Skip to main content

tv   Bloomberg Markets  Bloomberg  February 2, 2016 12:00pm-2:01pm EST

12:00 pm
markets. ♪ bloomberg world headquarters in new york, good tuesday afternoon. alix: here is what we're watching this hour. the slide in oil prices continue very tha. that is weighing on global stocks. can investors in china turn it around? ofst, we want a snapshot market activities. we check in with julie hyman. declineening oil continues to weigh on stock. ks. julie: it does. as terrible as this year has felt we has not had this kind of losing streak since the very beginning of the year. -- it is not in the
12:01 pm
not even that deep. downages arepened one and a half percent each. we're seeing the biggest pain and energy on her present the spirit of financial drop over ubs earnings, and insurance earnings in the u.s.. we have some smaller cap industrials with disappointing earnings and same for consumer discretionary. yes we have the royalties we you have thees royalties of it, but you have the regarding these of it as well. the market cap of alphabet has now surpassed that of apple. withmunster now coming out a note, expressing trepidation
12:02 pm
about that idea. that could be waiting on apple shares. the market cap rate is very interesting. alix: gene munster is the one for apple50% of side shares five september. so this would weigh on the stock. has it been a one-way move today? been prettys have steady. but if you look at while you are seeing somewhat of a bounce off the lows of the session. about 5%.l was down now it is 4%. you have seen a little bit of a bounce there. gold prices are interesting because we have seen buying of gold as a haven in what is a tumultuous market. that has now changed with old gold prices off the mark. there is a measure of fear in the markets. it has been coming a little bit down today, off of its highs of
12:03 pm
the day. perhaps signaling that maybe people are not that concerned about the lasting nature of this. alix: thank you. withet: let's check in first world news this afternoon. mark crumpton is that artist desk. mark: the first test of the 2016 residential campaign ended up with results that many found surprising. in the iowa caucuses texas senator ted cruz won the republican vote while hillary clinton and bernie sanders were net connect. hillary clinton edged out the senator from vermont. florida senator marco rubio did a better than expected with 23%. here is senator cruz last night in des moines. >> tonight is a victory for the grassroots. [applause] tonight is a victory for courageous conservatives across
12:04 pm
iowa and all across this great nation. republican mike huckabee and democrat martin o'malley have dropped out of the race. the rest of no head to new hampshire. the pentagon will ask for 35% increase in funding to stop islamic state. the u.s. military also wants $3.4 billion for european-based authority initiatives based on countering russia's aggressive moves toward ukraine. the world health organization is that unit -- unicef is asking for $9 million to help fight the zika virus. the process is slow in switzerland, and expectations for the syriangh
12:05 pm
opposition talks. they are working to negotiate directly with each other. dayal news 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world. scarlet: back to you. thank you. the white house is heating up even more with the primaries officially underway. but regardless of who comes out victorious what we have seen on the campaign trail flex a broader trend. our nextording to guest there is an increasing number of people feeling there is a broader benefits of globalization. a former economist at goldman sachs, the imf, the world bank, and the danish central bank joins us now from london. you have all of these contenders. explain the rise we have seen.
12:06 pm
>> it is a disturbing time we have seen. my point that you are referring to is that we have had about 35% years with huge gains for everybody. but if putting a lot of strain on america is on europe, particularly for the lower wage saw this moving away. we saw them getting frustrated, and you see demagogues, or people with very simple solutions to very complex issues pop up. this is what you are seeing unfortunately now. alix: it raises the question about what can one do about it? we heard from stanley fischer that it is not up to the fed to do it in the about income inequality.
12:07 pm
they cannot change that. >> absolutely. it comes down to fiscal policy. to be honest, i think the answer is quite clear. most of the middle ground politicians seem to be catering crazy ideasto by the extremes, but the dancer is you need to spend more money on education, you need to spend more money on public investment generally, and then we have to address the issue of income distribution. you have to have a distribution from the wealthiest 10% or 20%, to help those in the lower end of the range who have struggled to move up the value-added chain. offeel that they are a part the goodies that come from globalization. what is a monetary policy is what effect does next with regard to interest rates. he cannot predict the outcome of the next march meeting. do you think will
12:08 pm
happen? do you think they will go ahead with the interest rate increases? >> i do not know either. [laughter] we think they are going to do three hikes this year. the fourth seems a stretch for the markets seem to think it is less than two. better against the market on this one. they are worried about developments in the market, but before i got on here, i heard the gold prices. equities are confused right now. they should not run in pair with goldprices as low prices are good for equities. they may not do anything next time, but there is still plenty of time this year for two or three hikes. scarlet: you mentioned that
12:09 pm
equities are confused and you said they should not move in line with oil prices. is this harmful to the economy? >> the call is closing in america because of this. be no doubthere can that the lower oil prices are very good for consumers, and about 90% of businesses. this is a very good thing, and people are getting confused about it. it is a positive, and i bet my money against the very happily. alix: oil prices, does a two effect theprice high-yield fund. the argumentmake that it is substantial and there is systemic risk? >> there is a risk, but i do not thee with the market that
12:10 pm
russians, the chinese, and whoever are hurting, they sell equities. that is not usually what we saw. we saw when they needed cash, they sold securities. this is the first pilot money that they tried to liquidate, and not equities. we have not saved witeen the sao services -- disturbances. anytime time you take a key price like oil and move it dramatically, there are winners and losers. increased risk, the baseline is still that this is positive for the whole area. scarlet: the bank of japan took a risk by cutting interest rate, or adopting a negative interest rate policy. i want you to hear with stanley fischer had to say about that. >> countries that have used
12:11 pm
this, continue to use it. they have not given it up. we even have the danes undertaking a contractionary monetary policy. they are going from minus five basis points to -65 basis points. it is working more than i can thathat i can expect it -- i expected. alix: it is working more than he thought, so where else white we hear of negative interest rate? >> i respect him deeply. he is a superstar. but i hate negative rates. they are so fundamentally crazy. in denmark they messed around with this. you do negative interest rates to punter kersey on a downward pressure. i'm completely sure this is why the japanese did it also. the danes did it for this
12:12 pm
reason, the swiss did it for that reason, the swedes do it for this reason. worsttroublesome that the central banks are increasingly targeting this, but it is unannounced and uncoordinated. it is not good for markets. scarlet: it is another stage in the currency war. >> there you go. agree that oned of the reasons that he joined the fomc is that even in the states the fed no pace much more attention to external environments than it did in the past. that influences the extremes rate. -- the exchange rate. it is because of a burden has been put on the central banks. it is because the fiscal policy does not want to see to play a natural role. alix: always a pleasure to get your thoughts. up in the next 20 minutes of bloomberg markets
12:13 pm
command has been a bumpy road for yahoo! recently. will the company's fourth-quarter results be enough to restorre investor confidence? ? david einhorn lost $3.2 billion of assets last year. can he turn it around? scarlet: and will be see an end to the country's economic slowdown? ♪
12:14 pm
12:15 pm
alix: welcome to bloomberg markets. bloomberg now for the business flash. the biggest business stories in the news right now. shares of exxon mobil are following today. they're cutting the drilling budget to a 10 year low.
12:16 pm
they are also holding share buybacks while trying to deal with the slumping oil markets. scarlet: dow chemical ceo will leave the company after the completion of its merger with dupont. a trio ofeate separate businesses focus on commodity chemicals, agricultural products, and materials. dell posted there fourth-quarter earnings that beat analyst estimates. google parent also that has overtaken apple to become the world's most valuable company. they reported higher profit and sales fueled by a moving out of business. booming added business. that is your bloomberg/update. investors will not just be looking for the numbers at yahoo! today.
12:17 pm
they're looking for clues that they can become irrelevant giants again. scarlet: since marissa mayer took the helm in 2012, revenue has declined more than 10%. ceos have tried to turn the company around, and all of them have failed. many investors are saying that this time is no different. let's turn to victor anthony. the core business is not in question, it is all about the road ahead. >> it is about whether or not they choose to sell the company. i agree, the six ceos have all failed. it is a challenged business. i think any ceo would have a hard time turning around yahoo! i personally think that they should sell the company. anything short of an announcement that she is actively looking to sell, i think will do nothing but hurt the stock price. alix: the stop is already down 30% in the past year.
12:18 pm
a lot of the bad news is already baked in. if we do not hear anything concrete, what then? >> i think it will be week. -- weak. been a lot of press about cost cuts. that is fine, it helps you work more efficiently. but the only thing that will work is the monetization of assets. scarlet: more than one third of yahoos workforce has left, voluntarily or involuntarily over the last year. this is stunning to me. nothing has changed. what is the value of yahoos talent pool at this point? if the company does selloff parts of its business, are the people and the cash valuable? >> it depends on if you send them. contract them to stay with the organization, to work as part of possible -- hard as possible. the brand ort
12:19 pm
the people that is more valuable? >> it is the people in the workplace ultimately d efine what's the brand will be. me iswhat is confusing to that they say twitter gets credit for its 320 million monthly active users, even though their business model is not working either, but yahoo! one million users, but get no credit. >> twitter has its own set of challenges. i think it can be overcome over the next two years. right now the pullback in the stock, if you look back in hindsight will be a good buying opportunity. yahoo!, they have a hard time monetizing those users.
12:20 pm
roadmr, there is a ap, there is a potential google integration. with to give them time to play out. i'm not optimistic that yahoo! will monetize those users over the next year as long as they are a public company. scarlet: does yahoo! due to be taken private? what kennedy was a private company -- what can it do is a private company? >> there are investments that they need to do to expand the product before they give people and advertisers back onto the platform. alix: we will not hear of a turnaround plan right away. what will be the number you focus on before we hear from marissa mayer? >> i will be focusing on revenues. those numbers have to be had initially before we have any sort of restructuring plan or sale of the business over the next year. alix: deliver some things before you hear about the plan. do you think there will be a buyer on the sidelines?
12:21 pm
who would make a good pair? >> there have been multiple in the equity interests stock, verizon as well. behind-the-scenes i'm hearing that others have interest as well. there are potential bidders for the company. scarlet: thank you for your time today. alix: we will give more insight into silicon valley on bloomberg west tonight. tune in for that. scarlet: still to come, breakout moves at all for that and google. we will have the latest, coming up. ♪
12:22 pm
12:23 pm
coryscarlet: welcome back to bloomberg markets.
12:24 pm
let's head to our markets desk were julie hyman is taking a closer look at how hedge funds are performing. julie: hedge funds and not been doing well. we have been talking a lot about this thing over the past year. we saw a lot of hedge funds of pressures.ause green light also did poorly, losing about 20.4% last year. $800tors pulled about million from the fund, although it has recovered 1.4% in january. one way to look at this hedge lg on theo look at sn bloomberg terminal. as of september 30 for green light, because we have
12:25 pm
to rely on filings that already have been made. the top three holdings at that time, don' apple, general motors, and coors. let's take a look at how they are doing today. apple, as we talked about earlier can is declining today. the same for general motors. michael kors is roaring back after a relatively weak performance. quality sales were strong. if you look at the last year for these three stocks, it gives you an idea of why green light has struggled among its many competitors. can see all of these stocks are lower over the past year. not only lower, but have underperformed the markets. it has been a really tough environment, even though everyone lately has been talking about stockpicking. pick the not
12:26 pm
right stocks, you have a problem on your hands. alix: $600 million of that drop could be because of redemptions, which is very small considering other hedge funds that have had to close. investments are about less than $10 million a pop. can kind of sit through and waited out when those stocks do not work out. julie: can have strong brand equity as well. by david einhorn, you are getting his perceived brilliance. scarlet: we will be back with more. ♪
12:27 pm
12:28 pm
12:29 pm
alix: from bloomberg world headquarters in new york, welcome back to bloomberg markets. scarlet: let's start with the headlines on first for news. mark crumpton has those from our
12:30 pm
news desk. the rearviewwa in mirror, the presidential candidates now turn their attention new hampshire -- two new hampshire. that state will hold their primary one week from today. megan murphy joins us now from manchester. thank you for your time. last night's results in iowa, hillary clinton barely beat bernie sanders, and ted cruz with a surprise win over donald trump. how will this change the campaign over in new hampshire? have they clinton will same strategy she had before, which is as much interaction on the ground as she can. this is a very different composition in iowa. she will go to three or four different schools, she will do rallies. it is a state of rewards one-on-one interaction. for donald trump, the question is how he will come back in new hampshire. there is a huge double-digit lead in most polls over ted cruz.
12:31 pm
rubio is making up ground after that strong finish last night. mark: the on mrs. clinton's plane last night. what was the mood? when they having flashbacks to 2008? name wentth a funny on to capture the presidency at that time. >> i was only on the press plane. but the mood was quite defiant. and veryry careful, much emphasized to the press that this was a win. she has removed the ghost of 2008 from iowa. she is trying to paint this that this was bernie's to lose. i do not think a lot of people by that, they know how much time she invested in iowa, how focus she was on not having what happened in 2008 happened again to they might want to say a win is a win with a bernie sanders campaign is thinking a tie is a win this morning. or break forake
12:32 pm
some of the candidates in new hampshire's. . which ones? >> some of the french establishment candidates like john kasich. we need to see how marco rubio performs. it is to get some establishment points around him. it is also make or break for donald trump. wind will bethe out of the sales for that campaign, and he will fall off the map. mark: thank you. global news 24 hours a day, powered by or 2400 journalists in more than 150 news bureaus around the world. back to you. alix: thank you. the chinese government is stepping up efforts to ward off a potential financial crisis. banking executives had been warned of risks. scarlet: joining us now with more on china, tom orlik. and from washington, a chief
12:33 pm
economist from china facebook international. tom, give us your adjudication of these latest measures. they have tried to implement a number of different measures, most of them have not been successful. how do we put this into context? >> there's a huge amount of selling pressure. china has been hemorrhaging the exchange reserve, and that cannot go on forever and they are imposing much tougher capital controls. that is why we are seeing this over the last few weeks. arguments aremain that if you're more bullish, china will get it under control. if you're more bearish, you are looking at the massive amount of debt that the country winds of happen -- winds up having.
12:34 pm
what are you in? .> i've in the bearish camp i've been anticipating the problems for a while now. one of the clashes that people do not realize how deep the holiest. they d-- the whole but china isn is.le of the problems, a transition from an industrial economy to a services driven economy. how long will that rebalancing effort take? some say we are halfway through and seeing the benefits of it. but others say it has not begun. >> there is a long way still to travel. we have started to see the services sector play a bigger role. we have started to see consumption play a bigger role
12:35 pm
at the expense of the smaller roles for investments. huge has been a distance left to travel. balls tendhing the to ignore. but the bears tend to ignore the space in policy that china has china stilluver -- has to maneuver. we will see more of that in 2016. alix: we also heard today that the government is making it easier for a first term mortgage. what do you think is the breath that fiscal policy? >> i have two objections. simple,t objection is we do not have a record of china implementing use all fiscal policy. the grand physical announcement in november of 2008 actually turned out to be monetary stimulus in 2009 and 2010, which
12:36 pm
will no longer work. question. invitation but the more fundamental question is fiscal policy is supposed to enable reform. the reforms are not there. there was some talk in 2013 emma it has not been implemented. the number one reform would be shrinking the state sector, and they are not willing to do that. until they are willing to do that, fiscal policy is a sideshow. >> in 2015, we are already seeing a big significant acceleration. sending was up -- spending was up year-over-year. is alreadyhat china doing, not that china has to do. on the more substantial point on whether the reform is stalled or not, i think with the bears ignore is that even though china has been stimulating growth, they have kept the reward momenm on the reform agenda. using interest-rate, while they try to boost.
12:37 pm
>> we do not know. tom is citing the beginning of a fiscal stimulus program as china knowing what it is doing. i can see china wasting 15 years of enormous money while saying s what it is doing. but we agree on the reform side. thomas talking about liberalizing interest rates. i do not care. if they are still in collusion among state banks, and the --erest rate globalization liberalization is not real, you have to move the acid out of state control. scarlet: what you anticipate to happen while this week of breakors getting a happens? >> a huge amount of liquidity
12:38 pm
into the system. to ensureat is stability over this holiday season. my bet is they are going to succeed in ensuring that stability. tox: it is fascinating hear that it is not just now, it is about what happens later. thank you for joining us. scarlet: we will be back with more bloomberg markets after this. ♪
12:39 pm
12:40 pm
scarlet: you are watching bloomberg. alix: this is your global business reports. scarlet: oil giant bp is pulling
12:41 pm
back the curtain on how much the commodities route is impacting its bottom line. well securities businesses take a hit. scarlet: and a tire between two of the biggest retailers in the u k. between two off the biggest retailers in the u.k.. first let's start with bp, were fourth-quarter earnings tumbled 91%. the collapse has no driven bps market value below $100 million . >> we have watched the supply and demand figures carefully. our economics group, which will usin outlook sure the, gave some insight on late 2013 that this was coming. we have been saying this for a long time. lower for longer, but not lower forever. alix: china national chemical corporation is said to be make ana deal to
12:42 pm
acquisition for $43 million. it would be the biggest in their history. wo keys, profit in t units fell in the fourth quarter. here's the ceo on the challenging time. >> i think when you look at the dynamics of the fourth quarter, and you look into our generous stars, you can seen a trend continuing. a high level of risk aversion. people are happy with their asset allocation in general. but they are paralyzed by high volatility, and also the geopolitical macroeconomics they usually see. retailers inll the u.k. have agreed to combine. they are fighting back from competition from online
12:43 pm
retailers. providing context and background on issues of interest. today's topic is why central banks are going negative. this unorthodox choice is distorted financial markets and triggered warnings that the strategy could backfire. here is the situation. several of the central banks have had interest rates going backwards. in this scenario begs and japan are not charged a fee on new reserves deposited at the central bank. the idea is to encourage the banks to lend the money and to spur the economy. the first major central bank to venture below zero with a year-and-a-half ago. denmark use them to protect the currencies hike. by the end of 2015, about a third of the debt issued by eurozone governments had negative yield. right below zero have never been used before in an economy as
12:44 pm
large as the euro area. while it is still too early to find out if it will work, mario draghi said that there are no limits on what he will do to meet his mandate. at the heart of his action is policy makers trying to prevent a slide into deflation. the eurozone is rippling with a shortage of credit and unemployment at its highest. since 1999. there is risk that the policy might do more harm than good. -- ifcustomers also pay customers also have to pay to store their money, there could be outflows. banks have not passed these on to their customers. countries are engaged in a currency war of competitive devaluation, is the word. alix: for more stories, visit abigail to bloomberg
12:45 pm
doolittle who is live at the nasdaq who is looking at a few winners today. fewattel is one of the bright spots, it is the top percentage performer after the toymaker fourth quarter estimates with barbie coming back. they raised their rating to a buy. it is important to remember that the stock is about 40% from its peak back in may of 2013. more recently showing a sign on bottom turnaround hopes. it is probably too early to call. another winner today, facebook. shares happy fourth record high in a row with a bullish reaction to the blowout report. investors are favoring the winners in this difficult environment. today's big winner, alphabet. surpassedet giant has
12:46 pm
apple in its market cap on the heels of a very strong fourth order, beating estimates. that was driven by the core business, google. made $23, alphabet $.23 in profit. profit.3 in back to you. scarlet: thank you. as abigail mentioned, alphabet overtook apple as the world's most valuable company. alix: we talked about their $3 billion spending. >> $3.6 million was the operating loss for the moon shots of the other bets for alphabet. it iss a big number, but in the context of $75 billion of revenue, and it is a very healthy profit margin that is top andon the bottom line.
12:47 pm
>> are they the only ones that do this? >> we see it across the board from tech companies. theye set the stage with went public. they said we will take 10% of our operating expenses and put it towards these moonshot. they said that right in the perspective. there were very clear to the marketplace, and a lot of the tech companies that have come after them, including facebook, desolate halves of spending. speculative spending that they hope will pay off for their business. >> we all know it takes an extraordinary amount of money to start the process. it could end up a highly profitable. >> is going on with the fiber business is more broadband, higher-speed broadband, to more parts of the country. initially, that would drive more consumer usage of google and other internet services. quite frankly, google fiber has prompted the cable companies to step up their capital spending to improve broadband cable broadbandin this --
12:48 pm
quality in this country. google is the dominant search engine globally. it is higher internationally than here. they are the biggest mousetrap by far. but the one thing you mentioned in the context of facebook, they do not have a social offering. social a potential that they would look at twitter for example, which is something we hear. wery time twitter stumbles, hear this murmur. >> what would you use to compare the likes of google and apple? >> market capitalization is the one, and all you wish and as the other. but i think what the market place is looking at a stoplight growth. as the economy slows globally, people are looking for growth. one of the areas that consistently delivers growth is
12:49 pm
technology. sizeook at a company the of google with $75 billion in revenue, still growing as revenue at 20% per year consistently, with no bells and whistles, just consistent topline growth and spending, that was compelling to the marketplace. was our bloomberg intelligence director of north american research. scarlet: business school getting even bigger at cornell university. we will be to the dean about this new venture. ♪
12:50 pm
12:51 pm
alix: welcome back to bloomberg markets. scarlet: cornell's making business figure. the university will merge its business focused institutions into one college of business. compete with other large business school? we faced to the dean -- the to the dean, joining us from
12:52 pm
ithaca. cornell announced this proposal in mid-december. approved of trustees it at the end of january. they will begin operating this next academic year. what is the rush? >> no rush. we've been talking about integrating our three accredited business schools into one comprehensive college that maintains the distinctiveness of our business schools, but expands opportunities where our students and faculty. we have been talking about that for several years. on saturdayte allows us to begin the detailed priority process -- planning process of what's that integration looks like. the johnson graduate school of management is now very involved on roosevelt island. this is an opportunity for the other schools to become involved. how to align curriculum, how to organize our faculty. we are about expanding on entrepreneurship program.
12:53 pm
we expect it will launch sometime in the next academic year, but we anticipate there will be a little bit of discussion with our faculty, students, staff, and alumni, to put this college of business into effect, retaining the special excellence of our three schools, but also moving us forward in very aggressive ways. scarlet: the university has circulated a letter from alumni that were in support of this change, even though many of them have opposed it. one quote said that if you do not like change, you're going to like the rubble limits -- irrelevance even less. what you need to do to prioritize to stay competitive and relevant? >> thank you for the question. this change is really about the future role of business in society in general. in the world around us can we face a significant challenges, be it in inequality, and other key dimensions.
12:54 pm
business has to partner with the government, and society as a stakeholder. what happens now is with the combination of the strengths of schools, we will be much better place to address these global challenges. scarlet: a lot of the hotel school allows our of said about how they will be assumed into this. the hotel school is very small, dominant in his industry, they do not think it makes sense. how will they keep this distinction in their diplomas without watering down their identity? reported to us. the number was all of that area in the world. it is also an accredited business school. it is focusing on hospitality, hotel, real estate, as a way to think about business and a decoy -- in a deep quiet. we will keep the three schools,
12:55 pm
we will still have a school of hotel administration, a johnson graduate school of management, a dyson school of applied economics and management that comes out of our agricultural tradition and so emphasizes food and sustainability. each will have their own dean, they will have their own admissions process, but they will be led by a college of business which he will serve as the dean of. they will integrate more effectively, work together, have integrated curriculum. the hotel alums that we are confident that not only will be preserved the distinctive brand and number one ranking of our school of hotel in ministration, but this is even going to be a better school. for example, think about how technology has disrupted hotel hospitality real estate. we will be able to bring that into the hotel school, and as we have always done, being the leading place to study these areas of the economic environment. scarlet: final question to you,
12:56 pm
dean. many business schools have moved toward operating or offering more flexible programs. does this unified college of business give you more room to offer part-time mbas, or one year programs or executive mbas? >> the short answer is yes. we already offer some of these programs. the range of these programs will be expanded in the future. scarlet: thank you so much. up, we are looking at the triple digit drop right around the lows of the session. what more volatility is in store? ♪
12:57 pm
12:58 pm
12:59 pm
>> 1 p.m. in new york, welcome to "bloomberg markets."
1:00 pm
♪ from bloomberg world , i'muarters in new york scarlet fu. alix: and i'm alix steel. energy and financial shares leading the decline. scarlet: aaa delivers quarterly earnings after the bell. how much damage the e. coli scares did to the business. tesla, the price supercharged. scarlet: julie hyman has been tracking the losses. continuee losses that to deepen for the entire session. trading pretty much at the low here. take a look at the bloomberg terminal and the energy source that we have been talking about all day, it's not just energy financials.
1:01 pm
consumer staples, all of them down 1% or more. this has to do with earnings and specific groups. it has to do with oil prices. 30.29 a barrel. we're looking at the oil and the s&p the last month. days or theyen have threatened to decouple but it has not quite materialized for any length of time. energy stocks on the account for 6.5% of the s&p 500. it feels like much more because oil seems to be this proxy for all kinds of worries. when it goes down, it seems to
1:02 pm
drive everything. alix: that does not make sense. it's not a typical correlation. we do have some positive stocks today. do been talking about google all day. been talking about google all day trading at a record that led me to check on at the high low. 52 week high versus the 52 week lows. when have the selloff, as stocks selloff, there are 19 lows for nine highs so it's not quite as alarming as it was earlier in the year. and we continue to see the buying of treasuries.
1:03 pm
1.88% the yield on the 10 year note, very notable, the lowest since april. in this let's check afternoon with mark crumpton. the u.s. political spotlight now shifts to new hampshire where the first presidential primary of 2016 will be held a week from today. , narrowlyrnie sanders to hillary clinton last night is campaigning in new hampshire today. senator ted cruz one in an upset over donald trump and marco rubio had a surprisingly strong third-place finish. the fbi is working with the multi agency theme. the u.s. attorney's office in detroit said that in january, it was investigating the water
1:04 pm
crisis. it theys haven't said might be criminal or civil charges. they said they switched to save money under state financial management. bill cosby back in a courtroom today. his attorneys want the only criminal case ever filed against him tossed. his lawyers claim that cosby made a deal with the prosecutor that he wouldn't be charged and could testify freely in the civil lawsuit. he will try to override the president's veto. they will see if there is any common ground on a legislative agenda. mailkerry has had the one -- one million mile mark in diplomatic travel.
1:05 pm
only condoleezza rice blog more miles in the air. he could beat the record in the spring. dayal news 12 four hours a powered by the 2400 journalists and more than 150 news bureaus. oil prices slipping back -- scarlet: oil prices slipping back to the $30 level. from s&pnings results 500 companies this week, the chief investment officer at northern trust wealth management. oil prices and stocks should not be moving in tandem when it is a supply issue and not a demand issue. what theu understand bottom even looks like. >> they have to how unusual this is.
1:06 pm
the demand picture looks healthy. it's important to step back and take a look at the fundamentals. alix: are you taking a step back or are you panicking and selling? >> it is more like pent-up volatility. our clients a been prepared for these kinds of market movements and recognize that we will be in the market on some bad days.
1:07 pm
we don't get caught up in the short-term volatility when it is not connected to fundamentals. alix: are the cracks starting to show? loans were tightening and so is commercial real estate. the savings rate is ticking higher. i have that chart up for you right now. you don't want to see that. is a growing sense of uncertainty that i think is reflective in both of those numbers whether the banks are unwilling to lend or borrowers less going tomorrow. typically, we see much lower commodity prices, energy prices, and prices at the punk that we have this burst of consumer spending.
1:08 pm
the economic outlook is very slow growth. it doesn't feel very stable. changes have you made an expectation of more volatility? x we have not made any changes. we put a normalized multiple on that. investors have to realize that ,f the market price can be down you really have to stay the course. you say you are overweight risk assets, what assets? u.s. equities and u.s.
1:09 pm
high-yield bonds. >> it gets lost in the headlines. it is a relatively small percentage. there is some liquidity concerns in the market. you're going to have to sell some of the higher-quality high-yield which is why we have seen locations in that market. >> those prices will recover. >> it is very well contained in the energy and materials sector. thathing about energy is we typically have much more of a beneficiary.
1:10 pm
a decline in capital spending and expansion and high-yield bond markets. we have yet to see the positive consumption of fax. you could say drilling a shale well is better than me buying an iphone but profits wind up in a buyback situation. consumer spending drives 70% that eventually does get spent. which is why we tend to see this momentum and consumption. keating it in, thank you for joining us. -- katie nixon, thank for joining us today. ups had a jolly holiday season. what is next for the delivery company?
1:11 pm
and if is always was one of the next five restaurants to rise as fast as aaa. and the company releasing negative sales as the e. coli outbreak was declared over. what else will investors be looking for? ♪
1:12 pm
1:13 pm
1:14 pm
alix: welcome back to bloomberg markets. aares are higher today after company delivers robust earnings. a strong performance helping ups scarlet:. its lesson learned from 2014 when it expanded too much and overspend during the holidays. >> is the economy is positive as we would like? it is a mixed picture out there and it is driven by the consumer and consumer confidence is high. production is not quite as high as we would like. the last three months has been disappointing. we have to keep our eye on that.
1:15 pm
imports into the u.s. has really increased. once important for us is that we focus on our strategies and our execution. i am confident. scarlet: you could even see same day delivery. how much do you view those companies? >> we take a good and even in a very small way, our focus is global integrated work. the technology we continued to offer including orion which is
1:16 pm
our optimized dispatch. and provide even more value. we would be absolutely fine. are you forecasting slower growth they're? >> the long-term, we are feeling good about china and other emerging markets. it is growing at a fantastic rate. we will go to julie and
1:17 pm
have some company movers. julie: there are always a few winners and a lot of it has to do with earnings. retailers.sentially it is trying to tighten the underwear and denim business under the calvin klein and tommy hilfiger brand. and michael coors has been battered over the last couple of years. accessories. in another item that sold is barbie,well mattel coming out. that's the biggest one-day gain an almost seven years.
1:18 pm
if they exclude the effects of currency, it would be an 8% gain . is an area that would be struggling quite a bit. and the ceo said on the conference call that he's going to leave the company after the merger with dupont. >> the latest on the individual movers. it is fast becoming a huge trend in the industry. the only italian fast casual chain in the u.s.. ♪
1:19 pm
1:20 pm
scarlet: welcome back to bloomberg markets. alix: due to the success of popular chains, the fast casual
1:21 pm
restaurant trend. scarlet: it is experiencing a five-year same-store sales growth. >> this is bloomberg radio. talk to us about the fast casual space. now?it like right it is a hyper competitive space. overall, we had one of our best quarters.
1:22 pm
>> talk to me about what expertise it is lending. >> he asked about private equity involvement. >> they recently purchased fizzle lee's and they are great. they are able to help us grow by .roviding fresh capital we are really looking forward to getting he involved in running the business. >> they don't participate in day-to-day management. the present our plan and talk about key initiatives moving forward.
1:23 pm
they provide input overall but they do not micromanage us. it has been a great relationship with them. >> talk about labor costs, food costs, commodity costs coming down. how are these helping or hurting your business? have beenmodity costs a real blessing to help offset labor costs. they have been extremely difficult with the governmental regulations and unemployment getting shorter. it has been a very tough market overall. the commodity market has allowed us to be more aggressive with some of our initiatives. >> are you having a hard time finding workers? >> it was really hard to hire in the west part of texas. but overall, it's not a huge
1:24 pm
challenge. cory: i'm curious about the business. how many stores are owned by the company? we are the largest franchise, we have 125 company restaurants and 93 franchise locations. we are definitely out promoting the franchise initiative. find out all about the great opportunities to become a franchisee. now is definitely the best time to own a fazoli's. the brand is extremely vibrant. we have been doing really well. it's just a great time to be associated with the brand. in terms ofof busy starting a restaurant right now but what is driving the growth for you guys? >> we worked really hard to
1:25 pm
reposition the brand and the focus has been on food quality and service. we were a quick service restaurant that competed with mcdonald's and burger king and it really was not a great position for us. no one can do what we do at a seven dollar price point. we provide this tremendous experience. our food is so good. >> people would rather go out and see that trend? >> people have an on demand economy. i do see people that really want the convenience. we give them the technology.
1:26 pm
a lot of people are ordering stuff at home. >> good to check in with you. karl, thank you so much. thisr new york studio on tuesday. still ahead on bloomberg markets, chipotle will report fourth-quarter earnings. and see what the head for the chain. ♪
1:27 pm
1:28 pm
1:29 pm
scarlet: from bloomberg world headquarters in new york, welcome back. let's start with the headlines.
1:30 pm
: hillary clinton is the winner in the democratic caucuses in iowa. she barely beat back a strong challenge from bernie sanders. the iowa democratic party says it will not conduct a recount. says it does not intend to challenge the results. the new hampshire primary is one week from today. as he hasce is not previously said, terrible. mr. trump said that his experience was a great one and started out with all of the experts saying i cannot do well there and ended up in second place. nice. ted cruz won the iowa caucuses. marco rubio in a close third. president obama is making another first. he will visit the islamic society of baltimore. the official visit toward the
1:31 pm
american mosque as president celebrates the contributions muslim americans make to the united states. it comes as hate crimes are increasing. for $9 milliong for its programs in the americas to curb the spread of the zika virus. they will focus on educating communities in brazil. and how to wipe out breeding grounds. global news 24 hours a day powered by the 2400 journalists. scarlet and alex, back to you. scarlet: safety problems are nearing an end. and they have ended the probe into the e. coli outbreak that has dozens of customers and wiped out $10 billion.
1:32 pm
the company will report fourth-quarter results after today's close. we know that the company did announce results. what kind of commentary can we expect the company to offer? >> they rescinded the 2016 forecast. they had to recalibrate everything so i think investors are really paying close attention. >> i think people will be interested in how january is going and how the back half of january went versus the first half but chipotle has yet to go on the offense and yet to start
1:33 pm
their new marketing campaign. the second half of this quarter may be much more interesting than the first half. scarlet: to what extent can you draw parallels? >> all of these cases are individual in nature. provided closure and implemented safety protocols. hopefully from here we will have time for consumers to forget what happened in the fourth quarter. >> what is the expectation of the profit margins? >> margins will be something else. .t will be tough to judge
1:34 pm
going forward, can this company get back to where they were? now they have to spend a lot more on food safety, marketing. they are expected to be down for a little while. cracks as we take a step back and look at how consumers change the way they spend money, millennials on experiences and services. is chipotle a beneficiary of that? >> i think most restaurants are the beneficiary of that. millennials are in the experiential part of their life stage. we see where consumers are spending their money and chipotle has benefited from that in the past. we expect they will continue to be one of the more favored brands. thank you for joining us.
1:35 pm
we are getting headlines on yahoo!. it shareholders filing a lawsuit on themore information hiring and firing of its x coo. have -- a judge is saying that the bristol-myers firing is worthy of an investigation. our bureau chief joins us from washington. >> investors are basically gathering information to see whether or not the $60 million in severance pay was a waste of funds before they file a suit challenging that. >> did they just say he got paid too much when he was fired? >>
1:36 pm
the accusation was they did not do a proper job and they did not handle it properly. in a way that entitled him to severance. shareholders are looking to see if it was possible to fire him and away were he would not get paid the $60 million. >> is there precedents for this? >> a couple of decades ago, involving disney, the former ceo michael eisner retired his friend to be his second in command and i can't remember how many months. was paid a hefty severance package. to the disneyted case as an example of why investors have a right to get access to this information. >> what will they be looking
1:37 pm
for? they are looking for information that indicates how transparent they were in informing the board. investigating and looking into the terms of that contract. talking about decision-making. it does not have to pay the severance. >> one more thing it has to .ontend to on bloomberg markets, exxon and bp are struggling with these record low -- record low oil prices. >> we will bring you his comments. upgrade, so once on that
1:38 pm
call? ♪
1:39 pm
1:40 pm
scarlet: welcome back to bloomberg markets. some ofme for a look at the biggest business stories in the news right now. scarlet: it was an estimate from true car that projected a drop of 9.8%. alix: and microsoft is recalling
1:41 pm
2.4 million power cords. the recall was used in the surface pro, surface pro two, surface pro three. is a potential fire hazard. microsoft is offering free replacements for those cords. figured hellmann's has out if you can't beat them, you might as well join them. they turned to company unilateral -- uni-lever. under thet shelves carefully crafted dressing and sandwich spread. that is a mouthful. my carefullyhave crafted spread on my tuna fish. julie hyman has the latest looking at transports today. julie: i enjoyed the mayonnaise story. the stock market falling on the lows of the day.
1:42 pm
part of the reason why is the transportation stocks are declining. royal caribbean down the most and 6.5 years. it said yes, it is benefiting from declining fuel prices but outweighed by what spin happening with currencies and the rising interest rates. we have not seen the currency have ah and it will negative effect of $.14 on the company earnings per share. forecast is enough to put the shares down. rival carnival is falling. delta airlines came out with its january revenue. that is the benchmark revenue gauge. and finally the rental truck
1:43 pm
company coming out with earnings per share that missed estimates. demand andwer rental a minimal capital spending as well. it is also saying that it is taking a modest workforce reduction, trimming back on jobs . the transportation average is also lower today. the transports do tend to be a proxy for perceptions about global growth. the weakness economically is shown first in the transport service. it's an early indicator of weakness. lagging the industrial for quite some time now. >> one stock is exxon mobil.
1:44 pm
the good, the bad, the ugly. not as bad as bp seeing a record annual loss but exxon mobil has been cutting for a while now. that slide in oil prices really hurt it. and that really falls on the heels of bp which we saw earlier today saying it lost $6.5 billion. let's get an idea of the long-term damage. from theyour take away companies we have seen reports >> bp only a few months sizing talking about
1:45 pm
themselves to live with $60 oil and now it is below $60. we are seeing chevron which used to be fairly consistent with oil prices having to come back. it really talks about protecting the dividend. budget and even exxon isn't immune but there may be something else going on. exxon talks about being able to means or the cycle which the best time to invest is when it is cheap. even exxon is cutting back. part of that is prudence. they want to protect the balance sheet. that maybe they are
1:46 pm
preparing for m&a which has been the missing factor in the markets. >> he will have 10 major projects coming online over the next two years. -- thatng to add about production is not one for one. >> opec has made very clear that it will not reduce production because it wants to maintain and grow market share. primarily thes show producers. what kind of impact do you see? >> the strategy is not aimed at anyone in particular.
1:47 pm
they have to maintain market share. it will raise prices that will help maintain that position. we had the integration, the balance sheet. positioning for a longer cycle. bp has been the most vocal saying that we don't think prices are coming back that quickly. exxon gives a slightly more ambiguous message. preparing for a scenario. >> they are looking at u.s. onshore.
1:48 pm
it will really try to get something where it's the case of a company getting really good reserves. you can apply that to the production sector. little to doa has with gas because we are talking about no electric vehicle here. jonas is attempting to change the price target as the stock has had this big move. tell us a little bit about that. >> they really raised eyebrows last year when they raised the price under $65. , itheadlines price target
1:49 pm
is essentially a robo tax or over type service. with mr. jonas, they felt they could launch. the big message was that tesla is already attempting to do something very hard. essentially, overturned a century of internal combustion engine dominance and bring electric vehicles to the four. analysts are already talking about the things it will do beyond that. to me, it shows just how overvalued the company is. alix: getting paid for a job we may have in 20 years. good to see you. web.adfgo on the the best tutor in nba
1:50 pm
history comes to bloomberg to shoot hoops with stephanie. >> steph vs. steph. >> barely get it over the top. >> 30 seconds. ♪
1:51 pm
1:52 pm
welcome back to bloomberg markets. scarlet: oil prices continue to sink and it is dragging down the equity market. the dow industrials is on a session loan right now. getting closer to the 2% threshold. 29 members are lower and only dupont is higher. we saw a lot of long coming to the market and we can see them shake out.
1:53 pm
bottomnce, they call the . we've gone as low as we can go. the bottom may be in. right, he is considered by some to be the greatest shooter in nba history. we are talking about stephen curry. i knew this. for the golden state warriors. last season's m.v.p. and extended his contract with under armour. he's one of the most undervalued players in the league. curry: i have a great opportunity to play the game and it will take care of my family. turn around but ioa's keep the underdog mentality for that edge. scarlet: stephanie sat down with steph curry and got to shoot hoops with him.
1:54 pm
stephanie: business is good but think about it. 27 years old. he's not the highest-paid player in the league and not even on his team. they are not a flashy team like l.a. or new york. because of the endorsements. he has less endorsements than .ther players but they are deep if you look at under armour shares, it's their push and a china and their footwear. the number one shoe, the number two jersey behind lebron james. what is the brand? is a guyamily guy and that never misses practice. he shows up an hour early and you watch him on the court hitting three-pointers. he talked about his brand. take a look. part ofrry: it's a huge my daily routine to stay hydrated and take care of your body.
1:55 pm
the natural resource that we all opportunity great to share that message. barkleyis not charles anymore. i don't need to be an icon. it you become one. >> it is basically me being me. i am pretty public with my life. my family is included with that. >> and nba superstar whose brand his family. his daughter riley and his wife is a big lifestyle blogger. he has a routine before every game. he is giving that advice to cam newton who is playing in the super bowl. he and i had a shoot out and i would like to say i got all of mine in. it was nothing but net but i
1:56 pm
would like to point out at 5'4", left-handed, i had all of my shots. i thought my kids were going to fall down. alix: where is it? talking about it and looking at the ball. >> i am definitively 5'4". there you have it. wellness.bout not just being a hard-core athlete. there you have it. we are going to hear from -- ♪
1:57 pm
1:58 pm
1:59 pm
david: welcome to "bloomberg markets."
2:00 pm
from bloomberg world headquarters in new york, good afternoon. here is what we are watching this hour appeared oil plunging for a second day, its worst two-day drop since 2011. stocks are falling with it. the dow hovering around a 300 point loss. after bet passes apple as the world's most valuable company -- alphabet passes apple as the world's most valuable company. we're a out plans for yahoo! -- marissa mayer lays out plans for yahoo! pressure rising on greenlight capital. they've managed to avoid a large-scale exodus. will they deliver before it's too late? the selloff is exhilarating, dow down


info Stream Only

Uploaded by TV Archive on