Transcripts For BLOOMBERG Bloomberg Markets 20151228

Major averages around half a percent. Take a look at my bloomberg terminal to see how the sectors are shaking out here. Materials are also declining. Telecommunication stocks now the only Group Trading higher. It has now come off as well. On the commodity complex, not just oil but some of the other commodities. Heres the percentage change on the date. Higher by 8 on the outlook for Colder Weather, but if you go down the line you see a lot of credit, whether it is metal. We see a lot of declines in that commodity complex. Got got asil high a 23828. That puts a next of pressure on stocks. Unusual december. Looks like we are setting up for the first december since 2002. We also had backtoback december declines. Usually people do their end of year portfolio shifting and intend to have stocks go higher. Take a look at my terminal. Energy stocks versus the s p 500. Here is the here is the energy index. The s p 500 is now in the red after today. Only a few days left to see how we end of the year. Thank you for that snapshot of todays trading. Lets get you a round up of bloomberg news. Remy has that for the news desk. We head to iraq and the setback for islamic state. Captured aers have government complex. The iraqis were held by u. S. And coalition aircrafts. Boko haram tilde at least 60 people in northeast nigeria. The government says it will off the attackers and intercepted 10 suicide bombers. Dozens of people were hurt. Another shooting raised questions about the citys use of lethal four. Officers shot and killed two people during a domestic disturbance. Launched a civil rights investigation after video showed an officer shooting a black teenager 16 times. Nearly 900 fights have been canceled and another 500 have been delayed. It is all because of a large storm system moving through the middle part of the country. Than one third of those cancellations were chicagos two main airports. At the worlds Busiest Airport on one of the busiest weekends, they took a timeout for the party yesterday. Honoring his one millionth passenger of the year. That is a first for any airport in the world. Interestingly he missed his connecting flight. Global news powered by 2400 journalists, more than 115 news bureaus around the world. Coming up this hour on Bloomberg Markets, a terrible year for commodity and etfs. Surprisingly investors polled from other commodities. We will discuss the prospects. Consumers are spending more of the money they are saving from low gas prices. We will tell you which sectors are the big winners. And we will discuss the big jobs for banking. One key theme, the collapse of crude oil. Goldman sachs is 20 per barrel is possible. It will likely wipe out any prospects for earning games learning gains next year. He spoke with betty liu earlier today on Bloomberg Markets. Profitsyear energy dropped about 55 for 2015. Went toings countries 6 . Knocked out 6 of the actual earnings numbers. That wiped out the Growth Expectation this year. Earnings would be about six or 7 . Attributed ton be energy alone. You probably took another 5 out of earnings Growth Expectations. There are those who disagree. Though is when you get to that point there is not ofh more you can go in terms battering earnings among energy companies. She believes it is going to unleash Consumer Spending that we havent seen so far this year given the fall in oil prices. I think people say the exact same thing when you drop to 40. It usually takes 18 months for the drop in energy prices. Lets put that aside. They probably have to have a severe collapse in demand. Most of the shale projects can produce profitably. City looking for 55. Oil by the end of next year. Probably bounce fairly quickly after because there will be a supply reaction to it. It would have to be. 20 oil does not signal economic growth. It signal something very wrong in this economy. Lets go to what if scenarios. I know you have gained some out. You have seen dollar weakness. You mentioned the great rotation. We have been talking about several years about this great rotation. Why would 2016 possibly portend that . Finally start to see people taking losses and bonds. Usually once they start seeing losses for a sustained pumping of time they start to move away. That is to certain degree what happened in the u. S. We have 2000 through 2002 collapse. Now kind of distressing of equities. In the same sense you probably begin to create that great rotation. It wont be as rapid and we wont be on the same side with that great rotation. Imties have some value, getting paid more on the dividends, there is buyback activity. That could start to draw them back in. The valuationsof you are buying now would be cheap relative to where they could be just because of significant new demand for this asset class. Chief u. S. Equity strategist speaking with betty liu earlier on Bloomberg Markets. The broader collapse was a big team all year long. Investors cant seem to get away from certain commodities fast enough. A record 750 million was pulled this year. Bloomberg reporter, who covers the commodity complex, joins me with more. We are talking about nonenergy commodities. Why are investors yelling out so quickly . Investors bailing out so quickly . We have demand coming out of china whether it was livestock. R agriculture suddenly we see it will see a pullback. Supplies andover this is what is calling on these investors to pull out of this etf. Then i bigger supply demand picture. Talk about the im talk about the outflows. The first part of the year seemed ok. We saw this in gold and Gold Precious Metals follow interest rates. We saw the bill of of the expectation that the fed would raise the rates. In this final quarter we saw a ton of outflows of gold etfs. Are people, whether they traitors or strategist or Fund Managers, they say we are still were staying away from gold. Them on lets get back to energy. Energy bucks the trend. At what point do we see net that is the one area where energy linked etfs do see a little bit of inflow. Hugest of allhe commodity, maybe this will offset the outflows from the other commodities. That wasnt the case. Many of the Fund Managers tell us people are searching for a bottom here. What has been happening to oil has been well known since november of last year. Like the market is trying to say some of the etf side at least we are going to see a bottom of this point. A number of them are saying how much lower can it get . That is the point people are looking for. Especially with shale producers caving. People are talking about when the supply cuts are going to kick in. Some people are getting in their heads they could be affecting this market sometime soon. People looking for some balance in the energy market. Recently i was talking to the largest aluminum recycling recyclable aluminum supplier. We aretelling me expecting aluminum to reach a bottom in the Third Quarter of next year. It does look like a lot of different people are saying if they are looking for something in the First Quarter or by the Second Quarter of next year, supply cuts will affect will take effect. You could see some bottom hit and i dont know about gains. In theeems more pain first half and perhaps stabilization in the second half of 2016. Late Holiday Cheer for some retailers. We will tell you who had a blue christmas. It is time for the Bloomberg Business flash. The executive chairman and company f a mining james moffat helped form the company back in 1969. He will leave the board of directors on thursday. This follows the recent revelation that carl icahn had taken a huge stake in the company. The leadrd, independent director, will become nonexecutive chairman. The ceo of valley pharmaceuticals is taking a medical leave. A team of executives will replace pearson once he walks out. Deutsche bank will sell its 20 stake. The sale will generate as much as 4 billion. Selling stakes in chinese institutions. It International Rules make expensive to hold minority stakes in these lenders. And that is your business flash update. Julie hyman has a check on individual company movers, beginning with cmr acts. We call the company today. This is a small biotech firm. Had iny drug it development on human trial failed to meet its primary endpoint in a study it was doing in the lake fish clinical trial. Now down 80 . This is the only drug that had gotten as far as it had. Drug used toviral treat people while they are undergoing treatment for other illnesses. Despite its relatively small size it is affecting some of these big biotech companies. Some of the big cap bio techs are down today. Medicine is down once again. A couple of analysts saying the companys recent update is reassuring them on the liquidity position. Not everyone is reassured. 7 today and Short Interest at a record high. We are seeing a bit of an infection in the solar industry. Some ch as one of the most volatile stocks this year. Every time we talk about it it is up by doubledigit percentages. Thank you so much. U. S. Retailers may have had a Merry Christmas after all. A late surge and shopping gave a boost to holiday sales. According to early figures by mastercard advisors. For more now i am joined by Bloomberg Consumer recorder consumer reporter. Everyone had written it off for most of the year. Exactly. Womens apparel has been doing terribly until now. This late surge, there was probably some pentup demand because people havent been buying new clothes for a while. The weather finally turned in some parts of the country. People were wearing those hats and sweaters that you want for christmas. An interestinge thing talking about the consumer was furniture was up double digits. That is one of those big purchases that show consumer confidence. Job sixgoing to have a months from now or you are investing in your home because you view your home as an asset. A few areas of bad news, electronics is down. There really isnt a musthave gadget. Nothing like an act had or new tablet. Like an ipad or new tablet. That would be a boon to women. We talk about how consumers are a little more confident. Mastercard quantified it. You save a dollar at the pump. Goes down on the savings. All this talk. People are squaring away their gas savings. They are spending it now. People are spending a lot of those. Restaurants are big ones. Even on christmas day, which mastercard found was surprising. People going out to eat on christmas. When you look at the trend, many more in restaurants. Plenty more on entertainment. Those are areas that are way down. People wanted to spend it on doing something fun. Thank you so much. Meanwhile fedex is under fire for failing to deliver stuff. The fedex failed trending on twitter. Delayed packages will be delivered today. There is a great anecdote in that appears about someone who wont be ordering from companies. Is that something that people can figure out . A lot of retailers will print, whoe fine their shipping partner might be. He also might get an indication after the fact, an email saying this is how your goods are going to be shipped and to look for this provider. Ups has a slightly larger share. Ecommerce retailers based on services that analysts have done. Ups had some massive shipping challenges. They had to reengineer their whole process. What did they learn . They had a twoyear process. Last year the consensus will tell us they over engineered it. People, theytional also created mobile villages, essentially temporary sorting to deal with surge shipping. Turns out they did not need that extra capacity. This year they modified things again. Apparently they feel like they got it right. They finished all their priority shipping by christmas eve. Unlike fedex, where in some markets they did have people working making those lastminute deliveries. Behind all this is amazon, which has driven toward this trend of merchants providing Free Shipping and putting pressure on the likes of ups and fedex. Retailers are not in a position to charge an annual fee. What have you learned as a i think it . Has become a challenge for big shipping Companies Like ups and fedex. They have been working with retailers to get a handle on how many goods are moving through the shippers channel. It is easy for a retailer to say we will get up there because we know our shipping partner promises delivery in such a turnaround time. The problem is if everybody is stuffing that lastminute fedex or ups may not be able to deliver those goods in time. Thank you so much. , commodity giant cofounder is stepping down as chairman of the board. What does that mean for the company . Bring your family and friends together to discover the best shows and movies with xfinitys winter watchlist. Later on, well conspire as we dream by the fire a beautiful sight, were happy tonight watching in a winter watchlist land, watching in a winter watchlist land xfinitys winter watchlist. Watch now with xfinity on demand your home for the best entertainment this holiday season. When youre on hold, your business is on hold. Thats why comcast business doesnt 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 rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. Live from bloomberg headquarters in midtown manhattan, you are watching Bloomberg Television. Im scarlet fu. Ramy inocencio has more from our news desk. Ramy a senior russian diplomat says iran has met a key requirement by transferring most of its enriched uranium to russia. Under the deal, iran must ship out almost all of its enriched uranium. David cameron will visit communities hit hard by flooding. Thousands have been evacuated in the military has been called in to help read weeks of heavy enough swollen rivers to record levels. Cameron has called the flooding unprecedented. Severe weather also causing problems in the u. S. Has begun cleanup after Severe Weather in tornadoes killed almost 14 people. The dallas suburb of garland was among the hardest hit. One twister hit the town. Flooding in the midwest is blamed for at least 13 deaths. On the president ial campaign trail, former democratic president ial candidate jim webb may be moving closer to an independent run for the white house. Over the weekend, it he attacked Hillary Clinton for her handling of libya while secretary of state. Virginia senator and vietnam war hero. Global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Im Ramy Inocencio. Scarlet . Scarlet all right, shares of freeportmcmoran are falling for the first time in six sessions and the reason is cofounder jim moffat is stepping down. So, was this a surprise . No reasons for his exit were provided in the release. Reporter freeport has been under intense pressure, including from carl icahn, to and become more profitable. They have had three straight quarters of losses and obviously they are one of the Companies Hit hardest by commodities on the oil and gas and copper. Atkinson tookrd over as ceo. How much influence did moffat retain . Was he calling shots . Reporter he was a real leader. I do not think that he sits quietly in board meetings. The mo theo in he is in freeportmcmoran. He was a Leading Light in the company. Scarlet he is a Leading Light and they have also been taking steps to get to Free Cash Flow in 2016,status including a project nearing completion. What is next in terms of what fcx does so carl icahn does not have that much more leverage . Hes pretty entrenched. He has two people on the board. They halted their dividend, which a lot of Dividend Companies are doing, under the realization these low rices continue for a while. Its also looking at the oil and gass nest, splitting off again. Obviously that was not a great diversification play for them. Scarlet and it loaded them up with a lot of debt. Reporter exactly, a lot of debt coming due and they need to streamline as much as possible. In 2008, didnt they run this playbook before where they cut dividends and had to streamline and watch costs carefully . How long did it take them to get out of that rut . Reporter they survived 2008 pretty well. Among the companies that were able to reduce costs, they closed a lot of mines in arizona, where they are based very the idea was the company would survive the shortterm, but no one forecast these low prices would hit on both sides of the desk. Scarlet all right, tina davis, bloombergs energy and commodities reporter. We have much more coming up on Bloomberg Markets. Carol you are listening to the bloomberg advantage. Ourant to welcome all of beers on Bloomberg Television to Bloomberg Radio. Lets bring in our guest, tim decker ceo of communication. You have a new book out, how to inspire your audience to action. You looked at who are the best 2016. Rst communicators in who stood out . Who did well . Guest this is our 20th year doing this, and all year long, we take people to nominate. We want someone ideally in ablic, and it does not make make sense to make a list of no names. By december or so, we give it to 50 and we vetted to the 10 best and 10 worst communicators of of the year with the idea that there is a learning point to each person. M cory so, i want to get to the punch line. Give us some examples of the best communicators . Betty tuesday betty guest to start with number one, pat cole. Kat cole. She has a great story. She was previously a hooters waitress. She moved up. She became the president of cinnabon. The key area of focus, she has excelled at her communications if you look at any beach and a business, from standpoint, doug macmillan, great example of what we call the new breed of ceo, the ceo of walmart. Carol exactly. Its kind of interesting. Walmart has gone through interesting times. They have had seen slowing sales. Its a huge company. They have had to figure out and adapted this new space. Theres a lot of competition out there. There is a new brand of leadership we want to point out. He is the youngest ceo since sam walton. There is a warmth, as sincerity that stands out. Any multibilliondollar company we would like to see more ceos exude that, but you dont see it as much. What are the goals for communication . Do you take that into account . Not really. It is too often used as excuses there bloomberg, you have a lot of finance folks listening. They think to be taken seriously, they have to be serious. We help people understand how they come across. Really no matter what you do or what the goal is, there is a sincerity, a sense of care, a sense of authenticity that has to come out. Unfortunately in business you this is an of inconsistent message. We go to that. I think our listeners on bloomberg tv or radio would be interested. You have Justin Bieber, kim kardashian. Republican primary candidates. Walk me through those other games. Those other names. What we want to point out is what are the learning points. What are the things to do versus not do . One of the reasons to have Justin Bieber there uh, um. Could probably have way more sponsorships if he was a brand of people likened to. Kardashian, the key focus, the kardashians are the poster child for cory for a few things. But specifically your voice she is talking about . Vowel vocal fry, the long [imitates vocal fry] upswing like you are asking a question. That is becoming very prevalent in business. We wanted to raise awareness. Cory we occasionally have guests on the bloomberg advantage, where everything is like a question . Make we are trying to them more aware, so that does not happen as often area as often. What republican primary candidate has caught your attention . Of marco on there. He is a third time entry on there. The republican candidates, there are a couple we could have put on. Trump is a game changer. Christie is a fantastic communicator but we called out rubio because he does things differently. He simplifies things rid he connects in a very quick way, and there are very small, behavioral tweaks, the eyes, the smile, how he says it. Definitely not an upswing like we just discussed. Cory but you have also discussed people who lacked authenticity. Chris christie. There is a piece in the new yesterday about all of the things he communicated wonderfully except they were not quite accurate or true. Guest that goes to the power of communication. If you can say things with passion or conviction, the things you can get away with. That could be worth the challenge and the reason he is not on our list but i have had fun looking at previous people who have lied for a long time, and theres an argument that they should be on our best list because they have away with things based on communication. Carol that feels so wrong. Guest doesnt it . Which is why we have not done it, carol, but if you can bring your conviction and passion with the truth, amen. Khan academy. He is on your list read weve got 30 seconds left here. Guest we are probably late to the game on this one. He is doing fantastic. Con academy has a school khan academy has a school you can attend online. He is changing the face of communications. I going to ask you if you are to judge between cory and myself, what list would way beyond . Your smile, feel carol. This is a fun call. You get a thumbs up from my angle. Carol what about corey . Debatable, right . Cory dont answer. Guest i just heard his laughter. , thanks so much. Cory our new favorite guest. Carol talking about some of the best and worst communicators of 2015. Stick around, everybody. Bloomberg radio and television. Scarlet you are watching bloomberg. Im scarlet fu. This is your Global Business report. Here is what were watching. The rate yet planning spending cuts. What Economic Performance may lie ahead . Mark zuckerberg is making a personal appeal for Free Internet services in india. Neutrality heating up once again . A real boost to the indian economy. We want to start in saudi arabia. The new budget cuts for a cut of 14 . We have more from dubai. The subsidies are still there. But they are reducing them and they are doing so gradually. Themselves is going to be a fiveyour problem. In saudi arabia has been very profligate in terms of spending on fuel because it is so cheap. Some people leave their by hugeitioning on, cars. I think that will continue. But they will have to be more efficient in the fuel that they use, because the more fuel they use at home, the less is available for export. That will become an issue for saudi arabia. It is great. It will save the money that they can spend elsewhere. Scarlet meanwhile, an accusation of price fixing for global shippers. It is an expansion of chinas antimonopoly crackdown. Check, and Dairy Companies already been hit. Mark zuckerberg is making a personal appeal for india to allow a Free Internet service. Planroposed free basic would allow users to access facebook and other Services Without a data plan. Critics say that could change pricing in india for access to other websites. The olympicsns are will boost the japanese economy by 20 billion. That it willicts expand gdp over 3 10 of a percentage point over a sixyear period. The Olympic Committee has been hurt by cost overruns. For more business stories, go to bloomberg. Com. Lets go to Abigail Doolittle life from the nasdaq where she is taking a look at amazon. What can you tell us . Ab amazon is a source of strength. Shares are up after what the Company Calls a record breaking holiday, adding users and recording the biggest holiday ever for amazon devices. Munster is positive on this. He says it points to a Strong Quarter and basis of growth for 2016. Nasdaq is a top performer, up 100 . And turning to another piece of sharese trade, alphabet are trading higher after axiom capital raised is price target to 1000 from 900. This after news that the company is developing a new mobile messenger service. Other analysts believe the Fourth Quarter report could be a catalyst for alphabet as well. This is another top performer at the nasdaq in 2015. 90 have a buy rating. Every time i see also that, i cant relate. I think google instead. They fully the ticker is still goo. Thankfully. Eliminatingks thousands of positions. Here to tell us how they set up for 2016, our correspondent. This is one of the most widely read stories on the bloomberg. Erminal there are opportunities for bankers there . Reporter so, in 2008, 2009, you were lucky if you were a Financial Group banker because you were helping groups like ti, Goldman Sachs raise equity and restructure with other banks. That communicates to me in 16 and 17, that will be huge consolidation years in the industry. If they cant, they will have to love and go into a stronger competitor. Scarlet they would be advising on asset sales and breakups. Reporter for sure, that set to be one of the bigger parts. Youre thinking about boutique bankers, because the megabanks as either debtors, creditors, underwriters in these transactions, its really the domain of the boutiques the ones where there are some projections where they have a 25 of swing on revenue. Scarlet where do they spin off . Do they go to the boutiques or the big banks . Rate traders are going to see a lot of activity as well ofause you have divergence Monetary Policy in the u. S. And seemingly everywhere else in the world. Is convergence a bad thing for these guys . Hugeter basically, every central bank was doing the same thing. So, essentially, everyone was moving the same direction. There was just a lot less to hedge and fewer bets to make. Now they are going one direction and loosening. With the u. S. Tightening, you will have more opportunities to tradersey. Options would be up 15 income. Lets talkcarlet about how technology plays a role. There is a question of what role it plays exactly. Brothers and the former banking analyst at sanford bernstein. Here is what he had to a. What he had to say. The other problems, the banks have not been investing in technology. They have, but the technology they are investing in is related to regulation. You have a pie. It is divided. Half of it is maintenance. All of this is going from regulatory compliance. You have legacy systems getting older and older, and that leads to the next thing, which is you are going to have to come up with a different solution. Scarlet so, investing in technology, electronic trading forms could be a huge growth area next year . Yeah, and you had read hence talking about banks investing in tech defense. Think of this as often as for the banks. You have the head of jpmorgan, the worlds Biggest Investment Bank i revenue, he was like, you know what . Big data, robotics even . These will be huge projects in areas of focus in 2016. Ok, block chain. Explain what that is. I think of bitcoin, but is not the same thing here, is it . Hugh no, its essentially the technology underlying that point. The Technology Behind it that travels with the value , that the transaction gives seen almost universally as something thats going to be a winner. It goes back to your earlier point with job cuts. Cost cuts. This will save money. This will enhance the speed of transactions. Enhance the speed of transactions and liquidity. Thank you. Was 2015 the year that nothing worked . Why it was the worst year for bowles and a decades. We will be right back. We live in a pick and choose world. Choose, choose, choose. But at bedtime . Why settle for this . Enter sleep number, and the lowest prices of the season. Sleepiq technology tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow only at a sleep number store, find the lowest prices of the season. Save 600 on the 1 rated i8 bed, plus no interest until january 2018. Know better sleep with sleep number. Scarlet is 1 p. M. In new york, 2 00 a. M. Andon, hong kong. Welcome to Bloomberg Markets. From bloomberg World Headquarters in new york, good monday afternoon. Im scarlet fu. Here is what were watching at this hour. Traders of all stripes getting ready to say good riddance to 2015. From equities to bonds to cash, why this may have been the worst year for bowles in decades. Sales skyrocketing in the paid app store over christmas. Can the company sustain those games . And is getting serious about harvesting. We speak to the ceo of Jackson Hewitt. First though, we want to head to the markets desk were julie hyman has what is happening after a threeday weekend. And the answer is not a lot of volume. Are 5 below the 100day moving average. Not a surprise on a holiday week read a lot of people are off this week. We are seeing selling going on driven by the commodity market. The vicks of the most since december 11. We see options traders wherere volatility will be at a relatively elevated area. Is a ratehere increase behind us, what will the trajectory be . Inre is still uncertainty the market. I wanted to mention what is going on. We see a decline of 12 for the month of december. We have seen a little bit of up and down over the month, but largely the trajectory continues to be negative for oil prices and stocks, as well as energy stocks. Yet natural gas has fared better. Im always curious about this relationship. It seems to have to do with weather. December has been unseasonably warm. Yet natural gas is only down three point 4 . It bottomed midmonth and started to go higher. This has to do with the forward looking nature of markets. The nation we already have that Colder Weather unseasonably so in some areas of the country. Roundup Asset Classes. For the 10year, you see a very small increase in yield. So, interesting. We saw a relatively small gain in yields given, but the fed has finally raised rates, which gives you an idea of the project three outlook. Trajectory outlook. Scarlet gradual is the word. Julie hyman, thank you so much. Julie hyman with the latest. Lets check in with Ramy Inocencio at our news desk. Anorak, a major victory over is like state. Iraqi troops have recaptured the the government complex in city of ramadi. The defense secretary criticized the iraqi forces saying they had no will to fight. Two People Killed and nine people injured in a market in cameroon. Women suicide bombers were obvious to be members promised militant group boko rum. Also japans Prime Minister shinzo abe has made a landmark apology to korean women forced into serve as sex slaves for the Japanese Military in world war ii. Japan also agreed to establish an 8 million fund to compensate victims. Former been these suspected arson of the boyhood home of former president been closed. Has the estimated damage to the houses they 5,000. Global news 24 hours a day powered by 2400 journalists in 150 bureaus around the world. Im Ramy Inocencio. Scarlet . Much, ramyank you so inocencio. We have so much more coming up. Construction took off in 2015, but challenges remain or it can the market overcome a labor shortage and Rising Interest Rates . Michael pearson takes medical valeants. Shares taking a dive. It his deputies pull together . And shares on the rise we look at the popularity of fitness trackers and look ahead at the gadgets next week. Carol welcome back. Im carol massar along with cory johnson. Homent to take a look at builders specifically because we did see improved performance, if you will, in 2015, maybe a look at what is to come in 2016. Columnist, in our joining us here. Hey, lets start off with 2015 in terms of what has happened for homes though, because it has taken a lot of time to get going with the recovery. Sure. Housing starts have not reached prerecession levels, but they are starting to pick up. The economy has improved a lot. Right now the lowest rate of homeownership, and thats partly because of the affordability of houses has gone down. A millennialt just story . Is that just the Younger Generation dealing with Student Loans and stuff . Reporter actually that has been every single age group. Every single group has seen a drop in the percentage of people who own homes across the board. Carol interesting. Cory the consistent trend that we keep your in about is the slower household formation, particularly among millennials. Single women are starting to buy houses again. We have not seen that since 2008. Maybe this is finally about to change . Sure, there is one story that says 3. 2 million households are coming online that need places to live. So they have to find new places, new homes, rentals, renters ship mentorship. Carol there could be challenges and headwinds in 2016. One could come from a rising rate environment, correct . Rani right, even the higher and the market is starting to get priced out. Carol the higher end of the market . Rani that is the segment that helped bring Home Builders out of the recession. The higher end of the market is where the houses are. Buildingbuilders are for that. But now the entrylevel and the smaller Home Builders are doing well because they are not in as actuated a market. Of saturated a market. Cory theres a lot that goes with that. We got retail numbers, that sales of increased. That suggests that people are starting houses. In millennials rmb big purchasers of those houses. Rani and the thing with millennials and furniture buying, right now there is a price oference in the a new home versus a use tom more. The new home being and theypeople have always done this, but more and more they are going toward used homes in the diy movement is really geared toward them. Coming off the recovery ani, we talked about multifamily units and seeing strains. Has that shifted to the singlefamily home . Rani sure. You can see by reit performance apartment rates have far outperformed singlefamily homes, but there are other reasons for that. Singlefamily homes are harder to upkeep. We will have a landlord in the apartment building. I wonder, what are the key things to look for to change, to take hold in a believable way . The Federal Reserve comes out with a report that shows lending standards. Now that they showed that those are a little more relaxed, are those lenders learning more . Little talk about this bit in another story. People will buy as much as they can afford. Like, as much as they can get. Even with the interest rate, which will carry over to mortgages, that does not really matter much as long as people can still get loans for it. It really does depend on how far banks are willing to extend their lending. Carol if we look at the homebuilders complex if i look at the s p homebuilder composite index, checking that out on the bloomberg right now, usually outperforming the Broader Market when you look at the different players im just curious, are there any distinctions to be made from your Toll Brothers of the highend, versus the first time homebuyers . When you think about investors and what they should be looking at when they look at that homebuilder equity universe . Performing the best are those going toward the underserved entrylevel market. , those are not the ones going toward the other end anymore. That market is saturated. There is more room on the lower end. Entrylevel, but better amenities. It is interesting when you talk about the size of the housing. New versus used. Renting places, and real boom in that. Rani you are going to see a peopleariety of where are willing to live and what they are willing to do. I think especially with millennials there is more openmindedness about what situations he will live in. Carol what about migration . You see demographics play into older folks wanting to kind ever tire in cities because of all of the amenities. Is that the same thing for the Younger Generations. Offering migration back to the cities . Is it a safe bet . Are homebuilders playing to the urban environment . Where theynk that is actually agree living near cities. Cities are pretty expensive. Outside cities, places that have an easy commute, i think you will see a lot more interest. Interesting. Do you think the gains that we have seen, those will continue in 2016 . We have about 20 seconds. Rani i think so. I just read some thing about apartments in general. I think they will continue to do well because there is still good demands. There is still a low vacancy rates. Carol you still see a lot of construction. Cory everywhere. Carol we definitely see it outside of new york city proper. Fromnt to thank Rani Molla Bloomberg gadfly. For more, search lumber gadfly on the web. Youre listening to bloomberg on Bloomberg Radio and Bloomberg Television. Back in a moment. Thelet it is time for Bloomberg Business flash. The ceo of Valeant Pharmaceuticals taking medical leave. Michael pearson was hospitalized last week for a severe case of pneumonia. The executive chairman and cofounder of freeport is stepping down. James moffat helped found the company. He will resign and leave the board of directors on thursday. This follows the recent revelation that activist investor carl icahn had taken a huge stake in the company. Airlines changing its policy for kids traveling alone. At 150 fee will now be charged for children traveling alone up to age 15. Delta has a policy with a similar age range. That is your business flash update. We want to head back to the markets desk were julie hyman has a check on individual company movers. What have we got . Julie we have the worst performers on the s p 500 and its a new one. You can see the shares accelerating their decline as the day when on. The federal home loan banks are. Utting the obviously investors are expressing concern, shares down by 10 . Also concerns being expressed about iconics brand this is a self apparel brand like candies and joe boxer. Ordermpany has gotten a of investigation from these securities and exchange commission. This has to do with the accounting for its joint ventures. The stock fell sharply and is down 22 percent as the fcc is initiating this investigation. Talk about 3d printing companies. They have been quite volatile. Company says it will discontinue production of its consumer 3d printer. It is called the cube. It will also be is continuing website related to that. There has been talk about the consumer appeal of threeday printing. This may be a sign that it does not have that much at least not at 999. Scarlet the price has to be a lot lower to consider anything like that for households. I feel like 3d printing has been hailed as the next best thing for years now. You can make clothes, you can make food with it. Julie we will be speaking with a guest later who will talk about the Consumer Electronics show that will be taking place fairly soon and 3d renters are a big scene there. There talking about the potential buzz to drive things. We will see how it plays out. Scarlet julie hyman, thank you so much. Move today, on the valeant. Valeant pharmaceuticals down on the news that the companys ceo mike pearson is taking a medical leave of absence. Lets head to Bloomberg Radio where cory johnson and carol massar have more on this. It was not necessarily stress. It was a case of pneumonia that put mike pearson down for now. Carol welcome to the bloomberg tv andge, on Bloomberg Bloomberg radio. Carol massar with cory johnson. In the studio, our own drew a bloomberg news. The valleys ceo has a medical leave. What is going on . Yeah, over the holiday he was admitted to the hospital in new jersey with severe pneumonia. This is not your regular, run of the mill pneumonia. This is a serious medical condition. He is hospitalized. Our understanding is he was discharged for morris Town Medical Center in new jersey. We do not know what his condition is at this time. They have appointed a threemember executive Management Team tos in for him to sit in for him or it also a board to oversee that executive Management Team. Carol thats pretty serious in terms of structure. Reporter convoluted is one way to put it. And frankly it could not come at a worse time for valeant when we think of everything this company has been through. Their stock peaked back in august. Revelations about one of their andly chain agreements criticisms of drug pricing sent the stock down 60 . It has recovered a little bit, but still hovering around 100 and with the new news, the stock today. 10 mike pearson, people talk about him as the architect and executor of their strategy. He is the company. He is an incredibly important guy. Carol someone they need right now. Someone and they need for the turn around and he is in a hospital right now. They did not need this at all. Cory lets play devils advocate. You say that i need him the most. He is the one who led them into these problems. He is the one who led them into prices,ng of the drug the creation of ace specialty network, keeping that a secret from investors. He also let them there. Reporter thats all true. And despite that, the biggest shareholders, bill ackman, pershing square, they have stuck by him. Some people may have been surprised, but there has not been a push to get mike pearson out of there. Biggestby some of the investors who own a huge percentage of this company i think bill ackman is close to 9 or Something Like that. Bey look at it as this may the guy who got us into us, but hes also the guy who will get us out of this. The criticism they have taken for the strategy, i think some of the investors look at him as the person who can lead the Company Forward and knows the company well. They are stuck with him. I think investors are stuck with them whether they like it or not. The the other carol other thing that is true, he is been talking to investors, to shareholders, has promised more what ision to explain going on with the company. I assume that will oh forward. Mentioned, thery company has an Ad Hoc Committee from the board that is supposedly investigating all of these aspects. From a governance standpoint, you can say, hey, will they be hard enough . Should they have brought in more external people . They need to restart supplier relationships, shift its strategy, say were not going to buy up cheap old drugs and raise the prices, or we will not do as much m a anymore. Its really fundamentals for tj is a right now it really fundamental strategic shift right now and guy leading that is incapacitated as far as we know. To run theable daytoday operations of the company with a high level of intensity. Cory also sounds like you checked up on this just to make sure he was in the hospital and this was not just another surprise from valeant . Reporter the company has said they are in a hospital. They are not telling us where. They are not telling us how serious his condition is. They are not telling us if he is still being treated for pneumonia or some other issue. They have said very little at this point, and i think part of the reason the stock is down today is because people want to know exactly what is going on here. Carol there is a responsibility that is some point they have to give an update and let investors know truly what is going on. We have 20 seconds here. Reporter they have been pushing the company very hard. They need to say more. Carol ok. But this is all we know. Reporter thats right. Cory how much do we love valeant stories . Just when you think you cant get another wrinkle. Carol the story that keeps on giving. Thank you very much, drew armstrong from bloomberg news. Valeant shares down 10 as we speak. 10. 4 . All right, everybody. Bloomberg radio and tv. Scarlet live from bloomberg World Headquarters in midtown manhattan, this is Bloomberg Markets. My people are picking up the pieces after a series of tornadoes killed at least 11 dallas. Ear almost 1500 homes were damaged or destroyed. More than 40 people have died across Severe Weather across three states. The Transportation Security Administration is increasing random checks of airport and airline employees following decisions in the past two years where employees used restricted entrances to smuggle guns and launder money. U. S. Airport workers are allowed to skip security lines after undergoing obtainingnd check and a special badge. The voting records of 149 million record voting records of 149 Million People have been found online. This includes a detailed voting history since the year 2000. A security researcher discovered the breach and reported it. Global news 24 hours a day powered by our 24 hour 2400 journalists in 150 newsrooms around the world. Scarlet the largest Consumer Electronics show kicks off next week. Companies like microsoft and apple no longer present, but is this the years at ces gets its ces hask question mark not been doing it in terms of setting the pace and creating buzz as it has in the past. Will probablyu see this year is an extension of what we saw last year theres push toward things like 3d printers. Automotive took a big piece of action and the tv guys are on the shop floor. At the big names and product launches are being taken away. Why is it that ces longer has a hold on the companys imagination . Guest one thing is a 24 hour news cycle. They can talk to consumers directly through their website or through a blog and you have projects being launched on kickstarter rather than a big trade show. They still have a lot of that mojo and last years show was fantastic and it was gigantic. There were 160,000 people there. What are we using todays that we saw at the show . Guest sling tv it really transformed the landscape as far as over the top television. 3d printers i feel like we have been talking about this for so long and it has not crossed the threshold into mainstream use. Still stuck to the hobbyists and manufacturing in a lot of ways but they have yet to prove exactly what the consumer is going to use it on a daily basis and the price points are still not there. But more than the price points, i think its the idea that you need this thing rather want this thing on a daily basis. That is something we havent seen yet. Scarlet consumers are not really going out in droves and buying the printer which is why they are discontinuing production. Guest these are the makers who are putting together projects if you want to rapidly prototype a new widget or part, you need a 3d printer. You and me do not need these things. Future an interesting for 3d printers. Imagine a world where this battery port is missing from this thing. I could download the blueprints and print one. I dont need to go to the store and i can do it in 20 minutes. Are we there . Absolutely not. Scarlet thank you so much. We have much more coming up on Bloomberg Markets tax time is nearly upon us. We will discuss the tips from Jackson Hewitt. Carroll you are listening to the bloomberg advantage with my cohost carrie johnson. That timeking about of year where you are getting ready to file your taxes. We want to talk about the business of taxis and filing our guest here in new york. Nice to have you here with us. The tax business is a good as this. Unfortunately, we have to file taxes. Tell us about them of the trends that you see. The tax business is a great business. We have been up and just had our best year in five. Industry flatthe and you guys are up question mark david we started the transformation last year and we are not the u. S. Cory what part of the business is growing . We are focused on hardworking americans, folks they need their refund fast. Consumers,lending to charging them what kinds of rates . There have been a lot of legislation to lower the rates you can charge. David we dont believe in that. Fees, we havezero given people access to their refunds before the irs opens. The core of the tax businesses around people getting their biggest refunds. Average annualhe Percentage Rate of the advances you are giving . David zero. Cory that is a big change from what you have done historically. David we are wearing a white hat and what has been an expensive world for consumers. About thek to us packed and what that does with sears. We have a couple of hundred stores and it is convenient for those folks shopping the regional malls. Our biggest client is walmart. One in taxnumber there for over 20 years. Cory talk about what has happened with the business since 2011. The listed in david i came in about two years ago as the new ceo and double down helping to find are sold. We have committed ourselves to getting the biggest refund. We are on good footing. Carol we talked with one of our reporters about the disruption we are seeing in the financial area and what firms stands to benefit. You have the same thing happening in terms of tax preparation. What do you need to do to prevent your customers from growing increasingly online . Brokerageas in the industry for a long time. Complicatedst transaction and people want their handheld and it has been consistent for the last 12 years. Its the only way they can find out about your life and get a bigger refund. Carol what about millennials who dont want you to know about their life . What about your Customer Base from a Younger Generation . David we are the second largest tax business in the united states. Its incumbent upon us to be more mobile and digital. You can still help someone and be mobile. You will you will see strategies that we are letting you do your taxes in your pajamas but you can do it yourself. What is it like nowadays in terms of what it has been like in the past . David one thing that is new is a different marketing approach. We partnered with walmart and offered a 50 walmart gift card for trying us out. A classic strategy and it worked. We have put out over 50 million, so it is expensive. And spent money on bananas milk and the last 50 means so much to them. Are not the only game in town. There are other large firms and smaller independent players. What is your retention and how often do they keep coming back . David there is a lot of switching in the tax base. The best of the best is 70. Its one of the opportunities i have coming in to keep more of what weve got. Cory what is your core demographic when you look at the suite spot best served by you guys, who are you going after . David the tax season changes every week. Our core customer is a walmart 35,000 toing 75,000 the year. We have a lot of single moms and afterd folks, so we are the core of america. Every week, it changes. Carol what does that tell you about the health of their Financial Health . David in the early part of the year, we are marketing to folks and they need a refund to make things meet. We using strategies to open our doors. We will be open starting january 4 and even though the walmart gift card you can get before the irs opens, we see a lot of people who need access. With the Biggest Surprise when he came in to look at this business . David how complicated it is. , its veryr programs complicated. It is super competitive but i was surprised that using traditional strategies that come from other great brands have not been tried in this industry. Carol you are hiring 20,000 Tax Professionals in the coming months. Is that more than you have done in the past . David we opened 250 stores last year and we are one of the fastestgrowing retailers. It is up from last year. Much. Thank you so i know its going to be a busy season for you guys just around the corner. The ceo of Jackson Hewitt joining us right here. Just a quick check on the markets still down across the board but we are just coming off the lows of the session. Thel down about seven on s p and the dow is down about 42 points. Scarlet it is time for the Bloomberg Business flash, a look at some of the biggest business stories in the news right now. A late surgeon shopping and pentup demand for womens of tol apparel gave a boost retail sales excluding autos and gas. This is according to figures from mastercard. For all of november and december, sales gained 4. 6 . Spam group has received an order from the sec they brands like joe boxer. They say they plan to fully cooperate with the sec. The latest star wars movie broke the 1 billion mark for chinese fans could see it. China onopens in january 9. The film took 12 days to earn 1 billion worldwide, becoming the fastest movie to achieve such a feat. The previous movie to reach that was Jurassic World which had the benefit of record grosses in china. Business flash update. Have you seen the new star wars movie yet mark julie yes. I spent a long weekend watching the old movies. It was excellent. I was happy. I have some of the systems but it doesnt really matter. You suspend them and enjoy it. 2016, i willfor probably see it again and i will talk more about other predictions. Look at the s p 500 for the year to date, we have an s p that is very changed. That number could change in the next few days depending on what happens. Next yearking toward and seeing what strategists are addicting. Survey 20 or so strategists on wall street. We have some estimates on where they are protecting projecting the s p 500 will be. These folks who are the strategists and take more of a macro view of the world and try to estimate where the s p 500 will be. They continue to be optimistic and up here, you have the bottom up estimates. If you take the individual companies and average it together. Theres obviously a lot of optimism but as always, the outliers tend to do better. Analyst withachs consistently bearish and turned out to be one of those who was right. 2100 anding at about matches the most pessimistic forecast. One of the reasons behind that is hes looking at valuations. Take a look at the forward price to earnings ratio green is the current one. Its about 17. 5 right now which gets close to the historical average. That something other strategists have pointed out and thinks the valuations are giving a little stretched and with rates going higher, they are not going to expand that much further. We will see if he continues to be relatively right when it comes to stocks. That means theres less room for companies to buy back shares and boost their earnings per share. Julie hyman, thank you very much. That sets us up perfectly for our next discussion. Newyear nothing worked findings suggest 2015 was the worst year for asset allocating goals. We are talking about buying stocks or avoiding stocks and hopefully pick up your returns in another asset class. It is the notion some asset class will be more attractive Going Forward than the other. If you are half in stocks and half in bonds, Pension Funds are a big deal. That way if stocks it too risky, you are making money in bonds. On the find this story website and it looks at the four Asset Classes stocks, longterm bonds and treasury bills which are a proxy for the market mutual fund. It is a decent enough proxy. , the cr be index down 23 . The stock market, not a terrible year. The s p has returned to percent including dividends. Down 2 . Ar treasury so you didnt lose it . Guest you did not lose it. There wasnt an asset class you could do well with. Theres practically always an asset class gaining 10 , so its none ofal year in that your main asset class allocations work at all as far as producing any gains anyone would brag about. It did not feel as bad as 2008. Stocks did terribly and stocks took a huge dive. Bad year fortely a stocks and commodities. But treasuries did well that year. Looking at these four main groups collectively, the best return is about 2 including dividends. The best return hasnt been that bad since the light since the 1930s. If you are trying to pick an asset class, it is a hard thing to do to begin with. If you like to time it in and out of one into the other, you like to pick a good asset class and say now is the time for bonds and commodities. Im glad you bring up hedge funds. We have seen a lot of high profile hedge funds shut down and no longer take external money. Of plenty ofs part other things going on a flat year in the market will be rough for hedge funds no matter what. Winnersrd to pick your that will outperform in a market like this. How does this set us up for 2016 . Get the returns in a rising rate environment . Guest the equity market, it would be unusual to have to flat years in a row. Said, its hard to see that happening this time unless the forecast earnings are way too low and gdp surprises to the upside. It just does not seem like a lot to get people excited about stocks. Jim bianco basically said the for severalll boats years and raised the price of treasuries. All the extra liquidity and whether or not it helps spur economic growth, that helped lift stocks and now the fed is pushing down on everything. He sees the trend continuing for the foreseeable future. Basically flat returns if not lower for some Asset Classes. Scarlet thank you very much. Sectionfast commentary is gadfly on the bloomberg terminal. Founder of shiv kumar Global Strategies will be joining us. David it is 2 p. M. In new york and 7 p. M. In london. Welcome to Bloomberg Markets. From bloomberg World Headquarters in new york, this is Bloomberg Markets. Oil starting the final trade of the year, off about 30 this year. What does it mean for the future fracking . Foras a Merry Christmas retail after that a late shopping surge lifted sales. We have a look at the biggest winners and losers. Makes a zuckerberg personal appeal for Free Internet in india, calling it a bridge out of poverty. Find out why regulators are not as excited. First, lets head to the markets desk where julie hyman has the latest. Julie