tv Bloomberg Markets Bloomberg February 11, 2016 2:00pm-3:01pm EST
from bloomberg world headquarters in new york, good afternoon. global stocks edging closer to a bear market with the dow falling over 300 points. investors begin to lose faith in central banks and fed chair janet yellen says the week stock prices pose a threat to the economy. one of the richest men in the world joins us to talk america mobil feared oil and stocks have developed an unhealthy relationship. desk.head to the markets a potential deal with kroger. julie: we have not yet confirmed this, but reuters reporting that kroger is bidding to acquire the fresh market.
to mention it because we're definitely seeing a reaction in the stock. fresh market now surging. the shares now up by 22%. kroger in the meantime is also moving. we saw its shares take a bit of leg down.n -- -- about 8%.% did the clients we continue to see across the board, once again, global growth worries. ack of confidence that the central bank's will be able to alleviate the pressure we have seen. yellen doing nothing to
alleviate the pressure. gas lower at the open, had been bumping along the bottom ever since. arecan see what stocks moving the most in that average and what is weighing the most. the single biggest drag here is boeing knocking 71 points off the dow today. the securities exchange commission is investigating the way that boeing was doing accounting for a couple of its airplanes. all of this helping to increase volatility. not just for boeing, but across the board. david: how does this affect bonds? julie: we are seeing people by bonds. the movement has been pretty remarkable. also remarkable, one of these things you have to do a double take. inp function that prices
what are the chances that we will see a rate increase. 0 all the way through november. 12% by next december. now, seeing the probability of a cut. it is pretty remarkable here. we also seeing the flattening of the yield curve. why is one of the reasons we've seen banks under pressure here. this is one of the ways that make profits. the gap between the rates at which they borrow and lend. a lot of pain to go around. david: let's check on the bloomberg first word news this afternoon. mark crumpton has that from our news desk. and the russian foreign minister opened talks today to try to bridge deep differences over a proposed cease-fire with the syrian civil war.
the meeting in germany took wants-- the united states an immediate end to hostility. day's negotiations follow the breakdown of talks last week. the south suspended operations at the site. a stream of cars and trucks carrying workers and equipment from the complex back to the south. the north froze all south korean assets. south korea's maybe today displayed debris they say came from the north's rocket tests. the cdc says to american women who contracted the zika virus while traveling out of the country miscarried after returning home. cases haveour dozen
been confirmed in 14 states and the district of colombia. six of them involved pregnant women. the world health organization has declared the zika virus a global health emergency. scientists say they finally detected gravitational waves or ripples in the fabric of space-time that albert einstein protected 100 years ago. the discovery cement a fundamental premise of how gravity operates and offers signs a new way to explore the universe. the findings rank alongside galileo first using a telescope to look at the planets. global news to you for hours at a powered by our 2400 journalists in more than 150 news bureaus around the world. david: the worldwide market route is coming as the guest players-- the biggest hold a two-day q&a with congress.
janet yellen talks about what you think's is heart of the selloff. >> around the turn of the year, we began to see more volatility in financial markets. -- what she thinks is at the heart of the selloff. pricesnward move and oil and the chinese currency, those things have been the drivers. why it seemser like investors are not listening to what she has to say. she has had no real tangible effect on the market. >> not today, not yesterday. it's to the point where there is nothing she can say that will surprise the market. nothing that can surprise it to the upside right now. if you look at what has been going on here today, it is a clear signal about what they think about rates. you've got utilities and telecoms.
those are rate stocks, very clear indications that market participants don't think rates are going to go up. that is not a new thing. that's been going on for the past month now. they have been operating on the presumption that rates will stay low. julie has the screen up. zero everywhere now. as she comes out and says we will go back and do a cut again or something very grandiose that probably will not come from her, it is not going to have a move in the markets. david: she has threaded the needle so narrowly, it is funny, she has gone right down the middle. for?were investors looking what did they want her to say or indicate? >> when she says oil and moves .n the chinese currency, ok i don't think that's going to
change anything. she is accurate about that assessment from an investor standpoint, it is not adding anything new to the equation. between what the market thinks and what the fed thinks. --those to start to converge two start to converge, she is not giving any clear backdrop on the pace for hikes. david: i know you've been looking at buybacks. they are underperforming the s&p 500. >> the chart people have been talking about for several months now come you can see where the turn came. this has been going on for almost a year now. , it has been even more exacerbated as you see companies buying back shares. will that help keep stocks above where they would be without it? it's not doing it to the point where it is elevating the companies that do the most buybacks.
financial --these someone call it trickery,; financial engineering. companies incentivizing investors through buybacks or dividends. you have to start to wonder where the strength is going to pick up in the market. this year, we talked to bank of america and have notes from goldman say ing that buybacks are at a good pace. we will get a faster pace in buybacks. david: thank you so much. bloomberg's market coverage continues with a special edition id you miss?"ou mi bowing down 10.29%. continuing the story of
david: welcome back to bloomberg markets. time for the bloomberg business flash. the probe centers on ejections boeing made for the long-term profitability of the 787, 747. the spread of the enormous costs of making the planes over many years. global papereled a is less than two weeks after it was imposed. the ceo said the bank
listened to be back and try to find another way to save money. the hiring freeze remains in place. bruce springsteen really was heard he has been working on a memoir since 2009. publishing insiders say it is worth millions. let's head over to the markets desk. julie hyman has a check on company movers this afternoon. julie: myelin is the worst-performing stock in the s&p 500 today. there's another drugmaker doing poorly. s.side genomic we've been talking about mylan and their acquisition of meta. trialmpany is sending a of an expandable cancer lled jacophee.jack
one of the other companies we are watching his international flavors and fragrances but that stock down 14% after fourth-quarter earnings missed analyst estimates. the company is preparing for even more challenging conditions this year. we're also looking at the insurance today. the pain in financials not limited to banks. potential coming up with earnings that missed analyst estimates. prudential. the company said earnings were $1.94 a share, missing the estimates by $.36. national and u.n. m are
also falling today. aig reporting after the close of trading. let's take a look at big power companies. there was a power auction in new england. arrived at were much lower than had been anticipated. we are seeing many of this utilities declining today. -- many of those utilities declining today. d ameritrade's seo talk about where investors are going in times of uncertainty. >> people are being more cautious right now. what we've said all along, when the fed starts to remove some of -- they are very active, trading a lot. margin loans are down, the cash balances are up. that is taking the risk off the table. their rotating from the tech stocks back into value type of stocks. emily: if more and more
cash, that hasto to be a problem as you look to the year ahead because you need trading to get paid. fred: trading will go mostly with volatility. has been more elevated. there are good trading days. you worry about for me trading perspective is the market goes down and then just dies. stephanie: even for a mom-and-pop? individuals at home watching their facebook and google shares are simply pulling out of the market and hiding. fred: most about clients are still in. -- most of our clients are still in. what signs do you look for to say the retail person, the retail investor now is signaling that maybe this is the bottom?
retail investors go in and look at lower prices? fred: you could break our customer base into two or three buckets. one is people who are active in the market and trade regularly. they trade a lot of options and futures and futures holdings are up by 50% of your we're paid -- year-over-year. the others will take a contrarian stance. the longer-term investors, we try to get them to stay the course. some might moved into this might move into fixed income. -- some might move into fixed income. , thenew customers come in best indication we have would be the investor movement index measure whaty to
people are actually doing. in january come out at client base, we are still buyers. they were definitely moving to more defensive positions. we are still getting lots of new accounts. these types of markets, retail business does very well. stephanie: when we think about who is catching the falling knife right now, it seems institutional investors are not doing it yet. what is the lag time between institutional and retail? if black rock is not going long can i cannot imagine mom and pop in ohio are. fred: they are very defensive come of that is true. the market has to catch itself. i don't know how that's going to happen. >> what is the catalyst that is going to make someone say this is cheap? >> you will get the warren buffetts of the world who will come in and say this is good value in the market and certain companies. long-term thinkers will be the
first ones to come in, i believe. >> td stock is down more than 30%. not any worse or any better than any of its peers. what is wrong with the financial space right now and are you concerned about the beating the entire space has taken? >> there is that really a pullback -- definitely a pullback. .ook at the financials market the online brokers are perhaps the most sensitive to this. back in december or october or november, looking at an environment where there was two inthree fed funds increases 2016. the yield curve was supposedly steepening, trading upwards of 220. right now, you are seeing this morning at 150. expectations of another feds fund increase this year has gone away.
it feels like -- this past week with deutsche bank coming out, you are seeing investors move away from that with credit default swaps. is there more to it from a fundamental perspective? >> there is definitely a panic and fear starting to set in on some of the european banks. trading at 30% of book value, which is very stressed environment for a bank. you are seeing furor in the market with respect to european banks. that is not translated to the u.s. banks at this point. ahead, china might be in trouble. it's banks could soon see losses four times as the last u.s. banking crisis. here's the stocks leading the s&p 500 today. trip advisor up, cisco and
julie: i'm julie hyman with some breaking news on pandora. pandora media has held discussions about selling itself working with morgan stanley to meet with potential buyers. they were discussing private matters, talks preliminary might not lead to a deal in the end. that pandoration was also scheduled to report its earnings after the close of trading today. today'ses going into session are down about 29% from you today. they are spiking in the wake of these headlines, quickly spike about 2% completed for volatility, now going up by 13%. a lot of deal headlines coming out. bass made a fortune
betting against mortgages in the subprime crisis. biggerat china faces a problem in an extent that banks may see losses four times as big as those suffered by u.s. banks. you got a copy of this note that he sent out. the resetting of the largest macro imbalance the world has seen. for what is predicting and betting. >> and gloom. -- doom and gloom. the tremendous jump in credit that china has seen, domestic pumping of credit to maybe not the best borrowers could end up blowing up. he had some numbers in this report, some of his numbers are a bit different from numbers we have, but he has a lot of bank sources. the credits have expanded from about $3 trillion 10 years
.go to $34 trillion total in a typicalan credit cycle, china has seen 10% of the loss of its asset in the banking system. loss.ave a -- 10% of a loss of its assets in the banking system. which is way worse than we had in the u.s. david: this hinges on data, has a sense of what we know about the state of the chinese economy today. his sense. was sixeported growth point 9%. coaches are as had estimates that were half of what the official were. -- george soros.
he's already seen a lot of weakness in the products giving loans come off balance sheet lending because it has exploded in such a degree that a lot of bankers are trying to go with regulation and the underlying assets fall in value. as the government tries to compensate, they will be pumping money into the system to inflate their way out of this. u.s.w a lot of that in the , $10 trillion equivalent in china. the pressure on the currency to devalue a lot. david: coming up, the commodities close after the break. ♪
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wordiness this afternoon. -- headlines. mark: that stand edit it federal wildlife refuge in oregon is over. -- that standoff at the federal wildlife refuge in oregon is over. the holdouts were the last remnants of the group that seized the national wildlife and demandeduary 2 the federal government turnover the land to locals. bernie sanders and hillary clinton by taking a political battle to wisconsin tonight. they will square off in the bigt debate since sanders's primary win in new hampshire. he says his campaign had a record-breaking day, taking in $7 million. mrs. clinton as picked of a key endorsement. the congressional black caucus announced to their endorsement earlier today.
the federal aviation administration says .564 was erted to lax los angeles fire department says firefighters were not needed at the scene. the death toll from this week's head-on train collision in bavaria now stands at 11. 47-year-old man died of his injuries in the hospital today. officials are trying to determine why multiple safety measures failed, running two trains to travel on the same track crews used huge cranes today to remove wreckage from the accident. as for hours and powered by our journalists in newspapers around the world. -- global news 24 hours a day powered by our 2400 journalists
in the february around the world -- in more than 150 news bureaus around the world. david: this is something went to talk about with our next guest, who has long thought of as mlps are seeing increasing volatility. my next guest is heavily invested in mlps despite their downward slope. joining me is th matthew sally. the vti closing at a 12 year low. -- wti closing at a 12 year low. >> we are getting used to it here. who knows how low it goes in the meantime? we're focused on the long-term. prices cannot stay the low. it has not been dull around here. david: who knows how low it will go?
it has to be something of a parlor game among analysts. you have a forecast? , the futuresntime markets and derivative markets are about 20 times the daily physical markets. trying to predict where investor sentiment is going to take it in the short term is not a good long-term investment plan in our opinion. at this price, it is clearly unsustainably low. we are a producer operating costs. when you look at canada come the actual price of crude in canada is down to $15. the producers are losing money operating existing wells. rig counts continue to drop like crazy and we will see shut-ins of existing wells. what does that mean as demand growth continues to be strong? we will need additional drilling after we get the price response. ,e are looking at oil
short-term, who knows? it almost doesn't matter how low it goes. what we're focused on is longer-term. , it seems of the year crazy to say this with oil below -- but we are thinking $50 $60-$80 long-term as possible. look at the price and the price going up, i'm curious what your take is on when production will pick up again. how long after will it take for production to go up? >> we are seeing collateral damage in the space right now with the amount of rakes being -- rigs going off-line and people being laid off. with that, long-term gulf of
mexico, other key projects are being canceled. when we do need that production response, we will probably overshoot to the upside. u.s.ll be first met by shale producers are you can respond a little more quickly. even that will be a delayed response to get crews back to working. commodity markets always undershoot on the downside and overshoot on the upside. we know we are heading higher eventually in the near term. it almost doesn't matter how long it goes. we are focused on limited partnerships. these companies are pipelines transport products. they don't need crude to go higher. our portfolio has seen that.
even when the prices are down, the cash flows are growing. david: when you're looking at the mainstream of other companies that stand out in terms of insolvency? >> not within our portfolio. within midstream mlps generally. there are some producer companies that clearly have the risk of insolvency and we've already seen 42 bankruptcy filings in the emp space. toexpect additional emp's file for bankruptcy within the pipeline space, don't see a lot of that. within our portfolio, we are focused on an investment-grade companies. nothing we are investing in. much. thank you so you can read more about oil in
the latest issue of bloomberg businessweek. our cover story, how will and stocks are locked in an unhealthy codependent relationship. peter wrote the piece. -- how and stocks -- how o il and stocks are locked in an unhealthy codependent relationship. peter: it is a few of slow demand. people are taking oil as the canary in the coal mine. if the oil demand bounce as a perception, that must mean the whole economy is slowing down. -- if the oil demand falls as a perception. demand is not slowing down. 3.1 million barrels was added to
daily demand for oil last year. the price went down, the supply grew by 5 million barrels a day. what we have here is not soft demand, but strong supply. that seems to have eluded a lot of players in the market. you look at this argument some people are making that what this indicates is we are close to recession. you look at demand and supply, that is not the case. peter: the last two times we had a case where you had falling oil , falling s&p earnings and you did not get a recession were times when you had falling oil .rices people saw through that, saw there was underlying health and the economy. which we have now. it seems to me that there's a lot of underlying strength in
the u.s. economy right now being overlooked. david: how much do you follow the psychic effect of this? whenever we break one of these numbers missing a reaction the markets almost immediately. this article is perfectly timed. today was a perfect example. the stocks being blamed on the oil. there is a psychological aspect. the price of gasoline at the pump, starting down over one dollar a gallon since last summer. that means a lot to average americans, including people who may not be watching the show but care about their pocketbooks. they are spending a little bit, andng a lot, but overtime caps on november how to spend the future. -- that gives them the
wherewithal to spend in the future. david: to read his article, you can find in bloomberg businessweek. ted cruz is the top candidate in south carolina. why do many of them still think donald trump will still show? investors getting impatient with twitter after the last order sought a serious lack of user growth. -- saw a serious lack of user growth. ♪
the clinton and bernie sanders will meet to debate in milwaukee, wisconsin. the publicans are focused on -- hillaryina clinton and bernie sanders will meet to debate in the waukee, wisconsin. republicans are focused on south carolina. who do you think is going to win the south carolina primary? >> trump. >> trumpeted >. >> trump. choicesu are only two in the donald trump and ted cruz, who would you vote for? >> ted cruz. >> ted cruz. >> ted cruz. >> undecided. >> cruz. david: the first woman said i'm afraid of trump talk about what you heard from those borders down and stop carolina. voters. are undecided
that's what you heard from those voters down in south carolina. david: when you look at the ground game, the apparatus each cap has on the ground, who is ahead? this not need a big organization because he has the enthusiasm and television coverage. he's got something of an organization there. the strongest is ted cruz based on his super pac. they been putting staff people on the ground.
he has a network of clergy come as he did in iowa. his campaign has been organizing quite a bit. marco rubio has an organization there. the top one is clearly ted cruz. that is why his input is quite good. david: how much does the culture of campaigning change between -- howd new hampshire different is it in south carolina? >> there's two big things that are different. this is a massive primary compared to iowa and new hampshire. this is exponentially bigger in terms of the number of people who will vote. south carolina has a history of brass knuckle politics. history of people wear a lot
more goes in south carolina thanics, radio, robo calls is generally tolerated in the political climate and culture. you were at university of wisconsin. who is more progressive than home. you expect that to be the theme tonight? >> you have moderators who will look for new areas to explore. the topics may be less important ifn whether the question hillary clinton -- she has to prove to her supporters and others that she is fighting hard and understands the stakes here come back.
bernie sanders has proven consistently that he is better than he was when he started. thele will be taking measure of hillary clinton, her confidence level to push back against what has been a strong bernie sanders campaign. watch with all due respect tonight at 5:00 eastern time. they will be live in milwaukee for today's debate. time for the bloomberg business flash. pandora media said to be exploring a sale of the company. the company is working with morgan stanley to reach out to buyers. the talks may not lead to a deal. not a great time to be a bank. suisse'son from credit ceo. they slid to a 27 year low earlier today as part of an
industrywide selloff. let's head to the markets desk where julie hyman has today's sector report. julie: we've seen the dow jones industrial average as the big laggard of the day. it's also being seen -- if you 1.9%at the x l.a., down today. boeing is responsible for a lot of that. the sec investigates its accounting on long-range projects for long-term -- long-term projects like it's dreamliner. this is spreading to other industrial companies because iss type of accounting widely used within the sector. general electric shares down by 3%. many defense contractors also trading lower today. lockheed martin getting hit. u none technologies, general dynamics, all of them falling along with boeing. .- united technologies
union pacific is another one on our radar within the industrials group. ups filed a challenge to union send if weealmaking see any kind of deal in the railroad sector, that company, good news. fedex also declining. david: thank you so much. twitter added no new users in the fourth quarter. we'll hear from the company's coo next. mylan down 18%. international flavors and fragrances and prudential financial is down 8.9%. ♪
david: welcome back to bloomberg markets. twitter appears to be falling to their lowest price ever today. the drop comes after a disappointing earnings report where the company revealed they added -- emily chang spoke with twitter's ceo about where the company goes from here. adam: jack talked about one of the key priorities for us is around creators and helping drive creation on the platform. on the video side, we have two initiatives. one is our amplify program. a program for premium content providers to bring content on the platform and share in revenue. 225 television networks and premium concert providers doing that in 25 countries all around the world. we've begun to expand this out to move beyond premium content to allow other creators to upload video and share in the revenue. nichve a platform called
which has 25,000 content providers or creators who use the platform. it helps bring together advertisers with content creators so content creators can provide great content for those advertising campaigns. emily: we hear the rumors constantly about twitter selling. have you considered selling, have you gotten offers? adam: from the management team perspective, our goal is to -- is to increase shareholder value. we are continuing to see growth. 50%y: linkedin is worth what it was a week ago. is there any part of you that think maybe this would be easier orbetter if we were private if we were under someone else's wing? adam: we don't even think about that piece of it. twitter is a live platform. live is amazingly powerful for people and the business.
it is our core strength. on the video side, you see products like periscope which we areintegrated into twitter incredibly compelling for both areas, consumers and the business side. we have all the right pieces in place. the business is growing and ultimately, consumers growth will be there as well. emily: why not innovate faster or bigger? do away with the character limit and see what happens. adam: we have started refining the product. yesterday, we turned on a feature. it is an extension of our while you were away future. if you have not been to twitter for a while, we bring the very best tweets right to the top of your timeline. you pull your timeline again and you go back to life. -- live. with content creators on the platform giving incredible
insights and information. think about what has happened over the last two weeks in the political realm. when politicians want to speak directly to the world, they do it on twitter first. for the super bowl, we had players and journalists communicating about the game. who decided toe retire just through a tweet. you cannot help but think and know that twitter is a platform that is going to continue to dominate. emily: jack says his number one priority is recruiting. what are the gaps that need to be filled? adam: a big one was on the marketing side. communicating the value of the company to consumers in a stronger way was one of the priorities that jack and i had over the summer as we laid out the strategy for the company. i'm happy to say that we've done that.
has just joined us. she started this week as our chief marketing officer. she will get right to work to help do that, both on our performance business and for tv as well. you can see the interview and fall today on bloomberg west later today. plus, the cisco ceo. the tao halfing its losses for halfing-- the dow its losses for the day. opec is willing to cooperate on a cut. well down to $26.14, the most since 2003. ♪ we live in a pick and choose world.
good afternoon. i am betty liu. you are watching at this hour stocks getting slammed. it lowest level -- news that opec may move toward a cut in production. -- appears inell her second testimony on capitol hill are traders are not buying it. she left a slight door open for rate cuts. yellen: the single most reliable and predictable tool for affecting the stance of monetary policy is variations in short-term ies