tv Bloomberg Markets Bloomberg August 8, 2016 10:00am-11:01am EDT
vonnie: we are going to take you from san francisco to washington to stories out of the u.k. and brazil in the next hour. here's what we are watching. donald trump is set to unveil his economic plan in a speech in detroit. he is likely to propose a temporary moratorium on new financial regulations and a repeal of dodd-frank. will it help get his struggling campaign back on track? course forpound on his longest losing streak since in the bank of england has expanded monetary easing programs. strategists who says there are reasons on both sides of the atlantic why more significant moves could be ahead. vonnie: and we are pulling back the curtain on the next iphone.
apple is gearing up to release the next iteration as early as next month. it includes more advanced capabilities and upgraded hardware, but is it too similar to the last design to get the consumer excited? we are about 30 minutes into the trading day in the u.s. now. let's head to the markets desk were julie hyman has the latest. julie: i want to start with oil prices that as having a rebound effect in equity markets as well. oil almost at $43 a barrel. we had some commentary out from the opec president in a statement on that organization's website, saying that the country's are in constant deliberations on stabilizing the market. they're going to hold informal talks in algiers next month. a couple delegates familiar with the plans here say there are no plans to run new the failed push for production freeze. nonetheless we are seeing this bounds in oil prices today.
this is a missed what has been a very negative environment for oil. we had entered a bear market and are still -- there's still a lot of hessma has in his mouth pessimism out there. the price of oil that has been declining and reentering the bear market. short positions have increased to a record. much optimism that this low bit of a bounce that we are seen in oil prices is going to continue. the feedthrough of this, it is what we're seeing in stocks today. energy stocks are the best performing group. we are seeing that lead the gains. health care is pulling back the most down three quarters of 1%. what does it equal overall for equities? let's take a look at the major averages to find out we do not have a lot of movement today into theinutes
session, we had stocks bouncing th between gains and losses. friday notwithstanding, we sort of resumed this drift if you will and equity markets post the jobs report on friday. the downward pressure is winning the thingsof causing that is allergan. a lot of the large cap pharma stacks are down and they are actually beating analyst estimates. sales are better than estimated for botox. up 1.5%, wasll, slightly below what analysts had been anticipating. we are also seeing a pullback in shares of netflix this morning. late last week, there was some speculation bubbling up about alibaba potentially making investments or attention purchasing netflix. there are reports now that that is not the case and we are seen netflix down by 3%.
nejra: julie, we are about 90 minutes away from the european equity let's have a look at where we are trading. looking at some of the indices and you can see that germany's dax index is up 6/10 of a percent. it is heading for its highest close of the year and we will talk more about that index later in the program. unchanged,free much but it is on a pretty big losing streak. it is again something we will talk about more in the show and the euro-dollar pretty much unchanged as well. if you look at the stoxx 600, heading for its biggest three-day gain in three weeks. if you look at it over one day today, we're pretty much unchanged at the moment. looking at the breakdown of industry groups as well, it is materials, stocks, and financials that are very much leading the gains. that with commodity prices rising.
we have also had some banks gaining like barclays up after it was upgraded to outperform. the one stock that i wanted to highlight is one the biggest gainers on the stoxx 600, up nl.% right now -- post an the dutch delivery forecast a reduction of dividend payments in 2017. let's check in on the first word news this morning. resumed airlines has limited departures after a computer crash forced a worldwide grounding. a power outage in atlanta triggered a shutdown in delta's computer system. delta's is the worldwide crown stop has now been lifted, but cancellations and delays will continue. iraq has received a new batch of f-16 fighting falcon aircraft from the u.s.. with the arrival, iraq has eight f-16 in service out of the
fighter jets agreed to sell tobacco. -- to baghdad. -- a comics put it on a government run hospital. police say the bombers targeted --yers had gathered guests to one guest of a prominent attorney killed earlier in the day. turkeys president has vowed to keep fighting whatever powers seek to undermine the government. he spoke at a giant rally and that demonstrating turkish unity following last month attempted coup. the government has detained or arrested on was 18,000 people since then, mostly from the military. terrorist attacks have slammed france's tourism industry. overnight stays have fallen about 10% this year through july. international flight bookings to the city of nice are down 57% and luxury hotel bookings are the hardest hit category.
news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am alisa. this is bloomberg. vonnie: european and u.s. equity struggling to hold on to recent gains, although we have seen records in the u.s.. joining us now is the portfolio manager at frank when mutual advisers, where she oversees $2.6 billion in assets, .ncluding the european fund it is great to have you in to talk about undervalues and european companies, but how do you find the values and european companies when every thing is distorted from bond markets potentially now? katrina: there's a real dichotomy that exist in this market and it is very prevalent in europe where you have very cheap sectors of the market and you have some very expensive sectors of the market.
consumer staples and health care are trading in multiples, but you have financial stocks and other areas trading cheaply. vonnie: if you did into my bloomberg, you brought up valuations and dividend yields. if you see this, you can get the dividend yields and it's around 3.8%. if you change the measure and have a look at price-to-earnings, you're looking at something like 13% or 14%. it looks like a fantastic market, but where do you find that value? katrina: we're looking for names that meet our evaluation criteria. we own something mcphillips, which is a company and i talked about health care being expensive, but this one isn't. it is transitioning from being an industrial conglomerate to a health care company. teleflex did it here in the united states and phillips is doing it. that's an example of an equity
available to u.s. investors . nejra: great to have you could i. if there is this value in the market that investors are think somey do you of them aren't picking up on this or are they put off by things like bird brexit? katrina: the brexit risk is really significant and you cannot underestimate the uncertainty that exists at the moment in the market. when they will exit out of the common market. we do not know what the terms of trade are going to be and we do not know when they will start that three years. we think that uncertainty is going to be felt more within the u.k. and less outside of the u.k. country such as germany and france are not seeing that same kind of pause on investment. i think there are opportunities outside of the u.k. market. within the u.k., there are a lot
of multinationals. there are companies that really have their headquarters in the u.k. that will not be very much an impacted by brexit. nejra: with the uncertainty continuing, how do you position yourself? has anything changed since pre-bringexit? katrina: opposition on the financial stocks and banks in particular. they had been trading cheaply for a long time. i think with brexit, we're just seeing that recovery and earnings that as being pushed out to the right significantly. we are not looking is favorably on the financial sector as we brags itbably pre-brags i brexit. vonnie: we're seeing growth year over year in the euro, but if that does not improve, how long will it take to perform better?
katrina: i look at it like a glass of champagne. yet all of stocks that you own for a particular reason and then it just rises up to the top. i talk about a stock such as phillips. it will take time, but they are within the countries control. another name we like is a cement company focusing on cash, cost, return on capital. it are things they -- it is things they can control. it is just a matter of time in the capital looking at. nejra: european stocks are taking longer than u.s. and asian stocks to recover from the post brexit shot. how much longer do investors have to wait for european stocks to get back to that paris brags exit level?rag katrina: we are patient investors. we have a 3-5-year horizon and
we are willing to be patient. the problem with europe is that every time it starts growing, something happens. the ukraine crisis stall things and we had the greek crisis and now we have brand exit. i think that is frustrating a lot of investors, but if you're willing to get in there and do the work, there are a lot of good opportunities represented by european equities that are just trading significantly cheaper than their u.s. counterparts. nejra: just got to get in and do the work. katrina dudley, portfolio manager at franklin advisers. coming up, a $3 billion e-commerce deal. can jet.com help walmart's online sales take flight? we will discuss next. this is bloomberg. ♪
nejra: live from london and new ra cehic.m nejt vonnie: time for the bloomberg business flash. of pet will meet -- opec will meet for their previously scheduled november gathering . the meeting will be held in algeria on the sidelines of the energy forum. oil has been stuck in a range of 40 and $50 for more than he appea a year. tiaa-cref has agreed to buy financials. the bank is primarily an online bank and the largest lender by deposits. is led by roger ferguson.
martha stewart is teaming up with a new cooking show dubbed "martha and snoops dinner party." the show debuts this fall on vh1. that is your bloomberg business flash. we are taking stock of walmart. lower after acquiring jet.com for about $3 billion in cash. the deal underscores hoserious walmart is about igniting its online business. the ceo said last month that it has taken too long to grow. for more, let's bring in shannon could jet.com started off with great ambitions to be a competitor to amazon. how far along on that road did it get? shannon: it has got a little hundred billion dollars in sales could i. it is very unlikely to make
profit, but it's our $3 billion -- now worth $3 billion. in the world of tech, there's a lot of pressure on profits. we are now in the world of retail where there is pressure on profits. that is what analysts are looking for and that is what driving stocks. they just acquired in unprofitable company for $3 billion and it could be years and years before they actually see a profit. the founder was saying he thought it would be 2020 when they were profitable. that was when they had this $50 membership fee program that they ended up dropping when customers didn't fall for it. there is no membership fee now. vonnie: what kind of strategy is this for walmart? they deftly happen struggling with their online presence trying to compete with the likes of amazon and online retailers. they are very small in comparison. shannon: it shows some of the
desperation at walmart right now because they afford billions in for online operations. sales growth has only been decelerating . they've hired engineers and invested an enormous amount of money and have not been able to crack amazon's code. mark lore sold to amazon and was believed to be in the e-commerce world and one of the smartest thinkers. in a way, this is a deal to buy mark lore. you can call from the $3 billion man if you like, but the team around him is one of the big values for walmart. nejra: it is interesting you say that because i wonder what is in it for mark lore? what does this deal means for him? shannon: at one point, it seemed like he and jet had much bigger aspirations than $3 billion. that's obviously a lot of money, but much bigger aspirations to take on amazon and maybe a $10
billion company. this might say that it looks like things are going to be harder than he initially set out to or the capital markets and the investment that he needed to take it for was not going to be there. i asked walmart about what the future role is that he will have and the other people leading e-commerce. they have not commented on that and i assume we will have something later this afternoon on their role going forward. nejra: what kind of reaction could we see from amazon? shannon: it seems like nothing can shake amazon. i did talk to an analyst who follows amazon and he said i'm not worried about it. amazon is years and years ahead of everyone. you can never write off a competitor, but their scale, speed, and assortment -- even walmart despite all the money they spent is only scratching the surface of amazon. i think amazon shares were down a little bit earlier today. this has people
vonnie: you are watching "bloomberg markets." i am vonnie quinn in new york. it is monday and we are focusing on the $3 trillion etf markets. many of you may has spent the weekend watching the real olympics. julie hyman joins us with a look at brazil funds. julie: we have been talking about the olympics in rio, but let's talk about investment in brazil. michael regan with bloomberg gadfly is joining me woul now.
let us talk about brazilian etf's because many of them have been doing really well this year. michael: with all the pessimism and everything you read about the olympics, it is still full of pessimism. for the markets, it has been pure euphoria for as i brazil. the currency has rallied a lot too. if you are buying an etf, like the main brazilian etf, they are up about twice that, in the 60 percentage. julie: earlier in the year, this has to do with the possibility ilma doma reset -- dom rousseff would be removed and she was on an interim basis. and move during that sideways or has it continue to go up? michael: there's a lot of
optimism about the acting president and his cabinet's being called the economic dream team by goldman sachs. the forecast growth for next year is only about 1% in brazil for gdp. the profit growth is expected to be better than that. marketward p is on the are not too high, but the trailing piece are. julie: are there other ones that are more specialized? michael: there are a few good there i. there's not a huge menu like you have in the u.s. wzs from ishares, a small-cap fund, and the drf and they are both up more than 70% for the year. the other when i mentioned was levered off three times. those funds have just gone crazy. 20% and the other
is double leveraged. those things have been on fire. julie: they are always riskier because they could go down by a lot more. speaking of risks, you mentioned the forecast for gdp for next year. what are some of the other risks potentially associated? michael: you always have political risk. emerging market in general just tend to be more volatile. volatilest twice as unrealized volatility compared to the s&p 500. it has been a nice write up, but there's always that risk sentiment turning on a dime. julie: i suppose also one of the risks that has been talked about for the emerging markets is when the fed finally start and to tighten a little more significantly. that could put a little dent in the rally we have seen. michael: absolutely. easy money has really been a driver of the risk on sentiment, especially in the emerging markets. as long as the market is comfortable with what interest rates are going to be, it should
not be a huge risk. the more uncertainty and the more that there is a chance of a faster scheduled rate increase, that certainly would be. julie: michael regan from bloomberg gadfly, thanks for staying going into the etf roll this week. vonnie: julie hyman, thanks, and of course, michael regan. you can see all the gadfly columns on bloomberg. still ahead, the pound falling for the fourth day. it is in danger of dropping low $1.30. what could stop that? that is next. this is bloomberg. ♪ [ hip hop beat throughout ] [ fans cheering ]
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--nejra: i am nejra cehic. vonnie: let's check in on the bluebird first word. >> five-man of the date and australian and american in the capital of kabul. they were taken from their vehicle in front of the american university. and president vladimir putin could be in the verge of a significant victory in syria. russian troops are helping syrian troops bearing down on the city of aleppo. if they capture the city, it would make it harder to oust leader bashar al-assad. confirmed it hanged a nuclear scientist they accused information toet the united states. he claimed he had been held and , but the by the u.s.
"washington post" reports the cia gave the man $5 million to give information about iran's nuclear program. belgium opened a terror investigation into the machete attack over the weekend. a nigerian national using a machete wounded to ban police officers before another shot and killed him. the islamic state claimed responsibility. the emperor of japan signaled he is ready to step down. akihito said that he was concerned it will become difficult to carry out his duty. he is 80 two-year-old and has been in the ceremonial role in 22 year -- for 22 years. he would be succeeded by his son not akihito -- naruhito. global news 24 hours a day, powered by our 2400 journalists and analysts in more than 120 countries. nejra: thank you.
let's turn to the currency markets. the british pound falling a fourth day. it is on course for its longest losing streak since the brexit vote. if you take a look at my bloomberg, this chart is showing the pound-dollar price change. where the bar goes down, that is where we have seen losses. these orban days of losses is actually the longest losing streak -- these four days of losses is actually the longest losing streak since may. joining us now is jeremy cook, chief economist and head of currency strategy at world first. you can see the losing streak. obviously, that was triggered by the bank of england's action. and then dollar strength because of the jobs data. how much more downsize is up? jeremy: we are still looking at a figure in the low 1.20's.
if you believe the fed has another hike in them over the course of the year. and we have not seen the effects economyt on the u.k.'s yet. it has not been expressed in the data. we have to believe as well that while they did not throw it everything and the kitchen sink at the u.k. economy thursday, the bank of england has possibly another rate cut, as well as verbal easing. we are thinking 1.22. is below consensus, which is at 1.26 at the moment. i want to ask about the euro-sterling. morgenstern -- morgan stanley is saying so long. theecb will seek to weaken sterling, while the boe will seek to prop it up. what are your thoughts? continues to run higher. i am surprised it has not come off as much as we previously
thought before the events of brexit. it could fall as much as 0.88. -- why ite is euro-dollar has not gone off as much is because the negative rate story in europe is still there. the ecb stimulus cannot do much more at the moment. so can they still materially weaken the euro. nejra: what happens when article 50 is triggered? jeremy: if he gets this year, next year? the political uncertainty is the next shoe to drop. we have the first political uncertainty drop with the votes. economic uncertainty is the other issue. the next is what kind of negotiating stance we take.
if article 50 comes in, and the market believes the u.k. is not equipped to lead the eu in two years, it it will be open hunting season on the sterling. vonnie: so what is the move for the bank of england? and for the federal reserve? jeremy: it does not depend too much on what happens in the federal reserve. if anyone thought they would not be u.k.-focused, that would bring more pressure on the bank of england. they have to wait for more data post brexit. the market will not pay much attention to some of the data, but the pmi suggests we are heading for session. if we see that, you can expect more easing in november. vonnie: the second half of next year? jeremy: this year. nejra: when i spoke to you earlier this year, you are bullish on the dollar. are you still? jeremy: yes. 47% to 50% chance
of a fed rate hike by the end of the year. i think it is or should be closer to 70%. if we see a decent jobs number in august, coinciding with a calledgure of 2.6% and inflation still playing around 2%, those numbers show we should be -- the fed should be raising rates ahead of what is still an emergency stance. are you expecting one rate high -- rise over the next 12 months or will it be the start of a hiking cycle? jeremy: whether it starts a hiking cycle or not, i think they will become more frequent. i do not think they will do anything in september. i think they will wait until the full impact of brexit is felt in the u k u.k. the
they also want to wait for the election here. is a rate hiking cycle or not, it will return to normalization. vonnie: we have a stronger dollar and a much weaker chinese renminbi. how does that progress? jeremy: we continue to see weakness in the yuan. to see hugenue amount of outflows through china and dispersing into the global economy, the weakness of the yuan is likely to continue. china is the elephant in the room. for all of the chatter around brexit and nonperforming loans in italy, we have not really talked about china that much in the past quarter. we just passed the anniversary of their move back in august last year. if we see something like that in a september or october, i expect decent amounts of you on
weakness. andie: the yen at 102 change, where we go? jeremy: 92? vonnie: when? jeremy: six month or so. vonnie: based on? jeremy: they really have no options left. vonnie: all right. jeremy cook, chief economist at world first. coming up, apple is getting ready to announce new products of it iphone. what will it have enough new features to attract big sales numbers? this is bloomberg. ♪
walmart is ramping up its fight against amazon. it bought you, start up jet.com. nejra: there are new concerns china's economies weakening further. its exports remain sluggish and its imports are slipping. vonnie: in our could take today, america's changing attitude towards marijuana. legalization efforts are gaining ground. a lot of action today. we start with walmart making a deal to boost its online business. it agreed to buy e-commerce start up jet.com. they will pay about $3.3 million in cash and $3 million in walmart shares over time. setcom founder marc lore is to head walmart's online division. -- will buy mattress firm
holdings of houston for $2.4 billion. that is a more than 1% premium. this would create the world's largest bed seller. its bankinganding business. deal to buy florida's bank -- it is florida's largest lender by deposit. tiaa is led by roger ferguson. vonnie: the latest china trade figures are raising concerns chinese exports -- the latest china trade figures are raising concerns. imports dropped more than 12%, a sign that domestic conditions could be weakening. vonnie: time for our bloomberg quick take, where we provide context and background on issues of interest. america's have changed their
minds about pot. in four u.s. states and the district of columbia, it is legal for recreational use. in the debate about how it should best be consumed and situation.'s a maine, massachusetts, nevada, and california have referendums foregalizing weed recreational use scheduled for this year. florida will consider medical legalization. legalizing weed has generated more than $3 million in sales last year. washington, oregon, and colorado were the first to approve recreational use in 2012. they were followed by oregon, alaska, and the district of columbia. though marijuana is still illegal under federal law, the state department will not challenge states legislation.
agreed that marijuana was -- cannabis has been used since ancient times for its fiber and its medicinal and mood altering effect. it was effectively outlawed in the u.s. in the 1930's, around the same time a 13 year prohibition on alcohol was overturned due to constitutional amendment. marijuana grew after medical use of the plant was used to treat nausea. here's the argument. legalization advocates make the case that cannabis is safer than alcohol. they say making it legal would make for better monitoring of a business that is underground. it also provides tax revenues. say easing marijuana
laws exposes children and teenagers to the drug and could lead to an increase in drug taking. you can read more about marijuana and all of our quick takes at niquick on the bloomberg. up forapple is gearing its biggest event of the year. it is expected to announce newer versions of the iphone next month. but will it generate enough excitement to get current users to upgrade and bring more customers on board? joining us from san francisco is bloomberg technology reporter mark gurman. talk about the dual camera system. how big of an upgrade is it? significanta upgrade. we are hearing this dual camera system will be exclusive to the bigger iphone model, the one with the 5.5 inch screen. with this allows apple to do is
add a lot of functionality, like better lowlight photography. so if you take pictures at night . better pictures in dark rooms. resume.s for deep so if you zoom in on the picture, it may not become as blurred. a lot of enhancements to coloring and photo editing. a significant upgrade for the camera. nejra: how does this fit into apple's redesign cycle? redesignse normally the iphone pre-much completely every two years or so. we saw the big iphone four upgrade after iphone three and 3gs. we saw the iphone 5 and the iphone 6. this new iphone, which people are calling the iphone 7, will keep the same design from the a 14 peleased in for this is the first time apple has kept the design three years in a row. it remains to be seen if this is a new pattern. >> it does sound like what is
the point in buying this particular one, just wait for the next cycle. mark: i feel like a lot of people are going to say the same thing if they come from an iphone 6s. but if you're coming from an earlier one, it is a pretty substantial upgrade. if you're coming from and iphone 6 some -- you are pretty much getting everything the iphone brought.- iphone 6s vonnie: when is apple going to change its nomenclature? 6s, and then what this is, and maybe next year the 7? what are not be easier and maybe more enticing if they had a it not be-- would easier and maybe more enticing if they had a different naming mechanism? mark: i agree. there is talk that apple may change the numbers -- dropped
the numbers altogether. they have done it for the ipads. they have never done it for the macs or ipods. we will see. a of time, they like to do the numbers because it helps case makers, it helps marketing. but the numbers are getting a bit dated, in my opinion. nejra: will these new models be critical to the holiday season? mark: absolutely. apple's cash cow is the iphone. their biggest order -- quarter q1 holidaynally the quarter. q4. also had a bit in so there's iphone will probably touch the first week or so of q4. we will see the results in a few months. 10nie: cozy little about ios
-- tell us a little about ios 10. mark: ios 10 is a significant software up eight for the iphone. they have a new lock screen, where people can more easily view text messages, messages, frequent contacts, calendar appointments, mavs destinations. it brings new versions of apple maps, music, and news. it looks more like a newspaper. there are more messaging features that will the, popular with people used to weibo and twitter and facebook messenger. vonnie: that sounds promising. tell us about the new reiteration -- iteration of the watch. mark: the apple watch arrives joint came out around april 2015. here we are towards the end of 2016. it is around the time when apple
should refresh the apple watch. i think there is a lot of anticipation for a thinner, completely redesigned model. i do not think that will happen this year. i think we see that down the road. i think this year, they will focus on internal change meds. improvements to waterproofing, faster processor, display technologies. i do not think we are ready for a complete revamp, at least in this second generation. vonnie: re: things to mark gurman, in san francisco this morning. coming up, we look at the world's most expensive homes. this is bloomberg. ♪
hole in their pockets are in luck. joining me now is justin ocean. properties for sale. how does that compare to previous years? year, there are about nine more new properties than listed in 2015. it is a little confusing, because there were 19 last year, but some sold. vonnie: where are these? i imagine jacobi has to do with the price tag. justin: exactly. the majority of them are in the u.s. you have the new york area, including the hamptons and manhattan. l.a., florida. there is also -- there are a few in france. switzerland, barbados, panama. here and there. nejra: who is buying these? justin: billionaires. to put it succinctly.
it is a very small market. there are only so many people in the world that have enough money to be able to afford these. are is one reason why there so few and they tend to linger on the market longer than the typical $10 million apartment. us about the most expensive home on the list. justin: the one we were able to infirm is the bubble palace cote d'azur. is just incredible. it looks like something out of "star wars" or from a bond villain. it has a 500 foot auditorium. a panoramic view of the day there. vonnie: that is stunning and beautiful. you would need a golf cart to go around that. what amenities you
may expect as a matter of course. do they, with staff -- do they come with staff? justin: no. you are buying the bones. theyere are caretakers, probably stay on, but you are getting a trophy property. something you can boast about. arele at this echelon collecting them almost like works of art. they are not looking to make a profit, but some place to park their cash. an will have someplace with amazing view, the grounds, the privacy of it, the architectural or historical legacy. each one is unique. the people who own them tend to really like them. they are holding on until they get the price they want. those, ias in one of would probably like it as well. thanks to justin ocean. you can read his story at bloomberg pursuits. "the: coming up on
european close," we have our eye on a criminal investigation into airbus. the latest on the probe and how it sheds light on the use of third parties. and the latest moves in the and u.k. government bonds as the bank of england begins its latest round of quantitative easing. let's look at the european markets. the stoxx 600 pretty much unchanged. the dax up 5/10 of 1%, heading for its highest close this year. this is bloomberg. ♪
vonnie quinn. nejra: from london, i am nejra cehic. you are watching the "european close" on "bloomberg markets." ♪ nejra: we take you from detroit to new york and cover stories from the u.k. and france. here is what we are watching. airbus is under investigation in the u.k.. the probe involves allegations of fraud, brighter, and corruption, relating to commercial jet sales. we will bring the latest. vonnie: donald trump unveils his economic plan in his speech in detroit one hour from now. everything from new regulations to the repeal of the estate tax.