tv Bloomberg Markets Bloomberg February 22, 2016 3:00pm-4:01pm EST
from bloomberg world headquarters in new york, good afternoon. i'm vonnie quinn info betty liu. industrials and materials make big gains across the board. each baiters getting a breather from volatility -- traders getting a breather from volatility. and the chairman and ceo of global advertising giant -- is here. maurice levy is here to discuss the acquisition strategy and the potential for a british exit from the european union. close one hour from the of trading and stocks of been rallying. let's head to the markets were julie hyman has the latest on the blue-chip index.
julie? as thewe saw last week best week of the year for the major averages. there is lower volume than we have seen over the past 20 days. we have seen some of the worst performers of the year rebound and that really continues in today's session, all three major averages holdings deadly -- holding steady in a relatively tight range. if you look at the dow, for one example, throughout the day, we saw the gain and then holding justy, getting a bump up before 2 p.m. we will get two more of that in a moment. in addition, i'm looking at the seasonal chart on the bloomberg here, in this looks at monthly performance. the dow jones industrial now in the green for the month of february, up .9%, in this obviously represents a
turnaround. the nasdaq is still lower on the 500 is any on s&p to gains. a lot of the gains have to do with united technology. we saw surges, on news that discussion toin buy. that is not yet confirmed. that stock is holding onto a gain of 6%. other big gains, a pretty diverse group -- boeing, chevron, united health gaining with the new medicare advantage rates on friday. also want to look at the best .ut performers on the year verizon gaining on the year, walmart, kind of surprising on this list. it had been gaining on his perception as a more defensive stock. oil is down for the year to date. it has that big rebound, vonnie.
much,: thank you so julie. we will check in with you before the close. mark crumpton is manning the news desk. mark? mark: thanks so much. 45-year-old jason dalton has been arraigned on charges in connection with the shooting kalamazoo, michigan. he invoked his right to remain silent and ask to be represented by a court-appointed attorney. saturday's shootings took place while dalton was on his shift as a driver for uber. british prime minister david cameron warns there will not be a second chance to stay in the european union. forferendum has been set june 23. he made his hitch to stay in the eu before members of parliament. mr.e minister cameron:
speaker, this is a vital decision for the future of our country, and i believe we should also be clear it is a final decision. minister cameron is going up against the popular mayor of london, boris johnson, who has come out against staying in the eu. hedge funds managers stanley druckenmiller is backing john kasich for the presidency. in an e-mail, he says for state -- michigan, california, new york, and pennsylvania -- can give john kasich a path to the nomination. he says that the idea that marco rubio the most electable republican is "misguided." he has one of the best investor track records in the past three decades. michigan governor rick snyder under indictment for failing to to turner documents --
over documents. a elijah cummings want to be compelled. a petition to recall the governor has cleared a major hurdle after failing five attempts. chief justice john roberts is remembering antonin scalia a as he irrepressible spirit." called scalia "our man for all seasons and we will miss him chair measure." scalia's will remain draped in black next month.l global news 24 hours a day powered by 24 hundred journalists and 150 news bureaus around the world. back to you. the selling from january takes a breather. how long will this last. mohamed el-erian said that last
week equity traders got a much-needed breather from all attila been at putting markets. this may be a prelude to renewed volatility in the weeks ahead. the head of commodity markets at bnp paribas discussed volatility. have a listen. ofwe are in an era diminishing returns in central-bank activism. i do not think they are negative returns. i think a lot of what has been going on with risk appetite -- risk appetite, but where is the bottom in the oil market? i think a lot of that is not some much the level of oil prices. falling?keeping if we hit a bottom, you can see the risk appetite shift pretty markedly, i think.
>> you point out what is happening with crude. how about hsbc earnings? when we talk about that correlation, people scratch their head. why is that happening? look at the bank earnings. chef but absolutely. in terms of volatility, there -- >> absolutely, in terms of volatility, there are number of factors. can central banks calm volatility or not. when we look at the fed raising questions whether it can raise rates, that will cause issues -- dollar strengthening, issues with asia and currencies. that is what we are facing today. what are central banks going to do and what impact across different asset classes? >> one of the things that wasmed el-erian pointed to central banks, and earnings are disappointing, richard, and the
reduction of patient capital, or maybe the growing impatience of capital and he thinks those three things together really pulled well for the equity markets. do we extrapolate? he is absolutely right. we do have policy divergence and i think we have policy concerns. the story has been low rates supporting multiple expansion. i do not think we are in that world anymore. world in a single digit for earnings. that is clear. stephanie: the impact that oil has had on sovereign wealth funds, what does that do to the global markets? we think there's potentially $400 billion inequities that could get told off by sovereign wealth funds. that has a global impact. >> clearly, if you are talking about redemptions. i think that is the key issue.
what asset class to you go into? do you go long or short boards try alternative -- long or short or try alternative solutions? richard: there's a lot more uncertainty this year than there was last year. you have the concerns in europe over regulatory treatment, resolution authority, negative rates in japan and other countries. we have the news a week or so ago that in the fed stress test, they are doing a scenario for negative rates. i think that is hitting back in particular. i also want to come back to oil, defaults. there are re-determinations we have learned about. when the banks start looking at these global lines of credit. i could be a real headwind. richard: that is exactly my point, david, to my point a
moment ago. he said zero could be another, i hope we do not get there. the uncertainty will be lifted a little bit from the energy sector. stephanie: are we too skittish? every day we get a different data point and the market jumps. it seems like there is a black of conviction. so many different issues are plaguing the market? >> if there will be a catalyst, it may very well be in beijing. the chinese leadership just replaced the head of their securities commission. changing the deck chairs does not solve the problem, but china has had issues and a lot of uncertainty about their currency policy. a policy that has not been
emphasized, they are leaving the g-20 this year. i think they will be under possibleto explain a and sensible policy. about crudelking hovering around 30 bucks a barrel. 's stephen major was laughed out of the room. what is your view on treasuries now? richard: we certainly understand the rally in treasuries, but we do think that treasury yields will move higher this year. it does reflect the risk we have talked about. a swing and an overshoot. we think that sentiment has gone too far on risk assets and we will see a move up in treasury yields. not too elevated levels, but higherhan the current --
than the current levels. up, good for the personal pocketbooks of wall street ceo's. why the heads of banks may get even richer amid share slums. and we will speak with maurice levy. the paris-based advertising acquisitions and reorganizing for a more digital landscape. also what he has to say about the brakes it --brexit. day,iggest gainer on the united technologies, on a report of a merger with honeywell. ♪
vonnie: welcome back to "bloomberg markets." i'm vonnie quinn. we want to take a look at the s&p 500 now and where it is trading. 1940 one right now and taking a look at the dow next, that is up -- finally the nasdaq, we're seeing gains of the nasdaq of 1. 25%. have to mention the british pound as well. weakening 1.8% on the day. it's time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. lumber liquidators soaring. report released on
ferrari 10th used incorrect ceiling -- released on february 10 used incorrect ceiling heights. carlyle group is closing its hedge fund unit, just teed of years after buying it. $2y oversee less than billion in feepaying client assets. sachs has 30% -- says that 30% of the world oil and gas companies are downgraded funds. that is according to a regulatory filing. shares have fallen 42% in the last five months. and that is your bloomberg business flash. stocks are higher today, but the worstof the year was the for the s&p 500. that may have stopped the ceo's of big bangs. how did that work? that may have
stopped the ceo's of big bangs. out of that work? let's join my guest. why the plunging stock prices? does this have to do with options, yeah? >> it has to do with restricted stock. the bank boards come together and say we want to give the ceo dollars worth of equity. to figure out how much that is, they track the stock price. this year was that the market. you say 9 million, which the group drilled board wanted to give to my corbett, and you -- mike corbett, and you divide that and he gets more shares. in the long-term it could pay off. vonnie: it could, but the spirit
is correct, right? he has more shares, and if the price rises, he benefits? yes, it is aligning him with citigroup shareholders. the prices are down now, but he expects to hold them for a long time. vonnie: the incentive factor. how to be different ceo's --line uo -- line up? >> the trendline shows that they paid more of an equity the more the premium. dimon down to 41% more for mike corbett. vonnie: jamie dimon is benefiting more because he not stop for his own personal -- >> he thinks this is a great time to buy jpmorgan. corbett has bought shares and sit -- mike corbett
has buy shares in citigroup. talk about where the ceo's stand in relation to billionaires more generally. >> sure, just as proof of where the slump is hurting them, you had jamie dimon and lloyd blankfein before the slump and they have since hit that billion dollar mark the shares have depreciated, which shows compared to other billionaires on the list, they are much smaller than the owners of companies as opposed to professional managers of them. executivelative to compensation and individual banks, has ceo pay gone the same direction? >> yes, we see ceo pay definitely in a milder climate this sea than last year and the ceo pay tens to be pretty reasonable. all right, check out his
during this rally, as you might expect, the picks is down, the vixst since 2016 as -- the 2016.n, the lowest since the you're looking at futures -- but you are looking at futures? >> we have a couple things to think about -- julie: we have the chart up right now, i should say. >> off to the left, you are looking out over time, the next eight months or so of futures areas the inversion in the futures curve has been unwound. it has been replaced. and longered --
term, we are typically in the midst of a shock. that's number one. an number two, our expectation, this is a cyclical decline in volatility only and we remain period ofd -- in a -- volatility. the orange line is the same thing taken to the peak. our expectation -- not just over the near term, but the next few futures curveix isolates between the trough and the top. we are in the middle of another shock and we cycled back to these periods. what does this mean? the we see with stocks in
u.s., we expect to continue for a few weeks, but people should not be deluded into believing this decline in u.s. equity volatility signals the end of the broader high risk environment. julie: got it. fair enough. one of the catalysts we are looking at -- at least in micro re k specific catalysts, tail earnings. your trade has to do with a couple of retailers, one of them ross stores. they have done better than some of the off-price retailers. space --alyst in the specifically looking at ross stores and tjx are hurts you don't favorites. nordstrom, not stellar it all, concerns about access in the -- excess inventories. , in our into earnings
view, is ross stores, even better than tjx. all we want to do is express some upside. go out to may, by 57 .5, 62.5 call spreads. this, weironment like want limited risk. you will get about 350, in the event that the stock is 62.5 or higher at expiration. julie: i think we will have to leave the rest for next time. stay with us on "bloomberg markets." we will be back with more. ♪
deskdesk apple to get involved in unlocking the smartphone of one of the san bernardino shooters. in a statement, the company said government should withdraw the court order and congress should convene a committee to discuss privacy issues. with we are sympathetic apple on this one. we believe in encryption. -- peoplethere are are going to find a way to get in. i suspect it is not the right that from the mainstream products that people want to use. that will not be the right regulatory or economic policy to put in place. mark: the associated press
reports that an attorney who represents victims of the families of these san bernardino inotings will file documents support of the federal evidence order. a judge discussing a lawsuit against the makers of the rifle 2012 massacre at sandy hook elementary school. that wrongful death lawsuit was filed by families. 26 first-graders and educators were killed in the shooting. house majority leader kevin mccarthy says the contest is now between two candidates -- donald trump and marco rubio. mccarthy is counting out ted cruz, saying that rubio's victory in south carolina dealt to the texas senator hoping for the nomination. that theenzi says former first lady should be the
president. he says that his government will work with whoever wins the presidential election. global news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. back to you. theie: 30 minutes from close of trading. abigail doolittle is that the nasdaq. nasdaq higher for the second day in a row. they had been up one point x percent earlier. is led by another rebound in big tech including amazon facebook, and and tell. intel.on, facebook, and partnering with ericsson, nokia, and others to create an accelerated path to 5g. bloomberg chip analysts said that while this sounds like a positive and could be a
positive, it will not affect about four years. this could be a briefer preview before investors i absorb intel took down guidance for the fourth quarter. among interested parties, comcast,o be verizon, and at&t for yahoo!, as well as i'll firms like bain capital. ceo marissa mayer continues to face in tents scrutiny -- intense scrutiny. vonnie? atnie: abigail, thank you -- the nasdaq for us all day. a giant has had a couple of of sin downs. shares are down 20% in the past year.
-- a giant has had its couple of ups and downs. we are happy to have the ceo and chairman with us today. he has made a few little acquisitions over the past couple of years. maurice levy joins us in studio. maurice: thank you. 45 years. almost 30 years as ceo. many, many generations. a group of european ceo's got together and said as with one voice that it would be a bad thing for the euro, for european business if britain exits. i think when david cameron opened the pandora box of the referendum, he made a huge mistake. i'm very much in favor of the u.k. inside europe, provided
playing the game of the union. as of today, they are much more and it isit selfish, breaking down the eu with a lot of people wanting each one to have different stages. is the u.k.result will have a very specific status and there is no eu because of them -- i preferred that they go on their own. and it will be much worse for them than the european union. so you want the brexit? maurice: i do not want the br exit. i prefer that they stay in, but being a full part of the
european union. once they are on an island, which is the british island, and then they have another foot on the continent, that is not going to work. vonnie: it would be a disaster for publicis if there is an exit -- maurice: no. no, not at all. vonnie: but your european business -- less of it will be much a disaster. the eu is the largest economy in the world. and the u.k. is benefiting much more from the eu than the eu is benefiting from the u.k.. difficult much more for the british to live without the eu than the rest. you pitting yourself against some of your competitors taking this stance, because there is a major british bank, for example --
maurice: i prefer -- let's be clear, i prefer by far that they stay in. but they do not want to be fully in and they want something the measure.c to this is not something that is going to work. it's not going to build a union. think one minute about what the eu is all about, it is a european union. it is united. if we are not united, it is much that-- much better everybody goes on its own. vonnie: the trade -- the pound ot arading lower, n massive amount -- maurice: that is what i am saying. how are you dealing with
currency fluctuations? maurice: due to the fact that we are european-based and with the euro, we have the benefits of the strength of the pound and the dollar. of, you know, fluctuation currencies are part of the daily localas our business is and in each country, we are operating on local currency. it does not make a lot of change if there is some fluctuation. we havened this year benefited a lot from currency exchanges. 18% of our growth is due to currency exchanges. have been involved in very high energy merger strategy. investors have been punishing that because they do not see the results. do you stick by that strategy?
maurice: absolutely. i made this clear commitment -- vonnie: will this strategy payoff? you already have some of the highest operating margins -- maurice: yes. we will continue and we will margins.n the the market is punishing us because they do not see the benefit of the recent acquisitions. i believe they will see soon the results of this acquisition and i believe the markets will be .xtremely happy what we are doing is something extremely important. we are transforming our business in order to fit the future. vonnie: and yet you lost key accounts. you gain some, 20 -- why have you gained more? maurice: we lost the medium
account of p&g and recently walmart has made the decision to take -- under certain circumstances -- the media outcome. ourve kept not only relationship, but other aspects of the business. it is limited to the media and the media situation is based in the u.s. particularly because of the complication of what we call the fact that lots of ads are distributed through the internet and through -- vonnie: so, are you concerned at all about retrieving those media accounts? maurice: i do not see this is a huge setback. , it's tough tont
swallow, but i don't see it as a huge setback. relationships with our clients that i believe will bear fruition, including p&g, and you will hear in the next hours interesting news. vonnie: tell is news. you do not have to wait. maurice: i think the markets will hear the good news tonight. vonnie: ok. we will have to wait for more information before we send the stock higher. tell us about the oscars. have you seen any change in advertising? maurice: ok, the controversy has been hard of deal -- part of daily life for all of the people. i think what is happening today change in-- the huge
the behavior of the consumers and the way we are building brands. believestly, i don't that these changes will affect your magically the business we are in. vonnie: are you making another acquisition? maurice: we will certainly make a few ones. vonnie: is there one being announced today? nothing thate is we are negotiating of a certain magnitude currently. vonnie: we will wait for that announcement and perhaps keep your cell phone handy. , thank you. we appreciate it. coming up, a big week for european off in them -- a big week for economic data. what they say about the state of the u.s. economy. ♪
vonnie: you are watching "bloomberg markets." retail sales rose in january for the third month while jobless claims fell to their lowest level since november, stocks continuing the rally. are those numbers giving us the full picture? are those numbers giving us the full picture? let's talk to joe weisenthal. what is the economic data trying to tell us? real story is how steady the data has been while the market has fluctuated. been so much volatility in the market. think back to two weeks ago, everyone was panicking, talking
about central banks not able to hit their targets. nothing has changed. that was just overreaction to concern and now we seem to be getting back to normal. u.s. data seems fine. claims have been solid, retail sales, last week's cpi , yeah, inflation is firming up. it is hard to find those reasons for panic that had everyone so worried. isn't it amazing how sentiment can change so quickly? -- he saidnvestors that the uncertainties now are political, and that is where the focus is turning toward. -- the wayntiment that sentiment moves is funny. it seems to follow the market. the market tumbles and people make up stories about how the market is falling apart. the market rallies and people make up stories about how good
things are. the fact of the matter is there have not been that many changes. recession is not in the cards anymore. it's not like things are suddenly good. so far the data does not look like what a u.s. recession will look like. joe weisenthal, thank you so much, cohost of "what'd y miss?" the market stand now. also a pretty picture, but now we will look at the averages. 16 thousand 614. the s&p 500 is up 1.4%. the nasdaq 1.4% higher, too. ♪
--vonnie: you are watching "bloomberg markets." julie hyman as your market check. julie: we have had this rally once again continuing, extending in today's session, all of the 1%.r averages up 1.3 of discretionary, financials, all helping to contribute. i mentioned in the trajectory of the s&p throughout the day -- if you take a look, you have that gap at the open, and then a relatively tight range to the day, near the highs of the day interestingly.
it has led the games, just as it has led the losses. and then in terms of some of the other individual stocks, they are doing well in a percentage basis. you have commodity producers. many of these have been battered. there is a rebound effect. speaking of oil, we have had oil bottoming out around february 11. it is not rising ever since, but certainly on an upward trajectory. the other big market story has been the british pound after london mayor boris johnson said he was support a u.k. exit from the euro vonnie:. to -- from the euro. thank you.
let's go to bob bench. listen, the major averages are we're alln 1% and fine. there's a recession. is that it? the mini crisis is over? having a good day. i think it will break a down trend that has been in place since last december. until we get real confirmation pricehis bottoming in the is sustainable, we will get volatility. we have the freeze and a four dollar or five dollar bounce. does that mean it is in or we're just waiting for the season? >> we have had a double bottom and oil, technically. that is encouraging to the bowls. we are getting -- that is encouraging to the bulls.
inventories have not come down much. we've seen a cap on production at near record highs. that is not particularly encouraging. getting volatility and a lot of it will be driven by oil. withe: what happens treasuries? we have a vicious circle. treasuries rallied because of andand oil jobdrops treasuries rally more? is been a good rally in treasuries. we have had this balance of risk appetite and the rebound in oil prices. with troublesome inflation numbers. our chief economist is thinking we could round up to 1.6% year-over-year.
that starting to get dangerously close to the 2% level. i think the disinflation fears are beginning to abate, particularly in the u.s., and we may normalize as we go through the year. that is the risk or treasuries. brexit?where is >> i can't wait for june 23 to come around. i loosely a will be a risk for a lot of companies and financial institutions in the u.k. i wonder if the decision for the average voter will come down to something like immigration. there are a lot of people in the u.k. that are concerned about the level of immigration and what that is doing to them. immigration is becoming a big political issue around the world. i wonder if people are going to start saying, well, if the british leave the eu, they no
longer will be required to take some many immigrants and whether that becomes a dividing issue in the referendum. vonnie: what asset class are you watching? is it primarily the dollar and treasuries? >> i think what the fed does love an impact on asset markets around the world. i also think the ecb is worth watching. has come out that has suggested the ecb should be in march, but there is also this conversation about what our negative rates achieving around the world? vonnie: another 10 basis points? >> i think people will look at each other and say, another 10 basis points, what does that get us? the ecb is notoriously slow in
developing programs. i think we could going to be march meeting and they disappoint again. vonnie: we are out of time, but where will the 10-year treasury be after the elections? 's.low to mid 2 on the 10-year treasury. vonnie: thank you for joining us. wish we had more time. to give you some of those quotes -- the 10-year is .ielding 1.75% we have brent crude trading at 34.70. the market closes next. ♪
♪ u.s. stocks closing higher this afternoon. joe: the question is "what'd you miss?" scarlet colin a winter tantrum has had no impact. digging deeper into the technicals. 500 andt says the s&p gold miners could still double. david cameron attacked his fellow conservative. we look ahead to the referendum. our market.ay with the s&p 500 climbing to a six week high. investors are loading up. you have a banks arising for a fifth time