tv Bloomberg Markets Bloomberg July 31, 2015 10:00am-11:01am EDT
welcome to "bloomberg market day." planet fitness is coming next. more than 30 been years since tom cruise dance into our lives. >> ♪ scarlet: mission impossible clearly not risky business. but he's not doing too bad either. business andrisky i loved mission impossible. i swear, the guy has hardly ever made a bad movie. scarlet: he has made a few bad movies, but not very many. we debate that in a moment, because i know we have breaking news. betty: julie hyman has more. julie: maybe mission impossible can help confidence. sentiments worse than estimated.
we are seeing american expectations is reflected in this university of michigan report an eight-month low. economists were looking for reading of 94 even. that is a decrease from the number we got for june. all of that said, the gauge has 90 forove 94 -- above eight months. it looks like again if the forward-looking indicator within this overall reading that's coming in below estimates. matt: jules, thank you. we will take you back and check very little-- change on the s&p 500, you can see really unchanged there, 21 lh. the dow jones industrial average down in the face of big oil earnings that dropped and disappointed. 17,702. a 44 point drop.
the nasdaq up, i would call that unchanged as well. julie: i would indeed. not just the data we just saw a few months ago, but the wage data i know we spoke on your program. matt: 0.2%, increasing wage cost. we were looking for .6%. last month we had .7%. that was a disappointment. let's get to the top stories cross the bloomberg terminal at this hour. hiring is improving the pay isn't. that's the bottom line today in the new figures from the labor department we were just talking about that say the growth of wages and benefits this spring was the slowest in nearly three decades. i would sector salaries and benefits were unchanged, the weakest showing since the government started to keep track 35 years ago. if you think this is only in retail and no where else, it's
at least having a huge impact. also the united postal service has agreed to buy coyote logistics, the price is $1.8 billion, the deal is designed to help ubs expanded in truckload freight and it helps ease congestion at peak times. ups is buying coyote from private equity firm betty: gilbert pincus. i'm really not allergic to you. i hope that's not the case. betty: the price of oil is biggest monthly drop this year, west texas intermediate is likely finished ally down nearly 20%, and there is no sign the glut of oil will dry up soon. u.s. crude stockpiles aromas 100 million barrels above the five-year average and exports in southern iraq set a record this month. -- whichggest loser right 93 stock indexes around the world. one stood out for losing 14% this month. we have the story from hong kong.
juliet: no surprise which market won the award for this month worst-performing. the shanghai composite having its worst month in six years. in july, despite the unprecedented government intervention to hold the 3.5 trillion stock rally. they may have lifted chinese equities for 18%, but monday this week sellers returned on serious valuations that were unsustainable saying the shanghai composite plunged 8.5% in one session. andlatile month for many, they remain bullish. beijing becomes the first that he ever to host the summer and winter olympics. the chinese capital was chosen this morning as the site of the 2022 winter games. the international olympic committee held a secret vote during its meeting in malaysia. the finalists were kazakhstan and beijing. critics pointed to china's
delusion as a minor. the president boasted its country can offer mountains and real snow. matt: and probably less pollution. betty: indeed. those of the top stories. matt: energy prices having a big impact on major oil producers. exxon posted its worst quarterly profits since 2006. don't cry too much for them though, that company has still made more than $4 billion in profits for the quarter. it is down from nearly $9 billion a year ago. story forimilar chevron, the quarterly profit was the worst in more than a decade. both companies are racing to cut costs with no signs of recovery in crude prices anytime soon. here with me as bloomberg's alix steel and we have an energy analyst. let's start with you. what it is government is going to do, keep cutting back on
spending? looking toare offload. assetsd a breakdown of that was pretty ugly and brutal for the company. exxon does not have that problem. we did not hear they are trying identityssets alix: assets. they actually get an oil discovery in a country and a republic right off of venezuela that could have as $40 billion worth of oil reserves. likes huge for a company exxon which made me wonder, did that change their mna hopes? tap-in and be putting more wells in the ground? doug, we were talking earlier with other analysts who said what opec is doing and what saudi is doing is trying to boost its production and take back market shares by discouraging other users from putting new wells in the ground.
? -- is that working? doug: we think it is. if you go back to the agreement they had to not lower production , if you think about where we are today, demand is improving meaningfully. we had seven consecutive positive revisions to global oil demand. demand is starting to recover. you think about not impact supply, it grew about 2.4 million barrels last year. that growth rate gets cut in half this year to about 1.3 million barrels today. good -- inventory significantly. we think they are close to a peak in inventory. demand will exceed supply and 2016, they will come down and this methodical recovering all prices we revision -- we envision will gain some legs. it's going to be a methodical recovery. alix: you are looking at places
like mexico, brazil. if you listen to what exxon says, they are cutting spending on major projects like floating crude platforms by 20%. that is the deepwater situation, not opec, non-us supply. that is a concern if you wind up cutting enough, you wind up cutting production and you actually have production squeeze down the road because demand is higher and we don't have enough supply, and have higher pricing. betty: i met with the head of shell earlier this month, who was talking about the impact on u.s. production, the decline in oil prices on the rigs that the shale oil industry here, i want you both to listen to what he said about that. >> is probably getting near the bottom, although we can certainly fall further. we have seen a little bit of strengthening in oil prices as they started to fall again. i don't have any doubt you would see the rig count fall again. the stress level is cumulative.
companies are seeing that in the onshore business. betty: are we seeing a bottom? added 21 oil industry rigs last week, about six or nine of them came for u.s. shale. we were adding wells in the u.s. as oil prices completely destroyed. you do see rigs lag by about three to five months, and we've not seen that yet. matt: doug, what about m&a action? are we going to see more about that? we'll big players go sweep up small players are having trouble tapping credit lines? seeinge probably are this. they're looking at mergers and acquisition opportunities. but quite frankly, the real issue with these companies is not that they are not big enough, there plenty big. it's just that if you look at their capital expenditure, in relation to what they distributed to shareholders, and as doubled since 2008 at 2009. not only on absolute basis the
relative to the markets. whether they become larger or not is not the solution. they just need to become more disciplined with their spending, improve the returns. if they do, they will improve in the market and we won't see these big earnings messes like we saw today. started cutting costs before oil prices fall, which is partly why exxon is , liens, andlix: dividends. we heard from a son they're slashing dividends for this quarter. it's all about dividends. protect that at all costs. the rest doesn't matter. you own them the dividend yields. bloomberg's alix steel. watch her show at 4:00 p.m. with joe weisenthal. thanks for doug and we appreciate your time from ever core isi. coming up on the "bloomberg market day," the president of asset management 40 ia kraft has
betty: good morning and welcome back to the "bloomberg market day." i'm betty liu. matt: i'm matt miller. stocks little changed in looking for direction as we close out the week. we go to julie hyman for individual movers. julie: coca-cola enterprises one. the stock is the best performer in the s&p 500 as we get underway. up 11% right now after the wall street journal reported it was potentially considering a three-way deal with its other bottlers, fornish
the german when i will need mats help to try and figure out how to pronounce. matt: what's the name? julie: i'm not in going to attempt. it could value in billions of dollars. according to analysts, they say this deal would be dilutive, to buy the iberian or spanish bottler would cost about $5 billion and would boost enterprise earnings-per-share. the german business estimated $87 billion costs would not be helped. i can see matt smiling because i'm sure he has the answer. it's an interesting name. it means freshening drinks. julie: royal caribbean, going to do that one because it's easier for me to say. the company is raising the forecast because the beneficial currency rates in this case, which is interesting, and better
rates on fuel. the shares are up 8.5%. that's all have time for because we got that valuable information on refreshing drinks in german. matt: germans have a great knack for putting a few words together in the become one word, that's one word by the way. they are very literal. refreshment drinks. betty: now look at top stories. during his election campaign, alexis tsipras turn to troy got into a dirty word. for the first time since he became break from us or, cabinets will meet as representatives of the eu, ecb, and imf. growing prosperity measures that have hurt the economy, and tsipras needs them to come through with a bailout. experts say it finding debris tacitly from missing flight 370 doesn't make it easier to find the plane itself. tests will be done in france to determine if this is from the
doomed airliner. one oceanographer says it's nearly impossible to trace the debris back to the crash site. flight 370 vanished in march of last year with 239 people on board. southernal in the african nation of zimbabwe wants the u.s. to exit art american dentist who killed cecil the lion. authorities there call walter palmer a foreign culture. he says he thought he legally hunted the line. authorities are investigating. those of the top stories at this hour. tiaa-cref started in 1918 offering pension services as a teachers insurance and annuity association of america. now nearly 100 years later it has grown into a full-fledged financial services firm with almost $900 billion under management. with theu and i spoke
president of asset management this morning on "market makers." we talked about the firm's focus these days. >> it's been an incredible turbulent time in the markets overall. our investment performance across the tiaa-cref complex have done incredibly well. part of it is because we are so well diversified across international stocks, bonds, and real assets alternatives as well. one of the things we like about it well diversified portfolio is a balance of about 40% fixed income overall, 44% fixed income up 40% equity and the balance in alternatives. we feel very good about that balance overall. scarlett: what you give up to get that lack of correlation? do you give up liquidity? >> we do. we are a long-term investor. that sets us apart. whether its global real estate, agriculture, timber, commodities and other investments we take long-term credit and other investments, we find a way to
essentially give up liquidity, which we can in order to get higher returns for our clients. we also go with uncorrelated asset classes as a way to balance out the portfolio. you have 5 million individual clients, 15,000 institutions. you manage my mother's retirement fund because she is a professor. i was think of tiaa-cref as managing retirements for teachers, for professors. but that's only about two thirds of your client base. >> that's right. there had to have your mother is a client. you can tell her her money is in very good hands. we are doing great from an investment performance perspective. and also the financial strength of the firm is tremendous. in addition to that, as you mentioned, that's the core business, the retirement of not-for-profit. we provide financial services for those who serve others. but one third of our client base now is third-party asset management globally. every thing for investors and mutual funds to sovereign wealth funds and pension funds around the world. in all types of investments. matt: you have grown alternative
investments you taken a lot more global. when you look at what has performed well, what are the winners for you? you mentioned passive funds and someone says active investing is the way to go. what do you see in that debate? >> i agree. we've had an incredible bull market. i think that passive has turned out to be the way to go because things were not that volatile, a was an elevated right on the way up. it's hard for active managers to do things themselves. in the last two quarters we've seen a number of active managers, and we have been one of them. outperformed the benchmarks really well. this going to continue and we will see volatile markets. this is the time to think more about active management overall. that is where i am on that. something tove is think about. we do things for long only to absolute return. that's another area involving the market we have to think about. matt: scarlet fu speaking with
matt: they china-based company bought volvo back in 2010. after five years of fits and starts, the automaker is finally introducing a new vehicle that promises to give the competition a real run for its money. back intoc 90 day you the volvo showroom? matt: i here with hannah elliott and she has the brand-new volvo xt 90, is not even out yet. people have been dying to get her hands on this car, to get a
ride in it. we're talking people who actually do that. people talk about this is a game changer. it's important. they haven't redesigned it in over a decade. hannah: it's been 12 years and says brought a new xt 90. people were forced to go elsewhere if they wanted a new suv. audis, mercedes, bmw have new options. why would they go to volvo? first out of the gate, this has got to be the way to volvo breaks into the luxury suv segment. matt: it's not as expensive as i thought it was going to be. hannah: that's the crazy thing. it started under $50,000. ast: it seems like it has much luxury. the first thing i noticed is the real wood paneling. this was really well done, it's so swedish. beautiful,s really
and big point vrable hole. now that they are owned by a chinese company, they really want to hone on the message that we are still making swedish products in sweden. we put the little flags as tags on some of these seats and it feels very scandinavian. car they deliver the sat me down for 20 minutes to walk me through all of the technology. there's cameras all over the place, lane departure assist. they have a thing called pilot assist with actually drives the car for you, including steering and braking acceleration at speeds under 40 miles an hour. matt: that's unbelievable. it's basically autonomous. the vantage point is very high, it feels like you have a great survey of the land, which is why people like suvs. the visibility is amazing, the panoramic sunroof really makes
you feel like it's very spacious interior, the lighting is great. really almost no blind spots to speak of it so that's all great. for big guys you will have plenty of room with no problems. i did notice some lag in the acceleration. on paper it is a fast suv, for sure. but it doesn't have a lot of torque in the lower ranges. i don't really think people will care, you definitely notice that when you go from driving at turbocharged car. very pretty impressive, large luxurious vehicle. what is your overall take away? it's a plus.nk it drives fine, it's practical, it feels luxurious inside. a great job so far. elliottanks to hannah at "bloomberg pursuits," for
that. betty: it's cool but it parks itself. spot andfind you a parks itself. that is pretty cool. betty: i haven't heard anyone say volvo and cool in the same -- matt: they did 10 or 15 years ago. it's just been so long. and there are many cool things. people love this scandinavian design, they have been waiting for this for a long time. also the engine is supercharged and turbocharged. when's the last time you heard of that? betty: never. clearly, never. zero to 60 in six seconds. matt: goodbye. ♪
so i encouraged her to get a medical alert button. philips lifeline offers the best options to keep her doing the things she loves in the home she loves. if she ever falls, or needs help, i know we can get to her quickly, and with her condition that can be critical. and even though she doesn't typically go far from home, the button always goes with her. these days, she's still as busy as ever. just the way she likes it. innovation and you. philips lifeline. lifeline is america's #1 medical alert service. visit philipslifeline.com/caregiver today or call this number for your free brochure and ask about free activation. scarlet: welcome back. i am betty liu. two of the world's biggest energy companies have been rocked. exxon mobil is posting its worst
quarterly performance in six years. will need to do more crosscutting than planned. exxon's profit was its smallest and more than a decade. chevron was forced to write down the value of its oil and gas fields. site,cial networking is causing concern that growth is slowing. sales are $2.9 billion, it shares are down 10%. the commission is opening a investigation into the fedex takeover of at&t express. lead to higher prices. regulators blocked ups from years ago.
facebook's plan for connecting rural areas to the internet. they will use drones to transmit information using lasers. facebook has detailed some of the technological challenges. the drone will have the wingspan and weigh one7, third of a toyota previous. >> laser communication and microwave communication are going to be some of the solutions for providing more cost-effective connect to for people with there are no existing cell phone towers or infrastructure. zuckerberg has sold the board. some of your top stories. coming up, investors had a july
to forget. a better month for anyone putting their money into portuguese debt. we will look at this months winners and losers. 's career might be on cruise control. the fifth mission impossible is out this weekend. he is not the box office draw that he once was. a big beat on earning for skype. we will talk to the cfo of expedia. you could say that soul cycle has spoken. they have filed for an ipo. it is all about the climate it comes to revenue. they boasted 75 million dollars in revenue, last year it was $112 million. $40 classes sale outside of major metropolitan areas? i want to bring in leslie picker
who covers the ipo market and the florida finance minister that helped advise a google on its ipo. leslie, let's start with you. it is a potential weakness that soul cycle has a very defined user. it is usually a woman that lives in the city. leslie: the headlines have pointed out that they are rich, skinny women. however, people in the classes come in all shapes and sizes and there are men and then. my family in the midwest are used to paying $25 a month for a m. that is different than new york where you are paying $100 or month. it is a sticker price shock in the midwest. they have that pricing
power outside of new york or san francisco? professor, you think it is the right time? is it smart that they are ideally -- they are ipoing now? >> leslie has pointed out that the growth rate will be difficult su sustain as they .ove into more mid-tier cities betty: what is the story on this ipo? what should they tell investors? .rof. ritter: they have a niche they found an unsatisfied need. compared with traditional gyms, something that is more interesting for a lot of the people who have been participating in their classes. not theeslie, this is only ipo in the fitness world to
come to the market? we have had several? leslie: planet business -- planet fitness is coming out next week. it is part of the health trend. a lot of it is the mindset of the millennials and people who are spending more money on having more discretionary income. they are spending it on healthy food. another example. that is the high natural ingredient pet product. people have seen that do incredibly well, as has fitbit. doubled --ore than has more than doubled its ipo stock price. blue buffalo is 38% higher in the stock market. they are maintaining a strong customer demand. it is part of the movement for health-conscious americans. betty: is it a good sign that
the ipo's that we are seeing are in the other areas like health and fitness? we are not seeing as many tech ipos as we did last year. leslie: it is good the ipo market is not dominated by one industry. these last few years there have a lot of biotech ipos, which they're continue to be, but it is a broad mix of industries that are going public. betty: tell me about the company itself. the salingers who created this movement, they are stepping back? have an new ceo. the whole idea is the experience. brand whiche retail has contributed to their revenue. they have soul cycle university
where in structures learn to do the classes, making them more unique. much the come brand inside the new york area. we will see if people will buy $78 sweatpants. betty: part of the reasons that good isses are very because of the instructor. the instructors are a big part. how important is it that the founders have stepped back? they created the culture. leslie: you see that sometimes with ipos. when twitter went public, you saw jack dorsey take a different led the dick costolo company through an ipo. sometimes it requires different skills to do an ipo as a ceo rather than just have a vision as a founder.
as long as the two founders are involved, that is a good sign, hopefully they will maintain the vision. sometimes it is better to have outside talent to help provide that the balance for investors. betty: where do you think soul cycle could take their brand? prof. ritter: to big cities. you need customers. it is price-sensitive. it helps to be in locations where it is not easy to go bicycling. i'm sympathetic to this, i met my wife while bicycling. in gainesville, the countryside is much closer than in egg cities. betty: i imagine they will want to go overseas? leslie: they want to open 10 to studios internationally. that is part of their strategy as well as suburban and metropolitan areas in the u.s.
betty: we are one hour into the market day so far. let's get you caught up on the action. in europe, hans nichols is in berlin. hans: good afternoon from here. let's see what is happening with the equities market. it is a mixed picture. the stoxx 600 was down just a little bit. the ftse in the u.k. was down
ever so slightly. it isc 40 was up, now down. it has been hovering back-and-forth. 3/10d deutsche bank down of 1%. news overnight it is a $2.5 billion euro that could be in jeopardy. the main story is the ruble. it was crashed after the central bank of russia cut its interest mark by half of 1%. that is the first time since march it has been north of 61. it is down 3% on the day. a couple of stories weighing on the euro-dollar is euro inflation that held steady in july. it seeks to stoke price growth across the eurozone. 2%, the same as before, but data showed slower u.s. job growth that could delay
the federal reserve plan for a increase. had a high demand all month. is downd on the 10 year to 7.9%, one half a percent lower than the u.k. borrower. they're bracing for a week of heavy data. julie, give me the picture from the states. considering the employment cost index. data showed slower growth than expected in overall wages. we are seeing a mixed picture with earnings remaining part of the trading day. look at my bloomberg terminal. you can see the next nature. red and green,l or nearly equal red and green. utilities and house care are the two best performing group's.
had bignergy side, we earning reports. exxon mobil has its worst quarterly performance in six years. they cut by back in half compared to the prior quarter. chevron posted its lowest profit in more than a decade, and it has to do with lower oil prices. it continues its slide. oil is on track to have its worst month of the year as we see the perception there is a .upply glut the best performing group, utilities perform well when rates are down. if you look at the 10 year, .ields are at a low can we look at the 10 year? coming? -- 2.19%. rateng in at a 39%
increase in september, prior to the fed statement, and shooting up to 46%, they are back down to 38%. the dollar is having its worst .ay since june 8 you can see the straight line when the wage data came out. betty: that was a big disappointment. thank you, julie hyman, our senior market correspondence. consumer confidence dropped to an eight-month low in july according to the university of michigan index. it has held at 90 four 80 straight months. that is the longest streak in more than a decade. unveiledle tv will be in september. buzz feed news says it will have control.d and voice it will be the first change 2012.
california ordered a mandatory cut back in water usage. californians did better than expected. water you spell 37%, eating the by governor ordered brown. those are your top stories. july was a volatile month. the debt was no exception. the price of oil, coal, and copper have limited. here to break down who won and lisa.st is let's start with the bad news. who lost? the metals and mining companies. they filedources -- for bankruptcy. the coal companies in general are seeing their bonds decimated. metal and mining bonds have lost
8.4% on average so far this month. that is the worst monthly loss since 2008. are down. the gap between distressed bonds and the other high-yield universe has widened the most since 2011. you are seeing a break away from the distressed needs from the high-yield industry. you have analysts wondering if we are seeing the beginning of a true default to cycle in the u.s. among the riskier companies. a report says the count of u.s. speculative grade default for most of the second quarter in three years. you are seeing the actual losses on the bond of values triple down and have meaning behind it about companies that might not be existing. betty: is there a threat? lisa: that is an excellent
question, and one i have seen different commentary and varying opinions on. analysts have said yes, there is possible contagion. it is difficult to get a broad-based default cycle in just one sector, especially when it accounts for such a big portion of the market. high yields energy companies were down 4.5% for the month. you are seeing pain continuing to be taken out of these to faces that will have real deadlines to increase the revenues after such a long time of low oil prices. betty: what about the winners? lisa: the winners were in europe. portuguese debt was up 3%. italian and spanish debt. this is people renewing their hope for the eurozone. will last, let's
be clear, everyone is wondering when the next chapter of the greek saga will come up and we will talk about the same things, but for now, everything is good. the macro story is that people feel like we will not have anywhere.flation certainly not in europe. you have the european central bank continuing the quantitative rates negative, and buying bonds. they are a year or two behind the u.s. in the cycle, and that is the logic there. betty: thank you. abramovitz covers the debt market for us. mission impossible five hits the theaters. is the franchise all tom cruise has left? we will be back. ♪
betty: welcome back to "the bloomberg market day." i am betty liu. the fifth film in the "mission impossible" franchise is out this weekend. already inovie is the works. tom cruise is the star, 20 years after the original. his movies can still make hundreds of millions of dollars. the part where you say about tom cruise, and him getting older, and he is an aging action star, he is still garnering a lot of money with "mission impossible", right? >> this is the one that pays the
bills. it has been over $2 million in the box office -- $20 million in the box office. has received good reviews. the studio hopes they will have a good opening weekend, then word-of-mouth from the reviews will give it a longer run in the theaters. betty: how did this do overseas? paul: very well. very well overseas, probably stronger than in the u.s.. global boxof the office is out of north america. it is more important that a film does well internationally than domestically. film, a sequel to a sequel 12 long-running franchise, that should play well. betty: especially in china. paul: especially in china.
i'm sure they will aggressively market this film to offset a ish u.s. box office over the last few years. betty: he is doing interviews, he is on jimmy fallon lip-synching, he is more promotional. paul: for the longest time that was huge asset. now that his personal life, with scientology and other things, have clouded his image for some people. the question is, is his personal strong as it used to be? he is old school, and the studio believes he does have star power and can drive box office. some of the younger actors may be more impressive on social media to build a dollars, but he feels, if the studio
they can get him on jimmy fallon least forcally, at the weekend, it will lead to things down the road for the film. betty: it is with one of the mission impossible films that he got into it with matt lauer and the use of medication for mental illness. that was very damaging to his brand. now, it seems like no one is talking to him about scientology. why? paul: he is probably choosing more selectively where he goes. he probably puts down ground rules. he might not be on a morning show that features harder news. he leans more to the entertainment oriented shows. they put him on a lot of covers of magazines. they are trying to be more select youth. betty: i was told that john stewart had him on and got criticized for not asking about
scientology. like john travolta to a lesser extent. it has been an issue for their image and how they protect themselves in hollywood. how well they can carry a film globally. it is more than issue in the .s. than outside of the u.s. that is where some of the big money for these domes are being made. betty: paul sweeney, our u.s. -- on tom cruise and mission impossible. we will be back. ♪ ♪
shares are searching after sales proved better than analysts' estimates. you will meet the ceo of the travel reservation is nice and a moment. effective ebola vaccine from merc. primm: beijing will be the first city to ever host the summer and winter olympics. time to get ready for the winter of 2022 and artificial snow. ♪ betty: good morning. i am betty liu. primm: i am pimm fox. let's look at how markets are trading. let's look at stocks a little bit higher. the dow jones industrial average at 2/10 of a