tv Bloomberg Markets Bloomberg May 18, 2016 3:00pm-4:01pm EDT
betty: from bloomberg world headquarters here in new york, i am betty liu. stocks are raising their gains after the police of the fed minutes, fluctuating as the central bank raises a willingness to raise rates in june if the economy continues to improve. coffee prices are struggling to rebound. with futures posting a 60% drop in the past year, how does that impact business? andrea illy joins us this hour. google unveiling his latest creation at its android developers can't it's. we are live with one of the executives behind google's virtual reality business, a key area that google hopes to expand into. and maybe eventually dominate. are one hour away from the
close of trade. stocks took a big letdown after the fed minutes, spooking the markets. ramy inocencio has the latest. taking a leg are down but they are actually off of their session lows that we saw all right after the 2:00 hour when the spec minutes came out for the month of april. this is where we stand. moreow is down by a little than .1%, the s&p similarly, the nasdaq almost pulled up. now up by .3%. intradayok at the snp -- snp intraday. you can see the ride we went on in the lead up to the 2:00 hour. up until 2:00, actually, the s and p was up 6%, but then we see the plunge down. it had been down by as much as four -- .4% time. even getting closer to the flatlined, even as we speak.
with that said, the s&p is still now negative for the year. also, 10 sectors and their help -- their health. they are in negative territory by now but financials and health care are in green. financials up by green. fallen about 1% up. coming back to where we came there. utilities down the most 1.9%. we can see the consumer discretion down about half of the 1%. today, we were talking about target missing sales and earnings and that is bringing down costco as well as walmart.
taking a look at commodities and wantncies in particular, i to head to the bloomberg dollar index. the prospect that they might go the dollar might as well. it is up .6% here, coming in higher, and now this is the strongest level in 1.5 months. over two treasuries and the tenure specifically, it will go the other way. the yield is rising up by 11 basis points. higher interest rates to not hold treasury. this is the biggest jump suits -- since mid-february. down as is usually the case when the price of oil goes the other way.
sessionuch just at lows. betty: now let's get a check of the headlines. mark crumpton has more from the news desk. mark: donald trump has released a list of alleged -- of 11 potential supreme court justices. trump's takes include stephen and raymond, both judges on the eighth circuit court of appeals, and allison i'd of the colorado supreme court trump said in march he planned to release the list to ease concerns about his conservative credentials in the republican primaries. democrats are holding a hearing for supreme court nominee merrick garland. people who know the federal judge are testifying about his qualifications. senate republicans have refused to hold hearings on the nomination, saying selecting a justice during an election year is the job of a next president. we are learning troubling new details about the doomed carbon
-- cargo ship that may have used a storm track forecast at least 10 hours old according to testimony from officials with whether technology before the u.s. coast guard and investigation. the ship sank during hurricane looking back in october. all 33 crew members died. the wildfires in canada are threatening oil sands operations again. the oil producer, suncor energy, has evacuated three sites and is restarting in northern alberta. -- lost oneost it million barrels per day because of this. 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. back to you. betty: thank you. let's get more in the fed minutes. most said the june rate hikes would be appropriate if the economy continues to improve. joining me now for more is a
global quantitative strategist at the investment institute. were you surprised by the nature of these minutes? found really, they another way to use a lot of words to say they are data dependent. andgs happen between now june. we might raise rates. the numbers do not really agree on what that means. just covering our options. >> way to see what the data says p are you make it sound simple. why are the markets reacting so strongly? >> i think it is a struggle of whether the news is good or not. good news has led to central banks becoming a little more tight around the edges. ae paradigm has shifted little bit where the fed come the european central bank, bank of japan, i think they still want to air on the side of letting growth do what it has got to do.
higher rate coming with real economic data, it will lead to economic earnings. >> would you say that the data from now to the june meeting will get better? >> we think it is really tough. the bar is really high. the data have seen lately. housing numbers. >> you have what happens right after the fed meeting. the fed would have a tough time explaining why they raise rates right before, light would contribute to the volatility rates at such a unique time. betty: were you surprised, after inflation numbers came out just the other day. are you surprised by the rapid ratcheting up of the fed rate hike just based on one data point? >> what was more surprising was the fact there was almost no expectation. that was the bigger surprise.
if you listen to the fed, almost every meeting is a live meeting. to me, that was the more surprising aspect. betty: where you think the biggest will be? ,> areas we do not like utilities are probably going to get hurt. curve,. treasury staples. once you can get that in your market account, in your portfolio, you tend to look for it less in the equity portfolio. betty: are you surprised also someyou have seen certainty in filings, but the recent data in the last couple thatys and recommendations people are ratcheting down equity portfolios, they are taking money out of equity. it is a harder and harder case to take equities.
are you surprised by that? the contrary in view. a large major asset classes, bonds in the two percent range, and giving and earnings yield of six or 7%, if you are trying to think stocks, we are a key component of portfolios. hurt --our equity holdings and razor capital holdings. >> we give it a few weeks ago and we took money out of small caps and higher multiples, and out of the markets. betty: they are late to the game. >> i would just say it is not a bad time to rebalance. it is now a time to get out of equities. much, thenk you so global quantitative strategist at wells fargo investment institute. charter's $55 billion
her head and determining what exactly the sentiment means. time for the bloomberg business flash, a look at the business stories in the news right now. jpmorgan and bernie madoff, dismissed by a federal judge in new york. the suit claims jpm ignored ratified made off's -- and profits from doing business with a convicted con man. the claim was without merit. raising dividends and buying back more shares. the ceo says the board has approved a 33% boost dividend and the new $2 billion share buyback plan. similar announcements have been made in recent months. withzuckerberg meeting conservatives kirk -- concern about the social network's alleged liberal bias. liberal sources when choosing souris trending news topics.
zuckerberg says facebook found no evidence of the plan. that is your bloomberg business flash. it is a done deal for charter communications, which reported a closed more than 55 billion dollar purchase of time warner cable today. shares are mostly up today following the announcement. acquisition creates the second-largest cable tv and internet provider in the u.s. behind comcast. we talked to the chairman and ceo tom rutledge, creating a whole new one. >> we are going to change the brand to charter spectrum. obviously, the name of the company, it is not a solution. you have got to run a good service operation. we do at charter and we are getting better every day. we have invested an enormous amount of money and will continue to invest an enormous
amount of money improving the entire service six. call centers. we hired several thousand people in the last clutch or years and we will hire 20,000 people in the new company, keep all of our calls onshore and create service functions online for customers, train our technicians and give them equipment that works and do the job right the first time. it all takes a little time to implement and we know how to do it. we will simultaneously change the brand approach. today, is there a specific product that would change? longerle to tell i am no a cable provider now, i could do this, which i could not do before?
>> technically, you are today if you are as of this moment. we get spectrum services deployed. it means we have a state of the heart interface with search and discovery content. we integrate top services with the product so you will be able to search and see content in a seamless way whether over and it -- over the top service or whether it is a service delivered by us. we will put a two-day interactive outlet on every tv you have so you will have on demand on every outlet and the full range of user interface services i discussed we will price and package everything in a compelling way so it is competitive and better than what our competitors offer.
we put that with a voice product that is fully featured, a data product that is faster than competitors, and a video service veteran in our competitors, all hd and all interactive on every outlet. >> one of the things you acquire with time warner cable is one of their regional sports networks. this was not a thing that charter did all that frequently as you have been ceo, meaning wanting to go in and acquire regional sports networks. are you comfortable owning it? is that something you want to add? not the reason why we wanted to do the transaction. is a superiorle infrastructure and that, done well, it could be a great and well resonate with customers.
the sports channels were not the driver of the transaction. theill try to evaluate strategy. the fundamental strategy we went with was just to do the business better. size are all sorts of of that come from the scale we are requiring. we are not ready to say how we will implement those opportunities. betty: that was tom rutledge. still ahead, today's options chart of how is a the dow has traded. drop-off.harp it had been declining before but right after the minutes came out, we hit the low of the session. that was mirrored as well by the other exchange, including the nass act there are now trading
betty: a big leg lower after the federal reserve meeting. how is the option market handling the action? >> joining me is todd horwitz. he joins me from chicago. thank you for joining me. stocks are taking a leg down on the fed minute. taking a hike would be appropriate in june. your initial reaction? >> the fed is confused on what
to do and we get mixed messages all the time. chairs getting different coming out saying we should and should not raise. he says he thinks they should raise. they are trying to if they can. they probably will not be able to do it for the rest of the year. caveat is if they exist or if they want. do they want? >> i think the economic conditions are terrible but i thought so then as well. you see the declining retail sales and you see the jobs. the number may be good but look at the wages. the lowest participation rate since 1974. i see a lot of free money and you have got a lot of these companies and a lot of problems here need to be fixed. the only way through the economy is if they let the often are
into her might. it is hard to borrow money right now anyway. >> let's talk about fear. throws right when the fomc released the minutes. what is there to fear? >> is the motion of human traders. the vix is in what we call consolidation for the last three were were weeks. fear, usuallyf determined by the number of people buying foot. whether it holds up here, i would tend to doubt it. range, we are in a tight a couple hundred points, maybe we points, 18 to one, and
will be range bound until we get a real conviction of where the market wants to go. with the fed put underneath it, it is hard to go lower until the fed raises. >> the s&p was trading and something very small. why are you looking at sp why? it is pretty much flat for the year. >> i want to be sure for the market here. we have reached a level not as an investor but a traitor. i think we are in this market but i believe the next bigger move would be the downside. we saw that in february. i want to figure out a way to get short here. using the risk trade i sent you,
this aty, i will buy the end of june, i will sell the june tour, and cover that up so i do not have a lot of requirement, i will buy the tool. and it makes me short 100 shares of the sp why because i believe that worst case, we will test in the low 190's before the trade expires. i think we will see this rather quickly here. >> so many people are talking about the fed rate hike in june. who are you believing? fed fund futures pricing in a 150 chance in november? there will probably not be any increase this year. from my school, we need lending
power until the rates rise. in june and i it think they do not do it at all this year. >> thank you very much pair first time i heard of it. we will throw it back to you. strong are the european consumers holding up? a chairman joins us. plus, we continue to follow the markets. traded withequities got hit on those minutes. that sent the dollar up, as you can see. higher by over half of 1%. ♪
after the fed minutes. dayail: it has been a wild especially here at the nasdaq. down shortly after the fed minutes and now up ever so slightly. this is the seventh day in a row of 1% or greater in the nasdaq. we are seeing a volatility here for stocks. looking ahead for tomorrow, urban outfitters, those companies are reporting consensus calls for the company to earn 55 cents per share. is it -- investors will look for color on demand. shares of cisco are basically flat on that report. sharp shares are shares of urban outfitters. recent retail
minutes. the near-term lists are elevated. with the stock down so much in the report today, it suggests we could see volatility out of it as those prove right and there is something to drive the stock lower. it will be interesting to see how this plays out betty: we will be. what about starbucks? revenuesmpany missed for its second quarter and offered a below consensus view for earnings for the third quarter. they are initiating third quarter though. the stock is trading at a lofty premium. it suggests that starbucks may have to perform in the future, putting pressure on the company to produce results investors are looking for.
betty: thank you. it wake-up call for coffee lovers. the price climbed to the highest level in almost nine months this week. dry weather is affecting production in brazil. the world's second-largest producer. book, coffee his dream, the chairman and president of a cafe. let's talk about the coffee market. the drive season, how disruptive will it be for your industry? >> i do not think it will be so disruptive. others are doing better this year. there will be a good crop in brazil and colombia and probably also in central america. always keep in mind that karma changes in an erratic way.
sometimes due to droughts and sometimes too much rain and so betty: is it harder to manage the business? i am not too concerned about managing the business in the short term. i am much more concerned about the long-term. of -- are about twice the amount of coffee needed by about 2050 and half the amount of soule -- suitable land. the exact algebra is not clear yet. we need toen at quadruple in the next 30 years. this would require a disruption in the culture by introducing
the most modern agricultural practices to adapt, including developing a new resistance, climate change resistance. doe columbia did already with a long-term project. there would be a large program needed. at the rolled coffee conference, the international coffee organization last mark -- last march, a global plan to coordinate all of it. betty: what was the reception? with that be hard to implement? >> it depends. we knew the governor in order to make sure that the most important efforts are
coordinated. from philanthropy and institutions, from consuming countries and to reducing also to make sure the projects have a sense of urgency and avoiding duplications. something is needed and fast. about i want to ask you consumption now, particularly in europe, your home base. are you seeing from european consumers? >> europe does not necessarily -- it is the biggest market. in of coffee is consumed europe now. dynamict the most market. we shall speak about china and
asia because mobilization makes coffee consumption to increase disposable income. the consumers are getting more wealthy. and this is one of the reasons is the average growth rate twice as much as it used to be 20 years ago. if you make it relative to the increase, it increases four times as much. it is room for sufficient growth. now we have only 1.5 billion coffee consumers in the world, twice as many as maybe 50 million -- 50 years ago. path.is a long betty: we are financing all of the ceos we have had on
grexit,g, talking about and particularly those who are in europe. what your stance is. >> i am not an expert. from what i know, there is a 50-50, you know. liberal in thest world. to anything. and they want to preserve this. they see in a certain way, there thet, the european union is exact opposite. slowing down, inability to prevent crisis or react to crises. is not sothing that much about the short term for great britain, but more on
maintaining the position of the most liberal and cosmopolitan country in the world. betty: would you be sad to see them go? >> it depends. if you do an internet poll, it .ould be 60% leaving it is really uncertain. betty: it is. the coffeeto read beans. some breaking news right now conference,r the androidto develop an television set box. the box will be powered by android tv. emily chang will have an exclusive interview tomorrow with their vice president of global operations on the new
an incoming trend in technology. deeply involved in the virtual reality pushed. cory johnson? cory: thank you. you are here at the conference. it is interesting. thousands of developers are trying to figure out what the next big thing is. seems like you are using virtual reality as a platform to look forward to. platform is a consisting of phones with very high specifications to make sure they can render things smoothly. and a design so you can slip your phone into something and have a come will experience and interact with wings richly.
and finally an app, something we have been working hard on. cory: it has got to be massive. >> today's mobile phones have enough computing power in them to drive the experience to make you think, i am somewhere else, it is that immersive in quality. cory: i think i figured out, about a 1987 -- that is what you are caring around right now. place it has been a while since i have done the math. but it is pretty special. create anre trying to industry. i wonder what you think the key drivers of that are. >> to experience virtual reality, users need something to experience with the device, but
also something to experience, apps and games. the ecosystem with tools to start building all of the different components at once. we are making investments from wayhardware devices all the to what people can actually do with it. cory: give me an example that helps innovate the process. >> one thing we have done is create controllers we are working with, so that any phone canking a smart a control orure headset. we're trying to figure out how to make something with great optics. handed that knowledge to these companies, it is really to give everyone a leg up. two or three, a
killer app. >> he does i love, one is a tilt brush. paint in it lets you space, with light and fire and any other material that you could imagine. to scopere using it amazing things. the second is a version of youtube including things like spatial audio so the sound from where they actually are. it will let you visit concerts and events and faraway places and experience those like you are there but you do not have to be faraway to do it. is a downside, you do not get frequent flyer miles. >> it can be exhausting at a certain point, so maybe the immersive games, playing call of duty for 18 hours can be exhausting on xbox what 18 hours is just too much.
>> the are is more immersive. we are focused on bringing amazing, real-world focus is on it. upthink it will open interesting things like taking you to the stonehenge or the taj mahal. be some of thell most compelling and widely adopted content. thank you for having me. cory: thank you. some wild stuff to think about. interested. cory, thank you. cory johnson. much more is ahead. the close of the trade is moments away. he is how major averages are trading.
betty: markets are closing in about 10 minutes time. what a day it has been. we have your market check. >> that is basically what i was about to say. it was up and it is now down. right now, just a little negative, a flat line in the negative area. the dow is down and the s&p similarly. the nasdaq was able to skirt away from negative territory up three .3%. this has beenhow impacting the dollar first. toare seeing that is helping
boost the dollar. sincethe strongest level march of 29. -- since march 29. but it is not doing so well for treasuries. investors are pulling out of treasuries. field is moving higher, now up by nine basis points. a big jump since mid february and also the highest yield since the start of the month. at stocke a look movers today and the s&p's winners. that has to be financials up by 1.9%. we see citigroup and bank of .merica up citigroup is the biggest in a month. jpmorgan up by 3.5%. also, it did raise its quarterly dividend to $.48 per share.
it is also a 200 day moving average. green to the ready, these are the losers on the s&p. target is down by nearly 8% here. it has been down by as much as 11%. we did see the losses pairing. worse earnings than expected. walmart down by 3.3%. betty: thank you. most officials saw a june hike as likely. peter, first off, before we talk about your article on larry summers in the fed, let's talk about the minutes and what you thought about it. surprised how much they were leaning towards wanting to raise rates assuming the economy had been growing sooner than
expected. considering the economy has made progress, and yet on the negative side, growth is way below the long-term trend, it has not gone up to where it has was if it was the way it before the recession. betty: you have written a piece larry summers and the continued criticism of the on fed. onlarry is not focused criticizing the fed. he criticized the decision of the fed to raise the federal funds rate in december and he kept saying he was on bloomberg back in february. what he said there was he thinks maybe the fed has the wrong target and maybe you should look at nominal gdp. if we had a nominal gdp target, we would see that, we are well
below the trajectory we were on before and there is plenty of room for catch up. betty: which is why he criticized the rate hike in february. we know the history, he was up to -- for the chairmanship of the fed as was janet yellen. she won out. what was interesting is they were not that different. >> at least not publicly. barack obama told somebody the difference between them was like the thickness of a sheet of paper and shortly after was when larry fine -- larry summers gave a keynote important speech where he reintroduced an idea from the great -- great depression. like maybe we are in those kinds over againns all
were interest rate as low as zero not low enough to ignite economic growth here it betty: what happened? >> i think he probably always had it in him. i do not know whether the fact that he was not a longer a candidate kind of limit debtor liberated him? ,hat is clear is larry summers everyone, janet yellen at the fomc, could kind of measure her words. betty: she cannot say whatever she wanted. peter, thank you. that is it for "bloomberg markets. oh less than four minutes away from the closing bell. ♪
joe: and i'm joe weisenthal. scarlet: u.s. stocks closing, the s&p lowest in the month, with the dollar having its best day in five weeks. joe: the question is, what'd you miss? whether they will be ready for the rate increase by june. inequality, and why these factors are likely to keep inequality high in the future. number of poor results for retailers to get we have a number of charts you cannot miss. youlet: all right, and when look at ready indexes ended, it might see nothing happened today, given the down in the s&p come the nasdaq up a of 1%, those fed minutes at 2:00 p.m. really change the game here. wouldf alien struct, they