tv Bloomberg Markets Bloomberg August 26, 2015 12:00pm-1:01pm EDT
rally and avoid the afternoon swoon that we saw yesterday? pimm: the shanghai composite falls again. the government's policy actions failed to stop the selling. we will look into whether china's change in stock market behavior will also change the decision of the federal reserve to raise interest rates. matt: ford may start making new editions of the bronco and the --ger. is the root on the room on the road in the credit market? ♪ pimm: good afternoon. matt: we want to begin with a look at the markets at the moment. take a look at the equities and they are up across the board. danes of more than 1% for the dow jones at 15,850.
it is lost almost 2000 points in the last six trading days. the s&p down -- up right now at 1.2%. pimm: let's look at one particular stock. it is moving lower today. the maker of jack daniels whiskey and a variety of others. their report today/ while they did beat analyst estimates, there is concern that sales were a little bit lower than the analyst had projected. say they see modest gains for margins in 2016. i have earned a number of investors say that u.s. companies are doing great with margins and profitability because they've been cutting costs and buying back stock. is the revenue that is the problem. let's look at oil in gold. these are commodities that in most interesting over the last couple of weeks and the center of the crisis.
crude trading below $40 a barrel, down $.21 today. brent trading up right now but only marginally at $43.31 a barrel. gold futures continued their decline. they had a couple of good weeks of for he saw the brunt of the selling in equities and and they got sucked in as investors needed liquidity. they are down to $1123. pimm: let's look at the bond market and the selling going across the bond complex. a little bit of a selloff. let's look at the u.s. dollar versus major trading partners. the dollar gains, loses a little bit of value. gaining and strength against the
pound. the yen giving up a little bit. let's look at some of the top stories. a gunman described as a disgruntled television station employee is suspected of killing a television reporter and a cameraman has killed himself. shot -- he shot two members of the staff of the television station while they were on the air. the general manager of the tv station says the victims are allison parker and adam ward. was interviewing mickey gardner, economic development official about local tourism at a shopping center in mo data -- moneta. eight shots ring out and gardner was also wounded. the gunman report of the killed himself on interstate 66 after a police chase. employees of this tv station were told to stay inside the
building as long as the suspect is on the loose. bj in 50 people work at wd roanoke. matt: james holmes will be formally sentenced to life in prison. he was convicted of murdering 12 people in trying to kill 70 others in 2012. jurors rejected the insanity plea but could not agree on giving him the death penalty. holmesu see pictures of from the original arraignment. pimm: in france the suspect of the foiled attack on the high-speed train has been charged with terrorism. he is described as moroccan who authorities say had linked with radical islam. his lawyer said he only wanted to rob passengers. the attack was broken up by three americans and other attackers -- passengers on the plane. one of the americans walked off a commercial plane.
he was accompanied by his parents and the city of sacramento plans a parade for all three of the gentleman who grew up in the sacramento area. matt: the draft joe biden movement is picking up steam. a super pac that was the vice president to run for president says it will have a presence in all 50 states next week. the organization has more than 250,000 people that have signed on for the effort. pimm: dish network says 129 local tv stations and 79 markets have gone dark. the reason is a fight with sinclair broadcasting which owns the channels. says the dispute is over terms of a cable channel that dish wants to buy and sinclair says it is willing to negotiate a fair deal. matt: wings, beer, sports, it is such a simple philosophy. it's enabled buffalo wild wings
to go to more than 1100 restaurants. we spoke about growth with sally smith, the boss for 19 years. >> we said we could be a chain of about 1700 restaurants domestically and in canada and the next five to seven years. with 1100 we are well underway. smith also says wing prices are significant higher than last year. that is hurting margins at buffalo wild wings. those are some of the top stories we're following. in the next half hour, at the time and emerging markets are getting hit hard, this is the worst of the worst. we will look at that as well as donald trump making waves once again. this time facing down a univision reporter. will this affect trump's highflying pole numbers? to china where the shanghai was
down today, losing just over 1%. matt: interest rates cuts of failed to reverse the slide. what will china do next and what would that mean for the fed here in the u.s.? erik schatzker asked david wu at merrill lynch. would --is a chart it i sent you guys. --t is interesting to me erik: the blue line is the shanghai composition? >> is the benchmark interest rate in china. what is striking is you can see that despite the fact the stock market has collapsed, interest rates have barely gone down. the main thing with all these interest rate cuts they've been trying to implement, the real money market did not come down. the reason why is because in order to stabilize, they are
intervening efforts the market aggressively by selling dollars and taking liquidity out of the system. the irony right now is that despite the collapse of the stock market and all this effort to inject liquidity, they have not managed to engineer short-term interest rates. erik: because policies are at odds with themselves. >> the biggest constraint that beijing is facing right now -- the country cannot have a fixed exchange rate and an independent market policy at the same time. china can no longer have its cake and eat it too. china, these guys are magicians. it's clear now they are facing this real constraint which is actually very worrying. i think the next couple of weeks for investors that of seen china
-- they need to see if the break and come down. that is the canary in the coal mine. the seven-day repo rate. >> i suspect it will come down but it will not be without much further depreciation. if they want to bring down rates to support the stock market, they have to let the currency go. by letting it go, that will basically feel fears in the market of what china is doing in the global currency war. i want to talk about the u.s. because the same reasons china's rates are not going down in helping the stock market is the same rates -- reason u.s. rates -- 10 year treasury yields are at 10.1% this morning. furthermore, if you look at inflection -- inflation markets,
yields a gone of the last three weeks. pricing 20%s chance. what it is telling you is that china by intervening in the they are selling dollars, five event the cell u.s. treasury's as well. theylling u.s. treasuries. are preventing u.s. yields from going lower despite the sharp drop we have seen in the stock market in the last two weeks. impact on a direct global markets through u.s. rates. greater the likelihood is a federal ease before titans? ghtens.it treasury yields cannot go
down and -- cannot rally. they are encouraged huge losses. another reason why we have seen equities selling from that camp. erik: does the fed move this year? >> i think september is out of the question. you never say never but i think october is perhaps in play. there is no question that of china continues to slow, it is difficult for me to see the fed hiking rates. one to besible for cutting rates while the other one is tightening -- trying to hike rakes. wu fromat was david merrill lynch. still ahead on the bloomberg market day, we will take a look at stocks that are making moves right now in the market. matt: including monsanto who is
.- buying syngenta monsanto is abandoning the whole process and they may start buybacks once again. surges going up for monsanto. there is another big deal today, not nearly as big, but another deal was announced. buying -- a 66% premium to cameron's close yesterday. an oilfield services company buying a maker of equipment. the idea is they would be able to offer customers some sort of bundling. this might indicate they see a bottom to the oil market right now. we are also seeing other oilfield services company's rising on speculation we could
see more deals. --edies like weatherford at companies like weatherford and national oilfield. in terms of oil, we have not seen as many mergers and acquisitions as you might expect. so box -- with stocks going lower and lower. this is the 10 year chart of oil. and mergers and acquisitions in the united states specifically. the blue lines are the value of the deal and this line represents the number of deals. this is 2015. we have seen a pick up in recent years but this year has not been as high as some had anticipated in part because of selling themselves, some of the smaller providers have been going to the debt market and the high-yield market. thus far pretty successfully.
that may be changing. i have been looking at oilfield services versus the exploration and production companies. the white line is oil and you expiration tracking and production companies, and one tracking oilfield services company's. -- companies. -- it less than than the is not a big gap. all of them are down sharply as we see this big deal happening. matt: all of them taking a little hit over the last few weeks. thank you very much for that. pimm: let's look at some of the top stories at this hour. one of the few stars in new jersey's recovery could be stifled by the state's transportation crisis. jersey city accounted for 10% of the state's job growth last year
and it outpaced the state and nation in reducing joblessness. millions of dollars in tax incentives persuaded companies to move to the waterfront but a new commuter rail tunnel is still at least a decade away. the existing one is bogged down by repairs and delays. u.s. roads are more clogged the never before now that the recession is behind us. american motorists are stuck in traffic 5% more than they were in 2007. commuters in washington dc suffer the most, losing an average of 82 hours a year to rush-hour slowdowns. that is a lot of waiting. those are our top stories. matt: we will tell you about the worst performing bond in emerging markets. the absolute worst one. it dropped 43% in one day. a live report from mexico city next. ♪
♪ a gorgeous view of central park. this is "bloomberg market day." pimm: bond investors in mexico's largest construction company are getting very worried. it is plunged about 40% in the past month, making it the hardest hit bond and all of emerging markets. said this comes after ica it would sell its stake in its airport unit. brendan, normally people are happy to see asset sales but this was a sacred cow the comedy just said that this is one think it would not be selling.
this signals that it desperately needs the money, right? >> that is exec rewrite. this is a company that needs to do asset sales. it is already done a bunch this year. this is one asset that investors did not want to see sold. even if it was just a small up -- part. they said on a conference call in late july this was not a priority, down at the bottom of the list for asset sales and a week later they sold a chunk of what they owned. they maintained a large stake in control, but investors took that as a sign that maybe ica really needed the money. pimm: could you describe for us what is this company we are talking about? what kind of holdings do they have? with a just trying to refinance debt and put it into pesos and set of dollars? >> the ceo said that is one of the most -- motivations for
doing that sale. ica was able to convert some of whichllar debt into pesos is an important goal for them since they have most of their business in mexican peso's with about half the debt in dollars. ica is a company that built much of modern mexico. operator has airports in the northern business capital of monterey. it operates the airport and on the boko. -- acapulco. they're one of the better operators because of the weaker peso. you have an increase in foreigners arriving in mexico and significant increases in bus riders deciding to take discount airlines. -- has come to be seen as one of the best assets because its construction
business is so weak right now. matt: we hear from bond investors from pimco to mexicock that they have at the top of their list as far as emerging market investments. they have taken a huge tumble in the past few weeks. what is the outlook for a construction company in mexico city? it must be growth? >> the problem for a construction company like ica that has as its main client the mexican government is that the mexican government is cutting spending back. they traditionally get about one third of the revenue from oil. falling prices of oil means they have to budget less for spending. they have cut spending this year. they are probably an -- about to announce a cut of some size for next year. if you're in the business for catering to a client cutting spending, it is a tough position to be in right now for a builder. pimm: what about the corruption
in mexico? specifically how it affects government contractors? been -- there was an investigation into houses thed by the president, first lady lady, and the finance minister announced last week. this was a very big below last blow last year to construction spending because the government canceled but was going to be one of its biggest contracts. a high-speed railroad through mexico city. theyhappened is that abruptly canceled that days before it was announced that one of the companies that was part of the consortium winning the contract had sold the rights to a house to the first lady. that was the first of a number of project delays, spending cutbacks, and other challenges
for infrastructure spending in doneo which is dose of -- so far quite poorly under the current ministration. -- administration. pimm: the mexican stock market is down more than 16% so far this year. that is it for me. i leave it in your hands. next half hour, shares of oshkosh are climbing after the company won a u.s. army contract to replace the humvee. exciting pictures like this after the break. ♪
welcome to the bloomberg market day, i'm matt miller. that's get a look at the headlines from the bloomberg terminal. president obama has called japan's leader to express regret that u.s. leaders find on japanese officials. wikileaks showed agency reports on japanese positions on international trade and climate change. they date from 2007 until 2009 and also posted what they said was an nsa list of japanese targets for telephone intercepts. -- comments from president obama about his opponents. he told democratic donors that he is trying to figure out with "the crazies." remarks, as congress is choosing sides over the iran nuclear deal. a spokesperson says that the president may have been flipped with his remarks, but we have seen republicans to wildly irresponsible things. there is a sign that corporate spending is picking up.
orders for capital goods rose in more thanre than -- in a year. orders for planes grew 2.2%. orders of all durable goods exceeded all forecasts. the new york federal reserve president bill dudley earlier. he says international financial and market developments may have an effect on the fomc meeting in september. thisom my perspective at moment the decision to begin the normalization process at the fomc meeting seems less compelling to me than a few weeks ago, but normalization could become more compelling by the time of the meeting. fed funds futures pricing in a 28% chance of a interest rise. "the view" is returning to its roots by bringing back its
second longest-running cast member. joy behar will be rejoined the ladies on the show. paula faris and candace cameron moderatorjoin the new raven simone among other panelists. that is a look at our top stories this hour. coming up in the next half hour, taking satellite to the masses. we will meet planet labs, a startup that is selling tiny satellites that fit into a shoebox and that are launched by the dozens. and will the market volatility give the fed pause about raising interest rates? will speak to michael feroli, the chief economist of j.p. morgan securities. ford is gearing up to revive two iconic models. the automaker they return pickup of the ranger and bronco here to
the usa where truck demand is big. we have the scoop from detroit. david, for me, the exciting part is the bronco. ford makes the ranger, i know it's in demand in the u.s., but the bronco is the one that real auto nerds have been clamoring for for so many years. is it really true, is it coming back? >> i think it is. they don't want to put out the announcement yet because they are in the middle of labor negotiations. they like to dangle in front of the united auto workers union, if you make a concession here, we will guarantee that you have products to build. ford has done well with iconic brands. the mustang is doing well. they are bringing back the continental for lincoln. i think this will come back because it has a real following among young people in southern california, even though they
have not made a bronco since 1986. matt: we are looking at pictures of the ranger. are we going to see a new ranger, a different kind? this one looks kind of dated. 8 that is to be determined -- >> that is to be determined. these are small utility trucks, so my guess is they would have to come up with something adopted for the market. the toyota nissan trucks are pretty popular and general motors has hit the ball out of the park with the colorado and the canyon. these are midsize trucks. the colorado is not tiny. it really does take some attention and skill just to park the thing. it is not much shorter than the full-size pickup. me ask about labor negotiations. i know that you and the whole auto team is focused on this. all threem, chrysler, are in negotiations with the
uaw. how is that going, who is in the most competitive position right now? tossups sort of a between gm and ford, i would say , because they are both financially the healthiest. the union will go after them and ask for raises for the workers that have been there for a long time and the entry-level workers who start just below $16 an hour. doing thingsanies like importing vehicles from china, talking about building in mexico, they have a bit of leverage. they have money to give but they also have a way to brush back the union to say, don't ask for too much. we have these other places where we can build and import cars and trucks, which is much more competitive. matt: ford is moving production of five of its smaller fuel-efficient vehicles from a .actory here, down to mexico we are talking about this story, the bronco and the ranger, which
would essentially replace that production and give those workers continued jobs. >> that's right, and it makes a lot of economic cents. you cannot charge as much for wages arers, so the cheaper. suvs and pickup trucks are selling great right now. a new bronco would generate a lot of enthusiasm, depending on how they design the thing. so they can get good prices for that and it would be more profitable, so they could afford the wages. if you go back to the bronco from the 1960's, the first one came out in 1966. that was a pretty cool what is now the jeep wrangler. matt: i am excited about it. we are looking at some renderings now. at the frontking of the truck, sort of like the
cab inoncept but with a the back. surely, there would be some demand for auto nerds and others. thank you for being with us, david welch. story thisthe morning. congratulations on that scoop. still ahead on the bloomberg market day, the new controversy for donald trump after he temporarily banishes the univision anchor from a news conference. the walter cronkite of latino american anchors is carried out by donald trump's security. that is no bueno. ♪
matt: welcome back to the bloomberg market day. look at this incredible view that we have of central park. you can see on the right hand side of the screen, the baseball parks, the roof of what i believe is the waldorf astoria. there on the left, that is some building. what a cool. -- cool spot. maybe the coolest in new york city. julie hyman has the biggest stories of the day. i will keep from commenting on your new york travelogue, but much like yesterday, we are seeing a fade, just happening much earlier today than yesterday. take a look at the terminal. here is yesterday, we were chugging along with the rally and then we gave it all up in the last hour of trading. here we are again today and it's been a much more steady trend
lower, even though we are still higher on the day. nonetheless, cutting the rally substantially as the day has gone on. there remains suspends today, just as yesterday, in terms of where we will finish out the session. dth. a look at the brea utilities have turned lower, they led some of the declined yesterday. consumer areas in staples and discretionary which are now starting to turn red as well. kinks in the some armor of the recovery that we had been seeing. technology is the best performing group. that is where we are seeing a big bounce. analysts have come not to recommend buying a lot of these stocks after their big selloff. interesting, yesterday, in terms of what was leading the declines, it was the more defensive groups. held onto their
recoveries yesterday, so an interesting day on that front. at a coupleok commodities, not so much oil, but the metals. gold prices continue to march lower. they did not do well when stocks were selling off. to that people are trying factor in the fed, we see gold selloff once again. gold miners also selling off. copper situation with and where we are watching that trade today. china continued it selloff overnight. china and copper are very linked in terms of how they trade. down another 3%. gold down 5% as well. know why, julie, if the idea is that the market forces everyone in the world to get in line and turn the putting presses on full speed, why wouldn't the gold bugs go crazy for that precious metal, isn't that the point? it is a little confusing,
and was when stocks were down show sharply and people were going into treasuries and not gold. take a look at central park with me, one more time, is it not absolutely beautiful, isn't it not the most gorgeous place in new york city? it is lovely, i don't know about the coolest place in new york city, but it is up there. matt: thank you, julie hyman, who probably lives in a cooler place. now to our top stories. greek prime minister alexis tsipras said it is time for people to decide on his record. speaking in an interview, the outgoing pm said he had no mandate to continue governing even before greece's september elections officially called for rowing challenge inside of his a result party to avoid its disintegration. los angeles may take another
step today to hosting the summer olympics for a third time. the city council is inspected to mayorn whether to give aaron barre city the power to negotiate with the u.s. of the committee for the 2024 games. the toples emerged as commander when boston withdrew. the issue is whether taxpayers would be stuck with cost overruns, which typically there are many. if you are running on a wedding venues on land, how about borrowing a page from this miami couple and getting married underwater? to mark the 50th anniversary of the christ of the deep statue. the bronze sculpture is an icon in the florida keys national marine sanctuary. it was submerged 25 feet off of key largo back in 1965. very cool. that is a look at our top stories this hour. republican presidential candidate donald trump continues to make headlines today. the latest happened during a
news conference in dubuque, iowa. trump called on a reporter for a question and at the same time univision reporter jorge ramos stood up to ask a question. >> sit down, you are not called. sit down. go ahead. you have not been called. >> i have the right to ask a question. >> go back to univision. matt: a security guard removed him from the event but he was allowed to return later and asked several questions about immigration. joining me to discuss the story is mark crumpton. i have heard this man described as the walter cronkite of latino american news anchors. that may do him a disservice, he is one of the best journalists in the world. he has a following in the latin community because of his work on univision, but i was struck when i saw that video. the same timeout
the other person did and started to ask his question. but i'm thinking, it is in the best tradition of that adversarial, aggressive press that we have in the u.s. -- thinking about edward r morrow, dan rather. jorge ramos had a question and wanted to ask the question. be it far from me to tell him or mr. trump how to conduct a q&a, but i was thinking, maybe just the situation down -- sir, i called on this gentleman. hisoon as he has done question, i will go to you. matt: i have been to a lot of press conferences like this and so have you. there is to delete an orderly fashion in which the subject will call on people. but the last person you want to anger is the most important latino american journalist in this country, when you are already having serious trouble
with that constituency. the comments that donald trump made about mexican during the announcement for his presidency have reverberated across the latino american press and the hispanic press at large. race, yout to win a probably need to court that massive, massive demographic. we will get a chance to hear what mr. trump says because he will be joining us this afternoon. he will be on with "all due respect" coming up at 5:00 new york time. you will want to stay tuned for that. matt: is he going to come in the building? i will watch that. and that will be fascinating to see how mark and john handle the donald. mark is going to join me again after a quick 10-minute break to powder his head and get some coffee. coming up, an army of little satellites who are watching planet earth. >> this satellite is called a
matt: we don't want to leave the east river out of it. we can look at all of new york city from bloomberg's world headquarters in midtown manhattan. chbelieve that is the ed ko bridge, which most of us are heard to as the 59th bridge. doves flying in outer space. i cannot talking about the cleaner pigeons, but these are tiny satellites that's not photos of the earth each day. if you are an investor, the pictures they bring back could give you a competitive advantage and a profit. ramy inocencio reports from san francisco. watch this.
they are called doves, shut up from the international space station, and they are small, less than one foot long, but the telescope cameras are powerful. this is what we get. high resolution photos of anything on the earth's surface, from west texas oilfields to chinese power plants and argentine lithium minds. typically downloadable in one or two hours. it is all based here, planet labs. will marshall is ceo. have missionwe control. over here, we designed the satellites on the computers. we build and construct them downstairs. ramy: everything is done in-house. 13 iterations of the dove built here since 2013. front two thirds of that is an optic, so it's a telescope that look down on the ground, so it lies with that pointed down. here solar panels tested
power each dove. each has a radio in front, wings that unfurled in orbit, and durability. thehis could survive equivalent of dropping a satellite from here onto a marble floor. ramy: compared to nasa's satellites, they are cheaper. thousands off times cheaper than the ones up there today. ramy: that make their photos accessible and affordable. it is business intelligence and investors can profit. >> if they are a hedge fund in new york, we can help them because we can check the output from all the soy fields every day around the world. ramy: robert simmon is planet labs last pair of eyes before an image goes public. ,is favorite comparison is this from brazilian sugar cane fields 24 hours apart. >> before it can be harvested, you have to burn the sugarcane.
that happened the day after the original image. one thing we can do with this imagery acquired every day is get a fine-grained picture of changes occurring. ramy: it is watching the daily change that is valuable to investors, whether in agriculture, commodities, or transport. but it has not been smooth sailing. on june 28, planet labs lost eight doves when the falcon nine exploded over cape canaveral. ,xactly eight months earlier another disaster. a rocket over wall of silence, virginia. 26 doves lost. thise challenge in industry is doing with the risk of launch. our goal is to put our satellites on lots of different satellites from different countries. now, planet labs focus is
delivering on its image contracts. by the end of 2016, it wants 150 doves taking photos from orbit, largest constellation of earth satellite in human history, each a shoebox i in the sky. matt: ramy inocencio flew back from san francisco and joins us now in new york. what a fascinating story, what a fascinating industry. story to do inol san francisco. i had a lot of fun doing it and the visuals were stunning. know it's been pretty profitable for hedge funds to use the data. you would not think of that instantly as the use for it, but there was a pretty penny that went into funding the company and these companies in general, and that's paying off. ramy: they have gotten about $120 million in venture capital funding which has gone through three rounds. series a was led by adam draper.
with$6 million, but then series b and c, the money got larger. anted up about $30 million. data collected, a big data collector, anted up $40 million. all in all, $118 million. obviously, hedge funds are getting involved, billionaires are getting involved. have funded aj couple other competitors, what are some of the others? ramy: one that i spoke to was black sky global in seattle. they said that they would start launching about 60 satellites next year. they are saying, at least on the order of launching and pricing, they are claiming they can put up 100 satellite for $300 million. if true, that could. it we be some of earth's
cheapest satellites to ever go up in orbit. matt: so they send them up in a bag with the iss? ramy: not exactly a bag, but they will see where they can put their satellites and put them in and then send them off. matt: i know you have a longer piece on bloomberg.com. if anyone is interested in seeing more about this, check out bloomberg.com. coming up, we are speaking to michael feroli, to get his take how all of this china crisis has affected the fed. ♪
fed president bill dudley says the case for a september rate increase is now less compelling. monsanto's pursuit of syngenta is over. they abandoned their quest to buy the largest maker of pesticides. mark: forget about tech companies and hedge funds. wall street could be about to lose top talent to regional banks. and rhoders in ohio island are becoming attractive landing spot. lenders in ohio and rhode island are becoming attractive lendinanding spots. good afternoon, i matt miller. apologies, every time i say ohio, i am supposed to say the great state of ohio. home of matthew miller. wall street is trying to gain its footing to get