Transcripts For BLOOMBERG Bloomberg Markets 20160428

On a mostly declining market. It is somewhat of a mix. When you look at major averages come 11 increase in the nasdaq. Otherwise, we are seeing a negative cap to the markets. There is a lot of news on earnings. Including 60 companies. They are recording their numbers today. Some of them are already reported. Blowinghose is facebook past analyst estimates. Revenue is up 52 . And, the bulk of that is generated by facebook itself. Analysts say they are positive on the company. Not even beens able to monetize some of its other Properties Like messenger and whatsapp and instagram. You can see shares rising. Some of the other stocks gaining on earnings news include ford posting 2. 5 billion of those shares of 1 . As itree are benefiting, appears, some people are spending their gas seizing on buying higher price cigarettes. Mastercard is also gaining after that company Beat Estimates. The flipside, we have a viacom shares after the Company Expected a loss for this year. , victors appears to be a source of this problem here. Dominos pizza goes way below estimates. International will make our audio equipment missing estimates. So, we have a lot to sift through. Betty we did not even get to what happened in japan. When theamazing date bank of japan is an afterthought because theres so much other news. Japanndeed, the bank of did not move to increase a stimulus and that economy. Heard the banks say they wanted to bring time to the markets. It was only a slight majority of economists who were expecting the bank of japan to do something, this was really welcomed by the markets as a something of a surprise, you saw here the dollar fall with the yen increasing by 2. 5 . Ready big movement there. We also saw a movement and japanese stocks as well. Is settingdecision the tone here to start of todays session. Sending the stoxx 600 down. Where one third of 1 lower. To Industry Groups arriving on the stoxx 600. A basic resources tracking metal higher. Oil and gas tracking higher. No sopranos. It is a massive earnings day today. Particularly for banks. I will focus on three of them. Deutsche bank posted a surprised profit. Legal expenses dropped. Trading businesses performed better. These are the investment led banks. As you can see, all four are in decline. By 20. E is down theyre down by 30 . They have 13, comparable to the other two. The trend is very clear. The spanish lender is falling as much as 9 . Today, it is the biggest report since march of 2009. They had a 54 drop in profits. A lower trading revenue. The onetime sale was never needed. Very quickly, lets finish with the Lloyds Banking group. It was the largest mortgage lender. Yes, that was a bead of the coming cost. Falling. As these are the big u. K. Banks over the last 12. Theou can see, lloyd is best performer. Still, it is down by less than. 92 . Excuse to bring out the colors. Betty the colors, the line, everything. Its get the first word news today. Bonnie news has more. Came upnorth korea short in its attempt to file ballistic missiles. It was a week before the regime heard the first Ruling Party Conference in less than six years. Is expected to reach u. S. Bases in japan and in long. Launcheds successfully its first rockets from its new facility. Vladimir putin was on hand. They use a booster to blasted off. Officials say the three satellites are orbiting. Democratic president ial candidate Bernie Sanders will be laying off hundreds of paid campaign workers. It is further behind frontrunner hillary clinton. He plans to redirect his remaining resources to california which holds its primary on june 7. The Affordable Care act will likely be shutting out more money next year. Many tourists say the coverage has been a financial drain or them. It wave of insurers are already seeking premium increases. In virginia, nine insurers on healthcare. Gov are asking for average price hikes ranging from 9 to 37 . And, the department of education has launched a new website to help people with Student Loans find their best repayment options. Federal Student Loan Debt will exceed 1. 3 trillion. Website is student loan. Gov repaid. Global news, 24 hours a day howard i are 2400 journalists. I am vonnie quinn. Betty thank you. Lets get back to the market. First quarter has had a habit of coming week. Earlier, we learned that 2016 is no exception. In up at the weakest pace two years. American consumers will tighten their belts. He is the chief strategist at j. P. Morgan which is excellent at 7 trillion in assets. David, should we be worried that we grew less than we thought . No. Those numbers were in line with the expect patient. Actions that the number might be weaker than that. The key thing to recognize is more to dig into the details. That number was pulled out by 710 of 1 because of a decline in energy spending. Energy investment spending is down 17 from the peak. Now it is at 40 billion. Has a lot further to go. Grew more slowly, but they also fell in terms of the growth rate. The weakness from inventories and Energy Investment spending, between them, they matched 1. 1 . These are temporary factors. You know, when i look at the american economy, i say healthy tortoise. Not a sick hair. That is a good metaphor. Even if you cant explain those numbers, to some only bill gross , we are still dangerously on the precipice here of a collapse. Whatt david to listen to he said earlier about these numbers, and about the fed. Eric this is like Musical Chairs where we all wonder when this system, this artificial system might implode. And, for the most part, if the guessing game is extended to 2017, 18, 19. Eddie i see you shaking your head. Growth, do youd just disagree with him . Disagree witht everything. I do not think the economy will dislike lightly into a recession. It is not going to hit a tipping point. There is no excess anywhere. You get recessions when you have excess over collapses. We do not have that. Economies expansions do not die of old age. Think the expansion is to keep going. The problem is that Monetary Policy is not artificially propping up the economy. All is so frustrating to me of my career is i know the first few rate hikes actually stimulate Economic Growth your whether it is the bank of japan, or europe having a negative interestrate policy, all of it is actually slowing down aggregate demand. So, i think the economy can take your right type. Unfortunately, the fed does not see through that lens heard we will be waiting a while for a rate hike. Mark david, if you is as healthy, what is that make it japan after the doj today . The majority of economists we survey before today were forecasting some form of the stimulus. I think the word stimulus should be banned in this context , because it does not stimulate anything. Japan was going to lose right away. If they are going to lose a negative interestrate policy, they are counterproductive. They will only hurt the banks. If they do not do it, they will say you not do anything to reduce the value of the currency. We have to get away from this idea that zero Interest Rates or negative interestrate tonight anything. They have negative labor force growth. But, most of all, they have to encourage dennis consumer confidence. This fiscal Monetary System with the belief that the government will fix it, that is what i believe it is surprising the japanese economy and, to some extent the european economy also. Mark have we seen a complete dislocation between what the gop does and how the yen moves. Have we seen them gain control of the currency once again. Is there a surprise left in the tank . I do not think they can. I never thought they could. The dollar went up 20 with the promise of an increase in base is. There is not a strong relationship between shortterm Interest Rate differentials and exchange rate. Japan, the u. S. , europe and china need to do is take these exchangerate policies. If they can it greet on a band that is acceptable, they can remove all of these exchangerate currency. They can get out of writing this currency war. Policy, when you look at Monetary Policy, it will not get to everyone here there is no disability there. I think there is a need to support that so they can get back to have an appropriate Monetary Policy. Mark thank you. Funds taken up on bloomberg bykets, comcast divergence dreamworks. More on this story right after the break. Mark i am mark barton. Betty i am betty liu. Youre watching bloomberg markets. We talk about some of the biggest business stories the news today. Carrier is ordering 20 airbus is and 15 boeing 77s. The airline revealed its plans. The Airline Stock exchange is planesng retiring six. There a place of their chief executive after learning had a personal relationship with another employee. Has resigned. He was the ceo it priceline for two years. He was replaced by the former ceo jeffrey boyd. That is your Bloomberg Business flash. We go straight to the market desks were julie hyman is looking at everything we have seen in the last few hours. Julie it was 45 alien dollars. Three of the biggest earned one industry alone. Health care is remarkable. To look at the heart device. The share is the overall value. You can see shares pulling back a little bit. Saint jude is on the rise. This one is just a proposed deal. That is what they have done. The french drugmaker. It was 9. 3 3 billion in cash. This was formally made privately that has now been made publicly. They were moving up a share. That is what were talking about. Medivation shares arising above that. This looks like the idea that some investors think there could be a higher offer coming. There is a deal in the Media Industry as well. Comcast was purchased by. Reported billion dollars is the deal on this year. Give them more of an animation operation. The United States also expand its business programming. They have and try to sell the company for some time. Hell mostly step aside after the acquisition is done. Comcast shares go up just a touch this morning. Praise the choice of this deal. This announcement about the acquisition is incredibly smart. Lucasfilm of disney, think about how great that was. I am delighted with the management there. Werethings go up, we talking about when things go tough with apple and comcast. The figure out how to get through it. Betty that is the shareholder. Mark the doj catching many economists off guard by deciding to keep the stimulus plan study. What will the boj governor do next. That is the latest after the break. Mark bank of japan is surprising many economists by deciding to hold study with the stimulus program. The dollar taking a big did. Falling 2. 5 . Stocks in tokyo tumble. Surprised atyou this approach . Was it right for thedoj to wait and see effects of the stimulus in january. Jeremy we were surprised. We do not think it was the right thing to do. The stimulus announced in january it was very small. You feelthing to make like the inflation target was credible. So, we had those disappointments and Economic Growth. I think that the doj needed to be much more preemptive. Mark lets check out inflation. Chart shows them excluding fresh food. Biggest drop in three years. What will it take to get inflation banks to target . Lets not forget the doj once again put back its estimate for the fourth time in a year. Jeremy sure. The banks need to be much more aggressive. In theu have been stuck trap for as long as japan has been, the credibility of your actions is crucial. You keep disturbing the time when you hit your target. So, it seems you are reactive rather than proactive. It looks like you are doing a lot of damage. Second, i think government policy needs to do more. Both fiscally and on the structural reform front. Problems not just limited to what the central the policy needs to be much more coordinated. Betty lets get into what happened with the central banks. Read for you a sidebyside comparison with what the fed said. From last month to this past month. They said Global Economic and Financial Development continues to pose risks. Then come and a statement from yesterday, the committee continues to closely monitor these indicators and Financial Development. So, what was your big take away when you saw that chain . Jeremy that was reasonable, given that some of the Financial Market has dissipated. The chinese economy may be going through much more slowly. It is still very clear. Betty they added inflation. Jeremy exactly. They are still aware that this is what they need to do. They have to monitor these developments quite carefully. So, with all the volatility in Financial Markets, when they start to see a growth the Company Second order, they start to prepare the ground for lifting Interest Rates again. I think it will be monitoring carefully what impact that has on the Financial Market. Though, they have been trapped in a negative feedback loop. They start to sound more hawkish and the dollar depreciates. The stressed Financial Markets fall. That slows the financial expectation. Betty it does. What is challenging to just take a look at the numbers this slowng, you had firstquarter growth. But, you have a job claim continuing to fall. So, what is going on here . Jeremy it is a disconnect between the labor market and the economy. Are some temporary factors that slow growth. First, the stress and the Financial Market has had an impact on consumer spending. Mandatory slowdown in the First Quarter. We expect that to start to change. On thegest puzzle is consumer side. Because, we have had a big improvement in real income growth. Consumers remain cautious. The assumption is that stocks will pick up in the Second Quarter. If it does not, we can probably expect the labor markets to slow. Remember, the labor market is a lagging indicator of growth. Betty thank you. At standardist investment. Still ahead, well talk exclusively with the ceo of cbre group the largest commercial real estate company. Out with their latest. Being estimates on revenue and profit. That is on bloomberg markets. Betty live from bloomberg headquarters in new york, i am betty liu. Mark i am mark barton. You are watching bloomberg markets. Lets get to our first word news. Bonnie first visit is the to the country since 2011. To maintain his grasp on power as a countrys military prepares for a battle to retake the islamic state. Is lookingcommission into the flint lead contamination crisis. The panel is trying to see if residents faced discrimination. They look at the potential roles of racism, environmental justice, and other discrimination in the crisis. Republican donors are not giving ted cruz and john kasich of funds they need to stop donald trump. In analysis for campaignfinance record out of the donors who gave big money to jeb bush and marco rubio have mostly disappeared. Records show fewer than 3 of them gave to the limit to bush or rubio also gave that much to kasich or cruise. He will votesaid for donald trump in the general election, if you are the republican nominee. He would not vote for ted cruz. Speaking at the university, the student taper quoted him as saying that ted cruz is lucifer in the flesh. I have never worked with a more miserable person in my life. Boehner said he plays golf with trump. Global news, 24 hours a day. 150 news bureaus around the world. Mark thank you. Here, we can check out what is happening to markets. We are about an hour away from the end of the third day session. There is the stoxx 600. Investigators are pleased with the doj which decided to do nothing to date when a majority of economists forecasted that the doj would implement the stimulus. The major markets are trading lower today. Check out Industry Groups on the stoxx 600s earnings. Very much dictating the sway and trends today. The basic resource index is up. Health and retail are also trading lower. Has thedoolittle latest, live from the nasdaq. Hello. You are looking closely at two tech stocks deigning gaining on his earnings. Facebook shares are surging. Boosting the nasdaq the most after the Company Posted a blowout for its quarter. Driven by theas companys mobile ad business. Very impressive. 52 year over year revenue growth. It is nearly 5. 4 billion in revenue. They had the price target range including deutsche bank. They thought they might possibly miss. He is saying he got it wrong. Rbcs mark mahaney is now with a street high of 106 25 per share on a stock market where receipt buyers are simply overwhelming and overtaken the sellers. The stock is trading at a record high. Mark we are halfway to the earnings season. One of the reports shows moving stocks today. Thatil another stock is paypal shares are up nicely after they beat firstquarter estimates. , the high end of the Second Quarter revenue rate. Now, that is impressive according to the analyst. They go up 284 million accounts. You also have the price ranges here. There said he expects the company to continue to take shares. Now, out of all of this, the stock is back above the range trading in since the ipo. It appears that investors are bullish here on the shares of paypal. Mark thank you. Abigail doolittle. As get to the commercial real estate market. Cb already out with its earnings. Shares are higher for the biggest real estate. They Beat Estimates for revenue. Joining us from dallas for bloomberg exclusive is bob sutherland. Bob, thank you for joining us. Thank you for joining us. What was behind the earnings well, it was a good quarter for us around the world and across our product lines. We had good growth. Doubledigit growth and all the service profit lines. And, we went through all of our regions. The thing that i think drove it was a good solid real estate fundamental. Probably better than people realize. Fundamentals are rental rates and occupancies. Also, something that was really important for us was that we took market share with the majority the markets we are in across the product line. So, it was very satisfying. Mark are those fundamentals going to remain a 2016 . Or, will you continue to greg shares as well . Well come we think the fundamentals will remain strong. Again, the fundamentals im talking about our occupancy and rental rate. Expect Interest Rates around the world to be stable. We expect relatively slow Economic Growth. That is fine. Are goinghat things to play out well. We saw some choppiness in the first couple months of the First Quarter that were tied to the Financial Markets. That seems to have settled down. As it relates to us continuing to take market share. We have done a number of things of our business over the last few years. We added a lot of talent to people. With technology and other capabilities that are really helping us to take market shares. And, we did the big acquisition last year with our outsourcing business. Been very helpful to us in serving our clients. I want a look at the largest commercial real estate markets. You mentioned some of the volatility that we have seen with some of our prices. We have a chart here. You will not be able to see it. Prices haveshow how fallen. It looks like the peak in the not look 2014, it does like things are stabilizing. It means when you look at the chart for commercial real estate prices. What will happen here come in ew york . Mark you have some of the highest rental rates and history of the market. We have seen good absorption. Week spent expect rental rates to go up. One of the things you might be seen is that there is some concern with trophy asset. The biggest most expensive assets that there has been less demand for those assets due to uncertainty in the Financial Markets. It is the case that we have seen less activity around the sales of those assets. On, weas the quarter war saw things get better in that regard. In real estate fundamental new york are strong. We expect that over the next few years, united dates will only be at 3 of what is in the base of the space now. One of the really good things happening in the new york market is that there is a big growth and tech workers. We have always had the big Financial Companies there. Is market for the jobs really strong. We think that will be a sustainable advantage. Betty im glad you bring up that aspect. As valuations go down, as financing becomes harder to these tech companies, are you worried that there will be a spill out onto the commercial mark what market . We look at as a result of what is going on the tech market is job growth. Then can we have a secondary statistically look at. That is in regards to how much sublease space has been made available. There has been only a small pickup in the sublease space. So, there are no negative signs there. They have solid hiring. We think things are the less you work this year, than they were last year. But, the tech market is here to stay. New york city is moving more in that direction. So, we think of course that needs to be watched. We are not seen any real red flags. Mark i want to ask you about the u. K. With the big referendum about to take place, what it impact would a break for the u. K. To the eu to leave the ua for the u. K. Go to the rate market . There has been a lot written about that. A lot of it expresses this concern. What we have seen is uncertainty in the market. The june voteis approaches, people will cause a little bit. They had to vote in the negative with owners and potential buyers figuring out what it means for the market. The thing to know about the London Property market it is big. There is not a lot of space being added relative to the size of the market. The best companies in the world want to be there. The workforce that is emerging around the world wants to be in cities like london and like new york. Longterm prospects for london. They have good capital. We may see a pause or a concern. Long, that is a Good Real Estate market. It will continue to be one of the best. Betty thank you, bob. Thank you so much. Good to see. Much more ahead on the earnings run. Execution for ecommerce. We will talk about what is driving growth. Betty im here in new york. Earnings rolled in this morning. The Company Posted firstquarter profits that exceeded estimates. That is thanks to a strong supply of u. S. Packages. However, revenue came in lower than expected. Lets go through these results with richard. He is here. Good to have you on the program. So, lets start with a little more highlevel and broad. Which is what you are seeing in the u. S. Economy now. Visit feel like it is going to get better in the second half your . Year . Rich were seeing a tale of two cities. We are continuing to support the is a lightere shining through. Industrial production still is not there. Is outgrowingce the physical retailers. That is something we have seen the last few years. The interesting thing for ups is that when you bring it all together, what we call be be it started to blur the lines. We are those deliveries through ecommerce. Betty what does that mean for business . Rich that means we Grow Business and have the opportunities we talked about in the business to business where Industrial Production wouldve been the chief driver of growth. Now, the b2c is driving our commerce. That is because of the return services. Things we call access points. Allows customers to pick up packages near other homes. It all drives a volume to physical retail location. Up as a looks and shows businesstobusiness package. Issues with the last month or so is that there certain to build their own age. How much of a thread is that for the likes of ups . Amazon is an important customer. We have many important customers every day. What the ups offers is such a great proposition not only for amazon, but for all of our customers with density when you bring all this packages together. Is what we want to make sure that we are the shipper of choice for all of our customers. Because of things like access points. My choice, which allows the end user to communicate with ups around choice, control, and convenience. We bring it all together with a Value Proposition that ups offers is available not only for amazon, but for every company out there participating. I want to speak about m a because you are aware of the unconditional of ruvell from eu regulators to buy the rivals the end he expressed. It is something you tried a few years ago. Regulators said no. Rich back a few years ago when we are looking at that property, things that is important to understand is that we had that strategy. The big thing for ups is that we continue to win in the europe market. Have now saved a 2 million investment. We have those facilities looking at Something Like 70 new buildings. Build marketo share. The important thing to remember is that our business internationally had our fifth consecutive order. Thead the best yields on per package basis that we have seen in over two years. We feel like we are heading our cylinders. We are very deliberate about our strategy and where we are taking a business. We feel like that is most important. How are you managing fuel costs. You have seen oil go down. It is into the 40s. It has been over an upanddown roller coaster. Has beenatility something we have not seen for many years. What we tend to think about mostly is about reported revenue lines. We do have a fuel surcharge that acts as a natural heritage. The only difference is that there is a twomonth lag from the real price. There is a noise. At the end of the day, it does not have much of an impact on profit. Because come along what were trying to do is normalize fuel by having a surcharge. Can manage the volatility that way more responsibly. Are you sensitive to the swing in the price of oil . I know you have certain numbers where you are calculating if oil hits here, we will adjust our business this way. Doesnt work that way . , they founds customers tend to look differently at which products they use. The beauty of our network is that one year, and might be second, and the next week to make the next day air. Because, the fuel surcharge and the ad on, the price has changed. We do not wait at these kind of levels. More customers might move away from the air products. Because of the integrated benefit andwill deliver a product that is good for our customers and meets their expectations. We tend to use different products for different times. Fuel its elf, because of the way is handled is not really a big indicator or really something we are worried about other than when he gets into an extreme high. Mark thank you for joining us today. Financial officer of ups. Betty still ahead, home sales in the hamptons. Over a year, they had a threeyear low. We will talk about the market for oceanfront homes. Jonathan miller, the ceo of miller sandals. Betty get ready. The hamptons is the summer playground for the rich and famous. It is with the real estate market. Sales plunged to the threeyear low. Buyers estate on the sideline during a turbulent first order. Joining us now is jonathan miller. He has a report chronicling the hamptons. Actually feel a guy have heard the story for the last few years. Is there anything different this time around . John i think the Housing Market link closely to wall street in manhattan. What i saw on manhattan a year ago was a drop in activity year over year. We are seeing that now in the hamptons. Hamptons is the city for about a year. The way they look at it, sales are the lowest they win. So, essentially, the volume that is occurring now is pretty consistent with the longterm average. It almost argued that is returning to some sort of normalize level, even though there were not sure. Betty what is the price point and where is it . John north of the 5 million threshold. That is where manhattan has been quieting of of a the market. What youre seeing, and what is really interesting is that after the financial crisis, what youre seeing is the ski towards the end of the year sales occurrence of a 5 million. Before the financial crisis, it was sort of random. It is clearly becoming the year and activity. Mark you say that the hamptons and wall street, that they are bedfellows. Buyers dealerseas with the oilrich nations, the chinese, russians to name a few. John there has been a lot of activity over the last few years from international buyers. Largely, it has been out of europe. , likereally the europeans a good part of the eastern seaboard, were seeing a lower level of international volume. Partly because of the stronger dollar. The hamptons is no exception to that. Mark is it time to buy . John that is on the questions that is unique to every individual out there. I think what youre seeing is that youre already seen people buy. Youre just seeing it at a more normal rather than this frenetic pace we have for the last few years which was the result of pentup demand crisis. So, give us a sense specifically, the numbers like how much and where in the hamptons, and where and hamptons do they have all these towns . Where exactly is the works . John the way to think about it is on a price point level. The average sale for the hamptons was around 2 million. That was the highest in the First Quarter number in eight years. Pricing outhink of there is that Sales Activity is down. Pricing is virtually flat. It is moving sideways on a yearoveryear basis. I would anticipate the same thing going or written over the year. That we are not seen this rise in a price like we have before. Betty are they buying anywhere else . Competitorse of the as palm beach. I guess that if youre driving from the city, it is not that dissimilar. Betty i was just saying that come from new jersey. They seven mark comes, i will take him there. Jonathan, thank you so much. Close,oming up on the deutsche bank. Capitalbuild up the one. Betty kerry duffy, we will talk about potential growth from the largest future operator. Mark, professional writers of david love and darren smart. Will you take tips for your golf swing . Mark my golf swing is beyond repair. Nobody can make it better. I cannot wait to speak with them. Betty is 11 00 a. M. In new york, 4 00 p. M. In london. I am betty liu. Mark live from london, i am mark barton. You are watching the european close on bloomberg markets. Betty we are going to take you mark we are going to take you from new york to london to frankfurt. European bankers continuing to roll through cost keep cost saving measures. Betty from europe to the heartland, cma also reported results. What is their longterm plan . We will hear from the chairman terry duffy. Golf we are going to talk and the countdown to the ryder cup with david love the third and darren clarke. Betty it is 90 minutes now into the trading session in the u. S. Julie hyman has the latest in a day that has been