Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  August 4, 2017 2:00pm-3:30pm EDT

2:00 pm
♪ scarlet: we are live at bloomberg world headquarters in new york over the next hour. here are the top stories we are covering around the world and on the bloomberg. u.s. global market shows signs of spring, the market added 200,009 jobs in july. and robert mueller wants answers. he is now a listing help of a grand jury to get information on potential collusion between russia and the trump campaign. company caught the eye of short seller andrew west. kevin conroy joins us to help defend the colon cancer screen product driving growth. let's get a check on where stocks are trading on the slow friday. julie: a slow friday, even for a jobs day. we are getting a lift from that
2:01 pm
better than estimated jobs report, but not mush -- much of one. the dow up about 6.1 percent, and it is still the lowly of the majorhere averages. 22000 andove continuing to rise to a record. it is also gaining more than the nasdaq. the dow is up for a ninth straight session, and one way to check that is to bring back this chart we have been looking at, where the dow had been losing to the nasdaq for much of the year and has been worrying others over the past nine sessions because not only has it risen, it has been outpacing what we have seen in technology. all three major averages are up year to date. it is also important to look at what is happening here in comparison to the rest of the globe. this is the u.s. market cap as a percentage of the global market cap, and here is the s&p 500. the s&p has continued to climb
2:02 pm
even though it has been flattening more or less rate lately, but the global market cap has been falling, partly because of the u.s. dollar and the decline we have been seeing, so the declining u.s. assets around the globe. getting back to today, these are some micro movers here. we have the earnings movers to watch. weight watchers coming out with numbers that beat estimates, the company also posting subscriber growth of 20% of the continues to benefit from the opera affect. at sea showing its first profit since the first quarter of 2016 as revenue rose 19%. yelp doing well, and shelling -- and also selling its eight businessss -- eat 24 to grubhub, also seeing growth. julia: the jobless rate fell to 4.3%.
2:03 pm
betterowth numbers were than expected, with rising 2.5% from one year ago. to auly data points healthy economy, despite mixed signals in recent weeks. now, -- s numbers are better than the average we saw for the first half of the year. >> absolutely. anyway you slice the employment numbers, it is hard to tell a bad story there. maybe there were some slight weaknesses on the nonresidential construction, employment. but you had a broad-based job growth, an uptick in the employment rate, which shows there might be more room to run in this economy. julia: what about the manufacturing sector here as well? that has been pretty solid here as well. some weakness in the goods in producing side in particular, and we were expecting weakness
2:04 pm
in the autozone, but we did not see that happen. >> absolutely. we were expecting a bit more of a drag from manufacturing, but we did not see it because of that noise coming out of the sector. on the goods producing side, the manufacturing sector is healthy. most of the numbers were good. it was the nonresidential construction number that pulled down the reducing sector -- producing sector. on the service i'd, broad-based growth. we see it solidifying in the retail sector, which was a drag early this year and at the end of last year. lots of good stories there. scarlet: i want to pick up on what you said about the auto sales. it is a bit more of this noise. we have seen this falling out auto sales overall. at what point my that have a meaningful drag on manufacturing overall? >> that is a great question. as we track the u.s. economy, the one area we point to where the cycle is different is in the auto sector.
2:05 pm
i think right now, you would have to see some pretty outside --kness that outsized outsized weakness in the sector to pull it down. the sector is much bigger than at a verye look at it modest risks to the outlook. scarlet: and picking up on what we talked about with services, the service producing payroll did show a pickup. but if i look at the july services number, that was a weak reed overall. will we start to see a slowdown and services in the third quarter and fourth quarter? for theink the outlook third quarter is quite good going off of this report and other ones we look at. this has been diverging from growth for a lot of this year, actually. most of this year was calling for much stronger growth. the employment indexes have looked white different than what we have seen in the payrolls report. so we look at the isn is quite a noisy indicator of what actual activity is showing. scarlet: perhaps it is reverting of after -- after being too
quote
2:06 pm
optimistic. >> yeah. some of the moves there were historically big. that might be some payback. julia: i want to talk to you about some of the longer-term unemployment and the flows we are seeing in and out and the rates upon which we are seeing it. i really like this chart. we are looking at the number of civilians unemployed for 15 weeks or over, and it seems to trough several months before recessions start. and they are marked by those gray bars that you can see, the vertical lines there. what you think in terms of what we are seeing of the longer the flows moving in and out. that chart as well, which i find quite fascinating. >> it is an interesting chart. i view it as looking at a wide range of indicators and thinking
2:07 pm
how much more reminder be for the economy to run? on that chart, lots of times you have to think about the causality, when it gets to a certain level the fed starts to tighten. it does not exist in a bubble. in terms of areas where the economy still has room on this, i see some healing going on in the long term on lloyd. on the labor force participation rate, speaking of today's pickup, it is surprised to the upside, despite the demographic over the past three years. julia: and we are not near a trough, but judging by the flows in and out, people are coming back into the workforce. >> absolutely. notice with a long-term unemployed, but used the that unemployment and precipitation -- participation rates for the youth been getting better, so it is less educated, lower wage jobs, maybe participation rates for people with just a high school degree. older labor force is continuing to rise.
2:08 pm
there are positive signs that could argue that there might be more room to run. scarlet: when you look at the u.s. labor market as a whole, how close are we to returning to prerecession employment levels? in different metrics, we are past it, but in others we have a ways to go? >> i think the interesting thing is if you take the fed, for example. if you look at their latest sec, we are beyond what most of the members think is long-run unemployment rate. but the pattern of the last several years has been we go past it, you have not seen the wage pressure, and it is constantly marking it down. the vet is full of traditional economist to believe in the phillips curve, and i think even though the wage number was solid today, you are not the the exhilaration and wages you would expect if you are full employment -- past full employment. going to save a cannot have this without discussing where is the rage growth? -- wage growth? scarlet: robert, thank you so
2:09 pm
much. let's check in on bloomberg first word news with mark crumpton. mark? marks: special counsel robert is using a grand jury in washington as part of an investigation into presidential ordination between the trump campaign and russia. that is a earning two people familiar with the investigation. mueller is turning to the washington grand jury, in addition to one in alexandria, virginia that has already been involved in the in worry. the use of the grand jury suggest that mueller and his team of investigators are likely to hear from witnesses and demand documents in the coming weeks and months. attorney general jeff sessions unveils a government crack down on intelligence weeks today. this at a news conference alongside director of national intelligence dan coats. >> to prevent these leaks, every agency and congress has to do better. we are taking a stand. this culture of leaking must stop. mark: there will be a new
2:10 pm
counterintelligence unit at bf ei that will target leaks. it is a top and earn for president trump. israeli media says that prime minister benjamin netanyahu's chief of staff daley turn to state witness and testify into corruption cases against his former boss. he reached a deal with prosecutors today after israeli police revealed the day before, netanyahu is suspected of fraud, breach of trust, and bribes. the prime minister has dismissed the accusations as a witchhunt. soccer star name are made his official presentation on the turf of paris saint jermaine stadium today. his appearance was the first since the $262 million buyout from barcelona was activated yesterday. later at a press conference, he called the decision one of the most difficult of his life and not cashmove was
2:11 pm
driven. "i was thinking about happiness. if i was following the money, i would be thinking about another country. the value of the club soared overnight following the signing. mar, by the way, is 25 years old. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. scarlet: great respect. 25 years old. julia: but it is not about the money. scarlet: that is what he says. of scrutinyigns have been shrugged off. we hear from kevin conroy. he will be defending his company's: candor screening products. from new york, this is bloomberg.
2:12 pm
2:13 pm
2:14 pm
scarlet: breaking news. shares of wells fargo falling sharply in afternoon trading after they are saying there possible legal cause are beyond the reserves of $3.3 billion from the investigation of those fraudulent client account. the consumer financial protection bureau is investigating the freezing of the client accounts in a wider exam that might find significantly more fake account. it will be increasing its accounts review by more than three years, and as a result it is raising it possible legal losses from $2 billion in the first quarter. we do not have a number in terms of what is codified for further losses, but it could he potentially more than $2 billion in the first quarter and legal reserves will be more than $3.3 billion. we will need to follow this further. about the's talk biotech sector.
2:15 pm
exact sciences, to be specific. this is focused on the early detection and prevention of some of the most early forms of cancer. they have developed an fda approved, non-invasive test for colon cancer. some critics say the test is not the answer. this is how the company was described to me back in may. >> this is a marketing company, get a colonoscopy. they posted a beat on the second-quarter numbers and raised revenue guidance for the rest of the year. joining us now in the studio is kevin conroy, chairman and ceo of exact sciences. great to have you on the show. some pretty stellar results, it seems, an analyst's are happy here. is this silence the critics for now, do you think? manyere have not been critics. mayo clinic got behind the test early, most insurance covers it, it is included in the major -based guidelines.
2:16 pm
it detects 95% of curable stage cancers from the privacy of euro home. there is really an old tricks except a few who are trying to make money off of their criticism. we feel great about the second-quarter results. growth --2% revenue % revenue growth, this was a real validation of what are we are trying to do. julia: so when does the company become profitable? >> really, the burning question for us is we have 80,000 haveions -- physicians who ordered the product. there are about 24,000 primary care physicians we believe will order it over time, so we are making investments in educating them, and also educating the 80 million americans who need to be screened for: cancer.
2:17 pm
i want to pick up on the point you said about physicians. from this report regarding doctors, and doctors were ordering more, this business might become scalable. in their reaffirmation, despite the millions of dollars spent on marketing, doctors are not of this tech. you are refuting that here? >> it is not accurate. what we have seen and discussed with investors, quarter after quarter is that there has been eighth daddy uptick, not only in terms of the number of doctors who are ordering the product, but also in the case they order it. it makes sense. it is such an easy to use test. it gives patients peace of mind, and now that it is in all the major guidelines, these key quality measures that doctors care about, they are ordering it much more frequently. inas the docs are increasing terms of the base of customers
2:18 pm
and also their rate, you are going to continue to see this growth. julia: one of the big criticisms as well was go get a colonoscopy. the problem is that people do not. i have taken a chart from your report here, saying it is stagnating. the number of people who are willing to go get screen in a colonoscopy does not happen, and you are saying this is an alternative that is not invasive and you can do it in the privacy of your own home. i guess what you are arguing is this is kind of writer than doing nothing. >> much more than that. this detects 94% of curable stage cancers, and for the first time you can have an accurate science-based -- the most advanced technology goes into this product. you can have it from the privacy of your own home. julia: how many people are doing your test rather than doing it as a colonoscopy anyway? >> this is really interesting. we reported this with our second
2:19 pm
order. every two people have never been screened before. julia: so you are bringing in new people. age is 68.erage they have been in the screen andlation for two decade, they are just now willing to get screened. we are looking to eradicate colon cancer. it is audacious. if you detect: cancer early, it is highly curable -- colon cancer early, it is highly durable. if you remove the polyp, you can cure the disease. to ask you about medicare. what percentage of your revenues come from government money, affectively? >> medicare was the first insurer to cover the product. it was announced on the same day, both coverage and approval. is 62% of patients,
2:20 pm
but every quarter, that is ticking down as more and more humana,, like cigna and cover revenues. it is roughly the same, maybe a little bit higher because medicare is, today, paying faster. over time, it will be fairly even. julia: any concern about the aca repeal? whether the subsidies would be repealed that would be given? everything of time i look at that repeal this contributes to this, but is that a risk going forward? >> there is an important part of the affordable care act that says if you are part of the preventative services, like a colon cancer screening checks, insurers have to pay 100%. they cannot charge you out of pocket. that kicks in next year for us. and that is an important one.
2:21 pm
it saves lives and money, and we do not think that provision will go away. julia: let's talk about speculation over you are looking to be able to sell the company. --ave the illumina mentioned seeing illumina mentioned as a potential purchaser. what is the price? >> we do not comment on such things. we are focused. this technology that allows us to detect colon cancer early also allows us to detect what is shown as long cancer, liver cancer, liverg cancer, and stomach cancer. we have a deep partnership with the mayo clinic to go a cost -- across the top 10 deadliest cancers. julia: what about a pipeline deal to a seller it some of the things you are looking at? would you be open to an investor in that? >> there are always companies that are interested in this advanced technology, so we are always talking to companies about how we can accelerate. over time, time is on our side
2:22 pm
to do the science the right way. bezos has invested $1 billion in dna sequencing. i'm talking about future competitors, like 4, 5 years out. softbank as well with gardent. you have dna sequencing investing going on in a pretty significant rise. do you see them as future competitors of they can somehow map and recognize cancers early? >> we are five years ahead, because mayo clinic and exact scientists have been finding the right biomarkers for each cancer. we are way ahead of any of the companies out there. significantly less than the dna sequencing technology. meaning that we can bring early cancer detection to the masses globally. we are not talking about a $2500
2:23 pm
test, we are talking about hundreds of dollars from a blood drive. that is what motivates us. it gets us excited every day to come into work, and the science is on our side, our partners are on our side, and doctors and patients are. julia: we will see. kevin, great to check with you -- chat with you. scarlet: just reiterate the breaking news from earlier, wells fargo saying legal costs might increase from what it has already put aside because the consumer protection bureau is investigating more fake accounts. this wider exam says that wells fargo might have significantly more fake accounts and has increased the bogus account review by three plus years. react to thell announcements in the third quarter. we will keep you posted on these headlines. from new york, this is bloomberg.
2:24 pm
2:25 pm
2:26 pm
♪ scarlet: this is bloomberg markets, i'm scarlet fu. julia: i'm julia chatterley. it is time for the bloomberg business flash. elliott management is pushing for a higher offer on and according to people familiar with the matter. elliott has taken a 6% stake in the dutch chipmaker. buy an xpent to installed with european antitrust regulators. and this executive has pleaded guilty to criminal charges centered on the emissions cheating scandal. we will have more on that later. from new york, this is bloomberg.
2:27 pm
2:28 pm
2:29 pm
♪ from bloomberg world headquarters in midtown manhattan, this is bloomberg markets and i'm julia chatterley. commodity markets are closing in new york.
2:30 pm
metals, bold falling for a third straight day on the biggest drop for four weeks. this comes after the better than estimated jobs report, which bolstered the fed case for raising interest rates again this year. level in at its lowest two weeks, falling for a second straight day. by thetures crawling up most in two weeks. this is due to temporarily improving conditions, but does not count on soil moisture deficits. and -- slipping for a fifth straight week and fuel demand surging. crude ending the year flat, following the biggest rally of the year last week, which saw oil up more than 8.5%. scarlet: we are going to stick with oil. let's look at the showdown in venezuela. nicolas maduro is planning on
2:31 pm
installing a loyalist branch that will override all other government branches. he will use this to punish opponents, and the u.s. is refusing to recognize the assembly and calling for maduro to step down after sanctioning him on monday. what happens next? our guests says further sanctions, and this time venezuela's oil industry could be the answer. great to speak with you. thank you for taking the time. if the u.s. is going to impose energy sanctions on venezuela, give us a sense of what these might look like? options.are two one, which i think is kind of the conventional wisdom in washington, is that there would be sanctions on u.s. light oil and other product exports to venezuela. about 75,000lking barrels a day. of course, the venezuelans need the lighter oil for blending in their own refineries for their own gasoline. really would not have
2:32 pm
much of an impact. venezuela would easily be able to replace that, and there is a glut of light, sweet crude on the market right now. i do not think that will have any impact. the other big one, which i think is really what the administration is keen on -- at least in the national security council -- is very keen on implementing, and that is banning venezuelan crude to the u.s.. and that is approximately about 800,000 barrels a day. that is will a produces about 2 million barrels a day, half of it goes to pay loans in china -- venezuela produces about 2 million euros a day, have a goes to pay -- half of it goes to pay and the other, half goes to the u.s.. that goes away, there is no cash. venezuela defaults, probably. production,hut down
2:33 pm
and they have a lot of serious consequences, mainly in venezuela but also here in the u.s.. you could see gasoline prices jump $.10 a gallon, you could , about $10 a barrel according to the refiners groups. scarlet: so venezuela's information minister is saying if the u.s. and was as oil sanctions, they would be doing us a favor because the price would rise? -- i thinkat think there is some gains mentioned going on here. trump has laid out a red line for maduro and he has crossed it . by holding the elections, also by convening this constituent assembly today. i think the venezuelans are betting that the u.s. will not take these measures because of the impacts to u.s. refiners and u.s. gasoline drivers and consumers. they are betting that the
2:34 pm
u.s. is not going to treat this drastic move -- take this drastic move, but policymakers think this could be a short-term measure that brings down maduro. this is under quite active consideration. there have been press reports saying it is off the table, but my understanding is that it is actively under consideration. julia: when we are talking about refiners that would be impacted, we are talking about chevron, valero, because these are the guys who have calibrated their systems to be able to cope with the high density oil that comes from venezuela. i guess i would expect lobbyists for these guys or the company themselves to go to the government to this point in say this is you do this what would happen with the oil situation. i have to question degree upon which we would you some kind of -- see some kind of oil pricing. is there anything to suggest this is the kind of rising wti prices we would see, and a line
2:35 pm
for that, how quickly would we adapt, even if prices went up $10? we would shift it around, get oil from other sources. how quickly would oil prices come down? >> i think barclays came out with a report last week that couldted that oil prices jump five dollars to seven dollars. i do not think the refiners number is way too out of whack. they are making their case aggressively to the administration. the white house, i think it knowledge is -- acknowledges it. there would be impacts in the u.s. and the white house egg knowledge is that -- acknowledges that. but these refineries, especially on the gulf coast, are designed to manufacture and refine this heavy oil. they cannot just change and start reforming -- refining light sweet. they would have to spend a lot of money to reconfigure these refineries. but the oil is replaceable.
2:36 pm
heavier grade, colombia, and canada. mexico and colombia's production is down, they are not really an option. canada, there is oil but we do not have keystone so we cannot get the oil to these gulf refineries. the other option is by rail or probably bewould prohibitively expensive. some this market, there is oil that refiners will be paying some higher prices for it. that will translate to higher prices on the gasoline market. a serious situation. my guess is that these refiners would end up having to cut refinery runs, because the oil is not replaced very well. just to mention on the other side, venezuela is not going to easily find buyers for this crude either. ,he chinese basically by a lot the russian by some, but they are already at their maxwell -- accepting, and are
2:37 pm
crude in exchange for paying off loans. im not sure there is a market for the venezuelan crude in a short-term. points there,eat and the oil markets are incredibly sensitive right now too. joe, great to get you in here. thank you for that. let's get a check now on the headlines on the bloomberg first word news at this hour with mark crumpton. mark: thank you. president trump said today that dates can count on his administration to dispense emergency funds inefficiently. efficiently.funds he spoke at fema, where members of his cabinet were briefed on the summer hurricane season. forecasting 11-17 named storms, including hurricanes. hispresident continues vacation today. the migration agency among
2:38 pm
margaret trying to cross from mexico into the united dates is up 17%. ,he agency tallied 232 deaths 232 deaths on the route through the end of july, up from 200 for one year earlier. this comes despite a drop in u.s. border arrests, which fell half this year to 140,000. and vote closed counting underway in rwanda's presidential election, in which the incumbent called "just a formality." he won a 2010 election with 93% of the vote to sweep thisd one as well. he is running against the only on the position -- only opposition opponent allowed and independent. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton, this is bloomberg. scarlet: the jury deciding the
2:39 pm
is donemartin shkreli with their deliberation, and they have reached a verdict. we will bring that to you when it has occurred. from new york, this is bloomberg.
2:40 pm
2:41 pm
julia: breaking, a jury has convicted martin shkreli of fraud. this was an ongoing legal case. loosing theed of drug company he founded to pay back hedge managers for the money he had taken. he has denied the charges. he also had unrelated to that, notoriously raise the price of the anti-parasite drug more than 5000% in 2015. this is a man who has been very
2:42 pm
much in the press and vilified at the time for this. scarlet: that is what is critical. vilified, and that part of what he did was not on trial, but it leaves seeped over. his reputation was that he was a bro, andro -- pharma was accused of taking money from other companies to pay his hedge fund managers, but this is what got people's anger rising. julia: prosecutors said he repeatedly lysed -- lied to investors about the seismic assets, when in reality he did not have nearly as much money. he had no more than $3 million apparently. that is significantly less than he was saying. there's is a number of elements to this case. he has been found guilty of fraud. posted: we will keep you on any further details that come along. in the meantime, let's switch back to the market. media stocks are tumbling today led by viacom after that
2:43 pm
forecast disappointed investors. julie is on set with us here. >> especially considering how well the company did last quarter. in its fiscal third-quarter sales, profits beat estimates. hosting its first profit since the final quarter of judy 15 -- 2015. the revenue with a highest and almost two years, and the ceo has been trying to turn viacom around. it looked like last quarter there was progress made, but the forecast is causing concerns here. subscribers to the company's cable tv networks will fall about 3% this quarter, affiliates these -- are going to see these drops as well. that is the issue here. one of the interesting things is apparently the company purposefully cut down on domestic ads so that people would not change the channel. at least that was the goal of some of that reduction. an interesting strategy there. reinvention mode
2:44 pm
for sure. julie hyman, thank you so much. and the.other mover, their shares are sharing -- surging -- amc. hares surging after saying they were cutting back on investment plans after a slow week in sales. office is our box entertainment reporter. right to have you on this show. what is going on here? several months of flops from this industry, and some of the names of the movies out there -- valeri and, king arthur, i had not even heard of. give us a sense of what is going on here for the outlook? mentioned, those films, you probably have not --rd of, but they caught 100 hundreds of millions of dollars,
2:45 pm
but no one was bothering to see them. that is something hollywood is struggling with, is that it is becoming increasingly hard to get people out of their living room. tv, are joined by great amazon, netflix. and both of those streaming services are becoming bigger competitors for film studios. they went on a massive acquisition spree backed by company in china, they spent several billions and have very high leverage. they also face a structural downturn in exhibition, because studios are pushing for movies to come into the home sooner. so they can recoup some of the money that was spent on these movies a bit faster. but -- scarlet: julia: but -- scarlet: amc is not the same, turning a lot more debt because of their expansion in europe and their
2:46 pm
ambitions overall, right? >> the company says they have been using the money and the deal is been funded themselves, but there is a notion of a deep-pocketed shareholder that, should the company get into trouble, could be there to help. now, given the regulatory crackdown going on in china about investment and entertainment sectors, we have seen money flush into this sector. that is on hold now, and as a result amc has said they will be cutting back investment and selling assets. a very different picture now. much, andhank you so breaking news. julia: martin shkreli has been convicted on fraud. take us through the details here. what precisely was he under -- what was this thing
2:47 pm
he was charged with? my apologies. and what specifically has he been found guilty of when we are talking about this fraud conviction? >> he has been charged -- he was charged with a securities fraud. it was not the thing he became infamous or famous for in the eyes of the general public, which was drug pricing at a pharmaceutical company he later ran, but prior to starting that martin shkreli ran several hedge funds it has been convicted of security fraud --ated to those countries companies. he used one hedge fund to pay off losses in another, and pilfered from the drug company in order to finally pay off the rest of the money that he lost -- hat fund.\ sh he has been convicted on the three counts of fraud brought against him. he will likely be going to jail. he could face as long as 20 serve although he will
2:48 pm
likely substantially less than that. julia: what is the average sent us for something like this year ago 20 years is the maximum, but what do we know about him? said, this is not what he became infamous for. i remember in the u.k. he was being billed as the most hated man in america. and --terms of the links length of the sentence he will serve. ? >> that will be up to the judge to decide. i am not a judge. i would not want to speculate on that. it is very unlikely, in most cases similar to this, that anybody serves the maximum. you know, it will be up to the legal system to decide that. it is possible that some of his behavior will come into play. at one point, there was discussion that perhaps -- there was talk of a preview or some kind of play that did not
2:49 pm
happen, and they went to trial. so we will have to see what happens. julia: during this trial, he has been allowed home, blogging, on social media each day. what do we expect him to be able to do if he is in prison? will he be able to go home first or just be sent straight to jail at this point? >> i think the best thing to do is look at whatever twitter handle he is using right now. i am sure he has not spoken his last words on these matters. he has been booted off twitter multiple times after the service found him sexually harassing a female journalist, and he keeps popping up with new accounts or what appears to be new accounts under anonymous names. so i am sure that he will have something to say about this. we have to wait and see when that happens, but if there is one truism throughout the case, hisas not decided to shut
2:50 pm
mouth and stay quiet, even despite the advice of his lawyer. julia: what an interesting case here. -- drew,nk you to thanks you for your insight there. scarlet: turning now to corporate america, when rosenthal retires in november, she will be succeeded by dirk in only three-- cases, was she replaced by another woman. the shortage of female ceos is no doubt an issue, but the larger question is how to address it? here is what the weight watchers ceo said. is a real issue. you have to look at the numbers to know there is a real issue. if you sit back, the issue is around diversity. if you look at excess will companies, they tend to be ones
2:51 pm
that are diverse not just about gender, but holistically -- successful companies, they tend to be ones that are diverse about gender, and also holistically. we have to have companies that will support and allow women to move up, and that will require men committing to that and working closely to embrace the idea that diverse city drives innovation and long-term business excess. scarlet: and the ongoing coverage of diversity and inclusion in the workforce, diversity and management green joins -- jeff us. when mindy talked about diverse city, it is not just diversity in a company's upper ranks of management, but also at the board level. whether you are looking for internal or external candidates, you need a wide pool to draw from. >> right. companies that have a majority female board in the s&p 500 is two.
2:52 pm
diversity at the board level is low, 80% of directors are male, and even when you look at the company's positions below the sea suite, there is not a lot of people being promoted to be ready to service the io the job comes open. scarlet: the candidates that are coo's andped president. what are the numbers for women in those roles? >> if you look at the 27 -- --n to be 24 women set to be ceos in the s&p, only three of them have women ceos. that is not -- coo. so the potential successor is -- >> we have to jump in here. let's listen to martin shkreli and his attorney speaking right now. >> they would love to have a
2:53 pm
complete suite, but five out of eight counts not guilty is, in very good verdict, especially because count seven, the main count that impacts on the lawson's case, the retrofit lawsuit, that was the most important count in the case from our perspective. for martin to be found not guilty of that count is a very, very good result as far as we are concerned. this was ak that difficult case, primarily because of the anti-shrilly -- martin shkreli sentiment, and this jury acquitted martin of five out of the eight counts is a real testament to a trial by jury. also, to be honest with you, the testament to the importance of advocacy. verdict, as ithe now stands, even if all of the counts survived posttrial motions, will permit this court
2:54 pm
to impose a very lenient tenants, in her discretion, as in count was rejected by the jury, and that was the key count in terms of potential advisory sentencing guidelines because of the amount of money that was alleged in that account. like to make a short statement, but if you have questions, please direct them to me. i would also like to thank our this was indeed a team we had an i think interesting trial. thank you very much. >> thank you very much. i think then said it all. we are delighted in many ways with this verdict. seven waswas -- count the government attempts to theorize that i rob peter to pay paul, and the jury has spoken conclusively that my company was
2:55 pm
not brought it in this case. my investors made three-five times their money without any aid of settlement agreements, some of them made 10 times or more than that on their original investment after they did receive settlements. i think the jury did their job, and i would like to think ben, the greatest lawyer on the planet. and paid risk on me off. thank you very much, and mark, who is a great excess as a lawyer, and -- whose great success as a lawyer is extremely noteworthy, and penny and andrea, who worked around the clock to advise these non-guilty verdict. so we have some work to do. i think that the jury has found and it is in the record clearly that there were no losses that all with respect to counts three and six, which gratifies me personally. this was a witch and of epic proportions, and maybe they found one or two broomsticks,
2:56 pm
but we have been acquitted of the most important charges in this case. if you have any quick questions, we will take them. if not, it is a nice day in a ruined should try to enjoy what is left of it. i'm sorry? >> your posttrial motions? >> there is nothing to appeal from the acquitted verdict, and in respect to the verdict that he was convicted of, we think there are serious legal motions certainly with respect to count eight, which i think is hanging by a thread legally. three andct to count six, we need to review the .ecord the important part of this verdict gives the court enormous discretion in the kind of sentence that she could fashion, and allows for a sentence that does not even have to include incarceration, and if it does, to be honest with you, a much, much, lower amount of
2:57 pm
incarceration than the government contemplated. the drug company was the money count, and that factors into the sentencing guidelines, even though they are in pfizer he. -- advisory. >> we believe right now there is no loss, and if there is, the advisory guidelines could be extremely low. the judge has the discretion to impose any sentence she deems appropriate. >> i comment very, very briefly that i was terminated. this has nothing to do with this current case. litigation, like anyone who has looked at that employment agreement understands that my employment was terminated prematurely without any cause. i had risen, taken that stock price from an idea in my head to a half $1 billion company. i was terminated by some bad actors. some of that came out in his
2:58 pm
trial, and the litigation is for many tens of millions of dollars. i think based on the outcome of the arbitration, which was won by us, and regarding one of the consultants,ll -- we will be getting a very large check in the near future. >> i think the verdict undermines the merit of the n lawsuit come because he was found to have not alluded richer open at all. -- the company at all. it has great impact on that civil lawsuit as well. i'm sorry? >> [indiscernible] >> i think that is a ridiculous question. my first choice of person? for you or your -- for martin? next question. is ank this verdict
2:59 pm
reasonably good verdict, under the circumstances. i think we need to regroup and see what legal motions remain. but right now, if you are asking but 90%ot 100% please, please. >> [indiscernible] well, i think this case had a flawed theory, which was that had exposed. the controversy surrounding martin, god bless him, is sometimes not helpful. if you are asking if that factored into the decision to bring this lawsuit, i think it did, but that is not where i want to spend my time now. >> [indiscernible] withthink i am impressed the amount of effort put into the jury's work, and i think they listened to many of our core arguments and obviously did not go in their intent -- in
3:00 pm
on convicting martin shkreli because he was martin shkreli. so we got reasonably fair peopl. whether their verdict is 100% accurate or not, we need to review the transcript and the verdict. but on balance, count seven was the heart of this case from the beginning. it was a complaint that martin robbed money from his own company to pay back people. and that theory was soundly rejected. >> [indiscernible] >> we're not going to discuss that. there were never any substantive -- >> [indiscernible] >> let me answer that. ok? forin has some work cut out him in terms of trying to undo he wasage which i think
3:01 pm
unfairly given when the whole came out, raising the price. no one has ever been deprived of of the medication. martin is a brilliant young man. it but sometimes, people skills don't translate well. so we will have some good discussions. but at the end of the day, i think martin has held his own in despite thend issues that travel with martin, we are here smiling even though it wasn't a clean sweep that we would've preferred. >> [indiscernible]
3:02 pm
>> i will do everything i can to convince the judge in jail sentence is not appropriate. appeal thatll an would be brought here. there is no prison time for martin. have the entire federal government, including parts of congress you may have noticed. it is a scary feeling. it is a daunting thing to feel the weight of the government on your shoulders. there is maybe one man that could make that burden a little bit easier. there's anything that pales in comparison to the peoplee of dealing with trying to squeeze you and saying we don't think you have your backs right.
3:03 pm
we fought back and we feel like we won. >> what are you going to do next? continue is going to to find and develop drugs for the treatment of rare diseases. and to be honest with you, if at the end of this, martin is spared a prison sentence, one day, you will read about martin having developed a cure for some of the illnesses that are taking young children and martin will devote his genius and his talent to those efforts. it will be better for america, the world, that if martin were to be sent to prison. -- van if martin were to be sent than if martin were to be sent to prison. >> [indiscernible] >> i have never had a case like this. to overcome the prejudice we
3:04 pm
have faced is a testament to a fair judge that tried very hard. if it's the jury that tried very hard. i want to say something to the media at large. most of you have been my friends for many years. i did not read a single article in this case about our trial that did not include a reference to the controversy surrounding derek graham -- daraprim. that there is a need to try and inform the public, i hope tomorrow's reports show that martin shkreli went to trial and despite being martin shkreli, he won more than he lost. were just listening to the impromptu news conference hosted by martin shkreli and his
3:05 pm
lawyer that mentioned he was 90% pleased with the verdict. delighted was his exact wording. he was found guilty of three counts including securities fraud and conspiracy, not guilty on five counts. his lawyer was saying he will be speaking with the judge to determine if a jail sentence is appropriate. appropriateit's not and he did not say if they would appeal the ruling. julia: they were delighted. they talked about it. the longest term you conserve for this is 20 years. but he seemed pretty confident that this would be a very small sentence if not know jail sentence to serve. we will continue to watch that going forward. down guilty on three out of eight counts. scarlet: he won more than he lost his what his lawyer said. it's go back to our discussion with the diversity management reporter in detroit. we were talking about the
3:06 pm
difficulty, the rarity of female succession at the ceo level. we talked about how there are internal challenges and external challenges whether it is a lack of diversity from internal candidates or at the board level that would look for a next journal candidate. -- female a bit about --s tend not to have men they tend to have men as cfo's or president. at the top look executives, the majority of people in the position to succeed are men. and women tend to be in a role that is not operational. when you look at who the ceos are, their job is most likely operational. p&l.volves some sort of if you're the ceo, he had to run something. but women are not in those roles and that is what everyone points to. opportunities to
3:07 pm
like a position to feel ceo or it won't happen. thelet: once women reach top job, there is research that show men and women are judged differently. theirare judged by performance, men on their potential? a pretty: that is common reaction to how women are perceived in the job. time, a woman ceo is likely to have an activist come after her and for men, it is almost zero. scarlet: and one final point you made in your story is that activist investors tend to have a history of targeting companies where there are female ceos. tell us more. mr. green: that is the kind of research that is out there. you are more likely to have an activist take a swing at you.
3:08 pm
they have not been able to figure out if it is because they are women. or if women are put in charge of companies with risky positions. take a gander at it, try this and see what happens. one way or the other, it is much harder to be a woman ceo. think you for joining us from detroit. julia: that makes me mad. less than one hour from the close of trade, let's get a check on markets with julie hyman. julie: at least we are all here, julia, if that's any consolation. three ladies on air. we are seeing some gains here today, though they are not runaway gains. they are enough to put the dow at a record with all three rising in the wake of this morning's that are than estimated jobs report.
3:09 pm
those gains also mean that we are seeing a drop in the text below 10. it popped above 10 the last couple of days and is back below once again. as you here in the options we will seeuently, an upturn in volatility. soe is the vix this year far. and seasonally, the average we have seen going back to 1990. the pattern of the year is you see low volatility in summer and it comes out once again in august going into september and october. this year has been unusual in a lot of ways, including that volatility has been pretty regularly suppressed. back to today's session, let's look at the big movers we have been watching. latebreaking stories including one on wells fargo that i think we will talk more about later in the show. the company is now expanding a review that could lead to the bank finding significantly more .ases of fake accounts
3:10 pm
it's as legal charges could surpass its reserves by $3.3 billion. automatic data processing, adp tries to make changes to the board. adp is pushing back against that. higher, taking a leg lower but then coming back up after wall street journal said google was going to plan snapchat like media content. it's unclear what that would be from the description. but investors have come back after the initial leg lower. scarlet: as julie mentioned, we will talk about wells fargo now. expanding a review that could lead to the banks finding significantly more cases of fraudulent accounts. let's bring in jenny that covers the banks for us. tell us what we know so far. jenny: he did a quarterly finding today and there was considerable news. the first one is they announced
3:11 pm
the legal cost of this whole saga. it might reach $3.3 billion and the previous estimate was $2 billion. the legal costs mounting there. it's beyond what they reserved for. clear, it'sto be gone from $2 billion to $3.3 billion, none of which is reserved for? jenny: they have reserves, and this is beyond what they have reserves for. a number that investors are paying attention to and a little worried about. scarlet: they also have a new investigation -- julia: they also have a new investigation by the consumer financial protection bureau. jenny: it is a separate matter but all points to this idea, what going on at wells fargo. what will it take to clean this bank up? wells fargo is the bank everybody pointed to during the crisis. droip ofhat drift of --
3:12 pm
bad news. julia: what can we expect given all we have seen. jenny: one of the big things they've also announced. the significant more accounts is where they are seeing that from. it is way longer than they previously thought. are expecting more from that and involved in the auto saga where they were charging customers for auto insurance they didn't need. that is also expected to come during the third quarter. a lot going on for wells fargo, wells fargo customers, and investors. scarlet: the cfpb looking if customers were harmed. not great news if you are a wells fargo shareholder. julia: collateral damage trying
3:13 pm
to investigate the damage. jenny: it seems like they started this probe and it kind of came out. looking at all the different fraudulent accounts that were created and slowly uncovered a lot more that was going on. the regulatory filing points to a lot of that. scarlet: i like the way you put it, the drip, drip, drip of bad news. wells fargo stocks off the lows of the session, but still lower. julia: next, we go live to a manhattan courthouse where martin shkreli was just convicted of three of eight separate charges including securities fraud. more next from new york. this is bloomberg. ♪
3:14 pm
3:15 pm
3:16 pm
scarlet: this is bloomberg markets. i'm scarlet fu. julia: i'm julia chatterley. back to martin shkreli convicted left than an hour ago on three of eight counts of securities fraud. joining us from outside the courthouse in brooklyn is number of news legal reporter. great to have you on the show. of the three of eight counts here, what precisely has he been found guilty of? and what has he not been found guilty of? just a few moments ago, the jury delivered their verdict to the judge in the eastern district of new york courthouse. they found martin shkreli guilty for securities fraud and for conspiracy. it for lying to his investors in
3:17 pm
the hedge fund he ran. the prosecutors presented what they call an avalanche of evidence that shows that martin shkreli lied to his investors about how much money were in the funds. he lied to investors about his track record, leaving out the fact that his hold -- his old hedge fund had blown up. they lied about his background saying he graduated from columbia when he never went to columbia. and for that, for deceiving investors in telling lies to them, is being found guilty and facing up to 20 years in prison. julia: what will stand out here is how happy his legal counsel was there and how happy martin seemed to be. they pointed out there that there were no losses. as much as he was found guilty of lying to investors, they made money here. they seem to assume that he
3:18 pm
wasn't going to get anywhere near likely the mac from of 20 maximum of 20 years. >> he got off of five counts. this is not your usual white-collar crime case. did not leave a trail of destruction. he made his investors hold by .iving them shares and investors sold though shares, they made thousands of dollars or even millions. -- initial investment double the witnesses came to testify for the prosecution and weighed heavily on the minds of jurors. scarlet: that is pretty incredible. tothat end, are you going
3:19 pm
appeal? he did not give an answer one way or another. misyrlena: that is exactly right. what we will be looking at next is what will be happening moving forward. citing tainted jurors, this is a high-profile case. it has yet to be determined. what is interesting to see is if the prosecution will make an effort to remand martin shkreli and taken into account immediately. that is still yet to be determined. martin shkreli still facing as many as 20 years in prison. his sentence is set to take place later on in the year. scarlet: thank you so much for that, thanks to misyrlena e gkolfopoulou. will big tech keep climbing? we are tracking the nasdaq 100, the q qqq. this is bloomberg. ♪
3:20 pm
3:21 pm
3:22 pm
julia: this is bloomberg markets, i'm julia chatterley. scarlet: time for options insight with julie hyman. me today is kevin kelly, managing partner at kelly and company. we have been talking going into this about the low volatility. i feel like a broken record. mr. kelly: we all do. julie: you are looking at the nasdaq 100 today. mr. kelly: most of the gains have been led by technology this year. if you look at the correlation between technology and the overall market, you have a 90% correlation. the way tech goes is the way the market is going to go. about august,ried september, october. heightened times of volatility. the tech companies, when you look at the nasdaq 100, they have reported already.
3:23 pm
the volatility is that 14 compared to 10.3. what is that telling you? one month out, people expect volatility to come back. what you want to do is play the index options. going to india next. -- go into ndx. you want to do the 58 25 put. in order to finance that, you want to sell the 5400. and it will only cost you about one point 4% as opposed to buying the puts themselves which is 2%. market.s led this a are the ones growing revenue. they are dominating globally. if you think about it, half of the revenue oversees the benefit
3:24 pm
from a weaker dollar. you don't want to sell all the money calls. this is a great way to buy the put spread. people areou say, betting volatility is going to come back. have we seen an uptick in activity? go up aseen the price we see more people think they are going to see some downside. mr. kelly: it is relatively elevated compared to historical normals. , todaygo to utilities people came out and traded three times the amount of puts. that is pretty significant. julia: and utilities. mr. kelly: in the xlu etf. people are picking up in certain sectors and not the overall market. which is telling. if you look at the other sectors, it is the minimus
3:25 pm
trading. julie: it was sort of yield driven, right? financials doing well, utilities not doing well. do you think that, until the next fed meeting, we will continue to see -- in the absence of earnings -- that we will see this rate driven stock market? that will feed back into it? mr. kelly: it really is rate driven. the market move up was based off of janet yellen and her comments saying we will not get to normalized rate historically. there was risk gone from there and people were rotating out of defensive names like utilities and into highflying names, cyclical names, which was pretty telling. happened, you see the volatility come down to be near where the s&p 500 is. we see in 40% elevated. it is pretty telling right now.
3:26 pm
you start to see some bifurcation in certain sectors. that is why investors need to be conscientious with a are starting to place that and look at the sectors. -- place bets and look at the sectors. julie: you outlined the trade, but let's put it up. buying that put, the october put. selling the other put. mr. kelly: it's a great way to hedge yourself. you can see the risk reward is in your benefit. kevin kelly, thank you so much. managing partner at kelly and company. back to you guys. scarlet: still ahead, berkshire hathaway reporting results. from new york, this is bloomberg. ♪ ♪
3:27 pm
3:28 pm
track your pack. set a curfew, or two. make dinner-time device free. [ music stops ] [ music plays again ] a smarter way to wifi is awesome. introducing xfinity xfi. amazing speed, coverage and control. change the way you wifi.
3:29 pm
xfinity. the future of awesome. mark: time now for first word news. special counsel robert mueller is using a grand jury in washington as part of an investigation into potential
3:30 pm
coordination between the trump campaign and russia. that's according to people familiar with the investigation. mueller is reportedly turning to the washington grand jury in addition to one in alexandria, .irginia the use of the grand jury suggests his team of investigators are likely to hear from witnesses and demand documents in the coming weeks and months. says heime minister hopes european union leaders will see enough progress on some of the challenges facing northern ireland as britain exits the block. before he attends a summit. belfast.today and >> we need an answer to a very simple question. who do i and who do we in europe speak to? who will speak for northern ireland and her 1.8 million people? time is running out.

518 Views

info Stream Only

Uploaded by TV Archive on