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tv   Bloomberg Markets  Bloomberg  October 6, 2016 12:00pm-2:01pm EDT

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scarlet: brexit concerns. jitters have resurfaced. he spoke with our editor-in-chief of the other shoe drops at deutsche bank. a not it shows that the bank may have mismarked as many as 37 deals come even colluding to conceal the italian banks losses. we just got a little bit of a leg up in u.s. stocks but we are still mixed.
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julie: yes. the s&p is a little changed at a little bit higher. we are looking into exactly what is going on. health care and financials helping to lead the declining stocks. here is the two-week charge. it has fallen seven of the past nine sessions. 6.4%.count -- 4.6%. the two-year yield is the highest since june 2. jobless claims released today. likes go up, groups
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telecoms and utilities in real estate have tended to go down. we have hurricane matthew now bearing down on the florida coast. florida domiciled insurers, they are taking big kiss today. universal insurance holdings 16%. what is going on in the precious metals market. gold today selling below its two-day moving average. it has to do with what is going on with rates. as rates go up, we have gold as a hedge becoming perhaps having less appeal. matt: thanks. mark crumpton has more from our newsroom. mark: hurricane matthew has
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strengthened to a category 4 storm as it barrels towards florida. maximum sustained wind of 140 miles an hour. it is expected to make landfall orflorida late tomorrow early saturday. georgia's governor has ordered a mandatory evacuation of 500,000 people along the entire length of the coastline. hillary clinton and donald trump traditionally the red state of arizona. clinton edges trump 44% to 42%. the last democrat to win the state was former president bill clinton in 1996. another emerson survey finds trump leading mrs. clinton by one point in florida and 44 -- 45% of 44%. the candidates are tied in nevada. advantages a 20-point
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-- the syrian president is rejecting suggestions he authorized attacks on civilians, and could recent airstrikes are targeted hospitals. made his remarks with a danish broadcaster. he technologies to that individuals had made mistakes during the long civil war. but he said it is against the country's interests to order the destruction of hospitals or schools or to kill civilians.
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scarlet: the international monetary fund release its global policy agenda ahead of the annual meeting in washington. tom keene and france in the lock well. >> the findings of the gfs are is that, even if the economy situation improves, as we hope if policymakers make the right decisions and move into action mode, they're still about 25% of the banking system that is not going to be prosperous. re-examination. the work that any business leader has to do looking at its business. space to stevet major at hsbc looking for low rates and low rates up to 2021.
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"the solvency of many life insurance companies and pension funds is threatened by a prolonged period of low interest rates." you provided leadership on this and said it is about duration, about the chronic nature of low rates. how do negative rates fold into this chronic sense of lack a return? it calls for re-examination of those two sectors as well. the insurance sector and the pension fund sector. this is particularly true for the life insurance sector. specifically in those countries where the level of return is prescribed by law. in a country like japan, for law, it isnder the required to actually serve a particular level of return on those life insurance policies. be done in work to those two sectors as well. i think they know it. they are doing the work.
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probably a bit quietly at the moment. better hard duty is to say there is an urgency about it. -- but our duty is to say there is an urgency about it. how difficult is it for the government to begin up when we are so indebted. >> i want to call it little bit of caution on that number of $152 trillion. about two thirds of that is that,ate debt, household and a third in sovereign debt. not all countries are in the same position. heavilyntries are indebted and some of that debt is held by domestic holders, isch also is a -- particularly problematic. hugen't say that it is a debt around the world. we have to be country-specific. but there is an issue of the debt burden and there is an
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issue of what monetary policy can be conducted on its own as has been the case for too long. which is the reason why we are calling for the three have an pronged approach, monetary, fiscal, and structural reforms. they have to come together. sustainedeck can be with certain growth. among others, joe stiglitz has been very good on this. your is history -- where's terminal value? mother used to say that everything is better with butter. everything is better with growth. it has been too low for too long and benefiting too few. a three-front for approach using all lovers in the toolbox. tom: we've got to ask about brexit and the effect on sterling. can you get home?
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all, is therst of uk's so open for business after what we heard this week? >> i think you have just the u.k. authorities. i think the terms under which it will trade with europe, for instance, it's not yet really certain what it will be. we welcome the certainty about timing, but the certainty about terms and conditions when it comes to financial passports for banks, when it comes to harmonization of norms. are in an outright bunch of sterling. are in an outright bunch of sterling. where have a point currency destruction, debate
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shifts? >> i don't have a magic point. i would observe that the outcome runrexit is under a mild under the first scenario that we forecasted. aerling is definitely facing hit under the current situation. tom and francine, what came up a couple of times where the words re-examination in response to several of your questions. that was interesting giving guest given where we are. yes. we talked about this in the middle of our interview, this idea of debt. that seemed to be the theme today. but probably not the thing tomorrow.
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francine: the imf came out this figure of $152 trillion in debt. as media introverted that the government inability to deal with it. lot of what they are talking about is not public debt. tom: the scope and scale, this is the actual bloomberg screen on our phone. i know it's a little hard to see. this is sterling today here down it goes. it was interesting to show this to madame lagarde before our interview, the movement of the market. it is sort of quiet now. and yet there is sterling plunging today. the tory conference in burling ended. so we don't have any scaremongering. tom: she doesn't know about that yet. francine: she is very diplomatic because we don't really know how there is for the domestic
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audience. i wonder with her -- was the other story today not only raise for longer -- or lower rate for longer, steve major on surveillance if you days ago, and mr. major in the ft again. i would suggest that is a view that is a fear that men lagarde has. francine: yes, he was saying, look, we are looking at the same chart. some wonderful interviews coming up, including includingibrand --
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fully gillibrand -- philippe gillibrand. scarlet: all that coming tomorrow. matt: breaking news on another hedge fund shuttering prem chimeric capital is said to -- shuttering. camares capital. it declined to comment.
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scarlet: the hits keep on coming for deutsche bank. it missed market transactions on 37 deals. that's according to an audit. here now to explain his michael moore from london who helped to break the story. does this mean more legal problems for deutsche bank, more fines that we need to consider
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and wrap in? necessarily immediately. there is a lot of litigation still outstanding on the intitasking issue particular. paschi issue in particular. mats: is this a way for the toman government to back in bailing out deutsche bank are at least taking over operations? i know a german regulator has opened this investigation. if angela merkel can prove this is a disaster, they can forgive her that this -- take -- forgive her for taking a bailout. that thisis answer is
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would be under the previous regime and done during the crisis days during what he's been trying to show is the bank is getting simpler. they are not doing some of these complex deals that have questionable accounting methods tied to them. and are focused on being a simpler bank. is still, there concern about the size of deutsche bank's derivatives book. they been tried to sell that down a little bit, gets in capital relief on that. but that is certainly a question at there. scarlet: thank you so much for joining us. up, we will discuss cooper software's first day of trading. this is bloomberg. ♪
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walket: walmart is said to the -- it iser --
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butting heads. matt: it is a long-running corruption case investigation. walmart doesn't look to be willing to play ball for $600 million. let's check in with cory johnson and carol massar. thank you so much. welcome, everybody. we do have rob bernstein, the chief executive officer at cupa. soaring.ware nice to have you here on bloomberg television and bloomberg radio. tell me about the business. investors surely welcoming your ipo.
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what can they expect from you in the coming months that you are going to deliver on that seem to be high expectations from investors? what they can expect a stir my team and i to continue driving our organization further and further. we do that by focusing on our customers and ensuring their value tond driving them, better compliance through our platforms. cory: i think a hard for people to understand what you are -- what your business does. magical you have some cloud software that spells across an organization of possibly a spending and finds places where it is spending too much. : you are familiar with sales sores, which is technology in the cloud to help people sell better and service customers. of theother side
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equation, there are organizations around the world that are spending money. we help those organizations often amaze what they spend the other expense management processes come other invoice processes. help streamline their understanding of their suppliers come other sourcing activity. we are driving billions of billions of dollars in savings for them for organizations around the world. carroll: somebody else's kind of in this space, where you are having chief information officers who can use the software to track where all the spending is happening. but the space seems to be getting more crowded. how do you compete? how do you keep your costs down? how do you deliver would there are more and more players. software that is in the back office of the organization. extension.rategic
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many multinational companies ofe instances of the rp --of vrp. -- wet companies with have companies with tens of thousands of customers on the platform. they are optimizing their spending. erp.o-play with cory: what's a typical spend by a new customer and how does the adoption rate increase over time? levels've seen adoption 88% and 90% of management. they are able to route purchases across locations, across divisions come across employee base to contract savings. they can be negotiated at 2, 4, five cents on every dollar. every time they get that savings, that drops to profit.
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carol: tell me about the timing of this ipo. it has been a more conducive market. the indexes that more than 12% this year. these are companies that have come to market last 12 months or so. so it has been a much more hospitable market. did you feel pressure to do it now. we don't feel pressured to do investments. we feel pressure delivering to our customers. --have a great start to dell to tell and we are excited to share that story with our customers and getting excited to get back to work. a boatload ont sales and marketing, 60%, 65%, 67%. but when i calculated it on a trailing 12-month basis, it has been coming down in the last four quarters to 50% of revenues. but that is still a lot of money. what is the long-term expectation for sales and marketing as a percentage of revenue? operationally
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efficient as an organization. for every dollar that we burned of investor money, we created a dollar or more in recurring revenue. that's revenue we can keep forever if we continue to deliver for our customers. carol: rob bernstein, think you so much. scarlet: thank you so much. the ceo of coupa software. matt: philip hammond is on wall street telling executives he is determined to safeguard the city of london as concerns mount about brexit. this is bloomberg. ♪
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live from bloomberg headquarters, i'm scarlet fu. matt: and i'm matt miller. let's start with the headlines.
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for that, we go to mark crumpton. mark: hurricane matthew is picking up steam as it heads towards the southeastern united states. the category 4 storm bore into the bahamas earlier today with sustained winds rising to 125 miles per hour. it's likely to approach florida's each coast sometime tonight. about 2 million people in florida, georgia and the carolinas have been urged to evacuate. the u.s. hasn't been hit by a major hurricane, katrina coming more than a decade. praise today for hillary can -- praiseom hillary today for hillary clinton from an unlikely source, mike pence. he spoke on nbc's "today show."
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president obama is enjoying a surge in popularity as the end of his second term years. 55% of americans approve of the job he is doing. it is a four-point increase from the previous survey and 11 points from the same period last year. angela merkel does not seem inclined to grant the u.k. a special trade relationship once it leaves the european union. -- cellor merkel did not to british government plans purge immigration into european countries. scarlet: the u.k. chancellor of
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the exchequer, philip hammond gum is here today in new york, on a mission to make -- to reassure wall street leaders force -- ll philip: we don't recognize the difference between soft brexit and hard brexit. this has to be about mutual advantage. it has to be about a mutually beneficial solution. is financial services sector a very important part of the u.k. economy. it is the singular -- single largest conjuring sector. we place a high priority and getting the right solution with our european union partners. ben: do you think it should treated differently to every other sector?
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surely it deserves some degree of priority. philip: it is different from any other sector because manufacturing sectors, for example, if we were to end up in deal, manufacturing will be in it. john: it is different and we have to deal with each sector according to its specific needs. we are in the moment in the process of analyzing with people in the financial services sector and in other sectors across economy to understand the specific needs that they have. one of the things that is already clear is this sort of -- wel response of people must have this. it's too general. you have to drill
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down. there are specific issues we have to understand. john: the issue of euro clearing, that is when the comes of repeatedly when you talk to people in the city. do you think it is possible to hang onto that if the person is outside the sale market? philip: as you know, the ecb tried previously to force clearing of euro-denominated instruments to take place inside the european union. the case went to the european court of justice and the court found that the ecb didn't have any power to make such a ruling. theaven't tested discriminatory issue, as it were, yet. when britain leaves the european union, there will still be a number of countries that do not use the euro currency who are inside the european union, who are entitled to the protections
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of the signal market. so it is by no means clear to me that the rules of the single market, even after britain has left, would permit to the ecb to require euro-denominated instruments to be cleared inside the eurozone. you wouldn't expect that's what a business to come towards new york or other places that have that business or treaty already. philip: what i'm saying is that, if the ecb was minded to try its hand, as it were, to try again euro-denominated clearing would take place, that would be a legal process that would take time. i think that is some way down the line. john: what about the issue of foreign workers? the idea reducing foreign workers sent shockwaves. isn't that going to make this
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the much harder? philip: we have to recognize that parts of the mood in the u.k., the growth, the referendum mood about the pressure on wages at the lowest end, entry-level jobs and the from large-scale migration, largely from eastern europe. and we have to address that issue. that is the clear mandate we've received from the british people. highlyblem is not skilled and highly paid bankers, brain surgeons, software engineers. you will not find, if you walk towns andnsend -- -- britain how they feel about migration that they have a problem with people with high skills and higher earnings coming to the u.k. they recognize that those people are a positive conservation to the u.k. economy. the issue we have to deal with
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is people with low skills competing for entry-level jobs. that's a challenge. john: you know as well as i do that migration tends to be a sign of a healthy economy. now britain will play stuff on that. doesn't that limit to some extent the speed of the economy, even if it is for political reasons you've explained? limit the nominal growth of the economy. but what we have seen in the last two years is an economy that is growing, but gdp per capita has hardly grown at all. so what we need to drive is a growth in gdp per capita. we need to see economic expansion coming from an improvement in productivity, not simply from bringing ever larger numbers of low skilled people into the economy. scarlet: that was u.k. chancellor of the exchequer philip hammond. up, the auto industry has gone through
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tremendous shifts in recent years, from self driving vehicles to sustainable field technologies. jeff lancek with about the changing world of cars and focus really on the luxury brand lexus in our bloomberg pursuits section. this is bloomberg. ♪
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scarlet: you are watching bloomberg. i'm scarlet fu. matt: and i'm matt miller. we watching not only as deutsche a fine, but the german lender is being indicted for colluding with italian bank monte di paschi.
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ceo doug macmillan wants to invest in more digital and technology but can it keep pace with the likes of amazon? matt: from the scottish thependence referendum to brexit road back in june, pollsters have had a tough time getting it right predicting the outcomes in both elections. we break down why in today's quick take. europe where in german regulators investigating deutsche bank ties with bank mo paschi. regulators are saying that deutsche bank actually mismarked 37 deals with other banks, like the one it did for monte dei paschi. scarlet: one of the prices --
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philip hammond says it may not be up for grabs after all. hammond spoke with john mikel's weight. -- with john. scarlet: most interest rate swaps clearing click play for real quick. largestld's retailer will spend more money to renovated stores and increase its e-commerce capabilities. walmart had better-than-expected growth at its u.s. stores this year. but the chain wants to improve its online operation so it can better compete with amazon.com. disney says that attendance at its new amusement park in shanghai has exceeded its expectations. that comes after a media report
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cited the park was attracting about half the crowds analysts had anticipated. the report said that disney guests complained about high prices and long waits for some rights. the role biggest oil company will sell shares in all of its operations, not just in its refining and distribution units. he told bloomberg the company will soon announce a list of banks and consult advising on the ipo. saudi arabia wants aramco to go public. could the in the trillions of dollars. time now for bloomberg's quick take care pollsters have had a rough couple of years. predictions were far off the mark on the in 2014 congressional elections. they got the scottish referendum wrong. and they've had trouble with other referendums across the
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globe. we look at why that is. brexit polls. >> the pollsters have got it wrong again. democrats andhe the white house get this wrong? scotland, wrong, wrong, wrong. news or readt the any news outlet or take a peek get trumps twitter feed, polls are constantly referenced as if they are gospel. but each in a grain of salt because polling is an inexact science that i can in many cases lead to incorrect results. so here's a situation. scientific polling started with one man in 1932. george gallup. he conducted a poll for his mother-in-law who was running to be secretary of state in iowa. his poll was accurate and she
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won. but he still got some predictions wrong. headline?his one of the biggest headline blunders of all time was a result of incorrect polls. including gallup's. moreres were refined to be accurate. today in the u.s., there's gallup, rasmussen, quinnipiac, even bloomberg. the list goes on and on. it is getting harder and harder to trust their accuracy. one reason -- the cell phone. the cousin of a ban on cell phone auto dialing, all calls must be made manually, which is not only time-consuming but expensive. also, since anyone receiving on their cell and see who is calling, they tend to not answer the pollsters call. in 1997. in 2012, 9%. the low response rate means it's harder to get accurate responses.
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are likely to rely on aggregate polls. they don't just focus on one poll. here's the argument. given the doubts of the accuracy of polls, pundits and politicians may feel free to skew the narrative anyway they want, resulting in exchanges like this. but you guys are down. says who? >> polls. >> who? >> most of them. all of them. >> given the actual demographic of voters. some think bad polls are good for democracy, which is justification that more people might vote if they didn't think the results were preordained. aboutt: you can read polling at all our quick tates -- quick takes. head to bloomberg.com for more stories. ♪
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♪ matt: this is bloomberg markets. toyota's luxury brand lexus has seen record year to date numbers in its suv rx.the nx and the rx has seen incredible numbers, doubling its competitor. we are here to talk about the success of the line and the sporting performance criteria that lexus seems to be following up right now. thanks for joining us, ceo of toyota motor north america. you have so many other roles in
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this company. you have been working with them for a number of decades now. at the me first about the performance orientation. when i go to lexus.com, i see the export cars. when i'm driving around, i just drove around the country come i see more export cars with younger drivers. ? jim: very much so. a used to be -- are you headed in that direction? jim: very much so. the market is shifting away from suvs., more towards the customer still wants that fun to drive aspect. so whether it is an rx or an nx, it's moving all the way across the line. a normal focus on family card to buy would be the suv. that shifted the remaining cars, sedans sales to more performance-oriented vehicles. jim: i think it goes both ways. you half orng it is
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five different generations today buying cars, buying luxury cars. you have all the way from jen why buyers to traditional -- from gen y buyers to traditional buyers. you have to attract each and everyone. some buyers may want a soft, cushy ride. others may want an aggressive, fun to drive ride. you have to make sure that's in your lineup and you have to create a specialty vehicle or you can create a niche within a series to do that. today, the effective way to do that is a niche within a series. lfa blew everybody away but it is too expensive. they flagship model for performance and the brand is what everybody wants. to ramp up volumes of that kind of vehicle without heavy presence in racing?
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ready tou have a gtt go. lt 500 cominge the that is a fun sports car. if you can create the image around fun to drive and sport within the brand, you can then create underneath that the whole matt:. .att:-- f-sport matt: if you are going to be a player in the luxury market, you have to be in that segment. it is a profitable segment. the volley may not be as large as other segments. if you look at the luxury business, two thirds of the in near luxuryct and entry luxury.
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that's a strong player. then you have to choose which other segments you play in to make sure you have the credentials to be a luxury player. matt: toyota is really a forerunner in hydrogen fuel sales before anybody else but money there. i know you think there's a great future for that. can you create a tesla fighter with a hydrogen fuel fighter? selling thousands of model x's in that $30,000 range. jim: if you look at the eb market today, it is half of 1% of the total marketplace. a gallon gas, and it's unlikely we will see a lot of movement in the near future, thatar can you push marketplace. where the vehicles like an extended range plug-ins, like the prius,s, -- like
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on the other end of the spectrum, fuel vehicles, we believe hydrogen is an ev. it's just a better way to build a battery. matt: so the entry-level luxury segment was big for a while and now has declined year-over-year for the whole industry. as you pointed out, it moves to the entry-level crossover. is ramping up in the beats out every other competitor. is i here to stay? jim: i think it is. i don't think we will see the sedan segment go away. it used to be the largest segment in the luxury market. it is now number two because the midsize, the entry suv is taking that over. what i think is happened is, if you look at the transaction price, if you look at the ride
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quality, if you look at the mileage today, you can get all that in an suv. you couldn't do that in the past. in the past, most a few v -- most suvs were frame-based vehicles. he did not have the mileage or the rider the same creature comforts. you can get that today. eventually, you will see people move back to sedans. right now, it is all 62%. matt: what about the big trucks this is an area where? lexus has a vehicle? trucks?about the big this is where lexus has a vehicle. they're are looking at brand names. they want that l on the hood of the car. i can't tell you where fuel prices will be in the future. i can tell you were regulation is headed in the future. it will be difficult unless those big suvs gone a big diet
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to continue to push that volume. matt: very cool. we didn't talk about the yen because i know you guys have put your production around the world in order to almost create a natural hedge. it's been a pleasure to spend time with you. the ceo of toyota. still ahead, bankamerica merrill lynch, head of u.s. economics says the elections are the most significant near-term risk to the economy. what does she think that means for a fed rate hike this year? this is bloomberg. ♪
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york,t: it is 1:00 in new 6:00 in london, and 1:00 in hong kong. i'm scarlet fu. matt: i'm matt miller. welcome to "bloomberg markets."
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from bloomberg world headquarters in midtown manhattan, we are covering stories from bentonville, arkansas, moscow, and seoul. signs point to a strong u.s. jobs report tomorrow and the dollar is climbing as economic data points to the possibility of a fed rate hike as early as november. twitter shares are plunging following reports that google is not interested in buying the social network site. bid foronsidering a twitter, and when might we learn more about that? i mentioned bentonville, that is obvious we've walmart. walmart tempered its profit forecast for the next few years as it struggles to compete with amazon and invest more money. halfway through the trading day.
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julie hyman has the latest on what is happening with stocks. so much happening in other asset classes, i have barely looked at stocks today. julie: they are barely moving. if you look under the hood, there is a bit more of a story. earlier this morning, stocks were lower, the s&p 500 has not turned higher. this is what it looks like on an intraday basis. decline, and then before noon a leg up in the s&p 500. even though that gain is not day, the turnaround was quite dramatic. it originated in the bond market. if you look at the 10 year treasury, a similar reversal, although now you have had some back-and-forth. yieldsn leg in treasury has to do with a report from market news international that cited and ecb president as saying that there was not yet an agreed-upon plan to taper
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quantitative easing. stocks where the move in came from as well, even though we are seeing yields pretty much back up to levels where they were before. elsewhere, we are watching shares of whole foods. you saw a leg up in the shares earlier, up by 4% right now. that is after some unsubstantiated chatter on twitter that there was perhaps on m&a speculation about the company. kroger was named as a potential acquirer. shares are higher, again, unconfirmed, but the shares have been reacting to that. we continued to watch the effect of the incoming hurricane on the markets. in theed at in sure is last hour. that is trading higher. we also see things that have to paper, theser, companies are rising. people areup 1% as
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preparing themselves for the hurricane ahead of time. potentially will also have to make repairs in the wake of the hurricane. scarlet: thank you, julie. let's get a check on the first word news with mark crumpton. haitian officials say over 100 people have been killed by hurricane matthew and the storm is now headed for florida. almost 2 million people in florida, georgia, and the carolinas have been urged to evacuate. the category four hurricane has wind up to 140 miles per hour and could be near the florida coast tonight. analysts say it could cause anywhere from $5 billion to $15 billion in damage and may leave more than one million people without power. on a motorcycle has exploded at a police station near istanbul. 10 people were injured. several parked cars were also damaged in the blast.
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police were searching for one person who was spotted leaving the area on a motorbike. authorities in india have arrested 70 people and are questioning hundreds more in a massive and elaborate scam targeting thousands of americans . mumbai police say the suspects posed as tax authorities, even running fake call centers which contracted americans, demanding they settle back taxes. has say this can ran as one -- as much as $150,000 a day. how long can humans live? apparently we have topped out at 115, according to a new study. the 1900s. not all believe that there is a natural barrier to the human lifespan. the oldest person on record live to the age of 122. she died almost two decades ago. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries.
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i'm mark crumpton. this is bloomberg. thank you. investors are looking to tomorrow's u.s. jobs report as a potential indication of when the fed may raise just rates. michelle meyer of bank of america merrill lynch has been arguing for a hike in december. thank you for your time today. let me start by asking you, why not november? if we get a big number tomorrow, is it because this meeting comes only six days ahead of the u.s. elections? the fed will tell you, and yellen made it clear in the press conference, they are apolitical, not taking into account the political environment, but they are taking into account potential headwinds, uncertainties. i would argue the presidential ,lection is a high uncertainty not entirely clear as to how the financial markets will react depending on the outcome.
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from the fed's perspective, they will be risk-averse. we are setting the stage for a hike, let's wait to get past the election, and just pull the trigger in december. what else may keep them from raising rates in december? michelle: the data always matters. they say they're prepared for a rate hike in the -- december, but the data needs to agree with that. we need to see jobs reports that continue to show improvement, 200,000 in000 and the next few reports. evidence that gdp rebounds in the third quarter, as many expect somewhere between 2.5% to 3%. on the inflation side, they are not waiting for it to accelerate, but they do not want to see it decelerate. some price pressures building. you look at economic data, i have on my bloomberg the
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economic surprise index, which does not look at if the data is rising or falling, but just better or worse than what economists expect. in early august, it reached a two and a half year high before going down. it has turned around again, so the data is coming in better than inspectors and the fed may be expecting. matt: a little bit, but we are still at the zero bound. about theu think data, michelle, is it surprising you on the upside, are they coming in basically in line with your expectations? two scarlet's point, the august data was weaker, a few disappointing surveys, ism surveys in august, regional surveys. the september data, what has been reported thus far is a bit better, particularly in those surveys. we have seen a move higher in the data, but we are not supposed their reacting to that
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one month indicator. broadly speaking, the trend is pretty clear. we have an economy that is continuing to expand, but we are talking about slow growth environment. matt: how important is market feedback to the fed? most would agree that an increase of only 25 basis points will not make a heck of a lot of an effect on the real economy. but rising interest rates -- investors would definitely feel that. michelle: i think financial conditions are critical. is not their official third mandate, but it is clearly what they are thinking about, not only in terms of the transmission of policy to the broader economy, but also just gauging how globally conditions are in the financial system. the answer is twofold. on the one hand, they have to think about what that 25 basis point hike will mean to global financial conditions, how it
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spills over to other economies, which could potentially be back into the u.s. decidingher end, when what the appropriate policy is in the u.s., they have to think about the condition of financial markets broadly as well. they are definitely monitoring financial conditions in this respect. --rlet: we are mentoring monitoring the language, the semantics they use with regards to the tightening cycle. you had normalization and then the terminal rate. how is normalization different from a hiking cycle, and what does that tell us about how rates could potentially go? michelle: as we learn more about what the fed is trying to do, it is becoming clear that they are not seeing this hiking cycle as one where they are tightening to fight inflation, or tightening to stop x-axis from building in the economy.
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looking to normalize policy, given how headwinds are evolving in the economy and that is why they are bringing this discussion to another phrase, fund is the equilibrium rate. that is supposed be a way to calibrate to the market how they think policy will involve. currently in real terms, that short-term star is at zero. slowto be very careful and in terms of how quickly you increase interest rates. scarlet: you wrote that the election keeps you up at night in terms of what may come ahead for the u.s. economy. you see the risk of a soft patch in the coming month. what would that look like? michelle: what i would be worried about, just because the nature of the election -- it is unusual. you have two candidates that are coming out with pretty big views, a lot of uncertainty as to what will be implemented. it is a contentious election.
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-- the concern i have business community can take this uncertainty and say they will pause and wait to invest. they will wait to buy a bigger ticket items, which means you could see a soft patch developing in the economy even before you see the results of the election. some of the survey data was indicating that was the case. matt: michelle, thank you, we appreciate it. coming up, goldman sachs is set to pull $300 million from omega advisors after the u.s. charge of the founder of that fund with insider trading. we have the latest on that. this is bloomberg. ♪
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matt: you are watching "bloomberg markets." i'm matt miller. scarlet: i'm scarlet fu. said to behs is cutting ties with the famous former employee for the second time this year. the retirement plan is pulling $300 million from leon cooper's omega advisors. dakin campbell is here with more. say leon cooper was a former alumni, he was there for a number of years, and they have a long-standing relationship. at 25 yearsere before he started his hedge fund in 1991. was ae left goldman, he partner, head of their asset management business, so he was one of the most senior people at the firm. matt: i'm assuming that leon cooperman's reaction is i'm not guilty and you are leaving to judgment. right.tly from goldman standpoint, their
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retirement fund taxes a fiduciary for the employees who have their money in there. so it was -- they want to get ahead of this and they are not saying anything or jumping to conclusions about leon cooperman , but out of an abundance of caution, they are getting out of it. scarlet: how did his fun do for goldman employees? we got some performance data from when he first started managing money for them in may, 1993, so 20 years ago. he has beaten every major stock market index in that performance. this money was held in a justately managed account for goldman employees, for the 401(k) program. matt: this is the second big story for the fund pulling money out of a hedge fund that is closely related to their
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business, or a hedge fund founded by former goldman employees. the first was earlier this year, in august, the 401(k) plan said that they were pulling all of their money from dan och's fund, which adjusts settled with the department of justice over paying bribes in africa. most famous of the alumni of goldman, so -- matt: definitely in hedge fund world. >> certainly. now that the four ok one money will not be attached to these, if they want to invest with a hedge fund, they will have only one option and that is lee a insley's maverick capital. if you want to put your money into a strategy managed by a hedge fund externally, that is the only one left. scarlet: why only one option, nowhy not broaden the pool?
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>> i think they will. it takes a while to onboard new managers, there is a due diligence process, they want to make sure there are no sec or doj investigations. i sort of assume that they will over the coming months or year. since --does that put them back on the table? >> i don't think so. as we saw with omega advisors, the 401(k) plan is being very cautious with these guys. deadlock's fund pleaded guilty, so they harassed restrictions on managing retirement money for foreign people, so they had go the department of labor to get a waiver to continue to do that.
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it will take them several months to get that waiver. certainly not until they get that waiver, and then even after it will take a while to get comfortable again. your story is not about leon cooperman's innocence or guilt, but about what goldman sachs is doing with their money. is cooperman saying he did not make any money here? interesting timing as the supreme court comes up with a ruling on insider trading. know saying that he did something but did not profit off of it? it's a good question, and to be honest, i don't know the ins and outs of his case or the investigation. i know he has professed his innocence quite strongly, as he did in our story, and in prior stories, reporting from the sec. as he said, this is about his legacy. he will defend himself quite
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vigorously until the very end. we expect other bank pension funds to follow suit and do the same thing, pullout from these kinds of funds? talk aboutnot heard that, but in many ways, goldman is often a leader in these kinds of things. we may see that. also possible and worth noting, pension funds may not be in the specific funds. they may be in other ones, they may not give as much access to hedge fund strategies as goldman. we just don't know. matt: thank you so much, dakin campbell. goldman sachs pulling money out of omega and earlier this year och-ziff. crude oil are breaking above $50 today. the latest on energy, and a check on hurricane matthew as the category four storm
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approaches the florida east coast. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." i'm scarlet fu. matt: i'm matt miller. it is time for the bloomberg business flash. some changes at bank of america. john teal has set down as the head of wealth management, replaced by and e-cig. he is the current head of the global wealth and retirement solutions unit. thiel will remain as a vice chairman. a u.s. government agencies has mylan has been overcharging the u.s. for eight years on its at the tent allergy shots. this as lawmakers say the company was bilking taxpayers and may have made billions by ms. classifying the drug under complex medicaid pricing rules. the centers for medicare and fouraid services say mylan
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years overturns the program. acted properly. the new york comptroller once facebook, dow chemical, and 13 more big u.s. companies to disclose data on the diversity of their suppliers and increase spending with firms owned by minorities and women. campaigninger's extends an initiative that has for similar initiatives from 24 more pension funds largest investments. biggest oil company will saw shares in all of its operations not just its refining industry vision units, according to saudi aramco. he also told bloomberg the thosey will announce advising the ipo. they want to go public in 2016. 5% of the company could be valued at trillions of dollars. the u.k. financial software
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to sell $635 million worth of stock in an ipo. people similar with the matter say it will give them a value of $7 billion including debt. shares will begin trading on the london stock exchange in november. the big movesf and financial markets today is wti crude. the price broke above $50 today for the first time since june. this follows declines in crude inventories and opec's pledge last week to curb production. to the: part and parcel story is how a massive hurricane barreling toward florida is driving up the demand for gas. florida, georgia, the carolinas, long lines at gas stations. first i want to show you the path of the storm. a category four storm in the bahamas, talk wind at 140 miles for our. hurricane warnings now stretch
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of into the carolinas. expected to move close to the eastern coast of florida tonight and possibly making landfall on friday. this shows the different tankers and vessels that are at risk, potentially in the storm's path. i want to highlight this site you can see it. the path of the storm is like this, and it could go out. if it goes up, you are looking at tankers along the east coast, right around here, that could be at risk. if you are a tanker, you cannot really take cover, but something to keep in mind. turning an oil tanker is not a brisk operation. that is why you see a lot of pressure on the price of oil. chart a screen on my looking at oil breaking above $50 a barrel as open interest surges. this goes back to 2015.
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this is the first time we have broken up above since june. this is really some upward pressure on the price of oil. this, youith all of have insurance companies with significant exposure in florida. universal insurance holdings, aig, job all down today. universal done by 50% because of their exposure to florida. something that we will keep an eye on as we had closer to the market close. matt: keep an eye on the market with the price of oil. lately, oil has been moving equities. coming up, we will talk about twitter. those shares cannot be held up. if oil went to 60, twitter would still be in the red today. this is bloomberg. ♪
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scarletmatt: we are live from n, i'm matt miller. scarlet: i'm scarlet fu. let's get to the first word news
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with mark crumpton in our newsroom. mark: forecasters at the national hurricane center are warning that large waves push by hurricane matthew could threaten lives and property hour before the category four storm's eye nears the shore. the storm is steaming toward florida with maximum winds of 140 miles per hour. hundreds of thousands of people across the southeastern u.s. boarded up their homes and businesses and fled inland to escape the storm which has killed more than 100 people. some praise today for hillary clinton from an unlikely source, mike pence. the vice president a nominee says secretary clinton and donald trump have "many admirable qualities for young people to look up to." " inpoke on "the today show response to the question, is donald trump a role model for children? that same question tripped up kelly ayotte's week.
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she initially said yes but then backtracked. we are learning new details about that stabbing rampage last month at a minnesota mall. authorities say the attack was likely premeditated and the suspect was recently radicalized. authorities say he was armed steak knives. the off-duty police of his or who shot and killed him inside of the macy's will not face charges. none of the 10 people stabbed had life-threatening injuries. palestinian authority president mahmoud abbas has been discharged from the hospital after undergoing an emergency heart procedure. theassociated press reports 81-year-old was suffering from exhaustion and chest pains but was given a clean bill of health by his doctor following the procedure. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. thank you.
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quick check on u.s. stocks as we see big moves today in gold, oil, treasuries, and the dollar. reallyor equity indexes are not changing all that much with the dow down only 15 points, the s&p up slightly, and the nasdaq down .1%. let's take a look under the hood at the nasdaq market site with abigail doolittle. nasdaq down ever so slightly right now, down .1%. this represents a turnaround of sorts with the nasdaq malala of its lows. the index had been done .6% earlier. what makes it interesting, the big drag earlier, health care, is still the big drag. biotech index down 2% at this time. this tells us we have seen a recovery elsewhere. the biggest boost all day has 1%, apple, up one points -- higher for the third day in a row. can a court is saying demand for the iphone 7 is very healthy and
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the average selling prices may be higher than what the street is looking for, so that is bullish. the dialogueat semiconductor third court results beat revenues. positive points around the , suggesting it is positive for apple, especially around the fiscal fourth-quarter. for investorsf around the idea that the corridor will be ok. ideas, connect these two apple and biotech, you would not think there is too much of a connection, but when you look at the one-year chart of apple and biotech, over the last year, we see a huge correlation. until recently we had this divergence. there had been two smaller divergences over the past two years. very different in nature but both result to the downside. that apples suggests
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is pulling down to meet the weakness in biotech, time will tell. certainly an interesting chart. thanks very much, abigail doolittle. scarlet: sticking with tech, shares of twitter are doubling the most in more than a year following reports that google is not interested in buying the site. for more, let's bring in our m&a reporter alex sherman. who is left? recodeis not interested, reported that apple is not interested, and disney is not as well. does that leave stills force -- salesforce? still in it, as of now. i have not been able to confirm disney is out. google is an interesting case because they do not really need to buy twitter on its own in order to keep its current search partnership intact. the strategy for google may be to buy twitter now so that we
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can keep this search tied forever. but if no one were to buy twitter, you could see to tediously google also not needing to buy twitter. prisoners bit of dilemma game theory going on. it would make sense for google to say we are not going to bid at this time, which is what recode reported. we know that google is working with lazard. my sources tell me that there was never a firm commitment from google that they were going to bed, so it is possible they do not here and they are just looking at twitter and kicking the tires, and moving on. bidders, and if it comes off by this pace? right now it is worth less than $14 billion. shirley, somebody will pick it up if it is $10 billion. facebook paid $19 billion for whatsapp. >> that is the question.
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that is something that we discussed several weeks ago. you could see twitter being in a a-esque situation here, where it never falls low enough. turning into a cockroach instead of a bird. it never falls low enougha-esqu, where it never for a company to come in and scoop it up because there is always this m&a premium pickton from investors that assume it will be taken out, so it never falls to that $10 billion level. happens, orif that maybe there is some impetus for salesforce to say, if they are the only game in town, are they going to offer a low enough price were twitter will say, that is still higher than $10 billion, we may as well take it/ . on my bloomberg, i have a chart looking at the performance under the different ceos. duringpany did the ipo
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dick costolo's reign. the head ofis now the company. he also runs square. is there any possibility they could acquire the company? >> i have done heard that. there is still the possibility that you could have an outside buyer here. but i can tell you, all of the likely candidates, besides inebook, have told bloomberg one way or another, sources familiar with those companies, that they are not interested. we have heard sources familiar with microsoft say they are not interested in bidding at this time, comcast, verizon is a theoretical buyer. we have resources sources that say that they will not buy. it does feel a little bit right now that the deal is teetering, if twitter wants a big price, if they are ok with selling without that huge price, then salesforce
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is there. matt: what do you think about facebook? we had a guest yesterday saying that facebook has try to emulate twitter and failed a few times. they may as well pick it up. >> it make some logical sense, is this is going to be there shot at it. and that is where the game theory comes in. if facebook were interested in twitter, you would have to think that facebook would be interested again. then there is a bit of a war, and then the price on twitter goes up, and then maybe you have a bidding war. there is a lot of variables here , and it may be that facebook is doing game theory on this, too, were they don't want to get into early. they are ok with an independent twitter, they just don't want somebody else taking it away from them so they cannot jump in at the last minute scarlet:. scarlet:scarlet: what is twitter's valuation property right now, the data that they
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hold or the platform? maybe because there is no more growth in the platform. they are looking at growth of users and they don't have that. there is certainly a wealth of value in the data. the value proposition continues to be a little bit of a question , which is, what is this company going to turn into? jack dorsey has only been a ceo for a year. scarlet: he has not done anything with the company. >> you have to give him more rope than one year. mercer mayer was given three years before they sold yahoo!. scarlet: maybe they should not have given her that time. >> you could backtrack on yahoo! and say that the company was failing 15 years prior to marissa mayer. all i'm saying is in jack dorsey has a plan to turn around twitter, one year may be on the short end. matt: especially because he is busy doing two jobs. where can we find your deal of
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the week podcast? -- bloomberg.com as well .s walmart shares are down more than 2.5% at the moment. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." i'm scarlet fu. matt: i'm matt miller. let's go to julie hyman for her chart of the day. julie: it needs a little set up. we have been talking about how stocks have not been moving that much today. we are seeingng
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action and other asset, not so much with stocks. this is not unusual if you look at recent market activity before recent jobs reports. we have the next report tomorrow, so if you look back at other days before job reports this year, with the exception of the january report, we had very little movement on those days as investors anticipate and sort of hold their bets before those reports, which tend to be big market moving events. one is interesting about this report, september has been even more difficult for the government and economists to wille out what the numbers be. the chart of the day is previous september's last seven septembers. we have seen the initial read of the jobs report underestimated the eventual read. in other words, we get the revision next month. the initial read in five of the past seven septembers has been an underestimation of the theers, so you have
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seasonal variations that are difficult for the government to get its hands around. something to keep in mind as you are looking at the reaction tomorrow. we could be getting, in recent history is any guide, a revision next week higher. i also want to talk about the recent market action we have seen going into this job's report. your is the 10-year yield. in4 basis point increase that photo of time as we have heard some fed rhetoric, economic data that has been more positive. now more likely that we could see another rate increase, perhaps as early as november. one of the things i have been looking at is charting the 10-year versus the bloomberg economic surprise index. indexonomic surprise basically uses a calculus of recent economic reports by how much of a beat or missed estimates. the zero line is the yellow dotted line. we are just getting above that
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line again, so economic reports getting better than estimated, as we see the 10-year yield bumping up again. matt: very cool stuff, thank you. scarlet: we are looking at shares of walmart who are dealing with a handful of issues. u.s. officials want the retailer to pay 600 million dollars to wrap up a long-running bribery case. at the walmart investor day, the company said income in the year 2018 will be relatively flat. joining us now is our u.s. consumer reporter shannon pettypiece. hits keep on coming for walmart. this all comes down to the fact that the company for a while did not address their e-commerce strategy. talking to they were investors today, e-commerce came up over and over. they have the founder of jet.com , who they just acquired there. they are sounding more like a tech company and eventually looking more like a tech company, but still, that takes a lot of investment.
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if you're looking for earnings growth, profit growth, the company is saying don't look here until next year. they have a lot of money they need to invest to keep up with all the changes going on in retail right now. matt: they have been making strides. it is not like they had been failing continually. they had been posting better-than-expected sales for the past few quarters. shannon: particularly driven by their u.s. stores. in the second quarter, which -- the last corner they reported, online looked like it was picking up momentum, and the company must be seeing some encouraging things in the quarter which has not been reported yet. they expect 30% growth online in the second half of the year, a big part of that because they have added jet. before that acquisition, the company was spending a billion dollars on e-commerce year after year. we were seeing signs that e-commerce growth was slowing, so there were some troubling
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signs. we said a hits keep on coming, there are other negative stories on walmart that we can get to. although the shares sold off on this, not necessarily a negative story. we said a hits keep on they have done well, they are regrouping, they are reinvesting cash to do better in the future. shannon: there is a sense they are heading in the right direction. if you are an investor out there, they come back to, why own walmart? there are lots of companies that are posting growth. you could own it as a defensive, you are betting on the economy, but if you're looking for a growth company in retail, there are other options. not that many in retail, but there is amazon. why own walmart and not amazon? theyet: in the meantime, have to plow money into this moneyerce business, that they could be using to wrap up this morning investigation into bribery. sources are telling
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us, they have had years long investigations into these allegations which started in 2012 to pay bribes to open up stores faster in mexico. the doj and sec has been trying to build a case, they struggled. they are try to wrap it up before the next administration comes in. what our sources have told us is on the table is a $600 million fine they want walmart to pay. walmart says that is too much. so the investigators are now going back, trying to collect even more evidence to use as leverage on walmart to get them to pay the $600 million. to put that into context, that is a very large fine for foreign corrupt practices act. that would be one of the biggest corporate penalties. for walmart, there are other places they could put that. will it move the needle on earnings? it will probably be a one time charge that they write off and everyone will get past it. at least it will get that overhang past them. scarlet: shannon pettypiece,
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thank you. coming up, we look at the problem surrounding the philippines, argentina, mexico, and colombia. they all share one thing, sort of, the name of their currency is the pay so. this is bloomberg. ♪
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matt: this is "bloomberg markets." i'm matt miller. scarlet: i'm scarlet fu. colombia, argentina, mexico, and the philippines have had their trouble lately. we took a deeper look into the problem surrounding the emerging s with wind their peso thin. he began with the philippines. >> this is the most disappointing of all. stronglippines has a fundamental story, growing 6%, low inflation story. he has done his utmost to really mess it up.
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i don't think you can go around cursing the leader of the free world without any coptic and since. foreign investments have been flowing out. this is a challenging time for emerging markets. i want to talk about the mexican paso. it is pretty clear on a day-to-day basis, the process of a trump presidency is moving it around. there is some connection there. i'm curious about the fundamentals. let's say trump wins. is it clearly risk off for the peso, is a kind of a thing where the speculators are trading and taking control, divorcing it somewhat from the fundamentals? win: you have hit the nail on the head. most of our customers are pension funds come in dominant funds. the are more concerned with speculative markets, which have latched on to the story. there is a lot of negative things about mexico, if you're
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looking for fundamental reasons they are there. trump is sort of the noise. you have low growth, political problems domestically. lame duck president, record low popularity, domestic violence. enough stuff there to say that the peso is a difficult one. because the peso is liquid and tradable, it is often use as a proxy for emerging markets. maybe the fundamentals are not as bad, but it gets pushed around. matt: when we last spoke, the town was being used as a proxy. int about the situation argentina, is it a political situation there as well, not as affected by donald trump or dt uterte? win: argentina is an interesting case. one administration before. fernandez and kirchner basically decimated the economy.
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the latest later was elected to free up these things, and he delivered. markets have a devaluation of that magnitude, you will have a year of that stuff, recession, high inflation, high unemployment. seen the effects of reversing these bad policies, but out of these four, argentina has the potential to get out of it in good manner. scarlet: i need to ask about the colombian peso. after the surprising referendum result, people are doubting the government's ability to get anything done, including tax reform. win: they are hoping to pass in october and november. sides havews is both made noise, they want to keep this peace process going. my read is it was rejected because half the population felt it was too lenient on the rebels.
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we are going to make this worse on you. the rebels want this, but it will be very hard to do. is oil isews rebounding, so it is really an oil story in columbia. the fundamentals are not bad. -- in colombia. china was emerging, you could talk about these problems. now the tide goes out, and you have a problem in turkey, south africa, philippines, down the list. it is a challenging time. i have been telling clients, just differentiate. we cannot tell which are good and bad stories. joining us now is joe weisenthal, cohost of "would you miss?" let's talk not about the peso,
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but the story of the day today, which is really the move in rates, at least one of the main market stories. rates getting back to where they were in mid-september across developed markets, particularly in germany and the u.s.. the vice president of the ecb pouring cold water on a taper talk. that caused rates to shoot up. story of the week as well, gold getting slammed, rates shooting up. you see it there, rates jumping on those headlines from the ecb vice president. that is a continuation of the marketing we have seen for a while. matt: gold getting crushed and the dollar continues to rise. it all comes together. we will see you again at 3:30. scarlet: we will talk about those market moves. this is bloomberg. ♪
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2:00 p.m. in new york and 7:00 p.m. in london. i'm david gura. vonnie: i'm vonnie quinn. welcome to "bloomberg markets."
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we are live at bloomberg world headquarters over the next hour. covering stories out of san francisco, florida, washington, and portugal. treasuries are falling, posting their longest slide since april, while the dollar is up with a mixed picture for stocks. above the keyg $50 per barrel mark. --mbing inventories declining inventories are still fueling that rally. hurricane matthew is closing in on florida and has been upgraded to category four. impact ofscuss the what meteorologists are calling a potentially historic storm. markets are closing in two hours. julie s

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