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tv   Bloomberg Markets  Bloomberg  August 14, 2015 11:00am-12:01pm EDT

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pause on its live television service, delaying rollout until next year. anchor: a surprising slow down in euro area growth. : the fcc's new rule requiring ceo's to compare their pay to workers'. ♪ good morning and happy friday. i'm olivia sterns. pimm and i are in the office. pimm: let's take a look at how markets are faring right now. let's look at u.s. stocks. s&p 500 unchanged. dow jones industrial average one points.
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no action in the equity markets. a little bit more action in the commodities market. gold heading for its best week since may on all this movement we have been seeing in the yuan. you are looking at nymex crude. $42 a barrel? value. lost 60% of its olivia: this morning we had gary shilling on, who reiterated his call that oil could go down to $10 or $20 per barrel. pimm: less expensive than avian water. history in the making and have anna. -- in havana. the stars and stripes were raised over the u.s. embassy in
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cuba's capital. secretary of state john kerry the first american secretary of state to visit cuba in 70 years. kerry: we are gathered here today because our leaders made a courageous decision to stop eating the prisoners of the prisonersng of history. plunging energy prices starting to show up in the u.s. at the wholesale level, the government reports wholesale prices climbed at a slower pace in the month of july.
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inflation may be on its last legs. factory production rose more than economists forecasted in the month of july driven by record audio building, the biggest increase since november. total industrial output climbed by 6/10 of 1%. boosting itsotors stock offering. sees net proceeds of $642 million. --la's shares have guide gained 9% this year. after being held for nearly four months, the flash trader suspect could be free as soon as today. a london judge change the bail terms this morning.
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the man is accused of playing a role in the flurry of bogus trades that caused the flash crash five years ago. those are your top headlines at the moment. u.s. stocks took a beating this week, equities on track to end the week lower after china devalued its yuan currency. lackluster reports and weak quarterly earnings reports for stocks. olivia: paul christopher is wells fargo advisor -- a wells fargo advisor. what do you make of all the market volatility coming out of china? pboc'sthink the intervention into the currency markets is a sign of desperation? no, but he did catch markets by surprise.
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bonds have gained and gold has fear wen that sort of think it. is a knee-jerk reaction. the chinese are using this is one tool among many. pimm: what is the best place to put new money to work right now? think the best place to put money to work is in equities. we are still focused on a better second half globally than in the first half here it we think that is being ignored or underestimated and we still like the s&p 500, the european and japanese equities as well. olivia: what are the implications of the moves coming out of china or your u.s. equity portfolio? apple gets 24% of its revenue from china. paul: we are thinking investors on thoseay focused
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factors connected to the global consumerrecovery, discretionary, information technology, and industrials. inm: what about investing small and mid-cap stocks to take advantage of the stronger u.s. economy compared to what is going on in europe? paul: we still do like smalls and mids and position -- and with take those up to -- would take those up to even weight. olivia: do you think the rate hike is piriced in? paul: we don't think it will knock the legs off the recovery, but there is a difference or divergence between expectations in the market and what the fed seems to be saying in their printed and public pronouncements as well as in their forecast and because of
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that differential, you probably will see some volatility around the period when that first rate hike does occur. we think the fed will stay committed to a gradual and data-driven approach. that will mean as long as the economy remains below its historic average growth rate we should see the fed move very slowly. look into an imaginary portfolio and tell us what would you sell right now. paul: definitely gold. we would sell gold and silver on any sort of a rally, any sort of a bump higher in prices such as we are seeing now. precious metals are going to be heading lower as interest rates especially, and inflation remains very low. that will mean inflation-adjusted real interest rates will be very attractive to investors and they will move the financial assets away from gold. olivia: we have a series of european gdp updates.
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where are the opportunities in european equities? paul: we like the large-cap space in europe tried in 2012 and 2013 the u.s. also had wayods of softness on its to a more sustained and perceptible growing economy. olivia: and terms of large cap, are you looking at a company heavily exposed in germany? paul: global exporters would be among them. we don't make picks on individual companies. we are looking more at a regional approach and we would like those companies and countries that are most exposed to trade because we think that will be the mean beneficiary this better second half of the year. want to get your thoughts on investing in health care companies. paul: those have enjoyed
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strength in recent quarters. in terms of outperformance, that continue as some of those companies may have already had their benefits priced in, whereas we think the companies that are more leveraged to the global recovery and the u.s. recovery will have more sustained outperformance prospects. pimm: would you invest in oil or oil service companies at this point? not at this juncture. our research indicates you need to have a rebound in oil prices, at least better traction on oil prices to the upside before you see stock prices move higher and earnings will follow after that. in our research it really takes a year and may be a little longer for oil prices to really make that sort of a rebound. we have been looking for a retest of the lows and we have gotten it now. i don't think we will see anything in the $10 or $20
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range. i suspect in the coming months that we will see better balance in the markets and that could be the precursor to a better outlook for oil stocks. said you like large-cap growth stocks. how much are you willing to pay for them? the pe on the s&p 500 right now is about 18. paul: that is the median pe. we are also expecting further growth in the economy, further growth in earnings, and as long as investors have remained cautious we do not think there will be much exuberance. re-think you will see those multiple start to come down a think you will see those multiples start to come down a bit. pimm: apple fans, you will have to be patient. live tv service is delayed yet again. ♪
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olivia: welcome to the "bloomberg market day." pimm: it's time to find out what retailers are gaining -- after their -- julie: we have seen some rocking us this week after department stores came out with their numbers. it's a different situation for nordstrom today. after comparable sales beat estimates and the company raised its forecast for the full year. it has brought in new grants to its stores that are attracting younger women, things like top shop and made well, a j. crew brand.
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it has been aggressive getting into the online business that bought trunk club. both of those have been helping the business as well. comparable sales this year will rise 3.5% to 4.5%. then there is jcpenney. this company is doing less work. this loss it report it was smaller than analysts had anticipated and sales actually rose overall, up 2.7%. men's clothing has been doing well. at my to take a look bloomberg terminal and the longer-term trend for the company. we have seen a big turnaround in jcpenney. this is something we have been watching. we did see negative sales. they turned positive. the company's long-term goal is 6%. we will see if it can get there under the new ceo, marvin allison. i was reading a note earlier
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from sterne agee and charles graham over there and he says he was encouraged by ellison's comments on the call. we shall see. sticking with consumer discretionary but getting out of videogameetail, retail, gamestop's price target was raised to $58 from $50 at suntrust. the governing's second half software sales should benefit from good new games and strong sales of new hardware. you guys not big video gamers? olivia: huge. julie: favorite game? olivia: i am more of a nordstrom girl. i thought nordstrom was an interesting juxtaposition when you compare their results to what went on at macy's. revising down their forecast for the year,
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saying they see no sale store growth. pimm: a lot of it has to do with promotional issues related to west coast holdups? olivia: jcpenney is partnering with sapporo. -- sephora. let's take a check of some of the latest headlines. al gore is not running for president. despite a news report on the internet website buzzfeed, to .he contrary motors recalling 73,000 chevy cobalt sedans. may have been built with improperly routed side impact wiring that could prevent .hese airbags from deploying etsy is taking advantage
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of an irish business law. the online platform for artisans, craft makers, and small businesses is asking users outside the united states to accept a terms of use agreement with etsy in ireland. a change in registration allows the company to shield basic financial information about the units. google and linkedin also use the unlimited liability business structure in ireland. olivia: still to come, much more, including, it is the company behind stories you may like. delivers content recommendations to more than 550 million unique visitors each month. as the fed gets ready to hike rates it may be time to think about selling the greenback. how the u.s. dollar has performed before and after past rate hikes. bill gross finally figured out a way to execute what he calls his short of a lifetime.
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all that and much more coming up on the "bloomberg market day." patience. consumers who want to live television from their apple tv will have to have patience. apple scrapped plans to introduce the service this fall and is pushing back the launch to next year. olivia: apple does not have enough content deals in place and wants to offer a package of popular channels for $40 a month, about half of current bundles. jerry smith is a media reporter from bloomberg news and he joins us now. how significant is the delay? apple has been talking about rolling out a tv service for years. they are late to the game. it's not like with the iphone where they invented the category or itunes, where they changed the landscape for digital media. does it matter that it's late? reporter: this moment is critical.
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more and more people are starting to cancel their cable subscriptions. justice quarterly atv subscribers lost more subscribers than they have ever lost before. what is apple tv currently in what is this idea to offer live streaming television in addition to what you can get now? reporter: apple tv is a setup box you have in your home and you can watch -- pimm: you can watch television programming is any -- as well as any kind of movie you want. reporter: what apple is trying to do with this tv service is different. for $40 a month you would get 20 or 30 channels. the sticking point with the world'sd fox's of the
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price. apple wants to charge $40 for this service but at the same time they want to get as many channels into the service as possible. pimm: where would you get the connection to get the live tv? reporter: this would be a live television service. cableyou pay your subscriber for your internet connection and then you are going to pay apple for your tv and then you are going to pay netflix. olivia: you already pay verizon for a tv bundle and internet. pimm: if you get the tv bundle. cord cutting is people saying, i just want the internet. reporter: there's a lot of people thinking, maybe this $80 or $90 a month i am paying for cable tv isn't so bad. when you think about being a cord cutter you have to buy the internet, then pay eight dollars a month for netflix. hbo will be another $15. if you pay apple tv $40 a month
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-- it starts to add up and in some ways it might cause -- cost more than if you paid for your traditional keep -- tv service. olivia: is there any chance that cbs will go for that? reporter: programmers have a lot of leverage in these situations. there's a lot of people cutting the cord. these television companies want to have a new distributor that is a new source of revenue. not bean they afford to on an apple tv service that will be in next number of homes? -- an x number of homes? enters a when apple market, they are very influential. the tv programmers have to be careful because typically they sell bundles of 20 of their channels and now you are looking to sell 30 channels. not everyone's channels can get into this service. came intoen apple
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digital music they were able to tell the labels, we are going to sell your songs for $.99. there are plenty of over-the-top streaming service tv options. pimm: you have chrome, roku, amazon fire 6. olivia: it's called fire 6? reporter: there's google chrome. dish has a service called sling tv that is $20 a month for 20 channels. when apple enters this market, it is going to be competing with a lot of other online tv providers. thanks very much. olivia: you can watch a bloomberg television on an apple tv. still to come on the "bloomberg market day," we will go to
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uzbekistan. uzbekistan airways is adding a new flight safety measure. ♪
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airways isekistan introducing a flight safety measure you will not find on u.s. air carriers, at least not yet, probably never. the airline is planning to weigh passengers with their hand luggage before they board the aircraft. this is ruffling some feathers. it's not clear what will happen if you tip the scales while holding your hand luggage. it's not clear if you will be charged a premium for being overweight, but according to my notes, 44% of those over the age of 20 in his pakistan are uzbekistan are
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overweight. olivia: most airlines use an average, number of passengers, amount of bags. uzbekistan airlinesolivia: is ag people to weigh in before the flight. it does not affect how much it costs to travel. willently your identity remain secret, you will only be a category for men, women, and children. error some oh it does charge by the kilogram. omalia doesair s charge by the kilogram. we will have much more coming up on the "bloomberg market day." ♪
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pimm: let's take a look at some of the top stories crossing bloomberg right now. greek finance minister euclid
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suckle logos is in brussels to meet with his eurozone counterparts. they will work on the final details of the bailout plan. the greek parliament approved the three-year plan today after debating through the night. 's third bailout since 2010. the eurozone wants to make sure this $96 billion effort will succeed. the imf will look at that. pimm: debt-ridden greece needs the money for a big payment to the ecb due six days from now. euro area growth slowing. economists had estimated
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stronger performance. stagnation in france and weaker than expected results for germany, france, and the netherlands. germany's economy expanded by 4/10 of 1%. oil prices are headed for the longest run since january. u.s. oil futures dropped to their lowest level since 2009. agencyernational energy says the crude surplus will last through next year and since june of 2014 the price of oil has fallen 60%. coal mining, no. goldman sachs is selling a colombian mining operation at a steep loss according to "the wall street journal," but buying an online banking unit from general electric. the bank says the unit has deposits of $16 billion and
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offers an inexpensive source of funding. no terms have been disclosed and regulators still need to sign off on the deal. a surprise for those who are following new england patriots quarterback tom brady and his appearance earlier. brady was a surprise starter last night in the preseason loss of the visiting green bay packers. rady is fighting his -- fighting his deflategate suspension. those are your top stories at the moment. the markets are closing in europe. for the latest let's go to bloomberg's mark barton in london. it ater: let's call hangover from china's currency to preseason -- currency depreciation. euro area growth did not come in as high as expectations. the three big economies in europe missed their own estimates. lawmakers did pass
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the bailout but the attention now turns to a, we have a big referendum at the end of this month, voter confidence, after many members of tsipras' party voted against the measure today. finance ministers meet in brussels as of right now to possibly rubberstamp the deal. let's going on when it comes to greece. here are some of europe's biggest equity movers on this friday session. by 5.5%, biggest gain in europe today. french company that makes payment terminals. led by revenues from fees and commissions. penalties after a u.s. judge concluded it manipulated in 2000in texas back
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and eight. this is the your today performance. it fell over the week for the first week in three. an excuse to use the red marker. from there, the high of the year in april, the stock 600 through their club to date down by 7%. back to you in new york. coming up on the bloomberg market day, anyone looking for the dollar to surge after the federal reserve lifts interest rates has a short memory. with the coming rate hike as early as next month, is it time to sell the dollar? we will investigate. fans of apple, don't hold your breath. the company is pushing back the launch of its live television service. raisedrican flag was over the u.s. embassy in havana
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this morning. u.s. secretary of state john kerry spoke earlier. he is the first u.s. secretary of state to visit cuba since 1945. more coming up on the "bloomberg market day." week the securities and exchange commission adopted a rule requiring public companies to compare their workers' median pay to the pay of their chief executives. since getting that figure is slightly complicated, the sec allows for some degree of flexibility. the question is, will this leeway permit companies to game the system? laura mars nick is here with more. hasnd people what the sec said and what u.s. companies are thinking of doing. reporter: the point of the rule is to show how much a ceo makes compared to his median worker. we are not sure if this is something investors want.
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they finalize the rule last week. mary jo white comedy sec -- whit e, the sec chairman, said there is flexibility built into this rule. we know there will be room for some companies to move around that number. it's a matter of in what ways they decide to do it. he will vary by company. company.will vary by pimm: let's say a company has a large force of contract workers are workers outside the united states. 5%via: you can admit up to of your workforce outside the united states. you can admit contractors from your median -- omit contractors from your median number. theseabout nike or clothing manufacturers where they do rely on contractors for their manufacturing.
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they might have a slightly different numbers and another company. pimm: sure, because they have different inputs into the equation. what about the chief executives? what about at the chief executive level? pay is so hard to measure. you can look at it a million different ways. some of the flexibility comes in when you look at when and how companies will pay their ceo. if you are hiring a new ceo you might give him or her a lot of equity. options that are not exercisable at that time but might have a potential value of x. reporter: you want to load them up with equity so they have a stake in the company once coming on. a company has a couple of options. two different ceo's or time to transition where they calculate their pay ratio when
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the lower paid ceo was on board. there's flexibility there. these companies don't have to release this number for 2017. that companiese could frontload a bunch of equities next year or this year and have it and tend to pay a which casehile, in the reported pay going down the road will look lower. be a bonus payment for meeting certain company targets that you would not necessarily receive or factor into this equation. reporter: one thing we know about reported pay for u.s. companies is you have to give the value of what that award was, even though it does not pay out until they reach a certain performance level or a certain time passes. pimm: or a certain age. reporter: it's not very reflective of what a ceo is actually getting paid. pimm: i have a feeling this will
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be deserving of a lot of potential -- professional attention between now and 2017. thank you very much. still ahead, you ever click on those recommended articles that appear when you read something online? it is advanced technology and it works with publishers around the world. ♪
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pimm: let's take a look at the top headlines crossing bloomberg at this moment. fires are still smoldering at afterinese port two days
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a huge explosion at a warehouse. the blast killed at least 50 people, injured more than 700. officials say hazardous materials in storage containers sparked the fire. the force of one explosion equaled 21 tons of dynamite. shipping is crippled in this port city. it is the world's 10th largest port. of world's largest maker insulin may soon build a plant in the united states to produce the hormone. the company currently makes the diabetes treatment only in its copenhagen area factory. the company already has two u.s. plants that make other drugs. rain in california? perhaps. this year's el niño effect is the second strongest on record and u.s. weather officials say it could increase rainfall image route is stricken state of california. el niño is a warming weather pattern in the pacific ocean and in windte changes patterns and weather systems in
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much of north america. ever read something online and find a host of suggestions of what to read next? that is thanks to technology. company recommends online editorial and sponsored content to more than 500 50 million unique visitors each month and it works with publishers such as "the daily mail," "the chicago tribune." taboola's chief executive joins me now. great to have you here. what is the big news you announced this week? st: we always thought storytelling had the potential to be more than just the notion of reading a story. the concept of reading a story could drive the entire purchase, getting people aware of a product, making them consider it over time and down the product. today we announced a partnership
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over taboola would reach 120 million people on publishers ," and reachmagazine consumers that have high intent as a read products and stories on phones, and in our opinion be able to drive purchases. pimm: would this be something like you go to a ziff-davis website like pc and you say, i want to learn more about whether i should be buying video xbox 360, and you read the article, read a couple articles, and at the bottom you see this little thing that says you might want to read this, and then what? maybe you end up eventually at a best buy location. guest: we work with thousands of brands around the world and pieces million sponsored of content. we could choose the right piece of content that you never knew existed to hopefully drive you
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to be more educated about a certain product. pimm: how do you make money? i understand a company that would sell you the xbox would make money. we allow brands and publishers and marketers from around the world to send us stories they want to be discovered. think of the company that was born today, nobody knows of them. they tell us, we are willing to pay a small amount every time you are getting someone to com to our site to read it for the first time. on the other side of our business we work with publishers , ziff-davis as well, where we can connect those brands with publishers. do you make the money when the connection is made or do you make the money when the transaction happens? guest: only when the user clicks for the first time, similar to
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ad words in google. search was a great vehicle if you know what information you are looking for and you can type it in the search box. taboola is the opposite. we expect a future that is a web of one, a personalized world where information is finding us. instead of expecting people to go to search, how would the world look like if information were to find us in a personalized way? we are putting information you may like and we have a chance to generate revenue. pimm: i understand how taboola does the recommendation engine. that companies place a value on that actual consumer? the consumer that goes to a website to buy something has got to be more valuable than the consumer who just clicks because they are interested in the story. guest: that is the where the world is going.
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marketers today are trying to reach consumers with fantastic products and are trying to rethink what is the best way to get to the user. pimm: mobile is the big thing now. mobile and storytelling prayed on a mobile screen i will not click on a banner -- , on a mobile screen i will not click on a banner and buy something. when i read a story and engage in it, it is an emotional reaction. pimm: what percentage of the taboola business is just mobile? guest: 51%. pimm: that is the growing area? in 2012. were 8% this is going super fast. if you download the associated press or nbc news, within your there.oola will also be
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we take a big bet on mobile. storytelling works fantastic in a way that mobile is perceived. pimm: they also want you to take those photographs vertically, i understand. thanks for explaining all that he well done. still ahead, with a rate increase looming, some say now is the time to sell the dollar. why? ♪
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pimm: it is time to sell the dollar if you believe history repeats spread take the last three federal reserve rate increases. in the six to nine months preceding, the dollar strengthened an average of 9%. after the rate increases, in the following six-month period the dollar lost 6% of its value.
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with the federal reserve planning to increase interest rates as early as next month, is it time to sell? betty liu is here with more. betty: you clearly explained that. if you look at the last three in 1994, cycles we had in 1999 and in 2004, you would have thought the dollar actually would have gained after. people think, interest rates are higher, i will make more by having the dollar. currency least investors and traders, they are buying the rumor and selling the fact here, right? this timee even worse around because on average, the interest rate increase cycles have averaged about 2.25%. are time around we expecting the fed to do less and that, maybe 1.6 percentage cycle, givenis
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where the economy is, the fear factor about china, where oil prices are. that could mean that the dollar actually falls even further than what we have seen on average. in the past cycles we have seen it dollar, like back in 2004 dropped 9%, back in 1994 it was 6%. who knows? we might see a decline of between that range, 6% to 9% after the rate rise. pimm: let's say history does repeat itself. this would be good for u.s. companies. betty: that's right. fewhave seen in the last quarterly earnings reports, companies blaming, particularly multinationals, blaming the rising u.s. dollar as big headwinds for their bottom lines. you might see that this becomes a headwind no more, may be dollar becomes neutral to companies' earnings
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in the succeeding quarters. don't bet on the dollar rising for sure. pimm: thanks for a much. let's go to julie hyman in the newsroom, who has making news. julie: we are learning from "the wall street journal" which is importing that john paulson's company is said to buy shares in perrigo, the drug. why is this significant? it is because mylan is in the process of trying to buy perrigo. it is an unsolicited offer. perrigo has been resistant to that offer and there has been a lot of date -- debate about whether perrigo should reject the offer. the latest is that institutional shareholder services came out and said, mylan investors should vote against its quest to buy perrigo. two other shareholder advisory firms recommend that's mylan
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investors endorse that deal, a $33 billion offer. perhaps if paulson is taking this stage, he could nudge perrigo in the direction of taking that offer from mylan. that is something that could be happening. theill keep an eye on developing story and bring you more details when we have them. quick look at how the major averages are performing right now. we have had a mixed picture throughout the day and that remains with the dow and s&p higher. in the red.emains joining me for today's options inside is a traitor for -- tr ader. it certainly feels like a summer friday here, doesn't it? are seeingng if you anything interesting happen in the options market on the macro level. a quiet day today and
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we are ending the week pretty much where we started, despite huge intraday moves. we are seeing big bearish protection being brought in the russell index via put spreads. this is showing us that traders are concerned. i think that all has to do with uncertainty of rate hikes. julie: the russell's under par the -- underperformed the s&p. set to report earnings on tuesday. shares were up 15% year to date. we have seen mixed results from retail thus far, but you are pretty optimistic going into the numbers. absolutely. the stock looks fantastic on a chart. this time around they are implying a four dollars move. they don't have exposure to overseas currency headwinds.
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most of their operations are here. i'm looking for a call spread play. the 121, 123. 3-t0-15 i can get almost for my money. julie: construction supplies one of the areas where we saw an increase. jim, we will be watching those home depot numbers on tuesday. thank you very much. stay with us here on bloomberg. we have more "market day" coming your way after the break. ♪
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pimm: good day. none :00 a.m. in san francisco, new in new york and midnight in hong kong. betty: welcome. from the butter cow to deep-fried other, that iowa
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state there is the place to be for presidential candidates. we will look at how they visits may impact the iowa caucuses. pimm: in the summer heat, is stored bond -- and historic bond between the u.s. and cuba. the stars and stripes raised at an embassy in havana after 50 years of hostility. betty: a new miniseries for hbo about the fight over public housing in a yonkers. we will speak with producer david simon. pimm: good afternoon. i am pimm fox. betty: it is friday. i am betty liu and let's take a look at how the markets are trading. a weekly game for the s&p 500 but a volatile week so far. we take a look at where the s&p 500 was


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