Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  July 31, 2017 2:00pm-3:30pm EDT

2:00 pm
>> we are live from bloomberg world headquarters in new york over the next hour. deals takingion softbank could have insight set on charter communications. -- shoppingestors for valuing real estate. jeff pierce tells us in an exclusive interview on the true value is not in retail. washington, the clock is ticking for republicans to have the next course of action. her makers may begin tackling tax reform are yet another attempt at health care. pretty tight deadline as well. let's get a check number stocks .re -- modest moves
2:01 pm
>> modest moves. we looking at it in verse relationship between dow has nasdaq. up, nasdaq down, s&p 500 up ever so slightly in the middle. this is reflecting the flag that the financials are one of the top sectors helping the dow and s&p 500, more so while the nasdaq is being dragged down by technology. beneathmple the movers -- cap wells fargo and jpmorgan. today ongo bid valuation, plus yields are rising minutes hoping banks. investors think that will ultimately help with lending activity. bigso much -- down in a way, both down more than 1.5 percent, after facebook was brian keptto touch the price target of one hundred $40 per share, but it's saying
2:02 pm
that there's lots of concerns that aren't priced in, especially since stock has been so high. from friday was up nearly 50% on the year. one concern he cites is the idea that digital ad space may reached saturation. some other movers are factors on scripps networks, being bought out by discovery communications as you would expect -- this is fired. -- reason scripts is not since we heard talk the idea. the story broke by bloomberg first years ago -- a the bloomberg -- that these chairs of this company are up 30 1%. premium has been priced in, discovery trading lower. charter communications as scarlet also mentioned, trading higher. japan often could be planning to make a direct author. all this is very much in line with what we are seeing here in 2000 and 19. --we as the m&a go function
2:03 pm
this is a tally, billions of dollars per year. this is the first quarter of this year, the second quarter both topping 2016, topping 2012-2014. q4 tends to be strong. that is ahead. 2017 could turn out to be a banner year for m&a. time will tell. we will bring down. favorite as well -- we had a lot of action in media and telecoms specifically. for more on that, let's bring bloomberg columnist covering deals command media reporter for bloomberg news who covered -- covers the steelers and what has been going on. and when with you. you called it that this was the more likely more logical combination between scripts and viacom, or scripts and discovery. why does the deal makes sense? >> discovery, a lot of the
2:04 pm
content is good towards men. this content is geared towards women. they have food network -- that demographic is important to advertisers. as the two companies struggle ratings wise for these smaller networks to sustain themselves in this new environment we are going towards cord cutting, it makes sense for them to join courses as we get a hold of this script content. we are thinking about this small bundles -- a lot of support content. it makes sense that something like this to get more women to sign up for these types of things. >> getting or maybe something else -- is this the end of this particular deal question mark >> we don't know of anything else but what sarah was saying, what discovery and scripts are able to do now, the whole tubulin it was changing. these online tv services -- you are channels. what discovery has said is part of their russian office, now they can say, you've got five of
2:05 pm
the top 20 cable networks, we now have hdtv which was the third -- third most popular cable channel on all the tv last year. they have been left of these online tv services but they could essentially take some ownnels and create their skin a bundle of entertainment only, whereas people who don't pay for sports that can charge 3-4 dollars in suddenly create their own package of channels. >> it works if they go on their own. as has channels to be part of a bundle -- wouldn't companies like time warner look for content providers to have fewer channels rather than more question mark >> a few analysts have scratch their head about the logic here. >> a whole industry is strengthening down. field and, they are just saying we will try to find our most popular channels" on those, maybe caught some of our lesser watched channels. script and discovery come other channels are actually they could say to a
2:06 pm
distributor like comcast, t1 hdtv -- you also carrying out an advanced tlc. to some extent it gives them more leverage in these negotiations with distributors. >> we have a content on the one hand, and this on the other command potential deal here talking about. why do they want the u.s. cable company, in this case charter so badly smart >> that's a great question. i think france's flailing at this point. seems like it's either, did we i didn't try to sell with someone -- find a lot of reception on that maybe t-mobile. or do we by someone. >> the hard part with that is a company like charter that's not quite john malone -- i don't know that they would have had the likes of this -- which hasn't proven a strong u.s. spread to yet with sprint deal. they could in theory try to use that deal, but officials -- say
2:07 pm
this was supposed to be about the internet of things commands that teachers have -- i'm not sure buying charter are a hundred billion dollars or something would have other -- things with investors. >> impose a good question. is he trying to do something more with it -- >> i don't think it's quite clear yet. charter put out a statement, they were there but they don't want to acquire sprint. bigger picture here -- cable industry and the wireless industry, increasingly combining in a lot of ways. think about your smart phone, 8-90% of traffic on there is your wi-fi, but it company, not wireless company. we will start to see more and more these combinations. we are already seeing comcast and charter looking to resell wireless from verizon at work -- the cable industry in the wireless history are pretty soon
2:08 pm
going to be one in the same. >> i also think about the personality behind it, you have a strategic impetus behind the industry, the industry companies big personalities and joe maloy -- in that looks like tucson is join the ranks of his other media titans. curious -- malone and suddenly they need to connect on some level to get a deal done. , it'sre a match their weird to talk about it, but when you have these deals you typically have that kind of chemistry. >> that's right. joe maloy essentially built the cable industry, now he's goes through all sorts of changes with cord cutting. he has been talking about the isths of special platform about the possibility of cable companies like charter in comcast possibly wiring a wireless company. several there was going to happen. we know that john malone and the chairman of sprint and warren buffett had a meeting in sun
2:09 pm
valley recently. it sounds like there's a lot of different permutations on the table now. >> talk about content providers and distributors -- i looked at shares of amc networks -- other cable channels also declined. leftned to this company -- behind. >> i think i come is really interesting right now actually. they are sort of at this turning point. they have disney ceo bob bakish -- the idea is to win this -- it's unclear what happens to all of the others that they owned. --ms like all of the money they're building this new hbo-like network based on their paramount brand. i think next year, will it work, we don't know yet, but it is important -- it is a new viacom. it doesn't make sense for them to do a new deal right that --
2:10 pm
if they're trying to figure out how to get to the turnaround. take you both so much. let's check your first word news with mark crumpton. mark: president trump says retired marine general john kelly will do a fantastic job as white house chief of staff. terry was sworn in this morning. kelly replaces the reince priebus -- they reportedly have one thing it is never did, the backing of the monica and her husband jared kushner. week's failure to pass the republican health care bill, senator gifts like arizona -- talked to bloomberg about the next step. is an attempt to do it -- just with republican votes, i think we have reached the end of what we can do with republican votes on health care. >> senator -- acknowledged there are limitations to what can be done on a partisan races, but
2:11 pm
stressed that health care is not going to end and still needs to be fixed. the u.s. military said today that carried out a weekend from strike in smalley that killed a high level commander of the ocean extremist group. he is believed to be responsible for several deadly bombings in the capital. china's president xi jinping says that the military has the confidence and capability to strengthen the company's rise as a world power. president she oversaw parade that sold off -- chinese forces into his push for a modernization program aimed at making china's military a leader force, capable of projecting power overseas. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i mark crumpton, this is. up, and coming bloomberg exclusive. activists pushing for change -- capital partners make the case,
2:12 pm
labor department store operator should reevaluate its real estate portfolio. this is bloomberg. ♪
2:13 pm
2:14 pm
this is bloomberg markets. in julie hyman with scarlet fu. >>'s been a volatile share per day -- day for shares. department have guessed fire up 500open -- rose as much as percent asterisk about -- after investors have capital partners -- have taken a stake and will push for changes. after the initial -- this is now lower. wrote,naging partner they're essentially an under leveraged real estate company that -- is maturity at the lowest retailer. jeff joins balances -- in
2:15 pm
studio. welcome. the experiments. >> thanks for having me. >> your coverage is their real estate is key to this value -- a calculated the real estate mature netlist $200 a share. get to that number, and what assumptions are you making to get to the number? global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. says as he does report of your article, 10 million square another industrial zone. real estaterge company. you look income must eurozone hundred 59 million. just have that, convert the real estate to rent, that would be about 350 per foot. there's a public -- public we --ded thing out there, which i would argue the other is worth a lot more. the average rent is about 470 per square foot. as they recapture the dates, a rolling it up between 3-4 x.
2:16 pm
the average quality was in the dillard's portfolio has better demographics, higher growth and higher household income in the area. over time, if you just converted this -- in this isn't the strategy we would be advocating for, but over time, if the retailer didn't work, which we think was bible -- if you converted that reps to say, $11 a square foot and we have 2 -- we think that would he a below market rent, and that would give it to about 500 million. this gets you to $300 stock price. quite strictly -- clear, you're not pushing for them to spin off assets and put it into a real estate investment trust. >> request diligences cash lending. the catch close are very strong. great cash flows -- $400 million. there is no reason to over leverage the story. flow.n do this with cash
2:17 pm
you have a landing to have a lot of value, you can put any market rent you want on it, you get a number in the hundreds. feel -- isople undervalued, it has a lot left the firstjust put square foot of valuation than a trade that the public market, that's about $150 per square foot. marginal buyer and seller of dillards is -- don't have a nuance -- we are real estate guys, we don't have a nuance and tell them things come in the future of department stores. we donate have that view. if you just put the first square foot valuation that dillards trades at -- the mix is closer to 200 and 100. >> who would like the attendant, who would want to take up that space? the dillards store location, most of them are in the midwest and south. a lot of locations in texas and florida, more than one third of its stores. who or what kind of company would be most appropriate
2:18 pm
tenants for the real estate schumer >> if you look at the demographics of grillers -- dillards, mayor gray. publishing growth, income growth, this is where retailers want to expand. if you look at who is taking up junior anchors or other anchors fromu can look at leases 20-40 dollars a square foot, a lot of of the real estate is at least at that value. dave and buster's is expanding, marshals is expanding. nordstrom rack, dekes. really -- 20 retailers taking space. were you have a look through-put anymore -- and example is a fashion show. they on the dirt in the box of 200,000 square feet on the las vegas strip. right across the street from 1 dillards doing $125 a foot. you can run enough -- if you read set up, say a portion of that, you would get to a much much higher number then when the retailers .
2:19 pm
the family and client to this now when you have sears and macy's dumping in one million square footage on the market? you could argue there's too much supply. look at the core portfolio that dillards has, it's an attractive portfolio. if you have mauled $1000 per square foot -- and the list of --t doing similar to that there's a lot of throughput and dollars there. i could open up a store and generate a lot of income at the right rent. i could find a concept that would generate a lot of income. know where that clears is at a price. it's just a mass game -- where the price, you can look at where this is playing -- it's a better portfolio than that. >> obviously you look at shareholders of jailer dillard, family controls most of it. biggest outside shareholder with a stake under 10%, he spoken with david come
2:20 pm
in to what extent are your basel and here? >> i'm not going to speak for other shareholders. i will say we have talked with other shareholders of dillards, is we think that our -- differentiated. think everyone looks at the real estate value. the numbers around it, we want to find one person who the number around it. her question is why would family be interested in, i would pose the question back. why wouldn't they? fully compatible with their current retail operations. if you are able to find a lease in keep the store, so you don't need 200,000, you need 50,000, that's a lot more capital flowing in that gives them more freedom. i'm not sure the value is compatible with employees -- family conditions, and maybe the stock price will raise. dillards're saying -- is struggling to generate topline growth. once you unlock the real estate value, what's left of the company? are you offering prescription for how to include operation on
2:21 pm
a retail front? >> we haven't quickly said -- we have a number of ideas. is, we would like to do is, -- we kept to the family and if necessary, we will share those in short order with the public is well. >> up-fake responded to your investment customer >> as of today today haven't been unresponsive is probably the right way to phrase that. think we have a lot of smart ideas. >> till it's has been buying back shares in hundred million dollars buyback program. is that he could of cash customer >> if you look at overall as a whole, it generated operating cash flow minus cash back -- $400 million. we have a lot of stores -- they look like they're in good shape. the guy said, i'm not taking a retail view here. if i think the sale read --
2:22 pm
value is 350% -- >> that's north of net income. i don't need to say this thing -- thereoing -- plus 5 is a concept that will take over any real estate development in the country. they can make so much money off of this. i think that number that you get if you manage it over time is a much, much higher number from a little north income. >> final question to you. are you surprised by the share price reaction? since down something that leaves will >> and i don't know who the buyers and sellers are in the market. i just know what's -- a marginal buyer and seller. is to retail analyst that take a view on the sales and negative operating leverage. that is their prerogative. what i will say is the degree to freedom company has to operate
2:23 pm
a square foot of debt against the real estate. this is focused him where earnings will be a year from now. whatis renting north of the current income is overnight dovish to make money off of it. i would hope that they would continue buying back and maybe even accelerated. people want to assure into it, that adds value to us. >> thank you so much. arel ahead kilohertz shares plunging after person cancels plan that claims to redeem some of it. more on what this move means for the on. this is bloomberg. ♪
2:24 pm
2:25 pm
2:26 pm
scarlet: time now for bloomberg business flash. china has asked a company about new york -- to sell it overseas access. according to people familiar with the matter, the government wants them to bring the proceeds back to china. shares and bonds fell today after about a renter had lanes to redeem some of its debt. the speculation the quarterly results could be worse than expected -- into banks were more liquidities reserves. the report earnings on august 8. that's your business flash update. >> still ahead, agriculture in today's talk about it is] go. this is bloomberg. ♪
2:27 pm
2:28 pm
2:29 pm
♪ this is bloomberg markets. i'm scarlet fu with julie hyman and we will take a look at the commodities closed by focusing
2:30 pm
on companies involved in agriculture. is the third-largest maker of agricultural machinery and they reported sales and profit analysts estimates. joining us is the company's chairman and ceo martin. thank you joining us today. martin: good afternoon. scarlet: let's talk about the ag equipment market. as the market bottomed? see a kind ofo renewed demand, even when the market is down. they don't have it standing around. that means it is a kind of normal need for replacement. your north american market is important, but you get the bulk of your sales from europe, the mideast, africa. it looks like there is something
2:31 pm
of a recovery in western europe in particular. is that what you are seeing? is it sustainable? martin: we are doing 75% or so outside the u.s.. namely in europe, africa, the middle east. we are also the market leader in south america and brazil. we see brazil coming back. and we also see europe in a pretty stable condition across europe. of many different countries. and so it varies a little bit by country. england is doing fine, germany is ok. france is a little slow because they have subsidies in place which had been discontinued. spain is coming back. overall, we are slightly optimistic that this year will be better than previous years. [indiscernible] that is why we have raised guidance again. scarlet: a fairly long-term cycle of lowered crop prices.
2:32 pm
how does that change your strategy and investment outlook? martin: crop prices are important, of course. on the other hand, the most important figure for us is farm income. farm income is a function of commodity prices, in put prices, and basically what it can generate. be much higher than historically, but harvest are very slow. so that means by harvesting and paying less, farm income should be ok. technology is also part of the new farming, as it were. your company just bought a precision planting business from
2:33 pm
monsanto. do you see this as a new phase in agriculture that is relying on smarter technology? martin: precision farming is extremely important. to be in a machine position to communicate with the dealer, the manufacturer. and also with all equipment from competition. by theeve it is owned farmer and we want to help farmers to improve their business and their yields. precision planting fits pretty much in this segment. it helps us come up with more advanced solutions in seating. -- in seeding. more advanceds of technology, how is your company addressing climate change and how might that affecting farming practices? you're looking
2:34 pm
at south america or africa, for example. martin: in the areas where we are responsible and where we can put back thelp soil because our equipment is much more efficient than what our competition has to offer. it is fuel consumption -- we have the lowest fuel consumption in the industry. there is also water protection. in equipment and farmers use our equipment -- they use less pesticides and less water. tot means we can contribute responsible farmers to become more and more sustainable. in emerginge, countries like africa, india, and china, you start to use mechanized help to add to this direction. scarlet: julie mentioned the
2:35 pm
acquisition you made, precision planting. a i want to look at him in a overall by agco. you have made a couple of deals in recent years. kepler, for instance, in 2017. december you in 2016. in 2016.a that grainthink losses after harvest, grain losses have to be tackled. that was the initial reason why we invested in this area. it was not as consolidated is farm equipment. is more acquisition possible. and we also see the need for professional grain logistics, grain drying, grain transportation needs. alsodition to that, we
2:36 pm
invest in, mainly, we call it -- pig and chicken staples. we deliver everything from air-conditioning, climate control, feeding, everything you need in order to make sure that those animals are capped -- are kept as best and good and well as possible. animal welfare. julie: in terms of where you might be expanding, we mentioned africa a couple of times. your company did about 300 million dollars of revenue on that content last year. how do you think that opportunity can grow? the last year,in revenue and africa bubbling more or less every year. factory inhave a ontario where we manufacture
2:37 pm
massive tractors. farms --aining [indiscernible] we have started with one in z ambia. we're looking at another in the french-speaking states in africa. julie: martin, thank you for your time. at the chairman and ceo of agco. haslet: president trump removed anthony scaramucci from his communications room. he was given that role -- in fact, 10 days after he was brought on. rightssident removed previous had replaced him with john kelly. it appears anthony scaramucci has been removed from his position as communications director. julie: the new york times says this was requested by the brand-new chief of staff john
2:38 pm
kelly who replaced rights previous. priebus.ed reince this report by the new york times at this point. let's also check the other headlines at bloomberg first word news with mark crumpton. mark: secretary of state rex tillerson cost china and russia the biggest economic enablers of north korea. this came after kim jong-iun 's regime launched a second to continental ballistic missile in a matter of weeks. the u.s. want to be resolution to the tensions. top american generals discuss a possible military response with their south korean counterparts. jurors are deliberating in the federal security fraud trial of former ceo martin shkreli. they will hear closing arguments, accusing shkreli of looting his own drug company. were no victims
2:39 pm
because everyone got their original investment back and made hefty profits. the guitar crisis is back to square one. the saudi coalition has reinstated a list of 13 demands that must be met before talks to resolve the situation can start. the alliance cut diplomatic and transport links with qatar after charging country backed extremist groups -- [indiscernible] sam shepard is dead. political prize-winning playwright, oscar-nominated actor, and celebrated author died last week at his home in kentucky of complications from lou gehrig's disease. sam shepard was 73. global news 24 hours a day, powered by more than 2700 and --lyst in over 100 countries over 120 countries. i mark crumpton. scarlet: president trump has decided to remove anthony's era that -- anthony scaramucci comes from our quest at his new
2:40 pm
chief of staff john kelly. julie: saying on twitter that he may get another role, a reporter at the new york times says. is out ofcaramucci the role as communications director but still in the mix. julie: for now. scarlet: for now. this is bloomberg. ♪
2:41 pm
2:42 pm
scarlet: we want to recap breaking news. president trump has decided to remove anthony scaramucci has his communications director. this is apparently at the request of john kelly. his new chief of staff will begin today after president made the announcement on friday reince previous was -- reince priebus was leaving. more: it makes it difficult to deny the staff is in turmoil at the white house.
2:43 pm
when you see this kind of turnover. the reason that priebus was leaving was because he was at war with scaramucci. in a twist, scaramucci becomes the latest casualty. scarlet: it's not that scaramucci is out completely at the white house. he has been removed from this particular position. that's bring in kevin who joins us by phone. kevin, this is -- things move quickly in this white house. it highlights bears quite a bit of turmoil. what does this indicate to you about john kelly's level of influence at the white house? kevin: it's a bit too early to .now the back story behind this we should note the new york times reporting what has been a tumultuous -- to put it mildly -- first week for anthony scaramucci.
2:44 pm
that story really spoke for itself. just take a look at the messaging he was discussing. he really seemed to be someone who talked a lot about his own personal drama and not even the political drama. president trump tries to right the ship. mildly, the with thehip they have white house press corps is not good. if the president wants to focus his first week in the job, he did little if anything onall to put the focus himself. julie: who could that person be? before scaramucci came to the role, were there other folks talked about to potentially take
2:45 pm
that on? is there anyone we know that might be close to kelly who could fill that role? there are multiple people that could fill that role. it depends on what type of person he wants to -- president trump wants to put in the briefing room. not cabinet level jobs in the administration. pressot just speaking at conferences, this is someone that is supposed to be behind the messaging of policy. talk abouty to getting tax reform across the finish line, that is a very elaborate messaging strategy. quite frankly, they failed on the health care. and i have not seen, in my reporting experience, any indication that anthony wasamucci was developing -- interested in developing any kind of multifaceted dimensional type of issue. read from the top
2:46 pm
down. lower-level staffers are not empowered to work on policy releases. it really creates a culture of confusion. scarlet: and just to make the point here in terms of why, for a bloomberg audience, this story was particularly interesting. with sky bridge capital, well-known in the hedge fund community, throws a big conference every year in las vegas that draws some of the best-known names in the hedge fund world and on wall street as well. and sort of one of the culture clashes, if you will -- he alluded to the new yorker story which he called a new yorker reporter and unleashed a next lift of against his colleagues in the white house at the time. a lot of the commentary from wall street was, this is how people from wall street talk. kevin: it doesn't make it right.
2:47 pm
julie: not at all. just in terms of culturally where scaramucci came from. it's not like people in washington are clean-mouthed. scarlet: what value does scaramucci add to the president and the west wing? as we look at who his allies are in the west wing, he does not get on with steve bannon given the tirade he gave to the new yorker article. he has talked about, perhaps, his arguments with reince previous -- priebus. what role might he have in the white house? kevin: again, his words speak for themselves. are lookingif you at why president trump hired anthony scaramucci, it was because he represented, at least in the opinion of the administration, someone who understood the messaging, the
2:48 pm
tone, and the rhetoric of the president himself. that he was someone who is not going to be a traditional communications director. in that sense, he was someone who was going to be out there. over the top, eccentric, deliberate in that regard. that theytatic model had with the mainstream media. -- that and static -- that l that theyede had with the mainstream media. if you want to accomplish an agenda, you have to have a multifaceted way to accomplish that agenda. 10 days ofe first sky bridge capital, anthony scaramucci was like -- pathetic is an understatement. , thank: kevin cirilli you for giving perspective.
2:49 pm
kevin on his way back to washington to cover the unfolding story. julie: it will change by the time he gets to washington. in just a few moments, let's discuss the mutual fund price wars. fidelity is trying to beat vanguard at its own game. we will explain. from new york, this is bloomberg. ♪
2:50 pm
2:51 pm
this is bloomberg markets. scarlet: under armour reporting second-quarter results. the stock is getting a healthy boost of optimism from investors, jumping as much as 7.2%. you have been taking a closer look as earnings come out tomorrow. julie: expectations are not terribly good. we are seeing this
2:52 pm
stock climb on the day before the report. the second quarter adjusted loss per share is 6%. it recorded a profit of a penny. scarlet: and this will be the second straight quarterly. julie: revenue is seen climbing 8% to just over $1 billion. is saying in the second half of the year, sales will rise in the mid-teen percentage rate. 46%.rowth rate is but there is wide pessimism the company will have to cut its outlook for the second half of the year. part of that will have to do with what it is seeing competition wise. we see the other shoe makers better and if you take a look at the bloomberg, i have a look at the stocks of under armour versus competitors. under armour is in blue. scarlet: like blue at the bottom. white,you have nike in adidas in yellow, and upuma in purple.
2:53 pm
one of the analysts said the other part of the problem is that the sort of athleisure apparel is going towards lifestyle and not performance. that appears to be part of the challenge for under armour. scarlet: we will wait to see how they do tomorrow. a second straight quarterly loss and the estimates have not been great ahead of time. in the meantime, let's look at mutual funds and etfs. -- the stock and bond index mutual funds and sector etf's have expenses lower than its competitor. let's go to our bloomberg intelligence etf analyst. why are they doing this? it is not helping them in the meantime. they are not helping them shelves -- themselves. getting into playing shape.
2:54 pm
a lot of asset managers are cutting these to get prepared for what will be a low fee or even no thief you chirp. -- no-fee future. you swing out of active into passive, that is double any other start to a year. more than that, the bigger trend is what i call the great cost migration. investors are so cost of access that if you look at mutual funds , you will see a huge rush into products that are zero to 10 basis points. then it goes down to about 40 and then the outflows begin. fidelity is just giving investors what they want. they are utterly and complete cost of test to the point where blackrock has a chart that shows that cost is the first criteria people look at when picking a fund even ahead of exposure. julie: what do we know if whether the strategy will work for fidelity? everyone seems to be lowering
2:55 pm
fees and vanguard attracts most of the money. what will differentiate the etf's from one another? vanguard has something going for it which is the 30 year head start. they have been lowering fees since the 70's. they are known as the low fee provider. it takes a long time to override that. that said, it does work. they have seen flows. it in thety is doing index mutual fund space. it is working because they've taken in $84 billion in the past two years in index funds. that is the biggest growth area infidelity. accountnds basically for 10% of the index visual fun market and they basically attempt to battle vanguard on their own turf. -- people are willing to come in.
2:56 pm
scarlet: the fee wars continue. thank you so much, eric. we have more ahead on breaking president trump has decided to remove anthony scaramucci has decided to remove anthony scaramucci as his communications director according to the new york times. julie: and it comes at the request of his brand-new chief of staff, john kelly. priebus.g reince p a lot of moving parts. it is musical chairs in the white house right now. be talking more about it. from new york, this is bloomberg. ♪
2:57 pm
2:58 pm
2:59 pm
scarlet: breaking news out of washington, the new york times has reported anthony scaramucci has been removed from his new job just 10 days after he joined president trump cost staff.
3:00 pm
-- president trump's staff. here with us in new york is erik schatzker who spoke numerous times with scaramucci. , let's start with you. we need to get a better sense of who he is and what he brought to the table. what he brought to the white house. let's step back a few steps here. a hedgescaramucci was fund guy, new yorker, kind of brash. erik: kind of? [laughter] he's a larger-than-life character and he clearly revels in some of that. let's not forget where he came from. he built a hedge fund business. he founded sky bridge, alternative asset management in 2005. struck a genius deal to take the fund to fund's business out of
3:01 pm
citigroup when citigroup was restructuring. and built a bona fide fund to fund's business when people were giving up on that industry. remember, you are layering fees on top of hedge fund fees. most investors don't like them because if you have two and 20 plus one and 10, you are losing 3%. out was anthony figured there was an audience out there for a fund of funds that could invest with hard-to-reach fund managers. guns like job -- guys like john paulson. raised enough capital to make it relevant for those guys to do business. julie: lots of different little investors. erik: exactly. he built this conference business by identifying the untapped audience which was the high net worth broker. a bunch of guys brought to them from morgan stanley that had
3:02 pm
wealthy families and wealthy individuals as clients. not mega millionaires, but enough to be relevant. grouptively, they were a that people like john paulson wanted to talk to. they would go to the sky bridge alternatives conference. julie: it seems like he briefly found a new audience. is confirminge scaramucci is out as communications director. to bring you in here, marty shaker. there is still a lot we don't know. we heard it was at john kelly's request. it tells us something that when iebus was there, he tried to keep him from getting hired. he was unsuccessful. kelly was successful. >> i guess my advice for anybody that takes a job at the white
3:03 pm
house, don't send your things to the dry cleaners. it is breathtaking how quickly this happened. john kelly was reported to be the one who sought his ouster. he got it. it's clear he wants to establish that he's in charge and it's a great way to do it. there is a certain irony that this was leaked to the new york times in the context of that anthony scaramucci quite famously said he was going to kill the leakers. they apparently killed him. scarlet: part of his colorful language. is john kelly, the chief. formally department of homeland security secretary. at the request of john kelly that anthony scaramucci be removed. seems toe white house be confirming that at this point, saying in a statement that anthony scaramucci will be houseg his role as white communications director and further saying your scaramucci felt it was best to give chief
3:04 pm
of staff john kelly a clean slate and the ability to build his own team. that similar language was to what scaramucci said about sean spicer when spicer left. thelet: he had not left white house yet, he just stepped down from his position. today or tomorrow is sean spicer's final day. to my knowledge, and marty, you can confirm this -- anthony scaramucci was speaking on behalf of the president and functioning in the capacity of white house communications director. but until his firm is sold, he's not a white house of you. marty: that is correct. he was not officially an employee of the white house because he had to get clearances, among other things. national security clearance, if he ever wanted to be involved in
3:05 pm
sensitive information in the context of working with the president. not officially commit occasions director, but that said, the fact that he tendered his resignation sounds a little like spin to me. i think this was clearly kelly's call. he's out. with interesting is if he gets another role or if he is out completely. heard it said that the cardinal mistake or sin to make in the trump white house is to become the center of attention and occupy more airtime than the president himself. based on what i've seen, it could be argued that's what transpired over the last 10 days between anthony scaramucci and the media as opposed to president trump and the media. he had to potential for getting there, for sure. but there were reports that
3:06 pm
trump liked the persona scaramucci put forward even to the extent of the new york magazine comments. erik: you mean the comments in the new yorker. marty: right. julie: he did not get along with steve bannon given his comments to the new yorker. he did not get along with reince ppriebus. marty: the president of the united states is his lone ally. thinkthan that, i don't he had tremendous amount of support within the white house. whether or not people were there or not there. his standing was totally based on the president of the united states's backing. once that was removed, he was removed. scarlet: what value does he
3:07 pm
offer the president? marty: he was on message. he would make public pronouncements in support of donald trump. he was very much in his camp in terms of stopping leaks out of the white house. and donald trump really does like people that are able to, in public, back him and be persuasive. at statingvery good at case before the public the initial press conference. he got high marks with how he dealt with the press. has been successful in business. say what you will about his character and what people perceive about his character, but he built a real business. he has a long track record. ,e has something in his resume a stint at goldman sachs.
3:08 pm
he's are all things that could .e argued are attributes julie: what he talked to us about earlier, president trump had said multiple times and his advisers have said people put him in the white house to shake things up, not be polite and politically correct. quickly here, where does scaramucci go from here? the sale of his firm has not been completed yet. any chance he would go back to doing something like that? erik: it's possible. it's hard to see him going back to sky bridge. we are a little bit mysterious estes who has majority control of the entity buying sky bridge. it is pretty hard to see anthony
3:09 pm
go back to the firm given all that has transpired if the nha deal follows through. he has reinvented himself on more than one occasion. after he left goldman sachs in 1996, he founded a firm with a friend that was subsequently bought by lehman brothers. it was after the sale of lehman brothers. tohas proven the ability reinvent himself in the asset management or investment management business. and if he is -- again, this is hypothetical. if he is bumped out of the white house, i would not be surprised if he did it again. scarlet: he has a knack for reinventing himself. erik schatzker and marty shanker , thank you for joining us on this fast-moving front of the oval office and its members. julie: let's take a break from politics and get you caught up
3:10 pm
on the markets. abigail doolittle has more. abigail: we have the dow as the only average that is trading higher. the s&p 500 slipping between small gains and losses. the dow all day has been higher. the nasdaq pretty decent divergence there. the bank really helping the dow -- tech dragging on the nasdaq. let's take a look at oil. oil recently moved back above the $50 barrel mark. and right now, above it by $.19. it's not clear what behind it from a fundamentals and point. but it is worth noting -- from a fundamental standpoint. is worth noting it is trading in a range between $45 a barrel and $55 a barrel. backas been climbing higher in that range, psychologically important above $50 a barrel. sector, if we hop
3:11 pm
into the bloomberg. the divergence between financial zantac, it's a good way to get a snapshot of what is happening in the s&p 500. right below it, energy up about .5%. on the bottom or near the bottom is technology not in that last thought that near the last spot. take a look at some of the bigger drags for the tech space which is causing, again, the divergence for the nasdaq. here is the s&p 500, down about .5%. the hind this, facebook, alphabet, and apple. wiser to someian degree did talk about the fact that the recent ruling from the ec could be a risk for facebook. the ruling on alphabet. and everybody will be waiting to hear everything about the iphone 8 supercycle.
3:12 pm
will it turn out to be super? we will find out. julie: the biggest company reports earnings tomorrow. we will get a preview and dig deeper into what to expect from apple. numbers and what analysts are watching. from new york, this is bloomberg. ♪
3:13 pm
3:14 pm
julie: we have breaking news that the u.s. has sanctioned venezuela's resident. nicolas maduro making this announcement here. he is being personally sanctioned by the united states. the vote sunday that was a step toward rewriting that country's constitution.
3:15 pm
there has been widespread unrest in venezuela following the vote. and also leading up to the vote. this is an unusual move against a foreign leader. it freezes many of them at a maduro'ssets - - of assets. by the u.s.made treasury today. the assembly that was chosen sunday will meet us in is this week to discuss changing the charter that was rewritten already under former socialist leader hugo chavez. a lot of moving parts going on in venezuela. by the u.s.ioned treasury. we will bring you any more detail that we do get. back to the corporate world. apple is trading down ahead of third-quarter earnings scheduled for release tomorrow after the markets. analysts expecting a cautious outlook due to potential delays to the new iphone introduction. joining us is bloomberg
3:16 pm
intelligence analyst john butler. and in san francisco, we have alex webb. john, when we look at the quarter, are there highlights from it? we focusing our attention forward? john: the focus is forward right now, julie. apple iss because making that transition from a pure hardware business to a balance business of hardware and software. know, when they report the quarter, i will be looking hard this he how businesses did and how they are doing there. i will be looking for any commentary on the upcoming iphone cycle. you alluded to the potential for delays. i doubt they will comment on it. scarlet: it doesn't matter as much as next quarter and what it
3:17 pm
says for the iphone. the most of everything because the iphone makes up two thirds of apple sales. what do we know about the likely release date of the next iphone? iphone 8? we are talking about delays until when? october, november? alex: there will be three new iphones. an upgrade to the two current phones we have. the iphone 7 will become the will be 7s the 7 plus plus. the one likely to be delayed will have a different screen technology and there is a constraint on that supply chain. toy don't have enough oled bring out all the phones they need on launch day. there will be phones in stores on that day in mid to late september when they typically introduce the next iphone. but there will be not enough demand -- not enough for demand.
3:18 pm
interesting super is the forecast they give for the next three months. quarter, theurth three months at the end of september. usually there is a boost to that number because the iphone is introduced and it may not be as substantial a boost this time. they are expecting sales to back load it. i can't help but get philosophical when we talk about apple. existentially, what is apple at this oink? it is trying to diversify its revenue to some extent, but it still gets most of the revenue from the iphone. how much will it be able to get away from it and tethered to these expectations every product cycle? john: it is an evolution, not a revolution. the iphone dominates sales.
3:19 pm
it is 65% of revenue, and a higher percentage of profits. it is a huge company and a huge line of business. to not work it down over time, but work other parts up and have that decrease as a percentage of total sales will take time. i said, lies and services which includes icloud, apple music, apple pay, home kit, and many others. the app store is growing beautifully. we have no problems there. it is only a matter of time to get that up. where we were a year ago, i think it is a very doable forecast. i think we can make that. julie: evolution, not a revolution. butlerbb and john
3:20 pm
joining us. apple will be reporting after the bell tomorrow. we have breaking news, the u.s. has sanctioned venezuela's president nicolas maduro. crooks of bloomberg news joins us from miami. talk to us about how this is a personal sanctioned by the theed dates against venezuelan president and what it means for his assets and anyone that has dealings with the president. nathan: this literally just across the wire a couple minutes ago so this is an individual sanctioned versus what a lot of people had been speculating, the possibility of water economic sanctions. to the list ofd specially designated nationals that freezes any assets he might have in the u.s. orprevents u.s. persons anyone under the jurisdiction of the u.s. from dealing with him. is a big deal to sanctioned the president of another country. so far, we have not seen any
3:21 pm
broader economic sanctions against venezuelan sectors. it had people worried about the rising default possibility, for example. scarlet: and this move to sanction the venezuelan president comes after the president began taking a step toward rewriting his country's constitution. did he rewrite the constitution in a way that venezuela would be a dictatorship? nathan: that is a word people are starting to ask? . most people you talk to are definitely worried about the definite swing towards authoritarianism. what they did yesterday was held an election to elect delegates to a constitutional assembly. we will see that convening in a couple of days. we don't know yet what they want to put in this new constitution. if you look at the election
3:22 pm
yesterday, the opposition did not participate. there was no way the government wasn't going to win because only maduro supporters were on the ballot. retaliate, ifs he at all? does he use oil as his form of retaliation? anyone who watches venezuelan knows they are very short on cash. the u.s. market was pretty much the only place where venezuela was getting hard cash right now. , there's not a lot he can do to retaliate. he has not spoken yet today. we will wait and see what he says. , whenstance, last week they sanctioned 13 of his close allies, that night, he brought them up and gave them all swords. the people who were sanctioned last week were celebrated as a badge of honor. i am sure we will hear him
3:23 pm
speaking today and it is pretty much guaranteed. scarlet: lots of pageantry to be expected. let's get you to some options insight with julie hyman. julie: joining me is jim from in km holdings, talking about a big mover today. shareholder lockup expiration happened and the stock is falling. next analyst commentary from otr global, for example. havee analysts at mkm looked at the stock, the sentiment seems to be quite negative. are they as negative? jim: we don't cover the stock fundamentally but our analysts cover the internet sector. at 17, traded up to 27. found its way to 13 and then. -- 13 since then.
3:24 pm
traded down 21%. that is typical for internet companies where they tend to trade very poorly after that. we were here months ago based on rob's work because what typically happened like linkedin, facebook, twitter, those traded down 24% in the months leading up to the first major post-ipo lockup expiration. which is essentially today. and snap is down 24% over that same period. fundamentally, we don't have a view. but we still have a view that what we expect to see from the lockup has probably already transpired. and keep in mind, the consensus price target is up at $20. 50% higher. julie: you mentioned linkedin, twitter, facebook. goingly did they fall
3:25 pm
into the expiration, but they went up coming out of the expiration. jim: and that's exactly why we are talking about it. all three of those bottomed in the week following the post-ipo lockup. a week from today, theoretically as cap follows suit -- as snap follows suit. mind, they report earnings, the second quarter on august 10. noie: past performance is guarantee of future results. how do you structure the straight? volatility is incredibly high. august expiration up in the 90's. spot vix around 11. it --le of ways to go out to go about it. one trade we like is going out to september. this is purely speculative. buying a 15 strike call out right. but we are okgh,
3:26 pm
with that given the potential move. something else you can do as well is turn around and sell and 11 nine -- sell an 11-9 put spread. buy the 11, by the nine -- the nine. julie: we will see if snap goes the way of its other competitors. scarlet? after 10 days on the job, anthony scaramucci is out as president trump lost communications director. -- president trump's communications director. we will bring you the latest. from new york, this is bloomberg. ♪ ♪
3:27 pm
3:28 pm
track your pack. set a curfew, or two. make dinner-time device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. introducing xfinity xfi.
3:29 pm
amazing speed, coverage and control. change the way you wifi. xfinity. the future of awesome. mark: it's time now for first word news. there's been reporting, another shakeup in the white house. anthony scaramucci has been removed from his job as
3:30 pm
communications director 10 days after he joined president trump's staff. mr. scaramucci felt it was best to give chief of staff john kelly a clean slate and the ability to build his own team. we will have full coverage in a few moments when we are joined from washington blithe -- by bloomberg's margaret tolliver. imposed sanctions directly on venezuelan president nicolas maduro after the vote sunday was a step toward rewriting venezuela's constitution. in an unusual move against a foreign leader, the treasury department designation freezes president maduro's assets and prevents u.s. persons from dealing with him. trump won't carry out his threat to use force against north korea. china called for restraint after the north korean regime testfired an intercontinental ballistic missile for the second time in a matter of weeks. the south american general called

18 Views

info Stream Only

Uploaded by TV Archive on