tv Bloomberg Markets Bloomberg August 17, 2015 10:00am-11:01am EDT
as the bull market run its course? an faa glitch is being blamed for the cancellation of up to 6000 flights and 7000 translations over the weekend. could a software program be to blame? olivia: donald trump overshadowed literally everyone at the iowa state are including hillary clinton. he began to lay out his plans. the details which are not sitting well with some. good morning everybody. i am olivia sterns there with my buddy. wheretake a look at markets are at this hour.
stocks are moving slower. s&p 500 off my half of 1%. low volume of their. if you companies have -- a few companies have reported earnings but not enough to move the needle. matt: the dollar this morning -- i do not see it here. i see a euro and yen. 4.u can now buy about 6. not a big change from leslie but it did not slide over the past week. royaled. markets that the u.s. that's last week we were
up in the week before we were down in the week before we were up. olivia: we are prone to hyperboles. the big story is the dollar strength. putting pressure on commodity producing currency. we saw a big drop in the turkish lira. the economy and brazil was predicted to contract in 2016. the brazilian off against the u.s. dollar. now let us take a look at was making news this morning. thearget, cfo will become chief operating officer of the retailer. it has worked at target since 1996 and spent the last several months as interim ceo. targets new cfo will be kathy smith. she has been the executive vice president at express scripts. a key measure of factory output unexpectedly fell this month the
lowest level in more than six years. the new york fed says empire state manufacturing index plunged to a reading of -14.9. that indicates the factory is shrinking. matt: the federal reserve releases minutes from its meeting that may shed light on the timing of the first increase in interest rates since 2006. fed.don't know about the i don't think the fed knows about the fed. they do not know what to do with a stronger dollar and a weaker oil. matt: he also said he sees a huge boost in consumer spending coming while people begin to accept the fact that the lower price of oil is imminent and not a temporary shift in the market. americans are waiting longer than ever to buy their first homes according to real estate data firm zillow.
it is more than twice as long as 1970's.renters are having a tougher time saving for a down payment . qvc is buying zulu. toresents a 49% premium where's the lily" friday -- where zulilly closed friday. olivia: apple's project may be closer to hitting the road than first believed. the guardian newspaper saying the company is building a self driving car and is looking for testing sites. google driverless cars already being tried out on silicon valley street. apple is not commenting on the new report. those are your top headlines this morning. that is pretty cool. matt: that is pretty cool. there really is not a heck of a lot going on this morning.
i normally try and sensationalize. olivia: everything. matt: there is not a lot of news this morning. olivia: the apple wireless carts critical. matt:? we have been talking about for months and months. it is not a solid piece of news. olivia: we don't want to deliberately underwhelmed the audience. matt: there are days where this happens and today is one of those days. coming up next on the "bloomberg mayet day," millennials become automaker bread-and-butter. thatesearch is revealing china'sstill ruling market. there are people drumming of optimism for stocks are probably those who make money when you buy stocks. could los angeles pick up the bid for the summer olympics? it is gaining support.
l.a. for want to go to an olympics? olivia: no. matt: i feel like it is already such a pain to deal with los angeles. olivia: the traffic. matt: if there is an olympic games there -- olivia: questionable whether hosting the olympics translates a real economic growth. stocks firmly in the red this morning after ending last week with slight gains. the s&p is up 2% this year, by hedge funds to oversee $550 billion spent the past month and on trades that would profit from equities. matt: how should you be investing your money right now? joining us to discuss from his office in new jersey is chad. welcome and things for joining us this morning. sentiment has turned negative. even if you have stopped only
was it a little bit of gain your today or move sideways. it seems everyone who does not make money off of people buying stocks have soured on equities. chad: good morning. absolutely. the deceleration of global growth is will reported. growth is at 3.3% to 3.5% in 2015 and then expanding. we take a little exception to that. within global growth today is around 2.75% to 3%. it is all based off of the china growth engine that has blown a tire. you are starting to see that affect iq reported earlier in your last segment. oil prices are below $50 i a barrel. atres in the u.s. are stuck $25.
valuations are at the high of historical range. matt: you think it is going down to 30. that is a dire situation for a huge industry. how does that play out for the americans? a money manager, you want to move up the quality spectrum. when it comes to the base income market, you want to stay away from high-yield. we believe the oil and gas segment is going to go through a cycle here where you will have to watch these take place here. that will open up the seam of opportunities. doesn't mean we are looking for a stock market crash in any way but we are looking for a little return, not only within the
markets but also within the fixed income markets. olivia: you sent over some stock picks. why do you like consumer discretionary and why these beverage companies? chad: with a low volatility companies in regard to companies willare low beta outperform over the next 18-24 months. pepsi, dr pepper, budweiser, and even hershey's. these are consistently going and consistently profitable. their dividends are going to be increasing at a rate of over 10% a year. we think you can get a percent to 10% total return in a market that is probably giving around 4% to 5% total return. matt: anything outside of the energy industry you would not touch with a 10 foot pole? chad: materials as well. portfolio, we have a tremendous underway there.
anything tied to china trade or global growth will take the rest of the next correction. the dramatic yield is deceleration of global growth. with that said, china's deceleration. we do not think it is a 7% handle on gdp. would think it is more along the lines of 3% to 4%. that is going to affect the demand curve for not only oil but also base metals. olivia: we will leave it there. thank you so much. matt: coming up on "bloomberg a computer can affect as many as 6000 u.s. flights over the weekend. problem is the exact cause is not yet known. more on that next. ♪
olivia: good morning everybody. i am olivia sterns. matt: i am matt miller. hyman with ajulie look at what is going on in stocks. i will start with one of the companies he loved to talk about. julie: tesla could an interesting upgrade this morning up by 4%. it has been upgraded to the stock price target. it is a pretty incredible one. morgan stanley's and jonas is raising his price forecast to 465 from 280. notice the start right now is that about 253. matt: is that a 12 month price target? julie: think so. matt: or someday in the future? julie: there is a very good question. matt: they are mostly 12 months.
julie: they tend to be. that is the default. that is i was assuming. it has to do with tesla mobility. you have to read between the lines to figure out exactly what he is talking about. essentially, is talking about automated driving that would be owned by multiple people. is ofaring economy, people would buy a car that drives itself. this is based on not really anything the company has set. has talkedsays tesla a lot about technology and software car self driving cars a will be good at it. matt: i know adam is one of the to analysts in the auto industry. he also talked to elon musk a lot. it is not like he got a press release and surmised this from that. elon.eaks a lot to view
olivia: it is bananas. julie: i have the stock price versus the average price on the market which is 305. that puts the 465 in perspective. here is tesla and here is the target price. analysts have been pretty optimistic about where tesla is going. between theshrunk two as the stock has risen. is 305. this, 3 kinds pharmaceuticals. it's doing a clinical trial of non-hodgkin's lymphoma. there was a debt in that trial but an investigator said it did not relate to the treatment itself. the stock had been declining on that. now that it has made a commentary, the stock is getting a pop of 4%. olivia: thank you so much. matt: kite is a great name for a
farmer company. olivia: why? matt: it is up there. olivia: ok. if you are on one of those drugs. thank you julie. wase is a report that at&t more deeply involved in you is surveillance programs that have previously been disposed. edward snowden described at&t's relationship with the nsa as highly collaborative since 9/11. phone companies have been compelled to turn over user data. switching to mainframe computers that use an open source line. the mainframe is one of its signature products. and is expected to help the company sells software and services. martha's vineyard needed a little secret service over the weekend. president obama and president benson -- former president
clinton played the greens there. the obama's and the clintons celebrated the birthday together on saturday night. both looking pretty trim if i may say. matt: looking good. olivia: looking good. matt: there is a lot of humidity. are those mom jeans? u.s. flights are still going back to normal after saturday's air cap a computer system failure forced hundreds to be canceled and delayed. some say it caused 492 delays and 476 cancellations according to the faa. according to others, those numbers are much higher and bigger. with more on what caused the massive delays and how big it was is aaron levie.
sorry, alan. excuse me while i apologize for that. the concert is this can be manipulated and made to happen again. apparently what happened is the faa was upgrading the software on the system. the system is a real critical piece of the national airspace system. they were trying to add some functionality and the new software had a bug in it and that took the system down at this one facility. the good news is that suggests there is no inherent flaw in the system. eram is the system and it has no problems going forward. matt: how many flights that this actually take out? we are hearing 700 from the faa, but we are hearing 6000 from
flightaware.what is the real deal? counts everyware single delay in the u.s. and flights heading to the u.s. one 500 or so flights get delayed, they are delayed through the rest of the day as they try to catch up. i think it is reasonable we had about 2000 and 4000 total delays as a result of this. is probably a good guesstimate. it is hard to say exactly what the number is. olivia: can you explain with this upgrade is and why is the software more efficient? what improvements it will bring. alan: for years, the faa was operating on 40-year-old computer systems that were really prone to failure. they were slow. that aree computers
slower than a 30-year-old laptop in some cases. they upgraded the entire system. and allows them to move to satellite navigation. they are slowly rolling out things like text messaging to pilots. that would not be possible unless they did the upgrade. it is the underpinning for what is aown as next gen which $40 billion effort to upgrade the entire air-traffic system over the next 20 years or so. matt: this will make things a lot safer in the end i am assuming. alan: they are already pretty darn safe, but it probably does add some additional level of safety. that will improve efficiency. one of the interesting takeaways is as he avid technology, you also make the system a little more dependent on technology and maybe a little fragile. it will be interesting to see going forward. we have had two or three
meltdowns of the system in the past few years. it is probably less than the old system, significantly less. nevertheless, it is a fragile new technology. olivia: always a delicate line to walk. thank you so much. alan: thank you. matt: still ahead, millennials seem to shun public transportation and all for luxury -- opt for luxury instead. ♪
is one after 1980. olivia: the technical definition. matt: so long ago. olivia: it was. that is just the definition. i am not saying i was young. it seems millennials are opting to take out cheap leases just to drive luxury cars. this is according to edmunds.com. when i saw this i scratched my head because i sa the stories we always do millennials are they are broke but they are apparently leasing luxury cars. matt: i think a lot of people for a long time have assumed millennials would not buy cars because they are connected and would prefer to hitch a ride in a self driving tesla at some point through the streets in san francisco. it turns out they want to buy a car, they want to spend less money, and they want a better product. so they wait longer and are more finicky.
if you look at the survey, among the top 10 brands purchased by millennials, there are a lot of luxury brands of their. lexus comes in at number three. jack ma number four. jaguar at number 5 -- number four. ura at number five. olivia: by millennials taking on more debt to lease luxury cars? matt: they are compared to all buyers. 70% are leases by millennials. cars more than a pool of all buyers, but they only dropped 3000 on the down payments and $299 a month.
it is difficult to find models for that, especially among jaguars. olivia: right because we are out of money still paying student debt. is it surprising? matt: not all. like a phone. you do not want to have your iphone 4 forever. the new phones are getting better and better and they see the same thing going on with cars. carmakersxury -- received has a cla that millennials love. they do not care about the engine. olivia: we will leave it there. matt will be back but that does it for me. matt: we will see what the other side of the break. ♪
shopping district. 80 are injured. has been the scene of political protests. in china, authorities say 114 storagethe chemical was. weakness in how hazards materials are transported and stored in china. it is the company's biggest source of cars in china. and unusual development in the aftermath of an indonesian airline tragedy. the wreckage of the plane was spotted on the mountain side that was carrying 54 people and cash worth nearly half $1 million. the money was for families and eastern province. searchers have found the propage of a commercial jet that appears to have crashed into the mountain. there were 54 people on board.
that plane lost contact with air traffic control while flying in cloudy weather. germany's chancellor angela suggesting she is desperate it release. injuries,gard to there is -- we definitely have room for movement just like we had with previous times. we extended maturities and we moved forward to reveal the race. but that isssible, a clear statement the eurozone cannot allowing other haircut. she said she is confident the imf will join the bailout effort. those are some of the top stories we are following for you at this hour. i want to take a quick look at
the markets because they have staged a bit of a turnaround this morning. s&p still in the red for barely compared to the have presented as we saw earlier today -- to the half percent dip so earlier today. nasdaq is unchanged at 5049. coming up, it is porkchops on a stick. presentsonald trump's translate with voters? jeff bezos is on the defense today after a scathing new york about how tough it is work for his company. china's ipo market may have been poised for a comeback. 600 come back to waiting for regulatory approval for shares on mainland exchanges. china analysts and it right end of the year we will start seeing ideal approval after they were
suspended in july two and a $4 trillion stock selloff. thes bring in gordon chang, author of the coming collapse of china. understand first what the situation is now on the chinese stock market. they suspended thousands of stocks. some of them i believe that opened up for trading. they are still holding the stocks unless they decided to buy more. what is the story right now? gordon: i think of a story right now is the shanghai composite has increased by 13% in july. the reason is the chinese central government has put something like $80 a hundred million to one trillion in the market. they are about 4000 level of the shanghai composite. their target is 4500. yes it probably will get there,
but it is not a real stock market anymore. it is not functioning like a stock market. matt: surely chinese officials must understand how real markets are supposed to function. seems odd for them to set the market. how do they defend this market or discuss it among themselves? is a matterthem it of the legitimacy of the communist party. they have had stock markets in the people's republic for years and they have not gotten better in terms of organization. yes they look like our stock markets. now they only go up because of the government. but i think this is a problem because as functioning stock market, you need to have an open system. that cannot and china because the communist party will not let it. that will be the issue. you can buy but you cannot sell. the criminalized selling in china these days.
matt: what is the effect on the average person in china? i hear some people saying the average persons well is 10% -- person's what is 10% comprised of equities. i heard 10% are only exposed to the stock market. gordon: only the very wealthy are the stock market, but recently you have a lot of middle-class and even very poor people coming to the market because they saw it rise from basically a year ago. they thought it is a one-way bet upward and you cannot lose money. that is what has made this political because you have a lot of people who stand to lose substantial amounts. because of that, we have seen consumption hurt. not only a luxury cars not being sold because of the stock market failure, but also midsized cars are suffering problems right now because people put their savings into the stock market and now cannot afford to buy cars.
matt: surely the long-term view has to be that consumption will expand. you have one billion people and more and more moving into the middle class every year. they have to buy vehicles, right? gordon: maybe yes, maybe no. we have a chinese economy that's plunging. it is not growing at the 7% they claim. it is probably the 2.2% they talk about in beijing privately and can be even less than that. the one thing is that this trend is down. they are not as your percent growth today but they will be there into a three months. that is not a good story for consumption. matt: what does that mean for the rest of the region? kind of effect will that have on the rest of asia? gordon: is already having an effect on australia because they have an economy that is dependent on selling iron ore and other commodities to china. you are seeing problems in taiwan, malaysia, and a number of other countries that have been selling semi process components to chinese
manufacturers. then there is the currency war. because of evaluation last tuesday, we have seen the downamese force there is which is that because this was an active intervention but also you have seen australian dollar and others falling largely because of what is happening in china. the other big brea victim to south korea. matt: what does this look like at the end of the year? without about the fact that ipos will probably be back on the table at the end of the year. gordon: maybe. that is a very political decision. it will be made based not so much a market fundamentals but what it means for the communist people and atain party because this is an intense fight among them. whether we have ipos or not, i do not know. i think it will be not so much of an economics decision but one based upon the fortunes of particular leaders in the central bank and the regulatory
commission. matt: apolitical payout. gordon: yes. they talk about people getting fired and maybe a premier losing his position at the next congress. these are things hard for us to understand. if you went at market fundamentals with the market going down, i was just we are not going to see a resumption of ipo's in 2015. matt: thanks so much for your time. i appreciate it. we go to des moines, iowa, where presidential hopefuls are clamoring for attention and eating pork chops. that is next. ♪
matt: welcome back. we are one hour into the market day. it is time to get you caught up on the market action around the world. we will kick it off in asia. >> the chinese economy likely 6.3%.t we contrast with the 7% growth from the government. the official full-year target is 7% of those same economist have 2016 growth at 6.6%. china's economy is heading for its lowest of annual growth in a quarter-century but the discrepancy forecast helplessly my policymakers have stepped up stimulus. the economy may be in worse
shape than officials are reporting. to manus let's go cranny in london for a check of european markets. results on the chinese full or us down with the data you just released. we have a mixed position. the u.s. manufacturing and data as exhibit of a shine off it. lower than a 30 day average. on board, that is the message we are hearing for bailout number three for greece. depositors will get a free ticket. depositors in greece, that is good news for you. bondholder, senior that is a different story. beware. that is where the risk is in the big market. a couple of interesting names i will frame for you in terms of
stocks and positions. this is the european company that ge may well get a hand on the energy business and assets in new york. that is what they want to hear. alstom -- --and on they get their hand on alstom? airbus had a big order today. you are talking about an order from indigo. 250 new planes. $26 billion. julie: let's take a look at what is going on in the u.s. stock market today. a couple of economic reports showing conflicting items about the u.s. economy. manufacturing in the new york area slumping at since thest pace death of the last resumption. homebuilders confidence the
highest in almost a decade. all of that is equaling not much change in major averages. if you compare volume right now in the s&p 500 with the average of the past 10 days, it is 26% lower. just something to consider as you look at the action today or lack of it. take a look at the matt salmon bloomberg terminal of the various sectors of the s&p 500. hit.y taking a you get the mixed picture we are seeing today. let us delve into the commodities because we are seeing oil continue its sl ide. trading down another percent or so. iran says once it starts pumping fully, open production will be at 33 a barrel. that supply not good news for the energy markets. gold is on the rise today,
holding and extending the gain we saw last week, the biggest weekly gain in two months. with the cello evidencing in emerging markets, we are seeing some investors look for relative safety. the dollar continues his rally. that happened ever since the chinese the valuation last week. it is a a quarter of a percent. matt: figure so much -- thank you so much. a short sharp earthquake rattled the san francisco bay area, but there are no reports of injuries. before 10 magnitude quake was centered just north -- the 4.0 quake was centered north of san francisco. uber is beefing up its security team in a push to defend against hackers and attacks on his office and employees. by the end of the year, uber will quadruple the size of its security staff. this that will be in charge of
everything from data security to vetting driver backgrounds. donald trump is taking a break from the court of public opinion to go to court. he reported for jury duty in lower manhattan a short time ago. he said last week he would want to take a break from the stumping on the campaign trail to into the summons. presidential candidates dissented on iowa. john heilemann got up early to tell us about it. from where you sit and from where we sit, there are two trail. on the donald trump and bernie sanders. is that what you are seeing and i what is well? >> trail. i want to tell you i got you a gift from the iowa state fair. ready? baloney on a stick. matt: that is better than a pork chop and healthier. >> you'll enjoy the efforts are. -- you willton
enjoy that for sure. donald trump overshadowed everything with his sort of willy wonka-ish appearance with his helicopter. and clinton was on the fairgrounds and everyone near looked at in the skies and said it is trump. he is overshadowing everything. bernie sanders spoke to the biggest crowd anyone has seen here at the state fair soapbox, doing his patented anti-oligarchic ad. matt: as far as hillary is refuses toshe still answer your questions about her e-mails and servers and all of that. it doesn't look like this story will die down anytime soon. >> not with the fbi involved. by every reckoning we can make
out that we can discern, fbi seems to be taking a very serious approach to looking into this. ofhave had news last week the possibility of a second e-mail server with all of her private e-mail backed up on it may be somewhere in new jersey. the fbi is looking into that. with the fbi on the trail, that guarantees this is a serious thing and something that is not going to go away soon. matt: she can deflect pretty easily right now just by trying to link other republicans to donald trump's immigration plan, right? >> yes. she has lots of places to go in terms of deflection. she is attacking other republican candidates regularly and with gusto, but these questions do not go away. she is increasingly defensive and evasive to a lot of people. at some point, there will be a result of these investigations and the congressional committee
is looking into this but also the fbi. at some point, to have to answer these questions in a direct and forthright way. the question is when. ohio andr the votes in new hampshire, the worse it could be for her. donald trump's immigration plan seems to play well with conservatives outside of washington but it does not seem like any politicians agree with that we need to do for 11 million people -- deport 11 million people. john: the question is what will you do with the 11 million undocumented workers already in the country? he is not only suggesting deporting them but also some people who have already supposedly been granted citizenship, children of the dreamers. he wants to send them back to mexico and then find out which ones are the worthy ones and bring them back. it is not only a draconian immigration policy also an extra nearly expensive one to implement.
i cannot imagine anyone else who will be behind it. trumpople who like donald will likely the immigration plan because it speaks directly to their concerns and is consistent with his foster he had on this posture he had on this issue. matt: let me finally ask you, was he really taking random people up in his helicopter for joyrides? john: i did not get that question. say again. matt: he was taking random people from the fair upton up is helicopter? john: he did nothing when a people. you took your friend mark and martha from nbc. it took a few rides up with you got it because they heard he was giving out helicopter rides.
the helicopter took some of those kids without trump in it. they were not random. they were trumped fan fans. it was a magical experience for those who had it. matt: got his. a magical experience for some voters. day, ahead on the market the city of angels. some of the country's biggest celebrities -- it is now hoping to become home of some of the world's best athletes temporarily. ♪
stand a chance this time around? , aning me now is harvey former u.s. olympic committee executive director. you have a long list of a congressman's and i appreciate your time this morning general. what do you think about this l.a. bid? is the public support behind it? do they have a chance of winning? referendumspublic and tests they have done show it is up to 81% support compared to less than 50% for boston. they presented the international olympic committee three things. one is stable government, security, and the ability to activate sponsorships. when you combine all of those things, they will be competitive. ris hisis back -- pa
back and i think they are a formidable opponent. matt: we constantly do stories on the olympics turning out to be a bad thing economically for cities that host them. when you think about that reality? is usually ends up costing more money than it brings in. harvey: i think l.a. turned it around. the state of california and the u.s. olympic committee gained by that. atlanta proved they could make money. you have to take out the kind of federal support most of the games need for infrastructure. the case for los angeles is they have the places in place. i think in their particular case, i doubt it would be an issue. matt: let me ask you about the traffic issue because every time i go to los angeles, i spent hours a day driving back and forth between people who live far away and are separated by millions of cars.
how would los angeles deal with transportation? harvey: in 1984 it was a fear and it never occurred. people are smart about where they go and don't go and they see with the venues are. i think every city has been able to react in the right way. i doubt transportation would be a problem in los angeles. they have had the experience of 1984, it was not a problem then. matt: thank you for your time. commercialup 35 commissioner and u.s. olympic committee executive director brigadier general harvey schiller. coming up, forget the fragile five. you may have to worry about the trouble 10. ♪
happening at what's would equities and oil as it continues its decline. bit: yeah, we saw a little of a turnaround as stocks were down more than half a percent today. let's look at the major indexes right now, because we saw a recovery on the nasdaq. now we see recovery on the s&p and dow jones industrial average as well. the s&p off 17 points -- down, what? half a percent at the open? matt: that's right. the nasdaq fell. now we see stocks up across the board, but very little change, as has been the story over the past few weeks. not the same story for crude. yes, crude down about 4/10 of a percent. it continues it slide. brentlook at rents -- crude. nominally higher. nymex crude -- a
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