tv Bloomberg Markets Bloomberg February 12, 2016 12:00pm-2:01pm EST
markets. from bloomberg world headquarters in new york, tgif, i am scarlet fu. alix: and i am alix steel. >> oil prices rebounding. alix: and bonds have been popular in europe for the last year. but are they about to pop? betty : first, we want to get to julie hyman. julie: retail sales are coming better than estimated, but we are seeing a rally on a couple of things. secondly, oil prices are
recovering. we have seen the correlation between the two that we have talked so much about. all three major averages are higher. as we just heard scarlet and , are we seeing a rally or are we seeing a rebound? take the dow as just one example. this is a two day chart. declines yesterday. gains equaling just about .02%. there is a preponderance of gain or movement coming from a handful of stocks. if you look at the movement, you have financials, again, counting for a lot of gains, goldman sachs, jpmorgan, travelers are the three top games in the dow. i also want to take a look at the average point swings. this is a look at the increased volatility. this is the average daily point
swing going back one year. the past year was 209. that seems pretty large. except, this year it has jumped to 319. we have seen enormous swings on a daily basis. it's fun to talk about that with the dow because we are talking about hundreds of points. to do withof it has banks, but also oil. we saw yesterday that oil was able to rebound. stocks got dragged along with it. julie: it's funny. even though there is still skepticism about opec coming to any sort of meaningful when we got the , we sawt to discussion oil rally, and it's continuing. that rally now up high 10%. energy stocks we have been watching -- up by 10%.
energy stocks we have been watching as well. down 7%. the dollar year to date, we have been seeing a slump, although a theof it has been coming in month of february. alix: mark crumpton has more from power news desk. mark: thank you. the u.s. national institutes for health and an indian company have the lead on developing possible vaccines for these ka virus, butthe zi no one is close to developing clinical trials. >> we are at least 18 months away from large-scale trials. is spread by mosquitoes and has been linked to birth defects. the secretary of state john kerry and his russian
counterpart agreed on a cease-fire in a meeting in munich, germany. they also agreed to airdrop humanitarian aid to syrian cities. coalition planes will still be able to attack islamic state. secretary ashnse carter says the united arab emirates has agreed to send special forces to syria to help local sunni arab fighters recapture the islamic state capital. the secretary says they will train local fighters. george clooney had a private -- george clooney and his wife had a private meeting with german chancellor angela merkel. they discussed ways to help syrian refugees. they were accompanied by david miliband, the former british secretary who now leads the aid group international rescue committee. they plan to meet with refugees in berlin. news 24 hours a day
powered by our 2400 journalists in more than 150 news bureaus around the world. i mark crumpton. back to you. scarlet: thank you. the global stock selloff is taking a bit of a breather today, but that does not mean there will be a rebound. ofx: many investors are wary jumping back in. joining us to talk about his the portfolio manager at high investments, kerry. what are you hearing right now? john: people are concerned when turmoil the market in like this. we are seeing strong balance sheet's and dividends so point dividendsings -- supported by earnings. we are telling people to take advantage of more attractive prices now if they have a
long-term outlook. scarlet: is this a recovery or a little bit of a breather? john: what i find interesting about the market so far this year is that beneath the surface there has been a change in market leadership. last year, the russell 1000 growth was about 9.5% ahead of the russell 1000 value. this year, value has edged ahead of growth. both indices are down, reflecting some of the concerns about global economic growth and , geopolitical events and so forth, but the knees the surface, value stocks have been making a little bit -- beneath the surface, value stocks have been making a little bit of a rebound. people thought that perhaps with higher interest rates value stocks would struggle, but this year, the change in leadership may in fact be indicating that people think there might be another leg of growth ahead of economy might,
despite many near-term expectations, have a rebound, and it might not the as bad as people think. alix: i want to take you inside the bloomberg terminal for a moment to look at the two year yield. the five year yield has sold off so much more then a two year. it seems like medium-term expectations have become significantly more negative over the last few weeks. when you look at a chart like that, does that make you positive on those value stocks or are there more concerns for you? again, the signs i am seeing in the market are .entative we still have a lot of questions, i think, about earnings growth, international economies, and these crosscurrents, i think, are creating a lot of turbulence in
the market. we may have some weeks or months of turbulence ahead of us, but i personally think consumers are in pretty good shape. doingusing industry is well. there are prospects for improvement in international economies. the dollar has weakened against all the currencies except to the british pound. that puts companies in a more competitive situation, provided there is still some demand in struggling economies. a little worrisome is the weakening of the chinese yuan versus the dollar. we will see how that shakes out. but i am always optimistic and bullish. i look at longer-term and see a lot of companies doing great things. at these price levels, i can see ofot of stocks in a lot different sectors and industries to take an interest in. how has the aspect of negative interest rates changed your outlook? whether it is the bank of japan
or sweden moving into negative territory? john: the possibility of negative interest rates was raised during congressional hearings that janet yellen testified at this week. i think interest rates may move a little bit higher this year. i am not looking for very much movement. inflation remains subdued. it's aly, i think constructive environment for a lot of companies. i think it's going to put a lot of pressure on companies to have real unit growth because they are not going to have a lot of pricing power. and: to wrap this up rounded out, you mentioned you do see some attractive sectors. where do you see the value? john: we are especially intrigued by some of the sectors and industries, companies that appear already to have discounted a rather weak
economy. if the economy turns out not to be as weak as people expect, based on what we are seeing in the markets on a daily basis, those stocks may have more near-term recovery potential and appreciation possibilities them some of the stocks that are still trading at reasonably average to someone above average valuations that have had growth in earnings over the last couple of years -- some what above somewhat above- average valuations that i've had growth in earnings over the last couple of years. industrials, -- have had growth in earnings over the last couple of years. industrials, utilities, finance, stocks that reflect weak economic outlook. insightank you for your , john carey. up, a congressman weighs
in on how negative interest rates affect european banks. from london, the worst of the price slump isn't over. we have your inside look. scarlet: and one person says this is a manipulated market. we have more details coming up. want to missl not our exclusive interview with mark cuban. we will interview him from the technology summit in toronto at 1:20 p.m. eastern.
julie: a key analyst says u.s. steelmakers are likely to imminently file a trade case versus chinese stainless flat rolled imports. we are talking about the refined products, so to speak, from steele, as opposed to raw material, but it looks as though steel stocks are rising. the analyst also said this could -- this could prompt a rally in stainless prices. the price of copper also rising today. this stock has had big swings of late, up 16% today. a lot of volatility in that one stock. also, switching to technology and electronic payments, we specifically are watching square today. after a filing yesterday, visa said it had purchased convertible shares that would be asvertible into a stake of
much as 9.99 percent in square. we have an analyst saying this could potentially pave the way eventual takeover. as we know, twitter and square share a ceo, jack dorsey. we also saw a bounceback and twitter today, shares up by 9%. alix: shares of commerce bank jumped the most in three years today after fourth-quarter profits beat analyst estimates. scarlet: still, the bank faces a number of challenges. earlier, the ceo spoke about the impact of negative rates are having on his bank. see negative interest
rates already for some time. we are trying to price also deposit holders on the negative side, but you can't pass on these rates for private consumers, so of course, there is a certain margins wheeze on the deposit side. we are trying hard to offset this, but it creates a difficult earnings environment for banks. >> mario draghi is going to be ,onvening the ecb on march 10 and there is a lot of speculation that we could see negative rates going even further. is that something you would be happy to see? would you advise against that? >> on the banking sector, of course, it will put another burden, but the ecb has to take increase bank to balance sheets but to instill policy. that is their position and we
will see what mario does in the coming weeks. needs the banks, and europe needs the banks to be working properly. look at what is happening. you just described the effect negative rates have on your business. this something you think will ultimately be positive for the european economy? a significant burden, the negative interest rate environment, on banks. the prophet, if you look at the overall credit supply in europe, that is slightly up. gross numbers, we expect those this year to be around 1.3%. that is not great, but the economy is growing. profit growth will be better. at i think we will see painfully slow recovery in europe, but things are moving forward. you -- when
>> when you look at what is happening with your bank, you have done an awful lot to get out of some of the riskier elements. the market done, specifically, that you think people are going to be worried about? where is the risk and your generates at that 33% drop in the stock price? wakes if you look at our balance sheet and the numbers we published today, we continue to deal risk our business significantly and to strengthen -riskapital position, -- de our business significantly and to strengthen a 33% drop in the stock price? wakes if our capital position. i think it has more to do with a banging sector over -- with the banking sector overall than with us specifically. shift their
economic outlook, then bank shares tend to move a little more. i don't see any specific problems in our balance sheet. i think we have dealt with most of the problematic efforts by now -- elements by now. ahead, the oil industry met this week in london and agreed that things may not get better. that story next. ♪
her family and personal life. as i mentioned, the shares took a sharp leg downward on this news, off by 5% as you can see there on my screen. in the retaileen industry and showed relative strength. the victoria's secret brand in particular has shown relative strength to read over the past year, it is down 16% -- strength over the past year. it is down 16%, but that is not as bad as some other movers. scarlet: -- oil: the outlook on the market is pretty bearish at the moment, but you wouldn't have known it if you were at this week's meeting in london. scarlet: the party was just as lavish as it's been when oil was
$100 a barrel. joining us is how the air. there is a great photo and description of some of the cocktail parties taking place last week. one event featured for roast lamb's, a sushi bar, chocolate truffles. bs, a sushist lam bar, chocolate truffles. there's no indication that oil is in a stressed position. contrast that with what the attendees think. how the air: absolutely -- >> the industry continues to entertain. they throw a big party in london. , the settingion festive, but, very
the conversation was very pessimistic. worried. is oil is not $100. this downturn in price is scheduled to continue. it may not change until the end of 2017. from iangot a quote taylor saying look, you have to believe there's a possibility that you will not necessarily go back above $100 a barrel ever. so, admitting $100 is not going to be in the cards. you get to the impression the industry would re-rate it to a $30-30 five a barrelbarrel -- $35 market? be the $60 is going to ceiling and $30 is going to be the bottom range. the industry is getting prepared , and tough year in 2016
probably also 2017. know when i met had any hope we -- no one i met had any hope we would see $100 again anytime soon. there is so much supply of oil. what kind of sense did you get that the executives were discussing the possibility of consolidation, m&a finally taking place? >> everyone is expecting to see more m&a this year. ofy are taking advantage these stress we see in the u.s. sales sector. is the assetlem spread is too wide. sellers are hoping for a quick recovery. i was talking this morning with a banker and i said you were asking me at christmas time what was my sense of the crisis, would we see a recovery in the second half of the year, prices
recovering around june? if you ask me today, i don't think we are going to see any recovery until 2017. aobably, we are going to see potential increase in m&a, but one of the big surprises too many here -- too many here in -- to many here in london is that after 18 months of these prices we have seen very little m&a so far. scarlet: and alex will be going to ip week next year. ♪
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word news from mark crumpton. mark: presidential candidates from both parties are campaigning in south carolina today. former florida governor jeb bush is trying larger than expected crowds. some events today and tomorrow are being moved to larger venues due to increased demand. hillary clinton is also in south carolina. she will attend a dinner event along with bernie sanders. occupants of an oregon wildlife refuge go before a judge today. they surrendered to agents yesterday. seven others in six states have been arrested, accused of being involved in the occupation. and identify dna has been discovered on to explosive else linked to assailants -- belts linked to assailants in the paris attacks. one of the belts was discovered in a paris suburb where the cell phone of a fugitive attacker was located. that persons dna was also found on the suicide belt of one of
the attackers who blew himself up. european countries will restrict passport travel by revoking a rule for two years according to press. greece is failing to sufficiently protect its border. some 2000 people are arriving greek islands in boats from turkey. the pope is traveling to cuba to greet a patriarch of the orthodox church. the meeting last week. it could begin a healing of the rift in christianity that began 1000 years ago. global news 24 hours a day powered by 2400 journalists in 150 news bureaus around the world. i am mark crumpton. back to you. bloomberg surveillance spoke with ollie on investments ceo earlier today. scarlet: we asked if we should
be confused by all the conflicting policies and messages. >> i am not sure we should be confused. we should be concerned. in the markets are. the markets are concerned. on investors that policy makers don't really know what to do anymore. central banks are really sing -- are realizing that inflation policies of not worked out. trying negative rates since the opposite signal to the market. it's not reassuring. it's concerning. it's signaling that the economy is in worse shape than anybody is thinking. and our fiscal policy is severely restrained and constrained by very high levels already. it's tricky to see how we will get out of this situation in the long run. >> when european countries were going into negative territory's,
it wasitories, interesting. suddenly, the bank of japan is doing it. it might have started a global domino. his that's what -- is that what happening here? >> again, you can't read too much into this because the markets are completely manipulated. be in their right mind would buying a jgb with negative rates? i wouldn't. are facing euro in savings. this is a manipulated market. what the ratenow of discount is anymore. tom: you bring a wonderful to this discussion. two years at deutsche bank as well. and looku to step back
at this week. did professionals like you see this coming? s: yes and no. we didn't see the downdraft in risk assets, but we saw the significant difficulty in returns. we have been saying for about that we would see very low returns from bonds and interest rates below 4% a year. as we move through 2014 and 2015, i think we were proven right. what does that mean no? expect over the next two or three months that there will be considerable upside in many of the equity indices. there is juice from here. the did you learn this from
london school of economics, the "juice?" we do it with a cathartic drop or do we grind our way back to a good economy? i think we are going to grind our way back to a good economy provided we do not have any major geopolitical risks, whether that is from terrorism or an unfortunate outcome in the u.s. elections. i think we will grind our way true -- through. but this is not going to be a two or three year process. this will be a decade or longer process. we have seen a play out in japan over a generation. there is no reason to assume it will be different in europe. >> to develop tom's theme a we have seen the
banks really battered. you mentioned earlier in the that volatility is eye watering. is that where i will generate real rates of return this year? >> i think you are right. correlations have increased significantly. the ability to arm a trash security -- arbitrage security sector hasular weakened and that's why managers have not performed well. area, butfects is one i think overall volatility is another. cashossibility of holding is not high, so let's hold some liquidity and when there is significant volatility, let's buy cheaper. when the markets get ahead of themselves, you can take some profit. islow the market where it
rather than being obstinate in terms of generating opportunities from 20 years ago. meanwhile, down in mexico, shares of mobile are making a big comeback today. carrier sawwireless profit margins to a new love. david spoke exclusively with the son of the world's fourth richest man and asked him what he is doing to turn the company around. >> as we have in the past, we are in basting -- investing in making our networks stronger and broader. we have a state-of-the-art network. a threesay we have strategy program. one is to keep generating new sources of revenue, particularly
the services supported by telecom that can bring many strong benefits to our customers. we are working very strongly in inerating more efficiencies the execution process, generating savings in the places have technology, improving our processes, and improving customer service. agenda.n the top of our that's where the strategy looks ahead. looking at your place in the market in mexico, what is your hope? , there isf all
intense competition from our our rates have gone down. more services have been brought. there are more participants, more companies participating in the market. from the other side, we have all theshed requirements from regulation. we believe there is intense competition in the market. , we have been able not only to achieve all the regulation requirements, but to keep building a strong company. >> just a last question about your growth strategy. you put a lot of investment into brazil. expansion in at the western hemisphere, are you having to retool your strategy
in brazil, and if so, where are you looking outside that country? >> as you know, we are in 26 countries in mexico and in latin america, the united states and europe. , we are working on these three strategy policies , looking and developing new revenue stream sources, mostly on the service side. we believe there is potential for to participate more actively our efficiencies, lowering costs, doing more efficient processes so we can address the market faster and doing it in a more efficient keeping our customer service relationship with all of our customers. >> were you disappointed in how things have gone in brazil in light of the economic downturn there? reality that political
refugees are having a tough time. investing. anyre generating efficiencies we can generate. strongeve there is opportunity for revenue. coming up on bloomberg markets, the uk's so-called google tax will need a new name. the tech giant will tell us why the british law doesn't apply to them. deutsche bank may not be able to make payments on bonds. this is had a ripple effect through european banks. we will discuss. thehe doesn't just own mavericks. we sit down with mark cuban at the nba all-star tech summit. ♪
abigail: welcome back to bloomberg markets. i am abigail doolittle at the nasdaq. on the week, all three major averages are on pace to finish down. dragging on the nasdaq today, activision. the company is off sharply after holiday sales plunged, causing an earnings miss of about 3%. at least two analysts are defending the stock, saying it should be bought in its weakness. netflix shares are popping today despite a downgrade. subscriberowing growth in the u.s..
shares are down more than 20% you to -- your today. fourth-quarter earnings beat estimates by 35%. analyst carlos santa rally -- an analyst at deutsche bank set a price target of $82. i am abigail doolittle at the nasdaq. now, more bloomberg markets. you are watching bloomberg. i'm scarlet fu. alix: and i'm alix steel. scarlet: here is what we are watching. european banks have struggled, but commerce delivered a surprise in its report. google is stepping up the fight in the u.k. what is behind the tech battle? with one of start germany's largest banks returning to profit in the fourth quarter. commerzbank posted earnings that beat analyst estimates, almost
doubling its consumer banking business. the ceo explains the recovery going on in europe. >> we expect growth this year to be around 1.3%. it's not great, but the economy .s growing faster growth would be better, but i think we will see a painfully slow recovery in europe. deutsche bank is moving to reassure investors about finances. the bank plans to buy back about $5.4 billion in bonds. deutsche bank is seeking to instill confidence after its debt rose to the highest level since 2011. bloomberg, he rebuffed critics who doubted his ability to revive southeast asia's biggest economy. >> i still have four years to achieve that. developed,ucture is
manufacturing is growing, and tourism is doing well, then the growth will begin to show by the fourth or fifth year. has told the british parliament it won't be paying the so-called "google tax," attacks -- a tax introduced last year. apply under an't settlement google reached with the u.k. quick takeme for a where we provide context and background on issues of interest. today's topic, coco bonds. these have exploded in popularity in europe. is the situation. since 2013, europe's banks have been selling a new type of contingent convertible bond, or cocoa. a's an attempt to avoid repeat of the taxpayer bailouts
after the financial crisis. but deutsche bank is tumbling. here is how they work. securities are considered a cross between a bond and a stock. selling them raises what is called additional tier one capital, a bank's first line of defense to absorb financial stock -- shocks. contingent convertible bonds suspend payments when a bank runs into trouble. that's the contingent part. if the banks financials deteriorate further, the bonds can lose their value entirely or be changed into equities. that's the convertible part. they put the burden on bondholders rather than tax ayers to share the pain -- taxpayers to share the pain if the bank has to downgrade its assets. there is an awful lot of skepticism. the securities are complex and
can have varying definitions of capital. and they are completely and tested. when the first one does go sour, it is possible investors could flee all cocoa bonds and rattle the credit market. it remains to be seen if they will help shore up the financial system or weaken it. alix: this has been your global business report. for more stories, had to bloomberg.com. cocog up, more on the conundrum. we will see how the selloff of risky bonds is bleeding into other parts of the market. ♪
no good very bad few weeks. this is one measure that shows that in some cases it was worse than the 2008 financial crisis. every time this white line dips below this green line, it indicates stress and an oversold condition. this is a weekly chart, but if you were to look at it on a daily basis, you would see that european banks have been in oversell territory 12 times than 2008.ry, more this is on a weekly basis. but when you look at the share price action, it's incredible. it's at its lowest since august of 2012, right before mario draghi pledged to do whatever it takes to save the euro. alix: and he has done whatever it takes. but we still have oversold levels. incredible. i was looking at the credit default swap market. i wanted to check out what was going on with european banks versus u.s. banks. come inside the bloomberg. you are looking at five-year on americault swaps
subordinated and senior debt. the purple line and the green line here. you see the huge run up there, europe is much worse than its american counterpart. it really goes to show the stress of the market. scarlet: absolutely, and it all started with deutsche bank's contingent -- convertible bonds. deutsche bank and miss payments and it's not necessarily considered a default. alix: we are joined by the president of euro link securities alpha value. more tothis is related market moves than balance sheet deterioration. you make a great point. creditlook at the stock default swaps versus the coco, it was the stocks that moved first.
>> it's very unusual. usually, you have the credit default swaps move first and the market follows. you can see that the stock starts to go down. there is some selloff in august with the remand the -- renminbi devaluation. then the selloff in october and the action in december. slightlys were down into december and in january, started to accelerate. at the same time, markets were weree -- cds markets stable. it's only when the cocoa bonds to sellbonds started early this year that you saw the credit default swap market increase in europe, and that is quite unusual. scarlet: what is the number-one
question your clients or customers ask about these coco bonds? it's a new product. what did they want to know? >> people don't necessarily understand very well the product. there has been a lot of talk at the central bank about missing the coupon. people don't really understand cdsially that there is no on coco bonds. you can miss the coupon and it does not create debit. correlation normally between the cds market in these types of things. the issue with the coco bonds, it's a new market. it was never tested under stress. that unliketoday what it was designed for, which was to reduce disruption, it actually increases disruption.
have evolved on what they want to do. there are a lot of things people don't understand very well in these bonds. on one side, you have the trigger. on the second side, you have the regulatory -- regulator who can enforce the bank to pass the coupon. thank you so much. interesting point. it might be the regulators who say hey, guys, we don't want you to pay that coupon. you have to pay us instead, and that's an unprecedented world. scarlet: absolutely. coming up, an exclusive interview with dallas mavericks owner mark cuban. ♪
scarlet: from bloomberg world headquarters in new york, good afternoon. i'm scarlet fu. i'm alix steel. financial shares leading the way -- will the market slump finally come to an end? bloombergnd a exclusive interview with mark cuban. who is he supporting for president? why is the loony making nhl players crazy? head overirst, let's to the bloomberg markets desk where julie hyman has been keeping track of the games today. still at session highs? it will be interesting to see if they will stay into the close going into the three-day weekend. that will be the test of the rally.
you look at the s&p 500, over the course of the day, you expect that upward trajectory hovering at the highs. we will talk about the s -- the catalyst for this bounceback in a few minutes. also oil gaining does not hurt matters either. take a look at the bloomberg on the sectors. financials the best performing group in a big way, just as they have been the weakest group so far this year. andou look at the bloomberg the imap there -- materials gaining along with oil and we are seeing oil prices -- industrials also coming back after declines. the only group not doing well, utilities after we see an increase in bond yields. we tend to see them move inversely. if you look at the performance of the major averages, we are still seeing declines. alix: so, is this a dead cat
bounce? or you could say if you are short, you do not want to be short and to the three-day weekend as well. but people are finding fundamental reasons to buy? julie: yes, they are. via thert came to us bloomberg, the chief equity strategist at citigroup. this is a chart we looked at before, but one that, according to some economists, does not bode well for the markets. spread between the manufacturing and nonmanufacturing indices. do more poorly, which according to some , means -- it then will sell following the financial crisis and he has not
reclaimed that spot. he says products from services oriented companies accounting for more than 50% of the rapids of the s&p 500 will cushion fromll profits somewhat manufacturing declines. scarlet: it's a matter of big debate whether this will happen. julie: yes. alix: let's get to bloomberg first word news. mark crumpton has that from the news desk. former florida governor jeb bush is drawing more than expected crowds and has picked up an endorsement from former south carolina first lady iris campbell. john kasich is making a three-day swing through the taking to campaign the airwaves with two new tv ads. he is also praising the support of former chris christie backer -- throwing his money behind
john kasich after christy's decision to drop out of the race. a band being reversed on donations from political action and being lifted some time in the last couple of months. it was introduced in 2009 by then presidential candidate and -- in 2008 by then presidential candidate and illinois senator barack obama. at the annual munich security conference, abdullah said that arabs have a duty to be in the lead against isis, which he called "outlaws of islam." ourhis is a war to protect religion, our values, and the future of our people. but it is also an effort that must be global in partnership. mark: ahead of the conference, diplomats agreed to seek
temporary cessation of hostilities in syria's civil war within a week, although efforts cease-fire lasting fell short. secretary carter and has agreed forces to syria to help local fighters recapture the capital. a massive collection of papers belonging to the author of "the godfather" can be yours if you make them an offer they cannot refuse. it includes multiple drafts with handwritten revisions to the novel in the screenplay. the collection is expected to sell at auction for $400,000. global news 24 hours a day powered by our 2400 journalists and 150 news bureaus around the world. i am mark crumpton. back to you. scarlet: stock market investors
may have been dumping shares, but u.s. company executives are stepping in to buy. 299 directors and officers of companies are just their own stock, compared with the white line -- actually, i should save the white line is a ratio in it shows the ratio is the most bullish in more than four years. a group that has correctly picked market bottoms since 2008 are leading the buying. joining us now from boston with chiefs michael roney, u.s. globalt advisors, overseeing more than $2 trillion in assets. did jamie dimon just say to buying new stocks? -- guest: they sell stocks for many different reasons. it's hard to get real
information from when they sell. ofn they buy, it is a sign confidence, so it would indicate jamie dimon believes strongly that j.p. morgan shares will be stronger in the coming months and years. scarlet: executive buying has been higher now than in 2008 -- twice as high as it was back then. and it has proven very prescient as well. is this a short-term pop? guest: i think it is a display of longer-term confidence. to me, it signals that the market is a little oversold here. remember, a lot of the underlying conditions that have existed through the bull market through 2009 2 the middle of last year are largely in place. low interest rates, benign inflation normally a decent
backdrop for stocks. and i think financial executives are recognizing that. scarlet: companies have been buying back shares for years now. withis the distinction individual executives buying shares versus companies lying shares. -- buying shares? guest: i think it is a distinction with the real economy gas capital expenditure projects, real investments and that leads to financial engineering like share buybacks for example. it is different when an investor , when executive is buying stock on behalf of themselves, on the direction of the market and a company. what i would be careful about here is this is different individuals. we have seen pockets of financial strength saying that
conditions are oversold. i would not say that this is a signal for the broader market. i do expect market volatility will continue. but where there is strength for insiders, that is a good sign. jamie, it makes sense because financials have been really hard hit. we have seen buybacks in technology and consumer discretionary as well. -- scarlet: michael, you are looking for for signs to see if we get a market rebound. confidence china will avoid the and the path, of interest rates -- we could be waiting all of 2016 for any of the signs to come to us.
what to be markets look like while we wait? in the short term we should expect more volatility. the market has lost patience waiting for that growth. in anticipation, that monetary policy, quantitative easing would result in further growth. it seems like a lot of the things we have relied upon to get the growth or more normal trend growth all seem to be following up the same time. so, monetary policy, we have to look at japan in the last week -- it has had almost the exact opposite effect as intended. easy credit conditions is not going to address a world that is overly indebted, competitive devaluations in a world where global trade is rolling over is also going to continue to be a challenge, and certainly emerging markets growth, which has contributed to 40% of global gdp growth since 2010 and has
point 5% growth, it is growing at 4% at a time where it makes up for percent of global gdp. it will be hard to overcome those things. i expect the markets to a volatility in the near term. alix: thank you, michael, for joining us. chief strategist at state street and boston. up, a change in the etf landscape? the president and owner of the dallas mavericks is live at the munich summit. he will talk market volatility in fantasy sports. scarlet: and kenneth feinberg weighs in on big banker bonuses. ♪
alix: welcome back to "bloomberg markets." i'm alix steel. scarlet fu. john paulson diving back into debt -- the hedge fund managers seeking to raise money for private equity for companies in need of rescue financing. this will focus on less liquid firms and coinvestment. shares rising and then breaking, after news that the ceo of victoria's secret is out and leslie wexner will take over. shewill write or excise -- will prioritize family as she position.her next scarlet: and another invasion
ofthe decepticons. alix is marking her calendar. the next installment is going to star mark wahlberg, marking mark, and be directed by michael bay. alix: are you kidding? rk, michael bay? yeah. and i see isaiah on a lot of nerd things -- julie: i've got to break with you on this one. you say the words "michael bay" to me and i am out. alix: i'm in. julie: we're talking banks now. a far more interesting topic. a volume monitor on the bloomberg for the various sectors, but the average daily volume versus the 20-say averages down across the board.
we will see a surge of about 20%. we are seeing a lot of banks increased today. j.p. morgan rising after jamie said he waseo, buying 500,000 shares of the company. bank of america also rising, but this comes on the heels of a rough week -- a rough year for banks, essentially. well --ould mention as not only are the financials and the banks the worst performing groups this year, this index, this s&p banks index has only risen one week less far in 2016. the action we saw today, not just talked by jamie dimon, but european banks as well. deutsche bank confirming it will $5.4 billion of its owns bonds, commerzbank one of the rare european banks to release earnings that beat
analyst estimates. they pulled up european and u.s. banks today. alix: thank you, julie hyman. goldman sachs wants to create a new etf that would be based on a famous research report. could this be a game changer? how would that even work? reporter: right, so goldman sachs filed. it's interesting because it is called the goldman sachs and hedge funds -- goldman sachs vip etf, and that's the same language they used in another fund where they look at the hedge funds, the 50 stocks they are most committed to and you have read those reports. it's not like that is a new concept. there is another etf called guru that does something similar. the interesting thing about this is there really has not been any wall street banks that have
gotten into etf's, that had tagged etf's to their own research report. goldman in particular, people read everything that they write. they are playing to their strengths. so, that is why it could be a game changer. this is also a way of monetizing the research as well. for that research, the investors do. does that mean that they could charge a lot in fees? perhaps. goldman has come in very low in the etf space. that should surprise everybody. they are very much a cheap provider. i do not know if this will be comes-- look, if and etf in over 80, 90 basis points, it probably will turn off a lot of people, but given a lot of their other products, it probably will be cheap. ,nd etf's democratized this
these areas making it easier for the investor. wall street research will give them access, but that would not make it redundant. if you have read a goldman report, you know there will be 40 pages -- you want the details and the minutia, you can go get the report. scarlet: and you have to pay for that. alix: and also part of the report, they said high sharp ratio stocks do very well. those of the twt fl they are piling -- filing based on reports. scarlet: how long to get approval? reporter: 36 months. alix: all right, thank you. scarlet: we are going full-court press with the mba summit in toronto. we will have an exclusive interview with mark cuban. ♪
scarlet: welcome back to "bloomberg markets." i'm scarlet fu. steel.'m alix oil prices continued to plunge, 's ceost yesterday hsbc announced the cancellation of a global pay freeze after back from -- backlash employees. scarlet: betty liu sat down with ken feinberg. kenneth: there is growing pressure that if we do not know the gap between the well-off and the less well-off, there will be attacks on pay, some sort of regulation, or on the fdic, sheila bair did a
wonderful job. i think we will see more and more of that. that is the pressure. betty: should the bonus structure be taken away, for instance? ken: i think if the bonus structure remains, it should be based on shareholder value, not personal, individual bonuses. when i was at treasury, as you we thought if you were going to pay a high-end corporate individual that should the tied to the overall financial performance of the company she or he is administering and not personal benchmarks or objectives. and it ought to be paid out over 2, 3, 4, even five years -- long-term. not short-term. and i think if you are going to have bonuses that is the way it
ought to work. --ty: do you think though and i have always been curious to the euro opinion -- but do you think the pay structures of wall street firms and also in europe, that is an incentive for people to go long? ken: i do believe that. argument that you see on the other side is -- if wrong is not illegal or involves risk-taking or short time gain, that incentive ought to be discouraged. i think what i did was send a signal. i do not think there has been any long-term benefit from what i did. i think just the opposite. and i think wall street, if it had a little bit more vision and political sense, it would recognize on its own that we better rain this end, because otherwise, there will be political -- political --
, and political consequences in an sec, theation at the fdic -- betty: politically you are seeing that, don't you think? you are seeing candidates trumpeting that. whether you see any hard --dence of that, i don't what might be is a warning signal to people on wall street voluntarybetter take action or rue the day. scarlet: and that was betty liu with kenneth feinberg. on, guys. an event in toronto bringing together the biggest influencers for sports media and technology. stephanie ruhle is standing by with a true renaissance man, mark cuban, the
owner of the dallas mavericks and cofounder of ht net. who is better to sit down with on all things technology than mark cuban. he or we are talking about going global at a time when firms are going global. : it's not new. we have been there more than a decade. we turned basketball into the second most popular sport in china. markets are up and down. there will always be cycles of business. stephanie: and you do not think we will see any slow down there? mark: sure. mean stop.es not the smart way to play slowdown is to invest more. stephanie: do you feel that way
about equity markets now? it's tough to make money and volatile times. more investors are sitting in cash today than we have seen over a decade. mark: it's smart. we are going three market correction. we do not understand how the different asset classes are correlated and we see so much algorithmic traffic driving -- it's not about fundamentals anymore. and when investors or traders do not understand what is going on, they get out and go to cash. it's not a surprise. stephanie: what are you doing? have hedged the positions i like, like netflix. i have some smaller caps that really do not move. i have bought some lottery tickets -- stephanie: literally? mark: literally. the 120's, i in think i bought when they were $.25, and now they are at or near the money. and so, because i'm not quite
sure what is going on, two things will happen. differentl take fliers. three things -- teed up i will hedge, and three, i will do things that fall outside common sense. let's just say netflix, a company i like, false to 10. won't happen, but let's just say. or twitter. customer. on the at 15 i think it is fairly valued. at 10, i load up the boat, right? after cash, it's probably an eight dollars stock, and i think it's worth it. those types of aberrational trades and having the cash to swoop in and get them. stephanie: what about really good or well-run companies that are dependent on factors outside their control? oil for example. , they areces go down not necessarily a buying opportunity. do you check on the operating cost and leverage, they got nothing -- 2008, i went hard-core
into mlp's, because everything got the leopard and i tried to take advantage of that. i got 15%, 16% back then and they have increased their dividend. on a mark to market bases, i'm getting crushed, but i'm fine. i still getting paid a lot of money. i have not had any of them that have come close to not being able to cover. it happens. to create hedges. the point for me is i'm always looking for a hedge. there's always going to be uncertainty. there's always a genius enable market. i will give up a little upside to protect my downside. it paid off for me in 2008, 2000 nine. it's not working too badly. emily: where did --stephanie:
where do you think we are in terms of the cycle? some say we are headed for recession, and some like president obama say we are in a true economic recovery. two totally different things. we are going through a market correction. it's not fundamentally driven. it's even less technically driven. i mean, machine learning is that a whole different level of simple traders or funds or anybody for that matter. and then you've got the economy. as much as we would like to the market indicates what's going to happen in the economy, it's just not the case anymore. i always like to go out and give speeches and one of the questions i will ask is, who thinks the stock market is safer today than it was 10 years ago? nobody ever raises their hands. blameash crash, and they it on some guy in his underwear in london -- stephanie: sweatpants, not
underwear. mark: if everyday people do not trust the markets, they are not getting the upside or pushed up and down by what is happening now. stephanie: but given all of , should they sit on the sidelines? not that they should. they already are on the sidelines. a number of people -- when we went through the bubble of 2000 and all of the internet stocks, everything was going up, everybody wanted to talk stocks in the street. now nobody wants to talk stocks. it's not like with all of the volatility we have had from the start of the year it is the topic of conversation at every cocktail party. it's not. they will talk more about trump versus bernie sanders and will not make a connection to the stock market. are so, everyday people
disconnected from the stock market and the day-to-day. upset, butlittle they have been through it 100 times. when some people say trump versus sanders, they say what people like about trump, they should like about you. they say you should be in donald trump's position? in donaldld i be trump's position question mark i think i would do a better job, but i have young kids. can have more impact on the country and this world and innovators can have more impact on this country in this world than the presidents of the united states. think the do you current administration celebrates entrepreneurship? we know they celebrate tech. mark: they do. been at different functions that definitely celebrate entrepreneurship. have they done everything possible to make things better for entrepreneurs? no, but from the local to federal level, there is way too
that makesstrativia it too hard. but that's a topic for a different way. stephanie: but when mitt romney said corporations are people, he was vilified, but it's corporate america that creates jobs, health care -- we take one element, jen asked, baby boomer approach to look at corporations and entrepreneurship's. completelylook at it differently. today -- and i think this is part of the attraction of bernie sanders because you would think, why are kids so into someone who is a soft claim socialist? when you look at the most successful companies that, "shark tank," and i have invested in many of these companies, they have a social component to what they do. tom shoe copied the model one-for-one. i have a company i just invested in called flip-flops and they women, provide
schooling for afghani women. all of these companies have a social component. i have a company, the living christmas tree that delivers christmas trees and all they do is hire veterans. here's the thing -- these on for norse that, "shark i watch them. you push them on profitability. , thehing about millennials way they want to live and work, these companies do not make money. is there a time when these companies start to fall off? mark: two things. you're talking about two completely different things. if you want to sell to , you better have a social component. when mitt romney talks about companies or people, corporations are people, i think that was pre-social economics or under for nor should are seeing now because today to sell to , you better be
helping somebody, because those are the people, those are the brands they want to buy from. that is part one. put that over here. that is outside silicon valley. in silicon valley, they are in their own little world. they have lost touch with reality. you get a kid, because the graduated from the school or idea, thel with an get an 8 million dollars valuation, raise $2 billion, keep 75% of the company, it's ridiculous. stephanie: what's going to happen? mark: they are getting written down to nothing. they will go out of business. 90% of the companies that have come out in silicon valley, those companies have no chance. stephanie: no chance? them are saying 95% of done before they started. out of silicon valley, 5% will be amazing. stephanie: marc benioff has been outspoken saying, stop avoiding the public market. if you know how to lead, go public. get tested. a blog post saying
the exact same thing. i have been a proponent at that level for a long time. dearth of high growth companies. so now we look at facebook, netflix, google as hyper growth companies, when there are growth is behind them. what is happening now, the hyper growth in private companies is being bought out by private investors. i do not know that uber is going to accelerate their growth. stephanie: and early investors can't get out. mark: they are stuck. now with reggae plus, there are different versions -- i am working with different banking groups to say, let's go out and find companies that have $30 million in revenue, 100%-plus annual growth, 10 percent net profit after tax, and find ways to go public, because that accomplishes several things.
liquid wayvestors a to invest in hyper growth companies, which i think is great for the market and does not exist right now. it's great for the company going public because the visibility, the liquidity, the cash for trade, the liquidity for their employees, it makes it easier to raise capital, and being the old -- beholden to the market is nonsense. what is worse? crushed likestock linkedin, not meeting the expectations of private investors, having multiple down rounds when you try to raise equity and now you have no shot of going public. not stick with your sharks? why not knock on jack dorsey's door? why not invest in twitter? i think they have that silicon valley mentality that
works against them. stephanie: would you take a board seat if they asked? mark: i would talk to them. i think twitter is so fixable. stephanie: what would you do? mark: he has to call me to find out. stephanie: how about yahoo! -- fixable? mark: i don't know enough of their details. if you look at the expense base impaired to twitter, they are much more bloated. marissa mayer is trying to make those changes third i think yahoo! has a lot of core value, but silicon valley, that mindset out there, it is culture that matters in silicon valley has a very specific culture, the old hollywood culture. you hear about the old casting couch days of hollywood from 30, 50 years ago and you hear stories about people -- they are always looking over your shoulder for the next bigger star, the next better script. in silicon valley, they are always looking over your shoulder for the bigger unicorn, the decacorn, right?
austin, boston, new york -- there are so many places -- pittsburgh -- that are hypergrowth forts startups where the culture makes it so much better for growth companies that i think silicon valley has become a significant negative. it there's only one good thing about silicon valley. that is where people who create the assets are. tummy.who will buy your the vp's the connections to buy your company, and silicon valley is better then any other place in the world. not go bigger? you clearly understand the markets. you understand companies. you understand culture, leadership, entrepreneurship. the criticism of activist investors are, they only know how to play the market, but they do not know how to turn around a company. you can do both? do, every is what i
friday night on abc on "shark there are 20 million people who watch any given episode -- stephanie: but those are small companies. mark: that's the point. we reinforce the message that the american dream is alive and well. if there is a 10-year-old boy or girl watching and in the back of their minds there is an amazing idea and we give them confidence to go out and start that company, we send the message to them that being an entrepreneur is amazing. it's a great thing to do. if i can do one of those, to oppose, five of those, and have that spread, that is far more than i could do as an activist investor. stephanie: you don't look at ibm and say, i've got to step in there and turn it around? mark: oh, hell no. stephanie: do you think they have a chance? mark: they are so financially driven -- they have great
technology, but it does not drive their business yet. stephanie: last year, we talked about data and analytics and how it plays a big role for you and your team. that has only gotten bigger in the last year. how are you using it now? mark: there are teed up elements. how do you acquire the data, right? we went from fitbits and basic sensors and heart monitors and now everybody is trying to push new types of sensors, new ways to measure blood, whatever it may be. new sources of data is the first element and the second part of upside inreal analytics from a sports perspective. have you train the brain? how do you analyze the brain? how do you realize issues that are not obvious? we can put you in better shape than the $6 million man, but if your brain is not where it should be, if your mindset is not right, none of that matters. stephanie: a year later, are you
seeing results on the court? have a product called axon i invested in. all it does is train and train and retrain your brain. iq, see for basketball how quickly they can identify plays. here are different chain scenarios. how quickly are you able to make the right decision question mark we were able to take a rookie and run them through these drills, and you can see their progress and improvement. stephanie: mark cuban, thank you for joining me. the one, the only mark cuban, joining us, nba all weekend. i will send it back to you. scarlet: thank you, stephanie anchor.erg she will be back speaking to the owner of the washington wizards. alix: that was a really interesting conversation. current market issues. scarlet: what is the value of
investing in technology companies? and facebook can can still grow -- not hypergrowth, but that is ok. scarlet: he had very firm views. i love to the comet he had on individual companies. for instance, saying twitter's price is too high right now, it's very fixable. he gave us no details. said, jack, call him. there is too much silicon valley myopia at work and they need to break out of that mindset to come up with a solution. as for yahoo!, he does not know the company well enough, but says there is a lot of core value. alix: i liked what he said at , invested a lot in mlp's. so, yeah he is getting crushed right now on a mark to market faces, but based on when he in 2008, he is
scarlet: welcome back to "bloomberg markets." i'm scarlet fu. i'm alix steel. julie hyman has a look at the town movers. julie: we talked about one of them earlier, l brands, which had breaking news that sharon turney will be leaving as the head of the torilla secret. -- ceo of the company well will take over that part of the
company. victoria's secret generates two 's revenuethe company overall and turn he had been viewed as a potential successor to les wexner. are also looking at activision blizzard after they reported earnings after the close, missing analyst estimates. guitar skylanders and hero games disappointed. it is in the process of acquiring king digital. permission. health-care real estate investment trust lower today. it had a forecast below what analysts had been anticipating. it has been falling all week. and finally, sun edison, back in the negative column in a big way today.
company is contending with two legal disputes sending shares to a 14-year low. at a tuesday it will defend its acquisition of vivid solar, which we are going to use here. thank you so much, julie. now let's go to abigail doolittle, live from the nasdaq. abigail? abigail: lots of with saws up and down. out of the bear market that the nasdaq has been flirting with for many days now. one of the worst drags -- mylan, expressed extreme disappointment with being $9.2 meta. jpmorgan is anis shaw says it
overreaction and the deal makes long-term cents. shares of 9% after second-quarter earnings eat estimates, and importantly, strong third-quarter revenue guidance for facebook. the stock is up on the week. scarlet: now to the cross-section between sports and business. anchorerg " stephanie ruhle is standing by. alix: and she has a special guest, ted leonsis. stephanie, take it away. ted: -- stephanie: thanks so much. we are at the nba tech summit, but before we talk after -- talkwould like to basketball, i would like to talk about the businesses you are in. ted: there was all of this mania about unicorns, which i never really understood.
mythical creatures that were not able to adapt to a new reality and die the way? i did a blog post a couple weeks ago asking for smart investment again. increasing. are environment as a differentiator. and i think we will see a return to that. lot of volumeis a that will be burned out. in that would be overall negativity with what is happening in oil and gas right now, it's really driving the stock market crazy. stephanie: then are you a buyer at a time like this? ted: there are tons of companies -- i single out apple. i look at apple. they are trading like an industrial company right now.
greatest have the quarter in the history of american business and their stock is going down because of their body language for how they lean into the next year. onpanies with a lot of cash the balance sheet that are still organically growing, i think, are well-positioned, but public markets, those of the companies buying. stephanie: is this the point when you start to worry that some could take a turn for the worse? ted: if i were some silicon --ley investors, i would say most of these unicorn companies they come in with preference stacks that are deleterious to the actual founders of the companies, and this will be the next round of funding. we have tried to remain very, very disciplined, and there were times when that was counter to
what was happening, but i think moore and buffy said when the tide comes in, you see who is swimming naked, so i feel good about our portfolio. stephanie: sports media, tv rights -- it has been reported you are in negotiations to take a stake in a comcast sports network in the mid-atlantic region. where are you on that? do you need to control distribution? comcast is a great partner and they are paying fees to us and it's a very strong business for them and we would like to partner with them in a much more strategic way, and i am expecting we can do a deal where it is fair rights fees, but we can also get equity ownership. also, there is a new generation for cities on college campuses that may never get cable, something you should worry about as well.
how are they going to consume their news? what will they be watching? how will they experience games? we are looking at ott and evers as well. we will have news on that in the coming months but i am equally excited about. a big musicou are guide. people say you control the playlist during games. ted: i would not say that. stephanie: with pandora being for sale, would that be of interest to you? ted: i like pandora. in not looking at pandora or any of our funds, but i do think personalized streaming services, where mynnials, central generation, apple was important in itunes, and others -- pandora has become a very important time in their life. -- stephanie: what is the value proposition you have two
offer? a winning team? ted: winning, star power, and the fans know that you care about the end to end experience. we really do obsess about what they are hearing in the car, the pregame show, the experience when they walk in, what the beacons are predicting, what are want to eat, how clean the bathrooms? hundreds and hundreds of things that differentiate -- stephanie: but the big thing is winning. if you could have any player in the league, who would you want? ted: in basketball? stephanie: in basketball. wouldebron or steph curry not be bad. stephanie: what about hockey? i like my hockey team the way it is. we have the best record in the nhl and keeps getting healthy
and i like the way we are positioning the team. so great to have you on. hopefully the golden state warriors and the cleveland cavaliers -- your friend dan gilbert trying to steal from his own team. i'm going to send it back to you in new york. . are at the nba all-star weekend tech summit. i'm with ted leonsis. scarlet: all right, stephanie ruhle with an exclusive interview with ted leonsis. and speaking of holiday -- the nhl when he has a problem. it is hurting not only the league, but player paychecks. this is a problem because nhl in seven of 30 teams based canada. so what does it mean for the league and the players? a third of nhl revenue comes from canada, and that is ticket sales and franchises in a media dealn-dollar with rogers communication peerages looking at that deal, billionorth for
dollars, and it's a billion dollars off the top. scarlet: and it has changed up a lot. exactly. the canadian dollar was pretty low. winnipeg moved into the southern united states, québec moved into denver, so they moved a lot of franchise into stronger u.s. markets. right, thank you so much, joining us from bloomberg news on the loonie and hockey alix:. more bloomberg news on the other side of the break. the rally holding up. the dow is up 223 points. kind of a relief rally from the cell of destruction earlier in the week. we will be right back. ♪
from bloomberg world headquarters in new york, this is what we're watching. david: equity markets are rebounding after a tour in the week for investors, trying to separate sentiment from fundamentals. our bank stocks a buy? jamie dimon think so. we will look at why so many insiders see the outside mark cuban says the latest market turmoil as no surprise and why he says now is the time to invest and the american dream is alive and well. let's go over to the markets desk. it's definitely a relief rally in markets are taking a breather after what's been happening over the last five days of losses. this is a standard -- the s&p 500 is