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tv   Bloomberg Markets  Bloomberg  April 26, 2016 12:00pm-2:01pm EDT

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scarlet: i'm scarlet fu. : and i'm tracy alloway filling in for alix steel. corporate earnings setting the tone in equity markets. apple day and glitter all that to release results after the bell today. a look at brazil. will the bets on the regime change payout for investors? we are about halfway through the u.s. trading day. let's check in with julie hyman. it's a waiting game.
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waiting for apple, the fed. stocks are bouncing around in a very tight range. they opened higher, then they went lower. now they are trading. s&p is the leader. earnings still remain in focus. individual stocks moving on that rather than the entire market. apple could change that. eae a look for the latest on on the s&p 500. the s&p is orange for this current quarter. i'm comparing it to energy and financials. we have already seen some of the countries in these industries report but not the majority. you can see the drop in energy and financial sales and earnings. we knew that going in. some of the are
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worst performers in terms of the year-over-year change in earnings. overall we are still seeing the average beat rate around 80%. that's pretty much the same quarter after quarter. system's theer truck rental company coming out with earnings beating estimates. an hmo company coming out with earnings that beat estimates. when got sales here missing estimates in particular. is in the samede situation andn -- whirlpool as well. we had some breaking news. exxon mobil losing its coveted aaa credit rating. that it has had since
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1930. in february, standard & poor's had warned exxon mobil it could lose this rating. i was talking to vince piazza. companymany of the bonds already trading as though it had lost this rating so we are not seeing much of a negative reaction in the stocks. there are now only two companies that have aaa ratings in the united states, microsoft and johnson & johnson. there are only two other +ompanies that have aa ratings. you wonder what is going to set the precedent. tracy: mark crumpton has more from the newsroom. week may next
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determine whether donald trump will be the nominee. he needs a strong showing in today's five primaries in the northeast. path toan do that, his the nomination becomes clearer. hillary clinton is expected to pad her lead over bernie sanders. voters are headed to the polls. sanders says it would be a great idea to have a woman as ways resident. -- vice president. he says there are many women he would consider as a running mate . he called elizabeth warren a real champion. on the train service in france. it has to do with private companies are paring to offer passenger rail service for the first time. nfl commissioner roger goodell has responded to yesterday's
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court ruling in the tom brady deflategate case. a panel reinstated the four-game suspension for the quarterback. he spoke this morning in an exclusive interview with david westin. . we are obviously pleased with the court's decision. we think that was the right decision. the judgments were based on solid facts. we are pleased with that and we hope we can move forward from here. no word if the patriots will appeal the suspension. i'm mark crumpton. scarlet: is the stock market rally losing steam or just getting going? s&p's short-term trendline climbed above its long-term trendline. bullish sign.is a
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this comes after the dow jones formed its own golden cross last week. golden crosses everywhere. the last time we saw this pattern in the s&p 500 was in december. 10% thex actually fell next month. is this a significant move? christopher rohn is head of technical analysis at strategist research partners. i got in a little bit of trouble yesterday. the 50 day broke above the 200 day. it happened in december as well and the returns were not very good. our business is about managing risk. over the last 100 years of data the forward returns have been pretty good. we look at a signal like yesterday as a positive. it doesn't change the fact that the market is stretched here. we have stalled in this 2100 range.
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we gothe trend signal yesterday we would be more willing to use any consolidation given the improvements we have seen with trend. we know whether this golden crosses going to be like the last one? >> what i think is most interesting comparing this move to the move last year is this rally has been much broader. we have a lot more stocks in this move. last december was big cap names. this is broader. we have seen new highs expand. those are positives. tracy: some people still say this rally is shadow in some sense -- shallow in some sense. skew and equity options is quite elevated. what gives you more comfort that this is the real deal? >> from a contrarian standpoint
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there is a skepticism about this move. that gets us more interested long-term. we have not seen money fully embrace this rally. scarlet: not everyone piling in. >> exactly. we have seen a very aggressive flow into high-yield. a lot of that has been oil. we get a little bit uncomfortable when a move becomes very crowded. the move in high yield is more crowded than the move we have seen in stocks. scarlet: do we presume high-yield is leading stocks? say0 years ago we can credit was a good indicator. i don't think it is giving us the same signal right now. it is reacting to equities. that's a change from the character of credit over the last 10 years. you said the s&p 500
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has moved in a pretty narrow range. past two years. one of the narrow ranges on record. what's different from the previous times? last have gone over the 100 years. this is one of the narrow spans on record. about 16% or so. what's different is the extraordinary involvement of the central bank. sideways asas gone the fed's balance sheet has stopped expanding. think we can say there is probably some relationship that global liquidity or the lack thereof over the last two years has contributed to the market going sideways. the good news is that other examples for resolved higher not lower. scarlet: i feel like we have to
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talk about seasonal patterns as well. we are getting to the time of year where there is going to be multiple headlines about sell in may and go away. does that hold water? we don't think seasonals are ever powerful enough to make a big call. we use it to inform our broader call. i would just the mindful as we are approaching one of the weaker seasonal stretches. that begins more like mid june. as we approach the summer it would not shock us if there was some type of consolidation as a result of that. when we look historically, the returns november through april are much more robust than the market from october -- may through october. certainly there is a relationship that we pay attention to. scarlet: something else you
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bring up. i'm not sure if this is something you'd like to bring up. tends to do well in nonelection years in the first half and then continue to move up. in election years you get a different pattern. particularly open years with no incumbent. is something to be mindful of as we approach the more challenging part of the calendar. there's obviously a fair amount of uncertainty around that. it would not surprise us to the tactically that way on markets over summer. the trend has improved. this has been a broader rally. i would be more inclined to use weakness opportunistically. chris verrone, thank you for joining us. scarlet: coming up, mystery
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stock of the day. tuesday blues have grounded this stock taking a nosedive after its conference call this morning. investors may already be feeling depressed. tracy: it's the mystery stock. scarlet: it is a mystery. she is not about to make guesses. she will tell me during the break and we will find out and julie hyman. ♪
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tracy: you're watching bloomberg markets. i'm tracy alloway. scarlet: i'm scarlet fu.
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we have to reveal the mystery stock. we narrowed it to airline stocks. tracy: the problem is they all look kind of similar. scarlet: there was an additional clue. tuesday blues. nosedive. feeling depressed. downward glide. jetblue is what we were going for. tracy: the company was higher this morning. it is down 12%. it is very volatile. flight one could say. the stock has also been shocked and -- choppy. earnings actually beat estimates. on the conference call the executives said that april
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revenue per available seat mile will decline 12 .5% year-over-year. they said it was affected by the shift of holidays. it will fall by 7%. second half capacity will rise by 6.5%. that key measure revenue per available seat mile now hitting jetblue as well. down to .5%. 2.5%. on the conference call the ceo said pricing environment remains very soft. he said there are demand issues in corporate flying and the shoulde on unit revenue start easing in the third quarter. we are seeing other airlines fall as well. has not been strong
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because we have been hearing similar commentary about the unit revenue. i was taking a look at unit revenue on the bloomberg. passenger revenue per available seat mile looking at the low fare carriers. you have spirit and jetblue and southwest. the trend for all of them has been lower. there are indicating that is going to continue for the short term. scarlet: no relief for the airline industry for now. tracy: it is time for the bloomberg business flash. in oil prices has cost exxon mobil the top credit rating it has had since the great depression. standard & poor's has cut axons from aaa to aa+.
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microsoft and johnson & johnson are the only american companies left with a aaa rating. scarlet: ford is spending $1.6 billion to up great -- update plans. ford is planning another $2 million into an ohio assembly plant. tracy: a bigger board search and choie -- a big reward for bani's employees. to 10%ll get shares up of the company when it is sold. it is widely considered to be worth billions and could turn some employees into millionaires. that's the bloomberg business flash. scarlet: coming up, a slew of tech earnings. apple warning of dwindling iphone sales.
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in part of the business offset that? analysts are focused on monthly active users on twitter. ebay still in the early days of recovery. trends to monitor include gross and merchandise volume and cost control. they report after the closing bell as well. ♪
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scarlet: apple reports earnings after the bell today. a revenue drop would be its first since 2003. pick.is still his top as high a very gross as it used to be but the valuation is reflecting an even lower growth rate within what grow.hink they will the iphone is going to be down
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15% in the large corridor and should be up 7% in the december quarter. the multiple is going to expand going into that reasonable growth and then on top of that you get the services business wishes a new aspect of the story. that's higher growth and substantially higher profitability. the combination of those we think are going to be positive for the stock over the next six months. when you talk about services i assume you're talking about streaming music and subscription -based things like that. that is a change for apple. i think a hardware company. >> it is a change. they are finding ways to monetize the experience you have with the operating system. their service is business. you talk about the app store as the biggest part of it. there is also the itunes store care.pple pea
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all those experiences you have around ios are more sustainable. the hit and miss of work product cycles are needed it's just about every day engagement in the apple plot. that's why it should get a higher multiple. going to get're increasing disclosures around that which should be positive for the valuation. one of the things i have been amazed by is the amount of free cash flow this company throws off that i would argue is historic in terms of their ability to do it and keep margins where they are in a business you would think margins would compress overtime. is that sustainable? can you continue to do that over the long term? >> probably over the next few years that is sustainable. investors have expected their margins to come down over the
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next five years and that has not happened. gross margins have been at 40% for the entire time. if they get into new categories there is some debate read their they would still have a brand -- i think as far as the sustainability of margins around the iphone we feel it about that. broader topline growth story could be negative to margins long-term. >> i'm looking at the cashier. billion in cash and equivalents. is this the kind of war chest they need to build a car? >> it is. they have a lot of debt. isyou look at the net cash probably still more like $160 billion. it is still a huge amount. they will need to be more aggressive in auto or this
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concept of augmented reality. this next computing platform. apple will have to replace the iphone and that would cause a large amount of investment. the massive buckets they will be spending money on is augmented reality and autos. i stripped out the iphone sales which will always make headlines, what is the metric you will be looking for in the earnings release? >> it has to be the iphone. a little bit of upside to that is that the guidance -- we are expecting about 82% guide down. 2% guide down. the return to growth is going to be one of the key factors for tonight. >> you talk about the services side of it.
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you have not talked about the iphone 7. does that mean you don't expect something really major come fall? >> that's exactly it. we think this is going to be a nominal upgrade. it will still be successful and have the effect of returning the iphone to growth. people who bought iphones to years ago -- two years ago will be upgrading. reason people upgrade is not because of some killer feature. it is because their contracts are up and their phone is getting a little bit slow. i think it will be enough to keep the upgrade momentum going and the high retention rate in touch. ♪
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scarlet: we have some breaking news. is facingard redemption calls. investors in the firm has asked to pull $1.4 million from the main hedge fund.
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we are talking about the master fund which bets on macro trends. again, $1.4 million being requested, and needs to be met by the end of june. scarlet: the issue according to the report is successive losses. obviously, in the adjusting thing on this will be whether it says something specific about the hedge fund, something existential about the hedge fund industry, or something about the market. scarlet: these are all good questions, especially as we have seen other hedge funds face requests -- redemption . a couple of tough years for hedge funds. meantime, let's get to the headlines on bloomberg first word news. mark crumpton has more from the newsroom. mark c.: thank you. five primaries in the northeast today may decide the future of bernie sanders. in front runner hillary clinton
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pulls off a sweep, it will leave little doubt that she will be that party's nominee. meanwhile, trump has called on tohn kasich and ted cruz quit. in order to be seen as a more serious candidate, mr. trump will kick off a series of foreign policies teaches on wednesday. his critics include specialists who view the billionaire as erratic and misguided. he has faced criticism of making campaign promises such as banning muslims from entering the u.s., forcing mexico to pay for a border wall. the sister of the late musician known says that he had no will. his only surviving sibling says exists to manage
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the musician's business interests. no cause of death has been released. indictednziel has been on assault charges. he is accused of attacking his ex-girlfriend in january. the charge carries up to one year in jail. he no longer has endorsements. 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. tracy: who is bullish on brazil? blackrock, for one. william landers says the change in leadership could prompt investors see i taken off the sidelines and into stocks. >> when we look at brazil on the 2017 basis, the forecast for the
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first time in 5-6 years, have a chance to go up. with that, i think there will be support for equities. i think there is a lot of money sitting on the sidelines that has been waiting for signs of improving, and what we are seeing is one of these signs. scarlet: our next guest has a very different outlook on brazil. will pruitt, let's get to your take on brazil. you say it is not entirely out of the woods, yet, with investors piling money into the brazilian real and the stock market, investors cannot afford to not participate either. there is some momentum driving this. >> i think we have to disentangle the two things happening in brazil right now. on the one hand, we have a commodity rally driven by more optimism about what is happening
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in china. there has been a lot of liquidity coming into the chinese market. prices,riven up metals having a positive impact on the brazilian market. on the other side, you have positive momentum driven by people getting excited about regime change. unfortunately, i'm not positive on either of those. it is difficult for me to get that excited about brazil right now. tracy: what do you say to people who are excited about regime change? first of all, we do not know if and when regime change will actually happen. it seems like dilma will be replaced at some point, but we do not know if that will be the case. second, if you do have a regime change, what exactly will be on the policy agenda? what will be done? brazil has serious structural and long-term issues which need to be resolved.
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they are difficult to be resolved, even in the best of times, with political unity. in the current political environment, it will be difficult for who ever in power to get the reforms that are needed pushed through. scarlet: i want to bring you into the bloomberg, to show off one of your favorite functions. go,were saying it is crp country risk premium. you can sort this by different metrics. in the final column, you have premium. if you click on this, brazil has a negative premium of 1.299%, the second worst after egypt. what does the negative premium mean? >> this is my third point. i'm not a political pundit. i try to buy good dismisses at reasonable prices. shows me is the
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market is already forecasting and building into valuations a reduction in risk premium in brazil. my argument is even if you are optimistic on the outcome of regime change, even if you see positive reform coming through, the market is not that cheap. you look a higher quality businesses, and they are not that cheap in brazil. i don't think it is appropriate for investors to try to theulate on fund flows and impact they may have on stop races. i'm just trying to focus on buying good quality businesses for less than they are worth and holding them for a long period of time. tracy: are there sectors were you see good valuation? >> there are. there are pockets of value in the financial space, pockets of cyclical spaces within brazil, some of the
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domestic cyclicals, not so much the commodity producers. i am focusing my investments there, as opposed to say commodity producers, which are big heart of the brazilian index. scarlet: we cannot ignore the commodity producers. which metal or oil product is most closely linked to brazil? how do you capture that, whether you are betting on it or against it? >> iron ore, for sure. the way i think about it is has hoped its engine to china. mexico has hooked its engine to the u.s. i know which of those i would rather invest in and the long-term -- mexico. when it comes to brazil, you see some of the still companies
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rally significantly given the increase of iron ore prices. used to bethat, i the metals mining analyst at fidelity, i look at iron ore, and you guys action you had a good article this morning where you looked at the average holding time for trade and iron ore futures in china. it is like four hours. scarlet: unbelievable. to thew another stat same point. last week, the total amount traded in iron ore futures in china were higher than the amount traded in the asian market in china. the chinese speculator has his hooks into iron ore right now. prices have gone to law loveland -- lala land, in my view. scarlet: it goes back to the great ball of money into the next asset class, now it is iron ore.
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tracy: who would have expected that. >> you could make a career trying to determine what asset classes chinese will go after next. scarlet: tracy is doing that. tracy: if you're not particularly enamored with result, what latin american country are you looking at now? >> i think peru. they have been a great job orienting away from commodities and towards more domestic drivers. there are some really high quality businesses there, but not that many. there are some great businesses in peru. then, mexico. they went through and started putting reforms in place 3-4 years ago. are reaping the benefits of some reforms. i think in mexico the financial sector is an attractive one. the consumer space is a little more pricey. mexico, overall, a market i like
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a lot. scarlet: will pruitt is with fidelity investments, he is a portfolio management there. tracy: coming up, a formal world bank economist sounds off. ♪
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scarlet: you're watching bloomberg. i'm scarlet fu. tracy: i am tracy alloway. this is your global business report. scarlet: the world's biggest automaker has some competition, which automaker is edging out toyota. and, the cost of a brexit.
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what is really at risk. plus, more on central-bank policy in today's .uick take one more countries follow in the footsteps of japan and europe? volkswagen has pulled ahead of toyota deliveries in the first quarter, despite backlash from its peaceful and mission scandal. toyota made fewer cars this quarter due to recent earthquakes in japan. tracy: and, the crisis that has wiped out half of me to be she's mitsubishi's value has gotten worse. they have named three former prosecutors and a panel that will investigate. banking, holdings of cost savings in restructuring equity businesses and cutting
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jobs, according to people .amiliar with the matter in the u.k., pro-europeans have taken the lead in the upcoming brexit vote. the probability of written leaving the european union holds at 20%. minister spoke to bloomberg about brexit. >> a brexit would speed up disintegration. withuld create a fortress vortex within europe. scarlet: time now for our bloomberg quicktake, where we provide context and background on issues of interest. central banks in europe and japan are paying negative interest in a bid to jumpstart its economy. if it works, it could mark the
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start of a new era. the bank of japan became the to adopt rates below zero, surprising investors. more policymakers are willing to test this technique. the central european bank cut rates in march and offered a premium to banks. sweden and denmark also have negative rates. last year, switzerland moved below zero as well. janet yellen said that new rates could be on the table if the u.s. economy worsens. by february, more than $7 trillion of government loss worldwide offered you below zero. that means that investors buying bonds will not get all of their money back. here is the background. negative rates aren't act of desperation. they signaled that traditional policy options have proved ineffective. both europe and
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japan are trying to to prevent a flight back into deflation, falling prices that could derail economic recovery. here is the argument. negative rates, in. , should spur the banks -- in toory, should spur the banks trade. in practice, cash could go under instead.ess if more central banks use negative rates as a stimulus told, there is concern that the policy may lead to a currency war. that is your global business report. for more stories, visit bloomberg.com. tracy: while the consequences of negative rates continue to play out, so too do the consequences of income inequality. divide" discusses it.
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author of. on bloomberg describing the current inequality as severe. it has become extreme. in particular, there is a growing concern that a lot of the inequality is associated with monopoly power. the council of economic advisers to president obama just about 10 days go came out with a report showing the extent to which industry after industry in the united states has become more monopolized and there are consistent profits, and the differences in returns are inexplicable, in terms of any .odel of competitive economy
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that is the model -- you know, in textbook economics, when you study economics, it was about competition and how that always tries profits down to zero -- no longer true. look at inequality, you say it is no longer true. you think the problem of inequality, the great division, has been exacerbated? is it the fault of central banks around the world? >> i would not say it is the fault, by to think the policies that have been pursued since the financial crisis have undoubtedly exacerbated the inequality. one number that always stuck in , the first three years of our recovery from 2009 to 2012, when the president said, theeconomy has recovered, american people did not believe that. when we got the data, 90% went to the top 1%.
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no wonder americans are saying there is no recovery. and, because their incomes were not going got, they could not spend more. part of the reason that qe contributed to inequality is because it was a version of economics.n you lower interest rates, you don't pay attention to smaller businesses, whether they can get access to credit. work, bute markets remember, the whole crisis was because markets failed. the stock market was held by the people at the very top. >> are you concerned that negative rates are mistake a mistake? >> im. i have written a number of articles. the danger of negative interest
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rates, if you don't manage it extraordinarily well, is it banking weakens the system. if it weakens the banking system, banks will provide even less credit. while it might have some affect on financial markets, in terms of what we should really be concerned about, which is the , which is the flow of credit to businesses, that is not working. a columbia was university professor on bloomberg surveillance. scarlet: coming up, twitter user growth is slowing. can they were first this trend? ♪
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tracy: this is bloomberg markets.
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i am tracy alloway. scarlet: i am scarlet fu. let's head over to the nasdaq where abigail doolittle is checking out twitter. abigail: shares of twitter are sharing higher after first-quarter reports today. rbc says these estimates look .ossibly beatable the key is for user growth to turn around. we have a chart raise back toould the price of $26. scarlet: thank you so much. tracy: joining us to talk more about twitter is debra williamson. you say twitter is on pace to generate over $2 billion of ad revenue worldwide, but controls
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less than 2% of the market. how can twitter become a more dominant player? >> is a great question. we are forecasting that twitter will have about $2.6 billion in .orldwide ad revenue that is actually down from our previous forecast. late last year, we forecasted $3 billion in ad revenue. twitter has some issues. the inability to attract new users. i really believe that twitter needs to take really bold steps at this point to bring in new users whorejuvenate may have lapsed, who may not visit as much as they used to, and get some more excitement going again. this is a company were really hope there will be good news. this is a company that has gone mass consumer appeal, broad awareness around the world, and
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you really hope something good is going to happen. scarlet: it has a lot going for it, yet, the user growth is slowing down. how about user engagement? is that growing, and how would you go about measuring that? track user does not growth particularly, but we do track traffic. in the united states, we forecast 56.8 million people will visit on a monthly basis. that is not that many. lessrest is only slightly than that. instagram is ahead of that. building engagement is about offering content that people want to see. making sure that when they come back to twitter, they seek is that they are interested in -- see things that they're interested in. that is why twitter changed their algorithm to things you may have missed at the top of your feet.
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that, and things like prince passing away, which is what got .e back on twitter scarlet: very quickly, how about people criticizing jack dorsey doing two jobs at once? >> so far, it seems to be going ok. i think that is a question for jack. he does seem very focused on the twitter business, and that is an important thing. scarlet: thank you very much. tracy: a quick programming no. to join bloomberg tomorrow, special coverage of the f1 see announcement. ♪ . .
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tracy: it isn't 1 p.m. in new york and 1:00 a.m. and hong kong. scarlet: welcome to bloomberg markets.
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from bloomberg world headquarters in new york, good tracy: tuesday afternoon. i'm scarlet fu. and i'm tracy alloway. stocks are fluctuating as investors brace for tomorrow's monetary decision. the dollar weakens toward a 10 month low. we will look at how the currency market is playing the fed anything game -- read guessing game. scarlet: we will take a look at what is behind the change in business strategy. tracy: and roger goodell talks about tom barry d -- tom brady's suspension and how the league plans to go digital. scarlet: you are not a football fan, are you? tracy: i'm a fan of actual football -- what people call soccer. scarlet: tracy is continental that way. taking a look at stocks,
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we are drifting along as investors wait for a slew of tech earnings after the bell and commentary from the federal reserve tomorrow and the bank of japan later in the week. back byaq is being held some of the tech stocks we are watching ahead of the numbers. if you look at the map on the bloomberg, you have energy as the dust performing group, along with what energy prices have been doing, helping those groups. health care and consumer staples are the biggest drags. oil prices are higher. we heard from bp earlier today and the ceo says there could be more of a balance in the energy market. and energy stocks -- $43.96 , and energy stocks are the best
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performing on the s&p 500 today. point 5%. we hear from exxon mobil on friday and should cnx operation of energy earnings. the story today is all about earnings ahead of apple and twitter. aboutory this week is all earnings. julie: earnings-per-share matched estimates, but that sales miss is weighing on the shares with procter & gamble coming out with its numbers. numbers topping analyst estimates, but it has been doing 7% of theaggressively company with eli lilly shares trading lower. sales of a couple of its big selling drugs were lower than estimated. including its insulin medicine.
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mixed picture here with apple trading a little lower. ebay and twitter getting a lift ahead of their numbers. hedge against a this is a measure of the volatility of the nasdaq 100. we see traders hedge against volatility in tech more than they are in the s&p 500. scarlet: julie will be back later on with our metals bulletin. on thelet's check in bloomberg first word news with mark crumpton from our newsroom. mark: beginning on this tuesday, we are finding about the primary stash today is primary day in
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the united states. donald trump, the republican presidential front runner looking to shore up his bona foreignen it comes to policy. he has been criticized for making comments about the wall in mexico and banning muslims in the united states. holdrump has said he will global meetings and at least talk to some people because he has been receiving some sort of feedback from foreign-policy expert to say he is unprepared for the presidency. on the democratic side, the front runner, hillary clinton is looking to shore up her bona fides when it comes to clinching the democratic presidential nomination. mrs. clinton looking to sweep some of those primaries today and if she does, that would mean senator bernie sanders what have to rethink his strategy on whether or not he's going to stay in the race. in other news, the foreign ministry in iran has summoned the swiss ambassador for a
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visit. they want to discuss a recent u.s. approval court that says the families of the them's of some event believed to have been sponsored by iran am a the bombing in beirut for example, the supreme court said the families of the victims could receive upwards of $2 billion in frozen iranian assets because the u.s. and iran have not had relations since the 1979 hostage crisis. switzerland asks -- act as a media rate between the united states and iran. and of course, the deflategate story, nfl commissioner roger goodell, we will hear more of what he had to say. he spoke about the situation, saying he was pleased with the outcome and the circuit court yesterday on a two to one decision upholding the suspension of new england patriots quarterback, tom brady. he will miss four games at the
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start of the season. we have not received words -- we have not received word on whether the patriots will appeal. i'm mark crumpton. back to you. a strong dollar has come and perhaps gone. if you look at my bloomberg and track the latest data, you will see speculators have turned bearish on the dollar. it has fallen below zero since -- for the first time since july. tracy: so how are investors positioning for this big meeting? joining us now is the senior currency strategist at rbc. still feels like we have had a little clearing out of some crowded fx position. people getting squeezed on
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the yen. are we starting from scratch? a lot of things happening at the same time. andyen is getting long there's room to even get longer. we had some very interesting comments from the head of the fund. japan's pension that would potentially be a big source of yen buying. when it comes to trades for the week ahead, a lot of people are fed up looking at dollar trade. where can we position where we are not taking a view on the dollar? scarlet: what is the answer to that? guest: there are a few trades we like at the moment. trade.much longer term
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the swedish krona keeps coming up. reallyit is a interesting trade. the other one worth watching is sterling. the position in sterling was a popular trade but that splits a very short addition. the market has been bearish ahead of the u.k. record -- ahead of the u.k. referendum. odds, look at the bookies you could see lightning off of that short. there are a lot of crosscurrents here. does the fed or doj matter? guest: they still matter to a lot of asset classes. will be marking to market the economic assessment. particularly if they do more in terms of asset purchases rather
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than jgb. tracy: do you think they will be able to have as much of an impact on the yen as they have in the past? we have seen them losing control of the currency. when they cut interest rates, they really had the reverse effect and we saw the yen strengthening. the yen is still quite strongly inversely correlated. since they go down that to find more risky assets, they could have more impact. scarlet: this perhaps tacit stable,t to keep things if you come inside the bloomberg, you can see how global stocks in white emerging-market currencies have fallen and recovered in tandem.
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dovish at its last fomc meeting. likely toral bank is break ranks first? when do we see this fall apart? guest: that is why we are looking at some of these rv trades. you can take a more active view policy the active positions are and take a view on the fundamentals rather than having to worry about conspiracy theories or the big dollar trade. you can see a lot of value trade there. scarlet: thank you very much. don't miss our special coverage of the fed decision tomorrow. tracy: coming up, the metals and mining sector is the top performer in the high-grade and high-yield indexes, but has the rally come too far, too fast?
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we will try to answer that, next. ♪
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tracy: you are watching bloomberg markets. it's time to check in on the markets with julie hyman. julie: we have earnings from barrick gold and freeport-mcmoran later on today. tracy: cost-cutting is a big theme for any commodity producer whether you are talking about gold or oil, even though we saw a recovery in the first quarter, they are still cutting costs. cost topany cutting
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inc. -- to improve its cost of production for gold and it got a boost as gold prices rose in the first quarter. elsewhere, hearing about some of got anarious minors, we upgrade from newmont mining due to valuation. you can see those shares getting a boost from that upgrade. freeport-mcmoran coming out and reporting its earnings. have to dig into what is going on here. some of its -- shortfall was due to its energy business. the company had been trying to sell its oil and gas unit as an entire unit. they try to sell it off in pieces but in the meantime, it
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is looking at job cuts and restructuring those operations. any of those were offset by the week this in the energy group. the companies net loss coming in above what analysts had been anticipating. sharest helping the because of the oil and gas unit which is the albatross around freeport posner neck. scarlet: thank you for setting us up perfectly for our next guest. tracy: richard burke is the senior credit analyst at bloomberg intelligence. you put out some new research today looking at commodity forecast and corporate bonds. back butn the big cut the forecast tells us another story. the question on everyone's mind is have we come
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too far, too fast? tech resources, investors need to take a step back and say has it come too far too fast? you can look at the price forecast and if you notice that fory's current spot price all the various commodities in meansar and price which analysts are expecting prices to go down. across the board. but if you take another step back and look at what happened and year, led by iron ore gold, it's up 50% this year. investors need to differentiate the credit for which commodities
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they are for. tracy: we had one analyst who said in the sector, he didn't see investors differentiating between high quality and low quality. like 40%u had gains of or 60%. you are starting to see if you estimates, ifsus you follow the commodities this year and bond prices that follow them all, you have consensus estimates for gold, the prices start and get down and mid february, we had to rally come senses estimates to come back and they are greater than they
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were any year. you have had where prices come down and not come back. not filtered into some of the bond prices. if you start to look at consensus estimates, you could maybe start to differentiate winners from losers. scarlet: a reminder you can find his research and the full analysis on bloomberg. you can find coverage of various sectors and companies. tracy: still ahead, we are talking tech. lots more tech. ♪
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scarlet: this is bloomberg markets. tracy: with disappointing results from microsoft and alphabet in the rearview mirror,
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investors have set their sights on apple. they will be watching closely to see how far iphone sales have fallen. scarlet: but it's not just apple, twitter and microsoft round out the tech bonanza. we want to bring in our tv audience. my guest joins us from the janus global technology fund, a big tech investors -- big tex investor. what is it in particular you like about amazon? it does not throw off a ton of free cash flow. let do you like about it? when it comes to amazon, the thing we are most excited about is the amazon web services business. growthshown exceptional for the size of the asset that
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it is. it is over a $10 billion run rate, growing high double digits and it is incredible. white do they take such a big profit there? it is so not like amazon. think it is a function of where the market is at right now. if you look at the cloud computing market, amazon at a $10 billion run rate, the closest competitor is microsoft somewhere south of $2 billion and google, which is south of a billion dollars. effectively, the market is there. all three companies have had conferences where they have highlighted their strategies but the scale benefit amazon has, it just seems to be remarkable.
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>> how competitive is this cloud computing space? so early on -- if you just take the numbers i was adding up, we are at a fraction and we canall i.t. look at each of the respective competitors, being google and microsoft, and they all have their unique attributes. amazon, it seems to be benefiting them in the microplate -- in a marketplace. cory: what do you like about samsung right now? guest: it is a complicated story. cory: that's an understatement. guest: it is a very reasonable valuation. toy have it proven ability operate. is it the cement or the
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phone? guest: it is the technology aspect. cory: what particularly do you like? guest: there are so many moving parts to the business. they have done well in their components related business. a good example is how they have and theyeffectively are a company that will look out multiple years in terms of the decisions they make. those are the types of companies we invest in. we look for not just the quarterly earnings result but the longer-term view. >> apple is reporting today after the bell. thisou worried about decline in iphone sales? >> if you look at our holding of
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apple, it's a material underweight to the index. express a more cautious view -- cory: even though it's on a percent of your fund? guest: if you look at the index, it is well north of 10%. we are expressing a more cautious view. clearly, apple is going through a transition. now the question goes to what is a normalized growth rate of the company. apple has gone from a smart phone penetration story to a mix shift in its business. the other thing that is not eating talked about as much, we
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are feeling a little more cautious, what is going on in china? what was reported yesterday where the chinese government shut down online content, that has been part of the growth story there. cory: interesting stuff. going to toss back to scarlet and tracy. scarlet: thank you very much. still ahead, you don't have to be a millionaire to bank at goldman sachs, believe it or not. we will tell you about a new rule. ♪
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show me movies with romance. show me more like this. show me "previously watched." what's recommended for me.
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x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. e.t. phone home. when you find something you love, you can never get enough of it. change the way you experience tv with xfinity x1. tracy: from bloomberg world headquarters in new york, you are watching bloomberg markets.
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scarlet: let's start with the headlines from the first word news desk with mark crumpton. the: five primaries in northeast may decide the future of democratic presidential candidate, bernie sanders. if hillary clinton pulls off a sweep, it will leave will doubt that she would be the party's nominee. for the indiana primary may determine donald trump's prospects for winning the nomination. benie sanders says it would a great idea to have a woman as vice president. he says there are many women who would be qualified. warren called elizabeth a real champion. the fed is likely to keep its options open for an interest rate increase in june. economists surveyed by bloomberg say that offend will keep the
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funds rate unchanged for a third straight meeting. iny raise rates in december the first time since 2008. join us tomorrow for our special coverage, "the fed decides." the chimes of britain possible big ben will fall silent for several months. inestoration is set to begin january 2017 and cost $42 million. it will be the biggest repair job on the structure in decades. 24 hours a day powered by our 2400 journalists in more than 150 news euros around the world. tracy: goldman sachs is going downstream, offering savings accounts for the masses, and fti see insured -- fdic insured savings bank. scarlet: so why the pit it? it will require banks to hold
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enough liquid capital to meet liabilities due in the next year. they arealk about how positioning themselves is the reporter who wrote the story. this is not about lending cash out to individual savings account holders because there's not much money to be made from that. it could be down the line. they are working on launching an online lending platform. typically, the model behind that is getting them to act alone. usually you could use them for anything but as you mentioned, the biggest reason is regulations, favors and the posits over other kinds of funding. the most popular before the crisis was overnight repos from
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money market funds. that market has shriveled, shriveled, shriveled. money market don't offer that much. deposits at banks have become more popular. deposits at all the big banks have been growing massively since the crisis, but they are trying to get themselves in their as well. we are supposed to get some news surrounding new liquidity rules for banks today, specifically on the funding ratio. what are we expecting? the u.s.is is implementing global regulators getting together in switzerland. been in discussion
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since the crisis but they are finally finalizing that they are liquid. you need to have cash at hand pretty much. is aone coming up today long-term rule that looks at your liabilities for a year. you have to have assets that you .an get out of very quickly not as quick as the 30 day rule, but a couple of things you can dispose so you can get the cash and pay and don't have to rely on rolling over your debt. it is pretty much the same. sodas morgan stanley become more like a jpmorgan? going into deposits more
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and more, it helps them become more like their bigger brothers. those banks have trillions of dollars of deposit. they were half the size and have we caning because discuss too big to fail all day long. they have been taking their money from money market funds and putting them in deposits at the bigger banks. goldman is offering 1% for savings. seven timeslike more than anyone else. if you talk about what goldman pays on bonds, it is still lower.
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cds on the five-year banks, it offers 5%. pay 2.6%.to tracy: thank you so much. used to slower economic growth. that's the new normal. why does the governor say slowing trade is not a cause for concern? let's ask our bloomberg canada anchor who joins us from tomorrow -- joins us from toronto. guest: it's an interesting way a calling it, but it is for optimism. saying through the 90's and the 2000, we saw what was essentially globalization. the growth year over year is a short-term event in that sense
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and because of that, we have reached a new balance point for trade. we have to get used to that. he also says this trade story right now has to do with cyclical issues and there's reason for optimism because the cycle will turn them come back a bit. he made the point that policymakers have to stay on top of the trade deals with various nations around the world. scarlet: you had a conversation secretary ondian+++
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trade. pamela: essentially this has been going on since the 1980's. timber in canada is seen to be subsidized by the united states and when it crosses into the united states, tariffs are put on it. canada isn't happy and there is a new deadline coming up in august. i asked what he thought about any movement prior to that deadline. >> i think it is going to be a struggle. there are still some american interests who are not competitive and have not invested in the same way a lot of canadian companies have. b it is going to be a challenge year,e in an election they are responding to pressure being put on them and i hope that they ended the day, we can convince american industry as well as the administration that it is in nobody's interest to end up in prolonged litigation.
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the only people who win from and thatlawyers doesn't mean they are bad people but i'm not interested in lining their pockets. i said this to ambassador perlman. it's not just about our industry, it's dozens of communities. some of which come is the only industry in their town. tariffs or litigation that might force them to close it is not something we want to see happen. scarlet: much of the timber grown on -- grown in canada are in provincial or federal lands. that's seen as a subsidy. but it is one of the brewing trade issues. it's one sticking point i thought was interesting.
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scarlet: thank you so much. next, a bloomberg exclusive. roger goodell tells us he's pleased about a court ruling to uphold his decision to suspend tom brady. that interview, next. ♪
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scarlet: this is bloomberg markets. time for the bloomberg business flash -- a look at some of the biggest stories in the news right now. is rewarding its employees big-time. they are planning to give worth 10% ofres
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the company. their widely considered to be worth billions. the state could make some employees millionaires. janus capital says earnings fell as it took a toll on its assets under management. they join other fund companies posting falling profits after stop arc it losses in january and early february. shares of bg tea rising after brazil revoked a house arrest. holed up in his home since his release from a prison in rio de janeiro in december. he was arrested on charges of obstructing a federal investigation at her breasts. and that is your business flash
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update. scarlet: julie hyman has been checking a couple of movers, in retail section in particular. in thea big move today container store after shares matching analysts estimates, it sales are comparable fueling the increase we see in the shares. aalysts have been looking for decline of 3.6% and we should mention the advance we are seeing today is on the back of down performance, down nearly 70%, including the gains we are seeing today. last year was sort of an investment phase and it may be moving into the next phase at this time. ethan allen is at an eight and a half year high after its earnings beat estimates of 8%. goodeo says we're making
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progress repositioning our product offerings and making technology enhancements. a turnaround story there at ethan now and. we are watching with the company making big management changes. officer willrating be stepping down and there are some changes being made. he says coaches looking to emerge as a brand led company. looks like investors are happy about this news with shares trading higher by 3.5%. we quickly want to mention retail as a group this year is down as one of the larger subgroups. performershe worst
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and retail is down nearly 1%. one of those groups that has not been able to claw its way back. the bulk ofbe when retailers start reporting, the tide will turn a little. it is football time, calling it a right decision, nfl commissioner roger goodell weighed in on a statement for new england patriots cornerback. tom brady. he talked about the nfl plan to stream games through social media. first up, the brady suspension. roger: they are very firm on the decision that was within our authority. the judgment was based on solid fact. we are pleased with that and hope we can move forward from here. david: would you think for yourself or for the next commissioner that it should be redone so there's not quite so
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much authority? roger: this is something we have had in our bylaws for decades. we think it is important the commissioner protect the integrity of the game and you can't entrust that to someone who has no understanding of our business. the appellate court yesterday reaffirmed that, so we think that's an important element of our success. we have changed our discipline process through the years and we will continue to do that if we think it is the best interest of the nfl. david: you are also in the news on a new twitter deal, a deal to games.10 how important is that to the future of the nfl? roger: we think it is very important. you are well aware of the changes going on in the media world. we feel it's being brought to the broadest possible audience
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and we have a great cable partner. we want to expand and reach those fans consuming on their platforms, which are a tablet or phone or any other kind of device. with thosebe there devices and content and this is a good opportunity to do that. we think it will support our broadcast audience but we also think it's important for us to be involved with it now so we can make the right decisions down the road. david: you are the ceo of a really big company. if you look at the revenues compared to other companies, it is substantial. other people have been quoted as saying you have a goal of that $20 billion by 2025. how important would facebook or twitter or other outlooks be in
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achieving that goal for you? thing the most important is to do in a sustainable way. going to try to get to a number, we want to grow ae nfl and that includes on global basis. we have plans to play in china in the near future, so we want to bring our game to the broadest audience. content is great value in the united states and around the globe. the media opportunities we think are very significant. we believe the best days are ahead of us and still there and we will continue to focus on how we grow. david: can you see a day when revenue from outlets like twitter or facebook or social media we don't know yet could rival that of the broadcast?
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roger: we don't know but we are certainly planning on that. wet do we do to make sure are there? the real core for us is how do we reach our fans? today's technology is giving us the ability to reach directly to our fans that we never have four. it makes our content even more valuable and lets us speak to our fans wherever they are on the planet and it's a great advantage we have never had before. that was our exclusive interview with nfl commissioner roger goodell. coming up, is the u.s. headed for a recession? we will debate the topic, next. ♪
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scarlet: is the u.s. into for a
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recession? we debated the prospect of another downturn with a managing partner from westwood capital. when you are at .3, there's no difference between point three and negative one. matter, that'sl not really what is going on. what's going on is a lot of people are looking at this as though we are in a normal business cyclical environment and i don't believe we are. creatinghat is fluctuation in the market where there are some funny feedback loops going on and that grow economically, you have an enormous amount of countries and markets out there eager to steel demand from the united states and they have been doing it successfully. every so often, they run out of gas and the at takes an opposite tack. suddenly, their economies tank
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and they have tended to respond by more of the same. that forces the dollar up and heightens the impact of low price imports, which is what really hurts the united states. fading.rag from that is you look at the currency markets and u.s. policy has been getting tighter relative to europe for the better part of the last year at half. story isy to virgin's price in the currency market. now, howect to gdp many times do we have to go through this? if you believe all the economic data and take it at face value, u.s. employers are hiring 200,000 people a month to produce absolutely nothing.
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there's a wide range of studies that show one of the more stable measures of output is employment. we can talk about productivity but i don't think underlying productivity group -- >> there's a reason productivity is so low. playing labor into their factories and firms, hiring people and getting rid of them when they don't need them because they are unwilling to offer that they cannot dismiss. tracy: no joining us is joe weisenthal. people arereasons worried about the recession is that we are in successive quarters of declining earnings. people point to the idea we've never had this before or the recession isn't the real thing.
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the flipside would say a lot of that is driven by energy and unless we see that lead aggressively into other areas, it's not much of a reason. scarlet: apple is set to report its first quarterly sales drop in years and if you look at how the nasdaq has done, it has done ok overall. and if youis in blue take out apple, the nasdaq would have gained 8.5%. just goes to show if you take out enough stuff, you can bring up any market. tracy: a text learning frenzy today. plus a preview of the fomc. ♪
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david: it is 2:00 p.m. in new york, 7:00 a.m. in london and 2:00 a.m. in hong kong. lisa: welcome to "bloomberg
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markets." david: here is what we are watching this hour. stocks are mixed today at of the fed meeting ahead of earnings. materials are pushing higher. lisa: which is central bank is why thein the rally -- ecb and not the fed may be playing a bigger role in the u.s. the services ecosystem -- the numbers to watch out for in today's earnings report. markets close in two hours. let's head to the markets desk were julie hyman has the latest. julie: on days like this when you have so many earnings reports, 10% reports today alone , it is not unusual to see a lack of big moves on major averages

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