tv Bloomberg Markets Bloomberg February 4, 2016 10:00am-11:01am EST
betty: from bloomberg world headquarters in new york, good morning. i am betty liu. here is what we are watching this hour. stocks have been fluctuating. the bank of england cutting its inflation forecast once again to what it means for the future, and for fed rate hikes in 2016. controversial pharmaceutical ceo in front ofli congress moments ago. that is a live shot of the congressional committee. on thatred questions price hike. era.he end of an calls it quick that cbs has questions about his mental health continue. will he give up chairmanship at
viacom? straight to the markets desk, where julie hyman is looking at the final read of durable goods orders in a market that seems relatively calm today. julie: relatively calm, that is the key word. ,e are seeing a drop of 5% bigger than the initial reading of 4.5%. that is a little bit larger than the original read. excluding transportation falling by 1%. when these numbers initially shock,t, that created a ,ne of the first pieces of data more of a bumpy one on the economic front.
it seems calm her on a relative basis. if you look at the stocks i am moving at the moment, a couple of the big earnings stories. ," telestrating lower. the big story is not just -- conoco phillips trading lower. the big stories not just the earnings report. cutting capital spending after reporting its biggest quarterly loss in almost a decade. and why this is so important is a lot of the oil majors still have relatively high dividend yields. that is one of the things that provides a floor under some of these stocks. the fact that a big oil company is cutting its dividend is a big deal. shall isipside, reporting 44% decline in profit. to some investors it does not look that bad. looking at oil prices this morning. we see them continue to work higher.
just this kind we had in oil prices over the past several days. i have this affected elsewhere. julie: as we been getting this economic it it is putting pressure on the dollar. you see once again today, the bloomberg dollar index, basket of currencies, down over the past two days by 2.4%. the slump is quite unusual, particularly in light of recent history and the rallying dollar. the dollar-euro strengthening once again. let's check on the
bloomberg first word news. vonnie quinn has morphed markets desk. -- more from our new stuff. state johnretary of kerry says peace talks will at the u.s. is pledging more than $925 million dedicated to serious refugees. this morning i: talked to foreign minister lavrov and we agreed that we are engaged in a discussion about how to implement the cease-fire specifically, as well as some immediate possible confidence-building steps to deliver humanitarian assistance. the militant group that ladenheltered osama bin
wants to crush the islamic state in islamist. the telegram -- the taliban calls the group of scruffy and uncouth collection of nations in the middle east. commander in afghanistan is taking issue with president obama's proposal to cut forces in afghanistan. campbell says the afghan troops will not be ready to operate independently until 2024. global news 24 hours a day powered by our 2400 journalists in it news bureaus around the world. i am vonnie quinn. betty: defense is back in fashion in the markets. utilities, producers of consumer staples, they show the only gains in their share prices. commodities, banking, health care stocks, they fell the most so far. history shows that investors are piling into these safer stocks come that is a verisign. henry smith is joining us now.
he joins us from philadelphia. no bears there can just the eagles in philly. [laughter] --is that a verisign to you is that a bear sign to you? : look, only time will really tell. anything feeding into the energy sector, certain industrials, basic materials, are having a bear market. whether the broad market falls into a bear, only time will tell. typically bull markets and in anticipation of the recession. we don't see a u.s. recession over the next 12-18 months. betty: the economic numbers we have been seeing have not been great.
productivity coming down. not good for the economy. henry: no, this is a pause in the expansion. we have been looking for the economy to pick up at the 3% level of growth. i still don't think we will fall into a recession. the consumers in terrific shape. we have a huge gasoline dividend that we have yet to really spend. that might be happening this year. betty: someone who agrees with you is bill miller of legg mason who we talked to yesterday. he said the same thing with one caveat, henry, and i will redo what he said. remains strongmy with a low likelihood of
recession unless stocks fall so far that they caused the collapse in the wealth effect." would you agree? henry: that would have to be quite a fall from these levels -- betty: 20, 30%? henry: i think that would do it. henry:it would take a toll on confidence. when you have constant headlines of global recessions, economy stalling, that tends to have a negative effect as well. it is hard to imagine a global recession without the united states being in a recession. that hasn't happened before. usually the u.s. leads the globe into a recession. it is not to say there are pockets of recessions out there. -- aren't pockets of recessions out there. there certainly are. many developed countries are the
beneficiary of what is happening in the commodity markets. betty: i want to look at the stocks you are in and some of your holdings. you are invested in jpmorgan, wells fargo. we know that the banking shares have been hit hard in this selloff. henry: the theme really is, regardless of the sector, and i will get right to the banking in a minute -- the theme is quality. wells fargo and jpmorgan are the 2 highest quality companies in the banking sector in the united states. the other theme is above average dividend yields with dividend growth. in each case you are getting 3%-plus yield. you are going to get dividend growth in each case. compare that to your alternatives of cash, which yielded nothing, and fixed
income, 10-year treasuries yielding 1.8%. we're going to get growth of income. down, but wee think it is a cyclical but not secular decline. atty: right now let's take look at this, a live shot of the house hearing on rising drug prices. , former ceo of touring pharmaceuticals, has been at the center of this hot button issue. he repeatedly invoke his fifth amendment when he was speaking in front of the congressional leaders. post is a janet woodcock, howard schiller, and ng's chief commercial
betty: good morning, and welcome back to "bloomberg markets." let's go to julie hyman at the markets desk. julie: after sumner redstone stepped down as the chairman of cbs -- there have been questions about his mental acuity as he ages and we have seen the shares of cbs rally. he is still the chairman of viacom. the board of that company will be meeting on thursday. les moonves took over as
chairman. the ceo of viacom there are questions about whether he would take on an additional role or whether the company would bring in someone else. there have been some struggles at viacom that have been more acute than that of cbs. i'm charting these companies versus one another. cbs -- the idea that time is that cbs would be the more study company. viacom, the owner of paramount pictures and mtv, might be more of a growth company. it does not turn out that way, at least measured by the stock price. cbs doing better than five, this time and viacom lagging. some of the other groups that we are watching today include anything having to do with metals. freeport-mcmoran was the best performer in the s&p 500 today. it has been battered as we have seen this slump in metals as
well as oil. money and out, also bouncing back -- newmont mining and alcoa also bouncing back. oil producers and oil services-related companies doing better today. the worst performer in the s&p 500 this year to date bouncing back. murphy oil and consol energy, also one of last year's worst performers, coming back today. betty: thank you so much, julie. go pro was a one point last summer trading $65 a share. since there shares have -- since then joseph plummeted and are now down over 8% over the last two days. even ceo nick willman is feeling
the pain in his pocket. $287 million is reported to him in stocks and options. $51 million.wn >> that is feeling the pain. hear: what voice you beside me is cory johnson, bloomberg editor at large. what's going on here? cory: the big story is in the failure
of the latest camera and the competition in the marketplace is substantial. as i was walking down the electronics show in los angeles, everyone had a high depth camera. a tracker, drone, and high depth camera. the story that went public is, yeah, we sell cameras on a stick, but just wait, we will be
a media company. look, we make media, so we will be a media company. give us a media valuation, not the evaluation for a camera on a stick. when that story started to fade and the realization was painfully evident -- betty: they were
not immediately. not a mediawere company. for that reason we can start to tease out a different future not just for go pro. what are they? they sell cameras on a stick. there are problems with the cameras themselves. cory: it has been in the camera business for over 100 years.
the best-selling camera is the gopro, of the best selling cameras are the gopro knockoffs. betty: is there some sort of exit here? could they be acquired? cory: it is a big business of selling these products that are hardly differentiated from the brand. there is value there. is it anywhere near the share price? whatever the value the company might have, less than it is today. there was a note out of the month ago that apple might be interested in gopro. cory: why? but with a get out of that --
what would they get out of that? it is not the kind of deal apple does. idea but -- mind you, the margins are nice. that's a good brand that is quite a bit. all right, cory, good to see you. cory: good to be here. betty: editor-at-large and bloomberg. before we go to break, listen to this. we saw this this morning, martin shkreli, former ceo of turing, invoking his fifth amendment on capitol hill. a cognizant try to lower images speaking by asking and how to pronounce his name. >> is it pronounced shkreli? >> yes, sir. >> see, there you can answer some questions. that wouldn't incriminate you. i just want you to understand you are welcome to understand questions and not all of your
betty: welcome back to "bloomberg markets." i am betty liu. we have been watching this drama play out on capitol hill this morning where house hearing is underway on rising drug prices. so far the biggest moment was martin shkreli, turing's outspoken former ceo, choosing to invoke the fifth amendment. congress minute elijah cummings of maryland addressed how the price hikes hurt patients. , itike a ponzi scheme appears turing is using revenues and imposes similarly massive
price increases on future victims. it is not funny, mr. shkreli. people are dying and they are getting sicker and sicker. is and thatng us edney, health reporter for bloomberg news, and keri geiger come who broke the news of on fraud arrest charges in december and he was out of the courthouse defending those charges. has left. he is done with this hearing. it went the way people thought, that people thought it was going to invoke his fifth amendment. there was a little bit of spectacle as far as back and en on with congressm whether he could answer some questions. he would get a whispered in his ear from his attorney and continue to invoke his fifth amendment rights. anna, is anything going
to be done by congress or can they do anything about rising drug prices? anna: that is a good question. there are some proposals out there as far as congressman cummings, who you showed earlier. he has one with senator bernie sanders, who is running for president. he talked about -- congressman cummings did -- going after price couching, but he didn't get very specific. so far we haven't heard a lot on the end of what could be done. the congressman who chairs the committee spoke about the fda and how the fda could speed up the ability to approve the drugs . we'll see if there is more money down the line for the agency and something along those lines. betty: keri, let's talk about
the allegations of securities fraud. what is next for martin on that front? keri: martin's strategy has followed other people accused of crimes. changing counsel is not necessarily totally unexpected. the advice he is getting out from his legal teams to be quiet, basically. the trial. today in he has been giving news interviews and doing his live blog. i would expect that to stop, because as you lead up to what is likely going to be a trial, everything he says in the public domain is going to be scrutinized. he is facing several counts of securities fraud. the evidence included in the indictment against him is pretty egregious. betty: shkreli says she is not quite to talk anymore to the press. he is certainly still on twitter
and social media. tojust tweeted out "hard respect of these imbeciles represent our government." keri: you have to wonder why he will tweet or not testify to congress. it could be used against him. betty: what is this about his e*trade account? was used for bill and it the time it looked like it had $45 million. now the account looks like it has $5 million. he could have his bail revoked the judge takes a close look at that. betty: thank you so much, keri geiger and anna edney.
-- our news desk. vonnie: donald trump and bernie sanders have commanding needs in new hampshire. trump leads the gop field with 36%. he is followed by florida senator marco rubio, with 15%, and texas senator ted cruz with 14%. as for the democrats, sanders leads clinton 58-36%. residentialblican candidate has joined donald trump in accusing ted cruz of cheating to win the iowa caucuses. the tedon claims that cruz campaign spread speculation carson would drop out. they are competing for evangelical voters. hillary clinton has tried to distance herself from austria but is still getting plenty of cash from the financial sector. is stillall street but getting plenty of cash from the financial sector. donationsf of the have come from 2 financiers,
really not investor george soros -- millionaire investor george soros. a judge in suburban philadelphia says the sexual assault case against entertainer bill cosby can go forward. the judge ruled that prosecutors are not ruled by a decision left years ago not to charge cosby. cosby's attorneys say they will appeal the ruling. super bowl 50 has been deemed safe by nfl security leaders and law-enforcement officials. they say there is "no credible game."to sunday's , security secretary jeh johnson says the nfl, federal, state, and local law enforcement personnel are focused on security seen and unseen. global news 24 hours a day powered by our 2400 journalists in news goes around the world. i'm vonnie quinn. the recent market volatility makes it highly unlikely that the fed will raise interest rates in march. if you look at bloomberg now, the probability of a hike, as you can see on the left-hand column, down to about 10% for
the next meeting in march. the probability prices to just below 50%. pimco and goldman sachs say traders are not prepared for how far the fed may go. demand for safe investment is so high that a fed move might not even make much of a difference to the average investor. >> the main focal point for is thats to focus on yields from the bank deposit or certificate deposit or otherwise , will remain suppressed because of the demand function. there is so much demand for basic instruments like t-bills that there is not room to get off that near zero bound. betty: joining us for more insight is lisa abramowicz. even if thean that fed raises rates, given the near zero yields, it is not going to have much of an impact? lisa: first of all, let's talk
about whether the fed would want to raise rates. stanley fischer spoke this week with tom keene and said, basically, the negative rates seem to be working pretty well in europe based on the data so far. they just stress tested the banks for positive possible negative rate environment. it is hard to see them coming out with a particularly hawkish statement right now, given how much credit conditions have tightened. 5 ratequal to about hikes already built into the market. high based on how much yield bonds -- first of all, the fed is excited to surprise the market by being more hawkish than they are expecting, questionable theory. second of all -- the goldman sachs and
pimco think that that is wrong. they think we are underestimating the fed. lisa: and the u.s. economy, perhaps more importantly. the signs will be so overwhelming that the u.s. economy is doing pretty well and is on track that the fed really won't have another option but to raise rates. it comes back to a chicken and a question. can the economy continued being a powerhouse while the rest of weakens? regions -- betty: things are turning a little softer now. lisa: and you have the question of let's say oil does rebound. maybe we are at a bottom for oil prices. then you have less selling pressure from some of the big sovereign wealth funds that companin oil-producing es.
the dynamics of the treasury market now at a time of an expanding universe of negative yields from europe to japan is incredibly complicated and it is a dynamic of its office of security that very few analysts can understand or get right. betty: it is hard to read where the minds of -- my set of investors are. are they buying it because they are worried about growth rates, buying it because they have no other place to put their money? you can't read into that and think of one reason. betty or they though -- lisa: or they buy it because it is a high-yield securities. you look at the backup of what is going on -- the bank of japan coming out and saying it is boundless, analysts saying they can drop the deposit rate further negative. if that is the backdrop, how can the u.s. treasury yields really
rise all that much? at the same time, should inflation surprise, it could be a massive capitulation with treasury selling off. it seems to me, if i'm reading it right, that the bond market, or parts of the treasury markets, or indicating one thing with rates and economists are indicating something else. does this happen -- has this happened before? right?nd who has been the markets. betty: i got that one could take you so much, lisa abramowicz, bloomberg fi columnist. -- bloomberg gadfly columnist. we are all in the green. the dow is up triple digits again. abigail doolittle has more from the nasdaq. we're looking at a
rally here at the nasa but with a renewed focus on pharma and drug pricing, let's take a look at the pharmacy benefits manager company underperforming the nasdaq significantly this year. investors are worried that the company's largest customer, and them, may make good on its threat unless express groups provide cost savings on drug prices. seven months we have seen the concerns takedown biotech and other companies. it seems that there may not be too much relief insight for many of these companies, including express scripts. betty: abigail, thank you. still ahead, as we mentioned, martin shkreli facing the music on capitol hill this morning, kind of. the former turing ceo did not have much to say at a house hearing on drug pricing. there was strong criticism of
. he was the sole lock on the bank of england. no more. 9-0. we will talk to john micklethwait about this in just a second. have a look at the stoxx 600. we have been up, we have been down, creeping higher, we seem to be moving with the winds of the oil market. .5%.e up about what is fascinating is the euro is at its highest level against the dollar since october of last year. it is on a three-month high today, despite the bundesbank earlier signaling we could have more stimulus at the march meeting. the biggest weekly gain since october 2011. options shows traders of the most positive on the currency since 2009. are the likes of mario draghi, haruhiko kuroda, finding it difficult to debase their
currencies amidst the financial market turbulence and the concerns about the global economy? something we last john micklethwait. -- we will ask john micklethwait. betty: he is standing by and you are standing by t -- and what mark carney's game plan is going forward. lagging inflation is the crux of this issue. >> we are setting the drug on inflation from external factors on the short term would involve to rapid and acceleration in domestic costs, one that would risk being unsustainable and generate undesirable volatility and output and employment. considerations, they are sitting inflation to target at around two years and to keep it there. betty: are the walls closing in 2016?rate hike in john micklethwait joining us.
john: i can see that mark has cleverly got behind much mature with possible expectations of what it is. andever i say will be wrong prufrock almost immediately by -- market but it feels like proved wrong almost immediately by the market it seems like 2018 or 2017 blood talking about. as mark this problem, said mobile the different central bank governors trying to debase their currencies in order -- you things that don' even have janet yellen not trying to make too much of the dollar. money has been put in these allergies and yet there is no inflation out there. us, me included -- i've been much more frightened of deflation than inflation.
the priority is right. deflation is a killer. inflation is a ghastly thing but we know how to deal with it. deflation, as we've seen in many industries, is a really nasty thing. you can look at the history of japan and a whole series of things. at the same time, in order to fight that, they keep on building of the balance sheet. i want to bring up a sound from your exclusive interview you had with the bank of england, mark carney, in november, after the last quarterly inflation report. what i rather have the majority of the british people thinking that the rates are likely to go up in the next year? yes, i would good that is reasonably prudent behavior given the progress this economy is making, given the likely path of rates. mark: this leads me to my
wonderful function on interest rates. this is a chart which tells us what the market is telling us inut the ratesetting meeting 2016. the probability of a hike right out is 1.1%. john, what is fascinating is investors think there is more of a chance of a rate cut in .ecember, 29%, then a rate hike john, are you surprised that this complete shifting in next occasions over the last three or four or five or six weeks? john: i'm surprised it is that degree. there are people out there who are better at making money and longer than i have. you have to give in to the
market at a certain point. imagine that inflation begins to take off in other places. i would imagine it is somehow higher than 1%. the main point is it looks very, in 2016.kely that is a long time for borrowers to plan. john, the bank of england has been criticized in some quarters for not mentioning the r-word, but it was mentioned a number of times today in relationship to the client in sterling. mark carney to make made that linkage. how concerned should we be as we approach this possible referendum date in june? what uncertainty does it bring to the u.k. economy and financial markets? john: in my view brings a lot of uncertainty because you look at all the possible things that can .appen, all the big banks i saw the head of the big
american bank last week. they are all thinking repeatedly, where should i put people? them?hould i do with have a large amount of people working the city of london. where were they go? you have all the ailments of instability. -- elements of instability could you would have a two-year one of theiod and best things to happen would be for the british to vote to go out and then it would finally come home to the british what the true cost of this would be good they realize they would not get a very good deal and that might put them off it forever. once you start indulging in those sorts of "why don't we run over a cliff and see what it is like," it is not a great thing. betty: it is dangerous territory. can we make a connection between the handwringing over brexit and where rates are going to go? john: you can't of it, as long as you have the prospect of
britain doing something substantially -- you can a bit, as long as you happy prospect of britain doing something substantially damaging. most people would say that would be extremely damaging to the bush economy, and that must -- to the british economy, and that must be in the back of those regulators' mines. you have to think about it. you have to. getting back to this meeting today and listening to what mark carney was saying in the press conference, do you think he is reacting in some way to the markets, where he is -- or is he just monitoring? john: i think he is just monitoring. there are other times where he is just looking at the markets. that is not yet seem to be evidence of inflation. all the worries which to come from the market, but there is also things like china, and all the external factors around. mark said, there is
this brexit factor. you would feel particularly stupid if it happened in the referendum and a push out rates before that. betty: thank you so much for joining us. john micklethwait, bloomberg editor in chief. mark, i will see you in the next hour for the european close. chris reese is hosting its biggest quarterly loss in seven years. shares at its lowest since 1991. the ceo says expect more cost-cutting measures. more in the next hour. ♪
tried to make a decision this month. and japannn innovation network have made offers. lions gate entertainment is planning to restart discussions to acquire starz year after buying a stake in the pay-tv network company, according to people familiar with the matter. billionaire john malone, who controls starz voting shares, is said to be interested in merging with canadian domicile lions gate to lower company taxes. after a career spanning six decades, sumner redstone may call it quits in the entertainment business. redstone is 92 years old. yesterday he step down as chairman of cbs and today he may give up executive chairmanship of viacom. that is your latest bloomberg business/update. to talk more about sumner redstone's resignation, i want to bring in chris paulmeri.
he joins us, as we mentioned, from l.a. will sumner redstone give up viacom? it looks like that is the case, he will step down as chairman today. who replaces him? it looks like there is a knife fight in the courtroom right now. says she is to be determined but it is not clear she has enough support on the viacom board. betty: if not philippe, who could be? chris: she hasn't specified you that would be. she just wanted an independent director and to that degree she has a lot of support from viacom shareholders. if the stock. a, people are not going to see the change -- at the stock falls today, people are not going to see the change their calling
for. betty: who decides? chris: right now it is the board of viacom and that is aboard sumner redstone controls but it is not clear at this point he is exercising vote in this case? betty: what do you read into the fact that shares of both cbs and viacom went up after this news about sumner redstone? chris: there has been a perception and this is probably what prompted him to resign, itt he is out of it and has been going on for quite a while now and there have been articles about whether he is competent enough to stand. potentially new blood coming income potentially even takeover viacom.or betty: our investors hoping we will see more dramatic change? could there be a merger between cbs and viacom? there could be a really big change ahead here. are in a transitional
phase because sumner redstone still does control the voting stocks of both companies and he is declared mentally incapacitated and then the control would shift to a seven-member trust. a classmate -- that may cause people to rethink whether they -- independent, is goo independent companies. moonveschairman les says he does not think putting cbs and viacom together again are a good idea. he has hinted that cbs may be and time warner might be a good combination. as far as viacom goes, who might be interested, the list is long. john malone, discovery, and a lot of other potential media buyers. betty: on a final note, chris, what does this mean for les moonves?
consolidates his power. he has control of sherry redstone, the control of cbs board, and they are hoping for more of the same out of him. betty: thank you so much. much more on bloomberg television. the dollar extending that to-a drop. signs of a slowing u.s. economy and the really the wager that the fed could state that on rates in 2016. mark carney --'s we break out a new reality for central bankers on the european close, next. ♪ . .
mark barton joining us as we wrap up the trade. race thing ofnd a the lossing -- of the losses in the europe. mark: we have fluctuated between gains and losses -- reporting a biggest quarterly loss since the financial meeting. the european close starts right now. betty: we are to take you live from new york to london and berlin in the next hour. tell us about the trade today. have been up as much as 1.1% and down as much as 1.5%. we were down for four consecutive days. losing stretch for almost four weeks, but we crest high