tv Bloomberg Markets Bloomberg February 24, 2016 3:00pm-4:01pm EST
vonnie: good afternoon. here is what we are watching this hour could a stocks a racing declines after falling about 1.5% across the major indices. the major averages are now in or near the green after oil also reversed earlier losses. vixtility returns, the higher today. our fundamentals driving this? >> the markets and stay volatile. it is not underpinned by any real fundamentals. it will just flow around based on any news. atnie: should analysts treated andms be regulated like banks?
we will talk to the founder of citroen research. we are one hour from the close of trading in stocks have made a comeback today. let's head straight to the markets desk where julie hyman has the latest. julie: meeting the s&p 500 flirting with positives in the dow paring its earlier declines. not a steep selling as there was earlier today when all three major averages were down by more than 1%. the nasdaq has been leading to the upside today. you will see the dramatic turnaround we had in that particular index. the nasdaq on an intraday basis really climbing route the day. -- throughout the day and going positive after 2:00 p.m.. take a look at the big movers here within the nasdaq. these are those intervening the most, apple, costco, comcast, qualcomm.
most.tributing the look at the imap, the different sectors on the move since the s&p paring earlier declines. a disparate group of different sectors doing well. energy and materials bouncing. technology shares bouncing as well, but then you have telecoms and utilities on the list. financials do remain a drag on the major averages. vonnie: stocks were following oil higher. was it inventories? julie: yes. there was a bit of a lag. let's look at oil prices. there was initially a lack after inventories that came out with a build, but we saw fuel inventories fall. it took another big leg up later in the session.
we typically look at the correlation between oil and the s&p 500. i wanted to look at oil versus the nasdaq. here is this chart, the correlation between the nasdaq and oil prices. this year, we saw a climb and that it has come back down a little bit. a correlation around 0.6, moving in tandem 60% of the time. it is a little bit lower than it is for the s&p. with stocks falling, oil, the nasdaq into the green first. vonnie: mark crumpton is at the news desk. mark: the washington post is beingrian sandoval vetted for the supreme court vacancy. governor sandoval is the former federal judge in nevada and
served as the state's attorney general. josh earnest was asked about the possible nomination. >> i suspect it is only the first of many. stories that speculate on potential supreme court nominees. don't think it will be helpful for me to get into a rhythm of responding to each one as it appears. the nevada republican party says last night's caucuses made history. more than 75,000 voters attended the event, setting a new record. democrats had seen stronger turnout numbers. the u.s. senate has confirmed president
obama's nominee to be commissioner of the fda. senators voted 89-4 to confirm handful ofr a
democrats delayed action in a protest over the agency plus in action on the abuse of opioid painkillers. he was a prominent cardiologist and medical researcher at duke university for more than 30 years. the president says the u.s. will help jordan cope with the flood of refugees. the two leaders discussed u.s. assistance in jordan as it deals with an influx of syrian and iraqi refugees. provided $4.5 billion in aid since the beginning of the syrian civil war, more than any other country. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. marketsmore now
on the -- our next guest says they're likely to decline another 10% for the end of the appeared that
the end of the year -- another 10% before the end of the year. assess the health of the u.s. economy for us. you seem to think it was quite fragile and the federal reserve had a difficult job ahead of them. >> yes. i don't think they're moved to raise rates has done much to help market confidence. the economy is on track to advance very sluggishly. the consumer sector is in great shape but the rest of the economy is lacking. an averageto see economy for the u.s. economy. it is hard to see how the markets and power ahead. vonnie: do you see more rate increases the this year? >> i don't think we will see any until the second half of the year, possibly the fall.
.hey are very tentative looking at the rates overseas moving into negative territory, i think the fed is even more reluctant to raise rates. call.: 1.5% was a huge you see the 10 year yield going well below that. can you give us some sort of timeframe? >> right now, we have interest rates around the world tending to go lower and our treasury bond is far above the rate for european government bonds. as we have rising risk levels and as we see the federal reserve continuing to buy longer maturity bonds, that limits the supply available for everybody else. below 1.5%could see if there is a financial blowup somewhere because it is still a very attractive field compared
to other countries. vonnie: the sealed in european countries continuing to decline? 40% are negative territory. in europeane yields countries continuing to decline? >> i don't know how the central banks come out of this corner they put themselves in. the fed is very cautious on raising rates, not going down the path of negative rates, it will be more of a damper on the economy, it will not help business confidence. the fed it says it is data dependent but that says it is not sure what to do. ekbax, some of the top picks are minors, chemical makers and so forth. where do you see the upside there? >> the best sectors of the economy are the electric
utilities sector. i have little exposure in energy , mining materials because the sectors will still be under pressure comprising pressure, demand pressure. the consumer discretionary staples, certain parts of health care, devices, tools, research organizations come distribution companies will do well. in a slow growth world, these companies will have a growth that will be competitive with the average company in the economy right now. darden, dominion resources, home depot and estee lauder. yields?hat about high is there more value to be had here? should people wait a bit? thinkis attractive, but i with the qualifications only in
the highest quality, the top quarter of the high-yield market. those yields are not as high as you might think. the yield only 5-7%. if you look at the average bond around 9.5%, the amount of risk for over half the high-yield market is pretty high. i think we will see higher defaults from vulnerable sectors like materials and energy and energy services. those are not bargains at any price. we see the energy bonds trading at well above $.50 on the dollar. it is better to go with a higher quality and preserve principal. there aren't many capital appreciation opportunities in the high-yield market. vonnie: thank you so much.
markets are in a. the s&p 500 has made back all of its losses. -- let's check on where the markets are right now. the dow is up 23 points. whichy, the nasdaq earlier was leading the gains, up .6%. businessthe bloomberg fl. flash.bloomberg business lexis, porsche -- the report question 33,000 owners of 2013 model year vehicles about issues they've had over the last 12 months.
googles accelerated pages launched today. display in the top story section of search results. orzag will serve as the vice chair of investment banking. he was the vice chairman of corporate investment banking. your bloomberg business flash update. hands, theo guy volatility will not end anytime soon. jason kelly spoke to him in berlin about his outlook for investing this year. 2007,reminds me a lot of munich 2007, we had the biggest
-- weence we'd ever did ever did. it was followed up by the crash. speech saying they would go back into their baskets like dogs. .e are seeing dog biscuits >> i'm expecting more dog biscuits? how volatile is this market? >> very volatile. it is not underpinned by any real fundamentals. it is just going to flow around. >> how do you as a private equity investor play that? private equity does love volatility. >> it is not good for business. our portfolio business, volatility is very difficult. even if you take a business as local as our garden center business, we import products from china.
the products are coming in much more expensive than we expected. he passed them through customs, you cannot pass that increase on. from an investment point of view, it can be, if you get lucky. there was a deal at the end of -- we bothhich we decided we could not close by year end. the seller said we have to close by year end. the buyer benefited from the volatility and the seller was just trying to clear the books. >> what about financing for deals? we've heard pretty bleak pictures of the last couple of days. can you get financing for deals if you want to buy something? >> for quality, you can. the cost is not a lot higher. you can borrow less.
the bigger issue is it has to be really high-quality. we have a real move to quality at the moment. it's something you're selling is first class, it can get financing and be sold at a very high price. as soon as you move into anything mediocre, it is way down in terms of financing. poor, have something nobody wanted at the moment. >> are you finding -- dp like you will be able to sell some of the things that you talked about. -- do you feel like you will be able to sell some of the things you'd talke talked about? >> the are willing buyers. when you have something good, that is sellable. work in progress, nobody wants to pay for. >> what is the mood for investors right now? that00 limited partners
you guys rely on for funds. what are you hearing from them? >> they are scared. they are scared of not investing because they are suffering from negative interest rates or getting a return. they are scared of investing in looking stupid in a years time if the markets are way down. just be her come on happiness. it is a very scary market. happiness.r, on -- unhappiness. vonnie: he was a look at the s&p 500 sectors on the move today. financials the laggard. down about .1%. industrials and the tech index performing well. as is the telecom services in the. ♪
vonnie: it is bloomberg markets. stocks rebounding after a rough start to the day. nine out of 10 s&p sectors in the green with the exception of financials, barely in the red. time for the options insight. julie: joining me for today's options insight is tim bigham from delta derivatives. here to talk about what's been going on today. it has become a difficult market to navigate in terms of unpredictable of the. .- unpredictability how do you play these markets? tim: this is an oil driven market. oil representing that risk off trade here. s&p down over 10,
now poking up over 10. higher, the market went with it. that? what would change if we did break out of the trading range? >> absolutely. the 1970e, we have level. the vix back above 20. last week, we had it below 20, the first time of the year. the market just about right here. we will shop around until we get direction. where you are putting atr money, you are looking
technology for your trade today. a group that has been leading to the up and down side on days when meeting a lot of movement. facebook is the stock you are looking at here. why facebook as a proxy for what we've been seeing right now versus amazon or one of the other large cap tech stocks? six -- we hadr mark zuckerberg as warren buffett. given facebook is so big but trading at such a big multiple, i'm positioning with a spread of selling the april 150 call and buying the 120 call for protection. just looking for facebook to have trouble making an all-time high in this kind of market environment.
horizonhat is the time on this trade? if stocks to break out to the probablyne could assume that some of these large cap tech stocks would again be leading. >> absolutely. we have about a month and a half and we can see on the chart where to hang your hat. when facebook was going up day after day, it was hard to take a position. now that 115 seems to be established, that is the stop. andill come to that trade take a small loss. not, we like the risk reward trade-off here. as we've been talking about the nasdaq, the performer once again today. stocks like facebook have been recovering to some degree even if financials remain the
laggard. one of the things holding stocks back at this point in time. we will see what happens as we head into the last half hour of trading. vonnie: thank you so much. the nasdaq up .8%. a pretty big move. pound, we've been watching the pound sterling all day. the asia trade it should be starting pretty soon, trading under $1.41. source selling firms be subject to the same rules as normal bank analysts? ♪
nevada, donald trump talking about potential running mates could come says he would likely look for someone with political experience and that includes someone he has run against. mention any names but says he wants someone who could .elp get legislation passed paul ryan says republicans are taking legal steps to stop president obama from closing the u.s. military prison in guantanamo bay. blockers have the vote to the president's plan and overwrite any veto. republicans are taking all the legal preparations necessary to ensure guantanamo stays open. courts highest criminal dismissing the highest criminal charge against rick perry.
the charges stem from perry carrying out a beutel of state --ding for public corruption carrying out a veto. sergei lavrov have held a phone conversation to discuss the cease-fire in syria. president obama discussed the possibility of a truce at the white house today. president obama: we are very cautious about raising expectations about the situation on the ground. we have seen modest progress over the course of the last week or so. the cease-fire is scheduled to begin on saturday. global news 24 hours a day powered by our 2400 journalists and more than 115 is because around the world. -- 150 news bureaus around the world. mark: the u.s. stock market closes in 30 minutes. all three benchmarks in the green.
ramy is down at the nasdaq with the latest. amy: turnaround is what is happening. losses -- forg every nine stocks were up, 13 were down. now, the reverse. the nasdaq is on track for its first negative january and february since 2009. speaking about negativity, i want to point out one specific stocks that is on the skid. down 25%, its worst drop in seven years. one of the worst performers on the nasdaq. price is down after issuing 2016 guidance that was weaker than expected. earnings per share as low as $2.70.
currency headwinds trimmed $.17 a share. -- it doesn'tay say pricing will be flat. is 25% higher, its biggest jump since 2014 on earnings that did blow pass estimates. ceo's restructuring is paying off. the have a focused on feature films. have focused on feature films. gears to the renewable space, first solar up in a big way. the biggest jump since august. their profit did drop from a year earlier.
still twice what analysts expected. the company said it expects to ship free gigawatts two panels. , meaningwice as much revenue as much as $4 billion. etsy seeing its biggest jump since july. fourth quarter came in 35% higher. most people bought stuff off their mobile devices. there.all business was etsy says they will keep on pushing mobile. more than a positive day that's more of a positive day than where we started. hong kong authorities have started two weeks of hearings against citron research founder andrew left.
firmis part, left says his defense at shareholder rights. what is the role of the regulator here? left joins us now from los angeles and exquisite interview -- in an exclusive interview. you may not travel to hong kong for a long time. lawyers will be making your case. what is the primary argument they will make? a certain think i will not be traveling to hong kong. what my lawyers will be posturing is a statement of freedom of speech for the people of hong kong, much like we enjoy in the u.s. you have a right to your opinion. when you read anything written by myself, it is opinion. when you read a piece written by an analyst, it is their opinion.
you cannot say just because you do not like someone's opinion that you can stifle their free speech. at the mirror of what happened in the situation in hong kong, let's say i put out a research report on something and the stock price when higher and i sold stock as the stock price when higher, would i be in the situation i'm in an hong kong right now? probably no. hong kong unlike the u.s. has never charged anybody for notice what i put out was not focused. i put legit numbers together, work that was well documented over a long stretch of time, and based upon this, it is my opinion. i gave everything else that happened. >> this is one case of a real estate stock that was volatile. in all get to the u.s.
moment. is there a case for a short seller to not get involved? short-sellers in a young market like that of china. i realized in hindsight, if you don't want to deal with regulatory issues and you don't want to deal with those scenarios, don't get involved. but this is my business. i want to defend the right of what i wrote, and show that, for me, this is more than just about , how much money can i make on the trade, but rather, to lay a footprint to let the hong kong market evolve and see similar to what we have in the u.s., which is the democratization of information across people that is actually -- has led to a more efficient market. >> you mentioned regulators at and that you didn't want to deal with them. read a piece from the
column yesterday. the market needs more experts to look at every line of financial statements of even the smallest company to -- to win the integrity argument, short-sellers should identify themselves and be responsible for misleading research. would you be willing to do that in every jurisdiction? how am i going to register with authorities? i am an individual who short stocks and buys stocks. >> you are selling your research. >> no, i don't sell my research. i do have influence. that is because i have a 14 year track record that is probably unmatched by any wall street analyst out there. that is why i have the influence. in the same gentleman's article, he mentioned that there is accountability by researchers towards some kind of honesty or predictions. i was on your show, i think three weeks ago, and i mentioned
that the goldman sachs internet analyst is 0-30. i think he would be doing 170 years. but it is his opinion. he has the right to his opinion. if that is his opinion, we will see. but maybe you won't be influential of the markets. >> let's talk about the positions you have taken. you have covered your position. the $58 million, did that change your view? >> i covered valiant beforehand. there is a lot that is uncertain . at these prices right here, i would rather be in situations that i have more certainty. the restatement is a start of a longer process. i like the fact that now, the public discourse about valiant out there, wells fargo did a terrific job in covering the risks associated with the company. as an investor right now, i find
the stock on investable on the long side and at the same time, i didn't find the complete risk reward on the short side. my report put a $50 price target. that was from $150. pretty darn close. if that is the case, sometimes you take your money and move on. forou gave a price target monster a couple weeks ago, $80. it is trading at $120. bearish andously you have taken that position. why? >> monster is a fine company. it is energy drinks. monster has done eight or effect job executing. they are buying someone in their supply chain. traditionally, when you buy your supply-- in chain, you are admitting that you are a mature company, that maybe your larger growth may be
behind you and you are now more concerned about keeping the costs together. that said, i think monster should be more valued, like any beverage company that has equal competition. that would put it at a lower price. valuationset, matter. so maybe the market today, when we take this monster in the markets valuation won't matter, but pretty soon, when valuations start counting, i think monster has downside risk there. >> your report is a little more vocal than that, and you talk about monster going to china and saying it doesn't have a chance. there are 15 analysts on wall street, one of them says, at least one of them says the china story is where monster will see the upside. >> it is completely and utterly ridiculous. monster, i give credit to monster management in saying, they are bright people.
let's also give credit, china did not exist as a consumer market in the past couple years. i think monster might be the only consumer discretionary product on the s&p 500 that is not sold in china. first you have to worry about getting a license in china. second, you have to worry about the cost of selling in china. you are not selling a can for $3.50. red bull has a difference -- a different red bull base send in china. you have to worry about the brand. monster is a brand. they sell you a lifestyle in a can. nobody says, i drink monster because it tastes good. you associate yourself with the brand. >> monster has a -- me, listen ton to management. management hasn't been to china in 19 years. around for 12en years. if they haven't been there, there is a reason why. you don't wake up today and go,
let's go to china. >> we haven't heard from monster. they may say coca-cola has been to china and there has been an overlap between the distribution of both companies at the moment. let's moan -- move on. another position. would you like to tell us what it is? mobilize reported earnings today and the stock opened lower. with the rest of the nasdaq, it opened lower. comfortablelize is without ever getting inside information. this is pretty much as good as management will tell you when you look at a management that can't sell enough stock, not dedicating money to research and development. i brought up this case earlier last year. year.te last management had a conference call today where they said, i think we will dedicate more money to research and
development. >> there is a gap, as well. the gap is rising. stores. now, short gap in this way, it it has become completely irrelevant. if you look at everything that has come out of all of the surveys of what people buy, how people shop, you see gap is irrelevant. they are closing stores. go to the mall today, walk into banana republic -- >> target? >> you could swing an umbrella and not hit anyone. i haven't done enough work to realize once they take the charges for closing stores, what it is going to look like for the next couple years. but i think there is no reason why gap does not break 52-week lows. i think gap will trade lower than $20 within the next six months.
>> you are watching bloomberg markets. it is time for the latest look at the biggest business stories. world bank of canada climbing the ranks of north american banks by assets. passing goldman sachs for fifth place. $872 billiono waste on the conversion rate. bank's mostd on the recent regulatory filings. chesapeake energy will cover a half billion dollar debt thanks
to rising asset sales. they signed agreements to divest $700 million in gas field and other assets. they will sell $1 billion this more. -- more this year. u.s. of the economy is shrinking for the first time in two years. the services sector is heard by financial market turmoil, and an uncertain presidential election. the possibility of a federal rate increase potentially weighing on the sector. that is according to market data. coming up on bloomberg markets, trading is minutes away. a look at the averages, pairing the gains, the s&p 500 up 310 nasdaq the tao -- the the winner.
>> this is bloomberg markets. stocks posted a big rebound in the last couple hours. julie has the market. >> one stock that is not reek -- rebounding, that is gap. he sees it as irrelevant in the space.- in the retail it is down about 1.2% after initially falling, then coming back a little bit. however, i should mention, andrew is the -- not the first person to have this idea. looking at short interests, unless he is accounting for the short interest in the stock, we have seen it climb to its highest and at least a year. 18% of the company's shares are sold short. in addition, if you look at the hold on, let me show it over the past year. here it is over the past year.
it has done ok this year, will -- but we have seen over the past year, gap shares have sold off. in any case, we saw some reaction to his comments. averages, it to major we have seen a substantial and dramatic rebound in today's session. it has a lot to do with oil prices. they helped lead the way higher, even though much of the gains we have seen are not directly tied to oil. it is energy producers that are higher, but so are a lot of other groups. you see the turnaround on oil of the back of inventory reports showing a drawdown in you'll inventory. the s&p 500, more of a steady climb. definitely tracking along with what we saw with oil. the nasdaq turning positive first. it tends to have less of a correlation with oil prices. it has been the leader today to the upside. i want to take a look at the imap on the bloomberg sectors
that have been on the move. energy turning around significantly. materials, as well. discretionaryogy, stocks also rising. you can see some of what is happened on oil prices. but it doesn't look like all of it. >> julie, thank you so much. thank you very much. you want to talk more about the markets and bring in mike. and abigail doolittle, who was spent a decade on wall street. she spent time at the nasdaq on a daily basis. her twitter handle is @reaganonomist. creative. mike, we have a massive turnaround. stocks finish and positive. what changed sentiments? we heard some explanation from julie.
>> julie is right. for better or for worse, the appetite for risk in the equity market now is joined at the hip with oil prices. julie is right, in many ways it doesn't make sense, but it is what it is. i think the focal point has shifted, not just from energy shares, to banks. rebound fromt the about a two-year low that the market hit on february 11, it was a blistering rally over 6% , bank s&p and the dow stock indexes up 10%. people are keying in on the banks as far as the all clear signal. >> has it bled into european banks? , thelot of the concern u.s. banks are exaggerated. but it is what it is. for technical
charts and so forth, i read at -- and the05 s&p 500, what have you been watching? so many days of inter-day volatility. should we trust the closing rally? there is confirmation with bonds and oil and the growth of currencies. but in equities, the tao down -- the dow transports peaked in november 2014. they entered a bear market last december. still there. tellingtransports are us that investors are still seeing something out there in the broader context that they don't completely like. it will be interesting to see how this plays out. >> what about volume? >> i have not paid attention to volume. >> it was weak yesterday. on the downside, it was weak.
yesterday was strange because we had a huge snapback from february 11. goldman sachs said that that was a short covering rally, and don't get too excited. i think as abigail said, i don't know what you think, 1900, the fact we held above it, are those numbers meaningful? >> that could be psychological. it will be interesting to see how investors continue to trade around it. doolittle, michael reagan, thank you. that is it for "bloomberg's -- bloomberg markets." ♪
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♪ alix: u.s. stocks closing higher, what a reversal. is "what'd youon miss?" scarlet: are we headed for a bear market. can the u.s. economy kick into higher gear. and 3000 jobs a month as possible. how currency volatility may be impacting corporate america. we begin with market minutes, turn around gaining steam, erasing losses, nine out of 10 industry groups closing higher. financials continue to lag. joe: