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tv   Bloomberg Markets  Bloomberg  June 23, 2015 10:00am-11:01am EDT

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the highest levels in six years at we will find out if new homes are selling at a similarly fast -- matt: how long greece's creditors say they have to reach a bailout deal. everyone seems more optimistic today than they have been in months. some good will come out of this. betty: we are looking at why so many food companies are using healthier ingredients. ♪ betty: good morning. i'm betty liu. matt: i am matt miller joining her today. data is outeres julie hyman is in the newsroom with the headlines. julie: we are seeing an increase
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in the new home sales, the highest levels since february 2008. indeed a milestone similar to what we saw for existing home sales yesterday, the highest level in seven years. to 2.2%, 546,000 eat all of the forecast in our survey of economists spirit i it is thephasize biggest advance as well since february of 2008. februaryaw a reading through april higher. all of these point to good science for housing. also, the fact that mortgage rates have been picking up. on a 30ee them reach year mortgage rate, we saw them reach 4% over the past several weeks, the first time we have seen that in about eight months. we have been seeing that and you tend to see an increase in home
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sales as well as people try to increase inan rates. it could potentially be a factor here. you know all the other factors we have seen, an increase in wages, all of that in theory would be supportive of these stronger home sales. betty: thank you so much, julie. stocks rightook at now. big gains in china overnight. slightly smaller gains in europe and they worked their way down to no games in the nasdaq here in the u.s. the s&p is up and the dow jones industrial average is up 48 points, averages to 18,168. betty: on mark's are watching what is going on in greece and also what the fed will do. you are seeing yields, just a bit.
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yield 2.1% right now. matt: let's look at what is making news on a bloomberg terminal this morning. a demand for american-made manufactured goods stabilizing. in may for just the second time this year, booking for nonmilitary capital goods other than air rates. we're up .4%. if you throw airplanes back in, durable goods orders fell because the aircraft orders are such a volatile category that we usually leave them out. betty: greece is finally getting serious about trading economic reforms for more bailout money but there is still a lot of work to do and not much time to do it all. hans nichols is in brussels with the latest. the clock is ticking. will they pull it off? hans: everyone here in brussels
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seems pretty positive that the deal they are working on have a chance to get a rough . i stress a chance because there are still several hurdles. perhaps more importantly, what would happen in the greek armament. we have seen a variety of comments from greek politicians talking about potentially posing the bailout package is people currently understand it. an extension of the current package still needs to go through a couple of steps. that the to make sure mass actually works, that it will allow greece to hit the target in terms of a primary budget surplus. it is not just about the end of the program. it is about the means. how will greece actually get there. will they increase 13 to 20% on food items #what will they do with pension reforms. it is these specifics making sure the numbers are getting there. later on wednesday night, we will have financing gathered
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here in brussels again. it is likely on thursday to be agreed to by the entire in union. this is where they would agree with it. and they have to go to aslan and berlin. a potential liquidity crisis. bloomberg news reported 7 billion euros have flown out of greece since the beginning of june parity you look at those emergency liquidity increases of a deep on increasing them. they did the fourth one this morning, the fourth in six days. the iraq -- irish finance ministers says you can expect the ecb will turn off the emergency liquidity system. matt: there are obviously one million hoops to still jump through. assuming that all goes perfectly, they still will not have enough time to unlock funds to greece by the end of the
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month to pay the imf. christine lagarde said there would be no grace this time. what does that mean? imaginationure of to find some way. if they have an agreement to pass the parliament in athens and berlin by the 30th, i expect they will figure out a way or another to get the 1.5 billion to the imf. one option, the ecb could lift the limit the greek central-bank can offer. you can do it by shifting over some short-term funds like that. there are a variety of ways to do it. if there is a political agreement in athens in berlin, and some of the other national parliaments, i would not get hung up on how they will actually physically transfer the matt: they will probably take anything from greece.
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betty: at this point, they are looking for every option. thank you so much, hans nichols, our international correspondent. a deal, $2.5 billion. severalr has moved hundred million dollars in debt. expected to close in the first quarter. capital safety, it was acquired for $1.1 billion in 2012. matt: blackberry and smartphone sales fell last quarter. john is betting the company passes future will no longer be the smartphones that they once were. and customers are helping them make that decision. blackberry council and selling oftware, as well as a ton software for the auto industry. almost every major manufacturer, uses this software. we will speak live with john in the noon hour of the bloomberg
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market day in an interview you do not want to miss it also, the owner of the olive garden will split off more than 430 authorities. it will then be publicly traded. selling about 75 restaurants on separate deals here more than 30 have are even sold or are under contract. proceeds from the real estate retireould help him about $1 million in debt. chances are about 50-50 the u.s. economy will improve enough for the federal reserve to raise rates in september tear the forecast assumes stronger roof that in the first half of the year. a greater basis in confidence inflation. returning to 2%. those are your top stories this morning. matt: coming up in the next hour, there has not been a lot of frantic deals on wall street this year. the s&p 500 has not posted a gain or a lost of 2% since
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september. we look at why volatility has been so low. abidjan's joins the list of food companies trying to limit a artificial ingredients. it will cost a piece of chain hundreds of millions of dollars but they're are willing to do it to get a better product to you. those stories and more are coming up on bloomberg market day. back to greece. creditors say the country is finally getting serious about reform. the two sides need to reach a deal by tomorrow. you and primates or agrees to his creditor terms, he will still have to sell it to lawmakers, some of whom are willing to risk to fall to avoid austerity. betty: headaches are not over for greece by any means in the eurozone. in london, the chief european economist, as we were listening to the international correspondent hans nichols, he knows this has to pass muster for two sets of lawmakers. the german parliament but more important the greek parliament.
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how do you think both will react to a deal? >> not very well. but i think in the greek bond limit, there is probably a majority agreement. we know about the specifics of the agreement. cities will not support the package. however, two opposition packages, he might be willing to support. in terms of the german parliament, i think if the in broad is credible outlines, angela merkel will probably he able to get the german parliament to spot it. i am more worried about what comes after this one if things work out. greece will need additional funding. at that point, i think the cost
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to european countries will be higher and the german parliament may have problems with that. matt: surely they know this already. if they have right here research reports, they have seen others and they realize they are setting greece up for another fall. will there be some kind of provision for that? is it all part of the plan, or do they not look far out or care to? thinky probably do, but i we are in the realm of hypothesis in terms of how much will be needed and for how long. i think for politicians, the key thing is to preserve the unity of the union. they are very concerned about greece falling into a political situation, perhaps been folding under the influence of russia. explains why they are willing to continue these negotiations for months. eddie: you raise a good point.
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it raises the question that if citrus has trouble getting this through parliament, or if there is a lot of opposition to it, how much longer does he last? >> i think there are two possible scenarios. group,a parliamentary ultimately abstaining or supporting measures. leave thesome people party. at that point, it would be a question of whether it is a majority, whether he has a legitimate coalition at some stage. i think his goal would be to try to push this into the final months of the year to get a pause for the economy for public opinion. hopefully the economy will do a bit better in the coming months and then he will have to see if
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it is possible to continue. perhaps he calls an election and asks greek people for a deal. unless he is willing to take greece out of europe. matt: do you think greece does it is out? even if citrus is involved, some other coalition running the country? morest would probably be amfortable, including reformist movement that has more moderate views about the bailout it shrank a also -- lot in terms of its support base . i think for investors probably, that would be a good outcome. i personally do not want to make a political statement here. it is the greek people who
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decide on that. what we can say is if the agreement is what we're being it has takenress, five months and i think it has damaged the economy. this is more about politics than the economy. betty: thank you so much, ricardo in london. we will have much more on greece including anown, exclusive interview with the former greek prime minister coming up in the next hour of the bloomberg market day. matt: the bond market may be as volatile as ever but not so much inequities and we will look at why we have not in many big market moves this year. stay with us. ♪
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betty: good morning. matt: let's get straight to julie hyman with a look at some of the biggest movers in the first hour of trade. you have had 45 minutes. withdarden,s start the best in this young session. is trading at a record after news it is going to be staying off 430 of its restaurants into real estate investment firms paired we have seen this trend and retailers. bob evans says it is exploring the same moves, but investors are certainly happy about it. it is part of the agreement the company made, the activist investor that has pushed darden very successfully for changes. within theside
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restaurant group, we are looking at sonic, the fast food drive-through restaurant chain down by 11% today. company sales were relatively strong. the new franchise stores this year would he 42 to 47, versus 50 to 60 that investors were acting. take a look at my bloomberg terminal for a minute. i want to look at same-store sales for sonic. we actually saw an increase in same-store sales of 6.1% compared you can see it is an outpacing overall fast food. that has been the trend. sonic has done better. it is interesting this time around it esther's are not focused in on the relatively rapid growth in comparable sales, but rather on store openings and new restaurant openings this year. betty: it is interesting. it seems investors are focused only on sales for other fast. ok. thank you so much, julie hyman.
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action, it than that has been a relatively quiet year for u.s. equities in the s&p 500 has not in any moves from 2% upward down since december. it is difficult to believe. it is the longest streak since late 2006 and early 2000 and. the bloomberg stoxx reporter has been looking at the data and it is really shocking we have --aged to stay >> considering how wild january was. matt: for the last eight years. betty: you want some action. you want the roller coaster. : it has been tough in the market lately. not a lot of reason to go lower as well. we have a lot of risks out there even with the federal reserve and their plans and the greek situation and what will happen there. investors are set, i am not sure what will happen either way. so i will sit on my hands right
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now. classes part of it the makeup of the market and that is affecting volatility? it deftly could be. it was different than it was in 2008 and 2009 p the bears have been loud lately. you have bullish investors. if you look at the trend of the market, it has been up more than 200% in 2009. we were talking this morning about china because they have their biggest move in eight years yesterday. it is only up to part -- 2.2%. .here was a big swing i went to look at the s&p and see what our biggest swings have been in the past eight years. the only two i could find a double digits were 2008. we really do not see these massive moves, even if they swing from plus two minas and minus two plus all that often. callie: it makes you wonder, is
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the market losing steam? news up.we saw big in december, we saw two consecutive days. we have not seen any of that this year. of this signal something? is there a downturn on the corner? getting to these levels -- >> or is this a safer, less volatile moke -- market? i said it almost sarcastically. callie: a lot of people have noticed how the markets are turning lately. there is something to be set for the market losing momentum. we are coming into the summer months where there is low volume and a chance for greater or less volatility. if the greece situation goes and does not cause a lot of volatility, what else is out there?
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betty: a quiet summer so far. matt: thank you so much for joining us. betty: the rich keep getting richer. how much money does the 1% actually have? we will tell you next on "bloomberg market day." ♪
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wealth ofhe total high net worth individuals or the top 1% is more than $56 trillion, that number is expected to grow. the 2015 world wealth report was released by rbc wealth management last week and we were looking through it, betty and i. what is fascinating to me is how many of these people there are. betty: there is something like over 14 million.
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4 million here in the u.s. matt: 15 million people globally -- it would be cool if they bought their own country or island and all went there. betty: no income inequality in this world. no surprise the u.s. is the place that has the most number -- matt: almost 5 million here. $16 trillion. those people could all go to their own city. they could go to bentonville, arkansas, and lived there. betty: i'm sure that is at the top of their list of where they want to go. i was going to mention asia is number two and fastest-growing and you can imagine why that is the almost every day, you hear about a billionaire uncovered and india has the fastest
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growing segment of millionaires, uber wealthy. be they would not all stay there if they go to my mythical island. i would willie -- would be willing to be a servant, a valet. i would park cars for them. to me, the only thing interesting of the -- about , i have beenalthy reading a lot about the art people buy. betty: you might want to put that money to good use. i have aeel like historical and social goal here. betty: on that note, say goodbye and we will have a lot more when we come back. ♪
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betty: welcome back to the market day. the housing industry is finally
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picking up steam. home sales are up at the highest level in 7 years. april's gain provides upwards of 881%. the median sales price is up to 200 $83,000. the fastest home rental prices in the u.s. are in jackson, mississippi. homes are renting for under $1200 a month. year ago.han a rinse rose in bigger cities like san francisco, san jose, and denver. hauling down the confederate flag. they will not sell the flag or its products in their store or online. last week's church massacre in south carolina renewed the debate over the flag. we talked about it with ceo doug mcmillon. want to sellt
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anything that offends people. i was surprised we carry some of these items. we have over seven main items that we sell. we discontinued it. betty: walmart's move came the same day that governor haley called on the legislature to remove the flag from the state capitol grounds. mergers and acquisitions will be they 2007 record. the boom will continue. that is according to john says and ski. here he is with francine lacqua. the investment cycles are seven or eight years. we are looking at an expansion that could be 9 years. you will see a record amount of m&a activity this year and next year and potentially the year after. the sectors most likely to see more deals.
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those are your top stories. fees aup, change multimillion dollar revenue stream for airlines. how much they make from making you pay when you change. more on my interview with tim armstrong. how he will work with his new boss. why he is not only cashing out and leaving. -- who signedith a ballot with europe and lost his job. we are seeing strong home sales. existing and new homes sales are selling at the to -- at the highest rate. that could change with the fed raises rates. joining us is the real estate professor at the wharton school at the university of pennsylvania. she is in my hometown. she is with the economist karl.
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we will start with you. do the numbers point to, we are seeing a real recovery and housing, and it is time to buy to lock in rates? >> it is prime time for the housing sector to recover. i will we then a couple of top headlines. trends.portant rental prices are accelerating, not only in jackson, but nationwide. they are the drivers of inflation. push people into decisions. .anks are easing credit first-time home buyers are taking a larger share of homebuying activity. the other factor is the inventory. at the inventory
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numbers, and there are significant restraints in the housing are, especially for newly built homes. if we look at the homes for sale, aside from the housing bust hangover, they're at the lowest level since 1968. very low inventory numbers. it is a good time to be a homebuilder. iron is a re-market, rents are rising, -- betty: it sounds like a goldilocks scenario. professor, giving what he just outlined, might that offset any kind of effect that you might see from the fed raising interest rates impacting mortgage rates? it is positive. the growth is coming from higher incomes, better jobs numbers. this housingthat market makes housing a
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contributor to the economy for the first time in -- in many years. this will extend the recovery. the fed is likely to get back to a more normal mortgage rate when , not immediately, but at some point there will be an affordability crunch adding to the inventory problems and terms of slowing down the market. for now, construction will be positive. this is a good time to be a homebuilder. betty: as the professor is saying, where among the housing tears will you see this inventory shortage having the biggest impact? carl: across the board for newly built homes. we had the situation with the feds raising the rates this year, but that does not mean it will be a sharp backup in
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mortgage rates. it will depend on the reinvestment policy. what they do with the mortgage rates they bought through quantitative easing. will they let it unwind? that the fed will try to shelter the housing sector. there will be several rate increasing's before they unwind .he balance sheets they will protect mortgage rates, meaning this housing for abution can go on while. housing is a relatively small share of the economy. to 4%.bout 3% if we add in housing related expenditures it is larger. people buy new homes, washing machines, and coffee tables. is a: separately, there job coming out of the construction sector. we're not yet your normal
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construction jobs. that will be a positive contributor. the increase in jobs bringing markets back in terms of people having incomes to buy homes. about when we are talking the housing recovery, professor, i'm reminded that we are a country that is being nurtured by subsidized housing. care of thetaken issue of fannie and freddie and how they guarantee a majority of the homes in the united states. have we reform the housing are? -- have we reformed the housing sector? we haver susan wachter: two questions. the unraveling of quantitative easing and getting back to the normal interest rates. that could take more than a year. that will not cut off this recovery this year. the bigger question is that we are reliant on any and freddie.
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there has to be consensus going forward or we will have a long term problem. betty: the governor said there was a 50-50 chance that we would go in september. what do you make of that? carl: not surprising. we will see increasing reparation language from the fed to prep the market. there is a watershed event of the fed raising interest rates after being on hold, but that's the september meeting will come and go with the least amount of disruption as possible. he said that there's a higher chance of moving in in september than in december. you will see the odds being higher for september versus december. that shows that the feds want to get off of the zero balance. they will see what the reaction is and gauge the pace. data, we areat the
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not there, but we are moving in the right direction. if we strip out the airline orders, it is at least stabilizing. it is not roaring back, for sure, but we are moving in the right direction. betty: thank you. our chief economist for bloomberg intelligence, and professor from pennsylvania. why papa john's is spending $100 million a year to clean up the menu and bring you healthy pizza. ♪
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betty: welcome back. an hour intoover the market day. let's get you caught up around the world. in europe, in london, watching the talks in brussels. mark? mark: greece is serious about reaching a deal. that is contributing to a second day of gains for the stoxx 600. the biggest to -- the biggest 2 day gain. that is a big statistic. have beenling euros added to the german benchmark in the last couple of days. j.p. morgan chase says it is time to buy german stock. they predict a 15% jump by the end of the year.
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from yesterday, six percent of today. the biggest two day gain since february. up by 29he assets percent in 2 days. that is the most in 2 years. the feel-good factor is still prevalent in the bond market. i wanted to show you the greek two-year portion of the curve. the yield on the two-year basisday fell by 453 points. today, following by another 320 nine basis points. in two a decline of 7.5% days. that is phenomenal on the optimism we will have a deal between greece and its creditors. i want to show you what is happening to the euro. 1.4% lower against the dollar.
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the biggest fall in three months on speculation that the ecb and the fed are diverging. they say the currency will be sent toward parity. 1.05 by the end of the year. it is all about greece, again. julie: look at u.s. stocks. they are rallying. kicking into the red in the past few moments. the nasdaq is lower. the dallas holding on to gains. andaw optimism on greece optimism tied to the u.s. economic data. new home sales just came out 45 minutes ago and showed the highest reading in seven years. that has supported stocks. i want to point out the strength and telecom stocks.
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at&t upgraded over ups and barclay having to do with the pending acquisition of directv. they're optimistic on what that will mean. the stock is up 3%. telecom is the best performer .ith 1.5% gain looking at the treasury market, after the new home sales number, we saw a spike in yields. it is now 2.39 are sent on the 10 year. -- 2.39% on the 10 year. this includes the ecb. another way to measure, if you look in my terminal, is the premium for u.s. treasuries over there developed market peers. that has gone down. couple of things have happened. we have seen the perceived the global risk go down to some percent.
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it is refocusing on u.s. yields going higher. u.s. treasuries have subtracted in price, versus their developed market peers. i want to look at the dx why. .- the dxy we are seeing strengths as the yield goes higher on the back of that economic data. , asian stocks saw some of their biggest gains in 2 months over the greek talks and the optimism. one big story out of the region any fracturing gauge and china shows signs the industry is stabilizing. stephen engle has this report them hong kong. improving.le: it is he came in above estimates at
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49.6 for june. it is still in contraction territory below 50, but this is the third week in a row the pmi has an improved if this holds true through july 1. production, credit growth, and and property in china has stabilized. the survey showed that job cuts where the sharpest in more than six years. economists expect the central bank to continue their easing cycle. betty: stephen engle in hong kong for us. top stories crossing our terminal. tom brady is appealing his four-game suspension for the deflategate scandal. his making his case against commissioner roger goodell. there was a report that he was
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aware of the deflated football's use during the championship game. if the weather cooperates a plane will leave central japan for hawaii at 1:30 p.m. it does not have any fuel. the first leg is the riskiest because there is no place to land. a severe solar storm slammed into earth yesterday afternoon, increasing the chances of fluctuation in the power grid and gps. polaro pushed shimmering auroras the places where more people could see them. the northern lights may be able to be seen as far south as iowa or pennsylvania. the storm could last for a day or longer. papa john's once you to know they're taking artificial ingredients out of its pizza. it will not be cheap. they will spend $100 million a year to take the additives out.
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any companies are doing this. craig, as we were talking about, this is the first company to come out with an actual number on how much it costs. everyone is trying to one up each other. this is one of the first times were someone is saying we are how much and this is it costs. it is not a small amount of money. they say that $50 million of that is foundational. the dough, sauce, cheese. to geter $50 million is preservatives out of things like pepperoni. they are focused on the thing sauces. -- on dipping sauces. they're tackling the msg,
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preservatives, things that are in those. papa john's himself said that one of the only examples where they lost a little flavor was in the ranch dressing when they took out the msg. mere are little changes in am also. he says we are losing some taste, but it is not a big deal and that most customers will not notice. noty: he says that it is because of this sudden burst of butthy ingredients trend, they have been doing this for years. 1996 hee says in visited a sausage factory and did not like what he saw. ever since then he has been on a journey to clean up the food. they're making a push to get the word out. you have seen other companies get more attention. been doinghn's has
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this for a long time. they are making all of their ingredients available on the web on january 1. they are saying that we are doing this to, and we are one of the leaders. they want to get credit. betty: darden restaurants is saying that they will be spending off the real estate assets. a lot of investors have asked other companies, like mcdonald's, to do this. was expected. they warned darden restaurants not to sell red lobster. they said let's do the will real estate portfolio. it drew ire when darden restaurants sold red lobster. the guys from star board came in . they feel like this will move toward a structure that will help them squeeze value out of their real estate. betty: thank you. we will have more on fresh.
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we are joined by the ceo of california pizza kitchens in the 11:00 a.m. if you have ever been shocked by how much airlines charge you for your flight, the next segment is for you. ♪
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betty: welcome back. i am betty liu. airline change fees are the focus of the u.s. transportation department. this is years after rising passenger anger. many consumers say that fees are too high. airlines say it costs them money to make last-minute changes. how much cash are airlines pulling in when you change your flight? >> u.s. airlines and change fees. focus as the u.s. department of transportation meets to address the issue. nearly $3 billion is how much
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the u.s. airline industry gets from you in change fees. in 2014. that is a record. that is triple what they made in 2007. elton, united, american, jetblue, and one other made the .ost united made 800 million. american more than five hundred million dollars. this is what consumers pay to change a u.s. domestic ticket. delta, united, and american hit the $200 million mark. can be higher for international flights. as change fees have risen, so have consumer complaints. a consumer organization petitioned to bring them down. saying that the fees no longer
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was simple and approximation of the cost incurred by the airline, but exists merely as a tool to gouge consumers faced with the unpredictability of life. flip side, there's one major u.s. airline that does not charge. southwest airlines is still free. betty: do not miss our exclusive interview with the former greek prime minister in the next hour. stay tuned on the bloomberg market day.
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,etty: 11:00 a.m. in new york 5:00 p.m. in athens. matt: greek officials are meeting today to agree on a
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bailout deal to unlock more money for greece. all involved are speaking optimistically about the negotiations. ofty: teaming up with one the largest ad agencies to start a new division focused on brand sponsored video content. matt: changing pace in the healthy food revolution. the chief executive of california pizza kitchen on if they will eliminate artificial ,ngredients from their food following the lead of papa john's. good morning. i am betty liu. pimm: i am pimm fox. let's look at the u.s. stocks. a mixed trading in equity. adding


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