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tv   Bloomberg Markets  Bloomberg  April 20, 2016 3:00pm-4:01pm EDT

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from bloomberg world headquarters, good afternoon anyone, here is what we are at this hour. -- the rally hold even as folks awaken reportedly to reach a compensation deal over its clean diesel scandal. how much will this cost the company and can it rebuild its reputation? and will the european central bank extend its stimulus package yet the we hear from one former bank of england governor on the limit of monetary policy. we are one hour away from the close of trading. the fine bloomberg's julie hyman with a check on the bloomberg market desk. julie: we have a rally going on, it has booked the dow and s&p even higher.
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-- it has pushed the dow and s&p even higher. the nasdaq also gaining ground and paring its losses for the year. a combination of factors, including earnings, including a commodity led rally as well. the s&p 500 has been gaining strength pretty steadily throughout the day. you see right now it is up half a percent. and that is at the highs of the session. early bouncing around, it has continued to gain. we have been watching the fix during this recent rally. traitors in our option segment have been predicting a return to volatility. it hasn't happened yet. vix at theing the in eight months. first of all its look at the number of stocks in the s&p that are above the 200 day moving averages. climb andeen this
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climb here, and pre-much at the levels we were last summer. the dow also incidentally at its highest since last summer. volume, which had been running below normal is back above the 30 day averages. have been looking at the high-low indicator. is 52 week highs versus 52 week lows. the green has been building, the red has been shrinking. these are different ways to look at the very -- of the various internals. >> we haven't heard a lot about other asset classes. julie: we are seeing a rally and other types of commodities, we have been watching the u.s. dollar. there are some currency strategists that say it is not unusual for the dollar to weaken after you get an initial rate increase. is a debate when the next fed rate increase will come. the dollar's rally in higher today. it is higher versus the pound,
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higher versus the euro, higher versus the japanese yen. the metals today, for example, we have been seeing, with the exception of gold, which has turned lower, silver and copper has turned higher today. it is such a big upward move we weeklyay, in part by the production report. that lending some optimism to the idea of oversupply of production here in the united states. >> there is a correlation between oil and stocks again. julie: both rising to the highs at the same time. host: let's get a check on the headlines from bloomberg world news. mark richt and has more from our news desk. mark: the good afternoon. authorities say nearly a half mile long tunnel leading from mexico to san diego california has been discovered, with more
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than one ton of cocaine and seven tons of marijuana seized. yardsnnel extends 300 from my house in tijuana to the border, and than 500 yards on the u.s. side to a fenced lot in a san diego industrial area. officials say it was equipped with a rail system, ventilation, lights, and a large elevator. failed michigan family, that is how -- describes three people who face connections with charges in the contamination crisis in flint. had a duty toes protect health and safety of the families and people of flint." those charges include two state employees and a flint employee. they are accused of evidence tampering and other crimes. tuesday is shaping up to be a crucial day for bernie sanders, after losing to the difficult front runner in yesterday's new york primary. the sanders campaign pointing to
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five primaries april 26. her clinton's victory makes march to the nomination all but unstoppable. she's favored in all the next three races. earlier rattled ecuador today. the 6.1 magnitude jolt was the strongest aftershock since the deadliest earthquake in decades. the quake killed at least 553 people. the search for survivors continues, but there is little hope anymore will be found. 24 hours per day powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton, carol, back to you. carol: as julie mention, the s&p 500 hovering the highest level in months. the winner, emerging-market stocks. this is a chart showing the msp i global stock index compared with the emerging-market
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counterpart. emerging-market equities ahead through today. on thist a perspective wednesday. let's bring in the global chief strategist at citibank. -- we should take a look at things prospectively. where do you find the best opportunity for individuals right now? steve: it is this mix, this difference that central banks have managed to drive interest rates dramatically lower in the eurozone, where dividend yields are higher for equities than in the united states, conversely we have some of the highest bond yields in the markets. carol: it doesn't quite make sense, doesn't? makes sense in terms of global economic strength. outl: we have a story talking about japan's sovereign
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deals. hitting a record low. when you look at the fixed income and sovereign debt and see so much of negative rates, what does that tell you? steven: the idea that central bank's no effectiveness in financial markets. take a look at bond deals. they have been able to drive sovereign yields to negative territory. asset purchases, negative rates, these things are having a fax in bond markets. it is lowering the hurdle of rates of return, or what is required above those lower deals. that is part in what you are strength of credit markets. carol: in terms of the central bank policy, i this point doesn't really have much of an impact in terms of getting corporations to spend? steven: if you're looking at impact, that is a harder linkage to make between the performance of the real economy, where we have stayed at this very moderate trend. certainly if we can run
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counterfactual's, and of central banks had nothing but raised rates through the crisis, we wouldn't have had what we have, which is more than a doubling of corporate profits in the united states paid it is not as if they had no influence paid but the effect seems larger in financial markets. carol: there are some reports overnight, while there is not any official change in their policy, they may not be as easy going forward. that is based on some economic reports we got out of china. how does that change the economic picture for china, certainly the global investment? steven: the local china market, the focus is on policy stimulus rather than economic strength. have seen this turnaround to some of stronger data within china. that is the way this market is treated. if there is an important read through for the rest of the world -- there is an important read through for the rest of the world.
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oft's taking pressure off china and emerging markets and has gotten us this rather strong performance, with the idiosyncratic issues of chinese being an outlier. carol: and don't know how much visibility you have when you look at the second half, but when we tend to go into a year, it is soft in the first, and in the first, and then thing start pick up momentum. do you anticipate that plays out again that way this year? feeln: one thing i would more comfortable in, and you can't be as bullish in the trough of a downturn, you can't be as bullish as we were in 2013, all of these caveats. but the idea that this was going to be a her rent is year, going in the two -- going into the -- et place, we're going to see a massive profit drop. look at the actual results. what that tells me is right in the second quarter of the year, the spring quarter of the year, you are going to see in the u.s. agree market a modest resumption
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of equity growth. these legs we had with energy are going to be slipping away. right here in the first half of the year, we are not as bad as people thought. arrow bank brought -- carol: what about the revenue growth? steven: the commodity picture is changing after you have had massive this investment for t debeers. -- massive dis-investment for two years. carol: you like fixed income. steven: bear in mind we don't expect global economic recovery to be eddie's mod that be any stronger. -- economic recovery to be any stronger. sustainability in the recovery we had in the labor force in the past six months. maybe slowing demand, so the federal reserve is going easier than before. when you have u.s. corporate yields at the long duration and
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the fed going nowhere at 5%, that is a meaningful opportunity. municipal's and a variety of other spread products in high-grade products. those are opportunities where we overweight a lot. changed -- wes know the central bank has been looking more globally. they really kind of related out that they're going to be looking at everything. is that the most significant change? steven: it is not that the central banks want to be supportive, and you know this can't solve every problem, but they want to push back against policy divergence. they are moving their policy to have internal effects. that has heard japan on a relative basis. when you can see inside the eurozone, the effect of credit easing is hoping that is helping the internal prospects in the eurozone. pushing back against the impact in divergence, the central banks working together -- asol: does it play out well
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accorded native effort? steven: it is looking more like the first half of 2015. this was interrupted by a negative effect speed obviously the issues of chinese currency. that is why central bankers are on this.d it is fragility as well as a pragmatic approach by the central-bank spree at carol: thank you so much for coming in. he is the global chief bank.gist at citi private reached a deal over its clean diesel scandal. is compensation enough to bring back customers? and yahoo! --ing quickly to bring back will stronger first quarter revenue spark interest in a deal? and will the ecb cut rates tomorrow? that is certainly a focus. what it means for the global economy. stick around, this is "bloomberg markets." ♪
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let's get a quick check on the markets for you. we have market averages just coming off of their highs of the session. we are seeing stocks higher across the board did the numbers -- across the board. 500 about one third of 1%. 2108 is your last print. let's also go to oil. rebounding at the american falls , mixed crude up. brent crude oil up. nonetheless higher on the day. it is time for the bloomberg
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business flash, it is a look at the bloomberg business stories in the news right now. don blankenship must surrender to federal authorities on may 12 . he was sentenced, charged a $250,000 fine for an explosion years ago at the upper branch mine in west virginia that killed 29 people. he is appealing. he is seeking court approval to while this appeal continues. massachusetts is charging a stick corporation with violating the security acted it says the bank over charged clients over a number of years. the secretary of the commonwealth says there were secure messages that contained secret markups and charged customers five does per messages that cost them only $.25. volkswagen -- five dollars per message that cost them only to
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the five cents. people familiar with those negotiations. the compensation could be as much as $5,000 per customer. the amount of non-include recall -- volkswagen is facing more than $20 billion in potential environmental fines. is your business flash update. for more on volkswagen news let's bring in our own jamie butters, bloomberg's auto editor. he is live in our detroit newsroom. jamie talk to us about volkswagen and, first of all i feel like the headlines have been crafted fast and furiously. where are we in terms of this news? is -- jamie: there is a deadline tomorrow. they're supposed to come in front of a judge of california and present the plan on how they are going to stop the 600,000 cars from their continued polluting. that is the big thing the judge has emphasized, they need to get
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these polluting cars off the road or fixed. in addition, people are going to be inconvenienced. maybe the value of their car will be diminished some. is about $3 billion to settle the u.s. consumers. like at sounds reasonable amount. something that would be survivable for vw. they have other pieces of for issue carol: it must be better than settling this in the court. certainly. they don't want to go to trial. this so i multi district litigation. you have consumers, you have government bodies, you have all these people filing these complaints calling these clean they would beying
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great performance and good for the environment. and they were good for the environment -- they weren't good for the environment. reach an agreement with all parties and let the judge blessed and get it over with. carol: we need to talk about mitsubishi as well. i don't know what is going on in the auto industry but it seems like there's a lot of wrongdoing. mitsubishi admitting to manipulating field test data. lay it out for us. jamie: the way they cheated was very different. the way they were caught was very different. this is about how much air was in the tires and how they executed the test, and they were caught by nissan, their partner who bought most of these vehicles and sold them as nissans. the gist is the same, automakers are under pressure all over the world to reduce emissions, help do their part to slow mobile
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warming, and they are under a lot of pressure. and those that can do it are doing well, and those that can't are sometimes, whether it is individual level or systemic level, they are used to getting around and cheating. they put more pressure on the regulators and others in the industry to hold him accountable. -- are they asking automakers to move too quickly? jamie: there are certainly those in the industry who would say that. there are plenty others on the other side who say, no, you are doing just fine, you just need to work harder and do what we know you could do. it is complicated stuff. certainly there is opposition. we also see polar ice caps melting, so it is a trade-off. carol: is there any anticipation anything else will come out? jamie: there have been accusations about other automakers.
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there are a lot of systems in place, regulatory and within the industry. the thinking is that it is pretty well known or would be discovered. a certainly there are a lot more people looking now in the way that scientists in california and west virginia did in discovering the volkswagen case. they are also looking at other automakers and couldn't find anything, at least not immediately. this is forward paying almost $200,000 for tesla, their model -- suv. what is going on here? a high priced vehicle to begin with, it is considered a tremendous suv. i have not had a chance to drive one myself, but they sell for $155,000, it is huge. ford is the leader in suvs. they sell and a lot of them. they are investing in electric vehicles, they need to know what the competition is like. so when you have a vehicle that is in high demand, scarce
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supply, the price goes up. so they had to go to a dealer, some of who could get them a new one, they got it, they are driving around, presumably after they get a feel of what works and what doesn't. then they can tear it apart and see what is underneath. stuff, jamie. you are watching bloomberg markets, we are continuing to the market close. ♪
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julie: joining me for today's option insight is the chief strategist at bubba trading. he is joining me out in chicago. are watching the earnings reports rolling in. one of them coming in is under armor. first i'm going to get you to walk me through it, because this
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one has three different likes to it. >> i'm kind of bullish on under armor. we have seen lowered expectations. donenk under armor has well. i'm going to buy a ratio spread, i'm going to buy for calls at the $35 strike and sell three calls at the $33 strike, and i'm going to collect the net credit. will explode and i making a lot money to the upside . if i'm wrong and the stock goes down i get to keep the stock etiquette to keep the credit. -- i get to keep the credit. i get to participate in the long side and still protect myself on the downside in case i'm wrong. julie: where does your optimism come from under armour? had some mixed commentary from analysts.
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i believe morgan stanley was not very optimistic. but that they have been wrong sometimes in the past. there are other analysts that are looking at the numbers a little bit differently. what tea leaves are you consulting here? todd: my tvs are i'm looking at the chart. they have already anticipated -- my tea leaves are i'm looking at the chart. unless it is really bad i think we go a lot higher here. julie: we will be watching it tomorrow. thank you very much, we appreciate it. we will be back with more bloomberg markets in just a moment.
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governors says he thinks there is some room for the peso to grow. the exchange with the u.s. dollar, you can see the mexican peso just down half a percent as we speak. let's get things going with a check of the headlines. mark crumpton has more from our news desk. mark: senator ted cruz is downplaying donald trump's victory in yesterday's republican primary. a politician winning his home state. jump says there is not much of a race anymore and the associate press says crews cannot possibly collect the delegates he needs for the nomination before the convention this summer. ted cruz's campaign senator says -- democratic presidential front-runner hello clinton has a double-digit lead over billy -- over bernie sanders in pennsylvania. he leads the vermont senator 52-30 9%.
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52% to 39%. merrick garland was on capitol hill with a closed-door meeting -- was on capitol hill for a closed-door meeting with lindsey graham. garland, honest and capable. replacing antonin scalia a is it up for the next president. u.s. victims of terrorism sponsored by iran are on the way to collecting nearly $2 billion. the supreme court upheld a judgment today in a 6-2 ruling. the group includes victims as well as family members of the 1983 beirut marine bombing and the bombing of -- towers in saudi arabia. secretary ash carter is pressing defense ministers from six all nations to provide more economic and political support to iraq in
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the fight against islamic state. and secretary carter urged arab nation's specifically to help with the reconstruction of -- products. global news powered by our 2400 journalists and more than 150 news bureaus around the world. i am mark crumpton. back to you. carol: think you very much. the markets closing in under 30 minutes. abigail doolittle is live at the nasdaq with more. abigail: the nasdaq has recovered from losses. one of the biggest boosts are the shares of yahoo!. stocks up after today's first quarter earnings call. marissa mayer was given the opportunity to reassure investors yahoo! was making a quick sale of its internet business. potential of a 50% upside for the shares of yahoo! based on some of the analysis.
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that sounds pretty amazing, but when we take a look at the long-term chart, we see just this week yahoo! put in a bullish golden cross. the last two were a big upside. so shares may climb higher yet you -- higher yet. intel was a big turnaround stock. a disappointing 2016 sales outlook and an 11% workforce reduction. now that should stock is -- now the stock is higher come investors like those cost-cutting efforts. this may signal a move toward the flash market. perhaps investors are liking that. that may be the case, but when you take a look at this chart, it is pretty much the opposite of yahoo!. we are seeing embarrassed that cross. the last two were on the downside. how banks are the only watching those two. most of the names are higher on that average, but there are a thousand names that are dragged
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on it. any notable tech names pulling down the average? julie: one in deed, check point software is the second-biggest dreck -- abigail: one indeed, check point software's the second-biggest drag. the company offered a second guidance quarter that missed estimates. they have a history of being conservative, so perhaps this is the case again. this bearish action has sent the stock back down into a trading range. perhaps it will trade back down toward the bottom as it hasn't passed. this will be another tech stock in the nasdaq to keep an eye on. carol: abigail doolittle at the nasdaq. monetary policy has bought the economy more time to recover. policymakers have reached the end of that. book that he spoke to
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francine lacqua today -- he spoke to francine lacqua today. coming from ours would look at us and say the central banks governments said the answer was monetary policy for eight years into the so-called recovery, it is not generating a significant recovery. and the reason is we are not facing the normal postwar business cycle conditions. toare facing the need restructure many large economies and the world economy as a whole. it is a major discipline librium disequilibrium. i think central banks, by buying time for governments, that governments don't use to put in to place the right measures, it is making the next crisis more likely. because we are putting off things we continuously need to do. francine: is this because we are wrong indicators?
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think it is the basic framework we are perceiving. people like to use the word headwinds a great deal. and the implicit assumption behind that is if you give enough monetary stimulus and are patient enough, then the headwinds will bait -- will at their will abate own accord. countries like china and germany too need to spend less domestically and import less. francine: what is the endgame? are central banks going to continue doing too much until the governments decide that they need to pick up the bat? , iare central banks saying can't even focus on inflation, i can't even bring inflation up, so let's abandon the fight? mervyn: central banks need to
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argue more forcefully than they are doing. the answer is not monetary policy. they have bought enough time and can do little more. i think the forays into negative interest rates are demonstrating that monetary policy is facing diminishing returns. becoming likeare a cyclist cycling up the hill that is just getting steeper and steeper, and having to pedal faster and faster to maintain the same rate of economic momentum. this is not likely to work. impossiblent it is to judge when, governors will exhibit the audacity of pessimism. they will come to realize the outlook is sufficiently pessimistic. they will summon up the courage to do the more difficult things that are necessary to get us back on track. i think we will see further crises in debt repayments. i think we're seeing major
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potential problems in europe with both banking and sovereign debt. i see some of the enterprises default in on their loans. this is going to become more common. there are many emerging markets area the strength of the dollar is making life more difficult for them. we will see further debt crises, and that will feed back to the financial sector in some countries. >> i know you don't want to talk about the brexit -- about the allit, but have you modeled of the effects? i know it is -- is it a back of nap can kind of equation or is it so complicated? mervyn: i'm old enough to remember the referendum in britain in 1975 on exactly the same issue. the one thing both sides of the argument were wrong about is that it would make a difference, it did it.
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i think it is important people should not exaggerate the impact either of staying in or leaving. proponents ont both sides, treating this as a public relations campaign rather than a debate about the future of our country were inclined to exaggerate, because they feel they are selling a position. and what is more important is we have a calm and reflective debate about the role of britain in europe. and our relationship with a continent, with which we have struggled with for several years. this is a big question. tocannot be reduced simply the level of a simpleminded cost-benefit analysis. francine: the endgame for the world economy is huge, because it is seen as one of the three biggest risks. >> -- mervyn: i think they face two x essential threat sprint the second is the migration
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crisis. neither of these are easy to predict. but these are the big threats to europe and the world as a whole. british membership for the european your dish european union is not an exit stencil british never should for the european union is not an existential threat. membership is not the biggest risk or threat to europe as a whole. heraldingrmer -- former bank of england governor --vyn king speaking with bank of england governor mervyn king sticking with francine lacqua. speculation opec producers will meet next month. we will talk about the oil market. there is a trade. the highs of the session up 4%. 42-63 -- 42.63 per barrel.
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carol: republican presidential front-runner donald trump speaking right now in indianapolis after a big primary win in new york last. indiana voting the first week of may. and it could be a strong state for ted cruz for next week's primaries. you can watch trump's speech, just go to bloomberg -- it is time for the bloomberg business flash. it is a look at the biggest stories in the news. shares rose the most in three years after profits trumped estimates on gains and spending.
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they are up 3.5% on the year. services were expanded to include student lending and unsecured personal loans rose to -- plannedergen says he the path to an agreement to continue carrying channels owned by viacom on the satellite tv network. if an agreement is not reached by tonight, dish will take viacom channels off the air. the two companies are involved in a dispute, faced with the loss of viewers internet services such as netflix, cable programmers are seeking to increase the subscriber fees they get from pay-tv distributors, and that includes dish. cfo of monster worldwide. he is replacing -- who spent five years with the companies. than a quarter of their value since the beginning of the year. and more than 50% in the last year.
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first-quarter numbers released on may 5. and that is your business flash update. the events out of delhi are still fresh in people's mind. -- and is on the uptick the team over at what a jew miss is debating what is going on at the oil markets. joining us is joe weisenthal, cohost of "what'd you miss?" joe: we continue to see this big rally. the big surprises the failure of the dough hot talks. there is another surprise in the fact that oil didn't fall earlier in the week. we didn't attribute this kuwait strike. that is providing more buoyancy to oil. confusing things.
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the signal going in the opposite direction that people might expect. i think it is conceivable. one of the other bits of news that came out today is the -- is that production is dropping. opec aside is coming further into balance. we are also seeing other rallies and other commodities. we are seeing the rally in stocks. between this view that oil may be coming into balance and the general attitude toward risk and suddenly these events don't seem as important. >> you have to assume the demand for the vehicles will go up. joe: there was a great new story about that today. this supply demand
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equation. there are good reasons to be bullish on the demand aspect. americans are buying more and more suvs. india, demand out of where the total car fleet has been doubled since the year 2007. demand really searching there. just going to the fundamentals, ignoring the strike, ignoring the dough hot talk failure. -- the doha talk failure. -- l: joe: that is the big question, whether there is this ceiling on oil, on this idea that if oil were to hit another threshold they would essentially turn on more production. that is one of the bear reasons for oil. look at the decline in total oil production. is this view that with the
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rally we have now, the battle will inevitably go back up. there is that argument it is going further into balance. carol: the correlation between oil and stocks, we kind of come out of the gate without much action. a kind of crude turnaround. joe: that was the story for a long time, that stocks could not escape. people haveimes been quick to declare the death of this correlation. severed, butbeen it doesn't seem to have happened just yet. >> looking forward to more. joe weisenthal, cohost of what a jew miss. you have the close of trading just about 12 minutes away. a quick check on your major market averages.
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we have seen a rally, hovering near our highs of the session. industrial dow jones average is down. 3/10 of ast up about percent.
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carol: markets closing in just about 10 minutes from now. julie hyman has your market check. start with the mexican peso. we heard from the bank of america governor. the peso has room to appreciate. this is the dollar versus the pace appeared the dollar declining 4/10 of 1% versus the mexican currency. year to date, he pointed out the movements we have seen, the bounce off the lows, this was the haifa for the dollar and the low for the peso, that the
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movement that we have seen has more room to grow. so the peso can appreciate more. we will keep watching the mexican currency. we will be closing the market off the high of the session. all three major averages coming down off those highs. higher by half a percent. pairing those advances a little bit. earnings have been a big scene. some of the best reporters, including financial coming in, techs strong. linear technology with a forecast. and yahoo! with sales that beat estimates, also moving on marissa mayer's comment that she wouldn't waste any time. estimates, butg investors still concerned about the sustainability of growth after sales fell year over year.
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and connectivity with the forecast that were brought down on the higher end of the forecast for sales and earnings. those are the individual companies we have been watching. take a look at bloomberg for the group we are looking at today. some earnings there including discover financial. energy on the rise with oil prices. utilities down quite sharply. 2.5% along with consumer staples. pulled down by those coke earnings. we tend to get an inverse correlation between utilities and bond yield. that could be what is going on today. selling ofng some that 10 year treasury. a pretty big move here. six basis points in that year. climbing throughout the day as increasingors are that's that inflation will continue to heat up. also finally talked about oil since we have been watching that
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closely today and the strength we have seen in oil prices. interestingly that movement upward mirrors the movement we have seen in oil prices as well. move,e that upward despite the correlation you were talking about. not enough to see stocks close off the high of the session. carol: we want to talk about consumer staples. let's get some more bloomberg highlights. joe, you have been looking at the consumer staples, kind of underwhelming performance. is one area where people have been losing quite a bit of money. the only sector out of the 10 s&p main groups that was down since burning season started on april 11, and what you are bar that wasis the set for may be a little too high, clearing by .35%, meaning they are only exceeding analyst
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expectations by that much. that is the worst out of the major sectors. if you look at what fund managers are doing heading into staples was the biggest destination out of any asset class or cross asset. carol: you take a look at valuations, there are some sectors that are the pricier parts of the markets. this is undervalued? joe: this is overvalued. it is well over what the jessen that's what the s&p general is trading. well overector -- what the s&p general is trading. you have to wonder about the inflows joe: you do, and they thought earnings would be a little bit better than have come in. we have seen only eight reports. out of 35
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procter & gamble coming up in the next week. maybe they will right the ship a little bit. carol: there is certainly a lot to report. we have mentioned that correlation once again to some extent on off between oil and stock. >> the oil is helping stocks. the hasn't been much of a catalyst for the market. what is going right for the market, you really have to look at it. when coming back from that february, people were quick to write off that correlation. carol: that doesn't for "bloomberg markets." the market closes next. ♪ . .
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scarlet: we are moments away from the closing bell. joe: i'm joe weisenthal. tracy: alix steel is on assignment.
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[closing bell ringing] scarlet: u.s. stocks closing higher with the number at the highest since september. joe: the question is what you miss? tracy: currency managers after the dollar falls. joe: china wants to get control of yum brands. we dig into what that means for the company and its investors when earnings cross in just minutes. guest says glencore is one of the greatest collapse and turnaround stories. we speak to mark patterson later this hour. we begin with our market minute -- stocks close higher but they came off their best levels of the session in the last hour or so. nonetheless, settling at the best since december. joe:


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