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tv   Bloomberg Markets  Bloomberg  February 24, 2016 10:00am-11:01am EST

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from bloomberg world headquarters in new york, good morning. an exclusive interview with treasury secretary jack glue. he is -- jack lew. why he says the global economy is not in crisis. the turmoil continues today with global markets extending losses with crude oil back below $31 per barrel. it was another big victory for donald trump last night in nevada so how is world trade reacting to a potential trump presidency. we have economic data on housing. julie: new home sales came out the low estimates that an annual pace of 194 thousand which is a decline month over month of
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9.2%. it's weaker than estimated. 400 94,000 annualized pace in the pace in december was 544,000 and that have been the strongest and 10 months. the median forecast was 520,000. sales and the west in particular are down 32.1%. yesterday, we got existing home sales that looked better and that is by far the larger part of the housing market. we will keep watching to see if this has an effect on stocks which are deeply in the red across the board led by selling over in europe and exacerbated by the price of oil which continues to drop. we will get oil inventories at 10:30 a.m. and we will see how those numbers affect things. in terms of the groups on the we have most groups in the red with the exception of utilities.
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butnsive's are doing better financials are slumping once again. jpmorgan at its conference yesterday said investment ranking revenue was down 20% from sales and trading. down in 2016 and energy stocks are falling again and discretionary and industrials. a lot of the economically sensitive groups are down. we have had this bounce off the bottom despite that the kleins over the past few days. if you look at the major averages year to date, we are negative for the year. was down as much as 10.5% at its lows of the year. it hit its low on february 11. deeply in the red for the three major averages. one strategy according to an analyst at standard & poor's says that if you look at you are a tea of strategy, pure value and pure growth, stocks that
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adhere closely to the traditional definition of value and growth and if you combine those and a 50/50 portfolio, you have seen a strong outperformance not just this year for the past several years that if you go all the way back to 1965. this chart does not go quite that far. that's an interesting idea in the market as people struggle for a return and are looking for ideas on how to outperform. vonnie: at least for the major averages, the usual suspects are leading things lower? julie: exactly, we mentioned oil. 7.5% down. awaiting the oil inventory report me got a report from the industry group that tracks inventories that's a self-reported survey. that reported a building inventory so we will see what the government survey says.
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copper is lower as well today and it tends to track with oil and concerns about global growth. globe again is up by more than 2%. is taking up once again for the second day in a row as docs are selling off. if you look at the year to date movement, the uptake we have seen in the past couple of days is not as dramatic. for the year to date, we have seen the average more like 25. the fact that we are taking up today to 23 shows that yes, there is fear as measured by the fair index but it's not as elevated. vonnie: thank you so much. let's check in on the first word news with matt miller. matt: donald trump says he may not need all of the next two months to wrap up the republican presidential nomination. contest in aird row, dominating the nevada
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caucus. he ended up with 45% of the vote. marco rubio finished second fewer than 2000 votes ahead of ted cruz and next up is super tuesday primaries on march 1. we will have more on the race for the white house shortly. president obama is detailing the credentials he wants any supreme court nominee. writes that he wants a nominee who has a sterling therd and he writes that person i appoint will be someone who recognizes the limits of the judiciary's role and understands a judge's job is to interpret the law, not make the law. senate republicans are vowing not to hold hearings on the president's nominee anyway. they say that's a job for the next president. the u.s. and china are close to agreeing on new sanctions for north korea. both countries want to punish north korea for its recent nuclear test and long-range missile launch which violated un security council resolutions.
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the chinese participation in sanctions is essential. it is north korea's largest trading partner. in syria, russia and syrian warplanes and artillery pounded islamic state positions according to a group. the syrians and the russian allies are trying to regain access to a strategic road near aleppo that was captured by the islamic state. the cease-fire is due to take effect saturday. in cuba, the older brother of fidel castro has died. ramon castro was 91 years old and was a lifelong rancher who oversaw sugar production in russia. -- in cuba. news 24 hours per day powered by our 2400 journalist in more than 150 news peers around the world. vonnie: thank you so much.
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g 20 finance ministers will gather in shanghai friday to discuss boosting global growth. what can we expect? jack lu sat down for an exclusive interview before the meeting. willam hopeful that this be a g 20 where we take the commitment we got in the last countries to refrain from competitive devaluation and push it a little bit and have that be something that is heard outside a meeting room but to reassure the world that that is a commitment taken seriously by the 20 largest economies. david: what can we hope to see out of these meetings that goes beyond that? >> what is different is these last months have made clear that weakness in demand globally is a problem that cannot be solved to everyone looking to the united states. i have been telling my counterparts for a couple of years now that i think we are doing pretty well.
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they think we are doing pretty well but you cannot count on united states to provide all the demand for the world. we cannot be the first and last consumer. there needs to be more. economies,s with they need to use policy tools. when china looks at what it can do, it has to look how tickets -- how to stimulate consumer demand. europe has to look the on monetary policy and what it needs to do it fiscal policy. weatherntry like japan has been two decades now of slow or negative growth, they are careful not to make the mistake of stopping the economy with fiscal policies but instead use fiscal policy to drive things forward. fiscal policy cannot sign -- cannot solve all the problems. structural issues need to be addressed. it's different things in different countries. structural issues need to be addressed.
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fiscal and monetary policy are important tools. when used together, they are powerful and that the message we bring combined with sharing information about exchange rates, having a clear understanding that it is unacceptable to target exchange rates to gain unfair advantage outside your country. that is a question of who gets more of the existing pie. it's better to grow the pie. as i talk to my counterparts, they understand and they want to be clear that's not a direction we, the world community, can go in. i hope the g 20 reinforces that. there is speculation in the that these conversations could lead to different kinds of decisions to underscore that that is an important principle. it's pretty important. david: you started with global demand. we hear in economy us and business leaders say the problem we have is a demand problem.
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what can be done? do you hope the agreement out of g 20 does have specifics about how global demand can be stimulated? agreements at these and there are general principles that apply in different countries in different ways. there is a lot of discussion about the words because no country wants to sign onto iteral words that it knows will be inconsistent with. getting those principles right and getting more meat on the bones makes a difference. i cannot yet ahead of the process. we are still going back and forth before we meet on these issues. i don't think this is a moment in time or you will see individual countries make the kinds of specific commitments that have been made in some other contexts that have been marked by real crisis. this is not a moment of crisis. this is a moment where you got real economies doing better than markets think in some cases. that could beure
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influenced very much by the avoidof policies that having things go to a place where you don't want them to go. that's a different conversation than what you do when you are in the middle of a crisis. taking a look at the major averages, they are all down more than 1%. we have a 200 point drop for the now. -- for the dow. the nasdaq is down 1.4%. ♪
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good morning, this is bloomberg markets. bloomberghe latest
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flash. investment bankers at barclays won't have much to cheer about a bonus time as they are cutting their bonuses by 12%. it would have been more if the bank had not cut 1200 jobs worldwide enclose operations in asia. -- and close operations in asia. aston martin is featured in james bond movies and will open a new factory in wales. the decision comes after the company looked that 20 other possible locations. they will build a new model called the ddx in 2020. dunkin donuts is fighting to reclaim its turf in the battlefield is breakfast. it faces declining sales and tougher competition from the donald's. it is revamping its menu board and all they breakfast food. it is overhauling windows at 8400 stores in the u.s.
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that's your bloomberg's news flash now let's go to the bloomberg market --. starting with lows for earnings, it reported numbers on the heels of a home depot yesterday. the company shares are falling after the numbers largely beat estimates. earnings-per-share matched estimates. it looks like lowe's is reaping your benefits from a surgeon spending on home improvement versus home depot. same-store sales were up 5.2%. it is trailing the 7.1% gain that home depot saw. some analysts are talking about and questioning the gap in performance between the two. we've got target coming out with holiday sales that beat analyst estimates even though the companies margins shrank as it offered more promotions and cut prices on toys and offered free shipping for people ordering
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online. the company forecast for the is above analyst estimates in the shares are getting a bit of a lift. chesapeake energy has good news. the shares are up 15% today because it will pay off the remainder of its half-billion dollar debt that's due in three weeks. it raised more than twice as much as planned from asset sales. questions have been lingering about the company's cash position. this seemed to put them to rest at least for the time being. coming out with its forecast saying 2016 revenue grew -- growth will be at the height range after its fourth quarter numbers for the holiday season beat estimates. those shares are up 10%. dreamworks animation is out with its numbers as well, fourth quarter profit beating estimates. this is the maker of the kung fu panda movies. estimates is what my
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company has been restructuring and reallocating resources toward more tv operations on netflix. that strategy seems to be bearing some fruit. those shares are up 14%. vonnie: thank you so much. next up, the big trump victory in nevada. can any of the republican candidates still catch him? >> if you listen to the pundits, we were not expected to win too much and now we are winning, winning, winning the country. and soon, the country is going to start winning, winning, winning. ♪
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vonnie: you are watching bloomberg markets. another big win for donald trump at the nevada caucus with nearly 46% of the vote.
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is predicting he is on the way to locking up the republican nomination. >> there is going to be an amazing two months. [applause] might not even need the two months, to be honest. [applause] vonnie: joining us now from charleston, south carolina is steve useeno. how important is this trump victory? for donalda big win trump not just because it's three states in a row. he has the momentum but the margin of victory is massive. the second and third place republicans, marco rubio and ted cruz, they don't reach his numbers when you add them together. at theu look deep down nevada entrance polls, trump wins among old people but he doesn't win among young people but he wins almost every other category including hispanics
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which is what he has been talking about that everyone is not believing. everybody voted for trump yesterday and this is something he will talk about it on thing that will carry him into the march 1 contest. vonnie: we are headed for super tuesday were everything could change. it's a massive day in terms of primaries. can the momentum he stopped here? >> that's the big question. is obviously investing in his home state of texas and is leading in the polls there over donald trump. it would be a big state for ted cruz to lose. people are calling it a firewall. if he loses that, where can he win? he has been investing a lot of the south and donald trump, this is his territory. some other candidates will try to cherry pick delegates here and there may be in the
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non-southern states are certain congressional districts of certain states that have large chunks of delicates. the question is whether donald trump could sweep a majority of these states and if he does, how do you stop him? vonnie: thank you so much. let's turn to how investors are reacting to the presidential race. we talked with howard marks. listen to what he had to say about the candidates. >> they are scaring the hell out of people. donald says that the chinese are , the mexicans are killing us, the japanese are killing us that we will get the jobs back. i think that people tend to believe him. equallyrs compete to be fearful and dramatic. jason kelly is in berlin
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for the international conference and joins us now. the american elections top of mind for investors? >> it was interesting today, it david rubenstein, the cofounder and co-ceo of the carlyle group with experience himself in washington took the stage today to talk about private equity. one of the first things he said was the biggest question he is getting as he travels in europe and beyond is what is happening in the u.s. he proceeded to spend almost 10 minutes of his presentation giving his analysis of what's happening in the presidential election. it's clearly very top of mind. vonnie: is there a wide diversity of opinions? opinion is iny short, wow, what is going on and
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people are still amazed at how this cycle is so different from any other. we talked to david rubenstein or speaking yesterday here on bloomberg television kkr, all theyn at say is this is very different. what david rubenstein said was he expects hillary clinton will be the democratic nominee and he showed arithmetic that indicates it is somewhat easier mathematically with the electoral college for a democrat to win but everyone has the are in new, uncharted territory here. with all the political issues going on in britain, private equity people are keeping an eye on the u.s. what are they saying? guy hans and he
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spends a lot of time speaking and he thinks the u.k. should stay in the european union but he made a reference in our conversation about how markets and dealmaking tends to slow and pivot a little bit as an election gets closer. he mentioned specifically the u.s. election as having a big effect on how deals get done and how investors generally are feeling. vonnie: who would be most negative for dealmaking in the oval office? interestingly, that is something of a talk given the rhetoric we have heard so far. hillary clinton has had two or has chosen to really try to distance herself from her wall street ties given the criticism she has taken over speeches she made to goldman sachs and others
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in the time between the campaign and when she left office. has stoked a lot of anti-wall street sentiment. generally, investors are most worried about a democratic administration specifically around may be revisiting the tax treatment for carried interest which is something private equity is concerned about. they tend to lean republican. again, this is a different cycle and if you get a president trump, they are not sure what they would get. vonnie: thank you so much from berlin. still ahead, the oil slide. ♪
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vonnie: live from bloomberg world had orders, you're watching bloomberg television. in just a few moments, we will get oil inventories a let's you
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to our markets desk. oil is down 3% right now and we got the report from the trolley institute last night showed a building inventory that the government report does not always match up. you can see the 3% decline in oil. once the numbers come out, we see a little vacillation so there is a larger than estimated build in the inventories of 3.5 million barrels and a build in particular at inventories in cushing, oklahoma which is the biggest hub in the united states. that's a bigger than estimated decline in gasoline inventories at 2.2 million barrels in a bigger than estimated decline in distillate inventories of one point 7 million barrels. those are the overall numbers. it looks like that build is larger than estimated but we will see how it plays out
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considering the refined products like gasoline and distal it's saw a build. that we will see more of a drawdown of crude oil inventories? right now, we are not seeing movement as of yet in oil prices. it tends to take a little bit of time for traders to react to these numbers. let's take a look at my terminal. it looks like we are seeing delayed pricing. there is a spike up in oil but still down on the day by 2.5% and coming off the lows of the session. we will see how this plays out over the next several moments. let's take a look at the actual inventory chart. let me call up the number. this looks at the inventories week by week and it looks like we have the latest week on here. the second straight told an
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inventory of 3.5 million barrels. let's talk -- let's take a look the markets. oil spiked up and now it's coming back down and a similar move in the s&p 500 but the magnitude is smaller. we are seeing pressure on stocks and oil. let's take a look at the hsrelation in terms of using on the terminal. te.s is year toda over the past year, it gives you more context. even though it has come down from where it was in mid-january, both oil and stocks ae still moving in tandem considerable amount of the time, more than 50%. vonnie: thank you so much. it's time for our first word news. let's check in with matt miller. matt: thank you very much.
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president obama held a bilateral meeting with king abdullah of jordan this morning. they are expected to discuss efforts to counter the islamic state group, the syrian conflict and the need for syrian and iraqi refugees in jordan. the obama administration has been passive about heading off potential fraud in the president's health care law. that's one of the findings in a new report by the government accountability office. the report was obtained by associated press and the gao stopped short of alleging widespread cheating but says the administration has struggled to resolve eligibility questions. u.s., theyheastern are adding up the toll from last night's killer tornadoes. two people were killed when a park inhit an rv louisiana more than 30 were injured another person was killed in mississippi. the top u.s. commander in the pacific's is a new anti-missile me to be deployed soon.
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admiral harry harris told a committee the missile is needed to counter improved russian and chinese naval strength of the navy plans and lying 500 of the missiles through the year 2021. detroit public schools have reached their borrowing limit. that means officials will not be able to take on more debt to pay bills when money runs out in april. michigan lawmakers are working on restructuring some of the cities $2 billion of obligations. news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. vonnie: thank you so much. the u.k. potential exit from the european union and uncertainty around the u.s. elections presents more volatility in the market. the chairman of terra firma capital partners spoke with our new york bureau chief at the
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conference in berlin about the impact on private equity. >> it reminds me of 2007. in munich around november, we had the biggest conference we ever did. it was followed up by the crash. i made a speech saying that bankers were going to go back into their baskets like dogs and receive dog biscuits. i've still got dog this gets. -- biscuits. there you expecting more in next year? how volatile is this market? >> it's very volatile. it's not underpinned by any real fundamentals with the level it's at. it's going to flow around based on any news that happens. >> how do you as a private equity investor play that question mark private equity investors love volatility, isn't it good for business? >> it's not good for business.
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it's difficult for our poll probably a business. -- for our portfolio business. we import a lot of products from china. most of them are quoted in dollars. the products are coming in more expensive than we expected. when you sell them, you cannot pass that increase on. from a business point of view, volatility is not good. from an investment point of view, it can be. it can get lucky. we found there was a deal at the we bid $85 year that million and someone else bid $84 million but we both decided we could not close by year end. the seller said we need to close by year end so it was sold at $60 million. the buyer benefited from the volatility in the fact the seller was trying to clear their books of an old deal in an old portfolio. >> what about financing for deals? we have heard leak pictures over the last couple of days from
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your private equity brethren. can you get financing for deals? >> for quality, you can. the cost is not a lot higher. ltv is lower so you can borrow less but the big issue is it has to be really high quality. we have a move to quality at the moment. if you got something you are selling which is first class, it can get financing and it can be sold at a high price. probably higher than the end of last year. as soon as you move into anything that's mediocre, it's way down in terms of financing and way down in terms of bids and if you have something that's poor, nobody wants it. >> do you feel like you will be able to sell some of the things you have talked about selling whether it's odeon or the garden centers? are there willing buyers question mark >> there are definitely willing buyers.
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if you've got something that's really good that you spent years developing, that's sellable. work in progress nobody wants to pay for. >> what is the mood for investors right now? there sovereign wealth funds that you guys rely on, how are they feeling? >> fair. investingcared of not because they are suffering from either negative interest rates or no return but they are also scared of investing and looking stupid in a years time if the market is way down. it's just fear and happiness. it's a scary market. something that is scaring the market little bit, talking of the brexit, you have been vocal about being in favor of staying. how are you feeling about that right now?
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what happens over the next few months? going to be as close call. likelylooking much more that the vote would be to stay before. is an incredibly charismatic human being. he is somebody with a enormous amount of energy. he is an incredible self promoter. the risk for the camp that wants to stay in is the boris galvanizers. he acts as a figurehead and you and that with a population voting for the exciting boris not thinking about the tragedy it would be for europe and the u.k. if we left the eu. >> in the meantime, how much does it affect ipos and m&a leading up to it? weit will affect it more as
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get closer in the same way the u.s. election will affect people as a gets close. it's a scary year. that thet the risk u.k. leaves the european union. whereve a u.s. election trump continues to defy expectations and people in europe have no idea what that would bring. in france, you have the rise of , so around the western world, you've got a tremendous political uncertainty. the only place that seems certain is rusher with vladimir putin. that was the chairman of terra firma capital partners. software codeuld be considered speech? that's what apple will argue in federal court, more on that next. ♪
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vonnie: this is bloomberg markets. let's have a look at the major indices. the s&p 500 is down 1%. the dow jones industrial average is one .1% down. the nasdaq is down 1.2%. taking a look at the british pound versus the u.s. dollar, it is also up -- off its low point of the day but still below one dollar 41. -- $1.41. the german 10 year yield is a little better but reached a low 15 basis points earlier. note go to europe on that with mark barton.
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the synchronicity between the oil market and the stock market is back. this is a column you want to look at. the biggest drop for european stocks in two weeks. stocks of not risen for two consecutive days since december. these are the industry groups. is the basic resource companies, the automobiles and the banks where there is concern whether it's china or the u.s. presidential election, the declining oil price or brexit concerns in the u.k.. there is a lovely survey today that seven out of four -- some out of 10 economists see the pound falling. that would be after the brexit vote. i have used over the last 24 hours. we have seen the kleins of roughly 25% in six months.
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back in 1981 when the economy was mired in recession, it sank by 25%. 1992 was famous when the pound crashed out of the exchange rate mechanism. at the height of the financial crisis, sterling sank again. goldman sachs forecast sterling could fall to $1.15 against the dollar. if britons vote for an exit, that could see an outcome as we have seen historically. always look to the past. the chances are one in three. nevertheless, we are seeing the action more in sterling -- u.s. dollar. mark: sterling-euro is funny because many investors look at the impact on the euro if great britain leaves the eu.
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if you look at how the pound has fared against its peers in the last few days, it has fallen against most of them but among the worst performers has been the euro. the u.k. will be affected if we leave the eu but also euro area countries will be affected as well because the u.k. is among their biggest trading partners. it's a bit of a guest fast today. the bund is bank president will be joining us. and the south african finance minister as well. vonnie:
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>> this is one of the elements of their defense. government lawyers will have to work fast on this. where will the case come up? >> there is a long way to go with this case. you are seeing more and more activity in congress and the court of public opinion and it will wind its way through the legal process. apple will file its opinion this week. then the judge will make his determination. apple can appeal. lot of legal experts think this will go to the supreme court. congress could write new laws. this has a long way to go. vonnie: we don't even have a
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full supreme court at the moment. what are these subsidiary cases we could see coming from this? can civilians file cases on the back of this? >> a lot of legal experts are tracking this case closely because of the president it can set for others. every time you download an app, there is a signature tucked in there that tells your phone that it's ok to download this piece of software. there is a game or messaging app. what apple is saying is that the government is requiring it to put on this autograph within a new piece of software that it doesn't want to. this is not part of its philosophy. therefore, it is compelled speech. it's the sort of center of the argument. that could set a precedent for other companies in the future. vonnie: thank you so very much.
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u.s. financial stocks have climbed more than any other industry group this year. mike mayo assesses the mounting pressure next on bloomberg markets. ♪
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vonnie: this is bloomberg markets. shares are extending their slide today after banks failed in trading revenues that fell 20% so far. jamie dimon answered questions from analysts at the investor conference yesterday. it's a tough environment. oilhave low rates and low and low stocks and low capital markets. stephanie: investors are sitting on cash. >> the expectations for earnings are pushed out to next year and
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next year's earnings are pushed out further. it is d late so that was the bad news. it's a tough environment. for jpmorganhat, and the banking industry, it's the opposite of before the financial crisis. then you had great earnings in a weak foundation. today, you have a strong foundation and earnings softness. it's a little bit like a coiled spring. it's not uncoiling of its positioned to uncoil it anytime when you get better rates are at or oil stocks or better markets. stephanie: what to do ask jamie dimon? >> i asked why it was good to be a big tank. you see the public sentiment. the public still dislikes big banks. why is a good to be a big bang? stephanie: the answer? a 787 is abecause safe airliner. i thought he should've elaborated on that more. i thought he could have given a better answer. i think jamie dimon struck out on that last answer.
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what he said in the prior seven hours of the conference was that they have so much capital, they have $350 billion of capital to absorb losses. that's eight times the level of their actual earnings. jpmorgan has some of the most consistent earnings of any of the megabanks in the last decade and when it comes to cost control, they are called that they are holding cost consistent but they are investing. they have a $9 billion technology budget. stephanie: i am so confused. you're a debbie downer when it comes to banks and here you are backing jb morgan. a-month ago, they reported earnings in a month later, they have five million dollars extra for oil reserves. they certainly messed up there. stephanie: how is that a mess up? >> they could have been more conservative. they are ahead of the game now and were behind in their conservatism and now they are ahead with 10% reserves.
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you said oil is down 8% the last couple of days and that's a tough spot to be in but they are ahead of that. they have costs under control and have the foundation. they are gaining share so they -- short-term is tough and long-term is good and i think they will benefit. one headline away from this company doing good. stephanie: jamie dimon said he will buy his stock all day long and has in the last two weeks. >> absolutely it's a buy. we have not had a top rating buy since august. before that, i don't know of i ever had a top rating on jpmorgan.
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when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. >> it is 11:00 a.m. in new york, 4:00 in london and midnight in hong kong. mark: this is the european
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close. vonnie: we take you from new york to london to johannesburg in the next hour. the possibility of a brexit. 's choices at the upcoming ecb meeting. mark: the challenges facing the nation's economy. vonnie: airbus earnings missed estimates. from the company's on in today's market session? mark:


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