Transcripts For BLOOMBERG Bloomberg Go 20151118 : comparemel

Were talking about geopolitics and it was another example of how that are so many cracks in the overall system and these are not necessarily great times. Time to introduce bloombergs editor in chief. Thank you for joining us. David you always been a note of optimism. Matt i will disappointed today. Stephanie i think we need to get to some news first. David we go to our first word, and bonnie quinn. Bonnie heavily armed police raided in apartment today searching for the suspected mastermind of the terrorist attack. When it was over, two people were dead, and seven were arrested it is not known if the elected ringleader was among them. It took place in the suburb of far from theot soccer stadium or one of the attacks took place. Last night, to air france theyts were delayed after received anonymous threats. One from los angeles landed in Salt Lake City the other was diverted to halifax, canada. No threats were found in either flight after searched. Is not hisl says it time. He dropped out of the race for the white house. His Campaign Never really caught on. You can get more on these and other stories 24 hours a day at the new bloomberg. Com. Lets have a look at markets now. A look at futures, were up across the board. For now seeing a solid direction with three extra points on the s p many contracts. Look if you wouldve the European Index because i have them on the bloomberg here. This is an equity index i clicked into europe and you can see red across the board. Losses depending on which index you look at over in europe. Were also seeing the euro come back, its first day gaining in four. Level, myetty low testament to do with the slight gain we are seeing in a production of Market Expectations for a fed freight incident hike september. There was a slight decrease, not that anything really expects that to move, but this is what the futures markets are showing and that may be why you see some of the euro move. You could also be a from Hedge Fund Managers today. From the chief investment officer, they expect even if the euro goes to parity in book comeback win because of the pace will be slow. Here you see apple, Goldman Sachs although it has had apple y, it is now putting them on their conviction buy list which is a bigger conviction. Some people think that smart phone sales will be increased fairly dramatically. That in the Third Quarter they could go 15. 5 . The iphone help which is one of the biggest david producers of smartphones in the world. That is for sure, one of the most profitable. To we want to get back france in check and what happened. According to the prosecutor, seven people were arrested denis inraid of saint connection with the attacks. Brendan, as far as you can tell, are the Police Operations over . Brendan were seeing plenty of signs that they are over. A line of police cars just past behind me and the Forensics Team is on their way in and were seeing the first signs that residents are beginning to open their windows and look out. Of course, they have been told to stay in place since 4 20 this morning. We do know that the apartment block was cleared, two apartments were rated, and the target of this raid which was a massive operation that goes on for several blocks around, the the belgian who is believed to a planned the attacks on friday. He wast yet know that in fact taken, but the cycle for they haveu find already done the apartment. There areey are seven people in detention in the city hall. David take us more broadly as you look around, this is one police operation. Ofthere other evidence others . David, there is evidence of tension everywhere on our way in. After we found out this was happening, and fund of the opera house i saw someone pulled over and out of his car. Paris is tense. Right now the level of shop am seeing in the residence this is a workingclass neighborhood, people leave early. A lot of people caught outside the police cordons. This neighborhood is about 23 from outside the eu. I talked to one manus of the scary thing is they had no idea these guys can disappear in a place like this because they look like me. I talked to another man that said this is a tough neighborhood but i never expected Something Like this. These,ie as we look at these images are stunning. This is obviously a horrific attack. We look at the market, the markets seem that the beat goes on completely resilient. As at the prize you . Does that surprise you . Matt no, what happened is comenments at some point together and deal with it. A deal with the decisively. Investors are processing this. This will happen. Stephanie does it surprise you brought it up, it happened on a friday and investors had three days to sort of digested and think how it there ly infected affect their investment. This happened in the middle of thinkinging back back to september 11, would weve had a different Market Reaction . Matthew i would say this from previous observations in the first decade of the 21stcentury we witnessed bombings in london, and saw 9 11 , investors are aware that this is a reality of the 21st century. Stephanie sad. Matthew sad, but it is a reality. David maybe it is the best defense begin have. Matthew absolutely, there was no reason to indulge this behavior, so why recognize it as anything less than illegitimate . Stephanie in just a few minutes, Francois Hollande will be taking the podium in paris be soon ase you there as his comments begin. I want to take you back the markets. It might not be the terror attacks that are causing rumblings, were hearing more and more top Hedge Fund Managers have been scaling back the u. S. Investments. We sell u. S. Equities tumbled in the last quarter and it has been a response after the market has more than tripled from the 2009 low. I want to bring in someone who covers hedge funds and she joins us now. Ive for the last two days some of the biggest Hedge Fund Managers of the world, and they were almost no new ideas. If anything, they were turning a corner and that fear of missing out mentality everyone was racing to get in his may be right environment to go short again. He is saying there are now more companies out there where he sees opportunity to look for accounting fraud, or to look for simply people overstating their earnings. There are a lot of Hedge Fund Managers that seem to be getting out of long bets on u. S. Equities, at least from what we can tell. Stan druckenmiller has been super negative on the Global Economy for years. Tactically, he has been actively trading along the market. Now that the momentum is out of the game, you were seeing investments based on , which people should invest based on. Matt if you look at the u. S. Right now, we just got some manufacturing data that was very positive that suggested that the 2016 economy is going to be more robust in the u. S. Than it was in 2015. If you look at europe and asia you still cec or Monetary Policy. Overall, the is a constructive one. That means it has to be good for the economy and earnings. The interesting things is people like Stan Druckenmiller have said they may not want to go along because the earning situation just does not look that good for them going forward. If you look at the equity risk 500 earningss p yield minus the 10 year yield you can see that it has arisen here which would of made sense because this in blue is the 10 year yield. When that comes back, and right now about 2. 3, the equity risk premium drops and then stays low going forward. Not enough is just value, maybe it is just not worth it for big investors to get back in. We saw a big catch Fund Managers billiony about 200 debt Equity Holdings in the last quarter and only about 80 billion of that 120 billion of that is explained in a drop of stock prices. Druckenmiller, we have heard over and over that specifically macro is harder than ever. Not talking john griffin, were talking macro investors. Those who have to focus on the Global Economy. Those are the guys and we saying this information and uncertainty is just too much. We had cliff on who said that we were up in the 90th percentile, which means there may be a correction. Matthew i would suggest one thing, if you go back and look at some of the people were been consistently accurate and theyre forecasting like zaslow for rainy, back in 2008 he said this is probably the best time to buy stocks. He reiterated that in 2009, and he still is bullish. Stephanie Francois Hollande is speaking right now at an assembly of the mayors in paris. Hollande iscois it president Francois Hollande the Security Forces that have launched the operation , they knew the danger. They underestimated once again the violence that they would be met with. Despite that, they fought until the end of the mission. A number of them sustained injuries. Thinking also of the Police Officers and doctors who went to the bataclan in terrifying conditions, and once again they neutralized them. Have suchproud to quality of Police Forces to protect our citizens. [applause] president hollande these actions confirm to us once again that we are at war. Whichagainst a terrorism itself has decided to launch war against us. Organization of isil has an army, financial resources, oil, and it can occupy territory. Article last islamists, theyve committed massacres and it wants to commit murders here and it has done so. During the night of the 13th of november, at least 129 persons were killed and lost their lives. Our thoughts are with them, with who cowardlyomen assassinated injured where thinking about their families who have been put in pain and grief. Saddened me,as but these concern all the french wherever they live in the french territory. It is the entire country that has been attacked. For the simple reason, and five years and is pursuing to eradicate terrorism and for this simple reason of what we are. Terrorists aim was to target the , which hasnce itself happened throughout the generations. The liberty that france has, the universal rights that it beends, this is what has attacked during the night of the 13th of november. There are barbaric people in their blind violence have targeted the diversity of the french people irrespective of religion, itolor, was the france itself that was the target. , simply speaking, and the life. Immense, thes anger is just as immense. It is really a sentiment of compassion towards the victims following the attacks. At the same time, a demand for action. David it strikes me, looking at him, that he is the french flag and the european flag and it seems to me symbolic. This is a war on france, it is also to some extent a war on europe on the Common Market and the breakdown of borders. This is a challenge not just to france. Matthew it is a very comforting picture in the sense that all of the people who are of diverse backgrounds that are in that picture are united. Investor, there is a lot of confidence that comes out of it. Try to remember where we were after 9 11, there was just a very collective coherence response that was very positive. That really got across the financial markets, it was a great time to be investing, actually. We lost our sound from Francois Hollande and are working on getting it back. We will return to his remarks afterwards. At this is i dont want is a good moment, but we can see in the 17 countries unable to come together over the last five years. But as it relates to security, their fears, what could this mean in terms of the refugee crisis . Will they come together, united, and pushing others out . Matthew hardly. Youre seeing on an old finally having a common interest. You talk about inequality, it does not matter where you are coming from, Everyone Wants security at this point. This is actually a benefit that was not in the political landscape. By the way, as a reminder, remer where we were seven or eight months ago with greece . David i was just thinking, grexit seems a long time ago now. Yield on aok at the greek 10 year government bond. It actually is yielding less than 7 . He noted was in july . 19 . That is been a brady a hell of a return on investment. Stephanie if you are an investor, you are seeing a unified front just a week ago when guys were up and france was in a great place to do business but you see him united with other countries in europe as a positive, but you have to then go to the streets. Unemployment is still what it is. Comingseeing more people out of school in places like spain, and portugal, and those are places where tourism is massive. Following some and like this, tourism could get hit. But the economy is not standing still. The Monetary Policy that the ecb succeeding,is albeit slower than anyone would like. The easier Monetary Policy that appear seeing is going to have a positive impact, the economy will keep growing. David the president to candidates are paying attention as well. Public and president ial candidate jeb bush sat down with the anchors from all due respect , and John Heilemann is joining us now. John, bush spoke quite a bit about syria, was that he have to say . Morning, he is obviously very critical of president obama. He says president obama has failed to lead on this matter. He took great issue the president s tone when he spoke on monday. He is doing a speech today at the citadel where he is trying to outline his posture and layouts Foreign Affairs philosophy and how to rebuild the American Military which he thinks has been allowed to atrophy to a dangerous degree. Those are all relatively mainstream republican positions but he will lay them out today. The issue that got a lot of attention yesterday was a series of questions that i talked to governor bush about related to the question now, very politically polarizing, very partisan, and very rancorous over the question of Syrian Refugees and whether they should be allowed to and to the United States and posture should be. Lets take a look to some of that right now. We have systems in place, if there is any kind of concern we should not allow people in. I dont think we should eliminate our support for refugees, it has been a noble area of our countries. You dont want to ban muslim refugees . I dont, the answer is not to ban people, but resolve the problem in syria. John that was governor bush talking about the issue, i unfortunately asked the question of him as we started that conversation in a slightly confused way. I talked about the governors, 27 they want toay keep Syrian Refugees out of the state and a new senator cruz who is putting forward legislation at the federal level to ban refugees from coming into the United States. Syrian muslim refugees, i believe, specifically. Later in the day, he clarified his posture which is that does , but he to ban refugees does understand what the governors are coming from and is in the place that were speaker ryan is which is advocating for a positive Syrian Refugees to make sure that the u. S. Vetting system is competent to do with the influx of refugees before we let anymore in. Stephanie obviously, bobby jindal is out of the race as we mentioned earlier. Yet a chance to talk about the rivals he still faces. Donald trump has been all over the map on the question of isis. He does not want to create a strategy, it is a good example of why he cant be trusted. Probably more consistent, im less bellicose. Itry not to use language just think i could be a good commander in chief. You would not put them in the same category as trump, or carson . On putting anyone in any category. Message, thatt donald trump cannot be trusted, many people were expecting jeb to say that for the last six weeks but he has not, why . Pretty half onen trump over the last few weeks, but this issue is ramping up his rhetoric for sure. We see trump again defying all predictions and expectations on the part of the establishment that he would fade away and seems to be now gathering strength once again. Ben carson may be starting to fade in terms of the public polling, the entire it establishment or the grownup , they all expect that in the wake of these attacks in paris and the International Focus that they will somehow benefit from the fact that they as they see themselves the grownups and hopefully the world will according to them. It will try to make a more aggressive argument that this moment calls for their brand of leadership while donald trump, most vocally, is basically saying no, this is a moment for toughness and resolution. Hed blow the crap uses a more colorful expletive, that is his tone right now in that message seems to be resonating as much if not more stephanie the word diplomacy . The need for diplomacy is not isnt important here . John im sorry, i dont know that in his lexicon, i dont know if he knows that word. We were just talking about paris, and paris is a place that is welcomed theorically refugees, United States has einstein, the greatest achievements in our technology, our have come from immigrants. What is so disturbing, maybe unsettling, is that the rhetoric is obscuring the fact that we benefited more than maybe any other country from refugees, if you like, and immigrants. Part of the not discussion, and it should be. David John Heilemann, thank you very much for joining us this morning. You can catch him and Mark Halperin with all due respect on weekdays at 5 00 eastern. Next, why wall street and Salt Lake City<\/a> the other was diverted to halifax, canada. No threats were found in either flight after searched. Is not hisl says it time. He dropped out of the race for the white house. His Campaign Never<\/a> really caught on. You can get more on these and other stories 24 hours a day at the new bloomberg. Com. Lets have a look at markets now. A look at futures, were up across the board. For now seeing a solid direction with three extra points on the s p many contracts. Look if you wouldve the European Index<\/a> because i have them on the bloomberg here. This is an equity index i clicked into europe and you can see red across the board. Losses depending on which index you look at over in europe. Were also seeing the euro come back, its first day gaining in four. Level, myetty low testament to do with the slight gain we are seeing in a production of Market Expectations<\/a> for a fed freight incident hike september. There was a slight decrease, not that anything really expects that to move, but this is what the futures markets are showing and that may be why you see some of the euro move. You could also be a from Hedge Fund Managers<\/a> today. From the chief investment officer, they expect even if the euro goes to parity in book comeback win because of the pace will be slow. Here you see apple, Goldman Sachs<\/a> although it has had apple y, it is now putting them on their conviction buy list which is a bigger conviction. Some people think that smart phone sales will be increased fairly dramatically. That in the Third Quarter<\/a> they could go 15. 5 . The iphone help which is one of the biggest david producers of smartphones in the world. That is for sure, one of the most profitable. To we want to get back france in check and what happened. According to the prosecutor, seven people were arrested denis inraid of saint connection with the attacks. Brendan, as far as you can tell, are the Police Operations<\/a> over . Brendan were seeing plenty of signs that they are over. A line of police cars just past behind me and the Forensics Team<\/a> is on their way in and were seeing the first signs that residents are beginning to open their windows and look out. Of course, they have been told to stay in place since 4 20 this morning. We do know that the apartment block was cleared, two apartments were rated, and the target of this raid which was a massive operation that goes on for several blocks around, the the belgian who is believed to a planned the attacks on friday. He wast yet know that in fact taken, but the cycle for they haveu find already done the apartment. There areey are seven people in detention in the city hall. David take us more broadly as you look around, this is one police operation. Ofthere other evidence others . David, there is evidence of tension everywhere on our way in. After we found out this was happening, and fund of the opera house i saw someone pulled over and out of his car. Paris is tense. Right now the level of shop am seeing in the residence this is a workingclass neighborhood, people leave early. A lot of people caught outside the police cordons. This neighborhood is about 23 from outside the eu. I talked to one manus of the scary thing is they had no idea these guys can disappear in a place like this because they look like me. I talked to another man that said this is a tough neighborhood but i never expected Something Like<\/a> this. These,ie as we look at these images are stunning. This is obviously a horrific attack. We look at the market, the markets seem that the beat goes on completely resilient. As at the prize you . Does that surprise you . Matt no, what happened is comenments at some point together and deal with it. A deal with the decisively. Investors are processing this. This will happen. Stephanie does it surprise you brought it up, it happened on a friday and investors had three days to sort of digested and think how it there ly infected affect their investment. This happened in the middle of thinkinging back back to september 11, would weve had a different Market Reaction<\/a> . Matthew i would say this from previous observations in the first decade of the 21stcentury we witnessed bombings in london, and saw 9 11 , investors are aware that this is a reality of the 21st century. Stephanie sad. Matthew sad, but it is a reality. David maybe it is the best defense begin have. Matthew absolutely, there was no reason to indulge this behavior, so why recognize it as anything less than illegitimate . Stephanie in just a few minutes, Francois Hollande<\/a> will be taking the podium in paris be soon ase you there as his comments begin. I want to take you back the markets. It might not be the terror attacks that are causing rumblings, were hearing more and more top Hedge Fund Managers<\/a> have been scaling back the u. S. Investments. We sell u. S. Equities tumbled in the last quarter and it has been a response after the market has more than tripled from the 2009 low. I want to bring in someone who covers hedge funds and she joins us now. Ive for the last two days some of the biggest Hedge Fund Managers<\/a> of the world, and they were almost no new ideas. If anything, they were turning a corner and that fear of missing out mentality everyone was racing to get in his may be right environment to go short again. He is saying there are now more companies out there where he sees opportunity to look for accounting fraud, or to look for simply people overstating their earnings. There are a lot of Hedge Fund Managers<\/a> that seem to be getting out of long bets on u. S. Equities, at least from what we can tell. Stan druckenmiller has been super negative on the Global Economy<\/a> for years. Tactically, he has been actively trading along the market. Now that the momentum is out of the game, you were seeing investments based on , which people should invest based on. Matt if you look at the u. S. Right now, we just got some manufacturing data that was very positive that suggested that the 2016 economy is going to be more robust in the u. S. Than it was in 2015. If you look at europe and asia you still cec or Monetary Policy<\/a>. Overall, the is a constructive one. That means it has to be good for the economy and earnings. The interesting things is people like Stan Druckenmiller<\/a> have said they may not want to go along because the earning situation just does not look that good for them going forward. If you look at the equity risk 500 earningss p yield minus the 10 year yield you can see that it has arisen here which would of made sense because this in blue is the 10 year yield. When that comes back, and right now about 2. 3, the equity risk premium drops and then stays low going forward. Not enough is just value, maybe it is just not worth it for big investors to get back in. We saw a big catch Fund Managers<\/a> billiony about 200 debt Equity Holdings<\/a> in the last quarter and only about 80 billion of that 120 billion of that is explained in a drop of stock prices. Druckenmiller, we have heard over and over that specifically macro is harder than ever. Not talking john griffin, were talking macro investors. Those who have to focus on the Global Economy<\/a>. Those are the guys and we saying this information and uncertainty is just too much. We had cliff on who said that we were up in the 90th percentile, which means there may be a correction. Matthew i would suggest one thing, if you go back and look at some of the people were been consistently accurate and theyre forecasting like zaslow for rainy, back in 2008 he said this is probably the best time to buy stocks. He reiterated that in 2009, and he still is bullish. Stephanie Francois Hollande<\/a> is speaking right now at an assembly of the mayors in paris. Hollande iscois it president Francois Hollande<\/a> the Security Forces<\/a> that have launched the operation , they knew the danger. They underestimated once again the violence that they would be met with. Despite that, they fought until the end of the mission. A number of them sustained injuries. Thinking also of the Police Officers<\/a> and doctors who went to the bataclan in terrifying conditions, and once again they neutralized them. Have suchproud to quality of Police Forces<\/a> to protect our citizens. [applause] president hollande these actions confirm to us once again that we are at war. Whichagainst a terrorism itself has decided to launch war against us. Organization of isil has an army, financial resources, oil, and it can occupy territory. Article last islamists, theyve committed massacres and it wants to commit murders here and it has done so. During the night of the 13th of november, at least 129 persons were killed and lost their lives. Our thoughts are with them, with who cowardlyomen assassinated injured where thinking about their families who have been put in pain and grief. Saddened me,as but these concern all the french wherever they live in the french territory. It is the entire country that has been attacked. For the simple reason, and five years and is pursuing to eradicate terrorism and for this simple reason of what we are. Terrorists aim was to target the , which hasnce itself happened throughout the generations. The liberty that france has, the universal rights that it beends, this is what has attacked during the night of the 13th of november. There are barbaric people in their blind violence have targeted the diversity of the french people irrespective of religion, itolor, was the france itself that was the target. , simply speaking, and the life. Immense, thes anger is just as immense. It is really a sentiment of compassion towards the victims following the attacks. At the same time, a demand for action. David it strikes me, looking at him, that he is the french flag and the european flag and it seems to me symbolic. This is a war on france, it is also to some extent a war on europe on the Common Market<\/a> and the breakdown of borders. This is a challenge not just to france. Matthew it is a very comforting picture in the sense that all of the people who are of diverse backgrounds that are in that picture are united. Investor, there is a lot of confidence that comes out of it. Try to remember where we were after 9 11, there was just a very collective coherence response that was very positive. That really got across the financial markets, it was a great time to be investing, actually. We lost our sound from Francois Hollande<\/a> and are working on getting it back. We will return to his remarks afterwards. At this is i dont want is a good moment, but we can see in the 17 countries unable to come together over the last five years. But as it relates to security, their fears, what could this mean in terms of the refugee crisis . Will they come together, united, and pushing others out . Matthew hardly. Youre seeing on an old finally having a common interest. You talk about inequality, it does not matter where you are coming from, Everyone Wants<\/a> security at this point. This is actually a benefit that was not in the political landscape. By the way, as a reminder, remer where we were seven or eight months ago with greece . David i was just thinking, grexit seems a long time ago now. Yield on aok at the greek 10 year government bond. It actually is yielding less than 7 . He noted was in july . 19 . That is been a brady a hell of a return on investment. Stephanie if you are an investor, you are seeing a unified front just a week ago when guys were up and france was in a great place to do business but you see him united with other countries in europe as a positive, but you have to then go to the streets. Unemployment is still what it is. Comingseeing more people out of school in places like spain, and portugal, and those are places where tourism is massive. Following some and like this, tourism could get hit. But the economy is not standing still. The Monetary Policy<\/a> that the ecb succeeding,is albeit slower than anyone would like. The easier Monetary Policy<\/a> that appear seeing is going to have a positive impact, the economy will keep growing. David the president to candidates are paying attention as well. Public and president ial candidate jeb bush sat down with the anchors from all due respect , and John Heilemann<\/a> is joining us now. John, bush spoke quite a bit about syria, was that he have to say . Morning, he is obviously very critical of president obama. He says president obama has failed to lead on this matter. He took great issue the president s tone when he spoke on monday. He is doing a speech today at the citadel where he is trying to outline his posture and layouts Foreign Affairs<\/a> philosophy and how to rebuild the American Military<\/a> which he thinks has been allowed to atrophy to a dangerous degree. Those are all relatively mainstream republican positions but he will lay them out today. The issue that got a lot of attention yesterday was a series of questions that i talked to governor bush about related to the question now, very politically polarizing, very partisan, and very rancorous over the question of Syrian Refugees<\/a> and whether they should be allowed to and to the United States<\/a> and posture should be. Lets take a look to some of that right now. We have systems in place, if there is any kind of concern we should not allow people in. I dont think we should eliminate our support for refugees, it has been a noble area of our countries. You dont want to ban muslim refugees . I dont, the answer is not to ban people, but resolve the problem in syria. John that was governor bush talking about the issue, i unfortunately asked the question of him as we started that conversation in a slightly confused way. I talked about the governors, 27 they want toay keep Syrian Refugees<\/a> out of the state and a new senator cruz who is putting forward legislation at the federal level to ban refugees from coming into the United States<\/a>. Syrian muslim refugees, i believe, specifically. Later in the day, he clarified his posture which is that does , but he to ban refugees does understand what the governors are coming from and is in the place that were speaker ryan is which is advocating for a positive Syrian Refugees<\/a> to make sure that the u. S. Vetting system is competent to do with the influx of refugees before we let anymore in. Stephanie obviously, bobby jindal is out of the race as we mentioned earlier. Yet a chance to talk about the rivals he still faces. Donald trump has been all over the map on the question of isis. He does not want to create a strategy, it is a good example of why he cant be trusted. Probably more consistent, im less bellicose. Itry not to use language just think i could be a good commander in chief. You would not put them in the same category as trump, or carson . On putting anyone in any category. Message, thatt donald trump cannot be trusted, many people were expecting jeb to say that for the last six weeks but he has not, why . Pretty half onen trump over the last few weeks, but this issue is ramping up his rhetoric for sure. We see trump again defying all predictions and expectations on the part of the establishment that he would fade away and seems to be now gathering strength once again. Ben carson may be starting to fade in terms of the public polling, the entire it establishment or the grownup , they all expect that in the wake of these attacks in paris and the International Focus<\/a> that they will somehow benefit from the fact that they as they see themselves the grownups and hopefully the world will according to them. It will try to make a more aggressive argument that this moment calls for their brand of leadership while donald trump, most vocally, is basically saying no, this is a moment for toughness and resolution. Hed blow the crap uses a more colorful expletive, that is his tone right now in that message seems to be resonating as much if not more stephanie the word diplomacy . The need for diplomacy is not isnt important here . John im sorry, i dont know that in his lexicon, i dont know if he knows that word. We were just talking about paris, and paris is a place that is welcomed theorically refugees, United States<\/a> has einstein, the greatest achievements in our technology, our have come from immigrants. What is so disturbing, maybe unsettling, is that the rhetoric is obscuring the fact that we benefited more than maybe any other country from refugees, if you like, and immigrants. Part of the not discussion, and it should be. David John Heilemann<\/a>, thank you very much for joining us this morning. You can catch him and Mark Halperin<\/a> with all due respect on weekdays at 5 00 eastern. Next, why wall street and Law Enforcement<\/a> are struggling to shut it down next on bloomberg. Welcome back to bloomberg. Matthew winkler just asked me if i was born in 1982, that is why i love having him here. I love that. It takes americas medal winkler, thank you, glad you are here and tom keene who was in high school in 1982, thank you for being here. Tom not quite. David i think we better get to the first word. Police in paris finish a seven hour assault aimed at the suspected ringleader of the terrorists. Seven people were arrested. The raids took place in the s, notsuburb of saintdeni far from where the attacks began. David cameron is making the case for extending airstrikes from iraq to syria. He wants to hold a vote in the house of commons on expanding air raids by christmas. Continued showed trump leading the field of republican hopefuls with 22 . Ben carson, marco rubio, our next. Last month, carson had pulled closer to trump in New Hampshire<\/a>. Thank you, we have a mustread now. Tom this is emotional, you see mayorsion for the conference in paris. I think this was extraordinary. Financial times, i just thought this was great. Word,s a strange islamist. Maybe i would add in the where it is as well maybe decide that the London School<\/a> of economics is maybe written on this one than anyone i know on this idea is justamism fractured off of what you and i studied a million years ago. Is the mosts difficult part of this issue is the lack of clarity that everybody wants to have. They looked at terrorism, and the whole issue, what they get is a lot of confused verbiage, confused rhetoric, they dont know who the targets are, tom go to the cinema will be the up in this idea of servitude of different parts of the arab world. Back when egypt was normal, it has just all been blown to smithereens. David this is a fascinating piece it talks about the hierarchy within islamabad to and that there is no a fiscal thatm, but even apart from member that minister in florida that was doing things the thing that strikes me is why havent there been effective spokespeople stepping up from islam. Or have there been . We go to the, when middle east, we start with two very distinct groups. They have been in conflict with each other as you well know. So, when you are looking for leadership, it is very hard to say who exactly are we turning to . Both sides have some validity, and the various parts and programs and so forth. Politically, it is just a minefield. Goodanie you bring up a point, for many people we dont see very distinct groups, there are two clear groups but within that there are so many splinters that your average american or those who are so concerned simply say that a whole side of the world i dont understand it, it is too complicated. There should be spokespeople to stand up and say let me delineate. M you saw this outside of our due by office in choosing where to be. I think bringing that i did have a some clarity, our office probably is the most Diverse Office<\/a> in bloomberg in dubai when you look at where people come from and their backgrounds. You could argue many of our people are refugees in dubai. There is a perfect example. David thank you for bringing this up, it is fascinating, we really appreciate it. I know you have to get back to radio. Ons get you caught up now some stocks moving in for that we go to matt. Lets take a look at some of the movers this morning i will start staples, the dark about it often because of its involvement. Withompany came out thirdquarter earnings that was in line with expectations, or estimates i should remember the bloomberg way. It problem is the outlook, therees fourthquarter would looking for . 29, so the midpoint of the outlook is lower as a result this stock is down 3 . Take a look, this is another one of the Home Improvement<\/a> stores that Beat Estimates<\/a> yesterday, home depot, lowes, earnings were . 80 we were looking for . 78, people are going to consumers even if they pull in they will continue to build their homes and that is why improve their homes, i should say. To talke now we have about wall street, one of our favorite subjects Insider Trading<\/a> has a new business model. More hackers are infiltrating companies networks to access nonpublic information and trade on it. The two latest indictments ad dressing this issue, this is not just traders sharing information, how exactly is this working . Throw a the whole oldschool models, and they are different. We filed one in august which was traderslearcut of the in the u. S. Hacking in russia to go stephanie intensive in it, right . Right . In pennsylvania, keri right, they waited to take out nonpublic information and made tens of millions of dollars. It was a morecase broad global conspiracy. Leans of them looking for information as they hacked into dow jones, stocks trade, that the could be looking for that type of information to trade. Youre seeing this confluence of events where theyre not so worried about Hedge Fund Managers<\/a> and analysts trading tips and so much it is big, broad, hacking operations that are getting into Financial Services<\/a> that could potentially be used for securities fraud. Stephanie what kind of information of a getting . Keri the case we saw the summer was exactly what that was, but the Earnings Guidance<\/a> was or what earnings numbers were and theyre getting those 24 hours before they are released. They can be in the service of this company some of the largest Financial Companies<\/a> in the world for years without being detected. Chances are, this is going on all over the place. Called it Insider Trading<\/a> because it is confidential, but i wonder if it is . Is this more akin to just theft . Keri it absolutely is theft, and when the surcharge they are very specifically charged as securities fraud and not branded Insider Trading<\/a>, but it is a type of Insider Trading<\/a> what information is not available to the public and youre making money on that. Of course, legally, youre right. the verb that comes to my mind is steel, theyre stealing customer information that is not theirs. And hacking we know is one of the toughest crimes for Law Enforcement<\/a> to counter. It is just like in the movies, their 20 steps ahead of everybody. The u. S. Government was hacked and had an enormous hack of personal information last year. Stephanie and how does this get policed . Keri it is really tough, they hire security firms and spend a lot of money. Theyre spending more and more on proactive defensive systems as opposed to reactive defensive systems which they were stephanie doing for years. Stephanie what does that mean . Keri it seems like you cant spend your way out of protecting your company from hacking. We can identify that can help lead can get them out of there. Ew investors think well try to spend their way out of this. Cyber look at the isc, security index, that is in white. It is outperforming the Application Software<\/a> index that i chose to compare to it. This includes Companies Like<\/a> , sontec, but also cisco hardware, software, legal, advisory, people, investors are betting that this will be a huge growth industry and that is why it is up 152 . Stephanie if you cant spend your way out of it, couldnt the argument be made dont spend any money at all . this gravy dont, your company will be gone and thought hours. Every wall street bank will be decimated within hours. But to keep them standing and running up there having to spend hundreds of millions of dollars and this is just the new normal. A majorhas always been issue, but he crept up on us as an incredibly dangerous issue. Matthew i think there is an analogy with insurance, is that an appropriate analogy . Keri absolutely, that is why they sell cyber hacking insurance. Those Companies Love<\/a> that sentence, spend all of your money. David thank you very much for that interesting story. Migrant talk about the crisis and its impact on the Global Economy<\/a>. That is next on bloomberg. The ongoing refugee crisis has Enormous Economic<\/a> impact. This issue has become increasingly complicated, i think that is an understatement. Senior fellow the petersons jacob joining us now from washington, so i would like to start if i could by asking you to set the stage. How many refugees, where are they . Year, 798,000 have arrived in europe and close to 5000 have died trying to get to europe. Of course, it is a massive crisis for europe. The looked at from perspective of other countries that received large numbers of refugees across the globe, for other countries the attention on europe of begs that there be a global response. Whatever we find a solution workable for europe must be applicable to other countries and other parts of the world, southeast asia, parts of africa. It is a big crisis, and one that needs a global solution. David just that point, how much more difficult is your job become because of paris . Paris has had phobic feeling to europe, and we have to guard against that. Many people have said this is wants tohat isil create, a hysteria with a ,acklash against foreigners antiformer feelings that could arise. This will feed the stream of to thes who will travel conflict areas, areas where war is waged on a daily basis and it becomes a self reinforcing closed loop. This. E to guard against the events in paris were horrific, and of course condemned by everyone, but we have to be careful not to categorize migrants and refugees in a way that it becomes easy for right wings and xenophobes to attack them. It creates than i dynamic that we cannot control. Stephanie it is so hard to understand exactly who is who. Jacob what ought to be stated by everyone who is responsible for law and order and maintaining civilization as we know it is just how valuable refugees have been historically culture,odys everyones industry, everyones technology. If you remember in the aftermath ofworld war ii, if hundreds thousands of people just wondering the confidence. They had to find a home. Those that did went on to become really major contributors. Stephanie are people really thinking about history, or their own safety today . Prince hussein even if he were to say that a number of extremists come in with a refugee flow, and a huge amount the vast majority of refugees arent people that can contribute to the growth of an economy, contribute to filling in the gaps in the labor market, do jobs of the people will never do at the beginning, and we have to find a way of resettling refugees on a much larger scale. It has to be a greater Global Responsibility<\/a> to say all of us will do more to find homes for people freeing conflict fleeing conflict. Jacob, you have been doing a lot of work on the economic consequences. Overviewyou give us an of how you see the economic effects of this . Realityhe unfortunate is that the economic effects of this should potentially be positive for europe. In the short run, we will see a major fiscal expansion in the countries of major recipients meaning germany, the front tier countries, italy, greece, here now unfortunately also going to have another ramp up in security spending in france and other countries. All told, these are all stimulated a fax. Run, europe is a continent that is coming under increasing demographic pressure. A significant level of inward migration and obviously the ability of these economies to absorb these them intond turn productive members and the long run will be absolutely imperative for europes ability to continue to grow. David as you deal with World Leaders<\/a>, to the understand what jacob is saying . Hussein what does not get the impression that the extinct of instinctive reaction is to put a barbed wire , it is her difficult to see how you will have a europe in the future where you want to see the freeflowing movement of goods and services if you have long lines at the borders with the controls will be so restricted, every car has to be checked to make sure there is no migrant hiding in the back, every track has to be xrayed, stephanie what would that cost . Exactly. Ssein think about fencing of her territories, it is not realistic. You have to instead open up channels for illegal migration. We need to look at an overall equation which everyone can do buy into. Need to have a more broader policy of resettlement across the globe and a Global Responsibility<\/a> has to be here. David there was no shortage of role models that should be called upon. There are dozens more where they came from. Throughout europe and the notice states, they should be called upon to talk about this issue. Gentlemen, we have tickets to the break, fantastic conversation. We will be back with more. Up next, with ticket turn talking Good Business<\/a> of human rights and the companies involved. Stick with us, youre watching bloomberg. David welcome back, were and jacobprince zeid kierkegaard. What struck me is the extraordinary numbers that would be required to protect the borders compared to the overall budget for the european union. the basic point is that europe needs to spend 200 times more if it wants to achieve what i would consider a credible level of external border control. The reality is unless europe does that, he will see, unfortunately, the rise of xena phobic parties and voting ,ublics who feel insecure europe will get its act together and put together the financing ar what we call in this piece sort of security and mobility bond. Closing, expanded all out into the business of Good Business<\/a>. U. N. Issued ahe few years ago a guiding principle on the business of human rights. The author was from harvard university. We detected that the consumer of tomorrow, the shareholder of tomorrow will be much more sensitive about supply lines, much more sensitive about the value that a company aspires to project of itself. Companies we believe will be sensitive and risk of verse in terms of their human rights. Stephanie thank you so much. Great conversation. Stephanie breaking news for the retail sector, target numbers are out soon, what are they say about the American Consumer<\/a> . A lot of of people are hating on this recovery, and will housing hold up . We get the latest data on residential real estate. Stephanie from hong kong to london, to new york city, welcome to the second hour of bloomberg. David we have so much to cover. We would have to put a leaf on the table. If matthew winkler, very red ,oles our good friend barry our good friend, and the at her bloomingdales, not bloomberg, so welcome. Stephanie it is right next door. They go hand in hand. Those target numbers are coming out, so lets bring in another member of the family, matt miller. Matt earnings came out in line at . 86 and revenue was in line at well. Pullingyre doing is off the bottom of the range of their forecast. They previously said they would have earningspershare for the sayingar, now theyre for 65475, that tightening that higher end which you think investors would want to see. I will go through the statement and see if they mention tssappointing sales of coa because of warm weather, that i will see if they say anything about headwinds from Foreign Exchange<\/a> in case they did close their canadian stores. Stephanie they did to close their canadian stores, that is the reason. Which is why i hate weather as an excuse. It gets cold in the weather in the northeast. Itphanie oh my goodness, was raining out, that was why no one looked at houses today. Target is your new favorite company. Stephanie i love the target for a reason. The thirdquarter results are looking good. May be investors, their expectations are pretty high for this company. Everyone likes to see Companies Beat<\/a> by a penny. Stephanie that is a whole other pect subject donna analysts lower their estimates than they hit them. A lot of solid information from target, they are things they are really focused on and doing well. Apparel, home, baby, kids, wellness, those are growing 2. 5 times faster than the business. Whats dragging it down . The grocery business. They have these good private label brands, their increasing organic, craft beer, they say that this 10 better in the key markets, but theyre fresh is not great, their meat is not great. Target forgoing to those big weekly trips and thats what you want, you want them in the store every week filling up. Stephanie michael, it surprises me booming here that apparel is doing so well. I set down with someone we know that burned by jcpenney, and they are looking at the we tell sector saying a lot of Companies Got<\/a> beaten up, is this a buying opportunity . And the answer is no because retail is so hard to make money and at a time when consumers are expecting coupons and discounts. Michael thats one of the problems, it is a race to the bottom and the internet is causing that. It is an event worldwide because it is on the net. I know you were talking before the break about cold weather, it is a factor. Nordstrom says it wasnt any particular thing, but if you take a business and i have no ata what the numbers are bloomingdales in the northeast, when it is 70 degrees at the beginning of november, and has an enormous affect. It is about coats, hats, sweaters, there is a ripple effect. When it is cold, there was a different attitude about the customer. The fact the matter is everyone is in the business of selling commodities right now. There was an interesting article ,n the times about toms shopping was more than just sales. It is about a happening, we had this conversation all the time, people have been going to the markets since the time of the greeks. Experiment,social there is nothing you cannot to get to, you can go online, you dont have to go to the Movie Theater<\/a> to see the newest movie, wait a week in you get netflix and go on demand. It is about on demand, and everything is about storytelling experience. I think target has ok earnings, but the ones i thought were great was home depot. On a twoyear basis, whose traffic was up, the average sale was up, and the Business Year<\/a> over year is that strong because it is about an experience, stephanie they do have Extraordinary Customer Service<\/a> at home depot. Really . I can never find anyone. Stephanie then youre going to the wrong home depot. Let me push back, when i look at the world of shopping we see macys and nordstrom in the middle a little soft. Hield highend is bloomingdales and tiffanys, target is also doing better, part of the reason home depot is doing so well issue of so many people with no equity in their homes, the Sales Volumes<\/a> are still very light. That means people are spending more time fixing up their homes and saying we cant trade up, but lets stephanie is apparel harder to sell . When you have people investing in homes . Is that slice of retail dollar less . It may be, but Consumer Confidence<\/a> was up over three points. Gas is 25 less a gallon than it was a year ago. The fact of the matter is, in my mind, there is not just enough newness. Stores for a the long time was accessory businesses. That business is moderated, i dont believe that all the upscale stores are doing as well as you say. I dont believe that. I think that the upscale stores are being hit right now, i do not believe when the sacks numbers come out. I have no idea what bloomingdales is at, those numbers i think are tough numbers. That would be my gas. There is just not enough newness. The disney business is terrific, ok . The apple business is terrific, the business is people have interaction with. The ability to do something creative, those are the business is doing well in whatever environment airmen. David i want to go to matt miller before we continue. Matt i have a fantastic function to share, clients love this. If you go to any equity and type throughuity ta it goes transcripts and excerpts from Conference Calls<\/a> of all the companys competitors. Richard very cool. Matt i just typed in weather to see what target competitors are talking about, everyone has said something. Walmart just now mentioned warmer weather somewhat slowed performance. Down here, costco says not everyone is a story, but typical delays like whether have bummed us out. Big lots, due to unseasonable weather conditions q2 increased 2. 8 . This is a great function if you want to see what your companys competitors are talking about. You can type in any keyword and go through these transcripts. Another one of the Amazing Things<\/a> you can do the bloomberg terminal. Stephanie im looking macys, nordstrom, jcpenney, all missed last week. This week, walmart and target do well, what does that tell you . Matthew we are seeing a little bit of a retrenchment, but the Bigger Picture<\/a> is the American Consumer<\/a> is as healthy as we have seen at any time really since the financial crisis and maybe even before. That will not change. When we go into 2016, the Unemployment Rate<\/a> will fall some more and things like gasoline, cost of energy, American Consumer<\/a>s will be robust in 2016. I would not get too depressed about this latest setback. Some of these stocks look like it is 2009 again, some of these retailers look like that. That goes back to this point about the innovation in their apparel. That was a lot of competition now for that small retail dollar want to pay down your debt you have a million other things competing for your dollar. The cell phone bill, electronics, toys, children, will you spend that money . The Food Industry<\/a> also has my mind going, talking about restaurants. Endhave shake shack on one that comes out with great earnings, and go down to the new scent of downtown in brookfield and take a look at the environment the french food hall which is not fast with the way be used to know that. Sushi, this iss, all about a food experience. To millennials, people want that experience. If im spending, im spending on things that are exciting to me. I think there are a lot of good things out there. Allnon we talk about it the time, the shift from people that want to own goods to experience something. We attribute it to millennials, but more and more people are doing it every day. Thing, aone last comment about the race to the bottom, there was a challenge that when you look at the appeals toe pricing people that need merchandise. The real challenge is how do you appeal to people that want merchandise . I think that is a very big difference. The people that need it need to have it on the table, the people that want it it is what is that experience. We said this before, you need another pair of black pants . Stephanie never, because they have not designed one since 2009. Richard what us to we need . What gets people excited today is experiences. That is why Something Like<\/a> Shopping Mall<\/a>s, with a new American Dream<\/a> it will go into new jersey has a Great Potential<\/a> to do something really exciting because it is not about a shopping experience. Or Urban Outfitters<\/a> buying a pizza chain the other day and investors really rolled their eyes at that maybe they are thinking the same thing. Much,nie thank you so shannon, michael, and matthew, we kept to hear overtime. Barry, you are here for the whole hour. The new google lemon Flagship Store<\/a> opening today, 11,000 square feet it will feature something called hubs 17 which is a Community Center<\/a> for customers can take yoga workshops. They can even attend concerts. If that is not to record what michael is talking about, i dont know what to does. Still ahead, some quotes from around the world. This is bloomberg. Bonnie welcome back to bloomberg. More consolidation in the Semiconductor Industry<\/a>. Fairchild will be bond for 2. 4 at a combinedwork revenue of 2. 5 billion. Theyre splitting into two independent public companies, and it includes brands such as slim jim, chef boyardee, and pf changs the other was sell frozen potatoes and other vegetable products. Profit andome depot, sales both Beat Estimates<\/a> as the secondlargest homeimprovement chain. Four years of rising home prices have had people buying projects. David now lets take a look at some quotes from around the world something we call say what . Andrew bring and jason kelly. So, i want to start with a familiar topic, around this a deal that isantic not getting financed. There was a risk of this happening more we talk about this and a second, the amount of the market that is on finance of all is getting larger. Unfinanciable. It is the worst thing that an equity guy can hear. This is bad news. David this is not just any equitable guy. Guys trying are big to get the data buyout. This is summoned to worry about. Stephanie cracks in the system, we see more every day. Not anor is this just attractive deal . Stephanie five minutes ago, there was a such thing as an unattractive deal. Barry of course there are unattractive deals. Stephanie but we havent been investing based on fundamentals for years. David maybe what youre saying is that the market is finally getting rational. Barry when we look at some of the Venture Capital<\/a> financing of the socalled your records, unicorns, some of these are absurd. We macys of a similar and private equity. Stephanie just yesterday, they were saying that money is rushing following that uber enthusiasm of getting into that deal. On it. Jason the next quote comes from partner,s is former the question is where do they end up . It is a difficult environment to be in fixed income. We spend so much time talking about when will they raise rates, now we start to wonder with roughly a 60 chance they will raise in december, now people are gaming out where do they end up and how do you invest against that. They arerep said raising rates in december and that is money to me. He is the conduit to the streets. I dont want to satan say 100 , but at least 90 . It is how fast of a raising, a gradual rate rise to help normalize Interest Rates<\/a> and responds to the high demand for capital, should not derail the economy. Jason you think that is the most there when . Barry they learned what was the 04, 05, 06 increases, and the Housing Market<\/a> had gone too far. The last quote comes from live, coding is something talked a lot about and bloomberg. We did an entire special issue, stephanie longest story ever. David one piece. Here itould is is. There is huge demand for topnotch coders. Singledigit age kids coding, like five years old getting into this. When you take a step back and think about the whole educational system, one of the other quotes the story was talking about in the current Education System<\/a> you have to wait 21 years to figure out if it works. David thank you very much for being with us. Stephanie i have to get back to coding camp. David why so many people seem to hate this economic recovery. Gold spent many years in the mid to thousands as the safe haven over the u. S. Treasury considering the debt precipice we were looking over at that particular time. Now gold has seem to have lost that safe haven status. Treasuries at a relatively larger bound versus gold, and the reverse was extremely quickly. Tells you a lot, that tells you that the idea that some sort of global catastrophe just is not there with the general investor any longer. It is more about shortterm crashes that you can buy in the equity markets. Shortterm spikes you can sell and gold, that remains unless there is some sort of trend change. How low do you think gold can go . Most people expect the fed to raise rates but not at an extreme pace. We talked a couple of months target of 980t a that im still sticking to. If you held a gun to my head, it looks like a shortterm sideways channel to me. Loadld be buying the new when we get there. Remains inf 980 place. For the investor, it is not a good buy. There was a possible oversold condition that could happen. That needs to be a place where you go short. Thank you so much for joining us. Stephanie welcome back, you are watching bloomberg. A guy was is not between Shopping Mall<\/a> in 10 years, barry is with us. You are talking about the recovery, how many people feel that for the broad public has not felt the recovery. There has been a steady drumbeat of dissatisfaction about the postcredit crisis recovery no matter how much the economy improves, a good number of people insist it has not. Why . Many of these people are the base that have been supporting donald trump. Barry there are a couple of reasons, the biggest reason is the economy has recovered, but not evenly distributed. If you are in a coastal city or some manufacturing heartlands, and up till a year ago in an energy region, you are feeling the recovery. If you look of the difference between unemployment based on Educational Attainment<\/a> or industry, if you dont have a High School Diploma<\/a> your Unemployment Rate<\/a> is down to the mid60s, if you do have a college or better degree, it is 3. 5 . If youre in finance, management, or any executive function it is down to 2. 2 . Low, there ist competition for labor and wages rise. Depending on how much school you have, and what industry youre in, you could feel the robust recovery or none at all. David this is a really important fact, people dont think it has recovered because it has not for them. Does it count then . Barry by the numbers, on average, the recovery is here when you look at were on an 18 million sale rate for automobiles. When you look at the Unemployment Rate<\/a>, wages are finally starting to go up across the board. The problem is, the averages are misleading because you see some people doing well or very well, and other people just treading water with the present health care coming up in the price of other things, and that has hurt them. Stephanie housing and health care, you are staying with us. Next, is there a buying opportunity in emerging markets . I just had a horrible nightmare. My companys entire network went down, and i was home in bed, unaware. But that would never happen. Comcast business monitors my Companys Network<\/a> 24 hours a day and calls and emails me if something, like this scary storm, takes it offline. So i can rest easy. What. You dont have a desk bed . Dont be left in the dark. Get proactive alerts 24 7. Comcast business. Built for business. Tand thats what were doings to chat xfinity. Rself, 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. We have a lot, more to cover. Before we do that with have to get to the first word in that is bonnie cleaned. Bonnie heavily armed police raided an apartment today for the suspected leader of the terrorist attacks. Two people were dead, and seven arrested. It is not known if the organizer was among them. The raid took place in the paris nis not faraintde from the stadium where the first attack took place. France and russia have set up their airstrikes on the city of is becoming the de facto capital. A new poll shows donald trump widening his lead in New Hampshire<\/a>. Trump is leading the field the republican hopefuls with 22 , the ben carson in marco rubio our next. Month he it closed in on donald trump in New Hampshire<\/a>. I will give you some breaking news on Housing Starts<\/a>. You can see s p futures rising and theyre coming up with little bit higher right now. We did have a disappointing number as far as Housing Starts<\/a> we were looking for 1160, we got million is the number we got that is a drop of 11 month over month. Number than expected there, Building Permits<\/a> is basically in line. We have 1150 against the expectation or estimate of 1147, a gain of 4. 1 as opposed to a gain of 3. 8 . Look thatarts dont great, Building Permits<\/a> looks a little bit better. It is not had much effect on the s p mini contracts right now. Takeanie thanks, lets you now to the morning meeting. The chief u. S. Strategist, good morning. Welcome. We have to talk about the global slowdown. And the effect it is having a corporate america, especially due to china, tell us, are we seeing Companies Really<\/a> cut down on Capital Expenditure<\/a> because of the threat of a slowdown . I think there was certainly much more concern back in august and september. I traveled to europe and asia visiting with investors and things seem to have, down calmed down in october. Director did tighten up, partially in reaction to what the Global Markets<\/a> were doing. That is disconcerting, we looked 660 companies, and their they are still looking at 6 growth. Obviously, we should keep energy aside, but lets break down what industries are spending. Saw was aat we disappointment in the i. T. Yector, they were initiall looking at spending growth at about 9 and then pulled back led by semiconductors down 19 . There is but a real pullback in the Semiconductor Industry<\/a> may m a issues and things in china and the emerging markets. That was probably the biggest his appointment. Disappointment. I think that forwardlooking issue is what is happening in 2016 it will be more important to investors and what happened to 2015 given that were halfway through november. Stephanie we have seen more buyback programs, who does that really serve . Tobias we think there was a bit of a myth stephanie is that why you are smirking . Tobias this is bad information, i dont know how lost to describe it. Well ahead of buybacks, buybacks for the s p 500 companies peaked in 2007, not 2014, so i dont know why this is being repeated over and over again. Capital spending is outpacing buybacks even this year to date but it is rambled on and i dont know why or where the data is coming from because it is so accurate. Stephanie im glad youre here then, tobias, the myth the buster, joining us. Our own matt miller has some breaking news. I will break the news here, you are the person i want to hear about on this anyway. Blackrock is winding down its Global Hedge Fund<\/a> after losses. Stephanie that is a huge wow right there. Lost 9. 4 this year, the assets are said to a fallen to below a billion dollars as of november 1. Two years ago, 4. 6 billion, now less than one billion. Black rock says it is committed to macro investing, but it cited headwinds and decisionmaking. Stephanie listen, if your blackrock it makes sense to say you are committed to macro investing because you have to have some element of macro, but to shut down that specific vertical is massive. Mike platt of blue crest sold out of his share of systematic which is a macro investing spin off. This is massive, i want to jump ahead and bring in our next guest because you have to have a reaction to this. We are joined by the head of Aberdeen Asset<\/a> management martin. Martin it shows a difficult that is to make money in the macro space now, it is not really that surprising but it is a big blow to blackrock. Barry if you look at the performance of hedge funds, leon cooperman and howard marks of the great in the Hedge Fund World<\/a> they are not macro investors and both said that 30 years ago that there were 100 hedge funds creating alpha. Today, there is still 100, the differences there are 12,000 hedge funds. Stephanie when they were creating and turning 18 having 22 there was just a few hedge funds that had significantly more information. Now, everyone has information at the exact same amount of time and you lost her ability to generate that. Now we are in a different Interest Rate<\/a> cycle so it will be difficult to make money ahead. David go back to luke ellis, that was his point about macro, makee olden days you could money off of information that everyone did not have the. Now it is disseminated everywhere immediately which makes it difficult martin you want a central bank governor. Stephanie the reason he named his front appaloosa because you got call sheets from banks back to you. He wanted to be a fund with the because that meant he would get the information first. An insane fact, fun fact, but it is the truth. Barry macro is really challenging. Not only do you have to figure out what is going to happen before everyone else, but how that will also manifest itself. Martin i think it is just reputation. I dont think it will have a huge effect. I think it is incredibly relevant given the black rock news, take a look at Hedge Fund Returns<\/a> over the last five years and stack them up against the and the s p is in white macro hedge funds are in green so you can see theyre doing better than just straight long , this yearss activist investing, so event driven. But look, as a group, hedge funds have been doing horribly compared to just buying. An index tracker from jack bogle over at vanguard you could do much better with your money over the last five years than you would with any of these incredible genius masters. Stephanie i turned to my insmed bloomberg where duane saying macro investors are some of the most successful out there maybe youd attribute it to weather. Thank you for that. Lets break this down a little bit, talking but hedge funds in general, lets talk about emerging markets. Martin where is that investment today . Martin it has been a tough two years, we saw outflows for the last two years and have seen sovereign wealth funds selling bigtime equities. It has been some tough years were aberdeen, but we are seeing a slight change in sentiment with quite a bit of interest from u. S. Institutions in emerging markets which is the first give seen for two years. We have not seen any retail interest yet, or even european interest really. Over here, the institution stuck with the asset clause and actually are investing a bit more. David is it emerging markets overall . Or are there certain winners or losers . Have nothing in china just because of the Corporate Governance<\/a> issues, but that did not help on the meltdown came in chinese equities it affected everything so we got hit across the board. We were probably a bit too heavy politicala but it was issues, but india has been fantastic, mexico has been good, and what we have seen a some big corporations taking their chance to buy subsidiaries. Sabad a big calling and miller, a Tobacco Company<\/a> in brazil, both of which have been taken over. We are seeing that as a trend. Barry you were born in malaysia . Martin yes. Barry how does that affect your ability to go from different parts of the world . Stephanie no one ever had to buy shovels because of the weather, so we decide think it should affect anything. Were setting up in asia, i likes to think it was partly because i had been born out there that we made that move the. It was a natural move for us to make. We seeie right now, hedge funds getting her today in seeing out, as we are outflows, there is 9. 2 trillion in hedge fund investing, are you seeing money taken out of funds and put into organizations like yours . Martin i wish we were. [laughter] martin i shouldve said yes. Barry acid alligators are coming from the brokerdealer side, it is not so much from the hedge fund universe. Martin clearly it makes sense to be in the s p during the bull market run with had inequities. It will always outperform hedge funds. Hedge fund is supposed to protect us on the downside, obviously long short will underperform in that. Arry lisa hedge funds returned negative which was better than 57 before and after. Stephanie why dont you show us with a look like in the last quarter, i have someone a just refer to themselves as the next macro master, and he is crushing it. I tend to think when you call yourself the master, it is a kiss of death. Matt i am just looking at hld yes, we can see what his holdings are, these are the changes that he has done over the last quarter. A reduction in Energy Holdings<\/a> probably very smart, a reduction in financials, a big increase in i. T. Holdings. I noticed that, similar to what we see if i look at truck and stand rock, i wonder what you are doing differently than say black rock you dont see any changes in Energy Holdings<\/a>. Massive reduction in their financials. Here it is, the black rock macro theme is now being wound down, they are obviously not doing something right that you were doing differently. Last week the jimmy keenan on who knew itd been a tough slog but they could get through it they had long to investments. Templeton,ranklin they bought companies at a 70 price, and were faced with outflows and had to sell. In it the things we like emerging markets are definitely consumer led. We like countries like india and mexico, especially india should benefit from the lower energy prices. Barry Strong Holdings<\/a> and pepsico, for example. Hcfcn in india, we like we like the banks in india, india has been really the star performer for us. It is quite expensive at the moment. Been fortunate getting some very big holdings taking over. The problem we have is finding the investments to replace them. It is really hard to find another sab miller or the Tobacco Company<\/a> in brazil. David we will have much more with Martin Gilbert<\/a> coming up next on bloomberg. Stephanie welcome back to bloomberg. Sales picked up in the Third Quarter<\/a>, better than expected increases. Target also raise the annual profit forecast. Target says its strength wellness products and childrens clothing. Through the worlds rejectedesticide maker a deal earlier now it could be acquired by a chinese company. Surgery on the slow selling lincoln making a come back car when it debuted in 2013. The mpb has outsold by bmw three series in the United States<\/a>. The mks the will be unveiled in los angeles. Bonnie. Hanks so much, we want to talk more about aberdeen. Days dig deeper, you have a had a rough patch. Martin take us into your office. Your options as you look to improve performance . I think we have to stick it out, basically. What you can do is change, you have to stick with your style and just see to the cycle. We think long only Asset Managers<\/a> dont have that option thats a Hedge Fund Managers<\/a> do of selling out of emerging markets. We just have to ride it out. Asia will come back and emerging markets will come back. Stephanie there are massive Asset Management<\/a> firms out there who the last five years have been broadening out their investments. You have a selfcontained unit, and go to that. Martin it is a great advantage being an independent asset manager. We can do it all the private banks so we are not owned by one or another of them. But youre quite right come we in bankinga trend from selling their Asset Managers<\/a> to now realizing it is a great business to be in and wanting the more in it. I think that his Wealth Management<\/a> rather than Asset Management<\/a>. Banks are natural earners of Wealth Management<\/a> but find Asset Management<\/a> difficult. Stephanie are you concerned that overplaying the Wealth Management<\/a> trade . Banks get into the Wealth Management<\/a> business, is there any risk that this is just another trend cycle and we will come out of it two years from now . Barry i dont think so when you look at how much money has moved in and how much is moving to places like vanguard, and when you think about it, look at it from the perspective of the ubs and merrill lynch. Moving away from transactional business to longterm buy and hold has left much bless compliance headaches, much less appliance headaches. You are not quite fiduciary on ae brokerage side, but it is less capitalintensive business to run. Stephanie but it is not a guaranteed business. If you take about private talk about private Wealth Management<\/a>, if someone like stan druck and meyer gets paid to invest, what do you think they should do . Barry it was a different relationship between the highprofile hedge funds despite the poor performance of the shop thatsus the 1 is basically saying we cant time the market we are not great stock pickers who own everything. Over the long haul, according to john vogel and the academic data, that will do really well. Is a goodthink it business for banks because it will get bigger as people accumulate more wealth. They will look after themselves more than when the defined benefit schemes were so prevalent. I agree it is a Good Business<\/a>. They have been forced out of , thatnto the bond funds is another trend we have seen especially in the u. K. Which is worrying regulators at the moment. One important thing to think about, with 10,000 baby boomers a day retiring over the next 10 years we see 60 plus trillion dollars generational wealth transfer, where with that money go . Will it go to the Money Managers<\/a> , or the brokerdealers . Im betting it will go to the Money Managers<\/a>. David i want to go back to aberdeen, because it gives us insight into how one mans Management System<\/a> you did not jump at selling the firm, i think that is fair to say. Did not rule it out, either. Martin i have world it out. Being independent is absolutely vital to us as a business. We completely worldrenowned. David what about ruled it out. David what about costcutting . Martin where scottish, it is always in our blood. David how is that investment worked . At preciselyught the right time. It was a good bond alternatives business. Were still working in a lot of integration and taking out costs. Basically, we have to write out the cycle and wait for asia and emerging markets to come back into fashion. Stephanie banks cut costs by cutting jobs, will you do that . Not investment jobs, we always look at integration, you dont need to of everything, but it is basically a lot of systems work, automation, things like that. You have two back office systems, and a lot of that stuff. Stephanie stocks down 23 , you have take some more aggressive stances. Martin were always looking at our costs, it is scottish, it is our blood to continually look at costs. That is what were doing. Technologies is making the running of offices so much better, you have your talent, then your systems that youre constantly new technology lets one person do what five used to do. Syntax is an area thin tech is an area of rapid growth. Clearly they are up because im on bloomberg. Stephanie how long can you stay . I made the mistake of saying i would retire when the great alex ferguson, i gratis football manager our greatest football manager, also retired. I now have to keep going as long as martin saurav does. Im just ahead of him. Been due hishave parties, that guy can stay out. Good luck with that. , it will best him there for a while. Thank you so much for joining us. He is the ceo and founder of Aberdeen Asset<\/a> management 32 years ago for all you accountants out there that is when he started, you too can live that dream. Barry, thank you so much for spending the hour with us. Barry company underperformance, save for the high fees. Stephanie that was the best line i heard all day. More on blackrock winding down its global fund. Stick with us, this is bloomberg. We are 30 minutes from the opening bell. Stephanie we are joined now the king of canada, act chapter. Erik good morning. Isls fargo asset manager here for the hour. Ls fargo asset manager management has 480 billion in two controls 1. 3 billion across several funds. Martin is sticking around a little bit longer. Stephanie david said guess what, stay for an hour. Erik martin is the ceo of averaging management. Great to have aberdeen management. Great to have you here. Here is the vonnie quinn. The french president called Islamic State<\/a> a threat to the whole world. Francois hollande said it will take a Broad Coalition<\/a> to stop the militants. All 129 People Killed<\/a> friday have been identified. At least 350 were hurt. Were arrested in two were killed today in a raid on a paris suburb. Is dead is a woman who detonated a suicide vest. Police of they will corner the man they hope that believe they believe planned the attack. A bomb exploded last night in nigeria. 80 people were wounded. Toe 20,000 deaths are linked the secure uprising by islamic militants. Donald trumps lead in New Hampshire<\/a> is widening. Hes backed by 22 of republicans bowled by abbas pulled by a boston tv station. Ending hisl is president ial bid. You can get more on these and other breaking stories 24 hours a day at the new bloomberg. Com. Matt first off, futures are up across the board. That trend has been higher throughout the morning. We are now looking at gains of 6. 25 on s p many contracts mini contract. We will be waiting for a few hours more for the fed. We will get a deeper look into the likelihood that the fed will raise rates. Most people are betting it will happen in december. If you take a look at the market inflight policy rates i have here, mrpr go on your terminal. The expectation is for higher rates at the beginning of the curve and it will flatten out a little bit. No change there. Just to show you visually with this will look like. The 10year is selling off today. We see the yield moving up a little bit right now. 2. 28 is whether 10year is yielding. People are taking money out of bonds of putting them into equities. Goldman sachs recommends you put money into apple. List for on there by some time buy list for some time and then it moved into the conviction buy list. Erik its time for the five stories that matter to markets. Here is where we will begin. Another macro fund is shutting down. Blackrock will redeem investors in its 1 billion global ascent fund. Two years ago it had more than 4. 5 billion. Funds have struggled the Central Bank Policies<\/a> play havoc with prices. It has not returned more than 1. 4 in each of the past four years. According to hedge fund researchers, 470 hedge funds are shuttered this far in 2015. Artin, its not like Money Management<\/a> is an easy business. Ceo, what is it so you and you see funds like global ascent run by blackrock, which is very deep pockets, and furthermore the macro fund run by Fortress Investment<\/a> shutting down . Guest i think its as you dont have any outstanding macro trends to play with you had up until the crash. It says to me a slow growth world. The whole world is more accident prone to and you have a many accidents in holdings. Leveraging alone is not a way to add value. Erik as the ceo of a mutual fund company, does it put at all a smile on your face to see the socalled superstar hedge funds shutting down because they cant deliver positive returns . Martin not really. We dont have hedge funds. We dont think we can mix the culture with Hedge Fund Managers<\/a>. Thats just a personal view that we took. I think its difficult to make money in the macro space now with the Interest Rate<\/a> cycle and the Interest Rate<\/a> outlook we saw leveraging reduced and hedge funds. Its just impossible to even cover the fee. [laughter] bam anie awesome. David the mergers and acquisitions tsunami. Can anything stop it . 3. 5 trillion in deals of an announced. In the past two days 62 billion worth of deals and been announced. Canadian pacific bid for norfork southern and more recently air liquide agree to buy airgas. Microsemi raise its offer again and month was thinking again about running at syngenta. Are these individual situations driving these mergers or is there a larger pattern . Margie i think it is back to slow growth. How do you raise earnings . The cost of money is cheap so its easy to borrow. Companies have a lot of cash so often times they dont need to borrow. It says it is a way they can be do more because the market has been for me towards families that have done acquisitions. All the reasons come together. I think you are companies would want to sell in this environment. Valuations are high and there are questions that continued to be raised about whether or not we are in some kind of deke peak. Why would somebody want to buy . Martin weve seen two very big deals. Andby santa cruz in brazil buying of sab miller at a very reduced level. The emerging Market Outlook<\/a> at the moment. Its been great buys for these two businesses. I think its the wrong time to sell if they dont really want to sell a stake in as av miller. Sab miller. Its difficult to find the next sab miller. But its where you put the cash afterwards which is where we are struggling. Stephanie i will take you back to a crack in the market. Square. The mobile Payment Service<\/a> is set to ipo on wednesday. What investors are willing to pay will determine whether the Company Warrants<\/a> unicorn status. Square has all the attributes of a socalled unicorn. Is a productivity valued at more than 1 billion with a celebrity ceo in jack dorsey. Its a popular in simple technology. Opportunity for growth, a bigname Venture Capital<\/a>s backer. But they are also similar to a Financial Company<\/a> with 95 of the revenue coming from Payment Processing<\/a> and pointofsale transaction. It seems is less more about the details of what square does the more about the enthusiasm around tech investing. When we look at these companies, whether public or private, people have raced. This idea that Silicon Valley<\/a> is the new frontier in everything they do out there is touched by god. The fact that square is having this i would call it applause. A pause. Maybe things arent that good on the west coast. Martin it doesnt remind me yet of 19992000. But it has that sort of feel to it. I think of a look back on the Internet Banking<\/a> sector, they did not really make it. The banks became internet banks. The pure players did not really succeed. I suspect it will be a bit of that when things like Asset Managers<\/a> like ourselves are tech to move into fin rather than it being successful in its own right. I think its a big thing. Erik you will turn aberdeen into a robo advisor . Martin weve got to do something. We bought one in bristol which we are going to use as a platform. We bought a Platform Business<\/a> to put our retail platform on. Stephanie what do you think . i think it shows bubblelike characteristics. They are willing to pay a breathtaking price for companies they dont have revenue. You can take roughly a 10 times earnings for evaluation. If you value at 4 billion, yet to get 400 million in earnings, not revenue. Its hard to see that valuation the uber and 50 billion, and they needed 5 billion and we kind of dropped the mic. Physical service but it is a cool service but matt i want to show you the measure performance a stock through the first day of trading. Martin talked about 1999. We remember the insanity that happened when it ipod here. After you got syndicate and a bottomup. The ipo indexes climbed since 1999. This is a look back at that time period. They are still doing quite well. Obviously they recovered from the brief drop. Spinoff. Nagra foods foodservice business, leading provider of frozen potatoes and privatelabel throws investable to pursue growth and fastgrowing emerging markets. The remaining company will be called Conagra Brands<\/a> and will sell chef boyardee, slim jim, and other prepared foods. Stephanie that the special one for me. That is thanksgiving dinner for me at my house. David the ceo plans to transfer the comedy since taking the helm in april. The stock is up more than 10 this year. Explain this. What it does make sense . Margie it shows new management can come in and look at underperforming assets and really add value and improve corporate profitability. I think its a good move. The market is recognizing it. I think its part of a trend that the company erik the credit is going to the mention cameould in an april. Just too much later jenna was pounding of the door saying you do something. Much of what conagra has done has happened since jenna entered the picture. It almost doubled its holding. Is now the number two investor according to Public Disclosure<\/a> in conagra. Here is what we are always struggling with. Must companies. In this case a look like investors are happy but Must Companies<\/a> and managements must capitulate . Martin hopefully they dont. The ironic thing about this sort of situation is often the low Growth Company<\/a> actually does better than the one where they are going to the highGrowth Market<\/a>. David cbs viacom is an example. Istin the material business chalking up cash and its probably probably sensible. A lot of the big u. S. Companys a very strong emerging markets exposure anyway. This is probably the board capitulating rather than anything else. Atk in principle you look not just stocks but bonds largely as well. People get into this a little later, but how much does activism matters of the fixed income manager as was of the equity manager . We always talk about in terms of the Stock Performance<\/a> because that is where the activists are. Their implications for bonds. Margie they have been a detractor for Interest Rate<\/a> bonds because they pilot debt and it hurts the buyer. It is high yield site been able to the acquisitions. Hopefully on cash flow and value. Erik speaking of high yield, there is trouble in leverage alone land. Bank underwriting 5. 5 billion of Debt Financing<\/a> for one of the years biggest lbos. Investors could assist grabbed have subscribed to big discounts for they said no thanks. This could spell serious trouble for private equity firms and the banks acting the takeovers. This by outlook it done all the same because b of a and Morgan Stanley<\/a> are committed to the carlyle group. It does raise the question about how many will not go forward. You are a highyield manager. Did you get pitched on this offer . Margie i had no interest in that offer. Erik no interest as and 70 came to you and he said no . Margie did not even want to hear it. On that interested in helping Leveraged Companies<\/a> go private and bailing out banks and buying bonds that are subordinate to what they are selling. Im not interested. Erik do you say Morgan Stanley<\/a> b of a surge you right for trying to hawk a deal . You will end up holding the bag . Margie they are a cyclical business. I think its interesting that leveraged loans are trading at . 90 on the dollar. Thats a pretty serious indicator of where risk sentiment is when you have loans trading below par. Erik would you see a deal like this failing when you see a deal like this failing, is a direct like you . Martin i think is a good warning signal that the market got overheated and high yields got overheated. I think its good news. Stephanie we have to do a red flag check in. Trading at . 90 on the dollar. Square, in theory is the perfect tech comedy led by a successful celebrity ceo. They are potentially repricing. Major investors selling out of equities. In those are not very clear red flags, i dont know what is. Im just wrapping it up. Erik that is what we do here. Connect the dots. Those of the five stories that matter. Stephanie the apec summit tradition continues. 21 World Leaders<\/a> put on the traditional shirt. The Philippines National<\/a> garment. Filipina designer paul tabrol worked on it for four months is there personally made from pineapple fibers. Barack obama looking fantastic in his. I really like those. I think i need to get one. Were going to take a look david what is the woman have to wear one . Stephanie she was so stand out. When we come back. We will look at equities. Whats going up and down in premarket trading. We are 15 minutes away from the market opening. Back. welcome housing targets fell 11 to an end of rate over just one million. That is the slowest since march. Lyft is seeking half 1 billion in its latest round of fund raising. The right healing start up is valued at 2. 5 billion. At radioshack they call it black wednesday. They will offer holiday deals the day before thanksgiving. The company is emerging from bankruptcy. That the latest on bloomberg business. Matt taking a look at a couple of deals here. Is raising itsmi offer for pmc sierra to 12. 05 a share. I thought is interesting to show this deal. Is about 2. 3 billion. He ratcheting up in the Semi Conductor<\/a> sector. We have another one, another deal here. 90 billion were the deals of been done this year in the semiconductor space. The Norfolk Southern<\/a> story is very interesting because Canadian Pacific<\/a> railway has come out with a sizable premium for nor folk. Norfolk. Its a 20 premium to the day before we reported. It was in the making. Thats not really anything more than the average premium in this sector in the small universe of rally takeovers. David thanks. As we reported earlier, target is out with its thirdquarter earnings. It met analyst estimates and raised the low end of its annual profit forecast. Target, walmart, home depot, and those reporting betterthanexpected samestore sales. We want to try to figure out how healthy the real Retail Market<\/a> is. Were joined by Bloomberg Intelligence<\/a>. That he summits are being here. Help a sick all these earnings and all the reports and put them together into a store and tell us what is going on in retail. I am confused. Its a tale of two different subsectors. We had some interesting earnings. If you listen to most of the retailers and you can be precrisis if you look at the prices, back to school was pretty good. Something happened in october. Fundamental pressure that retail traffic has moving and changing preferences in terms of shoppers. We had whether. Weather. I hate to talk about it again but its not good. In november and im still not wearing a coat, it becomes a problem if you sell apparel. Have highthat exposure to apparel is much more pronounced. If you look at retail is a have much exposure like home depot, udc higher traffic in better results. Stephanie lets break it down. Earlier today they were saying luxury is doing well and Michael Gould<\/a> of bloomingdales saved about experienced spending. For the past two days as out of Hedge Fund Managers<\/a> across the board recently said retail is a problematic space. You just cant make enough money in it right now in large part because of technology in the fact that consumers can price check everywhere. Where is the opportunity . Price is part of it. They have to rationalize the numbers that they have. We just saw part of their book. As they moved on london to figure out the same thing. First, what you have in your store . And or merchandise . Indoor merchandise . What to the head to bring the traffic in . Give a fellow lifestyle if they are selling a lifestyle story, they can bring in the traffic. Stephanie think about what happened to best buy. See all the tvs but by the my name is on. You talk about more the general merchandise. That you provide that experience in stores and create an environment with a similar shopping experience. If i get to a shoe store and went to get issue, i find they dont have it in my size. If you have someone over there that can order it when ive had and give it to the next day or even the same day, thats a great value to the consumer. The concern really in retailers is over the face of revenue and earnings growth. From a fixed income perspective, you look at macys for example. For20 24th that will give three point or percent yield and other offering 4 yield . Margie i think it shows its deteriorating. The winners are the lower leverages. I dont personally like retailers because they look suddenly they can blow up suddenly. One season. It shows you. Erik we will be back on bloomberg. Stephanie welcome back. You are in for a pretty awesome day on bloomberg. From meeting,h plus fomc with the december hike seemingly in the bag, investors are looking to the fed Meeting Minutes<\/a> for clues on how quickly raise ministers will rates. We love to talk about the importance of this. In your world, how important is this decision . It is important because they telegraphed they are going to do it before, now they are telegraphing again. It will be devastating if they do not go through, but i put it at more than 5050. Stephanie how will you be investing the month of december . it will continue to have a depressing effect on the economy and that will hurt all securities. David what would you like in the curb after december . How important is it how high and fast they go after that . Margie i would like to see them restore normalcy, so i would like to see 25 basis points a couple times a year. They are a long way from normal financial conditions and it would be a big help for the banks and for making loans to small business. It would help everybody. A fixedat happens to income manager like yourself in the interim . That thisr, lets say is a big turn in Monetary Policy<\/a> and we are entering a longterm bond market a longterm bond bear market. What has not existed since highyield bonds emerged in the early to mid1980s. Margie i am not sure we are on term perspective to a higher rate. I think we may be on the way to deflation. I am not looking for longterm rates to go anywhere. Even if shortterm rates climbed by 25 basis points and maybe more in subsequent rate hikes, you see the long end will remain pretty anchor . Margie because of low inflation. What they have done with zero rates is forced money into Financial Assets<\/a> that have not gone into real roots real growth into building new businesses. Are seeing yield spreads widen out and why we are seeing some stocks wobble and crash. It is more delivered players that are taking the market down than the real economy. Erik that has potentially troubled banks, right . A flat yield curve is not helping the banking industry. Margie they will not make more in the interest margin and they will not have loan demand, partly because of regulations limiting it. Even more broadly for the economy, i do not remember the last time we look forward with no expectation of inflation. That is a very different world that we are looking that that were looking at if it is a new normal. Margie i think you are more on the financial players side than the real economy because they have not overleveraged. Stephanie when we say highyield bonds are offering attractive rates, attractive rates to whom . One of the trends we have seen investorscrisis, more have drifted their way into the market not paying attention to the risks associated with these companies and the lack of volcker. Post margie the defaults have been very low, under 2 for several years, so you tend to forget about risk. Fundswe think mutual drive the market, but half the market is more permanent investors. Erik what is it like for you to compete in a world that now includes junkbond etfs . Not affect the fundamentals, because in junk s, can the company erik do you worry about the doomsday scenario and all the retail investors, tourists, in j decide to stampede for the exits causing massive dislocation in pricing and maybe inspiring some of your investors look, it at prices has to create chaos for a money manager with little liquidity. Margie the shortterm outflows would be from leopard players, hedge funds, market traders rather than longterm investors. Longterm investors are pretty much staying where they are. The fed has more or less guaranteed we will not have that kind of liquidity prices liquidity crisis where everything freezes up. Erik what with the fed do next time . Margie that is why they are under stress because rates are zero. You cannot rule out anything in this fed. Erik so negative rates are as well . Qe4 margie i would say anything is possible once they start down this trail. Erik really . Do you think in your lifetime you will see the central bank buy Corporate Bonds<\/a> . Margie i never thought i would see zero treasury rates in my lifetime. Nothing is impossible. Stephanie why do you think that . Because super highquality Corporate Bonds<\/a> are more bulletproof than government bonds yakima erik it would be the next step beyond assets. Assetbacked like auto loans, for example i have no idea. If we are looking into the future and the possibility, as you pointed out, that the fed has guaranteed liquidity will thet, the only way for liquidity to exist in theory is if you put the unlimited resources of an unlimited Balance Sheet<\/a> to work, and that would require them going beyond treasuries and assetbacked into corporate. Stephanie Corporate Bonds<\/a> are far more acid margie they reflect that the economy has slowed down. The fed has gone on this trail, and they do not have another game plan to say lets do something else, lets try to raisingbank lending by rates, do more reverse repos. So they are stuck in what europe is engaging in, instead of saying we should throw out the textbook and get a new textbook. Stephanie i love this conversation. Erik does this affect the way you manage money on a daytoday basis, or is it back or is it in the back of your mind gekko margie with a slow Growth Market<\/a> with high liquidity, we are seeing lots of evidence that this economy is much more highly levered than you might think. So i am looking to be in the highest part of the highyield market in the more liquid names. Until the highly levered names, the ones who have piled more debt onto the balance margie we punished . Are starting to see that in the , some of the areas tech names you are seeing some modeling. You will see defaults go up as the economy slows down. You still have to say we have a robust economy, that even with the negative hits from the zero policy, it is still able to grow more vibrantly than anyplace else in the world. Erik in the western world, anyway. David so now we are a little over six minutes into trading in new york and matt lets look at the major indexes. You see gains across the board. The s p 500 gaining 10 points, the Dow Jones Industrial<\/a> average peeping up to a 100point gain, just 86 points right now. If you look in the bloomberg, you can see that we have green across all groups. This is the imap function. The only read that you see here, utilities and telecom. Everything else is gaining, but energy is the strongest gainer. Take a look at some commodities. You will see that oil is rising barrel,w, about . 49 a to 41. 16. Gold is unchanged here. Copper has been amazing to watch the last few days. Absolutely crushing through a sixyear low, now down to about a sevenyear low. Look at a fiveyear chart and it comes off, off, off. This is important because china is the biggest consumer of this metal, and it says something about the growth rate there, nothing good right now. Staples came out with an outlook that was disappointing to investors. Fourthquarter sales are going to be down. Its earnings outlook was a little bit it was a range that the midpoint was lower than the market is expecting therein we have an interesting note out from Bloomberg Intelligence<\/a> saying a decision could be made on the office depot staples. Ieups by q2 that is probably a long way off for starboard, which has been agitating for this. Comes out with better than estimated earnings. . 78. Solar city has raised the nectar 113 million. Interestingly, 100 million of that comes from an Energy Resource<\/a> and innovation fund. Silverlake. Also, it was an industrial band of my youth. Lets head over to Abigail Doolittle<\/a>, coming to us live from the nasdaq, taking a look at two stocks headed in completely different directions. Abigail one of those stops one of those stocks is apple. Goldman added it to its conviction buy list. A Service Apple<\/a> as rather than just as a hardware company. She sees a significant multiyear opportunity in tv, apple pay. Trading in abeen volatile but wide range. The stock is up less than 5 , not so far from where it opened the year, at 1. 1139. Moving in the doctor direction moving in the other direction, gopro is down again took her pricehy target to a street low of 15 from 20. She says for the pricing pressure is indicated, especially on amazon, and she also sees the product on flash sale sites such as go lily and groupon. Something that seems somewhat in line with a simply stunning 41 short interest. Erik that is Abigail Doolittle<\/a> at the nasdaq. Next, the best investment ideas from this years robin hood investment conference. If you follow some of the topics from last year, how would you have done . We will tell you . We will tell you. Stephanie welcome back to vonnie welcome back to bloomberg. Profit and sales topped estimates as spending was encouraged on Home Improvement<\/a>s rid the website is reporting political scoops from the past including drug use by torontos mayor, rob ford. Be all part of a broad reorganization. Ford gives a facelift to a slow selling model, the lincoln mks a. Sales are down 13 this year. A rectangularth grill is being unveiled today in los angeles. Erik for 7,500, you could have been at the robin hood investors conference this week where Money Managers<\/a> share their best investment ideas. The likes of larry robbins, david einhorn. Lets say you want to follow the pied pipers. What the 7,500 gets you. We follow the ideas from last years robin hood to see how they performed. Here is bloombergs new york bureau chief. Margie, you do some stocks, a lot of fixed income. Following these investors is not the type of thing you do typically, right . Margie it is always interesting to see what kind of ideas people have their it erik but as a rule you are not investing what they are investing in because they are in it. Little i saw very overlap in what i recommended versus what they have. Erik i have to say i was stunned because of the 30 long and short calls, 29 stocks, one currency, the total return if you took an equal weight position in every long and every short over the past 13 months, would have been a grand total of 0. 93 . Isnt that unbelievable . Stephanie a lot of the trade ideas presented yesterday were not new ideas. They were reiterating ideas that weve heard before. Erik like mo on allergan. Stephanie Lebron Roberts<\/a> from glenview reiterated months and two. Also, bill eicher said it would be great if allergan and valeant got together. Is saying dan loeb wouldnt it be great if allergan and amgen. Look across the themes of yesterday, clearly health care and health care m a dominated the conversation. Not surprising, given how much action there is around that right now, and how much activism there is in health care m a. Interesting to see these guys talk, but a little frightening to hear that it does not really erik unless of course you went with the shorts only three matt, i am not sure if you want to join the conversation, but these guys get up and they are almost always men. In some cases they are women. Stephanie there was a Portfolio Manager<\/a> talking charter. I like that. Erik however, these people made mostly long hauls long calls. A lot of them turned out to be huge duds, like gmc, Clovis Oncology<\/a> the Cancer Company<\/a> that just cratered the other day. But the shorts, like whitney calling lumber liquidators. ,t came out with a huge expose exact sciences they crushed it. Jason and temper on the euro. Stephanie it was a very difficult environment. Lumber liquidators is an outlier. This is not your average short. 60 minutes dozen expose feature that takes the whole company down . It is not that. Fair followingay the same exact storyline as lumber liquidators, using toxic. Roducts in way fairs example, they make their own furniture. He came out with the idea two days ago, and we may have seen a response by the company. I think this is probably a broader problem. I am not claiming it is unique to wayfair. However, wayfair is trying to build a trusted furniture brand. Me, some little guy like when he starts testifying if you s, and ing a few product have only tested three so far and two out of the three failed. I think wayfair has a much bigger problem here. They are trying to build a trusted furniture brand. Stephanie he came out those two days ago with the idea to shortwave. Yesterday they slashed the prices of those furniture items, and some of that furniture is sold on walmart, polls, and staples. They also slashed the price is there. David going back to what you said, in a slow Growth Market<\/a> individual companies are much more vulnerable to individual instances. Got lumber liquidators, valeant. Everyone of those is a oneoff, but you are very vulnerable. Margie if you have broadening revenues and profitability, you can absorb it and grow your revenue. Today, those mistakes are much more important. Hear it is funny to whitney say a little guy like me. Is are unique situations. This is why these guys get paid as much as they do by investors, to find those unique once in a blue moon situations that do get these big returns. Stephanie two days ago i had a chance to sit down with robin hood chair barry stern liked. We talked about the attacks in paris. He made a comment just before the break blaming obama at the white house for the spirit he did not have time to elaborate more, and i want to give him a chance to because he put out a public statement. Stephanie s quote was somewhat taken out of context and he did not have time to elaborate more. David thank you, jason kelly, for joining us twice today. Andmberg news bureau chief, margie patel. Stephanie margie is staying. David next we will look at some of our best conversations from today. David welcome back. Now it is time for some of our top moments in as heard on go we have to be careful not to categorize migrants and refugees in a way that it becomes easy for right wing xenophobia to attack them. The ability of these economies to absorb these refugees will turn them into productive citizens in the long run. We have to find a way of resettling refugees on a much larger scale. Did not jump at selling the firm, but you did not rule it out either. No, i have ruled it out. Being independent is vital to us as a business. Challenging. Eally not only do you have to figure out what is happening before everybody else, you have to figure out how that will manifest itself. It is not a big financial blow to black rock. It is more of a reputational issue. I do not think it will have a huge effect. You do not have any outstanding macro trends to play, which you did up to the crash in 2007. The world was more accident prone. And also leverage alone was going to add value in a slow growth world. Stephanie lets get final thoughts now from wells fargos margie patel. What is keeping you up at night . Policy, has i fed think they are on the wrong track. I would like to see them raise rates and change their way of thinking. I put that at 50 50. Stephanie thank you for joining us. Managing director of wells fargo Asset Management<\/a>. Thank you for joining us on bloomberg. Tory burch of tory burch Design Spirit<\/a> also david kirkpatrick. A huge day. Welcome to bloomberg market. Good morning. Im betty liu. Here is what were watching at this hour. Targeting a terrorist, police raid a paris suburb in the hunt for the organizer of last weeks attack. Meanwhile, some politicians want to close the policy a closeddoor policy. A closer look at what is the for those coming to the country. And pricing the ipo after the bell. Place in thefind a exclusive unicorn club . A blow to black rock, the Worlds Largest<\/a> act asset manager, losses and redemption","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia801309.us.archive.org\/2\/items\/BLOOMBERG_20151118_120000_Bloomberg_Go\/BLOOMBERG_20151118_120000_Bloomberg_Go.thumbs\/BLOOMBERG_20151118_120000_Bloomberg_Go_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240623T12:35:10+00:00"}