keeping people away. about leslie jones facing abuse to the point that she felt she had to quit. that makes people not want to sign up. david: you can get the top tech headlines on "bloomberg west." plunging 40%wagen through july. this is bloomberg. ♪
where live from -- we are live from new york. are watching.e after months of silence secretary janet yellen speaking in jackson hole. the possibility of a rate hike has climbed to more than 60%. david: the final hour of trading. putting cold water and on -- on an earlier rally. bonnie: can the brand ever recover from that emissions scandal? one hour from the close of trading in the u.s. let's head to the market desk. anchor: we are at session lows. investors pulling out from equities after we