tv Bloomberg Markets Bloomberg October 26, 2015 3:00pm-4:01pm EDT
bloomberg markets day. from bloomberg world headquarters in new york, good afternoon. i'm betty liu. markets are on the verge of closing lower as the four-week global rally takes a break. how worried should investors be about slowing global growth? merger monday. back in a big way. bridgestone buying pep boys. what is fueling the acquisitions? and what really happened at aig during the financial crisis? on why benttorney bernanke is telling the wrong story. about one hour away from the close of trading on this monday. let's go to the markets desk where julie hyman has the latest.
julie: we anxiously await the from the federal reserve. i had a back and ahead of a lot more earnings coming later in the week, little changed today on the major averages. volume on the s&p 500 is about 7% below its 10 day average. stocksr discretionary and health care holding up pretty well today. energy is the big dragon has been throughout the day. right now down about 2.2%. oil and natural gas are the reasons. lower on the global oil lot. , the fourth straight down day. with had some mild weather and
the outlook is for that mild weather to continue. all that combining for that steep decline we are seeing their. betty: and it's more noticeable because the dollar is falling also. julie: we do have that fed .eeting and china's rate cut the expectations on the part of traders and economists keep getting pushed further back about a federal reserve rate increase. if you look at the 10 year, we're seeing buyers coming in today pushing down those rates. -- point 06% is where we are 2.06%. gold is getting a small lift as we see the dollar decline, not by much, but it has been notable because it is going contrary to other commodities and because --
it's a tiny rebound. get a check of the headlines this afternoon. mark crumpton has more from the news desk. : president obama is holding talks with the president of indonesia. it's his first official visit to the white house. discussions will reportedly center on how to address the threat posed by islamic extremism and tensions in the south china sea. it's a chance to build relations with mr. obama, who spent part of his childhood in indonesia, and to attract investment in southeast asia's biggest economy. john boehner is reportedly looking to finalize a budget deal before he leaves congress this week. both parties tell bloomberg news the white house, senate, and house leaders are trying to seal an agreement on a two-year spending deal that would extend the government's
borrowing authority passed the 2016 presidential election. >> for several weeks there have been bipartisan conversations taking place on capitol hill. of white house has been part many of those conversations as well. we have worked assiduously to andect the privacy confidentiality of those discussions. principally because they are based on the principle that nothing is agreed to in the context of the discussions until everything is agreed to. that means nothing at this point has been agreed to. plan spendinge caps for dispense -- defense and nondefense programs would be raised during the two years. death toll from the earthquake in afghanistan continues to rise. more than 200 people are confirmed dead across afghanistan and pakistan.
the tremors were felt hundreds of miles away, as far as new delhi, india. experts say it's the strongest inke to hit that area decades. as many as 100,000 syrians have been displaced in just the last three weeks. the norwegian refugee council says they been forced from their homes due to the recent surge in fighting following russia's military intervention. a well watching boat sank off vancouver island. five british nationals died when the boat with 27 people on board went down yesterday. it's not clear what caused the boat to sink. you can always find the latest news on bloomberg.com. betty: mark crumpton, thank you with those headlines. central-bank policy decisions this week. to keepllen expected
interest rates i'm changed investors pushing back against the idea. how is all that going to impact the markets? michael rourke is here. you say now is a selling opportunity. why? >> what happened in august was on the back of slowing global growth, declining earnings, a lot of negatives out there in the market and the economy. sople positioned themselves bearish lee and that is what is fueling the rally here. we had a sharp rally and the reason the feds probably won't raise rates this week and ,robably not in december either here's an opportunity for investors to get out flat on the gear. betty: you're saying the rally is a short squeeze. based on what data? 500ast week the average s&p
name was down from the 52-week high. they started liquidating their long positions. when the market started selling off back in august and september, they hedged their portfolio with the s&p 500 teachers. speculatingat positioning in futures, it's the lowest level since 2011. the last time it was this low before that was december 2007. in 2011, there was operation twist. in 2007, the market heat a month later. this is similar to that 2007 scenario or everyone got very defensive and that is what is fueling a rally.
it's pushing the broad market higher. energy, groups with weak fundamental stories it has been week for the past year. that's why they are seeing the benefit of the broad market rally. a lot of people have that same theory. we've had articles in the last few days, we have kong through some of the short data. i don't know if you saw this report, but it basically said they found the amount of stocks borrowed across companies on the s&p is about the same as it was before this whole rally. it has been pretty steady throughout. i guess the conclusion there is that it was based on fundamentals, not the short squeeze. michael: earnings are going to decline this year.
current estimates are that will be down 2.7% year over your. it's more likely obese 6% or 7%. it's not a good fundamental story. if you look at the economy, the estimates for 1.5% growth. the fundamental news has not been good. betty: but it may not be a short squeeze, though. squeeze.it is a short stop short interest is definitely higher but people hedge with etf's and futures. there is definitely a short squeeze going on out there. investors should be careful. this is an opportunity for them. betty: so are earnings are
coming down. where do you think we will end up with earnings at the end of the year? michael: i think if we continue to trend the way we have, they will be 1.07 for the beginner. -- for the year. when you see are earnings start come you cannot have that much confidence on the forward estimates. if earnings are not meeting estimates and falling short, then you have a problem there. you could get clobbered. michael: here is a guy who is very bullish. if he is arguing for being tactical because there are a lot of negatives out there, that is a signal in and of itself. betty: good to see you, michael o'rourke.
much more ahead in the next 20 minutes of bloomberg markets day. a big weekend of wheeling and dealing. three major acquisitions in three different sectors announced on monday. shiftinghorn is strategies and hedging commodities as he battles his worst year since the financial rises. greenberg tells me why ben bernanke's new book is all wrong. find out what they say really happened surrounding the government bailout of the insurance giant. ♪
a look at some of the biggest stories in the news right now. acquiring 55,000 temporary workers to go with an expected 12% increase in business. 3.5x handled more than million packages from the day after thanksgiving through christmas. the office of eric schneiderman said it is concerned consumers who are paying for service from verizon, time warner and cablevision might not be getting the fees that are being advertised. shareholderargest in square is leaving the board ahead of its ipo. therefers not to serve on board of public companies. he on 17% of the famous company. he has been on the board since 2011. you can always get more business news at bloomberg.com.
nasdaq, abigail is standing by. abigail: stocks have been on nasdaq. right now we are flat. investors are taking a breather after last week. one stock that is down ahead of its earnings report tomorrow is apple. it is off about 3% right now. rbc is saying the we dialog semiconductor results in the third order and lackluster fourth-quarter guidance is waiting on apple. directionally negative for apple iphone units in the first and second quarter. interesting is the fact that the analyst is an outperform on shares. a technical analyst at cornerstone says apple is a cell
and head of earnings based on a chart pattern and suggests a disappointing quarter tomorrow is likely to be reported. shares off about 3%. broadcom is having its worst day since march. we look at the supply chain analysis, it does show that apple is broadcom's second-largest customer accounting for 14% of revenue. clearly investors do not like that right now. again though shares off about 3%. we are all waiting for those apple earnings. lots of mergers and acquisitions announced today. let's start with cap boys. bridgestone -- cap boys. boys. more than 800 auto parts shops around the country. duke energy will acquire
piedmont natural -- four -- natural gas. joining us is our managing editor of global mergers and acquisitions. >> typical merger monday, over $20 billion on an otherwise sleepy day. betty: we haven't seen this much activity in a while. jeffrey: $106 billion at for sab-busch is paying miller. we're still on pace to have a record to top 2007. we're not done with october and we have about $480 billion. we are on the pace we then all year. they: let's talk about
individual deals themselves. what is unique about the pep boys bridgestone deal? jeffrey: there is not a lot of growth to be had in japan. there's a famous number out numbers are being sold to adults in japan and two children. the demographics are really bad there. are buying into that area in the united states. automakers are selling more cars this year than in any year. there are just more cars on the road and they are older. you will make a lot of money with these do-it-yourself auto shops. oys is very much in that space. has it been a long time coming to see merger and acquisition activity in this space? jeffrey: gm and chrysler went
into bankruptcy and that salvaged by the government. think we will see more auto supplier deals as well. you'll see some of the people who make the parts for these retailers probably consolidate over time as well. betty: what about duke buying piedmont? jeffrey: duke is the largest based on market cap in the united states. most of their business is selling electricity to homeowners. namedseen another company black hills that bought in this year. people are buying or going into another area such as gas. in someack of growth respects that's pushing or prompting this consolidation. betty: are we likely to see more accurate -- acquisitions in this area? jeffrey: yes, but it's a little
slow relative to check or consumer areas. buffett owns the big utility there, maybe that will be an acquirer, who knows? good to see you, jeffrey mccracken. still ahead, losses are mounting for greenlight capital. david einhorn revisiting a page from one of his hedge fund playbooks to turn things around. we will tell you how, in a moment. ♪
greenlight capital drop the most since 2010 today. green light posted a loss for the third straight quarter. einhorn is trying to offset those losses hedging oil and national gas -- natural gas. let's start with what went wrong here. >> it's kind of a perfect storm, actually. -- a natural gas and coal company. we joke at the desk and say he handles a lot of pain this year. now it's about how far can the pain go. he is hedging his that's. he's been taking small derivative positions in oil and natural gas to hedge against anything he feels. this year energy is down about 73%. his derivative positions says at 10% fall in natural gas would be a $2.4 million gain in his
portfolio. billionut a $1.1 portfolio at greenlight. betty: what does that tell you? his find isyou that down 17% this year. his main fund. how low can you go before you need to start showing a little bit of relief in some of these positions? he is holding onto these but he is -- we don't know what it means long-term. it's not the way he feels about gold. he believes the central bank
stimulus will increase the value. we will see how that plays out. has he said anything recently about the performance of the reinsurer are just his own performance. >> on the insurance side and the investing side, what's nice about david einhorn, he's pretty honest about how the performance is going. and he's admitted he's made some wrong bets. >> the statement came out friday after the markets closed. the party is not over. betty: not at all. what about investors, are they voting with their feet yet? >> not really. beyond this year, it has performed decently.
warren buffett has said the reinsurance market is a tough place to be. others have a different outlook on the reinsurance market. we will see what happens. betty: thank you so much. , staying with insurance companies, hank greenberg is not giving up on his fight to set the record straight about the aig bailout. he has some choice words for ben bernanke. ♪
bloomberg market day. i'm betty liu. mark crumpton has more from the news desk. mark: thank you very much alahoma judge has ordered psychological evaluation for a woman charged with driving her car into a homecoming parade, killing four and injuring others . she is being held on for preliminary accounts of second-degree murder. attorney says she is mentally ill. of also faces charges driving under the influence. belgium on high alert after a suspected attack or try to smash his jeep through army barracks. soldiersct fled after opened fire. they obtained the suspect after a manhunt with helicopters taking part in the search. catholic leaders from five continents have issued a 10 point appeal to negotiators in
paris. this move comes after pope francis's landmark encyclical demanding urgent action on climate change. a new poll shows hispanic voters have a message for donald trump. you are fired. he is viewed unfavorably by 72 percent of hispanics. according to the survey, only 11% you him favorably. trump began his campaign with controversial comments about mexicans. a billionaire's backing ted cruz. senator cruz has raised more than three times as much money in texas as jeb bush has through the first nine months of this year. the world health organization has released its most definitive report about the
relationship between cancer and processed food. the who puts foods like sausage in the same cancer danger andgory as asbestos cigarettes. farmers and industry groups reject the findings to review can always find the latest news on bloomberg.com. betty: no more bacon for us, mark. an right, less than half hour until the market close. let's check with julie hyman on some of the moves, starting with apple and its suppliers, right? inie: one of the suppliers germany -- the company revenue missed estimates. it was up by 18%. that is a slowdown from recent quarters. in germanl 20% trades. ripple effect.
if you look at chipmakers, we are seeing selling. companies like sky works. all of them taking a big hit right here. then analysts are saying there could be a reboot for apple itself. potentially a signal of stagnating sales volume for iphone. apple itself is treating down 2.7%. i was looking at the supply bloomberg terminal. on the left side of your screen, apple's biggest suppliers. its 8%e semiconductors of its revenue from apple alone. serous lock should -- cirrus logic, 22 percent. you can see if there is stagnation with apple sales be bad news for
the suppliers. there is a feedback loop for the suppliers. it will be interesting to see what apple has to say tomorrow. it is. thank you. julie hyman at the markets desk. ben bernanke has opened old wounds with his account of the 2008 financial crisis. in his new memoir "the courage to act" he comes down hard on aig for its role in the crisis. aig's still fighting the terms of the government bailout in court, and for them, there is more than pride at stake in telling the story. the chairman and ceo, greenberg, earlier thisntly morning. >> in 2007, almost teed of years after aig had totally stopped engaging and what chairman bernanke he calls insurance of these swaps, bernanke was still
giving speeches saying there was .o problem with these mortgages and one of the things the judge says very explicitly, and it's accurate and reflects the the aig was that not in any way because of the financial crisis. financialictim of the crisis. it wrote this insurance based on misrepresentation and it stopped at the end of 2005. if there was a problem intro -- in failing to recognize the risk being taken -- right, you already knew that there were problems that could arise from these credit default swaps? >> absolutely. bernanke, do think they target you? do you feel like you are being targeted? that they are not listening to what you say is evidence?
>> i don't been they are listening because they have made their mind up, what they want to say and do. they over reached, after theached government. that is what the lawsuit was all about. overreached.than they admitted overreach. but they made aig -- and they admitted this to the trial -- a political scapegoat. they were trying to demonize aig for the wrong political purposes. they had to admit that at trial. they had to support what they had to do for political reasons during this crisis. betty: bernanke title that chapter "aig: it makes me angry." >> yeah, it made me angry. get to beant to
lawsuit appeal. i believe it is going to be now. by a panel given that, there is a possibility, is there not, that the panel could, a, they could they couldmages, b, rule for no damages, but also reversed judge wheeler's decision. do want to risk that? >> anytime you go up on appeal, the appellate judges could disagree. we feel that the law is very clear. as judge wheeler ruled, the statute is very clear. the legislative history is very clear. the 75 years of interpretation is very clear. it all goes one way. everybody recognizes. even the fed internally recognized they did not have the power to confiscate equity. that's what this is about. i feel very comfortable with the appeal. will look atourt
this fairly and carefully and think not only will they affirm what judge wheeler found in terms of ee legality of the offiscation -- you legality the compensation of evidence, they will award damages, too. that decisionit by judge wheeler enough though? it was a moral victory. you did not get damages. but it was a moral victory. just but i feel we have an obligation to all of the shareholders who lost their life savings. -- >> i feel we have no obligation to all the shareholders. it's not just me. all of the shareholders. betty: right. were talking tens of thousands? >> absolutely. did you take why this case on? i knew you and hank are back a long way. but why did you take this case on? >> it was partly because of
hank. but also i think this is a very, very important case for the way our government operates. government tremendous power and discretion. if the executive branch can use that to leverage still more either nore is beginning or no in to that power, and that is very troubling for citizens. the government can one way or another confiscate their consultation.ut the executive branch only has the powers that the constitution in congress give it. if you allow the executive branch to begin doing things because they think it is a good idea even though they have not that, ourrized to do protections of individual property, our protections for individual liberty go away.
i think this is a critically important case to the way our government operates and the kind of rights and preservation of rights of citizens need to have. betty: that was against former aig chairman and ceo hank greenberg, and the legendary lawyer david boies. of the bloomberg market day as we count down to the close. central markets thinking of adding a boost. play into the fed decision this week? will find out more about the health of this business after the report earnings after the bell. ♪
betty: good afternoonbetty:. welcome to the bloomberg market day. a new study finds that age discrimination in the job market is pervasive in the u.s. is despite laws prohibiting it. the older you are, the more discrimination you face. older women have it particularly tough. on thes $17 million bet nfl kicked off this past weekend. yahoo! says more than 30 million logged on to the league's first game to be streamed live. that includes more than 15 million unique visitors. sales for u.s. homes slumped to a 10-month low, disrupting a trend of steady improvement this year. two months before september they
were revised downward. you can always get more business news at bloomberg.com. makes its case before investors, defending itself from claims it is using a specialty investor -- pharmacy for sales. lower. see shares are this is after report from .hareholder andrew less on a conference call this morning, valiant ceo michael pearson sought to reassure investors, saying that the company is committed to transparency. tone,k an aggressive saying he is prompting an sec investigation into citron. was i the one that laid off everyone at the bausch & lomb department? there are reasons why this stock is here and it's not because of me. betty: that of course is andrew
left. he was on bloomberg television and he said, as you just saw, he was not contacted by the sec and is not to blame for valeant's problems. meanwhile valeant also brought value investor -- back to the board. he will be looking into these special relationship with a pharmacy company. a lot more ahead on the valeant case. turning to the broader market, fora's fixed rate cut november and the mario draghi's indication that the ecb is in countdown mode to more stimulus. joining me, joe weisenthal, you miss?"what'd joe: it is interesting. we got hints of easing and more easing and the ecb said it could the current policy in
december. what is interesting, that is when a lot of fed officials have said that they might be inclined up.ike if the data holds just because we have the divergence at this meeting, one of the world's most important central banks is hiking and that could create unusual complications and i version. betty: what is the different between the hawks and the dubs? have fullawks say, we employment, or we think we are. why not start now? saydogs and say the doves there is no indication of inflation pressure. maybe we need to run hot for a
wild. basically, what is the rush? why not wait? why not wait until the spring? i don't think the current -- janet yellen and her crew is really too far in extreme. when they have their meeting today, nobody expects them that they are going to hike. these are some of the issues that are going to be discussed internally for sure. is there any sense that the stimulus might be ending at some point for the ecb? joe: it could. you do not necessarily want that policy of divergence where they are hiking while everyone else's easing. the dollar get strong. there is tightening. , if china andand the ecb is reducing volatility -- that is where we should go. right, thank you, joe
welcome back to the bloomberg market day. i'm betty liu. 10 minutes away from the close of trading. julie hyman back at the markets desk has more on the averages right now. julie: yeah, it has been a trading session. if we are headed to the close of trading, we are holding on to this negative tenor to the markets. i want to get a look at some of the when and losers. we have had push, pull today. dialogue,suppliers' semiconductor -- dialog semiconductor gmail of
disappointing earnings. some of the other biggest drags on the s&p 500 include energy shares, exxon and chevron trading lower. chesapeake energy as well because we are seeing a drop in oil and natural gas. natural gas especially steep today. these are some of the stocks feeling the pain from that. those shares are trading higher. amazon is trading at a record, at least on a closing basis. also, valeant pharmaceuticals. conferencence -- the call holding is valued even after it named a woman from its board to better explain the relationship between it and the distributor. couple attempts at
going positive -- it did -- but did not hold on to those gains. betty: it was little choppy throughout the day. julie: it was. ofty: it was the biggest ipo the year. now we look at how the payment processing giant is doing after the bell. clues aboutr any the ipo. look, alexe you a barinka. they priced below $16 a share. the ipoe is around level. a lot of this will probably be coming down to what investors are looking for in the report today and there's not a lot of estimates out there yet, because we know what underwriters are take somecompanies time before they start raiding
the stock. we will really be paying attention to guidance looking forward. something they are looking for. also, a lot of debt. proceeds from that offering would pay that down. they're looking for cues of what management has to say. getting those levels down is really important to them to keep up with the competition. betty: why do they have so much debt? they got taken over by boom oh at the lbo heights. they struggled through recession and held onto a lot of that money.
they have been setting on all of this money and all that cash goes to servicing. >> they have all of these big core clients. they work with all of the banks. they do due process payments. they have a bunch of different payment services, fraud prevention. we do all of the basics for you. let's figure out where to add value. they are having to compete with square, another ipo candidate. all of these companies are pushing into the merchant acquiring space. they are trying to keep it at arms length. ok, they are also
reporting. alex: this is barry diller for big company. basically a grab bag of companies and match group includes match.com, okcupid, and tender, that we all know about. they are selling for less than 20 per stake in an ipo. be looking again -- again if they gave any forward guidance, the perception is when it comes to things that people really care about like how is tinder they just started monetizing that really a hot swipe at. is it cannibalizing users from older dating sites? those are the things they will be paying attention to. then with the rest of the business, what is left? surge in big applications business. they also have been me a, the video streaming site. where are they going to take some of this money from the
match ipo and where will they be investing that? that will be another thing we will be paying attention to, but the datingfter companies, those are not names people really know. betty: college humor. college humor, home advisor. these.com type of companies. betty: of course we will bring you all of those stories when they cross. that does it for the bloomberg market day. next is "what'd you miss?"." on hartford financial, broadcom, many more. and earnings bonanza on this monday afternoon. ♪
alix: and i'm alix steel. u.s. stocks closing lower with the s&p retreating from a two-month high. joe: but the question is --"what'd you miss?" china's shadow looms over commodities. we will talk about that with an expert from goldman sachs and why he is still with the bears. hike by thete year's end more or less likely? alix: don't cry for argentina. i just quoted andrew lloyd webber. scarlet: we begin with the markets. the eccentriceen bank announcements. later this week we will hear from the fed and the doj. for the moment, there is nothing and you saw