tv Bloomberg Markets Bloomberg December 1, 2015 3:00pm-4:01pm EST
betty: good afternoon, i'm betty liu, here's what we are watching at this hour. stocks moving in on relatively strong fashion, but will a fed rate hike sour the moves among about toughalk times for hedge funds, greenlight capital -- greenlight capital is poised for losing year. blue crest closing down, returning capital to investors. traders mayeven ubs be the first to face sanctions in the currency rigging scandal, putting them down by the end of the year. we are one hour away from the close of trade, at the markets desk julie hyman has the latest. julie, together we were earlier this morning, headed lower, but now we are making up those losses? -- julie: u.s. equities
shrugging off the down of the day, the interpretation is that it will be gradual as interest rate increases, but not enough to derail the u.s. economy. the really key economic support in a busy week for data will be friday's jobs report. also, just hanging on to their gains, but close. a broad-based rally if you look at my bloomberg terminal. mostly green, some subsectors starting to show some weakness, but overall all 10 industry groups are higher, health care financials and consumer discretionary stocks leading the gains. i wanted to focus on discretionary in particular. retiring even after the monthly macau gaming revenue numbers showed a weaker result and had been estimated by analysts. betty spoke with an analyst earlier who said that they were focusing more on 2016 and potential improvement. yum! brands is gaining after an prospectsgraded the
of yum splitting into two companies. amazon.com rising as we get more numbers on the holiday weekend, amazon shares are once again trading at a record. still on pace for a record despite disappointing numbers from the individual automakers, but ford, toyota, honda, contributing to those discretionary gains. betty: it's not just discretionary's being bought right now? julie: we are also seen buying in the treasury market, which is not necessarily typical. buyyield is down as people treasuries on the perspective that we will see the gradual pace of interest rate increases on that manufacturing data. where we arere not seeing buying. a little bit of a lift for gold , but crude oil remains little changed and has been a little bit volatile today.
finally the dollar coming -- coming down off a seven-month inh over the euro, again reaction to that u.s. manufacturing data. thank you so much, julie hyman. we will be back with her in a little bit. this afternoon mark crumpton is back with us. mark.e back, mark: thank you so much. president obama, headed home after a two-day visit to paris for that international climate summit. terrorism appeared to push global warming to the sidelines. the president met with the and the downing of a warplane, threatening to undermine a global coalition against the islamic state. president's effort to enlist the climate sector appears to be paying off. another 73 companies made pledges to reduce emissions and worries this week, bringing the total that's joined the
toinistration's initiative 100 54 companies. among those who have signed on, withue, amazon, and dupont an international climate change agreement. helping to fight the islamic the forces will be able to conduct raids, free hostages, and gather intelligence. secretary carter says they will unilateralconduct operations into syria. rahm emanuel has fired his police superintendent, gary mccarthy, following the release of a video showing a white police officer fatally shooting a black teenager 16 times. >> after this weekend, after effectively looking into the killers, superintendent mccarthy and i began a discussion on sunday about the direction of
the department and the undeniable fact that the public trust in the leadership of the department has been shaken. and a wrote it. this morning, i formally asked for his resignation. community leaders and protesters in chicago have been calling for superintendent mccarthy's firing and they want an investigation into why it took more than a year to indict officer van dyck and release the video. you can get more on these and other breaking stories 24 hours per day at the new bloomberg.com. i'm mark crumpton. back over to you. betty: thank you, mark crumpton at the news desk. stocks are getting ready to close out the news -- the newsday. key manufacturing numbers, auto sales numbers, and later this week on thursday we look at the highly anticipated ecb rate decision and janet yellen's testimony before congress.
then on friday we will get the november jobs report. opec, don't forget oil, they are meeting as well. jampacked this week. head of global market strategies at wells fargo investment institute, it is very jampacked. any chance at all that this could go wrong? >> only murphy's law. what could go the most wrong for you? the ecb meeting? >> i think that there are some speculations that mario draghi may move more gradually than previously thought, but i think the jobs report will be the main mover this week. we really believe that the economy is in a state where it can accelerate a couple of ticks next year. the job market is part of that and undergirds consumer sentiment. betty: right now it something like 80% of traders believe that
the fed is going to raise rates. so, wouldn't the jobs report have to be just so completely out of whack for there to be any change in that view? yes, buttopher: there's another side to that where if the fed starts raising rates in december, will the economy be strong enough to sustain higher rates? we do need to continue to see labor market improvement going forward. 200,000 in0,000, jobs numbers would be good to see on friday, very reassuring. betty: and it will say that the fed is on track. for you looking forward the big what, deflationary trends? those are the big risks you see for investors? mr. christopher: we are still in the adjustment after the 2008 crisis and history shows that it takes at least a decade for the global economy to adjust to such a shock and we are still about six or seven years in.
deflationary impulses, whether they be from a stronger dollar or financial disruption that occurs in china or a slowdown in , a dramatic new fall in oil prices would contribute new deflationary impulses. given that the fed is raising interest rates with record stimulus around the world where you have got mario draghi, for instance, trying to push inflation rates with this inflation target, he's missing it but he needs to hit that. why is it the leveraging deflationary risks? mr. christopher: too much of a spending binge left a lot of factories being built and when the demand retreated, the tide went out. the factories in the debt that was built up to build them remained. that has to be worked out of the system. the u.s. has done a good job in
working down the factory capacity with china is just getting started. betty: where are you overweight, where are you underweight? mr. christopher: we still think that this is an environment of growth with low inflation and low interest rates. it's the level that matters more. with this positive growth environment, low inflation levels and low interest rate levels, we've selected stocks over about -- over bonds. we like europe and japan next. what do you like the least, commodities? mr. christopher: commodities and emerging markets, not that they are strictly intertwined, but emerging markets are still dealing with that excess capacity. betty: where are you underweight right now? mr. christopher: at the far end of the yield curve, we'd like
investors to come back in a bit, underweight on treasuries, overweight on investment grade corporate where we think there is still value. we are also underweight high-yield and emerging markets. betty: ok. how big of a risk do you see the dollar being next year? we could steal: -- we could still see parity amongst the euro by the end of theyear and we could see yen around 127, 131. that's a modest additional appreciation but we are not convinced that that would pay investors to hedge equity positions. we do think the dollar could appreciate modestly and as long as those prices can stabilize, that shouldn't be much of a headwind for investors in the equity market. talking really short term in the next four weeks before the end of the year, typically december is a good market time for bowles, right? -- for bowles -- bowles -- bil e
ulls, right? betty: the santa claus rally -- mr. christopher: the santa claus rally is always to be considered , but there are other issues around the world. we have a new terrorism scare. oil prices suddenly dropping. opec announced a big new expansion. mr. christopher: that was a shock there. mr. christopher: exactly, we might see investors take a shot there, but we want them to focus on a longer-term to the end of 2016, the outlook is coming out today -- betty: oh, ok. mr. christopher: we want to focus on the economic improvement of next year and we did it will be a good environment for stocks. betty: thank you so much, paul chryst of her, one of the head market judges at the wells fargo investment institute. much more ahead on "bloomberg markets." david einhorn on track to post a loss that is worse
since the -- worse than the one during the financial crisis. and what exactly is going on with these hedge funds? rico edging back from default. the island has made all the payments due today, but the troubles are far from over. beforeellen speaks twice the end of the year, the market is looking to shape those expectations for a rate hike. ♪
business stories in the news right now. starbucks has pulled its holiday turkey business panini sandwiches after they were hit strain ase e. coli costco. sandwiches are part of the holiday lineup and they were inalled in certain locations nevada. no other markets were affected and the company has not received any other reports of illness. they are inviting more currencies into their exclusive club, with officials saying that currencies may meet their freely usable test. official basket of reserve currencies yesterday with a change that takes place in october of next year. the royal bank of scotland scraped through the stress tested a, but britain's largest government online reporting -- will be reporting a profit in the fourth quarter according to ross mcewen, who says the troubled lender has not returned
a profit in seven years and expect the trend to continue. 1.8 alien dollars is the net loss at rbs. you can get more business news at bloomberg.com. big news today in the world of hedge funds. first, david einhorn dropped to hit november, poised its second losing year in the next decade. michael platt says that he will return all outside all outside money instead of managing his own private wealth. he says that "everyone knows the landscape has changed, we want to position ourselves to be free betty: joining ourselves for moore, simone foxman. seems like the same tale when it comes to michael platt, so what went wrong?
simone: it has been a bit of a slow decline for his oldest fund. it just hadn't made much money for a long. of time. -- long period of time. in 2008 that was where a lot of the assets came from. so, a lot of people rushed to throw their money into the fund. it didn't turn out to be as great as it was. the firmwide assets dropped from 37 billion to 8 billion. they kind of made -- this is and . guess a huge surprise i mean, he's a name, and it's a huge surprise if you look at someone who lost that much in assets over short amount of time, you have to wonder if it makes sense anymore. betty: exactly. you have seen blackstone -- or
where theck rock strategy isn't working. macro there are people making money -- little nother than passports -- macro fund, they are up quite a bit this year. 17%, that was through october. there are people doing well. it has been a slow grind for three years. investors being demanding, it didn't seem to make sense for them, are we really going to work to keep it? they may overturn the money, manage their own and worry about that. david einhorn, that's a different story? simone: it's almost a completely
different kind of story. this is a real maybe watershed for him. in 2008.wn 23% surprising no one, he was kind of -- ok, 2009. , down nearlys done 21%. you worry about what he's going to say to investors. when he speaks publicly it's -- i process works, it's worked overtime, but clearly except this year it's not working. he's made some wrong bets on what, sun edison? and consol energy? those event his worst bets so far? simone: then he came out with about notall for being as great as he thought it was. he has been less quick to say -- well, my thinking has been wrong
completely and these are errors. he's even gone and double down on consoles, a huge imposition for him this year. more than a little bit last month. betty: can you imagine if he can out and said -- i was just wrong? there is something to be said for honesty. simonethank you so much, . still ahead, one of the biggest players in the semi conductor's race reports earnings tomorrow. find out how options traders are capitalizing on that today.
even though it feels like a quiet thanksgiving, it's a busy week in terms of data with the ecb coming out this week, the jobs report on friday. do you feel jim: a lot of people positioning ahead of that? you feel auiet -- do lot of people positioning ahead of that? jim: yes, big events are coming, but as far as slow, it really still is quiet. betty: does that mean that people have already -- julie: does that mean that people have already positioned themselves or does that mean we will see a surge of activity? jim: it really remains to be seen how december plays out. there's obviously a lot of talk about the santa claus rally, it's true. the s&p is up 2% on average, 4/10 of 1%.
yes, december's a good month, something we are really keen on, pointing out that the crossed has historically been the antithesis of what they expect. no matter how well expected it might be with fed funds futures on the 16th, volatility is usually higher weakening after the post fed tightening. the opposite of what you might expect. julie: you are looking at something specific for your trade this week, earnings closed tomorrow i believe. this is a company already in the midst of a deal? being acquired by broad,? in the case where you have an impending deal. does that factor on the trade
itself? jim: long-term he's very positive on the stock, but in the first quarter of next year they have enclosed that in 2015. the story of being a consolidator within that industry and benefiting over time, we want a guide for the next quarter that's lower than street expectations. how is theulie: trade structure? jim: we want to sell 140 strike calls. you are committing to selling it there. the whole thing was flat and protected and even, on the downside with a commitment that loses stock off of that. should it rise after earnings before december expirations? the risk goes up more than that?
jim: risk is opportunity and you will not participate about that. gotcha, so a short-term trade given the deal that's been happening. im: after this earning guarantee you will will be back here. julie: gotcha, ok, thank you so much. yes, their stuff going on this week outside economic data in the ecb. betty: there is a lot going on, thank you. still ahead, a bloomberg market g bs traders may be the first to in the currency scandal, but will this be enough of a deterrent? ♪
mark crumpton has more from our news desk. left on ane bomb overpass in turkey exploded today, wounding five people. panic in the city, which is on edge following the recent deadly bombings. there was no immediate claim of responsibility. president obama is challenging rational republican who have fought most of his environmental policies in paris. the present said that they will meet commitments to helping to reduce pollution. president obama: climate change is a massive problem. it is a problem that is generational. by definition it is just about the hardest thing for any political system to absorb.
mark: the french prime minister is urging tourists to go back to paris a little more than two weeks after the terrorist act. the city is safe. france is the void almost 10,000 soldiers and police in and around paris. a five-year $281 billion transportation bill would increase spending on congested highways and transit systems. hiv infection rates are on the decline globally, but that's not the case in russia. they estimate the number of reach onegnosed will million next year. russians foreign ministry says that approximately 30% of the people who are sick lack access to the medications they need. on can get this and more
breaking stories on bloomberg.com 24 hours per day. back to you, betty. betty: thank you, mark crumpton at the news desk. puerto rico narrowly avoided a loan default, saying that they made all the payments necessary to continue -- to continue discussing a debt payload reduction. joining us now is bloomberg news reporter, michelle cassidy. what do they have to do here? michelle: they got the money together, they said they got it and on time and in full, helping them avoid lawsuits from investors saying -- where is our money, you were expecting to get paid today. somehow they got the money scrambled together. the government announced today that what they would start doing is redirecting some of the revenue the phase some of the other bonds, the bonds not
guaranteed by the central government. betty: how much time to the by themselves? michelle: a few more weeks, 370 -- 300 and 70 million. about the same as last time. 350 million or so? so, what happens now that they have made this payment? they will continue to talk with their creditors and investors. they really want to put together an agreement with them for something like a debt exchange that would help to reduce the overall $70 billion debt limit they have. betty: bondholders are saying? toie: they are continuing talk with them. they they hadn't made the payment, many of the investors would have said -- look, why should we continue to talk with you? betty: right, you are in default.
what is puerto rico asking congress, exactly? michelle: they want to be able to use bankruptcy and they want a formal legal process to work through this. right now they don't have access to bankruptcy. not even the locality in their fromy, that's different u.s. states. a u.s. state cannot file for bankruptcy, but the localities can. what is congress saying? michelle: look, you need to make some changes before we can pass laws and make changes to help you out. betty: the state of the commonwealth? where are we? michelle: it changes from day-to-day, they are really just trying to get the cash together to keep paying the bills. betty: all right, michelle, thank you so much.
turning to banking, seven ubs traders may be the first individual to face sanctions in the currency rigging scandal last year. making sure that these individuals know that they have something to leave -- to lose from illegal behavior. keri geiger joins us now with these details. what is this, exactly? >> the first step following the multibank settlement that several banks on wall street paid close to $6 billion for early shares and several of those banks included some of the biggest names on wall street, pleading guilty in collusion for foreign exchange rates. britishbasically where and u.s.'s uterus start to find out who the individuals were that were involved in this big scandal because banks to plead guilty and pay of billions and shareholder money. the first sector that we have is with swiss regulators. this is like the fcc, regulatory
infractions, they could be barred from the industry in switzerland and so on. the next steps, what we are really looking for is to see if there will be criminal prosecution of traders at these things. industrywide scandals, like the interest rate rigging scandal, which involves libor, one of the main interest rates being used, traders were interested in that. we have seen individual stocks used in u.s. and british courts on that. the expectations for individual prosecutions to follow is here. this is basically the first step in getting to that point. how long until we get to that point? it's hard to tell. a lot of these individuals have been named, many in the press, some in legal documents. it's not clear whether or not the prosecutors will
go for this. you have another issue here, which is that you have competition between switzerland, the u.k. in the u.s. on who would first. we have seen them arrested and tried in the u.s. with that it -- british traders arrested and tried in the u.k.. sounds like a bit of a timing issue. it needs a regulatory infraction, so we are as thick as he finds. but this is not criminal prosecutions. of wars, wall street, there is a lot of anger around the fact we don't see more individual prosecutions on wall street following these huge big scandal dollar reports. the department of justice has responded to that and they have sent out new guidelines that basically allow prosecutors to make deals with companies so that they can get more deals to access individuals. thank you so much, carry
-- keri. emerging markets of taken a beating as of late thanks to a potential rate hike by the fed. the prospect of stimulus i have help them pass, we will dive deeper into that. janet yellen takes to the podium tomorrow and thursday where the market watching for a hint of lift off. how will this shape expectations? tune in tomorrow, we will be taking you to the speech live from the economic plug in washington. ♪
time for the bloomberg is this splash and the biggest business stories in the news right now. dealmaking is keeping u.s. sales zooming towards a record pace in and industry sales are expected to exceed $18 million annual paid for a record third straight month. a different story at volkswagen, the omissions scandal appears to have put it ends in sales in the u.s.. dropping 25% in november, volkswagen has been offering large discounts on gasoline powered models, where the scandal broke back in september. can forget about owning a piece of jimmy john's for now.
conference calls and quarterly has aboutdy john's as0 restaurants in the u.s. we are headed towards the flu -- closing bell i want to get to end somellow luda that people -- and some people call it the thing train. all of these stocks are up to and and help to reimport and a soap three times as many this thanksgiving and looking forward, investors
are often bullish on the web services. in of these picks, perhaps that analyst is out with mark. st. pierre coming quarterly report with the fed breakout debut should be the most identical -- near-term catalyst in the internet land. shares do trade at a 24% discount to the cost group on the next price-to-earnings basis , suggesting that there is room to run 26 in. thank you, abigail. turning to emerging markets, the recession in brazil deepens with jean -- gp shrinking and the biggest contraction in 20 years. some analysts said that the report leak -- report reads like an obituary, but it was not that bad. turkish activity grew at its
fastest rate this year. here to analyze all of the data, with joe. how do we interpret all of that? joe: the start off to the new month is my favorite day, we just get this slew of data. factoring data, it's really date. -- great. eastern europe had good numbers. turkey, we saw some solid manufacturing report. i think that there are some signs that the economic the data we have seen in emerging markets is faded, but then the brazil gdp number was horrible, awful. it just seems like a mess. goldman brought out the dword, depression, to describe the situation. betty: four obituary. -- or obituary. what's going to restore investor
confidence? seems like brazil will need to see an end in sight to this scandal. there were obviously multiple arrests, including the ceo of that huge bank down there. people didn't see it coming. what people were saying is that until the corruption scandal ends, business activity is kind of paralyzed and you get these low numbers. bright spots here, but turkey with those manufacturing numbers, that the right spot, it really hurt professional investors, right? people whok the -- think they have the market right but were caught off guard. they talked about the emerging markets, let's see what they said. the expectedbly to
following the market fall in china and august, with the sovereign wealth funds settling in the quarter. it was really painful for us, probably with the benefit of hindsight probably to be expected. betty: any sign of a turnaround next year? joe: what's interesting is that australia, which had been caught , and obviously people see those fortunes is connected to china, the australian currency has been rising. its own manufacturing data on a nice run. it's sort of these green shoots. remember people were really like that? i think that maybe there are some green shoots on the global economy, but even china's own data, their manufacturing data last night was worse than expectations. nothing really vigorous to hold onto.
there is week i ascend data this morning, there was some data yesterday from the regional surveys. maybe some bright spots. just when you think everything is going great, you get a nice number like that and it makes you go -- let's not get ahead of ourselves here. thank you, joe, i know you've got your show coming up next. be sure to catch the black rockn with the portfolio manager, on emerging markets. much more ahead in the next hour. we will talk more. ♪
company movers ahead of the closing bell, julie. looks like we will be closing at the highs of the session. taking a look at the overall averages, closing at the high or near the high, since we have 10 minutes left, the s&p is up by nearly 1% here. manufacturing data out earlier they, that has not stopped momentum in stocks, december tends to be the next -- best month of the year historically when you look at the major averages. taking a look at my bloomberg terminal, the best-performing today is a broad-based rally that we had, health care, financial technology, consumer discretionary being the best-performing individual doing within health care, quite well, johnson & johnson, eli lilly, merck, all of them rated by barclays. analysts saying that we should see, hopefully, according to the analyst, more investment acquisitions of more pipeline.
new drugs rather than financially dragon -- financially driven m&a. drugs comingecific on these three companies and in terms of the consumer discretionary and tech combo here, facebook, amazon, netflix, amazon is trading at a record today. so are those alpha that shares. all of this momentum coming off the holiday weekend, shopping of course, disney rising within consumer discretionary today after fiscal 2017 for the company could see a profit increase of 35% for 2015 on a fiscal basis. wars is does star coming out this december, but the next one is coming up next december.
saying that if you look at how people tend to do, that is where he is getting the modeling here for that earnings increase. up 1.5%. they're supposed to be a new one for every year for the next five years? you can never have enough. julie: i can. [laughter] betty: julie hyman at the market into the's dig deeper markets as we head into the closing bell. joining me now, an economist with bloomberg intelligence. josh, janet yellen will be speaking twice this week, starting tomorrow. what do you think her message is going to be? josh: she will stand behind the previous messages that they want to take a step forward here. what is the particular argument that they used to justify that kind of move? will they focus on the traditional relationship between unemployment and inflation?
that's what you did a few weeks ago. but then one of the other governors was speaking this weekend about long-term initial or shirt -- short-term policy rate, something that president dudley has talked about. as well as the fomc minutes from october. she also talked about financial imbalances keeping rates low for such a long time. in the financial sector, in that context it will be interesting what the and whethern said he backs are up on that. on theg another hook argument, these are some of the things am looking for. betty: are people going to be listening for very simply her repeating that phrase? if she doesn't will people read the tea leaves there? whether or not she
increases the language or softens and anyway, giving a sense of how she's weighing the data. jobs report was strong, that's a reason why people are so much looking forward to a potential rate hike in december. is she going to brush this aside? for the last two years while she has been the chair of the fed, she hasn't been afraid to make strong statements, is she going to brush aside some of his weakness? is it really about the jobs report as long as they don't get a big surprise on friday? or is she going to be more -- we need and say to see a certain level of strength in the jobs report? betty: a lot of us have talked about the interest rate hike alone. describe to me what's likely to happen? what are the remaining questions? what will they be they raise the interest rate? they will be concerned
about market volatility when chairman bernanke raised the possibility of launching this one. , you knowong reaction the fed wants to avoid that. doing everything they can, it's been so slow in the process. communicating that carefully. talking about just how gradual that path is. what the cumulative amount will be over a certain. of time. when you are a policymaker, you want to provide clarity to the market, but you don't know it's going to happen. you saw that surprise in august with the data coming out of china. hands tot to tie her strongly. up if theyet cranked don't go forward with it. are there any questions
on how much they will dispose of that paper? toh: the fed has already try take the assets off the table as much as possible going back to september of 2014, saying that we are not likely to conduct asset bills. the moment of lift off, the moment they pressed a button, those questions will raise up again in the market will say -- hey, we want more clarity. josh, thank you. be sure to tune into bloomberg tomorrow, we will be taking -- taping janet yellen's speech live. ♪
>> u.s. stocks closing higher. the s&p has nine out of the main 10 groups rising. "what diduestion is you miss." >> we asked the momentum questions. joe: the heated debate over social media stocks. what is the real value of companies like twitter and facebook? us,obots, the future, and the fascinating new report on the robot revolution. we talked to its author. we begin with the markets. it was a pretty banner day in terms of the rally. dow up triple digits and held onto its rally. joe: it is surprising.