tv Bloomberg Markets Bloomberg August 3, 2015 10:00am-11:01am EDT
big data on the state of the u.s. manufacturing. greek stocks are in a freefall. greek banks leading that plunge. matt: barnes & noble drops out of college. the bookseller is selling off its education unit. the new stellar starts trading today on the nyse. ♪ matt: good morning, i'm matt miller. erik: i'm erik schatzker, everybody. matt: we want to take a look at breaking economic news. erik: not breaking, really. it broke. matt: broken economic news. julie hyman is in the newsroom
with the headlines. julie: we have one item of breaking news, construction spending. month over month, it is a disappointment. it looks like it is more than made up for based on the revision from the prior month, an increase of 1.8%, up from 0.8%. getsee that the may bar bigger as the june bar is smallre. a strange situation with the isn manufacturing. the numbers coming out early. we saw manufacturing in the u.s. cooling in july from the highest level in five months. the reading is down from 53.5 the prior month to 50 2.7. guys. matt: thanks very much for that. i want to check out how markets
are reacting to that news. stocks are trading lower. take a look at the indexes. the nasdaq is up a little bit. the s&p is unchanged. the dow is down. we did have an up month at the end of the week last week. erik: i want to point everybody to what is happening in the oil market. freefalleen oil in a over the past few days. brent is really pacing declines. this is more of an international benchmark. why? iranast in part because has vowed to boost production once sanctions are lifted. we also saw a slowdown in chinese manufacturing. economy is chinese reflected in the brent. matt: absolutely.
oil is falling to a six-month low. it has been a rough couple of weeks for crude. atk: that is a quick look the markets. let's look at what is making news. former ubs group and citigroup trader tom hayes is the first person to stand trial for manipulating libor and was found guilty. after a week of deliberations, jurors found he conspired with gain libor to benefit his own positions. each count carries as much as 10 years in prison. erikmatt: wow./ big news. partnerre is agreeing to a deal with an italian company that breaks up a merger plan partnerre had reached with another company. exor is looking to diversify outside of manufacturing. for our those fiat and
riata mobiles. a new sign of the deep trouble in the coal industry. isha natural resources filing for bankruptcy. the coal slump is the industry's worst in decades. the japanese automaker is getting a boost from an american hedge fund. suzuki. it jumped in training on word that third point is taking a fund in the company. loeb.point is run by dan after going dark for five weeks, the greek stock market reopened and many investors wish it had not. athens stock exchange 2%.pped as much as 22%tra
manufacturing shrank last month at a record pace. one of my favorite stories of the day, three german automakers are buying nokia's digital technology to help drive self driving cars. daimler will pay for equal shares of the company. this is really unprecedented for these three carmakers to work together. the deal is expected to close early next year. they will sell this to other companies and it can also track where you are anywhere on the globe within 10 centimeters. otherore precise than mapping software. erik: and i will point out that -- in any considering
case, tom-tom is rising in amsterdam trading on word that it is weighing a sale, as well. matt: do people use apple maps? erik: some people who use apple phones, use apple maps. matt: i throw all of the apple stuff into a little folder called "apple crap" and then i use google and other stuff. puerto rico will miss a debt raiment -- payment. countryrnor says the just does not have the money. a big month for gm and ford. sales blew past estimates for both companies. field chrysler did not do so that itself -- fiat chrysler did not do so that itself. we will also talk to the ceo of
barnes & noble education. data on manufacturing, construction spending. erik: now, the focus shifts to friday's jobs report. ist: joining us to discuss johnson goleb. thank you for coming on the program. we had a long discussion. we want you to know what you think the fed should do and what you think the fed will do. janet yellen has said she will raise rates at a slow and measured pace. one and done for the year? what do you expect the fed to do. investorsow, i think are putting 50-50 odds on the fed moving in september. with a 5.3% unemployment rate, if they still think we need zero rate policy, they are signaling to markets that this economy is
more broken than we'll think it is. that is not a good thing. i want to see the fed moving in september. we could enumerate several reasons why the fed should raise an straits, right? because the economy is strengthening, because the unemployment rate has dropped. because it is important for the fed to prove that it can raise interest rates. points,om the data there are not a lot be on the unemployment rate, right? the economy is not superstrong. --no come the real question no, the real question is are we generally in a weaker and thatnt central-bank policy is probably not doing all that much? maybe that is because china is
slowing down. maybe it is because the demographic picture is a bit weaker. there may be other reasons why we are in this environment. simply continued money printing might not be having the effects that everyone thinks. why is productivity down? we have never had a cycle like this, where the employment picture is improng and you are not seeing the level of the economy show similar signs erik: what are your thoughts on why? >> clearly, it is a productivity thing. it is not just the u.s. productivity in europe is weaker. it also may be that in an environment where the population growth are demographics are weaker, you also get less productivity. you don't refresh your capital base when businesses are not refreshing for the future.
the data are accurate and there is not really productivity growth, what does that imply from an investment perspective? taboo in a world of low productivity growth? >> if we are just looking at , it extends the business cycle. that is extraordinarily good for stocks. number two, companies, when they don't see gdp growth or revenue, they push harder on margins and you get this strange world where revenues are weak, but bottom-line earnings are pretty good. if i told you decent earnings that go on forever, you would probably say that is not a bad thing for equity.
it also means central banks are to remove they punch bowl in a way that it is going to hurt things. matt: what gives you confidence that we are going to see a longer cycle of growth? >> if you think about what joints the economic cycle, you have a certain amount of excess capacity at the beginning of the recovery and throughout the recovery cycle, you burn through that spare capacity and eventually create inflation. because we had a worse recession, there was more spare capacity and if you are running at a pace 40% below normal, you do the math and you are talking about double or longer economic cycle. matt: we have not seen that inflation yet. , it isou look at pce running at 1.3. erik: core pce. >> if you look at the headline,
it is actually at a record ahead of its earnings. only of about 0.6%. the price target was raised to about $130. optimistic not only on earnings, but the prospect for the "star .ars" reboot "the force awakens" is due out in december. there is already a buy rating on the stock. let's look at tyson foods, one of the worst performers today, down 9.5%. beef margins hurt its earnings. higher cattle prices taking a toll. also, we have some other analyst commentary anticipating earnings , specifically on coach and kors.
down.l kors the price target was cut over at piper jaffray. coach was down waited to neutral from overweight. both of these companies have been having issues with slowing sales. you can see the two of them. out performer,n but we are seeing decelerating sales. coach's sales have been down. coach has sort of repeated some of the mistakes orkors has repeated some of the mistakes that they saw coach make, including oversaturation of the marketplace. matt: oversaturation of them all. julie: exactly. and the outlets. matt: we want to get a look at some of our top stories. the wing part found on a remote
indian ocean island is being tested in france today. investigators are trying to determine if it is from the malaysian airlines jet that vanished last year. they have already proven that it is from a boeing 777. missing 777 inly world history, so what would seem likely. officials in northern california are calling for thousands of evacuations. wildfires are threatening scores of homes. one blaze tripled in size over the weekend. more than 9000 firefighters are battling 21 major fires across the state. the west coast is in during the effects of a drought and summer heat. erik did some fantastic reporting on that. president obama is stepping up the fight against global warming. the administration will reveal
new rules on greenhouse gas emissions. the proposal calls for reducing emissions from u.s. power plants by nearly a third. the u.s. accounts for 1/7 of global emissions. plants, of that is from as in factories, releasing carbon into the air. all 50 governors are being told not to obey the rules. those are some of the top stories. erik: we have been talking about greece. the situation remains unresolved. the greek stock market reopened after a five-week pause. equities plunged by the most in almost three years. down the benchmark indexes as much as 23%. hans nichols is that the athens
stock exchange. what is it like there? we see the entrance early exit behind you? are there a lot of people trading on the floor? or is that a calm, frankfurt type situation. where there are four or five guys having a beer. calm her then frankfurt. most of the activity takes place elsewhere. we are at the exchange, but it is mainly an administrative hub. we see read all around. most of the bank stock is down. we see some of the other ones, coca-cola, the local bottling companies. that is down just 5%. the only question is, what is going to be the very first stock, bank to trade in positive territory. i don't expect it will be a bank. it does look like tomorrow we
could have something in the green. that was the prediction from the ceo of the athens stock exchange. why: hans, we talk about anybody would want to be buying greek stocks. happening with seem to be an equalization. the greek etf continue to change while the greek stock exchange was closed. are you getting any sense -- for every buyer, there has to be a seller. what are you hearing? that is why a lot of participants are concerned about how accurate this pricing is. there are restrictions on greek buyers. there are no restrictions on international investors, but the restriction on greek buyers is
going to affect the pricing and that has been a concern all day. not necessarily that everyone is going to be leaving money on the table. , the really the accuracy very integrity of the market itself that could be in question. if it is a short-term problem, it will be worked out. does that make the benchmark index an accurate report card or gauge of sentiment around the prospect for a bailout? hans: not on a bailout. it is a distorted report card on what is taking place right now in terms of pricing. we don't know how distorted because we don't have accurate pricing. don't conflate what is happening here with the bailout talks. there is no linear relation. erik: thank you so much. that is hans and a calls live in athens -- hans nichols live in athens. matt: from athens to san juan,
this is "market day." erik: it is time to turn our attention back to puerto rico. over the weekend, it missed a $50 million bond payment on its public finance corporation. to draw artant distinction between the so-called moral obligation bonds , which puerto rico has been paying, servicing up until now, and other bonds. matt: and has to constitutionally. erik: and other bonds for which there are tighter restrictions. or assets, cash flows pledged as a security. matt: tighter restrictions, but no constitutional duty to meet
those obligations, right? erik: well, look, you have a contractual duty. in the case of -- i want to get to prepa, the puerto rican power utility. the bonds are backed by puerto rico's electricity generating assets. much of this has been guaranteed in an assured guarantee. the banker was here earlier talking about why there has been no deal regarding restructuring .f prep a bonds too many people, it seems like it should be a no-brainer. than politics and other than hoping to take losses for creditors because it is convenient, we don't understand why they want take a deal right now. everybody is ready. you name it, we are all together in rooms. every week, we are together in rooms. there is no deal why -- no
reason why deal could not be struck. tim coleman says he does not understand. matt: i spoke to him a week ago. not only do i understand why they have not struck a deal, i understand why they have not struck a deal. they are both negotiating for a better deal. i'm not so sure that is necessarily the case. towould be easy for prepa become solvent. all they have to do is raise electricity rates and then they have the money to pay. politics? whoever heard of politics? matt: i think it is a negotiating tactic. erik: all right, matt, i am leaving you. matt: all right. ♪
this is a great place to work. not because they have yoga meetings and a juice bar. because they're getting comcast business internet. comcast business offers convenient installation appointments that work around your schedule. and it takes- done. - about an hour. get reliable internet that's up to five times faster than dsl from the phone company.
hundreds of civilians are dead because of us-led airstrikes against islamic state. that is the conclusion of an independent group monitoring the attacks in iraq and syria. the airstrikes started a year ago. the coalition is not commenting. it has previously ignore knowledge to only two civilian deaths. secretary of state john kerry at his meeting gulf foreign ministers today. the united states agree that the partnerships that we share is indispensable to the security and stability of the region. qatar after ais in trip to egypt. while presidential hopefuls are not opposed to $50 campaign contributions, they prefer those
of the seven-figure variety. ap, the tinythe group of millionaires and billionaires are asserting campaign 2016. nearly 60 donations of $1 million or more represent a third of the donations so far. those are just some of the top stories we are following for you at this hour. breaking news, toyota sales just crossing the wire. ofy rose 0.6% in the month july. a drop of 0.1% was the estimate. we are seeing a gain rather than a drop and a fairly sizable one, considering the drop that was expected. every automaker we have followed has reported a gain in u.s. auto sales. they are celebrating, those big automakers.
toyota is up 0.6%. gm, car sales surged for ford, and chrysler. nissan and honda also did well. caldwell.g in jessica we also have carl brauer, senior director of insight and analysis at kelley blue book. thanks for joining us. we are starting to see even big estimates for full year. gm came out with a 17.6 million full-year sales estimate. jessica, what is driving this surge? >> right now, all of the fundamentals are in place. if you look at interest rates, they are really low. a lot of 0% offers are out there. likeundamentals don't look they are changing anytime soon. matt: carl, do you think we are
seeing a particularly strong july for some reason or other? f-150 sales shot up 13% in july. >> i think ford is finally ironing out the production problems. they say that they are going to be at full capacity by september. everything else is just kind of humming along, in terms of fundamentals. july is the heart of the car buying experience in manufacturers have everything in place. what you think the problem is with car sales? is it just that cheap gas prices allow americans to buy the bigger cars and trucks that they really want? a big part of it. there is undeniably more interest in big trucks because of the lower gas prices.
you do have some cars doing extremely well. acura is doing well. generally speaking, it is the suv and trucks and there is a lot of new product out there, especially in the compact and midsized suvs out there driving interest from consumers. matt: jeep sales continue to be on fire. is the hacking report a little bit too late in the months to hit the numbers? >> it does not matter what the news is for jeep. it seems like they always do well. they focus on the lower end of the suvs with the new renegade and the jeep cherokee and that is what people are buying. downsizing ande their lineup hits the market at the right point. although chrysler has had an interesting last week, it does not seem to be affecting jeep sales. matt: you mentioned the people
buying these cars. baby boomers account for one group. millenials? people have forecast millenials not needinguber are not needing cars -- are not needing cars. >> they make up a relatively small percentage of the market. the baby boomers are driving the market. older, the ,, as they get older, they will start buying more cars. matt: carl, what do you think about the groups that are buying? baby boomers are retiring, right? i can't see any reason why they would be upsizing to a big pickup truck or a minivan. they still have a lot of
buying power and you see people who do want a vehicle that is pacific where the time in life, a larger vehicle to go on trips were one that is easier to get in and out of. larger vehicles are generally more conducive to that. the millenial thing is really overblown, this whole idea that young people do not care about cars. it is a common misconception. all the research we have done shows that they are interested in cars. economic interest has kept them from buying cars, but they want cars and are interested in cars. matt: let me get to luxury very quickly. lincoln sales were up. where is sales were down. this has a lot to do with lincoln coming from a lower base , but why isn't cadillac making any headway? it is a great question. it is very frustrating.
i think their cars are some of the most underrated. , these are fabulous sedans. but it is tough to sell the dan's in this market. they may have some pricing challenges, as well. lincoln has the new mkc, that is ized suv and cadillac to's not have an equivalent that is new and fresh. i think of bmw as the big challenger, everybody wants to hit -- pit a midsize sedan against the bmw 5 series and then i wonder if they're strong dollar has anything to do with it. we know that bmw produces a heck of a lot of cars in the u.s. taking agn automakers stand against the strong dollars? >> i think they certainly are. it is the leasing market area they are advertising low lease payments. they have also extended --
expanded their product line. it is hard for domestic luxury brands to compete. when they start introducing these leases, it is pretty compelling for people who just want to get into the luxury market. matt: thank you so much for joining us. ahead, barnes & noble spins off its education unit. we will talk to the new executive chairman of the spun off unit, barnes & noble education. ♪
we are in our into the trading day. itses & noble spins off college bookstore division, calling it barnes & noble education. it is not having a great day. the shares are down more than 11%. the company's executive chairman and former ceo of barnes & noble, what is going on with the stock? where they're pricing problems at the open? >> first day of trading, i'm not worried about it, i don't have any negative thoughts in my head about the stock. we are focused on celebrating today. we have this been accomplished. we are getting going on it. i don't think there were any pricing problems. is the market. i'm not worried about where the stock is going to be once we get going. that is optimistic because a double-digit drop usually leads people to have negative is, especially in the first day
of trading. however, you carved off the most successful and promising business in barnes and noble, have i got that right? think both the retail and the education businesses are promising. i would categorize them as successful. at the pundits two years ago, i think that most people would agree that where the retail company and the education company are today, we have been well-positioned to be successful going forward. matt: personally, i can spend hours and i do in barnes & noble and always leave with a arm full of books and magazines. but i am 41 years old. is that still the future? promising place for millenial's to go and spend time and money? >> that is a great question. barnes & noble education, our primary customer is the
millennial. we do a lot of research on millennials. we also service the faculty at the campus bookstores and websites that we service. across the contracts united states to service those institutions and the faculty and the students. we are doing very well. we are growing that business. added $90 million in annualized revenue with 48 new store openings last year. since may 1, fiscal year 2016, we have added 24 new stores with $48 million of revenue. our growth strategy is to grow that core business of providing management services and educational services to bookstores and also to students and faculty outside of our footprint, as we get into the digital functionality that we have built on our platform.
also, to look at strategic opportunities to partner with others and do acquisitions to try to grow the company a little faster than just organically. matt: i wonder how you compete with ipads and over the air internet books. two college students still want -- do college students still want hardback paper books? >> yes, most do. we don't compete with ipad, which is a device. runs morel platform ipads than any other device. our digital technology is agnostic as to which device you use. your point about online bookstores, we also have a large web business. we did over $350 million in web business last year. we are different than some of the online companies.
we have a very close relationship and a deep relationship. helpingn the ground students and faculty. matt: thanks so much for joining us. now it is time to get you caught up on the other market action we are looking at around the world. i want to kick it off with hans nichols in athens. at the athensere exchange. the market has just closed. on the aggregate, it was down about 16%. trading was halted after a lot of them dropped 30% within minutes of the open. be affected seem to by that much negative news. it was up ever so slightly. leading the really gains.
up ever soso slightly. the banking sector was not affected by what was happening here. some of that influence the euro a little bit and then it didn't. it looks like it is going to end flat. .he big story and currency a bad day for the ruble all the way up to 62 rubles per dollar. it looked as though the yield was going to increase. it went down to 0.635 percent. it is very cheap for julie hyman to get a car loan in europe should she want to purchase one. luckily i am not in the market for a car.
quick check on u.s. stocks. we are not seeing a lot of movement today. we have gone a little bit more into the red versus the beginning of the session. some of the declines today have once again to do with the commodity market. prices.ook at oil a couple of things going on. iran is signaling that it is going to release oil into the marketplace. also, we got the manufacturing data out of china. it came out weaker than estimated. all of that is weighing on oil prices. fund bullishness. this is a five-year chart. it is at the lowest in five years time. with the commodity selloff, we have a lot of market participants being left bullish. take a look at the hedge fund
interest. we noted that they were net short in their gold positions for the very first time and that has happened for a second consecutive week. we have had some shorter-term traders coming in on the oil and the gold side, so maybe we could see an uptick with so much bearish sentiment. right now, it is nowhere insight. much of at seen as straight line downward, but the trend is generally down. copper prices are also down because of what is happening in china. jules, thanks very much for that report on the extended bloodbath in commodities. in asia, stocks fell for the first time in four days on china factory data. the shanghai composite slid to the lowest level in three weeks. south korea's index fell.
investors weighed earnings. one big story out of the region, petro china has seen a surge in volatility. the stock market is being propped up once again. more from hong kong. china much money is putting into its markets? take a look at petro china shares. traders could be caring less about the 11 billion oil reserves. the stocks volatility in shanghai surged to the highest level among the world's 100 biggest companies. the swings or another sign of how state intervention is leading to price distortion in the mainland markets. at least is moved 4.5%, including a record 9.6% plunge last monday. matt: now, here are the top
stories crossing the terminal at this hour. american pharoah proves he is among the all-time royalty of racing. he thrilled a huge crowd in new jersey, wilting a big major stakes race after resting two months. fans are wondering when or if he will run again. his connections might take him straight to saratoga the end of this month. 18-year-old american is making a splash in the swim world. she could be an olympic star next year. she smashed her own world record in the 1500 freestyle during a meet in russia. 800also holds the 400 and world records. the fifth and latest installment of the "mission impossible" films conquered the weekend box office. "mission impossible: rogue nation" took in $56 million for
paramount, the second-best opening in the history of the 20-year-old series. vacation stumbled out of the , earning just over $21 million since it opened on wednesday. those were just some of the top stories we are following for you at this point. still ahead, wire competitors bmw, daimler, and audi joining forces? to take on google, of course. ♪
luxury carmakers are joining forces in an unprecedented move. bmw, audi, and daimler will buy nokia's map maker. will eventually be used for self driving cars and will surely be put to work in some of the features of some of those cars and many others. pimm fox joins me to discuss. these companies already use the map technology. pimm: they have a license deal. it also highlights tom-tom home of the one remaining independent player. matt: people think it is going to get taken out. pimm: exactly. you talked about this a deal with the german automakers. what happens to all the other automobile makers? are they going to be allowed to participate using the nokia gps system? is up about 80% so
far this year. it licenses its map technology to apple. it has just renewed that license. was one of the countries -- companies interested in gpsiring the nokia business. if you don't have access to accurate map reading, you cannot get the transport where it needs to be. but even if you don't own this technology, you will still have access. they will happily license the technology. pimm: could be. or they could license a version different than the one they put in their 7 series bmw or the top-of-the-line audi and you may not get the latest innovation from the release of that. but you made the interesting point that having these three big german automakers do something in concert, specifically -- matt: terribly unusual.
pimm: to make this acquisition of nokia mavs and to invite , other investors not looked at as competitors, but other investors to go in on it with this purchase. matt: they have said they are open to other investors coming in. not carmakers, not clear if that is carmakers. pimm: that is the point. matt: someone has been listening to sergio. he is saying, we all developed this stuff individually, we need to join forces, but they did not join forces with him. hour ofp in the next "bloomberg market day," we are going to talk more about car sales. ♪
-- it's 11:00 a.m. here in new york. ?hat about natural gas we will hear from the industry top lobbyist. on thehere do we go is cusp of default. -- puerto rico is on the cusp of default. we will hear from blackstone's restructuring chief. and the founder of mount docs has been arrested in japan. digitalst the latest in currency. ♪ matt: good morning. i matt miller. pimm: and i pimm fox. -- and guilty verdict at a 14 yeapr