Transcripts For BLOOMBERG Bloomberg Markets 20160525

The last two sessions. The major averages have maintained the gains. We havent seen any major hiccups. Relatively broadbased rally once again. Energy stocks are leading the way higher. Whether its a good idea to buy Energy Stocks, people are certainly doing so. The group is up 1. 4 . Banks have also been leading the gains we have been seeing over the past couple days. We did get that Oil Inventories report indeed, and that has been helping these Energy Stocks. Take a look at the percentage leaders. Weve got transocean, chesapeake. Many of these are those that are the most sensitive to changes in did in the underlying oil prices, and in terms of index points, weve got chevron and exxon mobil, which happens to be holding its annual meeting. Oil prices themselves were volatile in the wake of that aventory data, which showed larger than estimated drawdown in the weekly inventory numbers for crude oil. Gasoline is another matter. Its the 11th straight week that production has fallen, to the lowest level since late 2014. That is helping to support those oil prices. Shery we are seeing oil stocks up, but then a big user is down. What is going on with utilities . Julie utility shares, the only group that is down on the s p 500. There are a couple different elements. One is the idea that bond yields are higher. They have a relatively high debt load, high dividend yield. A little bit of competition there, and also some data that was released late yesterday payments to Power Generators slid in an auction already, thend industry has been struggling with record low rates in some parts of the country because of lower natural gas prices. This is another blow and prices are continuing to slide. You are seeing a number of different Power Companies falling. David thanks so much, julie hyman. Lets get to bloombergs first word news. Mark crumpton is in the newsroom. Mark House Speaker paul ryan says he has not come to a decision on a possible endorsement for Donald Trumps president ial bid. People close to the wisconsin lawmaker told bloomberg that ryan is ready to end the standoff. They said he is concerned about the split that has developed in the Republican Party and may endorse mr. Trump this week. Hillary clinton and mr. Trump, both primary winners in washington state. Trumps victory moves him to within 28 delegates of clinching the nomination. For misses clinton, there were no delegates at stake. Washington democrats awarded their delegates to Bernie Sanders in march. In washington, a House Committee voted to create a federal Oversight Board to address puerto ricos 70 billion debt crisis. The bill wont be acted on by the full house until after the memorial day recess, and it still faces obstacles in both chambers of commerce congress. Completeday not be before the june 1 deadline. A United Nations report says has reached over 40 of those the siege in syria. Assistance has reached more than 200,000 people, about 42 of those trapped in wartorn areas. The report says moreneeds to be done to help the more than 13 million in need. Global news 24 hours a day powered by our journalists in more than 150 news bureaus around the world. I am mark crumpton. David returning to the markets, lets look at the major indexes. The dow is up 9 10 of one thing percent. The s p 500, up a tenths of 1 . The nasdaq, a tenths of 1 . Its a second day of gains. Stocks are rallying as signs of a stronger economy fuels speculation it can withstand higher Interest Rates. Shery should we be skeptical of this rally . I want to bring in Michael Regan. Every time we seem to see a rally past 20 100, it falls. Will this last . Mike that is the big question. If you look at the s p 500 over the last year since the last record in may of 2015, it will have a dip, and then it will rally back. It will never quite get back to that previous high. Return is not quite as high as it was before. The high in april was around 2102. That is one level to watch. I think there will be a lot more confidence if we can close above that level consistently, and the question is, can we get to the new alltime high, and the 2130 . Area we need to eclipse that we to eclipse that hide. Otherwise, it is this rangebound trading. There are some interesting things that are leading it. Obviously, very heavily economically cyclical industries. Financials and technology, two of the most important sectors. I think the Bloomberg Stock story says it best, dont fear the fed. We got this housing data that makes some people feel comfortable that the economy is humming along enough that we can withstand higher rates, which will help the Financial Sector and really helped the market find new leadership to take it to these new highs. David how about the brexit vote . What are investors making of that . Mike i think that was a big deal. Over the weekend, the polls made it seem like it wasnt going to pass, that most people wanted to remain in the eu. Its interesting to me because there has been this shaken confidence in political polling in this country because of the election. A lot of primaries are coming up against what the polls are suggesting. The market is putting a lot of faith in these british polls and hoping the brexit is not going to happen, and that obviously dovetails into the feds decision. It will make it easier for the fed to raise Interest Rates if they believe the brexit will not cause turmoil. Shery weve got so much data about oil the past couple days. Where our Energy Stocks headed . They seem to be doing pretty well. Mike the dollar is the big question. The dollar has been strengthening throughout this rally. Its a little bit weaker today. Ultimately, i think a rally in the dollar is going to threaten any sort of rebound. There are so many other variables at play. I would hate to be the one to predict oils next move. Watch the dollar. It is so important right now. If this strengthening trend continues, that is going to be a big question. David what are you connecting to hear from fed officials the next few weeks, janet yellen speaking in cambridge . The expectation for that speech is it will be mostly biographical. She has another speech next week. They do manage to squeeze any policy information out of her, i think the trend has been, dont count june out, july out. The feds funds futures are showing that people are way more confident in a june hike. It is still not above 50 , but it is inching closer to 40 . I wouldnt expect her to really do anything to quash that speculation. Shery how important is what the fed says now . Investors dont seem to be reacting that much. The probability of a rate hike is not as pronounced. People just dont seem to believe the fed anymore. Mike so much is dependent on what the data looks like going into that june meeting. The home sales data yesterday was very strong. Theres a question of whether that is sustainable or whether people are jumping off the fence to buy homes before the Mortgage Rates go up. There is that confidence in the housing sector, and we have so many other data points between now and june to determine whether that confidence is justified or not. Shery thanks for joining us, Michael Regan from Bloomberg Talk abouting us to the fed. For more commentary, head to gad f. David paul ryan may be ready to endorse a donald trump. Chevron is holding a shareholder meeting. Is the stock a buy . Look at exxon, up 16 . More Bloomberg Bloomberg markets, coming up. David this is Bloomberg Markets. Its time for the Bloomberg Business flash, looking at some of the biggest business stories in the news. At t has joined the bidding war for yahoo at t has made an offer for yahoo s internet assets and remains a contender. Verizon has long been considered a frontrunner for yahoo , but fries and did not submit one of the highest firstround bids. Can financial is exploring a sale. People familiar with the matter say the lender is working with Sandler Oneil to solicit offers. Is the Largest Community bank based in north carolina. David wells fargo will pay a 70 Million Dollar penalty to end its fiveyear fight over foreclosure missteps. Regulators say the fine freeze the Mortgage Lender from restrictions imposed last year. The was accused wells fargo of not fixing problems fast enough, but regulators say the bank is now in compliance. That is your business flash update. Shery lets head to our markets desk were julie hyman has a check on company movers. Julie we are looking at biotech and pharmaceutical companies. This company is searching after the company said the fda has the later ruling on its drug to treat a type of muscular dystrophy. That raises hopes among some that the therapy could be approved, although analysts are cautioning that is not necessarily what it means. It was scheduled to be completed by may 26. If the fda rejects this experimental therapy, it will be the third drug that patients have seen turned down over the last year. You can see the shares rising 22 . A battle continues for medivation. That Companies Shares are down. Sanofi has said it wants to replace the companys entire board after medivation rejected earlier this month its 9. 3 million bid for the company its 9. 3 million bid for the company. They are considering bids for medivation, as well. Medivation, by the way, is a hot property in part because it has a couple potential Prostate Cancer drugs. Finally, nova nordisk shares are rising after a group of advisers the company has a shot for diabetes that will be approved for sale. David thank you so much. Still ahead on bloomberg the Sophisticated Software Hillary Clinton is betting will help her beat donald trump and get her into the white house. David this is Bloomberg Markets. Shery we are following two major stories and politics. A state Department Audit found Hillary Clinton federal rules when she used her personal email to conduct state business. David david House Speaker pauln is said to be warming up to paul ryan but will not endorse him yet. Managing editor John Heilemann joins us now. Lets start with the Inspector Generals report. What did we learn today about the way Hillary Clinton used the server, what she did with it and what she knew . John there have been a lot of people talking about this and claiming there is a lot new in this report that is not really new. The things that are important about the report are the secretarygeneral saying that she never sought permission within the department to set up a home server, that if she had asked for permission, that she wouldnt have received permission. There is interesting reporting in the report that tells a story about staffers that raised concerns about it at some point who were told explicitly that it had been approved when it had never happened. It also suggested that she and her aides had not cooperated with this investigation. We are trying to determine if any previous secretaries who had been investigated by their Inspector General had not been cooperative. The real action on this story still sits with the fbi and the investigation ongoing there. David not the House Committee. John not the House Committee. The House Committee is a political exercise. The fbi investigation has the potential of being a criminal enterprise. That is still out there. Hillary clinton may be interviewed by the fbi soon. This is a big story. It doesnt break a vast amount of new ground but breaks a little bit amount of new ground and will feed, politically speaking, a lot more discussion about this manner, revive it, and will give her critics and tomies a lot to seize on further his caricature of her as crooked hillary. Shery will that make a significant difference given that you are saying theres not much new in this report, or will it all be about the fbi report . John there are a lot of questions still outstanding. There is a criminal inquiry going on. Criminal d to a something criminal, but probably wont. Shery probably wont . John its impossible to know. The question people ask, will Hillary Clinton get indicted . I think that is unlikely. Is it possible some of her aides could . That is possible. This continues to breathe life into a story that has dogged her for a long time. Will it matter . To partisans who dont like Hillary Clinton, this issue, like benghazi, is an issue that gives her a sense she is not be trusted. For people who are democratic partisans, i dont think its going to matter. To people in the middle, six months from now when we get to election day, will this be a decisive issue . I tend to doubt it. Part of being a president ial campaign is winning news cycles, and on a day like this, she is going to lose the news cycle. Its another day for donald trump to seize on this with a vim and vigor. No doubt he will be later on this later today in california. David mark toner doing a briefing at the state department. He said a moment ago that he is confident that the clinton email situation like this would not happen again. Let me ask you about paul ryans decision here. John just to be clear, one of the most important things about this for the arc of history the Clinton Campaign has claimed, a lot of people have had personal email system set up. The one thing this Inspector Generals report says is, no, a lot of people have had personal email systems, but not a lot of people had servers set up in their home. This was something out of the ordinary that she did not have approval to do. David let me ask about paul ryan. The decision he has to make on whether or not to endorse donald trump youd john he is going to endorse donald trump. Shery its inevitable. John i dont think its inevitable. Ryan is still struggling with a variety of things. Ryan is making it hard for to do what he wants to do. Ryan wants to bring the party together. Ryan wants to try to educate trump and make trump into something that trump may not be, which is a paul ryan doctrinaire conservative. Ryan continues to delay doing this thing that he wants to do. Is he setting the ground to inevitably endorse him . This is what we are hearing from close aides to paul ryan, saying he is thinking about it. I dont think its inevitable. There are things trump could do to keep ryan from doing it. Ryan has always wanted to get to the place where he could endorse trump. The question is what the timing is. To see howmazing quickly people who had great reservations about trump have come to his side. A lot of people thought there was a chance this would last months. The fact that there is some indication it could happen within a week, assuming trump doesnt go off and do something that upsets ryan, is a sign of how successful trump has been so far in bringing together a party. Very quickly, the party is falling in line behind him. Ryan may be the next piece to fall into place. Trump will be able to stand up and say, i have unify the party. David thank you so much, John Heilemann. Another story about Hillary Clinton if you have gotten emails from the Clinton Campaign, you may have noticed they are increasingly personalized. That is thanks to a data Service Startup called timshel. Shery reporter tim higgins joins us from washington. Tell us about this, this new. Ystem have you gotten these emails from clinton . what is unique is it is personalized digital engagement, part of a broader strategy by the Clinton Campaign to look at all the ways her campaign is interacting with her potential supporters and make sure they are coordinated. Think about the data that is coming in. Shes got data from the email addresses of her supporters, people going to the doors of people, maybe social media data. Its a lot of complicated information. Is ithis startup is doing helps a client such as clintons andaign sort through that pull in the data and see if they can react and respond to it. There was a lot of talk after 2008 with the legacy of the Obama Campaign was going to be, same thing in 2012. This is the legacy realized, right . This is run by a guy who was instrumental involved with the Digital Initiative on the Obama Campaign. Tim it was one of the whiz kids behind the magic of that campaign. Hes got some backing from googles eric schmidt, really putting together a team that can be in place to do the r d that is required for this development, and he doesnt see it just for political campaigns. He would like to see this business go into the world of nonprofits, to take that big Data Strategy to the world of social change and help them. David thank you very much, tim higgins joining us from washington, d. C. A reminder that eric schmidt is one of the featured guests of the bloomberg breakaway conference. He is backing this startup. Watch it on our live events channel at bloomberg. Com live. Still ahead, the commodity close. That is coming up. Okay, ready . Whoa [ explosion ] nothing should get in the way of the things you love. Get americas fastest internet. Only from xfinity. To the first word news. Mark crumpton is in the newsroom. Insights longstanding systemic weaknesses related to communications. This started before her tenure secretary of state. The romanian hacker who access the computer accounts of the bush family and others has pleaded guilty to identity theft. Admitted to unauthorized access of a protected computer. He also hacked into the email account of Hillary Clinton j k confident, sidney blumenthal. That led to the revelation of clintons private email account. The agency will add screeners by withune to tsa, to deal long security lines. Or said several factors have contributed to added weight times, including more passengers and shortage of applicants for the expedited screening program. A Ukrainian Pilot has been released and sent home from russia. He was exchanged for two russian serviceman held by ukraine. She was the highest profile prisoner. She said she was kidnapped on ukrainian soil. Global news, 24 hours a day. Back to you. Commodity markets are closing. Lets look at the biggest movers, copper. The u. S. Housing market boosted demand for the metal used in wires and cables. Soybeans gaining. David u. S. Crude supplies decline. Last week, gasoline inventory rose. We could see gasoline falling on that news. Chevron are meeting today. This is in response to activists who say future climate rules will make it unprofitable to pump. The Companies Say demand will grow for decades even if Carbon Limits are imposed. Youngberg joins us. Not surprising to see these did not get to succeed in this meeting. They do make for a heated debate. What are your takeaways . Brian it is a big challenge for the industry. Oil is plentiful, relatively for theuccessful developing world. The flipside is, alternative energy tends to be expensive. It is not successful everywhere. Will that change . With Climate Change, it could. The Oil Companies tend to look at 30 to 40 years. What we think of as alternative energy, more down the road. David we had this conference in paris last year. The tide was turning when it came to Climate Change and alternative energy. Do we see that playing out . Are these Companies Getting more into those sectors . Domestic companies are not doing a lot, especially exxon mobil. It is not measurable. If you look at the european companies, they are doing more. The europeans seem to be ahead of things from this standpoint. Oil usage in europe has been declining. The u. S. Probably peaked prerecession. We will likely not get back to those levels. I think the Energy Companies do not want to lead on this. They want to see how things play out. And aill do like they do lot of things. They will let Smaller Companies develop it and perfected and then they buy it. You will probably see that down the line. You have a buy rating for chevron and a hold for eggs on for exxon. It pays a better dividend. Their Growth Prospects are better. On naturalthe lead gas projects, most notably in australia. Be a good growth driver. The valuation should improve down the road. Read exxon mobil hold. David the vote here about exploration, what were other big votes . What were shareholders concerned with . Investors are going to be able to put names up for the board and the access to the board has changed in Corporate America the last couple of years. Received enough votes where if you own 3 of the shares, you can put some up for vote and that will be new for exxon mobil. There is pressure from diversity standpoints and maybe down the line, the groups that are more supportive on the Climate Change, they will try to put someone on the board in the next year or two. We will see how that plays out. When we get close to 50 a barrel for oil, it doesnt seem to go down. If it does, where do stock there is greatn upside in the energy sector. Oil may have gotten a little ahead of itself the last couple of months. No question about that. We are seeing production come down. Oilsands fire issue. We had nigeria issues now. We are seeing anecdotal demand data improvement also. Oil will end up kind of where it is now, the dollar will have a big impact. We think that is part of the reason oil has moved up quicker than we thought. We think oil will improve through 2017. Is a good longterm price average to think about. Past that. T we are not investing much. We may be undersupplied in a couple of years. Time will tell. We think 65 is a good price to think about an investor should have energy and a diversified portfolio. For that. Nk you david coming up, making money with hockey. The nhl commissioner discusses revenue grows. Yahoo gets a new suitor. At t makes a bid for the core internet business. This hits at t against verizon. David here is the nasdaq today. More Bloomberg Markets coming up. David this is Bloomberg Markets. The National Hockey league sol record revenue last year just under 4 billion. The commissioner says the league continues to do well. David scarlet fu asked if they could get to form billion dollars to 4 billion this year. If the Canadian Dollar was still at par, we would be 100 million or 200 million higher. I believe there will be a revenue increase over 15. We continue to grow year after year and set new records. Both in terms of revenues and attendance and the number of people touching our game in the media. What is growing the fastest . All platforms. Media, new media, international, all of our platforms continue to a terrificesent opportunity to grow revenues and engage our fan base. Scarlet which is growing the fastest . The base. Nds on if you look at digital platforms, that is where the growth is. Putting the emphasis on international efforts. If you look at the world cup we are going to be doing, that will show tremendous growth as a line item. Scarlet i am glad you brought up digital. You put a lot of resources into that. Turned into a revenue generator already. How significant of a revenue generator is it . As we were looking at what we were doing and what the opportunities were, we look at a various set of models, we looked at doing it ourselves. What we concluded was if we want it wouldourselves, require a big investment and if we were really good, we might be as good as them. We thought they would be the best partner for us and together, there is the capability of providing yearround programming, using bestofbreed technology. We transition in the middle of is using a which high wire at without a net and they performed magnificently. Scarlet is that model something you will replicate as you expect to grow your digital presence . Engage with them to engage as many fans as possible, particularly without of market streaming. To create new content that will bring more people to the game. Scarlet talk about sponsorship being a source of revenue. The deal with adidas begins in 2017. Any ideather where the three strikes will be . Stripes will be . Adidas owns reebok, so there will not be radical differences and how the uniform will perform and look like. Redesigned toe relaunch. We have complete confidence in adidas ability. When you go to a hockey game, you probably see more dressed fans than any other sport. Scarlet joins us now. We are in the throes of the conference finals. No canadian teams. That has to upset canadian fans. Scarlet and traditionalists. There are no original six teams either. York, chicago, detroit, toronto, boston. You also have two new expansion teams. The San Jose Sharks and the lightning playing. When it comes to gary bettman, his goal is to grow the sport. It also means growing the u. S. Audience. The northeast has a lot of teams. Canada has a lot of teams. That means expanding to the sun belt. Las vegas has filed an application for an nhl franchise. Of las vegas does not have any professional sports teams. It is curious to play hockey in las vegas. Shery i know nothing about hockey, so i am lost. Scarlet a lot of canadian patriots moved to hong kong. A lot of people play there. Kids are playing there. There are a lot of indoor rinks. They play hockey there. Is the nhleresting is focused on expanding the game internationally, bringing us to the olympics. Are hearing controversy about that, the nhl not wanting to go, not willing to go. Scarlet the next two winter games are going to be in asia. There are a lot of expenses with that. Benefit not a financial to a league for letting players participate. Dont make money going to the olympics. There are costs, significant, in nhl players going to the olympics. It relates to transportation, insurance, accommodations. That is something people are worrying about and wondering about. European players want to go over and represent their country. No word on whether they will be allowed to dos thing. Maybe it will be like fifa. Developednd more layers play in the olympics. Shery i have no comment to that. David the playoffs are important to the nhl in terms of what makes money. Scarlet the longer the series goes on, the better for the league. In one series, it goes to seven games. The other is going to game six tonight. David you will be watching. Scarlet i will not be watching because the rangers did not make it past the first round. David lets go to julie hyman. Julie we talked about soybeans at an 18 month high because of what is going on down south in argentina. There has been a squeeze down there, whether reducing output. Argentina is the top shipper of soybean exports. Twice as much as brazil. When you have this kind of constraint, it has an effect on the price. Up by 3 today. We are seeing a gain in some of the other agricultural commodities. Corn prices are trading at their highest. Week prices are also rising. The weatherly about in south america, but the forecast here in the united states. This has a Ripple Effect across the companies who service the agricultural industries. Are also intocks focus today. David thank you. Up, the sales process marches on for yahoo . A new suitor, at t. Why are they of such interest to the phone giant . That is next area. David this is Bloomberg Markets. At t is joining the list of bidders for yahoo . Will join verizon in the in submitting bids in the next few weeks. Shery emily chang joins us. At t was reportedly not interested. Why did they change the mind . they think this will help them compete with a. At t decided to stay out, but they kept their foot in the bidding process. At t had a stake in y p. Bidding for yahoo and it would have worked as a wide he has dropped its bid altogether. At t is going into this wholeheartedly. Offers in0 initial the range of four to 8 billion. Verizon had been considered the frontrunner, but verizons bid was not nearly the highest bid. It is not clear if verizon is the front runner. It is unclear how seriously they are continued they are considering at ts bid. At t would like to have some of. Ahoo ad tech we heard from yahoo cfo 10 goldman yesterday, who talked about the sale process moving along the way. It is a robust process. It is on the way. I and not going to give a number of innings. Going iit is think, very very well. The sales process will continue for two to three weeks. There are several parties in the mix here. A group led by quicken loans founder, we have heard Warren Buffett is financing that particular bid. A group that includes Vista Equity Partners and a former yahoo executive, ross levinsohn. We will have to wait and see how this plays out. David other news about microsoft. It is cutting jobs. What does this say about microsoft cell phones Going Forward . Emily this appears to be microsoft taking another foot out of the phone business. Reports of emails saying they are stepping back, but they are not out. Nobody knows what that means for the strategy Going Forward. 7. 6 year they wrote off billion dollars related to their nokia acquisition. Now they are cutting 850 more jobs. 1300 more of those are in finland. 500 of the jobs globally. 200 million will be used for severance packages. They are writing off another 950 million today. Its is microsoft focusing phone strategy Going Forward. Maybe they will pull out of the line of phones altogether or focus on a single surface phone. That is something we have not seen yet. Microsoft has not come close in any significant market share in the mobile phone business and it seems like they are now realizing that. David thank you. A washingtonbased company, news across the terminal, seattle has said there is a large power outage in downtown seattle. We will monitor that throughout the afternoon. Join emily tonight on bloomberg west. 6 00 p. M. Eastern. Shery we will follow the market rally. Strong growth ahead in the second half of the year. For the s p. Join me in the next hour. Shery it is 3 p. M. In new york, 8 p. M. In london and 3 00 a. M. In hong kong. Welcome to Bloomberg Markets. From bloomberg World Headquarters in new york, good afternoon. Im shery ahn standing in or betty liu. Rising amid growing investor optimism that the World Economy can withstand higher Interest Rates from the fed. The s p 500 is at its highest level in almost a month. At tberg news has learned is entering the contest for yahoo s internet business, setting off a headtohead battle with verizon. A look at why at t is making such a late entry. And microsoft is slashing more than 1800 jobs, accelerating its exit from the smartphone business. What is the companys strategy . Are one hour from the close of trading. Lets head to the markets desk where julie hyman