tv Whatd You Miss Bloomberg May 10, 2016 4:00pm-5:01pm EDT
alix: u.s. stocks rising around the world. the dow jones jumping 200 points. bearish sentiment pares back. joe: the question is, what'd you miss? scarlet: we ask goldman sachs' jeff currie what happens to metal prices. realplus, the brazilian rallies as the impeachment of dilma rousseff gains momentum. ide,: and on macy's s there's demand an week -- week demand and fierce competition. scarlet: u.s. stocks are gaining more than 1% and the dow up more than 200 points and the major s&p 500 groups are higher today. if you look at it on an individual basis, this is the dow and s&p's best day since 2011.
joe: real risk on appetite. a big rally in europe, rally in commodities. green everywhere. alix: talk about green,, talk about amazon? at its highest level ever. share,d to $1000 per looking at market expansion, and basically the profits will expand faster in the next two years. i want to contrast that with gap, down over 11%. same-store sales down in april and the reason i thought that was interesting, it is like the new retail versus the old retail -- joe: perfect dichotomy there. alix: cap could not get more people in its stores. joe: there is optimism about a deal in greece and you are looking at a one-year chart of the 10-year bond, where it fell below a percent for the first time in a long time. people are hearing positive noises out of europe.
also interesting, check out what is going on with the u.s. 10-year yield. you expect with this huge risk-on, it has shot up -- scratching his head, why are the stocks rallying? who knows. unchanged on the 10-year and basically flat on the two-year. scarlet: philippines peso is the biggest and are among currencies . barclays says the peso may outperform the regional currencies in the second half of the year if the new president follows through on campaign promises to deepen institutional reforms. alix: on the commodities from, stocks were the story today. a cut of argentina and brazil in 2015 at 2016 supplies so overall, these global supplies less than estimated. huge pop there. interesting thing happened in the oil market today. versus the vti
moving averages. golden cross, when you have the averages.ving you have the short-term trend outpacing the long-term trend. technically that winds of looking bullish for the asset. scarlet: those are today's market minutes. you can find all the following charts using the function at the bottom of your screen. alix: i was looking at the corporate bond market. etf is outflows for the hyg . the biggest high-yield etf. look at the outflows, you guys. scarlet: it has just consistently gotten bigger the last few days. alix: it is truly unbelievable. overall you are seeing credit again, start to widen and it is not just energy.
yes, it is energy and materials, but it is also retail and other sectors, too. morelast few days there is anxiety, his credit sending a warning once again to the market? i am looking at some data out of germany, if we go into a chart going back to the 1966, the german current account balance, and you can see from 1966 to 1999, the german current account balance was flat, and then the german current account balance exploding,solutely hitting a brand-new record high this morning. everyone knows what happened in 1999, of course, when germany adopted the euro and some would say that we get the currency. -- that weakened the currency. the euro has been very good to germany. scarlet: that is the proof. there is anxious calm. commodities are holding up relatively ok. the white line is the city macro risk index. isthing about this .5 line
there is meaningful risk aversion. there is also a lot of anxiety because so much of the calm is predicated on the falling or weak dollar. if the weakening dollar seems to be critical in feeding the appetite for risk, it is not clear sentiment for risky assets are strong enough that if the dollar were to gain like it has over here, those assets could necessarily hold onto their price gains over longer-term. joe: arguably a lot of the rally we have seen has been the fed really pushing out the past -- scarlet: rather than the fun and also the specific economy. you can see all these charts and more on twitter. alix: i want to bring in jeff currie, goldman sachs global head of commodities research. scarlet: the price of oil has been dictated by supply rather than demand, and we have gotten plenty of disruption from alberta and kuwait to nigeria
and libya. the question is, why isn't oil rising more and at $50 a barrel? jeff: couple factors going on. we look at the disruption you are talking about. most of them are transient. they are not persistent disruptions to create a rebalancing. until we see evidence of that from which in our view is sometime late in the third quarter, we see u.s. production falling off sharply enough to tip this market into a sustainable deficit. until you see that it is difficult to really take a very strong view on oil. i would argue it is pretty mixed right now. you have the macro -- you just pointed out it has had a fed an weak dovish dollar supported commodity prices. there is a risk that that could burst if we see a strong rate environment. alix: if we take a look at the bloomberg here, i've charted the 1-2-month time spreads.
the pivotal level is zero. prices are stronger today than they will be in the future. we didn't seek backward -- we did see backwardation just weeks ago. the markets seem to get ahead of themselves despite the oil production. how does that make sense? did we just get ahead of ourselves? has athe market maintenance program and it was very isolated to a certain internet. it may be that they bring the production down to fix the rig and the june program would have ended up being quite light and that helped to create the tightness. more broadly, this market is not out of the with yet. the fact that you have a very deep entangled the vti despite the fact that you have the wildfires in canada, the return back in the broad market, all pointing to an oversupply market, it goes to answer your question, are we in a sustainable deficit that would
push the market substantially higher from here? the answer is still no. if you look at the high-frequency inventory data for the month of april, it points to the seasonally adjusted deficit. we are see it as being sustainable yet. scarlet: what is history -- joe: what does history tell us about supply disruptions come in several that are analogous to what is happening now in canada and nigeria? jeff: excellent question. the biggest pushback we get from clients over the view that these are transient disruptions, there are so many of them, is it is systemic. think of strikes in kuwait or civil unrest in nigeria. is this a random event or the cause of the lower prices? i would argue, yes, i cannot dismiss this -- there is too many of them to say they are idiosyncratic, one-off events because they become systemic. when we look at it historically, and you typically find that under stress --
you are running these platforms longer than you you normally would, which creates the need to take them down for maintenance longer. i do not want to completely dismiss this as being independent of the price environment. however, i just don't see it as come again, pointing to the fact that we were looking for the sustainable deficit in the third fourth quarter that is really going to get us excited. alix: is there. -- scarlet: is there predictability to supply disruptions? does one beget another disruption? jeff: strangely, if you get much higher prices you end up with, once again, the high probability of supply disruptions, because you have the higher probability of workers going on strike. there is the in between around the librium where the disruptions -- around the equilibrium, where the disruptions are at much lower levels. creating civil unrest, creating worker unrest, all leading to disruptions. alix: last time we spoke you are
looking at $20-$40 oil and a lot of volatility in between. do you still see that call? jeff: that view is driven by the probability of containment issues. what i mean by that is the surpluses are so large they itach the capacity and crosses into the $20 range. we saw that in january, we saw that in february. cannot happen between the months of april and october? the answer is, very unlikely. the reason for that is january, february, and october, refineries go down for maintenance so the demand collapses for crude, which backs of accrued, creating a likelihood of that happening. upgradedhe reason we oil to neutral a month ago because during this period from april to october, the probability of that happening is lower. i don't want to dismiss it right now because you have a lot of
supporting factors. joe: going back a second, you mentioned the role that fed policy and the weaker dollar late in providing the bid to oil and other commodities. that policy can work the opposite way, that easy money keeps marginal producers alive and ultimately deflationary. do you think that element is a factor in terms of what is going on in prices? jeff: when i think about commodities more broadly, i like to separate the macro drivers from the micro drivers. what you are talking about would be a micro driver. it would create more supply but it -- the macro driver would lead to higher costs to create the supply. you think about producing oil in canada. upwards of 80% of the cost denominated in canadian dollars. when you have a weaker dollar, you end up with a star canadian dollar at a higher cost to produce the oil. when you are talking about is what i call sentimental or micro
drivers, which drive the shape of the forward curve, while the macro drivers drive the price level. i like to point out more broadly in thinking about commodities that the number of barrels, the number of metric tons of commodities, primarily drive curve shape, while these macro variables drive the overall price level. there is a reason why oil is considered a fixed income instrument, because like rates, like -- it is much more of a carry instrument, and it is also, when we think about the equilibrium value, function of rates in these other macro variables. jeff curry, global head of commodity research at goldman sachs, you are sticking with us, because we will talk about speculative mania in chinese commodities. a quick check of fossil and electronic arts. fossil tumbling right now, 24% lower after reducing its full-year forecast. electronic arts gaining more than 6% after reading earnings and revenue estimates. ♪
i'm mark crumpton. vice president biden has not endorsed either of the democratic presidential candidates, but in an exclusive interview with abc news, he shares his views on who will win the nomination and the race for the white house. >> you bring up the next president, we are anxious to see . vice president biden: ifo confident hillary will be the nominee and that she will be the next president. mark: the vice president decided not to seek the white house. breaking news on disney earnings. my colleague scarlet fu has details. scarlet: it is amiss for disney for the second quarter. missing the analyst estimates of
$1.40, comparing with $1.23 in the year-ago period. a little bit shy when it comes to where analysts have been looking for adjusted earnings per share to come in. revenue for the second quarter, $13 billion, also lighter than what had been anticipated. analysts were looking for $13.2 billion on the number has come down in the days leading up to the earnings report. media revenue -- this includes the cable networks like espn and, of course, the broadcast networks -- that is the lion share of disney's business. $5.79 billion fourth-quarter. again, missing analysts estimates year. despite decent advertising trends, the second quarter media visit a little shy here. in going to the results, we are looking for any kind of comment from bob iger. he is not saying much about the succession plan, as you might expect, in the earnings release.
that is a team that will be counted on in the conference call. .isney shares are taking lower this is the tick by tick trade. alix: i want to piggyback off the cable network revenue you were talking about. part of it -- they did have an increase over at espn, which was the good part of it. the bad part is it was offset by lower equity income at a any. -- at a&e. the big concern was espn. it looks like that part of the does this held up well. &e that was the big question. as you mentioned, there was a lot of optimism about disney due to the fact that the cable networks had shown increase in a video growth and other media company said shown strengthening and market for tv. scarlet: not to mention the movies that alix gets so excited
bloomberg here. aggregate interest for steel, iron ore, and cotton. it has come back since then. is on the normalized basis. the long positions have gone nowhere fast. jeff currie, global head of commodity research at goldman sachs, is back with us. what happens when this ball of money go somewhere else in china? jeff: well, it is in the process of going somewhere else right now. i want to think about this from the fundamental perspective as well as from the speculative perspective. clearly not only do we see in china or even here -- but even here in north america, commodities more broadly have a lot of money in them. with fundamentally -- is this fundamental he justified? in the very near term there was fundamental reasons. what was it? if you look back at, let's say, december and january, where everybody was very concerned about what was going on in china, we saw a significant amount of destocking of everything -- iron ore, steel, the basic commodities. d inventories to a level that is consistent with a 20% decline in demand could guess what happened? insaw the credit injunction january, february and demand was not down 20%, it was up 6.2%.
the market was caught very short. hence, the pop in steel. the steel rebar went to a higher 2800 and is now turning around so there was one of mental justification but longer term just like the story in oil, it is not a persistent underlying shift in fundamentals that justify the type of money increase we saw. scarlet: a case of massive catch up and the individual investors .re joining if you look at the average holding period for investors for rebar and iron ore -- joe: some of the statistics about chinese speculative retail commodity trading are absolutely mind-boggling. you explain these sort of medium-term fundamental stories, but how much does this speculate -- decorative bubble affected the price, and what is the long-term -- where does the money go next? jeff: that is my think, the
question -- actually comes on the arguments i've heard recently as to why you get more money in commodities is, yes, in net for tons or barrels, you are at record levels, but not in absolute notional value. when oil was 147, the notional value of money and commodities was higher than what it is today, despite the fact that the actual number of metric tons or barrels are at or near record lows. now, the concern i have with money --ight now the this was part of the reason why i think the long-term expectations need to be taken down. there is still the view that this is a once in a lifetime opportunity from the investment perspective. think,hose types of, i unrealistic views are gone, you will still see a lot of money attracted to this sector. the problem is eventually it creates supply, which can put further downward pressure on prices for the -- further out. alix: right, because of the
prices iron producers alike, back in business. trying to clamp down on speculators. rebar claims have fallen off a cliff due to that. can china control it? so far come when you look at the class in prices, it has been rather orderly. created a massive collapse. i think it goes back to the fundamentals story i started with. there's just not longer term, and why do i say not longer-term? unlike oil, where you could argue their air -- there are supply restrictions come in metal or steel, we are dealing with massive surplus capacity. producers will respond to the higher prices and create more supply. we saw last week the inventories in china began to increase,
which spells much lower prices and a much weaker environment going forward. stories you talked about, the weak dollar, fed- driven oil rally, and the credit -- the central bank credit stimulus-led rally in china with metals. what does that say about the long-term commodity complex? does that mean ultimately none of this is sustainable? jeff: with oil and energy you could argue it is more sustainable and metals. in metals we take a very bearish longer-term view. think about with oil, it has the natural depletion rate. aluminum -- once you build it, it is there. --is pretty difficult joe: we are not running out of it. jeff: not running of the metals anytime in the near future. alix: jeff, such a pleasure to have you. the shares of get
scarlet: i am scarlet fu. what'd you miss? shares of disney falling after sales and profit missed analyst estimates. the abc-tv network, broadcast network, and the consumer product division declined when it comes to revenue. itn you look at the shares, is the most actively traded stock by value, $135 million worth of shares changing hands right now. alix: on the good side, let me
take into this cable profiteer, led by espn come up 12% to just over $2 billion. espn benefiting from lower programming costs as well as higher affiliate revenue. they did see a decrease in advertising revenue grew espn a key metric for disney to watch. joe: it is amazing that espn, because it is an old as it is from is still growing 12%. obviously, investors are disappointed overall with the growth, but $624 million, still pretty extraordinary numbers is around aspany long as it has been. scarlet: not just the parks, but the studio entertainment the movie business, getting dividends from the "star wars" movie last year. alix: all the movies i watched were disney last year so that drove their revenues higher. all right, we will be
marco i'm mark crumpton; let's get to first word news. donald trump's campaign manager will leave the search for a running mate. "the washington post" reports the nominee will had the team that will survey and vet possible candidates. as previously announced, they will impose ben carson. president obama will make history later this month when he travels to japan to become the first sitting president to visit hiroshima, or the u.s. dropped an atomic bomb 71 years ago. a white house aide says the president won't apologize for the bombing. meanwhile, a u.k. new service s shinzo abeay may
visit pearl harbor. an excuse not to do business there. the exception, entities that are still sanctioned, including iran's revolutionary guard. says theykerry can still facilitate legitimate transactions. in basketball, golden state seth curry has won his second straight nba most valuable layer player award. he returned from a sprained knee to win 17 points in overtime. the warriors beat portland, to take a commanding lead in the semifinals. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. scarlet: we're keeping an eye on
disney shares, folly in after-hours trading after the company reported a miss on the bottom and top line. falsely joins us live. paul, when you look at the breakdown of the different divisions of disney, park in studio entertainment beat estimates; what missed was media networks and consumer products. >> yeah. i think media networks is what people focus on the most; it is where investors put the highest multiple on. it has been the profit engine. we for callbacks last summer; the company called out the fact that they lost subscribers and that started a big selloff, not only in disney but in the media sector overall as investors became increasingly concerned about the risk of cord cutting and what it means for the cable network business. if you are concerned about the cable network business, top of your list would be espn. i think we saw a little more of that here in this quarter. cable profit up by
12%, and lower programming costs, higher affiliate revenue. it seemed like there were good parts. >> there were good parts. there was a timing issue of college bowl games, and that help lower programming costs. but again, people are looking at the overall, topline operating income, missing expectations. that brings to the service people's underlying concerns. what really is the next three to five year growth rate for the cable network business, for the company that last summer took down their guidance? is that still the right level of profitability? joe: when we talked to you before previewing disney, you pointed out that the cable networks had seem decent video growth; other companies saw solid at market. why is disney more exposed than some of its peers? >> it's interesting. disney had a decent advertising
quarter, but because of espn, it's kind of a perverse logic. they are the biggest cable network, therefore they get the largest amount of affiliate seeds to the extent that you lose subscribers and you lose the affiliate growth. that's something that is disney is more exposed to, which in the last 20 years has been a good story. unraveling,undle is that becomes a larger risk for disney than other companies who have less exposure. scarlet: so benefited when things are going well, and hurting more as things are slowing down. as disney articulated a strategy for reviving growth? aside from watching subscriber growth drop off a little bit, isn't doing anything or has it so what is it going to do? >> well, they continue to invest in the best programming, to the extent that if there are any games to be made on the advertising or affiliate side it will be driven by ratings and
they continue to make huge commitments to the best programming out there. scarlet: it's a nuclear arms race though. >> it is. but the good news for espn is that they are way in front. they have been cutting other costs.l we have seen around the playoffs costs.ing other we have seen the layoffs. they are cutting costs outside of programming where they can. they're starting to think about digital opportunities for espn. is there a model where they can offer espn direct to consumers and commoditize younger demos that way? to date, they have been reluctant to do that because of the big economic model they have. scarlet: they don't to cannibalize. >> at some point, they will have to do that. joe: how upset with the cable companies be? >> i think they would be extraordinarily upset. they pay over $6 per subscriber per month, by final largest, and they demand -
- is.ifst households, it you look at the numbers were espn is not including , the question is a lot of these operators should try to figure out is there a market for a skinny bundle, a one offering of channels that does not include sports? not everybody likes sports and everyone is going to pay. alix: what we saw last summer when disney came out was a huge selloff the media, that in some ways was a preamble for the big august selloff. disney down almost 6%, is this the same thing or has the story changed? >> investors are probably more comfortable with the longer-term story relative to last summer. we have seen a rebound in television advertising; a lot of the companies reported very strong network television and broadcasting cable-television advertising revenue. companies are
reporting increases in video subscribers for the first time in seven or eight or nine years. the concern that the world is coming to an end tomorrow, which was the precursor of last summer and what prompted the meltdown, i think investors are more sanguine. scarlet: call sweeney, thank you. "what'd you miss?" for the third time in less than a year, an extensive interview with an unnamed official address challenges facing the world's's second-largest economy -- china. this time around, the focus is back on supply-side reform. joining us now to discuss is for anyone global investment chief. an unnamed official -- people seem to think it's xi jingping --- what was your biggest take away? >> there are three major takeaways. one, the piece is aimed at managing expectations. if you think about the chinese, there is a return of very
optimistic assessment on the chinese economy. the government understands full well that this gross stabilization has been achieved by using the old wave of stimulation. they haven't done anything on supply-side restructuring. aimed athis piece is telling people, or at least preparing the public, that there are tough times ahead, and once the government addresses the oversupply problem, the overcapacity problem -- the second take away is that government is trying to defend its economic policy. we all understand that president xi jingping really wants to make the supply-side restructuring a hallmark of his economic policy. but the bad economic reality has basically torpedoed his plan, forcing him to rely on this old way of creating more debt, more credit, to solve the economic slowdown, which was caused by
loss of debt in the first place. the government is trying to tell the guys both inside and outside china, the critics, that yes, i am not forgetting about this debt problem; i'm not addressing the problem right now because of the slow down. i'm dealing with demand, but at the same time, i understand your concern and i'm going to deal with that problem later on. the final one, the most important thing, if you read carefully about the interview, it seems to me that the government is not fully bracing this physical and monetary support of the economy. that basically says, going forward, i think chinese economic policies, especially in terms of fiscal and monetary stimulus, may follow a pattern of stop and go, and that means the chinese economy will indeed play out as l-shaped,
which is not as positive as i would think. scarlet: that would suggest a big drop-off and stagnation. films this message being directed at? is it internal critics, individual investors? >> there's a lot of different schools of thought here. one is that xi jingping si not very happy with what the prime minister is doing. that's why he basically used his hisest friend to voice dissatisfaction. that is one thought. the other is that they are trying to defuse the criticism that we have often heard, especially from abroad, that the chinese government is reverting back to the old ways of physical and monetary stimulus instead of doing the right thing, which is
applied restructuring. two theories. we don't know which one is correct right now. , we sawiously in q1 this extraordinary surge of new debt issuance. continue?ect that to >> i think so. it's a very unique problem in china. don't forget, this is a very high savings economy. 50% of gross national savings, which translates to $5 trillion per year. you have to convert that massive amount of savings into investment. how are you going to do that? the only feasible way is to do that through the banking system. that is why the chinese banks credit gdp ratio is very high. if you look around the world, all nations with higher domestic savings, they all end up with very high debt to gdp ratio. which country has the highest in the world? singapore.
singapore has a very long time a very high savings, and the banking system has been the key conduit to transform savings into investments. i don't think that is a problem, per se, but of course there is a problem of misallocation of resources. there's oversupply in the real estate sector, there's oversupply in the resource sector, but that debt to gdp ratio itself is not a problem. think about japan. japan's ratio is very high, and the economic and financial system has been stable. alix: in to see you. -- good to see you. a quick check on the main stocks moving in late trading. disney missing on the top and bottom line; shares off by 6%, stock plunging in after-hours trading by 28%, missing his earnings and cutting its forecast. meanwhile, electronic arts up by 7%, the videogame maker beating earnings. ♪
alix: brazilian stocks resume rally as the drive to out dilma rousseff appears to be back on track. she reiterated the sour she will not resign. joining us from washington to discuss is the director of latin america from the eurasia group. joe: thank you for joining us. 36have had this pretty crazy or 24 hours where we saw impeachment moving forward and reverse and reverse, and it looks like it is moving forward. now it looks like it's going to happen. to you see any further monkeywrench is being thrown into this, or does look like it is on? >> i'd say we have seen a pretty crazy six months to say the
least, but i think the impeachment is on track. we don't see any major surprises, although we are talking about brazil. that we think overall we do think the impeachment will happen tomorrow, and with that, the following day, they'll be able to begin to take brazil. scarlet: the government is appealing once again to the supreme court. you expect them to intervene in the process? >> it's a possibility, that the court has traditionally refrained from what they see as intervening in other branches of power. they set up the rules earlier this year, pretty clearly. now my educated guess is they'll avoid weighing in again. i think this is a matter that pertains to the senate. scarlet: i ask because so far the supreme court has focused on procedural matters when ruling on the impeachment. is there a chance that at some
point it might be tempted to intervene on the merits of the process? >> well, there is a lot of debate around that. legal experts in brazil have different views. but if you look at the constitution, and brazil had another impeachment process in 1982, the supreme court does not weigh in on the merit. the meri is the senate. i think it is unlikely. the procedural doubts are mostly clear, so i think now -- and keep in mind that this is the first vote in the senate, you still have the trial in the senate that may last up to 180 days -- but i think the supreme court will weigh in. of course the government will continue to the last minute to try and delay the process. joe: let's just say it all goes, and she is ultimately removed. weigh the odds of meaningful reform that will improve the economy and improve investor sentiment? >> i think investor sentiment
will improve. we're more bullish on the sector's microeconomic reforms, the low hanging fruits. they will probably open up the oil, telecom, the infrastructure concession package that the government announced. i think those below hanging fruits that he'll be able to bat the first three months. of more structural, macroeconomic reforms, particularly with the fiscal situation, we are more skeptical. scarlet: joining us from eurasia group; thank you. alix: coming up, a tough year for oil and gas. where's the sex are going to find relief? ♪
as the global ratings expect the u.s. speculative default rate to increase to 5.3% by march, 2017, and energy companies are in the middle of it. that clark is partner and head of energy practice at haynes and boone, and author of the and metal."k, "oil what kind of default rate are you expecting this year? >> well, i think we seeing some pretty high default rates this year for the highly leveraged oil and gas companies. public bonds, public debt. we see 50% of all rape on some of those. the bond crisis would indicate that that is what the market is also expecting. alix: wow. extremely high. one way to trigger that default is that the bank lowers their borrowing base below the amount that a company has borrowed from them to squeeze them. have we seen these cuts
recently? >> yeah. you are seeing a lot of them recently. bargain bases are determined every six months, so that can last all -- there may have been some cuts, but not cuts into the outstanding amounts borrowed. below theborrowed amount that is outstanding they have to pay the money back that's easily a six month amortization, but the first month they have to pay the money back that is easily a precipitating event. alix: so whenever we going to see that click over to lots of bankruptcies and defaults? iswell, the borrowing base being determined right now between april and may. probably the more difficult may not be determined until late june. it is not required that it happened like clockwork. once a borrowing base is reduced, it doesn't mean the company is in default. the company has six months to repay the bargain base, and
they will certainly do that. but it's indicative of a real cash crunch for these companies, and it really can be a precipitating event. i think probably the more proactive borrowers know what the new base level will be; they know what their debt level is, what their interest payments are. we have already seen companies not make her interest payments on their bond debt, anticipating reduction and preparing for bankruptcy filing. that's certainly a pattern we have seen a lot. alix: you also point out in a recent report that banks are trying to sell them. typically these are safer loans, because they are backed by physical assets, by actual reserves. are they having any luck offloading them? going onthink what's is banks would like to reduce their exposure to oil and gas, production loans, but they aren't so interested that they
are willing to take a steep discount. while there's a lot of private equity interest in buying the bank loans -- because as you indicate, their first priority is a secure loan, so more likely than others to be repaid -- the private equity is only willing to buy it at a discount, so they get a return on investment. bank is not pinched enough that they are willing to sell at a steep discount. pieces ofcertainly loans that are trading on a daily basis, but the more distressed sales, which i think that privately fulfill looking for, that has not turned on yet. alix: all right. so more to come. thanks so much; good to see you. scarlet: coming up, gap posts weak sales numbers. we dig into another retailer next, macy's. ♪
scarlet: i'm scarlet fu. "what'd you miss?" star board value is turning its eyes to macy's, pushing it to squeeze more value out of property holdings. this comes as macy's sales decline. let's see what the numbers show. macy's stock is down more than 40% in the start of 2015. is the performance against the s&p 500, which is up marginally in the period. weakness in sales is driving macy's underperformance. comparable sales have fallen each of the four quarters last year, with an overall decline of 2.5%. when macy's announces earnings on wednesday, analysts estimate a 3% drop in quarterly revenue. like all retailers, macy's is suffering from a slowdown in traffic. traffic data shows has been falling since the first quarter of 2012, and most
analysts see little chance of a sudden turnaround. in order to match sales volume, macy's is treating its store count. this is all part of a plan to shape $400 million off expenses. the company had 871 stores at the end of last year. macy's is taking their advice and exploring options for its real estate; it hired two real estate executives this year, and according to their presentation from january, macy's real estate is worth almost $21 billion, which is more than their current market cap. the will report earningsy before the u.s. open they'll on wednesday. joe: something else we will be watching -- mortgate applications come out tomorrow. not miss brazil's lower house of congress voting on the impeachment of president dilma rousseff tomorrow at 7:00 p.m. eastern. the government is trying to ask the supreme court to annul it. the drama keeps eating a.
scarlet: and of course we will be watching disney shares in pre-open after the earnings reports that mr. revenue. ♪ hii'm here to tell homeowners that are sixty-two and older about a great way to live a better retirement... it's called a reverse mortgage. call right now to receive your free dvd and booklet with no obligation. it answers questions like... how a reverse mortgage works, how much you qualify for, the ways to receive your money... and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home and here's the best part... you still own your home. take control of your retirement today!
john: i'm john heilemann. mark: and i'm mark halperin. and "with all due respect when it lewandowski, comes to your boss's running mate, remember -- you have options. >> paul o'neill a bianchi's. stand up, paul. paul, you originally come from ohio, right? oh, wow. paul o'neill. >> ♪ mark: happy election day sports fans. voters in west virginia