tv Bloomberg Markets Bloomberg September 8, 2016 3:00pm-4:01pm EDT
vonnie: we are covering stories today from san francisco and the u.k., and here is what we're watching. stocks coming back in the final hour of trading. are bracing for markets, we will hear from someone from citigroup. u.s. stockpiles dropped the most in 17 years. vonnie: drone deliveries are coming to the virginia tech campus. is this the future of the service industry? are one hour from the close of trading. let's head to the markets desk were julie hyman has been happening all day.
than 1%e've seen less move in the s&p 500. and it's been quite a while since we've seen this compressed volatility. we will talk more about that in the options of eight in about 20 minutes. energy shares are the best performers today. , mitigatingt now lowerclines, there's lots today, real estate all by nearly 1%. remember the formal self ration of real estate in financials .ill happen on september 16 individually within technology we have apple falling for the second day after it introduced its newest iphone, on skepticism about demand. the company saying it's not
going to give first weekend preorder numbers in terms of how the numbers are looking for the company. and ibm offwn a bit by about 1.5%. well,he oil majors doing all higher along with the oil prices which as you heard are higher after we saw weekly inventories decline, going all the way back to 1999, in part because of hurricane hermine. oil prices up 4.5%. we've seen natural gas prices rise today is smaller than estimated gain in inventories. chesapeake energy is one of the stocks gaining the most today because of that progress and oil . it is reliant on both. david: julie hyman there at the
markets desk. mark crumpton has more from the newsroom. hillary clinton is slamming voter identification loss. during a rally in charlotte, north carolina, she said such laws are a blast from the jim crow past. >> we should be doing everything we can to make it easier to vote, not harder. that's why if i'm elected president, i will work to expand early voting. universal voter registration so every young person in every state is automatically registered to vote when you turn 18. she praised the recent federal court rolling -- ruling the voter idown and access law. donald trump has a narrow elite over hillary clinton in north carolina. a new survey finds 24% of likely
voters support donald trump while 41% support clinton. gary johnson comes in with 4%. in germany, there's another challenge to chancellor angela merkel's open-door policy for refugees. the christian socialist urge her government to give preference to christian refugees. a draft proposal calls for germany to take in no more than 200,000 asylum-seekers the year, but also wants to ban women from wearing veils in public when possible. ryan lochte is banned from swimming until next june and will forfeit $100,000 in bonus money that went with his old metal in rio. it's part of the penalty for his drunken encounter at a gas station during last month games. the penalties were announced today. inbal news 24 hours a day
over 120 countries. i'm mark crumpton. this is bloomberg. back to the markets, bonds and stocks falling after the ecb played down the need for more stimulus. let's go to the chief u.s. equities strategist. that would in target be a drop from the current level. tobias, great to speak with you again. take is inside your equity -- or. what are you looking at? >> you noted our year-end target of 2150. 2250 by the middle of next year. see the market having upside. we think in the very near term things like interest stock correlation is extraordinarily low.
there is a little bit of complacency out there. wen we talked to investors note a qualitative aspect of complacency. more importantly, everyone anticipates the easier comparison on the dollar as well as energy. it's not going to be a compelling driver to the upside. if we are off 1% by our target, i can live with that. vonnie: so where will the leadership come from? they have to put the money somewhere. where will it go? >> there could be a little more rotation in the market. we've seen some of that began, the so-called defensive utilities, telecom and consumer staples have been weakening of late. we think more money will make .ts way to the energy sector
in addition to that, you look at areas like tech hardware, media, there are some interesting areas that have been undervalued and beaten up of late and that probably create some opportunity. ofnie: is there a little bit cold feet about the consumer coming into the arena here? there have been indicators that suggest the consumer is not doing as well as we had hoped. >> there is kind of a mixed bag there. we've seen some weakness in cruise lines and people worried about things like zika. i wonder we should be using wonderful technology like drones that deliver burritos, but i will leave that to the consumer to decide. the notion of the shift in the way consumers are spending is
ready interesting. auto sales have been relatively good. if you look at home renovation related retailers, their numbers are pretty good. consumers are choosing where to spend money incentives just spending it willy-nilly. i would hope that some members of my family would do the same. >> how worrisome is that read for you? bit of ay it was a shot. there have been seven really good months in a row of orders in the manufacturing index. then the august number was fairly disappointing. i think of it more that -- as an aberration than a new trend. we are not seeing people laying off tons of bodies. capital spending data has not fallen dramatically. the one area it has fallen dramatically is energy. end of are coming to the
the phase of the cycle, and if that's the case, what is the next phase, or should i even ask? >> i'm not sure which phase of the cycle you are referring to as ended. if we lose consumer spending, that would be a significant factor. we've had decent job growth and still have energy savings left over. there have been some bastions about why haven't we seen the consumer being more active. there are a series of answers people have raised. one i heard recently was interesting. if you're not earning anything on your money right now in the the fixed income world, maybe you have to save more to create that retirement benefit and essentially very low interest rates are having almost a negative impact on consumer activity as opposed to a positive one. it's an interesting issue to debate.
i'm sure there are lots of questions back-and-forth. volatility in the vick's, when you look at volatility and see where it's been, what do you make of it and what should we make of it? >> a lot of people misunderstand volatility. if you have low levels of usually the market is up 12 months later. the problem area is between 20 and 30. our work suggests, based primarily on the shape of the yield curve, that we are likely to injure a higher volatility environment over the next couple of years. not the fact that it moves from 10 to 15, that is a nonevent, almost. thank you, tobias, coming to us from citigroup.
generals. he also went on tv and touted putin over our american president. let's be clear, there is no one who would tout someone in russia versus someone who is in america. i would tell you on that topic situation, when people look at it, they will say one is a commander-in-chief and one is not. with -- with respect to all the stuff about the bill, it's going to be about foreign policy and the economy and social issues like immigration and the supreme court. that will be the triangle. people are not going to care about trump university or an e-mail situation. the director of the fbi has come out and said the case is closed. that is not going to be where the election is won and lost. polls, according to
donald trump is winning white voters and those who don't have an education. >> president obama i don't white folks without a college education and he won in 2008 and 2012 in a substantial way. the good thing about our country, we are diverse, we have many different people voting of all types of races, gender, and ages. one area of the region is not going to differentiate where we win or lose. the electoral map is key and that bodes -- very well for hillary clinton today. i am a big fan of joe biden.
at that time announced i was still supporting secretary clinton although for some reason no one believed me, although i it.publicly announce joe is a good friend. we are honored to have him as a vice president and i'm sure if he ran and hillary didn't, we would have a democrat in the seat of the white house either way in november. what sounds like a dream come true for many college students might be real now. program is run by a unit of google's parent company alphabet. allen, blacksburg virginia is not going to know what hit it. how did this come about, and why burritos, of all things? we were joking that we would like it here in the newsroom as well. it turns out virginia tech is faasite of one of the six
approved drone test sites. the perfect place to gather data with some real professionals, and it turns out that virginia tech has a very aggressive generation next transportation and infrastructure, so it worked out well for everybody. vonnie: is it some kind of partnership? how will it progress from here? partnership, the federal aviation administration. alphabet is really running the show here. it's a delivery system they worked on for quite some time now. they have done thousands of delivery runs at the remote california test site but they wanted to move to a somewhat more urban environment where they can test these drones in a
more realistic setting. the other thing they are doing is testing the marketing. they will use real people and see if the burritos arrive still warm and if people like the experience and that sort of thing as well. david: i think of all the provisions a college student needs, notebooks and pens and pencils and the like, there was a reason for picking food. it provides certain difficulties that a notebook would not. next that's right. flips upside down when it comes out of the package, you are fine, but people are not going to be happy if their burritos lands on their lap. and speed is important because you want to keep it warm. they wanted to pick food because it was a challenge. vonnie: where are we on regulation?
there still is not a comprehensive drone regulation handbook, is there? step just took a huge a couple of weeks ago by unveiling their new drone .egulation they allow much broader use of commercial drone flights. when we are talking about deliveries, that is a much trickier problem. over cities with lots of people, it's going to require andsorts of safety system low level air traffic systems. edge of thehing the envelope on robotic technology in that sort of weighing. say they can do it within single digit years but i guess we will have to see how long it really takes.
thanks to alan there in washington dc. would you order a burrito by drone? david: i think i would. they are going to be underneath it waiting for it to drop. david: i would do it. vonnie: i would watch from the sidelines. twitter shares are down 30% over the last year as it struggles to compete with facebook and other social platforms. this is bloomberg. ♪
time when volatility will come back. we were talking during the break . even if you think volatility is coming back, there are different degrees of fairness. -- are not like at desk on deaf content, you may be at five or even lower. defcon 10.ot at >> we expected volatility after brexit. in a week and a half we face the reality that yes, typically, volatility does the in fall. we know we've had shots in august, september, and october over the course of time and we want to start managing that risk. you sell a call and buy a put,
protect individual stock positions, and also stock replacement. lululemon came into earnings, stock was up 50% pre-earnings. we talked about taking off long stock positions ahead of earnings and replacing it with call spreads that expire in december. phase two, start looking at index hedges and long volatility. julie: let's get more into lululemon. essentially through your trade, you protected yourself from what would've been a steeper loss if he just held the stock outright. call spreadended before earnings. the stock is down about 13% post earnings. the call spread we recommended
has gotten absolutely hammered. >> but there is still a chance the stock could come back. >> that is exactly right. if you took down stock 50% year to date, it would be down about 15% of what you would have suffered had you just did there long stock and suffered a 13% drawdown. let's look out for stocks at halftime against them. realize some gains, and replicates options. julie: twitter is having a board meeting today and which they are discussing, we don't know exactly what. there was a report that their are not any bids on the table for the company. analyst doesn't think there is a bid out there for twitter. , monetization,
ongoing issues. williams stoked speculation once again that the company might be up for sale. we still want to represent a pretty inexpensive way in case there is a deal. it doesn't cost a lot and you have the upside in case a deal does come. julie: we will see if it does. thank you so much. coming up, breaking down the latest data on e-commerce and real estate. this is bloomberg. ♪
mark crumpton has more. at the state department, republican jason chaffetz of utah said during a hearing today the former secretary of state conveniently created a chaotic system that's costing millions to repair. saidte department official the agency is improving its records management but is overwhelmed by open records request. a foreign-policy advisor repeatedly interrupted the intelligence briefing last month. he inundated rivers with questions. new jersey governor chris christie also at the briefing reportedly intervened. federal prosecutors say they're moving to drop corruption charges against former virginia governor bob mcdonnell. officials say they will not .ursue another trial
the high court unanimously held that the actions mcdonnell took to benefit a businessman who gave him luxury gifts did not cross the line into illegal conduct. in portugal, several thousand firefighters are battling wild fires. one of the worst is in a national park close to spain's northern region. temperatures over 100 degrees have not helped. a number of villages have been evacuated. i'm mark crumpton, this is bloomberg. markets close in under 30 minutes. let's go live to the nasdaq and find out what's going on there from abigail doolittle. abigail: were looking at a bit of a pullback for the nasdaq after a new record high yesterday. down around .4%, but the
pullback today is all about weakness in technology. is biggest story today apple, shares down more than , really doing something unusual which is trading down halloween the iphone event. this is only the second time this is happened. the stock has traded up by more than 1.5%. the company recently put out a statement talking about the fact that they will not be putting out a post weekend -- preorder figures on the iphone, saying it's limited by supply and will be sold out the matter what do to limited supply. investors may think that is smoke and mirrors and they would prefer to have the transparent. one analyst has taken his rating down to market perform saying
that the stock is likely to trade in a range. we see that apple has been trading in a range over the last year, going up and down as investors view the change. recently the stock has started to break out of that range but over the last few days it's starting to trade back down toward the range. perhaps it continues to break 104 --her but a low below 104 it may stay stuck in that range. matt: it looks like the health care sector is up. what is going on with health care? abigail: biotech is trading nicely higher, up .7% at this point.
biotech the nasdaq industry is gilead science. chief operating officer earlier this morning said that they may be considering buying a cancer drug company. our team one to find out more about this. clovis oncology appears to be cheap in some ways to some investors, he said. they're looking at a cancer drug that would include clovis oncology plus the recent .edivation acquisition that was one factor providing support that there could be in acquisition within this space.
matt: thanks very much, abigail doolittle at the nasdaq. joe: let's turn to real estate. on commercial properties has increased. joining us is the ceo and chairman of prologis. thank you very much. we got an interesting quote yesterday that stood out to me. only modest expectations for sales and construction activity ward surrounding the november elections. do you see any evidence that anxiety about what is happening in november maybe impacting the market? i think it relates to residential business and we are in industrial.
it started out with vacancy rates on commercial properties increased. >> people talk about retail or office primarily. we are in logistics are industrial, which is a totally different sector. we are at twenty-year historical lows in terms of vacancy rate and doesn't of come down from about 14% in 2008 to about 5%. supply of new product continues to lag demand. so those vacancy rates continue to go down. so you do logistics for dhl, amazon, for businesses that are innovative and growing. you've been listed among the most sustainable businesses 48 years running. years running. how do you find new supply if it is drying up? nobody really knows what a
warehouse or distribution city is. but everything sitting on this table or in your home at some point comes through one of our buildings are one of our competitors buildings. it's an important infrastructure play for consumption. it is not a sector that is very well known to the public that it is extremely healthy. the number one reason it is healthy is limited supply. it is tough to find large pieces of land near major metro areas to buildings large distribution facilities that support a lot of e-commerce,cluding which has been on a tear. we focus on those large markets in the major metro area. we are in a good sweet spot where the market is today. not much has changed in the last couple of months. prologis shares up
about 20% this year. 500, youer of the s&p have seen the sector struggle live -- struggle a little bit. as the s&p gets ready to spin off from the financial sector, do you see evidence of a new type of investor sprouting up for your company? >> we are seeing that based on our conversations with investors. base part of our investor is the dedicated investor that the sector. the person who buys health care and all kinds of other things is all of a sudden a lot more interested in real estate. they are looking at sectors that have some economic drivers that are very healthy and e-commerce
is one that stands out for our business so they are attractive to us. joe: you have a boost from e-commerce in that unlike many physical real estate companies that actually benefits you. are there other economic trends that strike you right now terms of regions that are particularly strong in the globe, or anything else like that beyond the general secular growth of e-commerce? >> i've been doing this for about 30 years. if you look around the globe, the last year or two have been the healthiest of that entire time. that is pretty important. usually when one part of the world's up, another part is down. a lot of focus on europe and the u.k. and brexit. not seeing weakness in any part of our business. consumption is healthy. why? onause the two big claims
household cash flow, mortgage payments are low and energy prices are low, and that is translating into consumption and sales. e-commerce is shifting sales from bricks and mortar to online, and that is a big boost to our business. every dollar of online retail space.equires is there a space where you specifically want more land? do they have to bring it through one of your buildings before -- is there place your focused on lying -- on buying? >> we look at high population density with affluence, so dollars of consumption of available matt:.
so you want to be near the end customer. >> that is number one. and we want to be in markets where difficult to bring on additional supply. places where the land is tilt up . tokyo, london, places like that. pretty simple business. but you will pay top dollar for that land. it is expensive to invest in these things and to buy that land. isn't that cost a concern to you? >> certainly land is more expensive in manhattan dan and a small town somewhere in the middle of nowhere. concrete is the same concrete. most of the building costs are the same. forou pay a little bit more
land and end up in locations where there are a lot of people, you usually come out ahead. our strategy is focused on those global markets. it's pretty unique in our sector. scarlet: banks are offering special benefits and perks. make moneyit cards off too good to be true promotions? this is bloomberg. ♪
with the company. -- dell will cut jobs. the new company has 140,000 employees. airbnb is rolling out steps to address discrimination. under new rules partially theyed by eric holder, must agree to an antidiscrimination policy that -- airbnb will also provide online training and guaranteed housing to anyone discriminated against on its platform. that is your business flash update. the newest chase sapphire reserve card was so popular when it launched that despite its whopping annual fee, the bank ran out of the actual cards in just one week. the success was due
entirely to its word-of-mouth strategy. thanks for joining us today. great to see you here. you do not spend any money on the marketing, and the internet and word-of-mouth has been responsible for driving its popularity. what kind of misconceptions are out there about this card? >> clearly the response has been phenomenal and we have tapped into in unmet need in the luxury card space. $450e often ask us, is the fee worth it, and the answer is absolutely yes. we are offering customers 100,000 points as a sign on bonus. three times points on travel and dining as well as a suite of benefits on travel. so the fee goes down to
$150 as a result. >> that depends on how the customer is using it. matt: it's popular among the hard-core points nerds on the internet who talk about how they can maximize their miles and where they get points and all that stuff. how important in the development and marketing of a card is it to figure out what's going to resonate with that community? >> we do times of customer research every time we're developing a product. there are customers who are the reviews are, but this product appeals to a wide range of customers, including millennials. young, athletic, modern travelers are excited about both the rewards and the benefits. at the same time you try to discourage those who sign up for a lot of cards, reap the rewards and then move on to .nother card
>> there are a set of customers we call serial starters. they apply for card after card, take advantage of the sign on bonus, and then cancel the card. in relationship terms, they love them and leave them. we are clearly not interested in those customers and more interested in building lifelong relationships with customers who will use the cards for years to come. matt: i know everybody wants this card and there is a metal version rather than plastic. i only want to carry this. how much longer are we going to have cards, and cannot i just have it integrated in my smartphone somehow? >> the truth is that we want to cards to our customers whenever and wherever they want to use them. we have lots of customers who are still pulling a card out of their wallet each and every day. we will also be creating our own mobile wallet that will be
coming out soon and we will have all our cards embedded in chase pay or any of the markets. it feels like there's an arms race among these premium credit cards that are available out there, providing first-class perks or benefits. at what point does it just become too costly? whatcannot comment on others are doing but we are really excited about this product. -- a greatg to get opportunity for us to tap into. we think it's going to be great. what peoples of want, what is the selling point that gets people the most excited? what is the one thing that really gets people the most excited?
>> i think the rich rewards are the number one thing. chase sapphire reserve customers will get invited to participate in unique, once-in-a-lifetime havingnces, ranging from the opportunity to walk the red carpet at the images, go to the pga or the sundance film festival. we will invite all of our customers to these events, called our access platform. you will be hearing even more about that. that is really the secret sauce. scarlet: thanks so much for joining us. we will look at a chart that showcases the newest trends. this is bloomberg.
i'm looking at asset allocations . this is what many hedge funds have turned into after they stopped taking outside money. this is data from ubs. it shows family offices are cutting their exposure to asset classes including bonds and equities. what are they increasing their stakes? in? private equity, cash, and real estate. everything is either going up or falling at the same time. i thought it was fascinating that they are steering away from bonds, stocks, and hedge funds which would cover the three major asset classes. there was a good story that said the only way to be diversified is cash. everything that is not cash is moving together. scandinaviant a
fund? assets are in cash. i want to keep the story of alive that betty brought to us. we been talking about it all day today as well. the interested in is what they have done to prices. they had 80 ships stuck out at sea and prices for shipping are searching in the last couple of days on these bankruptcy concerns. $743 per 40 foot box and that's the whole cell number. the retail number is a lot bigger. joe: that is to ship from hong kong to l.a. is u.s. be fair, this measures total crude inventory in the u.s., so it does not expect all of oil, but
you can see the draw down here, well over three standard deviations. the biggest got down we've seen since 1999 and that's why we saw a 3% jump in crude today. the general downturn in the price of oil is having an impact on the economics of norway, a major oil producer. it's gotten to the point where oil is no longer the number one point of investment for the country. it's recently surpassed oil as the main source of investment. there has been an incredible housing boom. there are incredibly low interest rates in norway. homes one of the highest
price to income ratios in the world. real estate is booming there. scarlet: is there a housing bubble in norway? joe: they have been talking about it for a while. that does it for bloomberg markets. take a look at the major averages with less than four minutes to go before the u.s. market close. the dow off by 48 points in the nasdaq retreating after closing at two successive record highs in the past two days. the nasdaq off .5%. this is bloomberg. ♪ . .
[closing bell ringing] scarlet: u.s. stocks closing lower this afternoon, the s&p 500 falling for the second day in row. joe: the question is "what'd you miss?" scarlet: we spoke to a former imf cheap about -- chief about helicopter money. joe: and ridesharing companies are a flawed model. how theyt explained can make a profit. the philippine president cannot afford to pick a fight scarlet: h the u.s. we look at the trade links between the two countries. we begin with market minutes, looking at a down day across the indices. we're back from the summer and post labor day, but if you look at the moves in equities, the