tv Bloomberg Markets Bloomberg April 21, 2016 2:00pm-3:01pm EDT
david: here is what we are watching this our good markets are trading lower as u.s. stocks threatened to snap their three-day winning streak. after thealso down ecb decision to not release further stimulus. lisa: the lights have gone out for sun edison, the company filing for bankruptcy. waiting on big earnings after the bell today. a starbucks kamal for that alphabet -- starbucks, microsoft. julie hyman has the latest. julie: stocks falling to the lows of the session right now. yes indeed 500 is now off i .5%, s&p 500 is now-
dow.y .5%, as is the health care is the only group in the green. rest the tearye reading as the day has gone on. telecom down big today on verizon earnings, utilities taking a hit. staples as well in financials, the biggest racks we have seen at the moment. -- and financials, the biggest drags we have seen at the moment. under armour beating estimates. citrix systems also beating estimates and union pacific coming in, cutting costs nato costs innt -- cutting a tough environment. united airlines sang passenger revenue for each seat flown
one-mile will continue dropping. those shares often percent. saw a decline resume last quarter. off 10%.shares what else has been moving? julie: oil has had a volatile session along with the currencies on the ecb, on mario draghi's commentary. you see of bouncing around. -- you see it bouncing around. mario draghi talking about patience. news, viacomaking and dish resolving their differences over a fee dispute
over which dish network subscribers would be able to carry viacom content. sharplywhich had fallen , rebounding by 12%. lisa: thank you so much, julie. the dollar is gaining. let's check on the bloomberg first word news this afternoon. prince isc legend dead. his publicist says he was found at his home in suburban minneapolis. he was widely acclaimed as one of the most innovative musicians of his era with hits including "little red corvette," "let's go cry."" and "when doves fans gathered in the rain outside his house. prince was just 57 years old.
a former ambassador and congressman who sat on the 9/11 commission is urging the release of 28 pages that have been kept secret. he says the public should be allowed access to the material which reportedly focuses on saudi arabia's possible role in the attacks that killed thousands. the investigation did not discover any role by senior high level saudi government officials. homicides in the nations's 25 largest cities surged last year with killings in baltimore, illinois andcago, washington, d.c. accounting for more than half of the increases. baltimore had the highest per capita homicide rate on record. homicides in chicago were up more than 13% from the previous year. queen elizabeth ii is 90 years old today, the longest-serving monarch in british history has rain for 64 years.
tonight, the houses of parliament will be lit red, white and blue in her honor. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. as we kick off the second quarter earnings come out next guest says there is reason for optimism. having better expectations than the consensus can be a good way to make money. lisa: with us now is brian jacobsen from wells fargo funds. he joins us from wisconsin. where are you seeing opportunities right now in the market? brian: most of the opportunities i'm seeing right now are outside of the u.s. emerging markets represent a good value play for a patient investor. we are bumping up against the 52-week high on the s&p 500.
there is still room to run for a number of different sectors within the s&p. energy, there's low expectations for earnings and revenue going forward. when you get into the small cap and mid-cap space, that's where i see a lot more opportunity for investors to jump right now. i'm encouraging people to look at the mid-cap value space. that area has underperformed for a number of years. it represents time where we could see some upside surprises in that specific area. david: let's talk about earnings and what we've seen thus far. a much importance deep wood on those reports in light of what we know, the first quarter was pretty abysmal. that is the nice thing about this, people have low expectations going in. typically, companies do beat expectations about 71% beating
earnings expectations. the trend the last three quarters has been about rewarding those companies that be on top line revenue growth. that is where investors should shift their focus. look for where is the revenue growth and where is it that companies can exceed expectations. aybehat space, m consumer discretionary and the energy spaces where you have a high likelihood of companies been able to be on the top line growth. how much does that view hinge on the idea of oil prices having already bottomed, stabilizing and even rising going forward? brian: it is critical. that is the linchpin to that decision.
down again inp oil prices come i suspect we will see energy stocks move in tandem with that as well. it does depend upon whether or not you believe the supply and demand equation is coming back into balance here. according to the different energy information agency's out there, it does look as though things are coming back into balance because shale production in the u.s. is beginning to taper off. you do see some demand instruction as economists like to say, the best cure for a high price is a high price. the low price has made it uneconomical to extract more oil from these high cost wells. you are saying about 700,000 barrels per day decline in production. when you have a million barrel per day surplus, that is going to take a bit of time to work off. we will see a bit of a balance more towards the september time period here.
david: we have the fed and bank of japan meetings next week. what is most important to you in your outlook going forward? brian: the bank of japan is the most important. when they launched their negative interest rate policy, it was only a 5-4 decision. weak big move in that there wasn't a big endorsement and going negative with interest rates. my preference would be to see the bank of japan do something like the ecb did, to launch something like the targeted refinancing operations where they bribe banks to lend to businesses and households. that will be effective and something i would like to see them do in japan. i would like to see that bounce go from 5-4 to something more in favor of continuing with the stimulus.
hikeed will tee up a rate to put a june rate hike on the table. in october, they inserted language that said, watch out, we might hike in december. they will probably do something like that in april. david: thank you very much. brian jacobsen. coming up in the next 30 minutes , starbucks has been expanding its international footprint. will global ambitions boost starbucks earnings? lisa: donald trump appears to be thinking more strategically. david: health care up at the top in the green come up .17%. telecoms down 2.83%. ♪
david: this is "bloomberg markets." time for the bloomberg business flash. aeropostale planning to file for bankruptcy after years of losses. they are trying to work out a loan to finance operations during the bankruptcy process. blackstone group is considering a takeover of concordia health care. the buyout firm is in talks with , with a market value of $1.6 billion. that is your business flash update.
julie hyman has a check on company movers right now. julie: we have a number of auto related movers by general motors chief among them. the first quarter profit of $2 billion beat analyst estimates by a wide margin. the net income doubling from a year earlier. sales down 2.5%, revenue rose by 4%. is because of the mix of its sales. this is a chart from kevin of the company's light truck volume versus car volume. trucks have a double benefit, higher margins than the cars and they tend to sell at a higher price. also, looking at other car related movers.
the owner of 138 dealerships in 15 states around the u.s. at cutting its new vehicle sales forecast for the year. on the flipside, johnson controls coming out with a forecast that is above what analysts had been anticipating. elsewhere within autos, we watched those volkswagen shares getting a boost after the news that the company had come to a settlement with the u.s. government agreeing to settle $10 million of civil claims related to its emissions rigging scandal. mitsubishi motors had its own scandal, disclosing it manipulated fuel economy tests. livehares did not trade today.
it traded limit down, the limit down being 20%. we will see what happens tomorrow in japanese trading. to allow it to trade life. lisa: analysts expect another quality report from starbucks saying a weaker dollar may these pressure for the second quarter. -- may ease pressure for the second. david: let me ask you about the loyalty program at starbucks. what has changed and will we see signs of weather that has worked out in this report? peter: they moved from a transaction-based model to a spending-based model. it will hurt people who spend less on average.
on average, it should be about equivalent for everybody. they moved from a transaction-based to spending-based model on the loyalty program. lisa: we do expect to get information on how that panned out in this latest earnings report. peter: they will talk about the transition in early april and how that has worked so far. early, two weeks or so since that transition took effect. lisa: what about food? how important is it? starbucks food sales and whether they are managing to diversify away from just averages? that's just beverages? it's been driving a couple hundred basis points for the last couple of years. the mobile app, the rewards program come all that is helping , which isore food
very important for them. the average check is $5.20. seems like i'm spending too much on starbucks. this company has done a lot of acquisitions. eavanna, evolution fresh -- peter: i don't know what they would need right now. they are executing very well. they are already getting growth from food, beverage innovation, digital growth. unit growth in the u.s., internationally. tea as well. i don't know that there is anything missing. there is nothing missing for them. , theyif growth slows
would look for an acquisition, but we don't see that anytime soon. lisa: what would the headwinds be? peter: this transition on the loyalty program. does it irritate some guests were now spending that who are now spending three dollars or four dollars at starbucks and are annoyed that they're not getting as much rewards as they used to? i doubt it. the company is expanding globally, back in the japanese market. how is that looking for them, how is china looking for them right now? peter: they bought out the japanese market. it is a big market for them. lots of opportunity to take what they are learning here in the u.s. on mobile, digital and transition that to the japanese market. japan is a big market for them,
china is a growth market for them as well. continuing to see unit growth. you will see a lot more out of them in the coming years. lisa: peter saleh, thank you for being with us. new developments on a story about whether stephen cohen can handle money. this after elizabeth warren blasted the fcc over the issue. ♪
now. whitney oak kelly joins us now. what the senator warren want to accomplish? what does senator warren want to accomplish? >> she said we did not do enough berniesh people -- with settling into the background of it, elizabeth is taking that moment to step into the spotlight and say we have not done enough here. look at what she has in her letter here to the head of the ftc. whetherd like to know there are others in a similar position. this particular issue is difficult because there was a court ruling making it hard to enforce and get these victories over insider trading and stevie
cohen was never convicted of insider trading. he did not supervise people enough. that is a light problem in the scheme of things. the ftc wanted to bar him for life. elizabeth clearly would like to see more enforcement and a tougher piece from the ftc. they don't quite have the willpower or tools to do that. this is a slap on the wrist. cohen's firm did plead guilty and had to disband, but stevie himself ha got a slap on the wrist. who would be responsible arsherving them a hear punishment? to getreason it is hard
the kind of prosecution and the --d of decisions that would no one is willing to define what insider trading is whose --ponse billy would that be what insider trading is. whose responsibility would that be? congress and the senate. they would step up and give the ftc something to work with, it would make their jobs a lot easier. this decision raises serious questions about the ftc ability to protect investors and uphold the integrity of that she markets called it unacceptable. what does it steve: what to do cohens new firm -- steve want to do in his new firm? >> there is a new firm called
stanford harvard capital taking cohen is not managing that money. the ftc capital of folks come all that went away. over, he can be fully active. in the meantime, it can raise money and get ready. winnie o'kelly, thank you. at sunwe will be looking edison, filing for bankruptcy binge wenttivisiom wrong. ♪
pop music superstar prince has been found dead at his home in suburban minneapolis. his publicist told the associated press the music icon was found dead in his home thursday. was widelysongwriter acclaimed as one of the most innovative musicians of his era, drawing upon influences ranging from james brown to the beatles to jimi hendrix. the minneapolis native broke through in the late 1970's with "he hits "want to be her lover and purple rain. ♪ >> ♪ purple rain, purple rain the title song includes
one of the most popular refrains . he subsequently appeared at a prince was 57 years old. president obama is trying to persuade saudi arabia and other gulf states to contribute more to the fight against islamic state the president met with the gulf cooperation council to discuss ways to strengthen the us-led war against isil >>. we remain united in our fight to destroy daesh. the united states will help our partners in making sure our forces are interoperable. president obama also said the u.s. is committed to helping the gulf states contain iran.
powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. david: commodity markets closed in new york. we will take a look at the day's biggest movers, starting with steel come up more than 50% on increasing demand from china, the highest level since 2014. oil rising amid speculation that -- the door remains open for cooperation among producers. lisa: sun edison filed for bankruptcy today. shares have been getting hammered over the last year, falling 99% since june. acquisition spree
has lifted with $15 billion in debt. joining us now is gordon johnson who covers sun edison as head of alternate energy research at axiom capital. what was the biggest thing that went wrong with sun edison? something created by investors -- it allowed sun edison to acquire projects and drop these projects at a very low cost. investors would invest in the edison's cost of capital was 9%. sun edison went out and aggressively brought everything they could. they took on tons of debt, brought a lot of stuff. appetite forvestor yield co would never end. people still clung on to the story.
because so many smart investors were invested in the stock, they kept being aggressive and it all came tumbling down. sun edison had a portfolio of projects. governmentscked by with high credit ratings. they went out and acquired advanced solar. was a bunch of rooftop solar projects backed by individuals. mix the portfolio of projects backed by individuals with portfolios backed by governments and the risk increases. suggesting the backlog of utility projects they had was real. is sun edison a unique situation or are there other solar companies that are in a similar situation? edison, soshares of --ity -- solarcity
>> sun edison started burning a lot of free cash. their net that went up significantly. -- these are companies that are rooftop solar companies that are doing the exact same -- i think there are companies out there in plain sight doing similar things. the other dynamic is the way people value these companies. using retained value analyses that essentially use twenty-year estimates. when these things come crashing down, you have to reinvest. lisa: which company is the worst offender? solarcity we cover is . there's a lot of risk in that stock. stockscks are sentiment
because they lose money every quarter and their free cash flow is negative. this been positive data points that have come out with things governments have done and solar city raised some cash and the stock went up a lot. they will have to bring down full-year guidance and we don't think they will be free cash flow positive. anything you learn from this filing today that is particularly notable? the company will be able to spin off some debt. >> you have first lien and second lien debt holders fighting about who will provide the debtor and processor fighting. if the first lien guys win, they will sell everything immediately. they will fire sell them. your projects are not going to be able to be sold for a
high-value. second lien debt holders will try to get more value out of the projects. that is what is going on right now. i would buy their projects. there is a price for every asset. they will be able to sell the project. what would the return on this project be? coming up in the next one minutes of the campaign --lution of donald trump coming up in the next 20 minutes , the campaign evolution of donald trump. lisa: out the best and microsoft two of the close today. ofalphabet and microsoft two the companies reporting after the close today. ♪
david: this is "bloomberg markets." time now for the bloomberg business flash. disnetwork and by a calm have reached an agreement on new payment terms that will keep icon channels on the satellite-tv service. the agreement picks up where the last contract left off. walgreens will pay $500,000 to settle accusations it deceived -- an undercover investigation found instances where walgreens used misleading advertising in its stores. that is your business flash update. donald trump's campaign is
planning big changes. lisa: trump is pulling out all the stops to try to secure the 1237 delegates needed to avoid a contested convention. he is just under four delegates short heading into tuesday's contest. joining us now is mark halperin. bird aald trump really a contested convention -- avert a contested convention? mark: he can. some say it is done. said less than a 50-50 chance right now.
to the extent he gets that done through interviews, the restraint he showed the other night, he has a better chance in those two other contests. you can watch the rules ng on live said themidt movement -- why has it been so ineffectual? mark: it started too late. they did not find a candidate to get behind. i never thought you could stop
trump with a movement or interest group or some ads. you have to stop and with a candidate. for all the movement towards ted --z, there is not a national the stop trump movement does not have a horse to run. trump has played his cards pretty well so far. lisa: let's say trump does when all the delegates and it does not go to a contested convention. how important will republican support before trump in the general election? some of trump's top advisers are there talking to members of the rnc. he will need the republican party's help and the republican party will need trump's help. ifre is a real possibility trump does get the delegates come a lot of people avoid stick to the never
trumps logan and say i will write in some of the else. trump will be the nominee. ifhas to be super successful the party stands any chance of being somewhat united. i asked you why john kasich was still in this race and you mentioned these upcoming contests. he was waiting for these northeastern states. have his odds stayed the same come improved? david: he is still behind marco rubio. mark: i don't think he will get out. this candidacy is predicated not on winning a majority of delegates, it is simply being in cleveland in his home state, available if the parties has donald trump is not electable, ted cruz cannot win a general election, of the three guys guy. left, here is one
today, based on public opinion polls, you would have to say john kasich has the best odds of winning a general election. that alone could be enough. if he stays in through the convention, he is the third most likely nominee. that is not a bad position to be in a field that started with 17 candidates. lisa: is there a chance that bernie sanders will pull out of the race? mark: he wants to accumulate as many delegates as he can, bargaining with delegates at the convention -- perhaps what secretary clinton said. the more delegates he has, the more leverage he has. runs forody who president, he does not want to
give up the dream. ,e has been a great fundraiser and inspiration. he wants to see what happens. as long as the scenarios exist, why get out? he is still has plenty of money. david: he has raised $46 million. he still a formidable fundraiser. thingse's proving to that does good things that are myths. one is that you cannot raise big money unless you hang out with fatcats and lobbyists. do that kind of fundraising and he is raising more than hillary clinton. money does not by victories. buy victories. in new york, he spent substantially more than hillary clinton and he lost a badly. hang out you don't have to
out with fatcats to raise a lot of money, but spending a lot of money does not by elections. lisa: mark halperin, thank you very much. don't miss "with all due respect " tonight at 5:00 p.m. new york time. julie hyman looking at the lacking utility sectors. julie: utilities and standing out because of their underperformance today. the two day loss is the biggest two-day pullback since last august. it is because of the march higher we have had in bond yields. we've seen utilities pulled back when we see an increase in interest rates. they have relatively high dividend yield. they almost compete with treasuries as an asset class. they have relatively high debt loads.
utilities by far underperforming in today's session. you have seen a larger uptick in volume for utilities today. this breaks down the increase in volume versus the 20 day average or the 10 industry groups in the s&p 500. utilities with the biggest volumee, 64% increase in versus the 20 day average. this increase or decrease is coming on the heels of a strong year-to-date performance. 8.3% as we have seen, generally the trend for the year has been downward in yields until this recent uptick we have seen.
lisa: alphabet and microsoft report earnings today after the bell. core businesses such as google are a main reason white alphabet -- why alphabet has topped estimates in recent quarters. david: emily chang joins us now from san francisco. so much of revenue comes from search with google -- what we learn from this report? emily: the last quarter was the first quarter that they broke those businesses out separately.
we learned last quarter that all st, fiberogether, ne and more lost $500 million. ruth joined the last may and since then commissioners have been up and the idea has in that she is going to bring discipline to google, which may be the reason why they broke out those non-core businesses for the first time. tonre still not getting a of information about them individually, but certainly getting more information than we have been. we will be watching for whether google says anything more about this, these charges leveled against them in europe against android specifically. android is a huge part of their business model. they have been making more and mobileney on noble dust -- on mobile ads specifically.
is the changes to their business model that google have . lot more to be worried about since mobile accounts for 50% of their revenue now. feeling, isre any anybody expecting profits from them? ?mily: the non-core businesses has had from the beginning that these businesses will not be making money for a long time. it certainly appears that they are continuing to invest heavily x, heavily in other parts of the business like nast est and investing in google
fiber. google has to worry about facebook because facebook has become an online and advertising juggernaut and they have a very -- appced at ecosystem ecosystem with instagram and google has predicated itself on being the front door to your digital life. that front door is potentially being compromised. today microsoft reporting , investing heavily in the windows 10 ecosystem. what will we learn about that today? emily: we will be watching windows, more portly, cloud.
the cloud is an increasingly big part of microsoft's business. 28% of revenue now. microsoft is trying to transition into a digital and mobile age. pc sales on track to decline for the fifth year in a row. investors are optimistic about it. there are some out there who have said i'm not sure cloud can make up for it all. we will be looking at the company as a whole. david: you can watch emily chang tonight on "bloomberg west." by dick s joined costolow. ♪
from bloomberg world headquarters in new york city, good afternoon, everybody. i'm keller massar -- carol massar. it is one of the biggest earning days - of the quarter. what does it mean for equity markets? alphabet might be the big one reporting after the closing bell. will the tech giant report healthy profits despite its uber issues in europe? amazon -- what does it all mean for consumers? we are one hour away from the close of trading on this thursday. what's let -- let's get you going with a check on markets. julie: