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tv   Bloomberg Markets  Bloomberg  November 25, 2015 2:00pm-3:01pm EST

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from bloomberg world headquarters, good afternoon. here is what we are watching at this hour. we start with the markets. stocks edging higher in a quiet day of trading and of the things giving holiday. -- i had of the -- ahead of the thanksgiving holiday. a ho-hum shopping season and huge debt load hitting the retailer pretty hard. petrobras scandal hitting a high profile target. the corruption probe engulfed the country's political scene. we kick things up on this wednesday with a look at the markets desk where julie hyman has the latest. julie: we do have trading volume down.
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a lot of people out of town already. for theeeing some gains major averages, but they are not huge ones. much of it mixed if you look at the overall takeaway. the best-performing stock is a bit of a head scratcher, curated green mountain -- craig green rig green-- keu mountain. an back-to-back sessions by 5% each. there does not seem to be a particular catalyst. the company continues to try to gain back market share. a lot of complaints in the wake of its earnings report about its pricing power or lack thereof. split oking at the newly hpq and hpe. hewlett-packard enterprise is
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more optimistic when it comes to the future. those shares up 3% even of the forecast missed estimates. hp is still seeing waning demand as pcs, printer business part of that legacy company and those shares are sharply lower. the price for crops has fallen to such a degree -- farmers demand has fallen. dear will do poorly this year. -- deere will do poorly this year, but not as poorly as previous downturns. carol: talk to me about the oil markets. julie: there has been some volatility today. we had weekly inventories number coming out this morning. the weekly rate data is normally released on friday and is released today instead and shows a continued decrease in the rig
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count at the same time we saw a build in inventories. oil still down .25%. take a look at my bloomberg terminal, the bakers use rig count. this big downturn we have had, 12 of the past 13 weeks come a igs.ease in rak that should be good for the oversupply we are seeing in the markets. carol: let's check in on the first word news this afternoon. laura has more. laura: thank you. president obama says americans should not hesitate to travel or go to public events this thinks giving. mr. obama spoke from the white house after meeting with his national security team. no president said there is specific credible intelligence about a plot against the u.s. at this time. his administration is taking every possible step to keep the country safe. the islamic state is pleading
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that claiming this possibility for an explosion that left 13 people dead. attack, tunisia's president declared a month-long state of emergency. the u.s. commander in afghanistan says some of those involved in the mistaken attack on a hospital have been suspended. the were not identified. the crew of the u.s. gunship thought the hospital was a caliban compound. in chicago, hundreds of protesters took to the streets last night over the killing of a black teenager by a white police officer. the city released a video showing the officer shooting the teenager 16 times. the officer has been charged with murder. you can get more on these and other breaking stories 24 hours a day at the new bloomberg.com. thank you so much for
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that. there was no escaping today's economic data days ahead of the thanks giving break. -- thanksgiving break. consumer savings at the gas pump raising concerns the holiday shopping season will not be particularly cheerful for retailers. 3% gains in all durable goods orders. moving to ams record low -- new home sales jumping 11% overall. let's get more of today's economic takeaway. let's bring in lisa abramowicz and michael regan. section on the bloomberg terminal with so many data points, it was hard to keep up with it. the bondooked at market reaction, looking at how are people positioning going into the holiday weekend. after a slower december month. the overall takeaway is the fed
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hike rates because there's not enough economic data to justify not. that will slow inflation over the long-term. and slow the potential pace of growth. you are seeing that yield flattening curve trade going on right now. day.: it is a quiet it has been astonishing considering all the news flow we've had this week. >> the bad news is not being sold like you would think. study drumbeat of negative news -- there is a certain amount of disconnect that happens in fourth quarter in the stock market. it is traditionally the best quarter to be in the market. an average gain of 4% of war -- or more. year towardsof the
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the new year tends to be a bullish time. ,eople get year-end bonuses fund managers are chasing performance. the question is, will it be enough to get us out of that range we've been stuck in? we are 2% below a record but it's been elusive to get back to since may. carol: goldman has a call about what we can see next year. let's bring in the credit markets and debt markets. the debt markets and high-yield markets, there's nervousness out there. >> rightfully so. not just in the u.s., but we got news out of spain, renewable on thebuilding company brink of bankruptcy. it's bonds fell to nine cents on the dollar. real record lows. the ceo arrested on suspicion of trying to get this jailed
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petrobraso ross -- ex- executive not to mention him in testimony. spot, george revisedcame out and upward his economic outlook for britain and says we are doing really well. trying to make sense of it. it is a difficult time to make sense of the world when the economy is interconnected. carol: what does goldman have to say? sayinglead strategist is expect a flat year. his forecast for the end of 2016 -- this is the21 time of your windows forecast start trickling in. others are more bullish. snowfall -- sam snowfall has
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set a 10% gain. lisa: if people in the stock market are feeling tired -- the people in the bond market are just exhausted. it has been an exhausting year, hard to make sense of it. it is hard to get trades done, the execution is poor, you are seeing air pockets. are you seeing the same thing? there is a consensus that we have run out of steam here. we have rallied from the august low. mike: it's a weird situation. by definition, you are always enable market or bear market. we had hit this flat market. a bull market or bear
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market. the fed questions about interest rate hike. a lot of differing opinions. thinkings reasons for next year is the valuation part of the rally is over. will makeerest rates people not have a stomach push equity valuations higher. it will be a great year to own stocks, a rated companies that won't be susceptible to higher rates -- companies like chevron with the highest dividend yields they've ever had. outlookld rely on the i don't know if tired or maybe people throwing up their hands and saying we don't even know what to expect now. carol: an interesting year in 2016. thank you so much.
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coming up in the next 20 minutes , investors are not buying into j.crew's strategy. the worst-performing retail debt in the u.s. can the ceo get things right again? with arobras scandal high-profile casualty. the resilient billionaire arrested. -- brazilian billionaire arrested. more on that story and the close of commodities training coming up next. ♪
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carol: welcome back to bloomberg markets. it is time for the bloomberg business flash. we begin with california.
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volkswagen to recall its three liter vehicle automobiles. the board is citing potential vehicles.h 3i forget the crowds at the mall. 'tis the season for mobile shopping. there will be more people visiting retailers websites through their smartphones been on desktop computers or tablets. than on desktop computers or tablets. just outcome will attract customers during its first holiday shopping season -- they begin operations in july. et.com.
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let's get another check on the markets. julie hyman has a check on company movers. julie: i'm still hoping for free shopping. with this company, rising after the court reversed a decision that had invalidated the company's patents. they sued companies like samsung over this patent. the cases are and hold pending reviews. a relief rally for the stock, by 22%. initiatedd company with a by writing and citigroup. uy rating at citigroup. a $13 price target. shares of 8% today.
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-- shares up 8% today. sears has lowered its free shipping minimum by $14. the company coming up with holiday deals for the next few days. that does not seem to explain alone where the shares are up. if you look at the short interest in this company, we have seen the absolute short interest declining to some extent. look at the short interest to percentage of float, 53%. incredibly high number. the short interest ratio, the stock has been going down, the is at aboutst ratio 22. a lot of folks are betting that sears is going to continue to fall. carol: thank you so much.
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the nation's retailers are trying to entice shoppers this holiday season but it will not be easy. spending on black friday was down last year and it could fall again this year. joining me from north carolina and the studioh i want to kick it up with j.crew. our investors losing faith in the retailer because they were good, they were not good -- where are we? >> 21 months ago, they were talking about an ipo for j.crew. now, we are talking about their bonds are trading at $.25. it does seem traders are losing faith that mickey will turn things around. they were so hot in 2013, the first family was wearing them to the inauguration. since then, things have fallen off.
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we heard about the ipo potential and then they did not write have -- have the right clothes in stores. it's up to mickey to get back to basics to improve sales, improve profit margin and get the private equity firm in. carol: is a bad merchandising choices? is it as simple as that or something more intrinsic? say they make mistakes. the j.crew brand brought into and fashion forward pieces got rid of too many of their basics. you cannot get a pair of ballet flats but you could get a great statement these. that is not what their shoppers wanted. they're pricing was too high for the quality of the clothes they were selling. customers are not very loyal anymore.
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they can shop wherever they want , whenever they want the at the internet. shelley, one thing i keep hearing from you killers, it is a tough sector. -- from retailers, it is a tough sector. headwindcy is a big for these retailers. you've heard it at macy's, heard it at cap. -- gap. tiffany said this has been really hard. they only have 50% of their sales in the u.s. it is a real concern because we all joke about we don't make our numbers because of the weather. the stronger dollar has a big impact. it impacts retailers in three ways. the first is the translation cost. pick is more expensive for people outside of the u.s.
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tourists, people make old vacations out of coming to new york city to go shopping and they're just not shopping. carol: what about the stronger dollar? is that a big deal for j.crew? >> it is not something j.crew has called out. they are not a big tourist destination but they have started to expand overseas. i opened their first store in paris earlier this year. they are expanding more in europe. wheretailers like macy's you are a big tourist destination, bloomingdale's and macy's stores, it is a really she. real dollars you are not bringing it. rates,the fed raising this could become a bigger problem because he will see the dollar rise as rates go up. this will be a long-term issue and it will not go away
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anytime soon. the retailers will lapse all of this in the coming quarter. those comparable sales will get easier but it will continue to be something that these retailers have to manage and watch for. carol: thank you so much. and our thanks to lindsay joining us from north carolina. aill ahead, some bad news for billionaire banker may mean bad news for brazil. how the banker's corruption charges are affecting brazil's political and corporate giants. ♪
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carol: welcome back to bloomberg markets. we are just getting word that has appointedzil an interim ceo after andra is the best was arrested as part of
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the petrobras corruption probe. -- andre estevez. good to be checking back in with you. newsus about this latest headline in terms of the new ceo. that throughout the day, global sources had told will be thechairman interim ceo. while andre estevez is in jail. we don't know exactly how long that will be. he was arrested today, initially for five days. that can be extended. we still don't know for how long. we think we are removed from this story, but it is a big story. we've been following the unfolding story with petrobras and brazil and government connections. how important is this? what it means for the business climate and political climate in brazil.
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>> this is pretty big news. the biggest arrest since the ceo of the big construction company in brazil was jailed in june. seeing arrests and arrests and more developments and more deals being made. what investors were telling us is that we don't know where the next she was going to fall. we don't know how long this is going to get in town of people will get caught in it. we've had clear reaction on that. currency and stocks, a selloff day here. carol: what does it mean for the brazilian president? >> she has not commented on this. we would not expect her to. she had been gaining some ground in congress over the past few weeks, getting some measures approved toward getting the fiscal adjustments done.
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the government leader in the senate was also arrested today. that puts a stop to that progress she had been making. carol: maybe a few more shoes to drop on this one. thank you so much. still ahead, can commodities make a comeback? that story in just a moment. ♪
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carol: this is bloomberg markets. let's kick things off with the headlines on the bloomberg first were news this afternoon. laura has more from our news desk.
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lore: president obama made a statement on the nation's homeland security posture heading into the holiday season. mr. obama spoke earlier from the white house after meeting with national security team in the situation room. >> want the american people to know that we are taking every possible step to keep our homeland safe. said there isnt no specific and credible intelligence about a plot against the u.s. at this time. he said if there were to be a credible threat, the public will be informed. the president also said americans should go about their usual things giving activities -- thanksgiving activities. angela merkel visited the square in paris, the focal point for tributes after the attacks. she went with francois hollande and laid a single white house at the site.
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frontal a lot will meet with the italian prime minister tomorrow morning before flying to moscow to talk with letter. -- francois hollande will meet with the italian prime minister. was told that turkey violated the -- they spoke over the phone about the attack. john kerry offered condolences and urged calm. pope francis arrived in kenya for a first ever visit to africa. francis is also scheduled to meet uganda. this marks the first time a pope has flown into an active armed conflict zone. these andt more of other breaking stories 24 hours a day at the new bloomberg.com. let's get back to the markets for a moment. commodity markets closing in new
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york. we start with copper dropping for a third time in four days as demand concerns deepen. the commodity selloff has room to run a midweek chinese demand and a stronger dollar. erased an earlier drop after ukraine said it is no longer needing russian gas. oil declining after u.s. crude stockpiles advanced for a night week. slumped 43% in the past year. the last time the bloomberg commodity index had investor c --rns this low, the fran slowing chinese growth put the first nail in the coffin. joining us with more is cory johnson.
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let's talk about the commodity complex. it's amazing if you look at the last few years, it is amazing the run-up we've seen in the pullback. it has gone nowhere. >> china consumes 50% of the world -- you've had an industrial explosion in china that we think is now the bubble burst. cement production come industrial production in china, these things are trading negative. the real issue is china. carol: once china gets back on track, you think the super cycle continues? >> you had a two decade super cycle. continue,k it will but it will take a while for china to adjust. we've seen industrial explosion like this before in russia and the u.k. and brazil. china is now seeing as bubble
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bursting and it will take a couple of years for this to correct. carol: we love all commodities in one basket, but there are differences. is there anything that will separate from the commodity complex that could be an outperform or? >> iron ore. last year in the hundreds. people thought they could not b go below 120. --y averaged roughly $20 even though there has been a correction, that dynamic is applied to all currencies. carol: we have to dynamics going on. tremendous supply that we have seen over the last two years in the united states. you have the chinese demand slowing down. do we seewo dynamics, that playing out in the other commodity conflict is? desk complexes? >> we had a fracking boom in the
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united states. you've now had a revision lower in chinese growth. you are seeing this across all commodities. iron ore, these guys invested years ago to build out significant capacity and now that capacity is just hitting the market when demand is slowing down. people thought the boom in china will continue, it is now collapsing. carol: let's talk about solar city. something we will all learn about is retained value -- the irs is looking into solar city and other players. solar city gets an investment tax credit. money from us taxpayers to pay for their solar panel. ort they were using to value represented the government the value was this retained value calculation. most important assumption is
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they assume that all of their customers will buy their technology 20 years out at the same price they are paying today. the equivalent of me buying a computer made in 1995 for more than i'm willing to pay today. they were using that in their calculation to get the investment tax credit on the amount they are representing to the government. it makes sense that the government is looking into this because the assumptions make no sense. carol: the stock is down 45% so far this year. musk made investments. does this change your thoughts on this? >> absolutely not. the cfo just left today. real issue is it is not just the investment tax credit issue. every single state is pushing back against this dynamic. solar companies don't pay for access to the grid. that dynamic will weigh on the stock. carol: great to get some time
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with you. thank you. earlier today, erik schatzker -- he asked him about the resilience of the u.s. shall business. >> it turns out that the people who do the shale oil are ingenious, entrepreneurial and e becoming a lot more efficient. service costs are down. evaluatorperformance that lets us look at every well in the country. 2014, only 30% of the new wells produced 80% of the new oil. there was huge room here for a lot more efficiency. innovationcontinuing and support. at $60, this thing would have continued with a lot of momentum. we are now closer to $40 and you
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are starting to see the impact. u.s. oil production down half a million barrels a day from the peak in april 2015. back to where it was in november of 2014. we will see more decline because of all the pain there. it has proved to be much more resilient. resilient than people in the middle east thought they would be. there is still a lot of talk that the credit markets will shut down more production in the shale patch. are we going to find out that supply is more elastic than some people anticipated? >> maybe it has been less elastic than a year ago. it will be more elastic going forward. it's interaction between the
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financial markets and shale producers. this is a very capital intensive activity. we were looking at our numbers for 2015-2019. 40% of the cap x will be spent in north america. a lot of that is in the shale. the other thing that's out there, there's a lot of that billionequity with $60 waiting for distress to get there. we are starting to really see this distress mount up now under these price pressures. >> where do you think oil will be trading a year from now? >> let me put it this way. the next couple of quarters will be tough. iranians, that will put more oil in the market. thear from now, we will see
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end of 2016, 2017 is when we see the oil market getting back into balance. , whatf that question happens to those big cushions of 3 billion barrels of inventory out there. coming up in the next 20 minutes, u.s. and nato urging calm in the tensions between turkey and russia. the first direct clash between countries involved in the syrian civil war. drama gettingt rave reviews. more.ohnson will have hour, online buying trends this holiday season. stick around. ♪
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carol: welcome back to bloomberg markets. time for the bloomberg business flash. recruitingways potential pilots with no flight experience. the airline will provide its own training under a proposal awaiting approval from federal regulators. they would have to meet u.s. requirements including 1500 hrs of flight experience to be certified. united airlines offering pilots
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a 13% raise next year according to people familiar with the matter. a race that sizable make united spar pilots among the highest paid in the industry. flight attendants at lufthansa have taken a step toward ending a long running labor dispute. concept hasys luke moved in the direction of workers pension you can get more business news by checking out bloomberg.com. let's head back to the markets desk were julie hyman has the latest. looking at -- julie: health care is one of the best-performing groups. , thererebounding today does not seem to be a specific catalyst, but the shares have been down on concern over the agreement to come to a deal and whether there will be any regulatory hurdles for that deal. you can see both of them higher today.
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looking at the biotech companies, the nasdaq biotech index up by about 1%, paring some of those gains. there does not seem to be a very specific catalyst. pharmaceutical stocks and biotech have underperformed. if you look at individual movers doing the best within this index , there is a catalyst for immunogen. a buy rating at jefferies. one drug has shown robust activity in patients with ovarian cancer. valeant, shares have turned lower once again. report allegedly linking the company to a number of specialty pharma names. it was scrutinized for its relationship with philidor.
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philidor was subsequently closed. the shares had recovered earlier today. now, they have turned lower. carol: staying in the news, isn't it? thank you so much. you are looking now at live pictures from the white house rose garden with the annual pardoning of the things giving turkey -- thanksgiving turkey. and abe.doning honest formal in 1989e by george h.w. bush. a little fun on thanksgiving eve. we will stay with some news out of washington right now. president obama is seeking to reassure the country saying
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there is no specific threat against the united states from islamic state or any other terrorists. >> as we go into thanksgiving weekend, i want the american people to know that we are taking every possible step to keep our homeland safe. carol: in the wake of the multiple attacks in paris, president obama said the united states remains on full alert. murphy is with us. the president making some comets earlier today as to be expected. there was a lot of comments made by the president this week and president francois hollande of france. they don't want to see the situation to escalate. >> definitely. the president has been very explicit about saying that his main objective is to keep things calm. and keep people focused on coalescing around an
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international strategy to fight islamic state. point of saying there is no credible, specific threat in the u.s. people are remaining vigilant. that is the key message. he will be speaking with other world leaders. that is their number one priority, to keep tensions at bay while they deal with this bigger threat. carol: we had a statement from john kerry, talking to turkey with russia and making the dialogue stays calm. what do we expect at the climate summit in paris? we will see another gathering of global leaders. the topic is a different one. paris is in the background. >> that is what is so fascinating about this. unbelievable
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gathering of leaders for the climate talks. what we thought was going to be a real moment for obama to make further progress in what has been a signature agenda item of his, climate. putting in place further progress on climate. we will have a tremendous focus on terrorism and islamic state and what were leaders can really do to make meaningful gains in this.g back against president obama has said repeatedly that he does not believe that u.s. boots on the ground would help despite. -- this fight. do a better job in identifying targets and increase airstrikes. a point today of going through what we are already doing in combination with our international allies. in paris, all eyes will be on the one thing the meeting is not really convened to do, talk about climate. love the focus will be on the
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threat of terror. carol: the u.s. is trying to manage this huge coalition in terms of dealing with terrorism. how effective will they be? >> whether they will be effective remains to be seen. canobama, the key thing is, he convince a skeptical american public that he is the man best to do this job? other candidates are seizing on this perceived leadership vacuum , including donald trump, marco rubio and ted cruz. carol: thank you so much. megan murphy, thank you. a special programming note. rove will be the special guest on "with all due respect." the competition for the couch potato, amazon counting for its
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dust coming for its rival, netflix. -- amazon is coming for its rival, netflix. ♪
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carol: welcome back to bloomberg markets. make whitman promised hewlett-packard investors that the company would do better if it split up. she got her way and both companies reported earnings that both missed analyst estimates. that is where the similarities end. on hp andon has more the new hewlett-packard enterprise. hello there. cory: i'm used to radio with you. a bit of a diversion in these two companies. the stock price is playing out differently. what happened? cory: what they reported last
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night was the last time the combined company will report results. within those results, they break many divisions of hp. ink,are going with hp others going with hewlett-packard enterprise. these were the results that went through the end of october and the results were just plain bad across the board. if you look through every single division of this company, u.s. sales declines across the board. some of them quite shocking. enterpriseception of systems, you had big sales declines in every single aspect of the company. really disconcerting for hp investors that hoped the bottom had been reached from this company that has struggled for so long. carol: how do you come back when you see numbers like that? is this a company that has a future? cory: that is the point.
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-- the pace of decline and printers was shocking. they have not see numbers that i said was the worst quarter they've ever done. the worst quarter they've done since the last recession. a really dramatic decline. there was a product problem. they sold a product that did not use ink as much as they hoped. as a result, the sales of ink and paper down quite a bit. that's bad news for these guys because the study nature of printing and helped hewlett-packard survive it struggles. now, not so much. carol: the old hewlett-packard, those shares getting hammered. hewlett-packard and a price at 3.5%. but they did disappoint. cory: service is the key there.
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it was up 1% in the quarter. the margins were a little better as well. they took a big restructuring charge in the quarter and that was to the benefit of the services and might not be a lasting kind of charge. carol: thank you very much. you can watch the full interview tonight on bloomberg west essex clock p.m. eastern -- at 6:00 p.m. eastern friday kicking off the holiday shopping season. taking a look at the point market and who has the cheapest toys. -- toy market. ♪
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3:00 p.m. in new 11:00 p.m. in hong kong.
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welcome to bloomberg markets. from bloomberg world headquarters in new york, good afternoon. i am scarlet fu. here is what we are watching this hour. a controversial pharmaceutical executive fight back. in an interview on bloomberg television he defends a huge price increase for a drug. he says it is still a formal. we will fact check. trouble in walmart -- consumers are finding cheaper toys somewhere else. consumers are spending less, saving more, even as wages pick up. what that means to the federal reserve as it ponders raising interest rates. we are one hour till the close of trading. we need to check in with julie hyman at the markets desk. a little bit of direction, but not much volume. julie: not much direction -- a little direction

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