tv Whatd You Miss Bloomberg November 24, 2015 4:00pm-5:00pm EST
alix: u.s. stocks were framed from higher losses. little changed in near a two-week high. joe: what did you miss? alix: u.s. consumer confidence weaker than it has been in a year. + tensions between russia and turkey. a russian fighter jet is shot down by jerking your the syrian border. how this incident is making a very messy situation even worse. spots in emerging markets. an expert is bullish on latin america. with a stockgin market. overall it was relatively quiet day. volume, little bit more but it feels like we are going into the holiday weekend with no
selling or trading action happening. joe: absolutely. after the news from turkey came out, we saw some revenue lyrical fears -- renewed political fears. people got scared that this was going to spiral. we do not know how this is going to develop. but at least from a market perspective concerns over that were rushed -- were brushed off pretty fast. we're solidly up on the day. that has to do with oil. we saw the premium come into oil when we heard that turkey rushed the news. when stocks bottomed out oil also started to recover for the second time that day. then movedthe v higher. stocks and a higher than oil. that was hard at it. energy stocks the best performer of the s&p over all. energy added about 17% to the return.
joe: not much doing on the interest rate fronts. praising a very high chance of december rate hike. after all of the buying. thatt to show you a chart encapsulates what happened with oil today. let's take a deep dive into the bloomberg terminal. this white line here shows the short contract. honestly, i just want to point out that they are high. look at the spike that we have seen right here. aboutt contract is up 35%. the reason that is significant for any kind of headline could be construed as bullish, and you see the potential of a huge pot on not a lot of news because the market is so short right now. it seems riskier because we are down pretty low. we have the opec meeting.
people do not expect much but any sign that there could be news forould be ample a headline. i want to go into the terminal and talk about a key data point from today, the more confident number. really bad on the headlines. peoplely came down to turning really negative on the job market which is weird. we have gone good data lately. if you look at this line this is the respondents who predicted good employment over the next six months. falling sharply down to the lowest level since 2011. the reason why that is weird is -- green light is the line is the labor data. i do not think that perfectly correlated but over time you expect them to be relatively stable -. will actual labor market conditions following down? that lead over into wages.
you are a little more pessimistic on the job market will be dismissing about job income. this did not include the paris terror attacks, so it did not include the stability -- instability. joe: you can see all of these charts and more on twitter. is theoining us now wells fargo security equity strategist. good to see you. >> thank you for having me. joe: we are at the very end of this earnings season. you notice something, the companies that are beating one of the main trends driving this? lowil prices were extremely and lower than expected in the third quarter. we took another leg down in oil
prices in the third quarter. we had another bout of weakness in the emerging market economy, especially with china. in the dollar was still pretty strong, reflecting strength over the last year. that started to way into earnings result. get anything that comes to mind is that this is a trend that has been going on all cycle. comedies are finding it increasingly difficult to be expectation. this has been going on since 2010, a persistent myth edging up in the company announcements. that is more about the longer-term loans will -- slow global growth. nk thingsr we thi will get better. the reality is that it has been .ersistently slow emerging market growth has been increasingly slower ever -- every year for the last five years. alix: does that mean that analyst just got it wrong?
>> it is a combination of both. i think that some of it is that yetanalyst get it wrong quarter after quarter after quarter we beat it in a lesser and lesser pace. earnings are becoming less predictable overtime. having driven some of the stock market rally, buybacks. thate have been concerned is monetary conditions tighten, that is the fed tightens and it becomes less able to borrow -- on one second. cory johnson is in san francisco looking at hewlett-packard earnings coming out. cory: this is the last quarter of consolidated earnings. the company's already split. it apparently went ok because it is better than the expectations. those numbers have come down. $27.5 billion in earnings revenue.
was $.73 inarnings gaps, foreign about what the estimates had been. is non-gapper earnings eager. that is $.93 per share. the analyst were guided way down last quarter. it becomes the above -- above those numbers. i will dig into this and pull out individual results. $25.7 billion in sales. earnings of $1.3 billion. alix: thank you. joe: we're talking about buybacks. will investors continue to like stocks that do buybacks or will you be stretching your balance sheet? >> we're at that critical turning point.
the top 100 companies have underperformed s&p 500 index at large. quality committees are starting to out perform. rising the next 12 months were investors are paying a lot more attention. company,uality growth investors are paying attention to the nature of leverage, the effect on the balance sheet, and that is the real story for late 2015 into 26 team. alix -- 2016. to findve been trying in the earnings what the impact was and i have not been able to find it yet. but the idea of the idea of being how much more downside are we going to see due to the u.s. dollar, especially with hedges rolling up? we might not have a 10% rally, but we are having hedges come off. >> at least in the near term we
think the dollar rally this year so far as priced into estimates. implies thaton now we had a 10% rally in the dollar so far this year. we have had just under 10%. so at least 42015 we are covered how muchit depends on we rally from here. we are testing critical top levels at this point. it was he the dollar surged from here, it is a pretty strong risk in the 2016. if we had more of a normal life ace rise it is obtainable for companies. that is the environment we were written from 2011 to 2013. it is just the last year and a half or so that the dollar became problematic when it became so much more volatile. joe: so far i have not seen too many people ridiculously bullish. most people say some upside. how is 2016 looking to you? >> a lot of it is more of the same. the big game changer for us is really rates.
they achieve liftoff where you get to a point looking at à la sheet, and leverage for the sake of leverage. you see a shift to quality, but of the night it is really the same. slow growth in equities. the only game in town. rates are rising, incrementally pressuring other asset classes. stille dollar is rising. same running into 2016. it is a challenging impairment for investors that over the last six years enjoyed rising tide lifting. now it is because lots character just take your slots carefully. joe: thank you for joining us. alix: coming up next we will discuss the calls for investors who take their gains in the u.s.
coming up on bloomberg television, chief equity strategist joins bloomberg surveillance tomorrow. he is always fiery. i'm alix steel, let's get right to mark crumpton with first were news this afternoon. mark: thank you. u.s. defense officials in washington and at nato say that the russian fighter jet entered turkey's airspace before turkey's shot it down. the plane flew across a two mile section of turkish airspace,
meaning it was only in the area for a matter of seconds. set 21 warnings and five minutes, but russia disputes this thing the plane was in syrian airspace. a show solidarity from the leaders of united states and france. they interest reporters at the white house today. mr. obama says the two countries will do more together to counter islamic state. the president also reaffirmed the long-standing ties between the u.s. and france. today to declare that the united states and france stand united, in total solidarity. to deliver justice to these terrorists and those who sent them, and to defend our nation's. mark: both men met in the oval office, as part of a dramatic push by president hollande. suspected architect of the
paris attacks is believed to have been planning to hit the french capital again, less than a week after the november 13 attacks. that is according to a french prosecutor who says he was targeting a major business district. was one of three people killed during a police raid on an apartment in a sovereign in northern paris. in another islamic state attacks, this time a suicide car bombing that targeted a hotel in egypt northern sinai region. seven people were killed, including two judges in the attack on the hotel in the coastal city was the latest violence on the peninsula. four policeman and a civilian were among the dead. at least 10 people were wounded. get more on these and other breaking stories 24 hours a day at the new bloomberg.com. i amthe first word desk mark crumpton. back to you. alix: thank you. one of the most read stories today involved the u.s. dollar.
stephen lender of citigroup who is the biggest world currency trader says the time has come to close out trays that benefited from the dollars rally. our next guest says there is little upside left for the dollar. the global strategist at the -- point securities. do you agree with what he was saying, that you should sell the dollar before the fed hike? absolutely. we worked together for a number of years. we're still on the same wavelength. this is a well discounted hike coming from the fed. the markets now assume that the ecb will do something to further ease policy at their meeting on december 3. positioning has gotten very long at the dollar. some discussion of that earlier on royal. has goneposition now very short and the yen is quite short and i think this is a well discounted december. and the currency markets, and on top of that the taller tends to be a good week during the month
of december. everything is lining up for at least taking profits on a long dollar position. joe: the chart shows a spike in a euro short. high as its was earlier in the year. but in terms of a short-term immediate return -- for trade on the dollar. >> i think there is more to come in 2016. the pace of it will depend on the pace of the fed. we stopink that is why to the sidelines right now. there are some further tightening discount in the markets for next year. but certainly we are not seem kind of interest rate spread in favor of the u.s. that we saw even back in the spring. the euro shorts were greater in the dollar was actually a bit higher. alix: when you look at the other part of it which is the hawks who might -- let's look at this chart. here is the five-year slot trend, what does that tell you about the dollar?
>> when it should just is if you look at interest rate five yearsls out to for which includes a letter future tightening in one market or another, the advantages in favor of the u.s. are not back to where they were in the spring. when the dollar was at its peak when the year. marketsthink while the are fully discounting or have now discounted a fed hike they are still not expecting major moves by the fed and therefore those interest rate differentials in the five-year enticing not all that to bring a lot more capital into the dollar of these levels. joe: let's talk about the yen. it has had a pretty weak run but has not moved that much lately. the central bank there does not seem to be about to do anything. long-term just the yen have much more weakness to go? it>> it is looking cheap when comes to purchasing parity.
the low levels of inflation or seenmild deflation we have in japan, the yen is very competitive right now. i think some of the market share we are seeing lost by some other producers throughout asia is actually coming in japan. they have had a year and i have high in the pmi index, reported this morning. so i think that the yen is probably a very competitive level, particularly against the chinese currency. 25 isnot think 120 to 12 125 a range that we have reached that level. see thesee geopolitical risks continue to unfold, data get will be that safe haven? do you think that will continue? japan andng that both the eurozone have a relatively large account surpluses. recyclenth they need to capital out of the eurozone and out of japan in order to keep those currencies from going up
on a pure supply and demand balance situation. with current account surpluses for both japan and the euro, there have to be reasons to continue to move capital out. if you do not get those than those currencies might actually creep up a little bit. in a risk-averse environment money stays home in japan, the currency tends to creep up. i should note that one of the reasons why japan has gone back to a fairly large current account surplus is low oil prices. they have been a big beneficiary from a trade, and current account basis for low oil import cost. they are importing a lot to produce electricity. joe: what about the interplay between the dollar and the fed for the dollar strengthen it year that will put a dampening effect on inflation that would not encourage if a piece of rate hike? -- a fast pace of rate hike?
>> i think a lot of it will depend on the data itself. if you look at core inflation in the u.s. those numbers are actually starting to grate higher a little bit. so i'm not sure that once we get the year-over-year change in oil toces -- and against moderate next year. gas prices were very low in early 2015. as we look at inflation numbers the headline inflation numbers are going to start picking up next year. core numbers, core cpi is and my bf 13. i don't think it will be enough of a dampening influence. as we discussed a few minutes ago, the dollar pete king in march of this year. i year-over-year basis there is not that much movement in the dollar as we go to the first part of 2016 unless it is another significant leg up. and i do not think the fed is going to signal in the near term they are ready to be that aggressive to pull the dollar significantly higher as ago through the early part of next year. next, much more from bob.
>> absolutely. commodity prices really over the last 45 years, particularly .trong in the last few months if we are geeks, we might see some improvements in commodity prices. this is related to other geopolitical factors we have seen stability in other commodity prices in the last few days. if we see the dollar start wall a little bit and come off a little bit i think we could see movement. commodity prices are denominated in dollars. do not forget in 2800 world -- lookdid not so good so good, that is when these soared.
commodity prices and other currencies like the euro and the yen and the like are not going down all that much. a dollareally phenomenon. we will get a good test. if it comes off three or 4% over the next couple of weeks but there are no signs that the global economy is not all that strong we will see a good test see which it is. my bet would be that it would get a little bit of a lift. history of oil dollar has not always moved the commodities. this is a new phenomenon absence 2008. it is not every commodity, like cocoa and sugar and wheat which do not move that much with the dollar. it is very specific to the riskier asset. it will be interesting to see. joe: let's go back to what you were saying with inflation in terms of expecting more inflation. do you think the market is prepared for the inflation you see next year? >> i do not overdo it but i think the markets continue to talk about disinflation,
deflation risk. if you look at core inflation measures they actually bottomed out early this year. if you look at the slow growth countries like the eurozone and japan they are at about 1%. using cpi,d canada, is of closer to 2%. right now i think the focus is on who is going to ease further. ,s we begin early next year suddenly you do not get the deflationary influence of commodity prices and particularly oil prices on the headline indexes. he was seen these headline indexes come back pretty robustly in 2016. joe: thank you. alix: coming up, what is the diplomatic scramble following
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alix: i'm alix steel. we want to get right to mark crumpton the first word news this afternoon. mark: russian president vladimir putin is calling the downing of a russian warplanes by turkey a stab in the back. shot down theit's plane along its border with syria after the pilots ignored they werearnings that violating turkish airspace. president putin accused turkey of the accomplices of terrorism and said there would be very serious consequences. minister iseign canceling a schedule trip to turkey. the u.s. defense official and a
nato diplomat confirmed the plane was in turkish airspace when it was shot down. russia disputes that. preliminary charges to 124 people since the state of emergency was issued after the paris attacks. lawmakers theter: more than 1200 churches have been carried out in 230 weapons have been seized. john kerry will travel to europe next week. he will take stops in paris for a global climate change summit in brussels for a meeting of nato foreign ministers. secretary kerry will travel to paris to join president obama as world leaders therefore that you and climate change summit. a white chicago police officer who shot a black teenager 16 with was charged today first-degree murder. officer jason bandai says the shooting of 17-year-old mcdonald was justified. the team had a nice and refused
to drop it. they also say he had cct in his system. attorneys say the team was walking away when he was shot. video of the shooting which was caught by a dashboard camera must be released by tomorrow. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. from the bloomberg first word desk i am mark crumpton. back to you. alix: thank you. let's get a quick recap of how u.s. markets closed. it was across the board an up day for the indices. clawed their way higher, and ended relatively flat rate. the s&p and the dow were down versus their 10 day average. joe: futures were lower after the news of turkey. the were something soon\ -- some concerns that it would be an ugly date.
y. try gohe markets seem to the weaker consumer confidence numbers that we got today as well. so that was interesting. it moved its way out. i do want to get back to our editor at large. i do want to get back to our editor at large cory johnson in san francisco has been digging -- who has been digging into the numbers from hewlett-packard. his: the big take away anonymous struggles across every business unit. as they go into this role with a new optimistic future and a force of the company behind them, one thing they can do is close the books on the meg whitman tenure of the combined company. we have a look at what the stock is done over that time. there has been an increase in but the hope of the spinoff as opposed to long-term results is cited. a lot of that coming in recent months, at least with talk of
splitting the company but when hood,ok a under the there's disconcerting signs in both businesses. we have kids from microsoft that the pc business has been getting a little bit better, but the personal business is a substantial decline. 14% year-over-year which is significant. that is disconcerting because that is the business that is supposed to providing a lot of the cash. a similar decline in the printing business. paperrs and selling incan have been the lifeblood of the finances for 30 years. disconcerting notion that they are both falling at double-digit rates. alix: thank you. i'm pulling up a chart of hewlett-packard that looks like the stock is down in after hours, tossing around a little bit because of the great drill down.
turkey shot down a russian warplane today near the syrian border, saying that the plane was in turkish airspace. argues it wasia over syria. the russian president called the incident backstabbing. stocks really sold on the news but then moved forward. joining us now is the vice president of analysis. these kind of things happen a lot t cwar, nato versus the soviet union. did it surprise you see something like this happen today? >> that happened a little earlier than i expected. but there has been this unspoken competition that has been developing between russia and turkey for some time. the syrian battlefield was getting very crowded. i think was only a matter of time for russia and turkey to rub up against each other. a pretty bold move, and we know that turkey's rules of engagement have titans. -- tightened. thereoes not mean that
will be direct military escalation between turkey and russia but there is a very real competition that has very real implications ahead as well. joe: what is vladimir putin's next move? >> it is tricky. russia needs turkey and a number of different instances. they play a very important geopolitical role. they are the gatekeeper to the mediterranean. that means if russia wants to send cargo ships, container tops and that even warships the west it has to go through turkey. likewise, if nato wants to send warships to challenge russia from its underbelly in the black team, that also has to go through turkey. that is really serious leverage the last russia once while it is in this greater confrontation and standoff with the west and the u.s. in particular, it does not want turkey to be a more defined part of that block that is working to counterbalance russia. to have worked
carefully to manage the relationship. economically, russia can' place trade restrictions, the things they do on the border to impose more border controls. energy wise, that is the biggest leverage that russia has. 55 percent of turkey's natural gas coming from russia. that is where we would need to look closely for any pune measures coming from russia. on the battlefield the also need signs. -- look at any the leverage for turkey as a nato member? the west needs to negotiate with bashir al-assad in syria. what with a gain by being aggressive? >> he does not gain that much which is why there are no great options to respond. russia also is not making much progress on the sanctions runs
at this point. there are big constraint on kiev , that remains a frozen conflict. syrian look at the negotiations, they were trying to position as a grand mediator. as a result of what has happened today that negotiation is wrecked for now. russia has drawn a redline around a number of different the turks and americans and others have been backing. now when you have turkmen rubble -- rebel groups that are shooting down russian pilots, that does not go over well in moscow. when you are talking about to theg rebel factions negotiating table, who will you bring that both russians, turkey, and the united states can agree on? joe: what is the play? want thisdoes not
open confrontation with russia. we do have to keep in mind here that turkey has tightened its rules of engagement ever since 2012 when we saw syrian fighter ,ets take down a turkish plane and turkish pilots died. turkey has intercepted syrian and craft -- aircraft since then. we have seen, even if russian aircraft were in turkish airspace for a short turkey'sse were orders. and turkey seems prepared to deal with those consequences, especially with the u.s. acting it out. and so i think the big focus now for turkey is to move forward with his military plans where it wants to create this buffer zone. that is where the onus is on russia to stay out of the way. there is plenty of potential for more incidents to happen. joe: vladimir putin said that turkey consumption of isis oil was helping to fund terrorism. that true at his turkey a
reliable partner in the fight against isis? ofwe have fought a lot allegations, especially a year ago when turkey was taking much softer approach toward his management of the isis threat. that is where isis is benefiting a lot, from the very poor turkish syrian border where they can bring in recruits from europe in particular. since then we have seen turkey crackdown on that border. turkey does see islamic state as a very real threat. there have been very serious attacks within turkey itself. it is not fair to say that turkey is a sponsor of isis. the word -- those were somebody e big rhetorical messages from vladimir putin. with this house and to frame the message that they cannot be trusted. joe: thank you very much for joining us and breaking it down. more coming up,
alix: i'm alix steel. it is time now for the bloomberg business flash. a look at the biggest business stories in the news right now. shares of hp are falling extended trading. this is after earnings-per-share fell short of estimates. an outbreak of e. coli is being linked to chicken salad found in costco stores. it is according to the center for disease control and prevention which says no deaths
have been reported. 19 people have been ske across seven states and five have been hospitalized in costco says it has moved all the rotisserie chicken salad from its stores. here is the latest demand from uber drivers. they are suing the comedy to be like employees. legal experts say ruling in their favor could cost hundreds of millions of dollars. that is your bloomberg business flash. emerging markets are down over 60% in the last year with torencies an addressing -- adjusting to lower global growth. you actually see emerging markets doing a little bit of a u-turn in 2016? what is your thesis? >> so many different things that need to be priced in that have been pricing since the fed restarted this path toward the
liftoff. will be the end of that this year. they will be pricing in the rate hikes and where the funds are going. as a result it will be an interesting opportunity. unfortunately between now and then there will be a lot of volatility rate joe. joe: what you like particularly? >> by all means, the brick has broken. it is not the same as we used to talk to or discuss. there are many different shades of gray within the emerging markets. heightening,are some of them are cutting. some of them have lots of death, some of them do not. debt, some of them do not. the world is not the same as five years ago. joe: so who do you like? pickthink that you need to
your poison, so to speak. states is the united growing and mexico has weakened so much over the past couple of years, mexico is definitely a good candidate for a long. inflation is very low. it is very competitive and has a lot of edge over canada. that is one good example. we inc. that in asia -- think that in asia there might be some opportunities. it could be an interesting story in 2016. within the region even russia would be interesting next year as well. alix: part of what you look to break down, where you want to put your money is when you look at the debt. there has been a lot of debt issued in emerging markets. there is a distinction between local debt versus debt in the u.s. dollar. looking at china for example. debt in local
currency versus latin america where it is foreign-currency. how do you do this call? debt is of all, your issued at two to the dollar for brazil and it is now four to the dollar. now one unit of debt they used to be one unit is now two units. clearly for latin america, and gets a lot more pain compared to china where basically most of the debt is in the local currency. that is one stored. there are stories of debt overall. mexico has a lot less debt than brazil has. and even within asia there are some countries that have more debt and less debt. joe: excluding the pure financial metrics, one of the countries that are actually reforming? where are they making it easier to do business? in asia there is a broad range.
india is incredibly low. what looks promising, who is moving up the chart in terms of actually making progress? >> joe: the most obvious in recent examples as argentina. we just have an election over the weekend and we had a very pragmatic president taking over which is fantastic news not only for argentina but for south america in general. could make a lot of progress going forward. that is another excellent example of picking the right leader to make those changes. alix: lots more coming up with you. up, will be december rate strongt an end to the dollar? ♪
alix: coming up on bloomberg television, macy's chairman and ceo joins bloomberg tomorrow morning at 7:00 a.m. eastern time. less than a month until the fed announces it is raising rates this year, potentially. so if janet yellen decides to hike, will the dollar strengthened or selloff? favorite question of the last couple of days. what do you think? >> we like to think about dollar valuation generally speaking. the dollar has not reached a stretched level from our
perspective. we see further room for appreciation. the question is against what currencies. we see more room against the japanese yen, we see more room against china. there is a lot of room for the dollar to appreciate against china. joe: well that require a shift on the part of chinese authority , where they will start to sever the link even more before the the two currencies? do you see something to read it, or is this a slow drift apart? >> he left to be dramatic. but i think -- he loves to be dramatic, but i think there will be more volatility because china frombecome a member november 30. i would expect additional volatility as that happens. next six take over the
to nine months. alix: does the fed want a stronger dollar, will it determine any type of aggressive rate cycle down the road? what do they pay most attention to when we say strong dollar? >> i think you're dollar is really one important cross for them. index, ithat the completely agree with it. a move from his highest 113 a month ago to one of six on your dollar. that is clearly very important and a key driver for additional on the upside. alix: do you want to stay in parity? >> we do see a parody at some point in the spring. -- guarantee at some point in parity at some point in the spring. we will see the dollar yen higher. joe: we have not talked about the pound. thee is this view that market has a long expectation of when the bank of england will
hike first of fed hike. market is not even sure they will hike next year. how much longer the bank of england really going to wait? even going out to november of next year the market -- >> that really is the story. , there areo an event things weighing on the bank of england. i agree with you 100% rating have the fed on one hand, which ing.ikin you have the risk of exit, and the ecb. they are the largest single traitor partner of the desk trade partner of the u.k.. it is keeping the bank of england neutral stance. joe: one of the things people have been talking about it this and thet inflation economy in general is becoming increasingly globalized.
the president of the dallas that talked about that. fed talked about that. so exposed to global fluctuations. does the bank of england have control over its own inflation and economy, or is it at the whim of the eurozone, the u.s., china, and so forth? discussede fed has external developments. singleaking every central bank out there. is supposedhat this to be a story, but we should not forget that consumption household spending is in good shape for you can't debt for the u.k.. alix: what is the biggest risk you see? >> i am worry about the corporate debt. ism quite worried because it a very large number of companies that have used low interest , as ino fund themselves
mark: with all due respect, there are enough cat pictures already on the internet. on our show tonight, the tv war, the data war, and the trump war, but first, the actual war. the president of france, francois hollande, stopped by today to visit with president obama. his visit was, gated by news that turkey shot down a russian airplane