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tv   Bloomberg Markets  Bloomberg  August 17, 2015 3:00pm-4:01pm EDT

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iowa this weekend? alix: target makes major management moves. what it means for the retailer. can a qvc owner save the struggling retail site? scarlet: good afternoon. i'm scarlet fu reunited here with alix steel. alix: i want to sing it -- ♪ reunited and it feels so good ♪ if we look at the 10 day average, the doubt down 20 20% and thecuse me, s&p down 26% lower volume. it is illustrating that nothing is going on.
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in the: drifting higher absence of anything going on. homebuilder confidence did climb to its highest level in almost a decade, so that is one area where we see action in the market. the real action is taking place overseas. come inside the bloomberg terminal and you can see the damage being done. those currencies continue faltering and have extended their log guest losses. has beenlian currency dragging this thing down. over five years, this is the of 2010.nce june you can see the high watermark was july of 2011. this year has been ugly, ugly, ugly. the forecast was lowered,
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saying it was going to add pressure to the currency. leapcould trigger a big lower, really putting pressure on that index. scarlet: all of these countries count on china for their exports. they are not going to get it with a weaker yen. also a higher u.s. interest rate or the prospect of higher u.s. interest rates gives the more worry as well. countries thate was hit hardest is turkey. there is the dollar versus the turkish lira. as the dollar get stronger, the lira weekends and we are at a record for that for the third straight day. headedntry looks to be to new elections, its fourth election in about two years. inflation andhigh bank america calls that very sticky.
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what are you supposed to do? political turmoil is certainly not limited to turkey. you can see that in malaysia and brazil with the weekend demonstrations. let's get to the stories making headlines at this hour. investors in clarendon road assets manager -- management asked to pull about $4 billion in assets. this is the group owned by carlyle group. 5.6%ain fund has slumped through august 14, primarily on wagers on greece, energy and financials. their assets down from a peak of $8.5 billion last september. breach at theer irs where these still information from thousands of taxpayers is much bigger than thought. according to the associated press, an additional 220,000 victims had information stolen
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a --a web site as part of irsleaning part of -- the did not identify a potential source of the crime but officials said it was a sophisticated criminal operation based in russia. scarlet: the federal reserve bank of dallas has named robert kaplan as its president and ceo. he's a harvard is the school professor and will assume his new post on september 8. he will replace richard fisher. he will not be voting on policy until 2017. alix: the federal reserve will release its minutes from it eating and it could shed some light on the first increase in benchmark interest rate since 2006. we talked to the chairman of cumberland advisors.
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>> i don't know about the fed and i don't think the fed knows what to do about the fed. with oil and capital spending contracting -- alix: he says he sees a huge boost in consumer spending. i think that means structural, not cyclical. trade commissioner, joshua wright, is stepping down. he's been a commissioner since 2013 and will return to the george mason university school of law. his last day will be august 24. homebuilder's haven't been this confident in almost a decade. sentiment rose this month to the ofhest level since november 2005. americans are waiting longer than ever to buy their first homes. a typical first timer rent for six years before white house,
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more than twice as long as in the early 1970's. recent reports indicate renters have a tougher time saving for that down payment. a case thatsion in could change the landscape of college athletics. the national labor relations board has ruled for ballplayers at northwestern university cannot form a union. for ballplayers were ruled as employees. it was specifically ruled for the northwestern football team. scarlet: and in golf, jordan spieth received quite a consolation prize -- his finish was enough to make him the new top ranked golfer, topping rory mcilroy. what was i doing when i was 22? stocks are extending last week's gains, but stocks are relatively bearish.
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stocks put on trades that would profit from a drop in equities. olivia sterns and matt miller spoke with a money manager at stifel nicolas and asked about the negative sentiment toward stocks and investors souring on equities. the deceleration of global growth is well reported. expanding and we taken exception to that. we think global growth is around 2.752 3%. 2.75 to 3%. the china growth engine has blown a tire and you are starting to see that effect. oil prices are below $50 a barrel. earnings-per-share in the united and we thinkuck
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that will be 3%, if that. valuations are at the high end of the historical range. you think nymex is going down to $30. that's a dire situation for a huge industry, but how does that play out? a managinguest: as -- as a money manager, you want to stay away from high yields or underweight high yields. we believe the oil and gas segment is going through a pernicious cycle here where you are going to have to watch these reorganizations take lace year. that's going to open up some opportunities. that does not mean we are looking for a stock market
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crash, but we are looking for low returns not only within the any that within the fixed income markets. >> why do you like consumer discretionary? volatilityhink low companies will outperform high data stocks over the next 18 to 24 months. pepsi, dr pepper and budweiser and i will even add her she's -- these companies are consistently growing, consistently profitable , and are well capitalized in regards to their value sheets. get about an 8% return in the market. matt: anything outside the energy industry you would not touch with a 10 foot hole? guest: i would be underweight materials in our folio. we have a tremendous underweight
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there. anything tied toward china trade or global growth, we believe will be taking the brunt of the next correction when that does come. general thematic is a deceleration of global growth and china's deceleration. gdpon't think it's a 7% on -- we think it is more along the lines of 3% or 4%. that's going to affect the demand curve not only for oil but base metals. -- let: alix: coming up, donald trump's media circus hit the iowa state fair and his presence there was an true trumps style. ♪
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scarlet: welcome back to the bloomberg market day. alix: let's get to julie hyman who's looking at the markets. julie: a little bit of makeup, but this stock could use a little sprucing up. estee lauder is who we are talking about -- the stock is down today the most in the s&p 500. declines have been accelerating, down by 5.5%. earnings beat estimates but sales fell by 7%, largely because of the effects of currency. what we have heard from so many other companies, but the company's forecast was also short of analysts estimates. on the flip side, we are looking at shares of rent. softbank was up after said it was increasing its stake. point 5% gain.
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the only thing we can find is the company is offering a new iphone deal -- if you pay $22 a month, you are entitled to an upgrade whatever you want it. your phone doesn't have to be two years old. apparently, this is raising speculation. this is companies -- one of the best performers, up by nearly 6%. there was a report from reuters at the company had gotten a takeover bid from spectra energy. williams said it was putting itself up for auction after spurning a bid of 48 million dollars. we've seen something of a pickup in midstream deals. take a look at my bloomberg terminal -- this is a fragmented and increasingly midstream industry and we have seen a pick up here. this is a five year quarterly
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look at m&a. the blue line is the dollar value deal and the green line is the number of deals. so this is the past five quarters or so and you can see the trend has been somewhat higher. i want to talk to alex and seen a -- we have not big burst in energy and the day that you might expect, but i guess we're seeing activity on the midstream side. alix: you should see more in the fall of 2016. companies go to banks and not sober and get reserves redetermined to see a much money they can get on a loan. citigroup estimates that to be 10% lower, so that could lower their ability to access cash. those who are really hurting could just be forced to sell. of companiesa lot
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with mlps roll them up and try to buy them back. julie: not even strategic, but structural deals done, shifting around to assets. we do have some breaking news talking about oil -- the u.s. is approving shell's needs for arctic drilling. heard about this before, that shall had wanted to drill in the arctic and were put off a few years ago and now it seems to be the decision is final, approving shell's needs for arctic drilling. it is kind of like drilling on the moon come a very unexplored region. it is going to take a long time for production to be up and running. scarlet: it's funny you say that it's a world desperate for oil. too much supply is why prices continue to be depressed. alix: this is the kind of oil supply saudi arabia wanted to destroy. this is the stuff that cost
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billions of dollars to come online and a multi-your project. these are the kinds of project open -- opec was trying to cut off at the knees. scarlet: now for a look at the top stories this hour -- a bomb blast rocking a shrine at a major central bangkok intersection stop the government says 18 people were killed and 100 20 were injured. at least two bombs were found at the scene. at least one detonated. the area had been the scene of the goal protests. thailand has been controlled by the military's intake to a year ago. the pentagon is looking for a new place to house prisoners from guantanamo bay. among the possible locations are for leavenworth and the navy greg. it's all part of a controversial plan to close the detention center. scarlet: republican presidential candidate donald trump is taking a break according voters to go
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to court as a potential juror. he reported for jury duty at a manhattan court. he arrived in a limousine and walked at the courthouse that's waving. the real estate mogul and reality tv star has been called previously but did not appear. a spokesperson said trump ever got those summons because they were sent to the wrong address. of presidential candidates, they descended on iowa to woo voters on the crucial state and trump trumped most of the candidates in terms of popularity. scarlet: mark halperin spoke with the billionaire front runner and he joins us now. we heard you got to ride in the trump chopper. was it incredible? was it awesome? was it huge? mark: it was huge and incredible. he said they were going to give kids rides. he did one round and i went up with him and one other reporter. besides a great view of the
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state fair where we are at and where we will do open it with all due respect" tonight, he is in a good mood. if presidential candidates are in a good mood and enjoying themselves, it shows. i did a 45 minute walk to the fairgrounds at he was greeted by very enthusiastic supporters and was in a good mood. scott walker has enjoyed the lead all year in that statement his popularly has dropped to third and the most recent cnn poll. switch? you make of the mark: governor walker was here and it's a week day and the crowds are not as big, but his team is confident. he's from a neighboring state and candidates from neighboring .tates have usually done well his teen is organizing hard and have gotten endorsements from legislators. people should not write governor walker off. most people i talked to are on the republican caucus process is
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a governor walker is going to have some solid support in the eastern part of the state and the far west where people like jeb bush may not do quite as well with more conservative voters who may not be looking for another bush in the white house. mark halperin at the iowa state fair. that is where he will be hosting "with all due respect" at 5:00 eastern time with john heilemann. alix: i want them to have that fried twinkie action. scarlet: i want them to wear that hat on air. alix: coming up, amazon chief executive jeff bezos is on the defense refuting claims of shockingly callous management practices. that's next. ♪
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alix: amazon founder jeff bezos is on the defensive after an
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article detailed the reportedly toxic workplace environment. the story does not describe the amazon i know or the caring amazonian's i work with every day. scarlet: stick cost low tweeted in his defense that it was taken out of context and symptomatic of a growing reliance on hyperbole to score points. corey johnson joins us live with more. you are based in san francisco -- except when you visit us in new york. but you know what that companies do most of the time. is this the case of the east coast overreacting to what has been standard operating procedure on the west coast? shot atis is an unfair a company that might deserve some unfair shots. right --ick costolo is i don't think there is anything inaccurate with the article.
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it was a big article and i think it is worth a read a cousin raises the issues of what white-collar workers go through and how much they work. we all know that we leave the office -- we are more like firemen in that we are always on then your average worker. the average white-collar worker is accustomed to taking the phone home. in amazon, they carry this to an extreme level. it still has the culture of we have to work around the clock to survive. but it's also a very doggy dog culture where employees will walk into a meeting and make the project go away. upx: what does that wind doing to the tech employee base? we see unlimited vacations and two-year maternity leave. what does that do to their talent pool? cory: i think it's going to
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restrict their talent pool. thanmployees are paid less a comparable job in other places, but they do that -- we -- iat that stock chart think most employees get stock options at varying levels. one of the things senior managers do is they go to work and put up with it with the expectation that if things work out, they can get rich. it's worth noting that now because if you see the stock price declined by 90%, which it has done more than once in its history, recognize there's a lot of electoral capital and a lot of people believe that company because they are there for those options. scarlet: there are a lot of
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former amazonian's around. let of people have set up shop to absorb those employees who have left the company. google has a big operation not far from the fremont neighborhood and microsoft is there as well. but it's one of the great engineering schools in america and that's a big draw. tax sos no state income that is a great draw as well. there are a lot of reasons to work up there. good stuff. thank you for joining us. we have to say goodbye to scarlet fu, but coming up on the bloomberg market day, when it comes to currencies, forget the fragile five. ♪
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alix: welcome back to the bloomberg market day. i'm alix steel. let's get to a look at the top headlines this afternoon. apple's auto project may be
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closer to hitting the road than first believed. "the guardian" says they are building a self driving car and are looking for test driving sites. google has built a self driving car and honda and received ends are also testing their own versions. millenial's are developing their parents taste or luxury cars. jaguar michalak and lexis are lovedthe top five brands by 18 to 33-year-olds. they are taking out cheap leases so they can afford them. betting on los angeles to keep its dream for the lot -- for the olympics live. boston withdrew due to a lack of public support. after failed bids in 2012 and 2016, does the u.s. and a chance of winning this time around? we for -- we spoke with the former olympic committee director. guest: they present to the
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olympic committee three things -- one is stable government, security, and the ability to activate sponsorship. i think when you combine those things, they will be competitive , except for the fact that paris is back and paris lost only by a couple of votes to london and i think they are a formidable opponent. alix: he also said he doubts los angeles will lose money if it host the olympics. tebow, runningm for a touchdown in his first game in two years. he got a standing ovation when he entered midway through the third quarter. he has not paid -- he is not played since the 2013 season when he was cut by the patriots. way to come back. emerging market currencies feeling the effects of a lower valued yuan. coined toe five was
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describe a number of the world currencies and citigroup says the number is now 10. the 10x asked what are currencies. guest: they could be the theible 100 10 because only u.s. is showing any sign of returning to normal and we are debating whether the fed is going to hike. things like the commodity price weakness we are seeing and the currency weakness we see benefit or benefit areas like be aurozone, it could broader type of move where the g3 or g4 if you throw the u.k. in is beginning to look good. whether you are an em currency or whatever acronym you are
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or a commodity exporter in g 10, those are the guys that are under pressure and are going to lose. it could be the marvelous for that we are talking about. matt: we should clarify the you are talking about currency investors because these countries are going to purposefully pushed on the value of their currencies. they: it is true that purposefully do it but the reason they do it is that your economy is weak or your financial sector is weak or inflation numbers are disappointing. it is a win only in the sense that you have a narrow the objective you are trying to accomplish and you do it. it does not take a bad economy and make it a good economy. not succeeded in taking
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low-inflation economy thinking them back to target. pimm: will it make a difference to the chinese economy? guest: 3% does not make a difference to anyone. take a might do is little pressure off importers because the yuan was moving up with dollar. massivelyn getting negative pbi's that tell you margins are getting squeezed enormously. they might see a little relief that 3% does not by much export volume increase. if you look at japan which has increased over the last three years, the units they sell art a lot of, so it takes depreciation to get a tiny bit of volume increase.
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pimm: so why do it? guest: helps your equity market and help your exporters. i think the policymakers are realistic about what a 3% or 5% appreciation is going to do to activities. is like the third decimal places of gdp. it does have an impact on margins. there may be more to come. what kind of impact does it have on currencies that are appreciating westmark janet yellen may want to raise interest rates in the u.s. and now has to think twice because of what is going on in china. going to think about it and the fed will be watchful of it. but i think the intention of china is not to try and grab a further each head in terms of
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u.s. imports. they are trying to regain some of the territory they have lost to their asian neighbors and to mexico because of the appreciation. china than.s. versus china versus competitors around the world. coming up, target is making changes to the seas weeks. what does it mean for the retailer and its turnaround plans to mark -- its turnaround plans? ♪
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alix: welcome back to the bloomberg market day. i'm alix steel. let's head over to bloomberg's julie hyland -- julie hyman. volume has been about 25%
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below the 10 day moving average on this summer august monday, but we have seen stocks performing relatively well, considering where we started out the day with declines across the board. we have gained some steam here in midmorning, things started to pick up after we got an index of homebuilder sentiment coming in at its highest level in almost decade. take a look at the bloomberg terminal and we will see which sectors are doing the best. it and health care have been again that. declining about the session, so that has been the consistent red spot. ,onsumer discretionary stocks we have some stories that have been driving them higher. hotels,ase of starwood it was revealed that john andson fun took a stake
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said they are exploring strategic alternatives. now they are speculating about a push for a sale and when that might happen. comcast is recovering after a lackluster couple of weeks. compton"aight out of did well over the weekend. rising along with the rest of the homebuilders on that homebuilder index i mentioned. i want to look at commodities and where they are trading. oil prices continued their downward march, the low $42 a down 1.4% on the outlook for an ample supply in the market. gold extending last week's gain, which was the best in two months. we are seeing some desire for relative safety. copper going the other direction with persistent concern about
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global growth as we saw china china'saluation -- devaluation. copper down 1.4%. cannot escape the bearish commodity feeling. some changes in the sea suite at target with the cfo john mulligan devoted to the newly created role of coo and kathy smith has been named cfo. the management moves are the biggest yet under the current ceo, brian cornell, and mark the latest twist in target is turnaround story. we have more now on that story. what does this do to help target move the needle for its sales and get customers back? guest: john mulligan is really liked by the street. he has filled in as interim ceo after the previous ceo was fired ther this tobacco with
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target hack and sales starting to flounder. said he put ad to lot of the strategy in place now that the current ceo is carrying out of its get back to target basis and focus on what we do best. the whole issue here is the feeling is target kind of lost its way. they tried to get into groceries and it didn't go well. they tried to get into canada and that did not go well. they did a deal with cvs to have cbs take over their pharmacy so they can get back to focusing on the products that made them what they were in the 90's -- the higher and upper-middle-class customer. alix: is that the focus? to get some of those brands? guest: people are lined up
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around the store. move backto want to in that direction. apparel, home goods, toys. groceries will be a part of that but will they be competing with kroger or walmart or safeway? probably not. they have not given much insight into that. that's where we will be looking next, but they indicated they -- maybe you don't go there for your weekly grocery store trip, but a be picked up kraft year or yogurt or things that are popular with millenial's. walmart reporting tomorrow morning before the opening bell. we are looking at 0% sales growth year on year. what's the number to focus on? guest: the u.s. is the big cash how for walmart, but investors care about the u.s. and they care about same-store sales.
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1%s supposed to be up around . if they can reach that, the investors i have been talking to say the street should be happy if they meet expectations. no one is looking for a big beat. they are looking for walmart to meet expectations. no more big misses we have seen in recent years, just meet with the expect haitians are. alix: what about china? guest: that's a big thing a lot of people are looking for. huge amount such a from china. if the currency is devalued, what does that do for their margins going forward? at the same time, they are a retailer in china, so what does that mean or their china operations? they are trying to bring in chinese consumers.
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what does that do for your efforts to grow sales and not just my cheap products? don't mess it up is the takeaway. thank you very much. now to a look at the top stories making headlines at this hour -- starbucks is changing the recipe for its pumpkin spice latte chain wascoffee shop criticized for using artificial ingredients. that's probably why it tasted so yummy. they say the new version will be made with real pump ins sand without the caravelle coloring. theceo has called it company's most popular seasonal beverage ever. nbc says tracy morgan will return to television in october and will host "saturday night live." this comes after a year and a half after a limousine smashed into his truck. one person was killed and morgan was severely injured. morgan was on saturday night
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live for several years and appeared on open 30 rock." the hits keep coming for comcast tad universal -- "straight out compton" was a big hit. universal had two other big summer hits and late word that the fx network has ticked at the tv premiere rights to "straight outta compton." the incredible hulk roller coaster is closing the day after labor day and reopening sometime next summer. the hulk has been a universal since opening in 1999 and features seven inversions, a 100 foot drop, and top speeds of nearly 70 miles an hour. i don't know if i could handle that one. those are your top stories. buying parent company is
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to lily -- buying zulily. they do flash sales on things like maternity close and 80 items. shares have dropped 86% in the last year, so what does zulily offer qvc? me now in forins emily chang on bloomberg west. matt: we are going to put that question to our guest -- she was at cisco for 10 years. acquisitivey company, so we will ask for her qvc on qvc lying zulily -- buying zulily. it was a hot stock that then tanked and so investors of other hot docs that have been tanked may betsy -- like etsy interested.
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caters to moms and i sy catersir kids and et to people who want god's eyes and knit sweaters. maybe they could be the same acquisition target. internethe retailer types popping up all over the place and are hot for a moment pan.hey are a flash in the it does not make sense for qvc to be putting the together. alix: if a smaller player ends up falling off the cliff, they have deeper park it's -- they have deeper pockets so they can support that growth. they get this discount play and the loyal customers that come with it because zulily has a big customer base. .s does etsy i joke about it, but the people who shop there do love it. so if you get the involvement of qvc, maybe that will bring those
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wires to qvc's other assets. since the stock has tanked so much from the initial public offering, maybe they are getting a deal. and qvc generated about $10 billion in sales. that's a lot of eyeballs. base, so wecustomer will talk about that. we will also talk about jeff raises and what it is like to work at amazon. -- the "new york times" described it and we have to narrow down our focus because there are so many stories out of we will talk about when we will possibly see a television coming from apple and we will talk about what we will hear at the september meeting and a load of other things.
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album just trapped on apple music and got $25 million in revenue. best the first time we've seen some of those numbers from apple music top how is apple music doing and why would you use it if you already have spotify? is it a win market? there's so much to talk about. alix: thank you so much, matt miller. find out more with everything going on on "bloomberg west" coming up later today. road isp, clara and seeing withdraws a 40% of assets after losses. we will be covering that, next. ♪
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alix: bloomberg news has learned that investors in claren road were asked to pull about 41% in assets. the firm is owned by the carlyle
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group which is facing $2 billion in withdraw that the end of the quarter. in terms of this hedge fund, what went wrong? guest: some wrong that. energy, the greek debt crisis, financials, claren road started in 2005 and had a string of up years with great performance. bets on fannie mae and ready mac started to decline and these other more macro that's an it's on energy have led to declines this year. alix: is that unique to claren road, or is that pervasive in all hedge funds right now? guest: hedge funds are up by about .5% this year. what is interesting is that carlisle, which has three hedge funds, is struggling with its other hedge funds out side of claren road. vermillion is down and the two
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cofounders of that firm just parted ways with carlisle and carlisle is shifting strategies. is also sovereign struggling. in the carlyle world, this is a big story because they are struggling that leak and hedge funds right now. alix: what can we expect them to do about it? at vermillion, they are shifting strategy. they are shifting into commodity financing, so that is -- alix: like the high-yield market? guest: that is one area. in terms of claren road, bad performance through july but we thought rebound in the first two weeks of august. people familiar with the firm say claren road hopes performance may recover after the first two weeks of this month. alix: what about the third one?
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emergent sovereign is having some trouble but we have not gotten into that yet. but they are trying to ulster up this unit. it's run by a guy who had a very successful career in ranking. they brought him in around 2010 or so and put him in charge of credit and hedge funds and he is trying to turn things around. alix: what do they do in the meantime to boost their hedge fund is this? at what point do they have to close one down? guest: that is what we are wondering. after these redemptions we are willng about, claren road be down about eight billion from just 12 months ago. in terms of shutting down, that's something we have not heard about, but it is something that naturally when assets flag
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that much, you have to wonder whether they are thinking about it. is it just three really unfortunate hedge fund performances? anst: carlisle is interesting firm. their leveraged buyout's have one of the best track records in private equity. outside of public equity, they are having trouble in hedge funds, they are having trouble in their international real estate investments. their u.s. real estate is doing well. it's not like a black stone which is successful in all of its different businesses -- carlisle has lot of work to do outside of its private equity business. up, there's a lot -- the number one thing you should worry about. ♪
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in -- arelosing
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moments away from the closing bell. another selloff in commodities boosting demand for u.s. treasuries. u.s. stocks turning higher and market currencies tumble. joe: the question is, what you miss? getting worse.p what does this mean china at our? frenzy.eding why salmon is such a big deal these days. joe: you take a closer look at norway. troubled times for it was an interesting -- for a once who make petro state. let's put all of this into perspective because volume is rightlight


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