tv Bloomberg Markets Bloomberg September 16, 2016 3:00pm-4:01pm EDT
we are life from bloomberg world headquarters in new york for the next hours and covering stories in chicago, berlin, tokyo, and beyond. a volatile week for the markets. oil trade at a one-month low. how this will play into next month's central bank meeting. deutsche bank sells as shares a selloff. questioning,f president obama's citizenship, donald trump this morning said the president was born in the u.s. but couldn't leave it at that. he used it as an opportunity to ate a job at a -- jab hillary clinton. let's head to julie hyman for the latest on the markets. julie: things have been steady today.
usually, you get more volatility in a surge of volume typically at the end of the closer we will be watching not. the dow and the s&p have consistently been down .5% today. the nasdaq has not been doing as poorly. financial's more heavily weighted in the s&p 500. if you look at the week in the s&p 500, we had a big rally on monday and a pretty sizable rally again yesterday and that did salvage the week more or less but we also had some big down days so these big swings are back to the stock market in the u.s.. if you take a look at the groups on the move today, you see here we have a little bit of green in the form of utilities. a lot of read on the screen and indeed, it is the financials and industries that are the biggest drags in the s&p 500. a number of stocks falling on
these regulatory risks. david mentioned deutsche bank. you can see those shares down 9.5% in u.s. trading. exxon mobil and the attorney general new york scrutinizing not company's finances. eric spider-man alleging the company did not properly write down the drop in oil prices. in terms of technology, which is back in focus today, we are watching one up mover in one down mover that are significant. oracle, its numbers missed
estimates. it's not making the transition to the cloud as quickly as some analysts were hoping for. , crediting ane increase in demand and resurgence in demand for .ersonal computers those shares up by nearly 3% today. david: thank you very much. let's get a check of the headlines on the bloomberg first word news. mark crumpton has more. more: hillary clinton says donald trump rose president obama and the american people in an apology in his role the birther movement that questioned the president's american citizenship. >> for five years, he has led the birther movement to delegitimize our first black president. his campaign was founded on this outrageous lie. mark: mr. trump acknowledged today president obama was born
in the u.s. but accused missed clinton's 2008 campaign when she challenge mr. obama for the democratic presidential nomination of igniting the birther controversy and we are receiving news about the upcoming presidential debates. we are finding gary johnson, the libertarian nominee, will not be included. michelle obama makes her first official campaign appearance for mrs. clinton at this hour in virginia. she will speak at a rally at george mason university. clinton are to have an insurmountable lead in the battle state but recent polls show the race tightening. authorities in columbus assuring, as they investigate the fatal shooting of a black teenager by a white police officer. say king pulled a bb gun from his waistband. the case has gone comparisons to the 2014 police shooting of 12-year-old timmy or rice who was playing with a pellet gun in a cleveland park when he was
killed by police. law-enforcement officials have evacuated more than 2000 refugees camping out on the streets of northern paris. they were taken in by social services or bust to temporary living facilities. france has been criticized for his handling of the migrant crisis. today's evacuation is the latest move by officials to find solutions. news 24 hours a day powered by more than 2600 journalists and analysts and more than 120 countries. this is bloomberg. news breaking on the bloomberg. julie: johnson and johnson will be buying a unit from abbott labs, its medical optics unit. $4.32 billion in cash is the price. you can see shares down just a bit. by 1%.ares up this is a cash deal. have it -- abbott says it
doesn't see it affecting its ongoing share estimates. that unit accounted for 5.5% or so of abbott's revenue last year. have a says it will not affect its earnings per share. johnson & johnson says the deal will add immediately to its adjusted earnings per share and will include products in three segments. it looks like this sale could have been part of the other deals abbott is in the process of doing but johnson & johnson shares not much changed in the wake of this deal being announced. abbott shares now up more than 1%. you very much. let's get back to the broader
markets with the s&p 500 index slipping today ahead of next week's fed meeting. joining us is bloomberg gadfly columnist bob reagan -- gaslight, and is bob reagan. >> clearly, it's a very unsettled market whether it be the fed or the bank of japan, concern about the ecb running out of the lives. it's pretty fascinating because it comes after this almost unprecedented stretch of calm we saw earlier in the market. one of the fascinating things is a certain level in the s&p 500. you have that charge there. if you look at the s&p 500 going back all the way to the thatning of late march, 2120 level is fascinating. a few people flagged this for me. a few other people talked about
it. obviously last year, it was what was known as resistance. the market had a hard time getting above it. can we finally broke through earlier this year and now, volatility has reintroduced and at the support level, meaning it tends to be where it stops where the market sells off. a lot of your fundamental roll their eyes. there is some credibility to that. different indicators, how predictive or effective they are. i love it when it works like this and when you see a level knows howstick, who long that will last. the story this week is that support level did hold all week. the lowest we got last friday and the worst days of the market was 21.92. it rarely dipped below.
right near where that record was last may of 2013. that number was kind of like a magnet where the market is now. david: next week, you have the boj meeting and said. i imagine investors will hold back ahead of those. >> it's hard to imagine getting -- risky before any of them obviously, i think it would be a very big surprise if the fed were to move in september but december is the big question. will they signal that and i could see a little more turbulence before then. david: we were talking about apple a few minutes ago. that stock was on a real tear this week. >> 11%, the biggest gain since
2011. obviously, there is the new iphone coming out, a lot of optimism about that. i also think people look at apple and there is this shift in sentiment. interest rates will rise and they really want to be involved in levered up companies? apple is the opposite of that extreme, a cash-rich company. a good place to hide out if you are worried about volatility from rising interest rates. david: we'll be talking about deutsche bank in a couple minutes. regular -- regulatory issues coming to the four. you look at the s&p 500 almost flat for the week. apple obviously the biggest contributor. wells fargo turned out to be the biggest interpreter on the downside, down about 7%. the worst week since january. thescinating story because
shares actually rose a bit. people said would hundred $85 million is chump change. the news gets worse. bank experts start looking elsewhere and saying maybe some of the other banks are doing this also. is this the first shoe to drop? it will be a fascinating story to watch going forward. david: thank you very much. for more commentary, check out gadfgo on the bloomberg. we will have the latest next. this is bloomberg. ♪
david: this is bloomberg markets. time for bloomberg business flash. prosecutors are investigating whether germany's robert bosch conspired with volkswagen to engineer diesel cars that would cheat u.s. omissions testing according to two people familiar with the matter. among the questions the justice department is asking is whether the software to skirt environmental standards. but to be she plans to raise is 33% stake to lawson to 50%. mitsubishi is looking to turn the country's largest convenience store operator into a unit. bbva reducing its corporate and banking stocks in the u.s. by 10%. a spokesman says it wants to streamline its business to focus on core clients. 35 bankers will leave the banks
businesses that offices in new york, houston, dallas. that is your business flash update. deutsche bank shares are falling by the most since the aftermath of the brexit vote. the justice department is seeking $14 billion to settle a probe. the company were about the claims, saying deutsche bank has no intent to settle these potential civil claims anywhere near the numbers cited. $14s talk about that billion figure. in that statement, deutsche bank andng look at our peers they agreed to amounts less than that. how valid is that and how big a number is this? >> 14 billion dollars is a big number. a good way to think about it is this is a number that one side of two-sided talks is putting forth as deutsche bank clearly and openly tells us.
willnk it's safe to say it be lower. how much lower? we don't know. it's a tough negotiation, obviously. deutsche bank probably wants it to be $500 million. take the average of the two in you can think about seven billion or 8 billion. that is probably a fair estimate. obviously, i'm not in the room but that would be my guess. david: when you look at deutsche bank and the state it's in right it to getmportant is out from behind all of these regulatory fines and settlement issues? >> is huge. a huge overhang on the stock and the company. he wants to put this behind him so he can focus on restructuring and on the revenue-generating parts of the business.
the tricky thing with deutsche bank is they don't have a ton of capital. to the extent that any of these settlements are above the legal reserves they have already set aside, that eats into r earnings more difficult. if he had a bucket of reserves, to make all ofat these things go away and he would probably do a right now but it looks like he has less reserves then he will need and is a drawnout negotiation with boj and others to bring that down. david: last question on that note. what are people saying about how long this back-and-forth might take with boj and deutsche bank? >> it will probably be another couple months. i'm not in the room, but in past negotiations with past banks, it
david: the fight over the cloud is heating up. the main players position themselves to grab oracle -- market share. oracle announced a $9.3 billion acquisition. let's go inside oracle. the stock today have been the worst day since december. the company reported quarterly revenues of well short of analyst estimates, highlighting how tough it can be to
transition to the cloud. oracle has seen overall shares growth the klein. the company says the second quarter is projected to fall in the range of unchanged to 3%. when it comes to netsuite, oracle was buying market share in the cloud, a market expanding rapidly. revenue forecast to reach $140 billion in 2019. it's paying a pretty penny. looking at the net we deal on a revenue basis, it ranks among the most expensive software takeovers of the past two years. this recent quarter, oracle cloud software has a service and a platform as a service. software license updates increased just 3%. chairman larry ellison try to minimize volatile finance results in the past.
we will see how the cloud wars play out in the coming quarters. it's time for options insight. fore: joining we -- me today's option inside, scott bauer. he is out in chicago. good to see you. today is a bit of a conundrum because it switching. and typically on a witching day, you would see a bump in volatility and yet that is not really what we're seeing today. what is going on? >> you are right. especially a day like today coming off a volatile week we have had, you really would have got there would be more volatility and more volume today but it's really just kind of business as usual. we actually see vick the down today. i think this selloff actually sets up for some buying
opportunities overall. >> what do you think is muting that volatility? do investors think there's not much to spend around the fed decision next week? >> as the week progressed over the last couple days, you are right and that decision next week is almost a foregone can lucian. even going out to december, down almost 40% or so. right now, everybody looking at next week as on most all bets are off. julie: you talk about buying opportunities and the one you're looking at today is costco. the stock down a bit this year but a lot of the decline tough recently so why are you looking to get in? >> from a real technical standpoint, the 150 area has
really been some very nice support, especially in the short run here. with earnings two weeks out, we typically see cosco gradually move higher and i think the overall retail market, people are so downtrodden on it and this stock in particular has from thee a laggard technical standpoint and combined with earnings coming up. julie: how exactly does that play work for you? >> i'm going to sell next weeks 150 strike put, the one next hiring next friday and since earnings are toward the end of the month, i will buy the last .eek of the month basically i'm selling this put next week to finance my purchase to the call so i can do that for about even and i love the along that called going into earnings. if something happens by next week and the stock does happen to drop below one week, i'm ok
with her because that to me as a buying opportunity. julie: scott bauer of trading advantage. thank you so much. cosco set to report its numbers september 29 at 4:15 so we will be watching those numbers and keeping scott on and see how that trade works out. just another quick check on the market here as we see this study trading today. five percent drop in the dow and s&p 500. volume is high on a relative basis, about 26% above the 30 the s&p 500.n as scott pointed out, on a witching day, you would expect the volume to be even higher. in terms of where the selling is concentrated, within financials and energy. those are the two worst performing groups today. we don't see much movement on rates today and oil prices
news. mark crumpton has more. mark: after years of rushing president obama's citizenship, donald trump today reversed course but with a caveat. >> hillary clinton and her started the2008 birther controversy. i finished it. i finished it. you know what i mean. president barack obama was born in the united states, period. out ahillary clinton set tweet calling the conference a disgrace. gary johnson won't be on the debate stage on september 26 alongside trump and clinton. he did not make the required polling threshold necessary to qualify for the first presidential debate. neither did geo stein. the commission says johnson
polling average and stein's came in at 3.2%. the bodies of three americans who never enlisted with the military but died fighting islamic state are back on u.s. soil. the men were killed in combat after joining a kurdish girl or group -- guerrilla group. british foreign secretary boris johnson said formal talks will begin next year. afterwardld reporters that the u.k. must supply clarity and certainty on its plans to leave the european union. global news 24 hours a day pellet by more than 2600 journalists and analysts in over 120 countries. all of her: it's closing in under 30 minutes. let's go live to the nasdaq were abigail doolittle the standing
by. abigail: the nasdaq on pace to close it down ever so slightly on the day. it has been a wild week for the nasdaq and stocks overall. we had three up days, two down days. a lot of volatility. olive this has left you nasdaq on pace for its us weekly gain since the beginning of july up more than 2%. and it's all about technology. most of the big technology names are higher on the week, boosting the nasdaq. this includes amazon, up nicely on the week and the third biggest news for the nasdaq this week. what helped out amazon was a channel advisor report saying same-store sales for august were and0.5% versus 6.4% in july today, we did have two analysts raised their price targets to $1000 or better.
one is deciding cloud automation. automation.oud pretty impressive. oliver: impressive indeed. you said amazon is among the top three-point boost to the nasdaq this week but looking in the terminal, apple is the top point boost by big margins, like 40%. that is all about the iphone? >> a stunning week for apple, the best performance since october 2011 and it really is largely about the iphone. preorders, bullish reports from sprint, t-mobile. yesterday, the company said it sold out of the iphone plus in retail stores. analysts are election on the iphone. at this time last friday, the shares of apple were down 2% on the year. this time, shares are up 9% so
simply a huge reversal. we had an interesting conversation yesterday who said they had been expecting this, that the bar was so low for the iphone seven that a survey suggested there could be this hundred outperformance and he's been recommending to really aggressively over way the shares of apple into the september quarter report on october 24 when he thinks there will be news about the possibility apple could turn to topline or sales growth in the december quarter ahead of what they are looking for. lists apple. sky works is up more than 13% on the week come on pace for the best week since 2014. a big week for the nasdaq. oliver: and corvo doing pretty well on the back of apple. lots apple is doing to help the market. thank you. holding belowtion
the fed's 2% target and the unemployment changed recently, many fed watchers regulate the central bank feels little sense of urgency about raising rates when it meets next week. jaquienh his take is felps. we look at the fed's preferred measure of inflation, the pce is closing below 2% but almost everything else i look at that tries to signal inflation seem to signal inflation is getting close to or above that 2% level. does fed need to broaden the way it looks at in measures inflation? the fed does look at a broad range of indicators for inflation. they have noted there are some signs the underlying wage growth is picking up. if you look at today's cpi
report, core cpi increased from 2.2% to 2.3% and also slack in the labor market has been eroding further. i think the fed's baseline outlook will remain the same. inflation on their pc measure will creep toward the target overtime and i think that sets us up for a rate hike in december. oliver: i want to talk about what we have seen in bond yields the past couple weeks since ecb last thursday. there's some sense investors didn't quite think they would take things to the next level, get some clarity on how they will continue qe there. ae jump we had in yields as result in the treasury as well, is this a taste of what we will see as more and more of that policy gets removed from the system? >> think you are right in
pointing out it all started with the ecb meeting september 8. is interesting central banks have now become a source of volatility. investors i think are nervous that central banks may start to reconsider unconventional policies. -- we still says expect them to do it in december actuallytors have been surfing a wave of central-bank accommodation all this time. now we see some like i'm in the temper tantrum. i think this is what the markets are worried about in this is why volatility is up and its central banks that are now at the source of this volatility. volatility is a reflection of concern over some kind of regime change, then what does a new regime look like? >> i think the new regime will
still look a lot like the old one but i think there are now adjusting and recalibrating, .articularly the bank of japan the speculation the bank of , there's a lot of talk about a reverse of the operation twist in japan where the boj buys less long dated forms and maybe more short dated forms. long-term interest rate is a really bad for the financial system in japan. it is bad for the banks and a particular, for the insurance and pension industry. this is why i think the new regime is one where central banks may put more of a focus on the shape of the curve, still pushing short-term interest rate somewhat lower. this could happen in japan but theyin europe, but then
may allow a bit more volatility in the long end and somewhat higher long-term interest rates. i think that creates risk for other asset classes, which has really been driven by very low interest rates. evaluations are excessive in some cases. why we will is likely see more volatility ahead. so to what extent did the central banks, particularly the fed and boj next week, look have to gyrations in their assessment? >> i think the fed is very focused on financial conditions. we have had a tightening of financial conditions over the so that clearly means the fed is not going in september. i think what they will do is they will make another step
towards the second december hike and i think how they will do it is through communication. janet yellen may repeat her phrase that the case for a rate hike has strengthened in recent months and they can also signal it. i think they do this in two ways. first of all, you will probably see a majority of fomc participants now expecting the rate hike in december. outthey can also flatten further. the path of interest rates over the next several years. that clearly reflects their view that the interest rate has come down over time. thank you so much for your time. coming up, a special conversation with tom vilsack. what he thinks about a
scarlet: this is bloomberg markets. time for the bloomberg business flash, a look at the biggest business stories in the news right now. until raises forecast for third-quarter sales today. the semiconductor giant now sees revenue of 16 early in dollars. the previous forecast was $14.9 billion. it is now forecasting the midpoint at roughly 63%. some of the world's biggest banks want the u.s. to help them check london's status as a financial hub after brexit.
they have asked the u.s. and others to lobby policymakers. that is according to barclays chairman. citigroup and deutsche bank are on the short list. a u.s. panel investigating wells theo and the scandal of opening of unauthorized accounts. the house services committee will look into the allegedly illegal activity to meet aggressive sales goals. that is your business flash update. monsantohe takeover of
once again of investors this week. size and complexity, the deal is getting attention on regulators around the world. the $66 billion merger cap say wave of consolidation across the agriculture space. what will the future of the industry look like? we asked tom vilsack earlier today. whatte take a look at happens when commodity prices get tight and margins get reduced, you see consolidation at the farm and in terms of businesses serving the farm. underlying this i think is a series of small companies providing that innovation i think farmers are looking for. there are appropriate russians to be asked in connection with any merger this size but i'm confident with see technology that we will continue just to that willr companies be just as successful and push the big guys to provide farmers
choice. i think is appropriate for regulators to ask questions but at the end of the day, i'm more encouraged by what i think will be a spurt of innovation. >> how much positive give you that when you look at these mergers, a lot of them are taking place with companies based overseas. >> that is part of the world we live in and frankly, we just got finished having a conversation at several hundred folks about open data and the sharing of information and governments and private care and nutrition. there's a sharing of information. challenge, to feed in ever increasing world population. it will require as much innovation that we have seen in the preceding 10,000 years. it will be important for us to accelerate innovation and research and i think what we are looking for our ways in which we can provide help and assistance to the government. >> you think of an invasion on the tech side, it's often happening with small companies. it struck me as they to ceos of
months and her though -- of monsanto that they were saying by creating a bigger company, it will be a more innovative company. >> in agriculture, there has been an incredible amount of innovation. obviously, that has been a result of technology and it has been one of the most innovative sectors of our economy over the last 20 or 30 years. >> you talked to a lot of farmers. what do they say about this trend? >> they are obviously concerned, looking at their bottom line. and are deeply concerned they want choice and competition. they want quality, new innovation, and they want it for the least amount of money possible, which is understandable. what wend of the day, see in america is a
diversification of agriculture. we are beginning to see a lot of smaller mid-sized operators regionalo local and food systems. that will create new to beunities for farms more diversified in what they grow. we are dealing with climate change and the challenges that will create. we are in a position to adapt and mitigate. >> you talk about the world we live in now. the u.s. tendering a complaint recently with the wto about how china has incentivize farming. how big a can turn of that is for you? >> china is our number one agricultural customer so we have to risk that bad but they could be doing a lot more and we could be doing a lot more if they hadn't been subsidizing their commodities as much. then -- they made a commitment and promise that they would follow the rules and they would be allowed a certain level. they have exceeded that by about
$100 billion. that's costly to our producers and i think it's appropriate. we filed 20 of these cases. 14 have been against china, several in the agricultural space. i think it's a strong signal to farmers and ranchers and producers and the country that we will focus on enforcement and make sure these trade agreements are lived up to and this is a reassuring step we had taken from american agriculture. >> exports are way up. from half of the rhetoric on the campaign trail, is in what looking, talking about trade we haven't been talking about. how concerning is that to you? how difficult could that be for your successor? agriculture income is related to exports. the extent that we can only do business with ourselves and a mistaken view. we have a tremendous opportunity
marketlarly in the asia in agriculture to extend significantly exports and take advantage of that growing market and increase farmer income. is a deeply concerning to the president, to anybody understands a world that we live in. the trade agreements need to be fair added force, and i think we are reflecting that, but we have to be open to the rest of the world because 95% of the world's consumers live outside the u.s. and emerging middle classes in asia offer a significant opportunity. matt: that was tom vilsack earlier today on bloomberg television. scarlet: coming up, deutsche bank. this is bloomberg. ♪
the release on no known deal is certain but according to a source, high debt levels and operational issues may limit the buyers. we will look into that for you. it is moving up in trading right now. leg up h getting a big by 13% at the moment. cyh getting a big leg up by 30% at the moment. matt: even the little fisher looks like are getting involved. a $1.3 billion company with the rise. time, let's get to our chart chat. i'm taking a look at deutsche bank because the ceo says he will not pay the $40 million doj is requesting to settle the federal investigation. what you are looking at is the movement and deutsche bank's stock, which is in blue and its riskiest bond in white.
you would expect it do the worst representsite line deutsche bank's 6% additional tier one bonds, the first note to take losses in a crisis. speaking with dakin campbell, he was telling me equity investors are of course vulnerable to an equity raise and if deutsche bank does have to pay $14 willon, which is said it start negotiating with, that would be more than double what deutsche bank as set aside as its provisions for litigation. matt: what did jpmorgan have to pay? more than what bankamerica had to pay. scarlet: if they have to pay more than what they would probably have to raise money by selling equities. it's about as a stodgy in opposition you can take. scarlet: the beginning of a long negotiation. matt: you have to wonder if doj said no, we demand 14, would
deutsche bank say we are not going to do business in the u.s. anymore. they are not doing well just by themselves. let me show you what i have got here, which i stole from julie hyman. she stole it from dave wilson. scarlet: we share it. matt: when we get good charts, we pass it around. today is a special day i have been waiting for a long time because the s&p 500, standard and poor's will finally break real estate out of the financials. global indicia classification system. , the s&p 500 is broken down into 10 industries. from now on, it will be broken down into 11 and with real estate coming out of financials, it's been a big drag on financials lately so you could see a bounce in financial's tomorrow.
oliver: it's incredible how appropriate the time he might end up being because of rates. scarlet: i was thinking the same thing. oliver: i'm going to look at the vicks are. despite all the volatility, we haven't seen an inversion of the vicks curve. the green line is where we are. everything looks pretty normal. this is how it was a month ago as opposed to august when the whole thing shot up in the first, second, third contracts inverted. we are now looking at an upward looking six curve. scarlet: that does it for bloomberg markets. gos than four minutes to before the close. tracking oil prices lower for the dow off. ♪