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Transcripts For BLOOMBERG Bloomberg Markets 20160129

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How far can they climb . And we are about one hour away from the close of trade for the month. Ramy has the latest. It may not be the worst january anymore. Ramy at least for today. It as we and the week as well as the month, and right now the dow is up by about 296 points. It had been pushing 1. 96 , near the 2 mark. The s p 500 also off of it session highs. Toare looking to be on track lock in a second day of gains. I want to point out with the dow, 294 points. The seventh straight session of triple digit gains for the dow. Some really interesting and a broad rally that is happening over the course of today. I want to take you on a tour of the dow intraday. We can see what has been happening ever since the market. As been on this trajectory the dow really has been leading the rally with the s p had the nasdaq. Stocks are in the green. Only three are down and what is flat. Lets take a look at some of the individual movers. These are some of the biggest gainers. Microsoft is up by 5. 5 . Walmart 3 . These stocks contribute 75 points to the dow right now. Looking at microsoft, microsoft is up because it beat its secondquarter earnings. Perestimate at 78 cents share. A lot of businesses are piling into the cloud services. Is looking visa for some caution and with apple, the latest news is they are developing a wirelessly charged iphone as early as 2017. Those stocks all getting a bounce. It lets go ahead and go to the majors, right now they are on we are talkinggh about the gains today, they are on track to end the month in the red. Most byaq down the about 8. 5 . Betty im stuck on the Wireless Charging. That would be cool. Lets get a check on the headlines with mark crumpton. Mark the Obama Administration is confirming that Hillary Clintons home server contains some closely guarded secrets including materials requiring one of the highest levels of classification. Department releasing more emails from her time as secretary of state later today. The Associated Press has learned seven email chains are being withheld in full for containing topsecret material. Department officials would not describe the suspect the substance of the emails. Syrian Opposition Group will send a small delegation to meet with you and officials at peace talks in geneva. The group has said it would not participate without an end to the bombing of civilians by the syrian and russian militaries. The talks are the first since the rounds of negotiations collapsed in 2014. Fox says 12. 5 Million People tuned in for the republican trump, theout donald Second Lowest of the president ial primary season. The debate in august, which attracted 24p, million viewers. Four miners were rescued after spending 36 days underground in a collapsed mine in china. It collapsed on christmas day, killing one person and leaving 17 missing, including survivors. It was so violent, it registered as a seismic event. The socalled off the lens a teenager will remain in a texas juvenile facility as he waits a decision to be transferred to adult court. Ethan couch made an appearance today after his return from mexico. Authorities say couch and his mother fled to mexico in decembers as prosecutors investigated a possible parole violation. Global news 24 hours a day powered by our our journalists around the world. Im mark crumpton. Betty stocks are trimming their worst monthly route since 2010. Investors are wondering if they have bottomed out. Our next guest says it is too early to tell. Have a number of factors. The founder and president of the on Coal Research says there are several things that need to happen. We need to have the head back off on Interest Rates, china has to stabilize, earnings have to get better. What are the chances of that happening . Jim very low. Fed Officials Say that more is possible on the table. They need to come out and say one or two is it. That does not look likely. To begs are estimated negative on a yearoveryear basis. So our revenues. They are lower than they were a year ago. They do not look like they are turning around and there is no sign china is stabilizing yet. It is still waffling around. They have made new lows the last two days. Betty so is it like oil . Stock market will finish the year down 5 to 2 10 . It is down 6 for the year. We are in that range. Next 11rift out the months sideways and it could be a subpar year. Betty ok. People are wondering given the decline in january, does this mean if the stock markets are telling us we are headed for a recession, that was a question that citigroup. Im not saying we will never have a recession. I am saying current data does not support the idea of a recession. Data is a whole bunch of points that dont support it. There is fear and as a result any piece of information is a narrative. Betty would you agree . Jim i would agree on a couple of levels. Markets are supposed to be forwardlooking, telling us what is to come. Tobias mentioned we dont have an and bill did an inverted yield curve. That is why it is important to back off and finally there is an old adage the stock market has predicted nine out of the last five recessions. Market has a 45 track record, but it is much better than most economists. Betty so you say no recession this year . Jim i think well have a subpar growth year. If you want it in school terms, youre going to come home with a d and go to the next grade. But no one is happy. Betty just passing. Jim f would be a recession. Sayy some people would this is a perfect time. If you look at the charts right valuation, weof have gone down to our lowest level since 4014. It does not sound like much, let it is significant. Might the market have gotten cheap enough to bring some in Value Investors . Could. Part of the reason we have volatility, every day seems to be a 1 move. Emotionsuse of the associated with the dramatic fall in the market. You could be dragging in some of the michael the money. Data imes most of the have seen does not suggest there was a lot of selling in the first place. If we actually had what technicians call a capitulation, we would have been more likely to see a more meaningful bottom. Betty you are talking about the last few years . Yeah, go back to the august decline when we were down 1100 points. There was no capitulation. And we have made it lower lows from that level. The same ingo last week or so. We have not seen this wholesale, everybody says dont panic. No one has. There has not been a wholesale selling of anything. There has been hope it wont be. Without that capitulation, you dont create that potential buying power to drag everybody in. Betty there is definitely uncertainty. Maybe there is no certainty we are headed for the exits with the economy. That leaves people wondering what the fed is going to do. You mentioned the fed would have to back off on raising Interest Rates. What about cutting what they hiked . That is an idea proposed by jim grant. Possibilityat is a if things were to get worse. I have a little bit of an unconventional view about the fed. They raised rates because they realized qe doesnt work and they were in the market manipulation business. That is why they had this deal to raise rates. They are going to drag their feet arent trying to get back in and the process will have to be to call up call off the rate hikes and then we could speculate about whether there would be a cut. Week,s the meeting this they have not called it off yet. So for a cut, the market would have to get worse and i am suggesting the fed will react to the market. I think they will continue to react to the market. Betty good to see you. A quick programming note, on monday a conversation with vicechairman Stanley Fischer from the council on foreign relations. Tom keene will sit down and discuss the economy and the fed and of course global monetary policy. That is monday in new york. Much more ahead in the next 20 minutes. Chevrons surprising the street, posting its first loss since 2002. Its Balance Sheet is torn apart. Is that a sign of things to come fo all of the others . Shares of mastercard rising. Can it continue to win the war on cash . The major winners today. Here is the intraday trade. ,e are now over 300 points hitting that high again in a session. Betty good afternoon and welcome back to Bloomberg Markets. Awaye about 45 minutes from the closing bell and you can see we are now up near the highs of this and for the dow. Up 304 points. S p, we are also higher as well as the nasdaq. Some of the tech shares have been leaving. , based on been lower their profit miss it. S p, up almost 2 right now. Industrial tech, those are the major sectors leading the way. Time to look at some of the biggest business stories and news right now. Jetliner heading into the skies today. It is already the companys best seller. Were onn 60 customers hand for the initial flight of the plane. American airlines is reporting fourthquarter profits that beat expectations. Its results were boosted by following jet fuel prices and strong domestic travel. A stronger dollars hurting demand. Foxconn is upping its offer for 5. 4 billion dollars, according to a person familiar with the matter. Sharp is discussing competing. Ailout plans the foxconn chairman is meeting with the board tomorrow. Bignessyour bloomberg flash of day. Chevron open the lid on its latest quarter and investors were met with a glum surprise, its first loss in 14 years. Talked about how the Company Plans on weathering this plunge. A strong Balance Sheet so you can withstand the ups and downs of the business. Prices are low and so we will use our Balance Sheet this year. Almost regardless of where prices are in the year. We are going to cut cost and reduce where we can. Betty the rest of the oil bigwigs report in the next week. Here to help us figure out what is in store is david who covers the sector. Is this a sign of things to come for the others . David we could see more writedowns. The producers have to write down the cost ofbecause oil is lower than it was a year ago. Chevron was selling oil 39 a barrel compared to 68 the previous year. They are not making as much money. There will be some writedowns. Is chevron better positioned than the others . David certainly better than some of the smaller ones. Can weatheron, they the storm better. Hey are going to cut spending next year they are going to spend half of what it did in 2014. They are hunkering down. Is all part of the rebalancing process that will take the market and get rid of this glut we have. Betty how long can they weather the storm . Seed the Analysts Companies as having enough cash on hand and the ability to take on more debt. Stronger, better credit ratings, they can borrow at cheaper levels than some of the smaller companies. They can take on some more debt to keep pumping and to weather the storm. Betty even if they continue to borrow, arent costs going up . They could go into a credit review. David at some point they will. Analysts are starting to see the second half, the market coming back into balance. That should help. Betty thank you so much. Still ahead, we are going to look at the market on this friday. Here is a look at the most active shares today. ,ake of america raised to a buy now an invitation for activists. Betty welcome back to Bloomberg Markets. Stocks are a higher this final trading day of january. Todaysining me for option insight is the managing director at kk and financial and joins me from chicago. Good friday afternoon. Right now markets are rallying. A lot of it has to do with the bank of japan going into negative Interest Rates. It seems like markets are not at the mercy of crude. Your thoughts . It is interesting. The Central Banks world and we are just living in it. We have seen oil swing around, we have i look at oil, been able to hold above that throughout the day. The markets really did not react to the downdraft. Is holding, we are seeing the market put on more gains toward the end of the close. Islly the thing shortterm on the central bank action. The market was caught hard without announcement and that is definitely building in the theme. The 20he vicks is at level. Ecb, howboj and the long can we maintain this level of less volatility . Its interesting. It opened around the 21 and really hasnt given up much throughout the day. Even though we have seen it almost double. That is a function of the fact we are still seeing outside moves. That is not pricing in a 2 move. Even though we are seeing a rally, that is why we are finding the floor because volatility is elevated. To the healtht care select sector spider fund. Right now it is down 8 . You are bullish. What is going to carry this through . Right now, it has been on the forefront of the ticker the last several months. It has been in the cross hairs of the campaign trail and from a regulatory standpoint, but overall it feels like this sector has been pushed down more than the implications are for though asial, even far as Hillary Clinton putting focus on the sector. I think there is a chance for the sector to respond positively moving through 2016. The focus will go elsewhere. Ramy lets go to your trade. A risk reversal. I dont really want to jump in. There might be more downside. ,m looking at selling a foot looking at the march 64. That is right in the middle of the range and it allows me to wait the market out. I think we will see this push higher. If it does it take off, i can still participate with the highside called. Dan, thank you for your time. Have a great weekend. Next. Bloomberg markets dont go away. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Bloomberg World Headquarters in midtown manhattan youre watching Bloomberg Markets. Lets start with a check of the headlines on bloomberg first word news this afternoon. The Obama Administration is confirming for the first time that Hillary Clintons unsecured home Server Health and closely guarded secret spirit the state department is receive releasing 1000 pages of front her time as secretary of state. The state department would not discuss the substance of the emails for lawenforcement Officials Say that one of the fugitives that escaped from the Orange County jail in california has been captured. One is still at large. Urged to remainmai on lockdown and keep their eyes out for the stolen white family could be using that white van they could be using. President obama will meet next week with paul ryan for the First Time Since he became bigger of the house and the meeting was displayed by the snowstorm that struck washington last weekend. Some policy goals, including an interest in overhauling the u. S. Criminal Justice System and concluding a large tax bill. Mitch mcconnell will also participate in the meeting. Removenwide effort to breeding areas for mosquitoes that spread a virus begins today. Everyone needs to eliminate stagnant water, or brazil could lose the war mosquitoes. Resc global news 24 hours a day powered by our 2400 journalists and more than 150 news bureaus around the world. Back to you. Betty while you were speaking government the dow just hit 335her session high, points. If we are trying to close at the top of the session we head toward the closing bell and lets get to abigail what want and what is happening in the nasdaq. It is certainly a rally today, but on the year and on the month not so much. Date, at 10 from last years peak about putting the mastec in correction territory. Behind this bearish tone are two tech names. Deeper intottle each, apple is by far the biggest point drag on the nasdaq, down by about 7 year to date after ongoing fears around slowing iphone growth were confirmed when management offered a sales growth drop for the march quarter. The first since 2003. The question Going Forward maybe whether or not that march guide is the bottom, or whether investors will worry about the june guide. After the Fourth Quarter to point it, and the company failed to offer a 2016 owed. Ok that while to times of the last several years in 2011 and 2014. Significantly proceeding at all correction of 30 . There could be more selling pressure ahead. Shares are trading at an alltime record high of about 7 year to date. They recorded revenues of 5. 85 billion dollars. Anappears that facebook is early runner to be a top text and once again. Betty thank you. Two other stocks that are rallying today, mastercard and visa both posting higher earnings last quarter and what wall street expected. That is giving a shares boost today. Spending during the Holiday Season helped, but analysts say they are challenges to the companies in 2016. In david ritter, joining us from princeton, new jersey. David, one of the big concerns on the horizon for visa and mastercard . David i think they did a very good job controlling expenses this quarter. They have also done a good job of doing that in the past. I think the concern really robots around the strong u. S. Dollar. That revolves around the strong u. S. Dollar. Slower inbound from china. That is a worry. But still 10 growth, or close to it in the u. S. In volume, and midteens growth in rest of the world is pretty good considering the environment. Betty considering the uncertain environment, which is causing pull back ono their consumer spending. When we see the challenge of a higher u. S. Dollar and concerns about china, is that going to hit both me set and mastercard that the said mastercard equally hit both the set and mastercard equally . Visa and mastercard equally . Investors, they understand these are complex global businesses. Currencies is always going to be an impact. What they really focus on more than anything is volume growth and that theyre capturing commerce as it moves online, into mobile and capturing that growth. That is the real critical thing to look at. Betty speaking of volume, can we bring up that bart chart we have of the volume growth between mastercard and visa . Both of those have shown very healthy growth. Be set, the yellow bar on the seeing clearly has been bigger volume against mastercard. What does mastercard have to do . First of all, mastercard has had a weaker position in the u. S. The has added costco, they have added a partnership with usaa. That is a challenge for mastercard competing in the u. S. But if you look at the overall u. S. Growth numbers, they have stayed very strong. The overseas businesses where the really high growth is. Trend, bothterm moving towards electronics, visa payment. Most of the worlds transactions are a cash and check them about cash and check by moment , but that is the runway to growth. Against competing paypal, and paypal is an interesting situation. A lot of people fund their paypal account with their these and mastercard credit card account. On the other hand, they are doing some things in the Online Mobile space or potentially of the longterm idea is to get the customer to use the Checking Account rather than their card. They have a complex relationship, and that was a hot topic on the conference call, how do you manage that . To watch overing time because that is the battlefield, the online and mobile space in payment. Betty thank you. David ridder, Bloomberg Intelligence analyst on mastercard and these of. Technology, oracle ceo mark hurd will be joining bloombergs cory johnson for an exclusive interview about the software companys progress in the cloud that airs tuesday at 6 00 p. M. Eastern on bloomberg west. Still ahead on Bloomberg Markets, carl icahn will get to pick at least three Board Members at xerox as it splits into two companies. Influence he will have Going Forward. Plus, we are watching the markets and the huge rally going into the close. Stocks right around session highs. Betty good afternoon and welcome back to Bloomberg Markets, i am betty lou. A quick check of the markets as we are now less than 20 minutes away from the closing bell on this friday. We are just marching ahead higher in this rally. The dow is now up 336 points. The s p is also up over 2 . In triple digit gain again for the doubt. Tech shares, industrial, those are leading this rally higher. That means the nasdaq is up as well. It has been a rough day for amazon. The shares are plunging bigtime after fourthquarter profits failed to beat wall street estimates, even if they doubled to a record 482 million of earnings. The decrease in for the mess was cost. E in fulfillment we spoke to one of our analysts. Fulfillment costs, all of the costs that they incur to to consumers, that came in higher than expected. The question for us, is that is something that is structurally in the model, or a temporary problem . We think it is the latter. We think that fundamentals can recover. T spot ise brigh of 69 ey saw sales greater xerox is the latest Technology Company to split in half. The copy machine pioneer will be splitting into a document Technology Company based on its copying standard hardware, and then a Service Company that will provide Tech Services to government and businesses. Downgraded xerox to triple be negative. The split comes after carl icahn pushed for those changes. Didant drive these a carl icahn drive this breakup . What has been reported is that this was driven by mr. Carl icahn. Interestingly enough, it was not. The board did its analysis, and came to his conclusion without speaking to mr. Icon at all. Fortunately, when we spoke to him, he is a large holder of our shares, you agree with the. Utcome that we reached on a Going Forward basis he will be involved from a perspective that when the company splits into two, he will have some governance input into the services business. He will not be engagement the Document Technology business, or the current xerox business at all. Im pleased with the fact that we came out in a place that is strong for the business and it happened to be a line and live with what mr. Carl icahn wanted to do as well. Went extent did you bring them into your Strategic Review to consult with him . As opposed to just getting his reaction . We never brought him into the Strategic Review. We came up with an answer, and that spoke to him about it at his request. That was the way the process was operated. With this list, services was your big question is a halt understand why does split makes sense. Why is services are growing area . Services as a top winegrowing area. I want to spend a little bit of Document Technology business. We are the number one provider of Document Technology solutions around the world. We hold the number one market share from a sharp perspective. We have the leadership solutions. It is a very high profit margin business for us. It will look at large about caps on has segments that we invest pretty intensely in to help transform that into buckets of growth. The business, not growing that much on the topline, competitive, we are unbelievably strong, and we are global in. It requires some investment, and s one side of the business that has a completely different operating model that our services business. The transition is happening very quickly, software as a service, cloud computing, mobility. This whole idea that the world is getting significantly smaller. Health care his chains, we provide solutions to all of these markets. For going to be higher in that business. Shareholders will be through a different model. Our Technology Business will be a high cash return business. We provide about 50 of our cash flow to shareholders. No are tech businesses will probably continue that way and the services will be more about investing and investing for growth and globalizing that business. Betty but was the xerox ceo joining bloomberg. Much more ahead on bloomberg. Were moments away from the close. Here are the three major averages and the month of january. The nasdaq is dell the hardest is still the hardest hit. The dow and the s p are now down about 5. 5 . Betty welcome back to Bloomberg Markets. I betty liu. The markets are closing in just about 10 minutes. We have a huge rally going on. We just hit another session high. We keep hitting us points as we get towards the closing bell. We want to end on a high note in fact. We have much more at the markets way wed there is no will make up the losses from january, right . Ramy correct. Let me take you through some superlative on what is happening right now. At session highs, pushing ever higher, with the dow right now, this is its seventh triple digit gain in the past seven days. 14 of the past 16, in fact. With the s p 500 were on track to close on higher with the second week running. The 45. 91 market, which means we will be closing on track in positive territory. I want to show you how to run this rally has been right now. Information technology has been leading for most of the day, of at the session high in and of itself, 3. 3 . That journals and industrials up by about two point 7 and 2. 9 . Dive into what has been happening with specific again or spray lets take a look at microsoft. It is up by 5. 6 . Its secondquarter profits be on estimates. Eat on estimates. There is a Wireless Charging device that might drop as early as 2017. They also beat the profit estimates, but they said that the dollar headwinds are not going o away. To the tune of about 700 billion. This is coupled with what is happening with crude. By about 1 , but you can see how volatile it has been for the whole entire day. It took a late lower after russian said there was no meeting plan with opec to take back production. This is right now on track for the fourth day of gains. Next fewold on for the minutes, that will be the First Time Since christmas eve. Lets take a look at what is happening with oil mongers. Fixed percentage gainer on the s p up by nearly 18 . Its fourthquarter revenue Beat Estimates by about 60 million. Isingpeake also r into slightly positive territory. Lets get onto what has been happening in other parts of the market. Most importantly with safe havens. Right now with the u. S. 10 year yield, it is now down by five basis points. Down by 2. 7 . A yield of 1. 92 . Yield is the lowest since october. Lets take a look at currencies. The boj did go into negative territory. The usda did gain strength against the japanese yen. Yeartodate, its interesting to see, we are still not out of the woods yet. Yeartodate where all down by 5 with the s p and nasdaq down by a percent. But it is a new day on monday. Start we get to reset and over. Thank you. This has been a wild year so far for equities. More than 2 trillion has been a race from american share prices. It is not just talked, but bonds are feeling the pressure. The behaviors we are seeing so far in 2016, are they i sign of how the rest of the year is going to lay out . Our stocks reporter is joining us. Had jim on,e just and he said we are going to be down another 5 . Were going to and the year down 5 . Is that the consensus . It is definitely not. The sentiment is no means out of place after such a weak start, i looking at is even though there were more emerging bears coming into 2016 and the bulls were getting a little less around, nobody came in to the year expecting a correction to happen in the first month. Even if you think that equities will end down 5 that from the start of the year, or you generally have a various tastes, there has to be some sort of perversion. Nobody expects this to be a trend to start the course for the rest of the year. In general, there is hocuspocus involved in whether you by the first of the year. Things are slightly less bullish on average when you start off poorly. So he is not out of line by any means. Betty how do you read is what weve seen in the bottom market . Much asid not move as stocks, but it is signaling that something is going on. On the and market is clear message to janet yellen, saying that we do not believe you. You can talk fed rate hikes until it turned blue, but it is not going to happen. Right now the derivatives traders are predicting and pricing in less than a 60 chance of one rate hike this year, let alone four. The best performers have been the longest treasuries. They were up almost twice the roster. Lester was an amazing rally the year before was an amazing rally. Frankly, for the past three january, january has been a fantastic month treasury bonds. About what happened at the end of the year, typically we get all of the economists saying next years when the fed is going to raise Interest Rates. Were going to see tha better economic numbers. This year it is driven by oil prices reaching a low point. It has put all of those expectations in check, and said it is not happening. Betty no inflationary hav pressures at all. Oliver, i know there is a truly with dechellis, which is how we have rebounded hrt want to ow we havehich is hav rebounded. It is very shallow in fact. The volatility, higher volatility, we make sense. There is some volatility coming out of the next 90 days, what it is interesting about these next 90 days and that it takes a while to get back out. Over the past seven years when we establish a shortterm loan, usually we have these ushaped rebounds and go right back up. There are certainly things that are starting to crop up now that people are asking questions about it. But i think it is more of a lack of a really strong bull case right now. We are talking about Interest Rates again, i feel like that was the story this week. Betty thank you. Our bloomberg stocks reporter, that is it for Bloomberg Markets bring what you miss and the market closes next. Were moments away from the closing bell. U. S. Stocks advancing, and oil climbs for the fourth day. Joe what did you miss. U. S. Equities suffering the worst rout since august. Is more market turmoil to count . Shockse bank of japan investors, adopting a negative Interest Rate strategy. But willing t it work . Alix how much oil wealth is in the market, and where is it flowing . We look at the major market impact. We begin of course with the markets. We finished the end of the month the opposite of how we started. Now we are closing at session weeks ofunding out two gains. Every Industry Group is at least up 9 10 of 1

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