tv Bloomberg Markets Americas Bloomberg October 26, 2016 10:00am-11:01am EDT
vonnie: we will you from san francisco to london. breaking economic data on the u.s. housingbreaking economic de u.s. housing front. julie hyman has the latest. julie: home sales. september sales following, .oming in less than estimated analysts had been anticipating a pace of 600,000. gain in new month home sales of 3.1%. that is close to almost nine-year highs. a 593,000 annualized rate.
we were seeing the major averages fall for a second session. transportation. weakness than 1% on from a lot of different fronts in terms of earnings. we will go more into detail in 10 minutes. a number of members of the dow jones industrial average reporting their numbers. numbers after the close. there appears to be disappointment with trouble with samsung. in apple's last fiscal year fell by 17%. a lot of questions about 17%.
profits coming in better than estimated. it booked a one-time tax game. numbers at the sales third-quarter revenue. coca-cola out as well. and also smaller package sizes. raising questions about whether it would sign on to a production deal. of -- a quickd check on bonds here. a see the yields climb on two-year note. we see the curve joined that as well. up. basis point jump stocks down byas 1.9%.
down for one third day. the biggest in a month. earnings tomorrow, destroying -- seeking to boost capital buffers and sure up investor confidence. formally discussed options, including giving some bankers share instead of cash bonuses and other ideas for, replacing the cash component with more deutsche bank stock. shares are up by 1.1%. shares are hired today. it posted a 16% drop in third-quarter profits. it took a one billion pound , excludingompensate
the charge, and other one-time items, profit fell 3% missing estimates. lloyds have taken more than 17 billion pounds in charges for payment protection insurance over the last five years, more than any other british lender. shares are rising by 2%. speaking with lenders, the spanish lender, shares up by one quarter of 1%. brazil and its european consumer finance business helping to upset a brexit induced drop in revenue. counting on the business in emerging markets to help the growthto diminish expectations and other countries where it has a large presence. europe's six death -- six best performing lender, with a loss of 1.8%.
still a loss of 1.8% today. shares today up by one quarter of 1%. >> let's check in, lisa has more. >> thank you. a new poll shows donald trump has a narrow lead amendment -- in a must win state for him, florida. the candidate leads hillary where third race party candidates are included. trump is getting support in florida from independent motors. he is showing his poll is stronger than other recent states. he still needs 35 more electoral college votes to win the election. say 17 peoplets have been killed, mostly people. the area has regularly been hit by russian airplanes as well as
the coalition targeting islamic state militants. the european union signaling that a breakthrough is imminent in a review holding up a trade agreement with canada. he is expecting the belgian french-speaking region to sign onto the deal later today. that would allow the belgian government to endorse the treaty. they can't that was thence with -- torn down. french authorities dismantled the town known as the general -- the jungle. it was seen as a signal of the migrant crisis. centers around france where they could seek asylum. the philippine president wants all foreign proves -- troops out of the country in the next four years. speaking in tokyo, the philippines will survive without assistance in the u.s. he knowledged it would be a lesser volley of life.
news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. vonnie? the s&p 500 open lower today, marking a second day for equities. it is maintaining its price target. goldman sachs chief u.s. strategy test reconciled -- reconciled. we are looking at $105 of ernings for the s&p 500 this one hundred $16 next you and $122 in 2018. the one increase, part of that is energy companies will go from a loss to a game. .odest earnings growth
modest upside if you look out in 12 months. >> given were crude is that and where it was last year, how does the story involves from here? >> it is one of the key issues for 2016 and 2017. been flat for the better part of five years and the key region -- reason that have beenincreased technology and apple in particular, responsible for one third of all of the margin increase in the equity market for five years. that is tremendous growth in sales and and margins. looking forward, margins are likely to come down in my opinion. they will peak at different points in time.
a very high level of margins and profitability and that will likely slow. your trajectory as you look out will be modest. 2% u.s. gdp environment is what drives your sales. you have lower margins, modest earnings. that is basically the story. the equity market and starts valuation it, very extreme. >> how do you separate out the , as opposed to janet yellen, giving you a lot of money. how do you separate out what is real? >> the way we think about how to invest and tackle a market at this level of valuation and modest growth in the future, it is really a barbell strategy. we are looking for income, not dividend growth in
given on the other extreme, you want to look at topline revenue growth. those are your two strategies for trying to outperform in a market that is difficult, with low volatility. on the dividend growth side, the market is totally missed priced growth. over the last 50 years, the growth in dividend over a ten-year time has never been below 2.i percent. the growth in dividends over the next 10 years, about 2.2%. we start with the statement that dividend growth is missed priced in the market for my forecast is dividend growth will be about 4% in the next 10 years. marketissed price in the performance based on better growth in the dividends.
that is a key aspect. to your point, where are you getting your topline revenue growth, you go from year one to year two, q3 over 10 years. maintaincompanies can double-digit topline revenue growth. sides ofoking at two the strategy. one is dividend growth and the other is sales growth. is at a high level .f valuation jonathan: a lot of people would bond proxies, etc.. multiples were very high. where is the dividend growth story being underestimated, in which sectors? >> we want to the long dividend growth and short the market. in every sector
and talk about the companies. on the what we trade dividend growth, the strategy. you have right now is 6% growth specifically next year, 2% in the next decade. and is the area you want basically a yields starved market. coming up, a disappointing string of results from some of the world passes biggest companies. we will look at the market movers next. this is bloomberg. ♪
vonnie: i am vonnie quinn p are you are watching bloomberg markets. a close for another 170 years, the current trend continues. the annual global gender gap award -- the pay gap has diverted to where it was in 2008 after peaking in 2013. comcast pete -- keeps beating the industry trend. the best third quarter in a decade. pokemon go was not enough for nintendo. sales of three ds and wii you gains. the forecast for the year. iphone,t game for the
the measure. this is one of the benchmarks within the airline industry. pink, white in continental and in blue. all of them have been trending lower with unit revenue. these declines, southwest is the highest among the carriers. now looking at some of the other travel related shares we are watching today, hilton hotels out with a forecast that has narrowed to a little below what analysts had been anticipating. the president and ceo says earnings-per-share are within the range is the company gave, the forecast ranges they gave even with the macro economic environment continues to underperform. thateven more after
company narrowed is forecast. it said it is seeing ongoing pressure in domestic and canadian oil markets. and seeing decelerating revenue trend within the industry. thanks a lot. still ahead, we are keeping an eye on apple today. the company reported a decline in iphone sales. iphone sales are set to rise next year when apple introduces what he calls the iphone 10. -- ibm chairman and ceo, 6:00 p.m. new york time. do not miss the conversation live from the conference in las vegas. this is bloomberg.
vonnie: you are watching bloomberg markets. let's get to tech news. apple shares under pressure today. the company reports it's prices for smartphones. point 5id it sold 45 million iphones with an average price of about $619 down from $670 a year earlier. thirds of revenue from the iphone and experienced its first annual sales declined since 2001. our next guest says do not worry, be happy. apple is sitting on a powder cake. raising the price target on apple to 125 and reiterated his outperform racing on the shares here joining us now from san francisco, timothy, thank you for joining us. is the powder cake that we have got to look forward to?
happening is if you look at the iphone 7 and can take what wall street expects for iphone 7 in december and march in june, what will happen is the number of phones more --n two years old sitting those will grow by about $80 million. in the next phone cycle, you will have 80 million more phones greater than two years old when you do today. that is where most of the of rates come from. the base is not growing that much. all of that and then some is growing from the older part of the days. next year, you will have a very new looking and exciting new phone against an aging base. should notit mean we focus too much on the market forecast? monthst 5% in the three
to decemr, that is below analyst forecast, there has been some handwringing over that. is that deserve? >> i do not think so. higher, 38 tos 39, and they always report the high-end guidance, that is where wall street was thinking. it in perspective. talking about 50 bits, number one. you have to remember they have a lot of currency headwinds. if you take constant currency versus two years ago when the dollar began to depreciate versus global currencies, what you see is the growth margin 40.5,ce would be about which is just about what you would expect it to be with revenue versus what they were doing two or so years ago. i would not make a big deal out of that at all.
vonnie: if you look at analyst -- wall street is fine with apple. it is just that investors are not. >> i think people are rightfully concerned. as you went through the iphone 6 the numbers were definitely disappointing versus what people were thinking. --t spurred concerns of about the fact there was no innovation. this is the fact that everybody to the six. had you talked to people, i could not give the stock away at $92. the concerns were number one, the fact that the iphone 7 would be disappointing from a unit perspective p are number two was iphone --
both of them are ok. at at back up significantly to a level comparable to what they were last year. of 9is with the inclusion million units of the lower-priced iphone sd nice job ofne a quelling the concerns from a few months ago. vonnie: will it be a big seller for apple going into the holidays? >> although mac tends to be more of a sideshow for the numbers aemselves, i think it will be nice event because they have not refreshed the product line in such a long time. a quick question on china. revenues are declining.
from 2014.t revenue down from 14%. the source of further expansion? read it quickly. >> china said you would see a market improvement. the rate of, you know, you would see improvement in the decline year-over-year. two,i want to come back to the fact they saturated the high-end smartphone arctic for the iphone 6 p are you give people a new looking phone next year. i think you will see a significant upgrade next year. mark: great to see you, timothy. ♪
brent prices hitting a three-week low today. let's get the latest update. what have we got? vonnie: we know the industry report showed a bill on inventories and quite a large one. we see an unexpected drop down here. survey, an uptick of about 1.1 7 million barrels. it looks like there is a drawdown in gasoline. nearly 2 million barrels. 2.3 million barrels. presumably, these four oil -- in the refined products. let's look at the oil prices here.
it is climbing as it tends to take a little bit of time 20 or 30 minutes or so. going through the numbers and trying to figure out exactly what it means. the drawdown and inventory. the other big news that has been more rhetoric from russia. signing up with the opec production freeze or cut. that had also been depressing oil prices. report, i will be back in a half hour with another update. thank you. a bloomberg politics poll shows donald trump has a narrow lead ,n us -- in a key swing state leading hillary clinton 45% to 43% in florida. showing in the polestar than other recent surveys in the state. economic advisor to the campaign , founder of sky bridge capital
and author of the book you have. over the rabbit hole. you are not going to say this >> i'm not here this year is a different sort of year. if you look at what happened with the brexit and you look at what is going on with people being reluctant for public i thinkin donald trump, people are reticent to say that they are supporting it. me, if i were on the democratic side, i would not be gloating at this point in the election. some of these guys are acting like they already won it. the last second in the game.
>> at one point, you gave them a 20% chance. , my guess ispisode it will probably be a little bit better than that. ohio, the latter path for the electoral votes. are you in danger of leaving them -- leaving the money on the table? and sticking with his friends. running -- of things he did not do. eventually, he was exonerated. me, i also believed in the free market system and free market capitalism. the stuff that goes on on the republican side -- the
philosophy is more in line -- are you being loyal to your friend donald trump? >> it is a combination of things. i took that pledge seriously. i moved over and became a committee member with jeb bush. those guys signed pledges. he is obligated to it and in jets case, he did not. some of the leaders have been very smart. background.e analyst, cash time. i do not think it is a reagan to do.
>> you must agree with his economic principles so far. >> he has got a good plan. vonnie: some economists who have worked on both sides of the aisle and is primarily known for his republican leanings, says that trouble cost jobs when it comes to things like trade. this perception of him internationally. >> i have a tremendous amount of respect with mark. he should pick up the phone and call me. i have been working on this for three months. mr. trump is a free trader. people say he is not. that is not true. he wants a fair process in the trade system. since 1945 to today -- vonnie: why does the peso weakened every time -- >> you know that markets peers sometimes perception is greater than -- the press tries to prop up the idea of terrace and
protectionism and him blocking free trade. if you read what he has said and trump.com, he is for free trade but he wants to even up the playing field for the american people. done with good intentions to help the emerging markets. >> him want to ask you about hedge funds. are you getting more of a , still kind of hide. >> easily explained by the depression -- trying to work. guys like the hedge fund
the sixth ofting issue a. that will be a huge mistake. that is not the right role of government. to shy away from products very good long-term. renaissance in the hedge fund space. vonnie: we have to leave it there. >> i am able on the hedge fund space. of hopping over the rabbit hole. how entrepreneurs turn failure into success. thank you. man, we will talk to a incoming chief executive -- this is bloomberg. ♪
vonnie: you are watching bloomberg. i am vonnie quinn. mark: here's what we're watching today. the debate is heating up. preparing for everything. vonnie: mercedes is taking on uncharted territory. the pickup chuck just ahead. mark: oil revenues are we will explore how this bumps against tradition in a bloomberg quick take. vonnie: london property prices are set to fall next year.
an exit from the european union ways on the u.s. -- the u.k. housing market according to the center for economics and business research. london will be the most affected with prices dropping 5.6% next year. morgan stanley ceo says his bank will force some employees out of london as a result of the outcome of the vote. he spoke at the year ahead summit in new york. >> there is nothing good about brexit. love folks like working in london. you have all of the ecosystem and the infrastructure, the pipes and the plumbing, the legal firms, everything. ourill have to have headquarters in new york and probably with our legal and, more capital and liquidity traps in those legal entities. none of this is good. moving out families from london. mark: earnings beat estimates
thanks to an increase in fees. upset diminished growth expectations in the u.k. and other countries where it has a large presence. was not enough for them to death for nintendo. the popularity for the summer hit did not upset sliding sales of three ds and wii you gains. has cut its sales in the operating forecast for the year. run debuts in december. now building luxury pickups for adventurers. the automaker, ask classmate that would attract sales vote owners and wealthy parents the suv's used to. mercedes says the pickups will be competitively priced. vonnie: time now for the quick
take where we provide context and background on issues of interest. --di arabia moved buyer's shares in his massive state-run oil company. the world passes biggest sovereign will fund. forcing change. the question is how much? price of oil creating financial strain in the region, the government's budget deficit 2015. to 15% of gdp in currency reserve at a record pace. part of the goal to earn more income than oil in 20 years, they plan to sell shares and then create a sovereign wealth fund that will eventually control more than $2 trillion. initial public offering, potentially the world passes against, is partially a drive to double the $400 billion stock market. in 1932, they became the biggest
oil exporter by the 1970 passes. when the arab spring started to stir, in 2011, the government released a $130 billion spending to head off potential unrest and create jobs. the bond between rulers -- have at times been strained. of the world passes last remaining absolute monarchies. the death of his half-brother in 2015. with the world passes biggest deals and $500 billion in foreign reserves, saudi arabia can continue to rely in oil money for some time. canquestion is whether it before the clock runs out. less isolated, its spirit chemical religious life will create a challenge to reform. about all ofmore the quick takes. head to bloomberg.com for more stories. the world's largest
supplier of equipment and services, facing an uphill battle since developing regions such as russia and brazil, exacerbating a struggle to generate growth. a new person will lead the company. he joins me on the phone right now. thank you for joining us this afternoon. >> it is my pleasure. >> do you have a turnaround plan for ericsson? has been a tough market for the country over the last year or so. it has of course accelerated in the third quarter. a cost launched efficiency program which continues to be implemented in order to get the space in order. these will continue. will refine and develop a strategy.
it is too early for me to talk about before i campaign on january 16 of next year. it take young will to refine and develop a strategy? how long have you been given? >> it is important we work internally in the company and we take the time it needs. of course, we will end up making some tough decisions where we invest money and maybe invest less. we would take those but we do that in the beginning of next year. importantntime, it is to also emphasize we have a lot of customers that depend on a daily basis for their operations. be at the center of whatever we do and our commitment to them will remain strong. mark: can you give us an idea of the lines you continue to invest you will exit? >> i think it is too early to commit to that.
i would say it is important for us to be leaders, so no one -- our commitment to that. we will invest in digital oursformation as well and customers should remain very confident on that topic. mark: you have been a board .ember for over a decade some might say you are too close to the company to implement radical change. maybe the outsider would have done that better. how do you respond to that line of arguing? important thats we recognize we are one of the few vendors who have gone shape. in quite good we saw a large number of customers throughout the world and a number of operators throughout the world. of the take a little bit opposite view of our performance
over the last decade. more importantly, i think, you know, it is very different when you take the ceo sitting on the i will take the responsibility for all of the decisions we do and drive it forward. have been given 2 million call options that will pay off if the stock almost doubles after seven years. willu think the stock double after all within seven years? does it mean you are staying for the long haul? >> i believe aligning the interests between me and the shareholders. if it becomes good for the shareholders, it becomes good for me. i therefore do believe in this type of long-term incentive get through the options. yes, i would not take the job if
i thought i could not achieve what you're saying. can it stay independent? >> yes. mark: you are not looking for potential suitors? focused one developing the company from a long-term perspective. you can see that in the way we invest. usk: thank you for joining on the day you are appointed chief executive and we look forward to hearing your plans after january when you take over. the incoming chief executive. vonnie: great interview. thanks for that. still ahead, highlights with an exclusive interview as he looks for investors to back his 5 billion euro capital raising plan. this is bloomberg. ♪
vonnie: i'm vonnie quinn along with mark barton. mark: shares sold the most troubled lender on the side today. that is the chief executive, seeking investors to back his $5 billion euro capital raising plan. down by 20.7%. we spoke exclusively to the daybreak euro team. planthink the business and everything was the first step toward moving to put the bank back to a stability look for andd then seek real interest. this is something we could have done and could have started only on the basis of the new business plan.
interest is already there. we now need to move to stage two and see where we are heading. >> let's explore the interest little more. our investors actively approaching you? or do you have to pick up the phone and call them? >> investors have been proactive in approaching either the bank or investment banks working for us. at that stage, we could not engage for obvious reasons. this is now what we will do. you're speaking with the kuwaitis or the chinese, give us the complexion of, are you approaching sovereign wealth or are you focus on the age of america? >> at this stage, we want to maintain talks with a multitude of different investors. which arell define
the best routes that we want to pursue and see what is the most appropriate attentional. you have a number in your head for the amount that you want to come from the cornerstone ventures or are you open to all things? >> we are open to all things. be a mixture from institutional investors. we need to find out what is eventually the conversion rate of bond conversion. speak.lt to gauge as we >> what would you hope for? you have got five and dollars that you want to raise. the amount you swapped equals the amount you are about to raise. what is your best ambition? the three legs are tied together, aren't they? >> they are. my ambition is to look for
long-term stability. we need to make sure the bank eventually -- how much of the 5 billion would you like to see convert from debt? -- were is going to be actually received a huge interest from bondholders to vis-a-vis thes potential conversion. at this stage, it is difficult to come up with a firm number, but at the end of the day, we want to make sure that the bank billion, the $5 billion are actually the base on which we projected the plan, and this is what we want. mark: marco marelli there speaking to anna edwards early on bloomberg television.
coming up on the european close, europe's biggest investment bank exploring alternatives to paying bonuses in cash. we will cover that and all the european bank earnings. a busy day. check it out, have a look at the european stock market down for one consecutive day. stoxx 600 .6% lower. britain's biggest mortgage lender posting a 16% drop in third-quarter profit. look at the currency board today. up i .4%ee sterling is against the dollar. big gdp tomorrow. this is bloomberg. ♪
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i am mark barton. vonnie: i am vonnie quinn and you are watching the european close on bloomberg markets. mark: we are going to take you from new york to milan, we are going to cover stories out of washington, germany, and the u.k. bondholders may be facing stormy weather. there is a growing chorus that sees 10 year treasury yields being pushed up by inflation and fed rates. we get reaction from schroders and of global multi-asset. vonnie: monta lea's beats estimates and boost its forecast. us andosenfeld joins gives us an update on cost-cutting. deutsche bank is exploring alternatives to paying bonuses in cash. that story andrew