tv Bloomberg Markets Bloomberg August 11, 2015 3:00pm-4:01pm EDT
announcements, guess what? millions. stunned theberg tech world with a major reorganization and a new name. what about this new clothing organization? scarlet: reach comes to an agreement on terms for new aloe deals. one of their opponents? ♪ scarlet: good afternoon, i'm scarlet fu with eddie lu on this tuesday -- that he lose on this tuesday. -- betty liu on this tuesday. coming out of china, you can see the dow is down 250 points. we basically erased all the games that we saw yesterday. which actually erased the losses gains that we saw
yesterday. which actually erased all the losses from last week. picking up a little bit here in dow, itjones, -- the has moved almost 241 points after it moved or swung 250 points yesterday. as you can see, this makes it the most volatile day in about one month. slowly but surely the spring is coming back and it has been a sluggish kind of trade. even though it had been speculated upon it was considered a sign that things were worse. betty: yes. that is why you saw the risk off trade and bond markets. the yield coming down sharply lower across the board, you can see the 10 year itaz note yield -- 10-year note yield down to 2.5%. scarlet: we will continue to
keep an eye on these markets. but let's get a look at the stories making headlines. federal authorities say that they have busted and insider trading ring that use computer hackers to scan corporate press releases. the hackers themselves are thought to be in the ukraine and maybe russia. they made over $30 million in stocks. the hackers are accused of .tealing 150,000 press releases valuing its land for the most in two decades, the people of the bank of china called it a one time adjustment. >> these policy settings are misaligned between having tighter importing monetary policies through the linkage to the dollar as opposed to what their domestic economy needs. in the chinesee
currency should make it easier for exporters to sell it overseas. itna is in the middle of against economic slowdown since 1990. scarlet: in the second quarter we saw the modest gain in one decade led by points st. lucie in florida. the median price of an existing single-family home have is an from one year earlier. ofthe first quarter 85% those areas saw price increases. betty: growing by the most in one year, hotel stocks were up more than 9/10 of 1%. rising industry levels are seen as a sign that is this is our more confident about consumer spending goods. stocking up. fast as not growing as expected, the measure of employee output per hour rose at an annual rate in the second quarter whereas productivity had
fallen in the previous two quarters. tme group has eliminated 3% of its employees. they have eliminated 3% of their employees with half of the cuts coming from tech. scarlet: it's that important, we need to repeat it. this: scarlet: -- betty: round of cuts covers a 5% reduction from october. shares have gained 33% over the last year. was that like a ron burgundy moment? scarlet: no, it's interesting that you say that because some people say that it may have led to what we saw on the new york stock exchange. the halting of trading because there were not enough people around. no institutional knowledge. let's move on. is he or isn't he? -- is she or isn't she? rise couldmone level
indicate a possible pregnancy. so-callede another pseudo-pregnancy. she had a cub two years ago. the little panda is one of the most popular attractions. /betty: i love the name. scarlet: they are so cute. are your top stories. greece saying and has reached a deal with creditors for a third bailout. will german lawmakers put the brakes on approving a package? , disrupting itself, hoping that the reorganization will be good for business and investors. alibaba, set to report after the bell. results change investor sentiment? that and much more coming up on "bloomberg market day." cyber hackers have found a new front. havers based in ukraine traded on the information before it became public. scarlet: five men in georgia and
pennsylvania were arrested this a man beingluding described as the linchpin of the market strategy. four others were indicted but they remain at large. mike riley, our cyber security fromter, joins us washington with more. mike, what do we know so far? sounds like we have the name of one verse in. is he the only one that we can describe as a pro? mike: the levels of professionalism very a little bit. one interesting thing about this scheme is that it combines hackers, people who know how to get into systems, with people who know how to market. you had a series of traders in the u.s. and europe who took this information and traded off of it. the amounts involved seem to be pretty large. the criminal indictment talks but the secllion, talks about 100 million dollars.
a relatively simple scheme, they basically just hacked into the servers of companies that have -- deliver press releases on sensitive information. in some cases they only had short windows but they were able to cash out quite a bit. what i mean is there is only one person from wall street who works within wall street and is familiar with working at a bank involved, so far, right? mike: one of the traders invested this morning is basically a wall street veteran. morgan stanley for a while, he left to start his own hedge fund. he clearly has the most expertise in the markets and how they work. what we don't know is if there were other traders involved, the hackers had deals with traders and france, russia, other places in europe. we just don't know very much about their expertise or what they were doing. we do know that it was this combination of expertise,
especially the guy in pennsylvania. is this the new face of insider trading? you don't need to pay anyone off anymore, just hack your way into companies? what we saw from prosecution is that it was expensive for these insider traders who did it in the physical world to maintain this elaborate network of sources in companies and elsewhere. in some cases they paid bribes of up to $1 million. this is just a lot easier and the possibilities of targets are more rod. you can hack into law firms, corporations, we are seeing all of that. that is true. this is probably the new face of insider trading. it brings up weston's about enforcement. scarlet: we have a rest's. we have indictments.
authorities -- arrests. we have indictments. what are the main challenges being faced as they try to put this forward? these guys are not anywhere where officials can get a hold of them. they have been indicted. there are criminal complaints against them. the possibility of getting hands on them is pretty slim. the hackers that know how the scheme works, they could hook up with a different set and keep going. the other part is they have to make the cases in court against the u.s. traders. i think that there are complexities here that rival what we saw in previous cases, which went through years of prosecution and appeal. thank you so much, mike. it's fascinating, betty. these were announcements that these hackers hacked into because they sat on a server for less than 24 hours.
they got all the inside information. it reminds me of when twitter reported earnings and there was this one company that went through and found the release before the company announced. betty: that's right. i read another headline that berkshire hathaway is hiring a new cyber security firm because they clearly need this. who knew? maybe this is r&d, investment for these companies. much more ahead. after intense negotiations, greece reaches an agreement on their new bailout deal. we will discuss that in a moment. ♪
betty: ok, let's get straight to a look at the markets. as we have been doing, we have a sea of red today. just barely coming off the session lows, echoing the selloff in asia and europe from overnight. this is in large part due to the shock currency valuation of 1.9%. down by 1.2%. the nasdaq is down the most right now. let's get a closer look at what's laying -- weighing down the markets. .ou can see the 10 sectors
utilities and telecoms are the only ones in the green and have been all day. materials and information are down 2%. downmation technology is and are the biggest losers of the day. energy earlier had been the biggest loser. looking at material producers, they are getting hit i the currency valuation as well. freeport mack brown, down 12.8% right there. this is the world's biggest publicly traded copper producer. the lowest since december of 2008. the biggest library in the s&p 500 today. their worst day since november of 2013. also, a look at this consumer stocks, a huge array of them actually. this is according to our own bloomberg data. yum! brands, for example,
companies like taco bell and kfc, down by 1.3%. they get 36% of the sales from china. herbal life gets about 20% of its exposure from china. is down bysee, that 1.7%. apple, not having a great day at all. lows, thishe session is because ubs says they are seeing lackluster interest in the apple watch and predict that apple will sell about 20 million watches. quickly approaching a seven-month low. every one stock that is up, turns out the four are trading down. scarlet: thank you so much. betty: now we have a look at the
top stories this afternoon. monthays that output last from iran was the most since 2012, accounting for 40% of world all -- oil supplies. this is the first time since the fukushima nuclear disaster since it went online -- that reactors have been brought back online. the prime minister and ministry officials wanted them switched on again to cut fuel costs. despite strong opposition from the public. mcdonald's plans to shrink by 59 locations in the u.s. this year. by the end of december they will have shut down 180 restaurants and opened 120 five new ones. the world's biggest restaurant 14,000 domestic
locations at the end of last year. those are your top stories. scarlet: greece has finally reached a deal with creditors for third al out. unlocking billions in funds for greece. as the news sent funds higher in the stock exchange, general index has been on the rebound since its three-year low last week. joining us now is hans nichols. what did both sides up getting? they will actually be allowed to have a deficit of 0.5, so nothing small from the creditor side in terms of concessions. the greeks have to do some work, passing 35 specific measures. there are difficult things in there. certain pension reforms, they will be difficult and they all have to pass by thursday. then you could have some potential votes on friday in
here more from european parliament next week. we still haven't heard anything affirmative from the germans. they could be an indication that this is not yet done. scarlet: is there a reason it could not? hans: all of them. these are all sacred cows. greece has known what they have needed to do. they have been clear they just have been bent over in these negotiations. according to two people familiar with the matter they may not be able to get this through parliament next week. that could be for political reasons or practical reasons as well. we are trying to figure out whether it is expressly political or practical. bringing this back, the germans have and saying over the last week to eat can have a short-term deal that is a bad deal. they want to do a better deal intake of time with it. getting you through this august
20 deadline. betty: what happens if this deal collapses? hans: we are back at square one. we're talking about kicking greece out of the eurozone. probably back to some sort of bridge financing. ,f this is an immediate deal these are the latest figures that we have from an official. actually 90.re if that doesn't pass or get through, there is always a way that you can finesse that. do they have enough support? hans: not within their own party. scarlet: overall? hans: overall, they will get it. this has all passed in september there will be a party conference. you will likely see the emergence of a rough platform and you could have the collapse
after september. if these laws are already on the books, that is less likely than having a new government than what's officially there mattering less. i'm looking at one of you guys to go to athens. [laughter] i cannot do anymore travel. betty: you say here, we will go there. hans: i think that most of europe has. betty: how long have you spent there? hans: less time, actually. i spend more time in brussels. which is interesting because you see how the eu works. you have got to go for the mayonnaise and the separate talks. [laughter] scarlet: thank you, hans nichols. he is here all weekend we will make good use of that. donald trump, republican hopefuls having new funding. candidate mosthe
to politics turn right now. until recently the republican candidates have an focusing on out trumping donald trump, but some of the candidates are now targeting hillary clinton. betty: jeb bush will be delivering fierce criticism in his speech tonight at the reagan library. joining us now from bloomberg politics -- who are the best candidates poised to do this? who has the credentials to stand up and poke holes in her record? >> it depends on who you talk to. the candidate that you hear the most often is marco rubio because he represents a
generational contrast, he looks like generational america and is his and it. and election that is about the future, not something of the past. scott walker can kind of make that argument has well. the argument that he has executive experience. a lot of republicans that jeb bush can make the strongest argument because he has even more moderate positions on things like common core and immigration reform. you mentioned marco rubio at the debate last week. he said that this election cannot be a competition of resumes. will is, hillary clinton be the next president. he said it not about the past, but the future. isn't the problem with marco rubio that he reminds people of president obama, right? a one term senator that never governed? sahil: that is exactly the problem with him among
republican voters. one voter brought up that exact point. to your point about hillary clinton, the campaign was that cloak, if you can imagine. ity have been circulating across social media. the problem is that rubio has to make that argument to win the nomination. there are 16 other candidates on the stage, all of them ostensibly more experience. he has to make the argument that the primary contest should not be about experience, but who can make the best contrast in the general election. final question to you -- what will you be watching for when you listen to the jeb bush speech tonight? there will be a lot of foreign policy there. expect him to make the case for a significant departure in foreign policy from president obama's vision. i will watch how he will contrast his vision against his
brothers. it's unclear the extent to which he disagrees with his brother. on how the united states should carry itself abroad. is he going to outline a foreign policy view that essentially returns us to president george w. bush? or is it going to be a new vision? scarlet: thank you so much for your perspective there, joining us from washington. of course we cannot help but look at those comparisons. [laughter] i am taking off. betty: ok, scarlet. great to see you. there is a lot more to "bloomberg market day," including activists. ♪ . .
bloomberg market day. in betty liu. the largest milk producer in the u.s. is staying mum about why their chairman just resigned. the sec is moving forward involving an insider trading case. that severelydent injured comedian tracy morgan -- ate is chris hartz speaking a meeting. >> we know a major contributor is driver fatigue. fordriver and had been on 14 hours. he had been awake for more than 28 hours, including an overnight drive from his home in georgia to the district center. betty: there was a traffic
backup on the new jersey turnpike. the safety board will look at what can address driver fatigue in highway works on hazards. quarterback -- will be sidelined 6 to 10 weeks after being punched in the job. got into his teammate an altercation in the locker room and smith was "sucker punched." and in pro football, the federal judge handling the tom brady case wants to talk settlement. the new england patriots order back and commissioner roger goodell will meet with the commissioner -- quarterback and commissioner roger goodell will meet tomorrow. those are your top stories at
this hour. tech worlded the when it announced it is starting company called alphabet. joining us with more perspective, david kirkpatrick, bloomberg contributing editor -- ooh, look at that background. bloomberg west anchor emily chang also with us from san francisco. david, how do you take this move from google? weit as significant as when all heard the news yesterday? i think it is significant. it depends on how they do it. i think it is significant both for the company's of ability to manage itself, but it's perception and its perception on wall street in particular.
the biggest single problem a lot of these founders have who have these revisions, how do they keep doing these things so wall street does not slow them down for constant search results? now they can have this other stuff off to the side and play around in that, which frankly, i think that is where larry tate is most excited in the long run. these visionaries have lots of things they want to work on. emily, out in san fran, houses being received? outy: i just want to shout to david for patrick who was with us live on bloomberg west when the story broke. i was looking at it, thinking it was too big, too grandiose. and when you think about it, only larry page insert a grin could come up with something like that. it sounds dramatic, -- only rgei to come upse
with something like that. it sounds dramatic, but it may not be differently from the way that google has been operating already. i agree with david that a lot of this has to do with perception and messaging. ally and sergei dropping presumption that this is anything but them working on these moonshot ideas and wanting to be bigger than google itself. they can bring in big acquisitions and allow the ceo's of those companies to continue operating as ceo's similarly to the way they have done with ness. -- with ness. -- with nest. i think they can make big bets that are further afield than anything else. betty: david, this is a big issue, but how does it take care of the fact that, you know, yes, larry page and sergey are able
to take care of a lot of to whatt areas, but extent is google wasting money and different projects and, some critics would say, not focusing on the core product? david: -- question is the core question. and having a clear ceo of google is a good move for rias during -- reassuring wall street that that business is in the hands of a master technologist and product person and distractions will not be felt in the day-to-day of google when they are trying to solve the problems of the world over here. i actually think it is a sm art move and they picked a good guy. when you look at nest, one of the problems it has had, people of thought, oh, my gosh, they
will take the data for my thermostat and use that to target me. i do not know if i want to have because google is going to consolidate. they could possibly address those problems more effectively. see moreily, will we companies, especially in silicon valley, adopt this kind of structure? emily: it is interesting, because we have been talking about facebook. mainook is google's competitor. people in the united states are spending 20 minutes a day on facebook. they are not spending that time on google. but in a way facebook is already operating that way. mark zuckerberg bought whatsapp and they have had great freedom to operate what's up on their own. same thing so far with oculus. messengert these book -- facebook messenger from facebook itself. in a way, it seems like some of
these big technology companies are already operating this way. you could argue the same thing with amazon breaking out a w west --aws. a question of how these companies are operating versus the perception of how they are operating? think thisd, do you will become a model for others? david: it is a rare company that can do all of this. but for these great technologist , they can handle a lot of ideas because their minds work that probably cannot be effective running their main business if they are not exercising their creative intellect in building new things. i think we may see a few more, but i think it is the giants, the most visionary companies this is likely to apply to. betty: david, thank you so much. look atrkpatrick -- oh, that. he or she?
the closing bell. ramy inocencio has more. thank you. we are looking at how we will end this day. it looks like we are looking at lockton losses across the board. china'sin part to currency valuation. the s&p 500 is down by 1%, the theis down by 1.2% and nasdaq is the biggest loser, down by 1.3 percent. interestingly, there is a signed today the dow may be headed for a long-term slide. let's go into my bloomberg terminal one more time. this is the gpo function. we're looking at the dow over the past year. what you are seeing is the so-called death cross. this is when the 50 day moving average represented by the pink crossed below the 200 day moving average, represented by the yellow here. the last time was in december of
2011. the dow fell by six cents and 2007.urther back by it lost half of its value the --t 14 months thereafter the thereafter. very interesting technicals coming out of the bloomberg terminal. shares.t's look for gm they have been down all day. but just after the 3:00 hour, we can see lift offs from their lows. it's management, and they junot expects that the ann revaluation will have impact on performance. gm says, we continue to live or strong results in china and those will be sustained through the remainder of the year. headed to commodities and oil, futures are off their session lows, but they are still down by 3.5%. --y have an down as little they have been done as little as
four percent. this is the lowest since march 2009. the reason? more iranian oil coming online. also means less buying power for commodities they have to pay for overseas. commodities falling, so, too, the races 40 companies. chesapeake. consol energy paring some losses. ad joy global, which is global minor, down some for percent there. a six-year low -- bad across the board, isn't it? mcmoran-mech moran -- down, paring some losses though. at its lowest since december
2008, betty and the biggest loser on the s&p 500 today. betty: huge decline there. gloom,ots of doom and right question mark got to love it. it feels good to smile. making headlines, the epa and if contractors may be liable for millions of dollars of damages from the colorado wastewater spill. the yellow sludge is threatening water and wildlife in three states. last week, a cleanup crew accidentally released toxic sludge from an abandoned gold mine. homes in ranches and the area will have to go elsewhere for the water. colorado and new mexico have declared a state of emergency. a northern california blaze more than doubled in size overnight, despite higher humidity and lower temperatures. it has burned 19 square miles. for the second time in recent weeks, residents had to evacuate
their homes because of the uncontained fire. meanwhile, firefighters have merely surrounded the larger blaze that started two weeks ago square miles. and this is the ultimate must-have for you ferrari lovers. the 1961 ferrari spider -- pyde could fetchr $18 million at auction. , cars from pope john paul ii. another ferrari sold last year for $38 million. those are your top stories at this hour. market liquidity for fixed income. everybody talks about it, but does little about it. blackrock's chief strategist jeffrey rosenberg has suggestions. he writes, what we do not believe the principal base market intermediated by
broker-dealers will disappear, we believe the form of liquidity needs to be supplemented by more agency-like trading venues. here is mr. rosenberg explaining his idea to be surveillance team. rosenberg: the bond market operates differently, meaning the intermediaries, the broker-dealers operate with their capital at risk as they were providing liquidity. post financial crisis, this becomes more problematic, because we want to take the financial risk out of the broker dealers. we do not want them to have proprietary trading. sometimes there is a fuzzy line between principal trading and proprietary trading. models, where the intermediary is matching buyer and seller rather than putting their own capital at risk, is more the way of the future, more of a balanced approach to having
liquidity in the bond market. from your perspective, you can say that. but it is such a huge risk. how does it come about, this change? rosenberg: it is really about the structure of bps. one of the things we talk about, what are the impediments about moving toward an agency like model? why do bonds develop as a principal model? one of the issues was that bonds were issued in a very scattershot manner. there is a bond over here, a bond over there. over time, you blew up the capital structure and you lost the fungibility. think about stocks. pages of hundreds of different types of stocks. so, one simple remedial step here is to try to rationalize the issuance side of ions so you can get -- issuance side of
bonds so you can get greater fungibility. there are some meaningful iterations that could improve market liquidity with market structural changes. josh, -- jeff, i spoke to alan greenspan the other day. he is incredibly vital. a bubble.e problem is do you agree with dr. greenspan? mr. rosenberg: i called it the anti-bubble. excessives about exuberance, to quote the man himself, right? it is about the expectation of higher prices -- tom: but will we expect turbulence here? that is aerg:
different thing. the expectation of turbulence should be very clear, because what the zero interest rate policy and quantitative easing has done, it has not dampened interest-rate volatility. you remove the blanket of interest rates and quantitative easing, you see this rise and you will see more of that going forward, so the expectation of higher volatility and finance markets, bond markets should clearly be on investors' minds. tom: are we going to continue with this deflationary trend with the chinese out of today? it's certainly possible. it can go both ways. that is what volatility means. higher volatility means you can swing both directions, and certainly it can develop in a much more negative fashion. seeing below to present is a possibility. betty: again, that was jeffrey
it seems down 26% since january 1. what is going on here? : it's a confluence of events. i think it is bearing the brunt of the slowdown of the chinese economy in general. i think when investors looked hard at this ipo, they viewed alibaba as a play on the chinese consumer and the evolution to consumerism in china, so to the extent that it changes my manufacturing economy to a consumer economy will be slower and bumpier than people perhaps thought at the time. i think that is being reflected in the stock. secondarily, the company is spending a lot of money here. they are investing a lot of money in a lot of different businesses, which is not a typical of large internet companies like amazon or google. alibaba is certainly doing that. the net result is it is really putting pressure on the margins. this is a company when they came public, they had very high margins, and it recorded since, margins have been going down.
the company has said, this is part of our growth story. similar to amazon. his bezos somehow got investors to become comfortable with constantly growing investment and expenses. are goinghe margins down. a number of issues for the company. it would be nice if they could put up a good solid beat tomorrow. betty: it certainly would. it looks like investors are not buying this story here. they buy it with amazon. they do not buy it with alibaba. paul: we know the core story with alibaba. it is a very good long-term story. alibaba certainly extraordinarily well positioned in terms of market share, but arecompanies said, we really going to make investments and try to grow our user base in china by going to more rural markets area that is a new business model, new challenges. they are going to look for
investments outside of the u.s.. the model is changing. investors, over time, are going to have to show support for the team and the stock price. right now we are seeing skins and should -- skittishness. investors will need solid results over the back several quarters to have confidence the management team can make it happen. what to make of this acquisition of the electronics retailer? yeah, it's interesting. they have so many stores, to 90 cities -- 290 stores in the country. to the extent that they need growth outside the major cities, this online to off-line trend is very interesting. using online services to drive off-line merchants tales. havere going to need to stores and physical locations in many of the markets around the country, and this does give them
that. it does give them logistical support as well, which they are going to need as alibaba expands, again, from first and second tier markets to smaller markets around china. from that perspective, it does provide a lot of expertise and capabilities, and they certainly have the capital to make these investments. it is the biggest investment on the part of alibaba since going since going-- public. it is consistent with where jack ma ss growth. to see you.ood paul sweeney, director from bloomberg intelligence. much more to come on "what'd you miss?." keep it here. ♪
for alix steel. [bell ringing] scarlet: stocks retreat after china devalues the yuan. the restropping after rally since may. joe: but the question is "what'd you miss?" two leading experts go head to head on our set. scarlet: plus, who was getting a raise, who isn't. -- who isn't? joe: and the liquidity conundrum. is it overcoming prices, or is it just a myth? we begin, of course, with the financial markets. for the s&p 500, if you want to get really technical, the biggest drop in five weeks and the dow jones, the death cross.