tv Bloomberg Markets Bloomberg May 19, 2015 3:00pm-4:01pm EDT
defective. we will talk to senator blumenthal about one of the biggest recalls ever. >> u.s. data showing a surge in housing starts. is this strong enough to lift the world's largest economy? let's we will count to down to the closing bell and the latest results from -- >> we will count you down to the closing bell and the latest results from at seat -- betsy -- etsy. ♪ >> good afternoon. i'm alix steel, here with scarlet fu. u.s. stocks, s&p 500 and dow jones, touching new record highs in terms of the closing levels, but there you can see that we have come off the levels a little bit, energy stocks of it higher. let'st: let's -- alix: call a spade a spade, that's a
boring board. we do have to look of the dollar moving higher throughout the day and part of that story was the weaker euro that we saw due to the fact that we had an ecb executive coming out saying that they would start frontloading purchases in may and june and the markets reacted to that on a weaker currency. of course, you are looking at my face? oil prices are lower. yes, there is a stronger dollar, but also a call from goldman sachs, a sense of a continuing surplus sending oil prices back down by october. aix: talking about self-defeating rally. the more they rally the more the crew keeps on trucking, meaning we will have an oversupply capacity. let's go to julie hyman with news on john malone. -- johnohn maloof malone is making comments in a phone interview about his company, liberty global and vodafone. there has been rising speculation that there could be
some sort of tie up between the companies after liberty global bought a company in belgium last month. malone says that liberty and vodafone make what he called a great fit in west europe and that the liberty global strategic review is under way, specifically saying that there is a great fit between vodafone and liberty in the netherlands, u.k. and germany, saying that he sees discovery teaming up for more takeovers with deal potential in mexico, colombia, and brazil and that he is interested in buying some sort of mobile network in the netherlands. looks like they are looking both to europe and to latin america to seek deals. malone has of course been a dealmaker and if you look at how the shares are reacting we have seen a spike in shares trading higher right now by 8/10 of 1% as he makes these comments, apparently in a telephone interview it looks like with a bloomberg news reporter. we will keep you posted on any
more headlines that come from the call. m&a of course continues in the media industry. caught a, reaching an agreement with u.s. regulators, the japanese company was use the failing to cooperate with an investigation into faulty airbags. the department of transportation will announce a fine and reveal possible causes of defects, at least 28 million cars have been recalled as of may 28 of this year, they have lost millions because of these airbags that have been linked to at least six debts. the debt crisis is proposing political problems for angela merkel, seeking support for a bailout deal with up to one third of her parties lawmakers not liking the idea. angela merkel likes the idea of keeping greece in the euro and is meeting privately with lawmakers hoping that they will see it her way. home construction stumbled, but they are finding their way now, they are at the
highest in seven years, the increase of 20% was the biggest in 24 years, revived by a stronger job market mortgage rates near record lows. americans boosted earnings to the biggest home-improvement chain, home depot beating estimates, helped by the continued rise of housing prices and the earlier arrival of home -- of warm weather. i'm also assuming that homes are pretty busted after that terrible winter. shares ofcarlet: walmart trading lower today, posting a first-quarter profit the beat analyst estimates. it has hurt their earnings overseas. the company is dealing with a broader shift in how consumers spend their money. still, douglas millon says they are making big strides when it comes to e-commerce. douglas: we are investing in the future of retail and i am excited about the process -- the improvedties that
capabilities provide. we are making progress on the toile technology platform make this technology easier for customers. scarlet: walmart has warned customers that they will be changing their inventory over the next couple of years. same storeaying that sales -- same-store sales climbed, no doubt my mother helped with that. the pairing accepted earnings per share in the second quarter falling for censure -- short. they fallen 2% since the start of the year. hillary clinton going big on small business, the democratic presidential candidate made her intentions clear, to be known as the president who looks out for small business owners. -- hillaryt to be clinton: i want to be a small business president. a president who makes it easier to start and run a small business in america so that it
seems less like a gamble and more like an opportunity. we should be doing more to fully support the regulations from. frank on the big banks, but should pass common sense community banking reform right now. the controversy over e-mails could spill into the election, the government proposed releasing 55,000 pages of her e-mails in january coming in response to a request from vice news. she used her private e-mail for official of visits at the state department. owner ofrobert kraft, the new england patriots, is excepting the punishment handed down around deflategate. >> i don't want to continue the rhetoric that has gone on for the last four.
im going to except, reluctantly, and nothas given to us continue this dialogue and rhetoric. and we will not appeal. lost two patriots draft picks. tom brady has already appealed his suspension, no word yet on whether his appeal is affected. alix: kfc, trying to update their image by bringing back there founder, colonel sanders. he's been dead for more than three decades, so kfc will have darrell hammond portray him in a new set of ads on tv and social media. kind of looks like him. i could see it. scarlet: i think that's the point. alix: does it make you want to buy more chicken? scarlet: are they going to make it clear that this is a role? or that he is actually colonel sanders? alix: like the progressive woman? scarlet: the one who is talking
over time? alix: flow. scarlet: thank you. as you just heard, hillary clinton spoke to the press of the first time in a month. we will tell you why facing reporters will not make her e-mail troubles go away anytime soon. alix: the newest on a mini in manhattan is ready to open it yours to buyers, we will be taking you inside the building that has apartment prices starting at 3 million. we discussed one oil pipeline billionaire who is very happy that the price of oil has crashed over the past year. going back to one of our top stories with housing and the data that points to a strong u.s. market, residential construction surging by 20% last month to a seven-year high. scarlet: the cio of global credit spoke with olivia sterns and pimm fox to explain why he has been bullish. >> i think that it strong. the fact is that housing starts 15% and the to
overall economy has grown at only 4%. we have record low inventories at 14 year lows. we have added 2.9 million jobs in the last year. you have got one million more job openings. importantly that 25-year-old to has addedd cohort almost 800,000 jobs, the strongest in 15 years. there is significant pent-up demand and we are still bullish after having been bullish for the last three years. give us more detail on why you think the housing market is strong? if you look at new construction plus spending on furnishings and furniture, from 5% of gdp today, 2007-- go back to 2006 in it made up almost double that amount. so, how is the housing market strong by comparison?
we are: -- alix: basically -- >> we are basically cyclically correcting and you can get strong growth rates. the fact is that if we go from 1.1 million housing starts to what we think will be 1.5 million three years from now, that's still growing at a 10% growth rate in an economy that's only growing at 4% or 5%. that housing has been a strong contributor to the economy and will continue to be a strong contributor over the next few years. >> where are we on household formation? big real estate investors are telling us that lower household ownership rates are the new normal, millennial's are just never going to be able to find a house, they don't want to leave their parents basement, who knows, either way and lower homeownership is the new normal, what is your take? -- >> we would be more
optimistic. 31.5% of the cohort in that group is living with their parents. the typical rate is 27%. you basically got an unemployment rate that has been coming down 1% per year, it's now 5.4%. you have got 4.7 million homeowners who were foreclosed on who lost their homes after a seven-year cure, those homebuyers will be coming back into this market. pent-upere is a lot of demand, which is why this thing has leg in terms of the growth rate going forward. >> how can people, investors, make money on the call? what should they buy? been overweight on non-agency mortgages and sectors like building materials, home improvement, home builders, banks, financials that benefit from refinancing mortgage insurance, which benefits on refi and new purchases.
basically housing and housing related sectors should continue to outperform over the next several years simply because we have still got significant growth even today. pimco's ciot was for global credit. alix: coming up, hillary clinton finally seeks to reporters on a trade deal, but she has more problems coming up with state department e-mails. scarlet: that's not going to go away, is it? alix: we are going to find out. ♪
looks like we are not going to close at a record unless there is a last turnaround area have already seen a couple of turnarounds today, but the dow jones and s&p did touch intraday records today. here is the balancing act we have been playing all day when it comes to the s&p 500. on the one hand, financials, on the other, energy stocks. right now energy stocks are winning out, down as a group trading in at a one-month low with the financial index at its highest level of 2015, moving higher along with rates today, along with treasury yields. if you take a look at the individual movers moving lower along with oil prices for the fifth straight session, comical phillips is having its worst day in about a week, but nonetheless a pretty heavy week. chevron, down for the third day in a rope, we have seen that slide in oil prices. also in terms of individual twors, take a look at take
interactive, impressive performance, it's best day in seven years, trading at its highest in three months. the company came out with earnings and particularly saw success related not just a grand theft auto, but also a new game called it evolved released in february. interesting twist, if you ordered it digitally you would get further along in the game than if you ordered it on this -- disk. this is part of their efforts to migrate their customers to being digital customers, which seems to be working. scarlet: all right, sounds good, julie. crossing theries terminal at this hour, the supreme court has added protection for those investing in 401(k) plans. they ruled unanimously that plan administrators must continue to get rid of investments that were considered imprudent. investors say that the company violated their fiduciary duties by purchasing retail mutual
less sets ofeir alternatives. scarlet: standard chartered bay -- bank is one of 11 competition , including barclays and j.p. morgan chase, they will all plead guilty in britain formative good in currency markets. foreign exchange price rigging has been under investigation globally for two years. scarlet: federal regulators -- alix: federal regulators are being pursued by the consumer financial protection bureau, accusing them of signing up customers for illegal products. if a federal judge approves, paypal would be fun $15 million to customers and pay a $10 million fine. those are your top headlines. hillary clinton finally speaks, she did a q&a today in cedar falls, iowa, of all places, where she's trying to picture yourself as an advocate
for small business. she cannot dodge the topic of trade forever, here she is answering a question on the transpacific partnership area -- partnership. hillary clinton: i tried to make the valuation depending upon what i thought they would produce. that is what i'm waiting to see. scarlet: she hedges and she hedges again. >> sounds like she is dodging pretty good. scarlet: she could stretch it out into 30 seconds. >> she wants this to take as long as possible, she has no interest in coming down on one side or the other. she and her husband have been historically big advocates of free trade, on the other hand a big part of the democratic party , most vocally led by elizabeth warren, that does not like this trade agreement and she does not want to have to take a side
until she has to. is there a lose lose at the end of the day? >> it's not a lose lose. one side will be happy with what she decides, the other side will be less happy, but the result is the chance that the agreement won't pass and she doesn't have to take a position ever. was she a voice in nafta being passed? in 1993s pretty busy working on health care reform, but she and her husband have been pretty staunch free traders throughout their lives. she was a supporter then and i think she would probably say that there are some things about it that turned out to not work out as well as she would have hoped, but that in the long run she thinks it is a good thing. that a federal judge ruled clinton state department e-mails on the page basis,
she is asking for it to be done quickly. i what point will this be laid to rest? quite that is the question. at one point yesterday they said they would not be seeing those e-mails until january of next year in the federal judge said that instead of releasing them in a bulk package you have to do it on a route -- rolling basis. a different thing from one of the things they were concerned about, which was this private server and the choice about which ones to consider personal. most of the controversy is around the ones that she destroyed. what is in those e-mails? we don't know. out,she wants them to come presumably these were part of the business and that she is still on relatively safe political ground on this. her point of view sure she would , butit sooner over later this is out of her hands at this point. scarlet: she does not want this to dominate everything.
>> if the e-mails have nothing politically damaging in them, i don't particularly think she cares when they come out. the truth is that when they come out if they are not politically damaging she will be able to say -- look, these are completely fine. we are going to talk but hillary clinton today on "all due respect" a lot. scarlet: five more than the day before. >> and for the last. -- last month. ,carlet: coming up, etsy investors are looking for topline growth. are you going to get a new hat? ♪
first-quarter earnings reports and going public, they are expected to break even in the first order. for more scarlet and i are mostd by alec, the important data point that the will be watching? >> they want to see the sales are still expanding. they are going to use their funds to push market and try to get into other markets, so we will hopefully see if those funds actually go to good use if they got their hands on them in april. the number two thing they will be watching will be the bottom line. last year they had about 15 million in losses and some investors will probably start to question if in that year you 1.9 billion dollars change hands, why isn't more of that hitting the bottom line? scarlet: how patient are these investors going to be? group therevestor is very interesting. it's a benefit corporation that
prides itself on maintaining good relations with their employees, the community, and as a company. they have a social mission. alix: what is going to be the catalyst for any real growth? the stock has not done much since the initial spike on the road to nowhere. is really- alex: etsy big in the u.s. and if they can expand into other markets and kind of convince more consumers goodshis hand artisan market is something that they need to buy into, that is really where they are looking for growth right now. is there still discussion of someone taking over? alex: that is always buzzing around. you have big players in the area.
looking to expand their portfolio. but the catalyst for that will come in around whether they get to keep the corporation status. within two years they have to have 90% of the shareholders ok it. if that happens there are implications for whether a takeover can go through. if it is going to happen it might happen before it is up for a vote. thank you so much for joining us for the preview on etsy. and i am taking off. alex: richard blumenthal -- alix: richard blumenthal will be coming to us, we will be discussing it coming up next. ♪
headlines this afternoon. or the first time since 1960, great britain's installation below zero.llen belowion is so far targets. it is under pressure to raise the benchmark interest rate. and a weaker second quarter predicted. were moreer-share than forecast. they are expected to fall at least four cents sure. texas may towns in not ban fracking. abbottcan governor greg signed the bill, saying that he was protecting private property rights from "the heavy hands of regulation."
that was a quote. and the summer of 2015 could be a busy one for travelers. aaa, the most in 10 years.ravel that includes trips by car, air, train, and bus for the 21st through the 25th. and those are your top headlines. out pointing to a shrinking u.s. housing market. also painted a promising picture, delivering another strong quarter. so, what does this say about the health of the u.s. housing market? we are joined by the chief economist at redfin. thanks for joining us. guest: hi, alix.
wouldwhat is one word you use to categorize the housing market in the u.s.? a great question. demand. what we are seeing is historic demand at all price points. the problem is, not everyone is buy or have the financing to buy. as good as things are, it will not be enough to turn the corner. such ahat about, it was bad winter of course there are no housing starts? nela: i think the numbers are significant. theink busting above million dollar mark is significant. we have to remember, housing starts have ranged from one million to 2 million. with all of the inventory out there, we are still at a low
point. 2006, you're looking at 1.8. it's important to keep these numbers in context. the demand in terms of houses? are seeing a shift, not just with buyers, but with builders. people do not want the huge mcmansions that characterized the housing bomb 10 years ago. they want urban amenities. to builders are starting target these close to the city, restaurants, bars. that is where the new buyers are. alix: one negative when you look investment --ial what is the potential to be addressed on the housing market? nela: we have seen this kind of conflation between the residential and the commercial side.
.hese condos are now huge this is beyond a trend. you will see a bump in the road. this is a very bumpy market. you will see more and more commercial and residential investment. alix: interesting to good to talk to you, nela richardson. announcing the recall will expand. that should be good news. senator richard and blumenthal has been its most local critic. senator blumenthal joins our own peter cook right now. peter? peter: i am joined by senator blumenthal hearing connecticut. he has been keeping track of these issues. first of all, senator, thanks for your time. your reaction for the word that nhtsa has reached an
agreement with takata? senator blumenthal: the right step. it's the right thing to do. i would like to see criminal penalties. is a very sound and significant message for the isustry that safety important. peter: you and others pushed the hump any. -- the company. senator blumenthal: we pushed from the very first, that there should be -- when there were safety problems, that there should be a national recall. that there should be an adjustment to the driver side, but also the passenger side. nationwide.
has done that nhtsa what is so important and critical for the safety of passengers around the world. we have takata trying to initiate these replacement kids around the --ntry in some 34 million replacement kits around the country in some 34 million vehicles. could they be installing defective replacements? senator blumenthal: i hope that they are replacing the replacement kits and feeding the results of the tests that were done. part of the reason i am so angry thinky had good reason to that there were defects in these airbags long before this recall. takata has failed to operate. they have resisted from the outset and that has hampered nht
tablet.otecting the that is why i would favor some sort of criminal sanction, changing the law, which i am looking at doing with my , criminal sanctions, and right now, i hope that the justice department will investigate. i think an investigation is well takata's here due to cover-up, concealment. of a: you are not aware justice department investigation at this point? i'm a formernthal: united states attorney as well as attorney general for our state. annow that there is investigation ongoing, but i'm calling for a federal, comprehensive investigation, assuming the justice department believes, as i do, that there is more to this potential criminal violation. this recall could be the
biggest recall in america, in history.products we have seen automakers dealing with a number of other issues. do you see them turning a corner and how they deal with these issues? thetor blumenthal: combination of these recently revealed, very horrific and and otherdeaths consequences -- injury, life-changing, transforming them -- ought to be a turning point for this industry. i think is the combination that should culminate in a greater attention to honest, fair dealing. we know they are defective. defectr up and conceal a is absolutely re--- reprehensible. the maximum fine that
takata could pay is $35 million. the administration could boost that to 300 million dollars. you think there's bipartisan support in congress to make that change? senator blumenthal: i think their support not only to raise that, but remove it entirely. this penalty is too small for a company the size of takata or g.m. and we should make sure the -- right now it is a pittance. $30 million. $300 million is still too low. sense of you have any where that legislation could be headed in this congress? senator blumenthal: i would hope there would be strong support for it. i see a real change, ace the change in attitude -- a sea change in attitude in this combination. just gm,takata, not
but a record number of recalls. peter: senator blumenthal, thank you very much. appreciate it very much. the latest on takata. back to you in new york. alix: thank you so much, peter. thank you so much to senator richard blumenthal of connecticut. coming up -- protecting data. emily chang has a full report coming up next. ♪
bell. more breaking news. grinding on a road to nowhere today is what we have been doing. good description of what we have been seeing. for some of the day we have been higher. the s&p, the doubt, the nasdaq, all trading lower now. targetsseen these because of oil prices partly. we will get to that in a second. if you take a look at what is going on in the bond market today, you can see the data we got in the housing market, the best month over month gain in housing starts in about seven years time. though there is certain in decision in the stock market. on one hand, yet a, good economic news. on the other hand -- boom.
rates. if you look at the dollar, the dollars moving higher and the oil market -- as the dollar moves higher, oil is moving lower. we have seen these moves in the oil market and it is falling to a one-month low. alix. alix: thanks so much, julie hyman. now for a look at the top stories making headlines this hour -- the standoff over greece extremely serious for europe. that comes from nobel prize-winning economist joseph stiglitz. the eurozone is on the edge of a greek exit. >> germany and the rest refuses to change the program -- i think there is no alternative. greekjoseph stiglitz is a exit from the eurozone would lead to instability. the world spends
more than $5 billion a year to subsidize. those subsidies are the result of environmental damage from fossil fuels. countryers say that no imposes meaningful taxes on its own consumption. and the forces with star wars creator george lucas. fortunately, so are the disney heirs. he has made a 2.2 billion dollar gotit on the stock that he in exchange for the rights to be star wars franchise. the next star wars sequel comes in december. all right, those are your top headlines. and facebook are teaming up to push present obama to reject any proposal that will give law enforcement the ability to hack devices.
for more i am joined by bloomberg west anchor emily chang who joins us from san francisco. emily, what is really at stake for companies like apple and google? all, by the of nature of having a backdoor, the government is asking for companies like apple and google to weekend their income should in -- there in correction technology with home abilities the government could exploit. they say, look, there is no magic key we could give the government that would allow them to get in, but would not prevent other hackers from getting in. so, all of the big tech linkedin, apple, yahoo!, microsoft, all of them have signed a letter to tosident obama to ask him kill any government action that would force them to have a backdoor. omission --ng amazon is not on it.
theyf you will remember, were quite critical about amazon's encryption technology. we will be talking on bloomberg west about someone who signed the letter. that security expert talk about these different things and how they play out. in your research, is there a compromise that can be found here? the idea of having these backdoors into their he is not a terrible one. are saying,ompanies look, we want to make our devices as secure as possible. why shouldn't we? on the other hand, privacy is important. but protecting people is important, too. i think it will be interesting to see if common ground can be reached. but certainly from a policy perspective, these companies are going to have to do with the government says at the end of the day.
if they do not want to hand over this information and are required to, then certainly they are going to have to do that. but it is interesting to me, al ix, that this is very far from over and you have these companies during their weight behind this letter. we will have to see the impact the letter will have. alix: they can keep their business overseas, making other countries look twice at that. 4:30 eastern. ♪
alix: welcome back to bloomberg market day. i am alix steel. we're looking at yahoo! shares, trending lower through the session. for a look at why shares are up 3%, we want to bring in julie hyman. what is going on? your guess is as good as mine. we've been trying to figure this out. we saw this sharp movement downward. the company's chief information
officer is leaving after less job.a year on the that information cross at 3:00 and the shares just started falling in the last five minutes or so. again, those headlines across before the stock went falling. we will keep digging into it. we wanted to bring it to your attention we are seeing such a sharp move, al.ixix. alix: yes. now we will turn our attention thing dragging on the economy, and that is oil. plansmpany and announcing last june to build 1100 pipelines that would come from texas through in illinois terminal to the gulf coast. project inted to the
gain support with rivals pulling back on their own projects. the company now stands out among the competition. they have only had slight gains over the year. but energy transfer has accrued more than $3 billion in cash over the last year. chairman and ceo kelsie moran has seen his net worth rise more than evan billion dollars. , brian gurley, and to joins us now from chicago. brian, thank you for joining us. alix. thanks, --x: who is kelsie moran kelcy warren? a guy a lot of people have not heard about. he started energy partners in the early 2000's, and it was a
$6 billion company. now it's about $55 billion. he has done this largely by jumping into opportunities for acquisitions. looking for bargains in companies that may not be doing as well as other companies. talk about the significance of him committing to building this massive pipeline where his competition is falling by the wayside. timing.art of it was he just got lucky. his company, his partnership decided last year to go out and try to get enough suppliers to agree to put their oil in that pipeline. when you do an agreement, whether you put the oil in there or not, you have to did. they got enough commitments to commit to building this 1100 mile pipeline that will go down through illinois into the gulf
coast. and the keystone xl pipeline which does not look so great at warren'st -- kelcy pipeline might be the only one that goes to the gulf coast. part of it was just luck. they got in there before their competitors. there are in a pretty good position -- they are in a pretty good position now. alix: what is a risk here that could really upset this company? bryan: well, this kind of company, like a lot of hype companies, is called a master limited -- pipe companies is called a master limited partnership. it's too complicated to get into in a short broadcast. you have to grow constantly or you die. you do this through acquisitions, which you can only do so long, and you do it for organic growth. if the price of oil stays low for an extended time and the demand ofthe
pipelines falls off, it will be at risk. alix: we have seen a reversal in some of these mlp's. reversal of the theme we have seen. is there anything to this? bryan: i think at the moment -- warren will consider all options thinks it will affect to shareholders. at the moment, i do not see them pulling one of those deals. right now it is a collection of four mlp's roughly controlled by kelcy warren and his board. alix: we've got to leave it there. the closest coming up next. ♪
you are looking at markets closing. the dow is up by 1750. the nasdaq is the weaker index of the day. they are waiting on the s&p. and you have oil prices sliding. material prices weighing on the s&p as well. what gives with these bargains today? i'm going to bring in lisa abramowicz, jeremy hill. it seems like the big data that permanentoday was housing starts, 20% unemployment -- 20%, unemployment at