Transcripts For BLOOMBERG Bloomberg Markets 20160204

If you look at the s p, for example, we see an awful lot of town seen around. It has been in a very tight range. It has gone up and down the line at least half a dozen times during this session. If you look at oil and stocks today, you can see to some has fared much worse. Earlier today, it was faring much better than stocks, now it is doing much worse. 2 2. 2 . Own do we thinkhat cause of that reversal, julie . Julie it is unclear. There is a sort of this directionless feeling and we do have a job report tomorrow, so that could indicate the direction of the stocks, that we cant thank the dollar for the oil downturn because the dollar is still weak. I should say is lower by 6 10 of 1 . Now we do have a lot on the corporate front in terms of earning reports today. We have Royal Dutch Shell out with its earnings and it had a smaller earnings that we hav e seen from its competitors. Weatherford international is saying that its cash flow is going to be better than estimated. Itshe same time, it is held dividends intact. Finally, take a look at the Bloomberg Imap here. Here you see a mixed picture, right . A lot of green, a lot of red on the screen. Materials and industrials financials have been holding throughout the day. Discretionary, by the way, it has been holding in retail. I will cover that a little bit later in the show. Weid all right, julie, appreciate that. Mark crumpton has more from the news desk . David, thank you. Hillary clinton is not the only secretary of state who has used classified information on a private email account. Former secretary of state colin powell and Condoleezza Rice received classified information in personal email accounts. Thealso reports of that messages were not marked classified when they were originally sent and did not include information from the intelligence community. U. S. Secretary of state john syrian assaults and will resume. The assaults were paused during communications of but secretary honor aed on russia to u. N. Resolution to stop airstrikes for civilians. According to the bbc, Julian Assange has been holed up in Ecuadors Embassy in london for more than three years and he fear beingld extradited to sweden on rape charges. He fears he would be extra guided to the United States for leaking classified documents. Ben carsonl hopeful is eliminating more than staffers more than 50. Staffers 50 staffers. The reason . His Campaign Funds are drying up. At 9 ofeceived only the iowa caucus votes. Blockedte democrats legislation for the flint federal aid package. They wanted to add hundreds of millions of dollars to fix and replace the citys pipes but republicans opposed the bill. Our the been powered by 400 journalists around the world. I am mark crumpton. David, back to you. Pharmaceutical variety ned nor notoriety for raising the price of a cancer drug more than 5000 spoke in front of congress today. i claim the fifth amendment and i respectfully decline to answer your question. John mica is a republican congressman from florida and mr. Mica, let me ask you a tweet shkreli sent out, it is hard to accept that these imbeciles represent the american people. Tells what you think about this . Mica when you have price gouging on drugs, i think this was a pretty legitimate issue to look into. He was a poster boy for drug ging he directly in gouging, and he directly inflated the costs. Arrogant way. Very he took the fifth, which is his right, but he was a smirking and he is trying to make himself the center of attention. We had a serious inquiry and he was very rude to the committee. I am a Senior Member of the committee and in my term, i have never seen anything like it. David you have never seen anything like it before. What would you have liked to have asked him . Mr. Mica it was an opportunity to ask them what is going on and how can you justify those huge increases . He has made himself the poster boy and i think he relishes the attention but other companies are doing similar things. There have been 1800 increases withher companies and prescription drugs, many people have seen dramatic increases the last couple of years in prices. This, taken advantage of i know he was a Hedge Fund Guy and an investor and that he sees a drug that he can inflate the cost and make a profit. Thwarted the process but we have an obligation to people who have suffered from these increases to control some of the prices without getting government to into it, so to speak. We believe in a free market but the free market is being distorted by people like this gentleman. Place is it congresss here to change the way the drugs are priced . Yes, i think it is when people take advantage of it. People are always trying to the cheese, to use a bad analogy, but they find a different way. They put the traps out to find the bad guys of but obviously, he has found a new way to game the system, jack up the price to try to make a big profit. I dont know if that has really worked for him, but again, he seems to relish being the poster boy of drug energy. Drug gouging. Put Additional Resources into the fda who approves the drugs, the new drugs, the competing drugs, we are trying to get them online as soon as possible so there is a Cost Effective alternative. David you just use the phrase price gouging and hillary that theweeted today testimony today is price gouging toreprehensible and needs stop. So this is price gouging . Mr. Mica again, we are trying to get the facts and they found this loophole and they are taking advantage of people and a are criticaldrugs to peopless survival. It is unfair and weve got to find a way to do this right and to increase competition to get prices down instead of up and to get a hold of the people who are trying to take advantage of it. When people get out for prices of gasoline and other things, we should be doing it for pharmaceutical and prescription drugs. It is something we need to do. He did not cooperate at all. He was acting almost juvenile. He was calling names, i dont want to do that, but it is unfortunate that he would try to make himself some sort of a star in all of this. He is doing the wrong thing. David what are the next steps as you see them in attempting to bring him back to the hill . What is next . Mr. Mica with counsel and the chairman, i said afterwards, i said i believe, again, from my experience, he was acting in contempt of congress, legitimate questions, and refused to answer. So we will make a determination whether to hold him in contempt of congress and we also have to address the price gouging issue and maybe put some mechanism in place to try to for that and make sure that the competition is there. People want access to Affordable Drugs and they dont want the price jacked up every time they turn around. David all right, thank you very much. Mr. Mica unfairly jacked up. Yes, thank you. Representative john mica who represents floridas seventh district. His threeg an end to decade reign over the Media Company he rolls, we look at this exit of a ceo. And mattel holds talks with hasbro and a potential blockbuster. Honoring nba obama champions at the white house. On can watch the full event bloomberg. Com live. Up asent obama dressed santa claus to give presents to children in need. Donated antimalarial drugs for everything every three pointer he made, so that is three drugs. [laughter] david welcome back to bloomberg markets. I am David Bloomberg markets. I am david gura. Onrts authority is planning filing for bankruptcy. It was once the biggest Sporting Good chain in the u. S. Now it has a deal to reorganize under chapter 11 and crops the proceedings. It is going to close more than 200 of its 450 stores. Fund itffshore merger was hurt by valiant valeanteuticals pharmaceuticals. Concerns thatnew the Department Store industry is in a slump. Polls fell as much as 15 today. It reported fourthquarter ko 15 fell as much as today. It reported fourthquarter earnings at the lowest it has been in the last few years. Juliew we go over to hyman to discuss a potential merger. Mattel are inand talks to get together. You can see that mattel shares surged and they have since given up the game, we are at two and 2. 25 . R percent investors are trying to invest how realistic it would be that a company would merge print after all, they talked but it doesnt mean that a deal would be in the works. But tell has gained 16 and a hasbro has gained 34 and both of them has outperformed the overall market. In terms of market cap and sales, some analysts report forecasting is going to change in the coming years as hasbro is taking over the frozen and princesses licensing from mattel. Life fora glimmer of those barbie sales which has been waning in recent years so interesting now that these two companies are going to be talking. And i know you are going to be talking much more about this in just a few minutes. David thats right. Julie, thank you so much. That is julie hyman there at the markets desk. The wishes of sumner children eo us joining me now is the Senior Analyst who covers viacom. Stock just talk about the performance. It was down in the year finishing at 45 . What does that say about these particular challenges here . Running theen company and has been chairman of the board and ceo and i think the challenges are the same. They need to improve ratings and they need to improve growth and are one at up they beat up. They are one of the cheapest stocks are now. David what plans are in place right now . Vasily nickelodeon viewing patterns are changing and getting kids back into watching nickelodeon and it is not rocket science. [laughter] there have been called here to split this company. Has he come out one way or another on that . Vasily it is a controlled company so it is controlled by the redstones even though he is no wonder the chairman he is still the controlling shareholder. There isnt a ton to split. In the film studios, yes, you could paint a picture where he could control the film studios, philippeippe them on dauman has the confidence of the board. I wonder about the boards confidence in him and how is Investor Confidence at this point and how much time does he have in the eyes of the investors here to turn it is around . Vasily in terms of investor opinion, i think he has been going down and that is the frustrating part but things are going from a less bad to somewhat good, for example, the ratings came out today and nickelodeon was down 30 last year and in january it was up 6 . So that is good. So as long as things keep getting less bad and finally get to breaking even, the stock should grind fourth and it could finally work for the shareholders. David people are worried about distribution arrangements and from reading your latest note, it doesnt sound like this is going to happen . Vasily i am not worried, of course this is worrisome, but the big distributor, dish, will between getting dropped, i think there is deal, so ifor a think it is not hyper growth but it is not a drop by hundreds of millions. I think that is what the big assumption is. David thank you very much. Still ahead on bloomberg markets, a big deal in the toy and hasbro. H mattel shares are up and we will have details, next. David welcome to bloomberg markets. I am david guta. Gura. Mattelyman talked about and hasbro merging. That would bring together the owner of my little pony and for visa brands as well as hot brands asand furbys well as hot wheels. Talksknow they have held of the talks were initiated by hasbro at some point towards the back end of last year, towards the fall of last year. Hasbro and mattel said, look, we want to do a deal. Biggermattel is slightly and it had a big runup in the past week. So yes, hasbro kicked this off and they want to have this talk. David any sense of what this combined company would look like . I dont know, i think it would look like the biggest toyshop in the world, the biggest toy box in the world. Today i learned what a brony is. It is like my little pony for boys. The other interesting thing is both of these companies are quite keen to play up this talk and in the present licensing out some toys like transformers is part of mattel and give it to one of the other and i think that is the argument. Other franchises like computer games, etc. , and they would like to be able to push and to these spaces as well. Ofid what about the health mattel, brand so closely associated with barbie which is undergoing some sort of reinvention right now. Very think it is going well, as you say, it is undergoing a reinvention and barbie is sort of enjoying her and toys ares look definitely an industry where it is easy to get mature and quite stuffy quite quickly and they have done a phenomenal job revitalizing and barbie has been around ben longer than many of us have been alive, right . David lets just ask you about the contented of ness of the face of making as you had mentioned having the Worlds Largest boy box. You mentioned the disney princesses going over to hasbro. This Rhode Island Company got those brands and these are brands of that are well fought over. Ed oh yeah, that is absolutely right. Partly, everyone knows that they ormous responsibility and they are globally popular. When one country is doing well another country is if you bring up listed toymakers, its basically hasbro and mattel. They are bringing new toys and this game and there is no one else. David ed hammond is one of our deal reporters here at bloomberg. We have more coming up on bloomberg markets. From bloombergs World Headquarters in new york, lets start with the headlines on the first alert news. Mark crumpton has that. A new wave of Syrian Refugees in europe due to increased aerial attacks by government forces. Mark syrian aid conference in london today that as many as 70,000 syrians were already on their way to turkey from northern the syrian observatory for human rights estimate that 40,000 people have fled the region in the last few days. The head of the airline whose plane was damaged by an explosion shortly after takeoff from somalia says investigators have found what appears to be revenue from explosives. The ceo says it is too soon to say a bomb was to blame. The airline was temporarily expanding its operations in the capital. Airbus 321 was carrying 74 passengers. Eager to hear from martin shkreli. The executive refused, saying he exercise his fifth amendment right. Four remaining occupiers at a wireless wildlife refuge according to documents release today, they say more than a dozen armed activists threatened violence against federal authorities and used social media to urge others to join them. The indictment named 16 dependents, including the leader, andstandoff other occupiers arrested last week. The National Football league is making moves to ensure that more women are hired for executive positions. All teams must interview women for executive jobs. Roger goodell made the announcement today at the first nfl womens summit and it extends a rule which requires teams to interview minority candidates for head coach vacancies. Dayal news 24 hours a powered by our 2400 journalists and more than 150 news bureaus around the world. I am mark crumpton. David markets Commodity Markets closing in new york, gold extending his longest rally in five months on rate hike expectations. All the other members of the Commodity Index 2016. Just under 32 a barrel as it continues to weaken, down 11 this year. Of theoon has cashed out market as Oil Continues to he was a guest on bloomberg this morning and talked about where he thinks prices would go. Absent recession, you are going to be 50 or 60 per barrel by the end of the year because you shut down rigs all over the world. States, oil rates have come down. Youre going to see the decline of production fast. Watch out for recession. What does that mean for you and your position . Now, i do not have a position. Im just sitting here, waiting for the opportunity to come back into the market. Up for us. T youre sitting predominantly in cash right now . Yes. Come back in, what sign do you need to see to get back in, and how would you go about it . 2619 was a low. I do not think they will go back there on last recession. Is in. The low dont get in a rush here. Plenty of opportunity. The market will be volatile. It will not go straight up and we know that. There will be good entry points. I will not reenter, i am sure, until we start to draw on inventories. That is a key point. I have a question for you. In the last 20 years, five times, we have seen Oil Prices Declined by 35 up to 75 . But in those occasions, we have seen saudi arabia decrease production. What is different this time . If they do not move, how long does it take since the u. S. Production has gone up so much for us to stabilize, and in particular, given that we talk about the shutdown and they will not drill the wells, we will have a lot of bankruptcies from those producers and in typical restructuring, people will run down those. Production may not go down as fast. What type of insight will you see from that . Wells, they decline rather rapidly. They did not decline quite as fast as i thought they were going to. The decline is there. It will happen. What happened to us, the saudis made us a swing producer. They had been the swing producer for years. They would balance the market and cut production and stabilize surprise. That is exactly where we are today. Indo not have any mechanism america to say, shut down production and it will just come from the decline production. Posco possible talks between russia and suppliers. They will come together and cut production in a substantial way . Look at what it is costing saudis. 500 million per day. Their cash reserves were over 800 billion. They are now down to close to 600 p rice think everyone is getting tired of it and at some point, maybe in june, you will see if they have not had a recovery, in june, that is when the next meeting is. Wilbanks see a big downturn because of oil prices . I have had meetings with banks recently. Is different. They do not like the price of oil going down. They have done a better job to prepare for it. I do not see the banks in trouble. We will see, if this continues, it will put more pressure on the banks. Coming up in the next 20 minutes of bloomberg markets, Bernie Sanders is increasing his attacks on hillary clinton, saying she has been too cozy with wall street and clinton cap is demanding sanders back up his claim to live in New Hampshire hours before tonights democratic debate with a primary a few days away. Closed shares, down about 70 in the last year. Can the Company Still connect with investors . Look at trade on the s p 500. Down about 1 5 of 1 . More after the break. David welcome back. Look at some of the biggest business stories in the news right now. The European Commission has cut the growth forecast for 2015. Down 1 10 of a percentage point from the previous forecast, where inflation will be much slower than expected, one half of 1 . Low Commodity Prices will be continued for some time. To stimulate growth with monetary policies and says it is especially important it raises rates in a prudent manner. Venezuela will probably retain the title of being the most miserable economy for the second straight year. Inflation was 98 and there was a 6. 8 jobless rate. Rate rising to 152 this year in unemployment and it will get worse. Bloomberg update. New fun rating numbers ahead of tonights president ial debate. 59 raised for the primary and 5 million for state parties in january. Team sanders pulled in one and 20 million in january. The rhetoric on both camps is heating up. Lets go live to margaret. Talk a bit about this debate tonight. We are seeing a number of foxtes cropping up here, will host a gop debate in march. It is simple. Hillary clinton needs to shrink the lead that Bernie Sanders holds over her in New Hampshire and Bernie Sanders needs to hold onto enough of the leading mantra that his candidacy does not pull that fall apart afterwards. How they will do that is in the spotlight. Has been sanders questioning clinton on whether not she is really progressive and clinton is figuring out how to strike right balance of owning her record and connections in terms of trying to work things out in wall street without seeing portrayed as a tool of wall street. We will see the attacks continue tonight. David lets start with progressive issues. She said that she is a progressive who likes to get things done. Not attack on Bernie Sanders. That is right. She will continue to say that one thing we heard today is the idea of the campaign trying to figure out how close they can get to questioning whether gender is an issue it in a way sanders is attacking her or the way some of his supporters have been included critical of clinton. It seems to be something they are carefully testing. You mention the fact that she had been accused of being too close to wall street. I think it will come up again tonight. She said last night essentially, they asked her why she paid so much from Goldman Sachs and she said that is what she was offered. In the past, she has been a little defensive, trying to strike the balance between giving the progresses and liberal base what they want with the antiwall street rhetoric without completely running away from her own record. Night, Anderson Cooper said why did you take the 675 million and she said, that is what they offered it. It will be interesting to see whether she thinks that is the right message or whether she keeps it at a and keeps to more. Alking about her policies david we have seen a lot of consolidation for candidates suspending their campaigns. Some collusion where you have the Bush Campaign and Clinton Campaign including against marco rubios rise. No surprise at all. If jeb bush were on top, going after him, marco rubio comes after iowa claiming the mantle to the alternative of trump and cruise, and Chris Christie and post timeoth need to marks in New Hampshire really to be able to go forward and rubio is the most natural guy for them to pile on against them. Also picking up a lot of endorsements as other candidates begin to continue all the way. David thank you so much. Do not miss mark and john heilemann. A little later, were talking to Sanders Campaign senior strategist 5 00 eastern time here on bloomberg television. Promising onas retail. Consumer discretionary shares biggest drags on stocks today. It has a lot to do with results coming out from various retailers. Down two thirds of 1 today. Lets dig into it. Ralph laurens plunging today. The company is seeing its worst single day in about two decades to cut its sales forecast. It is looking for revenue to rise 1 this year. A gain of 3 to 5 25 . So Many Companies have gleaned results on here the companies have been struggling here. Lauren ceo says ralph will come out with a more. Omprehensive longterm plan speaking of the channel, take a look at kohls as well today. That company is declining sharply. 19 , fourthquarter sales are weighing on a comparable basis, up. 4 . Retailers have been suffering from a lot of different elements from the warmer than usual weather, the month of december that did not drive enough traffic. Shifting from not buying as much as people want, but rather focusing on need instead of want, particularly when it comes to apparel. L brand, the owner of victorias estimates itbeat fell 2 . Sales were down 4 . Those shares were falling. S is spreading to others other Retail Stores as well. Target also falling. At,thing i forgot to look ralph lauren, if you look at bloomberg here, comparable sales just taking a look at trajectory. Sort of holding on to choppy sales in the past couple of years and then in the past year. Quarterly samestore sales numbers. Seeing a change in fortune. There are also the big secular retail issues and challenges for many of these companies. David thank you. Coming up, gopro is coming down in yesterdays earnings report. Theyre hoping for much needed a good news. Both companies coming up on bloomberg markets. David linkedin is looking for some upside with analysts beating fourthquarter sales forecasts. Another big item to look for in the report. Linkedin is the only social network in the company that has over 13 million chinese users. Emily chang here on the east coast. A huge challenge for a company like this is how to grow the network. When it comes to user growth, lincoln has a problem. It still me makes up like 38 percent of their business whereby twitter for example, International Users are three fourths of the business. One of the successes is china. Of linkedinofounder spent a lot of time in china and thinking about how to grow the China Business and they basically have done it through a joint venture or it when you look at the business itself, they have the business which makes up a vast majority of revenue. For. Is what recruiters pay there really is not a competitor out there but then they may have advertising and premium subscriptions. When it comes to lack of user growth, those businesses just are not doing well. The companies have been reporting recently, a transition to mobile focusing, specifically advertising. Is mobile ecosystem incredibly important. Mobile traffic makes a 50 of their traffic. They have been working on tweaking their mobile app. Know about you, but i am not constantly going to linked in on my phone like i would with link with facebook and twitter. Be shortterm pickups. A lot say this is a longterm story. The last 16 quarters have grown revenue. Swings, it is underperforming the s p so far this year. The s p down about 6 . There remains skepticism about their businesses in the short term. David when you look at the ernies coming out today, what can we learn from the social media earnings we got so far . Facebook is still king, growing advertising revenue as fast as linked in. It is becoming more saturated but somehow it keeps growing and they keep doing amazing things. Facebook relies almost solely on advertising and that is dangerous but they continue to blow it out of the water so at this point, it does not matter. David thank you so much. To go pro, the company taking a dive to its lowest level after taking fourthquarter earnings. Does holiday sales fell even further, dropped more than 60 . There is still a lot of talk how is it preparing for the introduction of more competition . Gopro is always criticized for being a one trick pony but they announced a slew of products they will be releasing. Have a quad copper and then hero five camera, and they have many developments in virtual reality. Offer up too many details. They are finally addressing the Huge Software problem. They are known for being notoriously hard to edit. David there seems to be a management issue as wealth or you look at the rollout, the timing is not great. Admitted theyve have made mistakes. It is supposed to be targeted to the masses. The price tag we put on it, it was high and they cut it two times to get rid of the access excess inventory. David extreme sports, on that call, what are they get expanding that audience somewhat . Emily they are going all out and spending a ton. Investors are saying that this had better pay off. Analyst estimates are that they will stand half the revenue this year in operating expenses. They are hoping they will reach a wider audience with a camera that is is to use and software that is easy to use. People can easily edit or share so that your grandma or to your old can figure out how to use the camera. They are invested in reaching a wider market whether or not that actually happens. David you mentioned operating expenses. Yesterday they have an awful lot on innovation. They have not innovated enough but are spending a lot of money trying to figure out what is to be done next. Totally. They have called it a Staggering Amount that they are spending on this. At the same time, consumers are fickle and they do need something new to get people excited again. It is really slumping, this one trick pony kind of company. Even though they are spending a lot, it seems like the logical thing for them to do. Thank you very much. Coming up in the next hour, we will follow to a posse. Stocks are mixed. Slightly. Only down the s p 500 is down about one third of 1 . The nasdaq is down about. 5 . More up ahead after the break. Welcome to bloomberg market. Good afternoon. I am betty liu. Stocks are struggling for direction today. Bouncing around between gains and losses. Dayrsing and it ends the with another decline. It is jobs day tomorrow. What does them nervous market were up in just the past week we learned that today. O, a ceo smirking his way on the advice of counsel, i invoke my sixth amendment privilege against selfincrimination and respectfully decline to answer your question. Betty we are one hour away from the close of traits. Stocks have been bouncing around