tv Whatd You Miss Bloomberg April 15, 2016 4:00pm-5:01pm EDT
scarlet: u.s. docs posing slightly lower on friday. joe: the question is "what'd you miss?" doha.18 nations head the joe: the political drama that has taken over brazil. we will take the climactic is that climactic turn. citigroup joins us. u.s. rival is slashing cost to ring out profits. we look forward to goleman sack earnings next week. we begin with our market minutes after going down and going up. we close with modest losses. if you look at the performing groups, it is kind of a recap of the first quarter. energy were the biggest laggards. we didn't really do much. we still managed to close up for
the week. joe: as we were talking about earlier, it felt like a summer friday, even though it is not summer yet. not a lot of volatility. alix: one stock that didn't feel like a summer friday was apple. the decline actually taking off dow.ints off the apple was responsible for half of the decline the dow jones industrial average saw today. we saw a report from japan that apple is going to have production costs of its iphones and sluggish sales. the stock could recover for most of the day. banks were a very difference story. this is a five day intraday chart. you can see that huge jump up there when earning started to come out and banks really able to hold onto that rally. however that rally builds on cost cuts. how much more just -- how much more juice can they get out of joe: we saw a drifted
lower on the two-year and 10 year. -- 1.75 on the 10 year. to be expected on a quiet trend. scarlet: the big mover got crushed, the most among the major currencies. it's as after the central bank stepped up its efforts to weaken the currency. how did it do that he echoed by extending the swap sales. ity bought u.s. -- how did do that yet go by extending the swap sales. -- do that? by extending the swap sales. we had headlines crossing about data that was bullish since 1999. the yen has strengthened, it has gone from 121 2107 handle last
121 to 107 handle last week. alix: a lot of movement in currencies and commodities. i wanted to highlight oil ahead of the meeting in delhi on sunday. this is the 200 day moving average. today closed below it. fell friday before the meeting. rally but not able to hold onto those gains. scarlet: we had a lot of eco-data out here in the u.s.. we want to take a look at the significant point in each of them. i'm looking at industrial production, calling it the u.s. achilles heel.
that white line is industrial production. it is 2% lower year on year. kind of treading water. line, that utilize ancient rate, that is the lowest level since 2010. take it all the way back to 2010. basically not a lot of capital investment happening in the economy. isn manufacturing, that is pretty good. there is kind of a discrepancy between that and the factory orders. nonetheless, this is where we have seen a lot of the weakness. scrubbing as the dollar strength goes away, what happens to this? joe: it is one regional survey, you cannot put too much stock into it. thetwo lines here are prices paid index, signs of some , as well as ading
headline and yellow index. back into the positive territory. maybe there was something seasonal going on. we are starting to see that weaker dollar kicking in. maybe this is a light at the end of the tunnel. that some of this manufacturing data is going to turn around and that dollar starts having an effect. >> the problem is the early read is not so great it we had an unexpected drop in consumer sentiment. chart, the at this headline is at one number, falling below 90. the orange line is current conditions. the blue line is future expectations. noction anxiety, there is
specific question about the elections in the april survey. news about the november vote made them feel a bit more negative. it is pretty intense. you can see these charts and more on twitter. i want to bring in our guest, global energy economist at credit suites. good to see you. bank officials will be gathering on sunday in doha. they hope to cobble together an agreement that would limit oil output. do we actually see an oil freeze? >> no. joe: thanks for coming in. guest: they have flagged what they are going to do. they are going to play nice in front of the camera, they are going to smile, everybody is there.
can they be more specific about what they mean they are going to do? who is going to go back down to january production? january to define what production is, and how long would you freeze for? i think the market is looking for answers on. i doubt the market is going to get them. alix: i took a look at when we saw opec and non-opec members get together. now on both of those occasions, the production cut didn't really mean anything. oil prices kept rallying, despite the fact that this production cut didn't mean anything. does it matter not, does the fact that they are talking about it -- guest: the fact they are talking means they are not going to engage in a price war, means they are not going to engage in
a share war. it removes the upside volume risk and protects them on the downside. press the case that pfizer needs to go to the low 20's or high teens. you just have to have a different risk reward structure. how long do they need to keep this up for? they are almost there. all they really did was make sure people understood there is no more price war and wait for the market. >> what would constitute a surprise to you in one direction or the other? what is one scenario that can move the market? it shows there is no
unity. less than 5%. is they hug,side they looked that little bit closer together. export volumes are going down. it turns out months from now they cooked up a deal behind the scene. >> if you take a look at long positions or short positions, longs have actually risen. longs are actually quite extreme. that if they risk don't hug and fight each other. scarlet: look at a selloff could we see that -- see in that scenario? guest: i'm no more constructive than the next guy.
it is kind of the opposite of what you would normally see. you should have seen prices go up. and then sell it off. now you would be selling off. what if there is a reservoir of flank that wants to step in but doesn't want to step in ahead of doha. what if you walk in monday morning and sell a lot because not a lot happened. i wouldn't be all that much surprise. and then by tuesday you start the rally all over again. >> we have seen oil rally a lot since the middle of february.
everything, e.m. rally, rates in the u.s. go up. what is calling the shots? is a commodities? >> the governor was all-out fear. deflation system risk. those guys are can chew beating by putting too much oil in the water. they are going to balance the oil market. that they wereon not going to tighten any time. we are going to run the fed hot type of thing. when this stuff correlates is when there is max fear. we are now beginning occasionally to trade on our fundamentals. i think that china may not be falling off a cliff. i think the consumers are doing
1:20 5 a.m. local time saturday. japan's meteorological 80 and see -- meteorological agency -- saysyoto new agency reactors are operating normally. bernie sanders is in rome to --end a vatican commerce -- he joined several speakers commemorating the 25th anniversary of the high level teaching document by pope john paul ii on the economy and social injustice at the end of the cold war. the vatican says pope francis had no plans to either addressed the conference or meet with senator sanders. join us at 5 p.m. new york time for an interview with republican president of candidate senator ted cruz. that is on "with all due respect," right here on liberty. iran's revolutionary guard may
be visiting moscow in a violation of a u.n. travel ban. secretary kerry raised the topic in a number station with the russian foreign minister. the heads of the elite special forces is subject to a five year u.n. travel ban. global news 24 hours per day, powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton, alex, scarlet, joe? alix: brazil will have a new president in may. but he won't last very long. that is according to the managing director and head country analysis at eurasia group. he says the new president is impeached, the vice president will take the reins. there is a 35% chance he doesn't even finish his term. christopher joins us from d.c. why do you think the president will make it? there is a 35% chance
he won't make it. but our expectation is he probably will. a one inn we give three chance that he doesn't make it is essentially driven by of thesive corruption carwash scandal. we have to remember this is a highly independent investigation , in which the volume of information is being given to cross it that the volume being given to prosecutors is tremendous. as a result, as this corruption scandal continues to grow, it has the real potential to continue to gulf the party of the vice president. and if that happens, then the narrative of the vice presidents government could easily become one in which you are -- you are essentially exchanging one set of corkscrew for another. , but webet on that attach a probability to that outcome.
joe: there is a view that to impeach to have fiscal changes and he to do that for a turnaround. but if there is this risk that there is a massive corruption involving everyone, including a possible replacement, doesn't really matter, is there any reason to be opposite -- to be optimistic about reform? guest: the good news is the vice presidents staff and ice president is very well aware that if he comes in and assumes the presidency around mid-may he has a very narrow honeymoon to work with. and the political strategy of survival is clearly one in which he wants to present his administration as the solution to the economic crisis. everything you are going to hear from the vice president early on in his term, we're going to have a credible economic team. from what we are able to gather, they are probably going to put structural economically arms on the table consideration.
the opposition has come to the conclusion that the failure of our government is not in their interest, because that would just be a cycle of deepening economic and political crisis, which would essentially generate an environment of kicking the bums out. i think our point is just that it is a tenuous equilibrium that could be unraveled depending on how these investigations on hold. scarlet: it is pretty one directional. investors have pushed the brazilian currencies versus the stronger dollar. the orange line is deposit rate futures. it would give central-bank room to cut interest rates. people are benefiting on an outcome that -- are betting on at -- reading on an outcome that would benefit the economy. chris: let's not forget the levels that where we were two or three months ago. financial markets were talking
about the possibility of restricting his debt, of a potential unhinged fiscal crisis that could generate concerns over the solvency of brazil and debt obligations. the correction we have seen is with the fall of the administration, there may be a different political environment. in fact we are correct and the vice president does present a constructive reform agenda, it could be -- whether that is to valley doorknob, the distribution risks remain large. i think at least what we are going to enter is a cycle with a long and painful road or adjustment. alix: it seems brazilians are divided. the government will be better, but 37% say it will be
the same. we did an unofficial hole. joe: -- unofficial poll on twitter. joe: here he go. alix: we can go to the computer and take a look at joe's twitter feed. joe: we asked if people in brazil have -- if brazil has more of a market rally. there is a clear divide here. just an em story we have seen in brazil? chris: the external conditions will be important in brazil. theink in the near term investors are going to be focused on what is the economic team that the vice president is going to put forth? what is the -- what is the agenda he is going to advocate? i think the end result of that question will be positive.
marcus will very much like what they are going to hear. i think there's potentially more room to -- the question comes after that kind of announcement. he's going to fall short. i don't think he's going to deliver structural economically arms. but he will make some progress toward. approve he will microeconomic reef arms. a new telecommunications law, those kinds of things we see on the upside. >> coming up we have the three charts you cannot miss.
scarlet: we are looking at china gdp and the economy overall. the question is how fast is the economy growing? here is one way of looking at it. the orange line is the government report. the last one was 6.7%. the blue line is what the government is targeting. the white line is the proprietary gp tracker. we get a little bit of a lift up above what the government had targeted. we are also above the official read as well. what is distinctive about our index is all the major components of demand, such as consumption and overseas sales. you can trust hours. >> this is my favorite china indicator in the world. this is electricity usage.
basically if you use more electricity you either use that you either own a house or an apartment. line showss purple electricity rose by an average 2% by the last three months. where did that demand come from? what that means is china's grand plans from an industrial economy into consumer driven economy, actually working a sans the uses. joe: scarlet pointed out this is one of the best months in a long time. the raw data is really destroying the electricity data, but here is the bad news. this chart comes from bloomberg intelligence. the amount of new debt that was
and this chart from bloomberg intelligence, the white line is corporate and household that a percentage of gdp. the economy is growing. maybe it is a soft landing. those concerned there is this unsustainable debt bubble and ultimately what china needs is deleveraging the last month shows there still piling on the debt. alix: you will see that go up. bank earnings have shown that cost cuts are on the rise. we have a push through profitability. that is next.
marketing all signs are pointing to the contested convention. ted cruzial candidate discussed his strategy for winning the party's nomination, and bringing everyone together. say as iti will probably happens in a contested convention, we are in a majority. it will be quickly important to keep the donald trump supporters energized and engaged. on with all due respect with bloomberg
television. the earthquake in japan was stronger than originally.. they say the quake was a magnitude 7.3. it struck 24 hours after a na li -- after another had -- another deadly quake struck the region. nuclear reactors are operating normally. water experts are proposing the state institute the nation's toughest lead testing rules. it comes in the wake of flint's water emergency. other recommendations would require utilities to test all schools and take care centers. u.n. officials say a record 155 countries will sign the landmark climate agreement at a ceremony later this month in new york. all 193 member states are invited to the event. more than 60 heads of state and government plan to attend. the previous opening-day record is held by the law of the sea treaty.
the nba announced it plans to game in northtar carolina, despite calls to relocate the event. over a newbacklash state law some call anti-lgbt. a bipartisan group urged the league to move the game. an executive order was issued. it tweaks the law but keeps most of the controversial portions intact. global news 24 hours per day powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton. apparentraw-hill is an that is fairly a country that appellate a company of -- it is marketing the asian services unit from $1.1 billion.
you may have gotten some surveys from the company in auto. they were pretty influential in that space. for $1.1the u.k. billion. let's get to a recap of u.s. stocks today. indicate a modest decline. 2% and theed almost s&p still holding its four-month high. >> and very quiet day, but quite an impressive week for the market. >> today was all about apple. were going to cut production of the iphone 6 and six as own. apple wade overall on markets. scrubbing alix steel won't upgrade her phone.
scarlet: alix steel won't upgrade her phone. alix: accordant people with knowledge of the effort, the firm is firing more support unless they are directly tied to serving clients. goldman is also said to be relying more on junior bankers. investors -- reassured investors he is keeping an eagle eye on expenses and the firm has more flexibility to reduce them. joining us by phone from arizona to discuss the cost cuts across he industry is former cfo of lehman brothers, brad. scarlet: the first quarter earnings report is proof that trading remains a problem child. revenue isn't coming of the way it used to, especially when you look at fixed income currencies and commodities.
how much smaller will these capital businesses get? brad: when you look back you had an industry that was much larger than the relative banking business. the issue we had is the trading has not been able to beat the cost of capital. you look at these banks and how many years are -- years out our we area -- are we? you are seeing that in terms of the valuation. can you shrink the fixed income businesses? yes you can. as you shrink a fixed income business, the person that is going to have to pay for it is larry think, it is -- larry fink. if you want liquidity, you are going to need to pay for it. the model of risk taking and making money from risk-taking is gone.
>> you heard goldman sachs was getting more aggressive about cutting things like spending and cutting people's ability to spend on entertainment and airfare. can these cuts really move the needle or are they -- or are the only cuts that matter -- brad: it is not 50% anymore but compensation is by far the largest expense. the way to cut compensation is really to cut the number of managing directors. the juniorutting people at the bottom. it is really managing director compensation. deferred compensation can move the needle. as a cfo you have to do what they are doing. as a cfo you have to say every
penny has to be at accounted for. -- be accounted for. compensation is where you get a big impact. you really have to be disciplined across the board. it still has at least a partnership culture. scallop and each of the banks seem to have chosen different paths. credit suites, pursuing asian wealth management. deutsche bank giving up its goal of being a global investment bank. which business model seems to have the most plausible path for growth and opportunity? brad: we can look at two traditional models, jpm and goldman. if this becomes a last man standing model of anybody else generating returns over a long period of time, they will be the
winners. ubs is the example of i'm going to be an asset management firm. when you think about all these businesses, unfortunately they are not all independent. i can't just do m&a. where you say and going to pay an asset manager and shrink my lower return investment banking businesses, ultimately it is going to drag down your market share. morgan stanley has an interesting model. they are pulling back pretty strongly. the implication is we are going to try to hang on to those high return businesses.
we don't know, we will find that out over the next two months as we see the market share shift. alix: we have seen that regulators are camping down on these abilities to take advantage of these benefits. how does the living well details play in with that? >> this idea that you have this document that is going to be a blueprint for the regulators to shut down various businesses and take you through something less than a bankruptcy. it is a great idea. it is unlikely whatever you write is actually going to be done. around the world is putting in place resolution rules. rules, yoursolution
entities, your singapore, hong kong entity. they are all going to have to stand alone. independent companies. it makes it difficult for this universal model of i'm going to move trading around the world. i'm going to move my funding business around the world. resolution rules make good sense, but there is going to be a good cost. and it is a direct attack on the u.s. banking model. when you talk to the board members, that is what they are worried about. i would spank coming up, has u.s. education hit its peak? we examine the ties between college enrollment and the economy next.
alix: it is time for the bloomberg business last. -- business flash. cut production the next three months. lower than expected sales have prompted apple to reduce its orders. this from a review that identify suppliers. cheaperterest a smaller handset last month in an effort to pump up sales. all ahead of rolling out a new flagship model later this year. another casualty of the panama papers. this time it is -- he after giving conflicting expectations about his ties to an offshore firm set up by --
denied anyy involvement before backtracking as new revelations came out. initial investment proposal was set to have been rejected. sides remain at odds with corporate governance. the canadian government is looking for a more favorable deal. the company's annual meeting on april 29 is said to be unlikely. that is your bloomberg business flash. alix: we may be at peak higher education. demographics in a stronger look joiningn department -- us now is george perks, a macro strategist at the investment group. researchbarked on this -- just explain, what is this research you did on education
and its impact on the economy? force iss. labor better educated than it ever has been before. of people with associate's degrees, very few people without a high school or full high school education or that have just graduated from high school. since 2000 there has been a ofaight trend over time those higher education part the labor force. >> this is not a situation where a bunch of people went to college after the great recession to get degrees. this is something that had been steadily going on for quite a while now. >> it is not just college. you see scaling from the associates degrees. let people not graduating from high school. it is a big shift up.
of people will point to the easy availability of student loans. they also worry about a bubble in student loan debt. is that misplaced? >> student loan debt is complicated. 70% outstanding is held by the federal government. that creates a couple of different scenarios. it is hard to see what happened in the subprime mortgage crisis happening with student loans. market is owned by the federal government, should we get into a situation where there are massive defaults or the percentage is default in? it's not like the banks are going to go out and suffer a wave of bankruptcies. governmentederal that holds the bag for that. there could be some fiscal policymaking and some tax policymaking and some choices we have to make. as it is right now, there are a lot of big numbers.
schooltudents and to during -- that number has dropped precipitously. we have seen the growth rate of loan slow down. the student loan debt is to be sure is largely in line with income distribution. the 25th percentile of student and also earned more pay a higher percentage of their income. >> the burden of student loan with the most people able to pay it off. >> i think it is safe to say that. era,ck in the crisis they're obviously wasn't many jobs available. it made sense for people to get advanced degrees, defer going into the workforce for a while. should people not go to college now? definitely added incentives as opposed to the labor force during the great
recession. important to remember the demographics are hiring a huge percentage of this. the age category for the five has been05, 2010, 2015 decelerating steadily. there has been this wave of people. they rushed him to school, partially because that is what people do in this age of our history. now that group is slowing down. scott a bank thank you so much. we will be right back.
and investor meeting he made the case to -- and pimm fox. >> we have already seen it come out and say they can father finance rolls april 29. they didn't find any wrongdoing. so what you have here is a busted roll up, in essence predictably that spend $30 billion buying a bunch of other companies under a premise which is actually sound, which is that specialty pharma companies much ono spend way too r&d to become more diversified, and you can create a diversified pharma company by buying specialty pharma companies, then cutting back. i think the stock has lost 90% of its value over the past year and a half. stock islike the fairly well sold out and when you begin to look at the pieces, even though they may not be
the marginal price that they paid, we think there is too much fear priced into the company. more importantly it is one of the behavioral finance of names where the names are so cheap and so be down. the risk is so high that people don't want to show it in their portfolios. the controversy continues every day. we had a bondholder default on the company. we think there are many levers to pull here. theyn't actually believe need to sell anything. many assets. they did that,f we think their guidance is somewhere in the nine to $10 range and earnings on a $30 stock. we think they could probably
earn seven dollars or so, putting at around 4.5 times earnings. >> does that go away? the cheaper the price. as they begin to dissipate, the stock would naturally move up because of the risk factor. 2003, the decisions wentrence in new york, i to a meeting who eventually went to jail. they were being investigated by the fcc. and i went in there and there was one other person in the room, a friend of mine and value investor from london. says i can'ts and
take any questions. i can tell you what our business is. he did that and jeremy looked at me and said, this could not be any better, there is nothing that can go wrong here that has already gone wrong. it is pretty clear there is nobody interested in this any. >> what about the corporate loans or the bond that have been issued by valeant? >> we bought some of those on the income and. and we are showing a profit in those if i'm not mistaken. thatu have written successful investing involves the discipline and patient execution of a long-term isategy, especially when it emotionally difficult. is that the case for many investors, it is emotionally difficult to either acquire or
shed an existing position? >> it has been exacerbated by what has happened since 2008. where the perception of risk and owning equities is high because of the scars left from the collapse in 2008. we have negative interest rates around the world. we saw the market selloff in the first two weeks. it is like mr. toad's wild ride. think that is much more evident in 2008. >> we have some breaking news, apple has filed a response to the u.s. appeal over a drug dealer's iphone. tois urging a brooklyn judge uphold the denial of an iphone large, apple saying it should not be forced to help access iphone data, consistent with its
scarlet: what did you miss? >> i'll be looking at the brazil impeachment peterman vote on sunday. it is such a big deal in brazil that they are postponing soccer so many people want to see the vote. >> that kind of awesome. we will also be looking at the opec meeting sunday. will they adhere to the freeze? scarlet: i'm looking at china much property prices -- march property prices.
mark: "with all due respect" to bill o'reilly, this is azone -- pin zone.in -- a no-s not quiternoon and tgi- tax day yet. we are just outside syracuse. a little while ago, we interviewed senator ted cruz. i will show you that conversation a little later in the program, but first, bernie sanders' hail mary. he took a redeye flight last night after debating hillary clinton and went to rome, italy, where he