tv Bloomberg Markets Bloomberg April 21, 2016 3:00pm-4:01pm EDT
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. sort of hovering around
the lows of the session. now, the nasdaq remains the outperform of the day. the dow and s&p are both down 1/2 of 1%. i was looking at the biggest drags on the s&p. we see verizon as the biggest drag, the company coming out with earnings that matched estimates. it says second-quarter earnings might be deeper. those shares down 4%. at&t also down, along with verizon. koch falling for the second day after coming out with its earnings report. going all the way back to 2009, on concerns about a secular decline in the soda business. we are also looking at qualcomm, and the ripple effect it is having on apple. commentsording to some
that qualcomm made, are being interpreted by analysts as saying apple might be going in a new direction for an iphone component that connects it to the internet. that is something that qualcomm makes for apple. apple is also lower. raymond james saying that iphone unit estimates for june and september, those two quarters, will be lower than previously estimated because of some comments that qualcomm made. been watching oil prices. that has been putting pressure on energy stocks. energy now turned lower. oil declines have been accelerating to some extent, now down 1.8%. they have been hurt in part by what we have been seeing in the u.s. dollar. the bloomberg dollar index has been gaining some steam, up only 1/4 of 1% but rebounding from earlier losses after we heard from mario draghi of the ecb.
talk about what's going on and pharmaceuticals. we had late breaking news. julie: it has to do with the canadian pharmaceutical company, concordia health care. blackstone group is considering a takeover offer to potential transaction here, might not end up happening. had an see it has effect, shares have been halted periodically throughout the day. not only has it been having an effect on con cordillera, we are seeing another effect on health care companies as well. higher on some analyst commentary. thank you so much. let's get a check of some of the headlines on the bloomberg first word news this afternoon. mark crumpton has more from our news desk. mark: it's the news that has
stunned the music world and the music industry and fans all over the world trade pot music superstar prince is dead. his publicist told the associated press that the pop icon was found at his home in suburban minneapolis. the singer-songwriter arranger and instrumentalist was widely acclaimed as one of the most inventive musicians of his era, drawing upon influences ranging from james brown to the beatles to jimi hendrix. let's go hits included " crazy" and "when doves cry." the minneapolis native broke through with the hit "wanna be your lover." earlier i spoke by phone with the vice president of mac presents. boundary busting, timeless music. iconic songs are 30
or 40 years old and they sound like they could have been made today. mark: fans gathered in the rain outside prince's music studio, where his gold records are on the wall. prince was reported to have been hospitalized in illinois on friday on his way back from a concert in atlanta. he subsequently appeared at a dance party at paisley park. prince, whose given name was prince rogers nelson, was 57 years old. democratic presidential candidates are spending plenty of cash on the road to the nomination. about 29linton spent billion -- $29 million in march. sanders spent even more, nearly $85 million between february and march. that is three times what trumps spent and nearly four times what cruz spent for the same time period.
an ocean front stretch of an elevated bike lane built for the olympic games in brazil collapsed when it was hit by a strong wave. killed, two people were a third is missing. the bike path was inaugurated in mid-january. janeiro is hosting the summer games beginning in august. the fbi's hack into a terrorist iphone did not come cheap. the fbi director said the u.s. paid more than he will make in salary over the rest of his term to break into a mobile phone used by a dead terrorist in the san bernardino, california shootings. the law enforcement agency paid, "more than i will make in the remainder of this job, which is seven years and four months, they tell me." he went on. "it was, in my view, worth it." global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. carol, back to you.
underwayrning season with 36 companies reporting results today. that includes google parent alphabet. take a look at this chart from oliver renick. it shows earnings by sector. the sectors with the biggest surprises so far this season, discretionary followed by information technology. strategist at wells fargo joins us on set. what do you make of earnings so far? >> it's tough because we are only about 1/5 of the way through. it's difficult to draw too many conclusions this early. expectations were so low coming in. it's almost a given that they will get beaten. what i'm worried about is whether or not forward expectations will change. i don't pay a ton of attention to q1 earning season. crucial.at is
it's too early to say. carol: it is too early to say. gina, having said that, you look at everything. you look at the economic batch up -- backdrop. what sort of environment is therefore global companies? gina: it's difficult. aggregate earning results are expected to fall 9% year on year. it's not all about commodities. the entire cyclical universe of companies is expected to post week earning results in q1. there was a clear deceleration of growth that occurred in 2015 and into early 2016. the trouble for investors right showingearnings are very little optimism. what is your case for buying stocks? largely it has become, stocks are a better yield opportunity than bonds. suddenly not only are stocks trading off, earnings have been
somewhat weak. the stocks that are so-called defensive stocks are selling off the most. carol: it's all relative to the rest of the investment. you advised down your outlook. are you still holding to that number? gina: i think 2100s a reasonable value for the 12 month estimate. we are starting to trade a little lower. it makes a lot of sense to me why the market would have lost a little bit of momentum around the 2100 level. that's where we get the consolidation of earnings and valuation. 2100 is a reasonable estimate for where we think the s&p can go. until we get some earnings momentum, it seems like 2100 is probably our near-term perk. carol: you say we could be near a near-term correction. how come? gina: there's a lot of signals
that happened in the market over the last few weeks in particular. many signals from the bond and currency market, a good example is the yen. the yen is the classic deflationary trade. inflation expectations in the u.s. reached a near-term peak about a month ago and have been trading backward, or stocks have continued powering higher. we have some near-term divergence and momentum in the stock market started to show some signs -- tiresome signs over the last month. that is created some warning signals that we are due for a near-term -- carol: you did say interest rates would be a big driver for markets this year. --k: gina: this is a huge .4 2016 at large.
everything is about commodities and currencies -- all about commodities and currencies. the most volatility in the index is transitioning, from energy, materials, industrials to financials and utilities. that's where we expect to see a lot of movement, a lot of rate sensitivity. write aboutlso quality being the new black. what you mean by that? tagline.s a we think this year is about quality companies outperforming. for not a year for value or growth, it's a year for quality. low earnings volatility companies, it's companies that have quality balance sheets. things andall those we come up with some recommendations for the top
quality companies in the index. it just so happens that those companies are outperforming substantially. you really have to do your homework in this environment. carol: quality. go figure. gina, thank you so much. gina martin adams, equity strategist at wells fargo. my amazon is keeping track of some of the best selling items on its website. it.and why it is doing it's kind of so they can make their own version. blackout averted by viacom and dish. what the two companies agreed to in their new programming deal. are alphabet margins being squeezed? ♪
carol: you're watching "bloomberg markets." it's time for the bloomberg business flash. walgreens will pay half $1 million to settle accusations. the state attorney general's office saying an undercover investigation found instances where walgreens used misleading advertising in its stores great it accused the nation's largest drugstore chain of overcharging customers. britain says it is willing to personally nationalize u.k. still assets if a credible buyer can be found. the indian owned company announcing last month he was pulling out of the region. that could involve the government taking a minority stake of up to 25%. dish network and viacom have reached an agreement on new payment terms that will keep
viacom channels such as comedy central and nickelodeon on the satellite tv. the agreement picks up where the last seven-year contract left off. it has about 14 million u.s. subscribers. that is your business flash update. is using insights gleaned from its web store to build a private label, juggernaut. why would it take a best-selling item and make it its own? our guest joins us by a skype in seattle. i love this story. set the scene for us. tell us what's going on. >> the story started and we got a look at a report done by a company. they help merchants sell on different platforms, including amazon. others being ebay, newegg and such.
so, they took a closer look at amazon basics, which is amazon's batteries,hings like cables for electronics. it's growing to include a broader assortment. is essentially how amazon is using its position in the marketplace, like an online bazaar where lots of merchants sell their goods, and then cleaning their insights from the search engine to figure out which products it should source on its own. carol: you actually take a small business, you talk about what happened to them. they were doing really well, it was a bestseller. amazon decided to offer its own version. >> it still is a bestseller. aluminums i made in laptops have been on the amazon
marketplace for more than 10 years. in july, amazon introduced its own brand. they look very similar. under amazon's label. it came out as an example of how amazon can kind of cherry pick what some of the best items are, best-selling items on the website, and then just think ok, is there a way for us to make this product, maybe make it cheaper, and try to get some of this market share for ourselves. is not the amazon is doing anything wrong. if you as a seller go on and sell anything on the amazon website, be aware that amazon is watching and they can see when there is something popular and they can certainly do it themselves. >> exactly. that was the impression we got when we spoke with rain design. they understand it is the name of the game and they have to
have a strong brand and a good line of products. advice to any merchants selling on the amazon marketplace, if you are trying to sell the things online, amazon has a huge audience. it's a great place for you to be. you have to be mindful that if you have a hot seller, amazon might catch on it copy it -- on and copy it. carol: you might not be a household retailer, but there are some out there where there's a gap. amazon is watching and they might duplicate some of the offerings that a gap might offer. amazon is basically an e-commerce search engine. wantthan 40% of people who to buy something online, they don't even bother going to google. they will go directly to amazon to start their search. that gives amazon insights into what is selling on its website.
it also gives insights on what people are searching for that it doesn't have. that is something they are keenly interested in, and they're looking to fill those gaps. people are searching for things amazon doesn't offer, they are looking for some kind of alternatives. carol: thank you so much. seasonhead, earning certainly rolling through. of the bet reporting its results after the close. the focus is back where it all started, google's search engine. can the company delivered? ♪
joining me for today's options inside is a senior market strategist at trading advantage. andoins me from the cboe chicago. with the market down today, with stocks down, we have an uptick in the vix. it is just below 14. it is at a relatively low level. kind of turning point here or is this because of this lumpy earning season? >> it is more of the bumpy earnings season. we did not see great reports this morning. some of the others. there is a little uncertainty in the marketplace, with the big hitters coming out after the close today and going into next week. it's more of a blip off the bottom of the vix radar, but it is a 5% move today. thee: i'm curious, one of things i've been watching is this increase in bond yields in recent days.
i'm curious if you've noticed any unusual options activity when it comes to products that track the treasury market. >> there has been some put buyers. i don't know if that is straight correlation to what you are saying with the increased bond yields, they could be. now that these yields are a bit higher, maybe we are starting to see people take some off the table from the overall market and put it elsewhere on these higher bond yields. julie: getting back to the earnings reports, one of the big ones after the close is alphabet or google. your trade today is not at looking at google directly, but as a proxy for google. not one that i would necessarily think about, which is facebook. >> it is. really what i'm looking at is the reward to risk. facebook moves on google earnings. haslast couple of times it moved quite exceptionally on google earnings. i do expect an upward moving
google. that comelick numbers out will be really good, and that is what will drive this. the reward to risk in the options market is really with facebook. there's a couple plays out there in facebook that i think are much more advantageous than doing anything in the options in google. to do in facebook is i'm going to buy -- tomorrow is expiring strike call. i'm going to buy that. i'm also going to buy next week, 115 strike cal and two of the 120 strike calls. it is setting me up for a big based on not only the google numbers today and if facebook follows, but also going into next week i have a potential for facebook next week. i can do this for a cost of about $.80 for all of this.
that's my maximum risk, $.80 or every dollars every time i do this. with facebook, i would rather know what my limited downside is facebook, rather than playing in $20 options on the google side. julie: facebook is up about 1% todya. -- today. we appreciate it. scott bauer at the cboe. carol: still ahead, viacom shares soaring after it avoids a blackout. ♪
headlines. mark crumpton has more from our news desk. mark: pop music superstar prince is dead. the singer was widely acclaimed as one of the most innovative musicians of his era, with hits including "let's go crazy" and "when doves cry." his publicist says prince was found dead at his home in suburban minneapolis. fans gathered outside his studio. 57 years old. hillary clinton's short list of vice presidential candidates will include women, according to a report in "the boston globe," citing an interview with the top campaign official. that has some suggesting elizabeth warren, because the live of -- liberal senator from massachusetts to help bridge the gap between senator clinton and supporters of bernie sanders. in maryland, clinton holds a commanding lead over sanders.
she has support of 57% of democratic primary voters. maryland and for other states hold primaries on tuesday. the fbi's hack into a terrorist's iphone did not come cheap. the fbi director has hinted that the fbi paid more than $1 million to break into the locked iphone used by one of the san bernardino shooters. the directors spoke at the aspen security forum in london. >> more than i will make in the remainder of this job, which is seven years and four months for sure. it.it was in my view worth it's a tool that helps us with 9, which is a ios corner kay's increasingly as devices develop and move on to ios's -- it'sand very important. mark: federal officials have
said the hacking method was successful, though they haven't revealed what it was. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. back to you. about markets closing in 28 minutes. abigail doolittle is live at the nasdaq trade nasdaq near the lows of the day so far. abigail: the markets are doing better than the other two averages, the dow when s&p. the difference between the other two averages, biotech. another big boost today is viacom. shares are surging. it was announced that viacom and dish have reached a deal that will allow viacom's programming to remain part of dish's services. bloomberg analyst paul sweeney says this deal is a huge relief for investors. paul sweeney says that mid
single digit would be a win for viacom. strong downtrend remains in effect. dragging on the nasdaq today, apple. the stock down 1% after raymond james cut iphone estimates, unit estimates for 2016. saying,ualcomm guidance the iphone hangover is not over yet. apple had asked its iphone suppliers to keep production at current levels. when we take a look at a chart, we see these bearish concerns showing as the sellers pushing the shares of apple back down even toange, perhaps the recent lows near $32. we will have to see what happens next week when the company reports monday after the bell. carol: we have to talk about google.
the stock actually higher today. abigail: investors are looking for 19% earnings growth. that translates to $7.96 per share. a big number for the first quarter. plus investors would like to see 32% growth in paid clicks. the stock is trading up into the quarter. has missedlphabet adjusted earning estimates five out of the eight last quarters. we see the shares have been trading in a rough range over the last six months that demonstrates a lower high and a lower low. somewhat bearish, suggesting perhaps sellers are more in control here. it will be interesting to see what out reports after the close. carol: abigail, thank you. as we mentioned, the google --while its core business seems to be humming along, investors are interested
in the latest antitrust charges. earlier on "bloomberg markets," we got insights from a senior equity analyst. >> i don't know that we will get specific breakout for youtube, but outside of desktop search, google or alphabet have created within the core business a number of large-scale businesses the youtube mobile search, display ad business, as well as google play and google shopping. there are multiple feats here. what are you watching out for? what is the number for you that you are watching? >> we are looking at core website growth number as well as the core google earnings number. that is separate from the other bets. keep in mind that google is coming off a year where they
posted strong growth that surprised a lot of investors who were overly concerned about facebook competition and that transition to mobile apps. google i think for this quarter has to show investors they can sustain that high level of performance. those are largely high level metrics. >> i know you are excited about the cloud services market. why is that for alphabets or google? >> it's potentially a very large business for google, similar to amazon. out this building service based on its core infrastructure that runs its revenue business. a $10w that amazon has billion business. we think google will catch up in a fairly short period of time. that adds another layer of potentially good margin, high-growth business for google, which we think is a natural fit. >> are there any existing
hardware or software companies that are actually immune from the emergence of cloud services? >> that's a good question. there is a very strong tale here of disruption and it is really incumbent upon those legacy technology companies to adapt quickly. we have seen that for microsoft, for example, where the introduction of azure and the cloud enterprise business has in fact given the may be a second lease on life from an enterprise perspective. clearly amazon and google are putting a lot of pressure on traditional hardware and software companies. carol: there have been questions raised about how some of their other businesses are run, like nest, or their life sciences business. critics have come out about the management and so on and so forth. i believe altogether those projects cost google $3.5
billion in 2015. is that only going to increase? how long will investors tolerate that? >> we have the losses from other bets increasing this year. these are long-term investments for google. >> how much? i think by $4 billion. google is a company that thinks in multiple years, not quarters or one-year. they do have a lot of patience. long as there as is some incremental benefit or productivity from some of these businesses, they will give google alphabet that flexibility. >> the big news yesterday was the eu launching this fresh antitrust complaint against google. will this lead to massive fines? will it lead to a radical change in the way the company does business?
would be afines positive case scenario for google. i think they would be ok with writing a check and putting the matter to bed. i don't think the quote, unquote nuclear scenario of forcing big changes for the search algorithm is unlikely. google would rather pull out of the eu they give out their secret sauce. i think there is a compromise somewhere in between. google is a victim of its own success. they created android and they don't make money from android. their market share of android phones in europe is where they are somewhat of a monopoly and they have to be careful with how they manage their business. still ahead in this hour, investors are already reaping the benefits of argentina's record-breaking bond sale. how much are they poised to gain? ♪
carol: you're watching "bloomberg markets." i'm carol massar. it's time for the bloomberg business flash. declarations are in early stages and still evolving. worth 29 billion dollars. blackstone considering a takeover of canadian pharmaceuticals company concordia health care. talks withfirm is in concordia about a potential transaction. concordia has a market value of $1.6 billion.
have fallen about 7% in the last year. stephen cohen's new firm will not seek funding from outside investors before 2018. theokesperson for billionaire hedge fund manager saying he wanted to make that clear after recent comments from senator elizabeth warren. the massachusetts democrat ripped the fcc for letting cohen back into the hedge fund business. a two-yeard to restriction from serving as a supervisor. flashat is your business update. investors who bought bonds in argentina's record-breaking sale have made about $597 million in profit in two days. cohost joe weisenthal joins us now with more. interesting. joe: it's a pretty good return, isn't it? you have this phenomenon in all assets, it seems, when something
initially goes to the market, whether an ipo or new bond offering. there is also an interesting story here. it is argentina, it was for so long this pariah of the debt market, and now there is such incredible demand for it. carol: does it mean they could've gotten lower rates to begin with? joe: going back to the -- every time there is one of these openings, people point out theoretically the company left money on the table. carol: this is important. this is an economy and government. they are in a recession. growth is not good, so it's a big deal. jeo: if you are any country, you don't want to pay more for borrowing than you have to. i think the really fascinating story is the ease with which now once they settle everything and they have returned to the bond market, how much interest there was in this offering. carol: it is interesting.
and it's up to them to get back on track. joe: for a long time the view in the sovereign debt market space was, once you defaulted you would never be able to re-access the bond markets. argentina is testing this right now. carol: what does this say about the global bond market at large? what does it say about bond investors seeking yield? storiesre are two big going on right now. in developed economies, interest rates will make your eyes bleed. rates in so many areas. starting in the middle of february, this extraordinary rally we have seen in emerging markets everywhere across the board. you combine the two thing straight extraordinary demand for government debt, extraordinary rally. argentina is in the sweet spot to take advantage of it.
carol: interesting story outside bloomberg news that talked about bill gross. joe: he's already pulling back from brazil. i was looking at the unconstrained bond fund earlier this week. it's having a pretty good year. people talked about the outflows from that bond. this year is looking pretty good. he has been bullish on brazil for a while and is now pulling back from it. carol: it is interesting to see what ultimately plays out in brazil. the impeachment process and the changing in the political environment -- time will tell. straight always tell the depressing thing about brazil is even if bruce f were to be -- rousseff were to be removed, the idea that there government that would have the political clout to start over and do the changes people think are necessary, highly questionable. carol: what does it mean for
either of these currencies? joe: if you look at the brazilian rail, a mostly has traded in line with other emerging market currencies across the world, whether it is in tunisia's currency or the south african rand. for a particular country like brazil, the macro factors that currencies,l e.m. probably are going to be the main drivers of the real for a while regardless of what happens in the political situation. carol: you guys will be talking more about argentina. joe: absolutely. carol: coming up on "bloomberg markets," the close of markets is just minutes away. here is your look at the major averages. we are down across the board. for the nasdaq, it is down just
movement we have seen in the market states. there's a lot for investors to weigh today. volume also higher than it has been in recent days. the s&p 500 over the course of the day has been sort of working lower. as you can see, never quite recovered. made it there. if you look at the groups that are on the move, telecom shares the worst performers today, dragged down by verizon earnings. utilities also week as bond yields rise. drags on the s&p 500. uplth care holding relatively well by contrast. if we look at the biggest laggards in the s&p percentagewise, ual coming out with earnings, and in particular, passenger revenue per miles flown. mattel, week barbie sales, and
travelers -- the only problems he and casualty insured in the doubt, 6% on its earnings falling by 17%. that is the downside of the earnings and mover equation. if you look at the plus side, it is mixed between earnings and other type of news. viacom, the best performer today, it does not have to do with earnings. health rising, and then getting after bloomberg reported black stone interested in buying concordia. united rentals rising in the wake of earnings as did under armour. it's worth mentioning what happened with oil prices today, since we did see a significant downtick, down 1.5%. overall formatters stocks. finally, the 10-year note in that streak. a losing streak for the 10-year, 1.87%.
we are starting to see inflation expectations rushed up a bit. we've got dave wilson from our bloomberg news stocks team. you always tracked the earnings really closely. where are we? have passed the point now that 20% of the companies, 100 are out. you see earnings declining's for those who have reported about 7%, which stacks up relatively well. the big thing to remember is we have not really heard from energy companies at all. candor morgan became the first energy company in the s&p 500 to reports. those shares are down today. we have a lot more to come in the next two weeks from that area of the market, which has been hurting now for more than a year. carol: you spend a lot of time talking on bloomberg radio. it wasn't just energy that was
going to be bad. the expectations were across the board that earnings would not look good. >> absolutely. you saw the s&p 500 earnings fall, and it was really energy companies responsible for that. energy,ere to look x you would see growth. that's not what analysts are looking for in the first quarter, and the numbers we have seen so far bear that out to the extent that you have this decline, and energy companies are not even really out yet. carol: what about the sales numbers and how they are coming in? >> we are looking at one half percent increase in revenue. it's probably more indicative -- estimates.o we know analysts really lower the bar in terms of profit during the first quarter. you saw numbers for the s&p 500 come down about 10.5 percent.
78% of the companies that reported so far have beaten the average projection. the bar came way down and they were able to get ahead of it. revenue a whole different story. 43% coming up short. more companies are missing estimates than beating them. carol: and that certainly worries them. specifically that's what are you looking at? >> it's an interesting story. ibm is in a class of its own relative to other companies. they had earnings out this week. for the 10th time in the last 11 quarters, their shares fell in the wake of earnings. you don't see any other stock from the dow with that kind of track record. the only other one that came close was american express. higher, onlycks about 1%. that's after eight straight quarters of falling in the wake
of earnings reports. even with american express, you are getting a turnaround. carol: interesting. it there.g to leave dave wilson, our bloomberg stocks columnist. "what'd you miss? close comingket your way in just a bit. we are less than four minutes away from the closing bell, hovering near our lows of the session. most major sectors down. about half of 1%. ♪
"what'd you miss?" ♪ today, stocks slipping knocking markets off their four month high. oil went into retreat. the question is "what'd you miss?" ceo of bb&t.to the with no further stimulus in the pipeline, we look at the ecb effect. the dow and s&p, the first decline this week, the s&p pulling back. there seemed to be this turn because of earnings, and stocks struggled. joe: big