Transcripts For BLOOMBERG Bloomberg Go 20160129 : vimarsana.

BLOOMBERG Bloomberg Go January 29, 2016

Took pictures of it. The u. S. Is not commenting. It is the latest Close Encounter between iran and the u. S. In the gulf. Earlierlors were held this month after iran said their boat drifted into its waters. Thema Administration White House will ask private companies to submit salary data to the federal government. The plan being proposed would affect all companies with 100 workers or more. For every dollar men earn in the u. S. , women earn . 79. That has risen to sense since president obama signed the fair pay act. And the show must go on, even without donald trump. Leading candidates squared off last night in the seventh debate. Trump sat out because of a spat with fox. Marco rubio it is not about donald trump. This campaign is about the greatest country in the world and a president who has systematically destroyed many of the things that made america special. Trump attended a fundraiser for veterans elsewhere in des moines during the debate. Monday signals the start of president ial voting. I am vonnie quinn. Markets now with julie hyman. Story has toggest be what happened to japan overnight. We are looking at honeywell because the stock i thought it was going to be higher premarket after the company came out with earnings that matched preestimates. Aerospace sales rose. We are waiting for sales in American Airlines in a few minutes. The big story of the morning is the bank of japan unexpectedly coming out with a negative Interest Rate, unprecedented in japan, perhaps taking a cue from what has happened in europe. We are seeing the dollar rise against the yen. That is the chart we are looking at. In the japanese market, you have to Pay Attention to what is going on with government bonds. The 10year yield falling to the lowest ever, getting as low as 0. 09 at one point during the session during the wake of this policy decision. If you look at the Ripple Effect to the equity markets around the globe, lets start with asia you see the nikkei up 3 , with quite a volatile session, climbing then plunging then climbing once again in the wake of that policy decision. Alsoopics the top picks rising. We saw gains as well. It looks like this Ripple Effect. For european stocks, are we seeing a Ripple Effect there . It is more muted, to be sure. You can see the other european averages trading higher, certainly not getting the same magnitude as we saw in asia. As for u. S. Futures, we are seeing something of a lift here in the United States. The magnitude not quite the same as it was in asia, but we also have earnings to cue off of. Amazon disappointing yesterday, microsoft up, so a mixed picture on the earnings front and we will get more numbers this morning. We are waiting for American Airlines, which is still not out. Finally, a quick mention for oil. Oil has had a volatile session. Yesterday we saw oil rally for the Third Straight day on the hope that russia and opec producers would be meeting next month to hammer out some sort of Production Cut plan. However, Russian Energy ministers sort of walked back on commentary yesterday, that a meeting was in the works, saying there is no meeting in the works yet. We want all ministers to agree on a couple for something happen s. David lets turn back to the policy changes coming out of japan. Joining us is bloombergs francine lacqua, who just spoke with japans centralbank governor kuroda. You set down for an extensive interview with him a week ago. Did you see this coming back of the rest of the world did not. Julie i did not no, i did not i spent the day kicking myself that i did not. Thursday morning, governor kuroda goes in front of his parliament and says they are not debating relative rates. He has just said to the parliament that they are not looking at negative rates. Unlikely, almost impossible that they will go around to that. Whatyle zimmers economists and investors are saying now is that when he spoke to parliament, it was before mario draghi spoke about more qe. Given the signals over the last couple of days, possibly coming from political pressure, he decides with his board although it is a close vote that negative rates are the right way to go. He would doid whatever it takes, but we were talking about qe, not negative rates. on the kuroda necessary,rend, if we can expand or further strengthen qe in many ways. There are many ways to further strengthen, expand qe. Francine it was very clear from the interview last friday that he was ready to do what ever it was necessary to reach the target of inflation. We did not know at the time it was negative rates, but at that time he thought it was the best option. I guess they are experimenting. Stephanie does that mean we will see more aggressive action . Francine that is exactly what he implied. Governor kuroda saying he will possibly cut rates further into negative territory if he judges that necessary. It is important also to look at because it is close. When you look at what we heard from the people who were against this, some members saying it may imply that the boj, but cutting rates into negative territory may imply that the boj has a limit on asset purchases, which would be negative for the market. It was balanced, but the fact that it is such a small cut and that the system is quite complicated would suggest that they are just experimenting, testing the market at this point. Francine points to the ecb and mario draghi as a participating as a precipitating factor. There was negative information coming out of the poor economy in japan in december. Is that a fact here . Is certainly is a fact. There are some signs of slowing sentiment in japan, and they are worried about putting a floor under expectations. I want to add to what we have just heard. I think this thing is mostly theater in terms of direct effect on the economy. Negative byve gone the merest sliver, but it is very effective fear in the sense that people did not see it coming. Becomingkuroda is adept at giving the market a jolt in the right direction in terms of inflation expectations, whenever he can. The problem is that the actual instruments directly operating on the economy are spent, and i am not sure i agree with what he said when he said there are many other places for qe to go. It is hard to see that there are many other places for qe to go. That is Mario Draghis problem in europe, too. Stephanie you were in japan a long time ago you were in japan it while ago. What do you think . When you think about japan, yenta, car sales, a lower is as good a stimulus as any for the japanese industry selling more stuff, and what led the industry parade, if you like, in 2015, Consumer Discretionary goods. This is a stimulus. It is working, and it is understandable why the stock market is enjoying, for the moment at least, this policy shift. David we have seen reaction in as clivets, but pointed out, if you look at the practical effects, first of all it is only. 1 of 1 down. And it was only for new reserves. It seems like more of a symbol than anything else. Is it really going to affect the economy . Francine you are exactly right. In europe are saying it is a symbol but it is an important signal. Is really nowa looking at all possibilities. We will have to wait to see whether this has some real impact on the real economy, but it is a psychology. As matt was saying, this is about yen strength. They need to get yen lower, and one of the most important plays that we saw affects what strategists are doing. If you look at Central Banks around the world, we know where the fed is headed. The real the virgins may be but the real divergence may be between the central bank and maybe it is just governor kuroda trying to send a message out to fx strategists. I wanted to put a fine point on the idea that this was unexpected by market disciplines. The redistoric line is the function and the green line is the current implied probability. This is the zero line between negative and positive rates. So obviously Interest Rates swaps and japan, we are pricing in a slightly positive Interest Rate, but a positive Interest Rate nonetheless, so now it has had to adjust your medically given this movement by the bank of japan. Stephanie we are talking about the psychology of it all. You talk about the theater. Why was it so close . Clive paradoxically, the fact that the vote was close strengthens that it was theater. Suspects almost that it was deliberate, but i do not believe that. But the fact that it was so close and unexpected increases the psychological power of the move. Good for corona good for kuroda. Theater manipulation, the market psychology, is about all the Central Banks certainly the boj and the ecb it is really all they had left. It will be interesting to see how quickly diminishing returns said in on this strategy. What mario draghi said last time let the markets to expect action from him next time, but what has he got . What can he do . Mere words, mere symbols are not what will be effective next time. He has to produce something and it is hard to see what that can be. Stephanie clive, thank you. Our own clive crook, joining us from d. C. Ncine lacqua in washington washington, d. C. . In london. It is hard. It is friday. Remains. Ler we had big earnings this week. Amazon down big. 10 premarket. I do not even call it an online retailer. It is just so much bigger than that. They missed big on earnings. We will dive into the numbers and asked the question, is this a moment where investors are going to suddenly say, jeff bezos, show me the money . We will be back with more. I cannot speak today. You are watching bloomberg. Vonnie welcome back to bloomberg. This morning the Russian Central Bank may tighten policy if inflation risks intensify. The current rate will stay at 11 . Slumpedays oil has below it slows year ago. Toyota is buying out its , making a key unit for small cars sold in Southeast Asia and japan a fully owned subsidy rate. Automakers say it is driving costs from tougher environmental standards, and the challenge of slower global sales growth. That is the latest Bloomberg Business flash. Bighanie amazon is down after missed expectations for the holiday quarter. Paul sweeney is in the house, and shelly banjo joins us. Of course, gadfly, our new fast commentary section. Paul, when we look at retailers and the poor numbers they had first of all, are those new glasses . Paul they are. Stephanie they look great. They blame it on amazon. They say we would have done better but amazon is killing us. If amazon is hurting, what does this mean for everybody else . Top line was good for amazon, so they are killing it on the top line and they continue to take share. We saw that on ebay. Story remainsline very strong. But what we have again is a little more of jeff bezos and is basis, spent now, pay later. We had some good Profit Growth coming out of amazon. Investors said this is a profitable business. Stock traded up. Investors extrapolated that lower level of spending out to future periods, and jeff bezos said, no, we are dialing back up the spending. This shelley, how much of is increased costs . How much of it was the increased cost at the end of december, making all of those sameday deliveries and overnight deliveries. Lly they said we are spending more money to get things to people faster. They moved prime into 25 different markets, so they are focused on that. But to pauls point, they are doing well. It is just misunderstood by the street because amazon is days, back in the olden how many topline dollars flow to the bottom line . Shelly they do not care about the rules. They can make profit if they want, and they did show a couple of quarters of profit, but they are saying we do not really want to and we will use it for other things. Stephanie why is that misunderstood . If i was terry lundgren, running macys or bloomingdales, i would say, are you kidding me . I have activists knocking on my doors, where are your margins . But jeff bezos says the investors do not understand. I spoke to jeff bezos yesterday and he said there could have been more comfort on Earnings Calls. That is not what investors are there four. David barry diller said this would be the most Successful Company in history and jeff bezos would go to number one as far as the richest man in the world. What do you think . Matt i do not think that is that far off the mark because his company is disrupting. It is creating this endless ill of limitless choices, and that is such a powerful commercial strategy, which is what you are talking about right here. He is not letting up. He is pursuing this. Stephanie when you describe it that way, if i close my eyes, that is what walmart was it walmart first came onto the scene, it was, we have never seen this before and it is incredible. If you invested in walmart from the beginning, happy days. You are shopping at neiman marcus. Matt i baked to differ. In that comparison i beg to differ. In a comparison, walmart is bricks and mortar at amazons ecommerce. There is a huge difference. Stephanie when walmart began, your only choice was bricks and mortar, but it was an option that no one had before. What neither have are those big, fat, juicy margins. Walmart, amazon keeps expanding into everything you can imagine and beyond. Walmart has constantly bumped up against its own limitations. David what does bloomberg tell us . Shelly i do not know what juicy is, but they have some juice in here. We are looking around 32 . Macys, i picked another bloomberg another retailer. Around theargins are same. Is it apples to apples . Probably not, but amazons margins are still higher because it does not have the real estate, in part, that some of the bricks and mortar retailers do. David there you have it. Matt, you are staying with us. Paul sweeney and shelly banjo, thank you for being here. Next we look at the top trending Bloomberg News stories this morning. David welcome back to bloomberg. Now it is time for bloomberg trends, where we look at the mostred bloomberg stories. I checked and three of them were japan. Stephanie i am not going to say number three because i am giving them know more media attention. Trump. David matt winkler . Matt i could not resist the japan story. Historically, the bank of japan and the government have not always been in sync with each other. What you are seeing right now is actually the bank of japan and abenomics literally coming together. I think that is what the market is most interested in, because markets do not like uncertainty. They like certainty. What you are getting is something more certain about fiscal Monetary Policy. Stephanie shouldnt that be a positive . Matt yes, i think it is. The stock market rallied, the end is lower. That is what the fiscal policy is trying to do. So is the Monetary Policy. David i want to take us back to oil. Glencore has four supertankers part in malaysia. 8 Million Barrels of oil. To ownp to seven dollars a barrel of oil tomorrow as opposed to today. So there are 8 Million Barrels parked on the ocean. Stephanie this is when glencore is asking themselves, why didnt we just trade . Now we are storing oil off singapore. David if you look this morning, the value has gone up. Stephanie there you go. You know who is asking them selves, why am i doing this for a living . It is bankers. Busy of a year this was for banking, for m a . We are talking about the men and women, 43 weeks per year. This is a new normal. Davide serra said, the goose is cooked. Matt mccoy, do not go anywhere. We have got a lot more to cover. When we come back, we are talking gold. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Stephanie that is a big screen of green. You are watching bloomberg. S p futures down in the green. Oil all over the place. Earnings finally getting back to fundamentals. News out of japan, europe is creeping along, the fed is giving us not much information. It is nice to end on the green if you are long. Winklerg editor matt will be here at 8 00 a. M. We will speak with the xerox ceo. Xerox announcing their split into two public companies. Carl icahn is getting board seats. We will find out about these deals. The interactions with carl at 8 00 a. M. First work news with vonnie quinn. Peace talkssyrian will resume in geneva switzerland. The syrian president just arrived. Some fear the meetings will go nowhere, because the main opposition groups will not attend. Olympics fear the could spread the zika virus worldwide. The games and august are expected to attract half a million people. The World Health Organization is holding the murder is holding an emergency meeting. One of iraqs most influential groups, one of rocks most influential groups members is dead. He was a member of jefferson airplane. He was 74 years old. Bloomberg news 24 hours a day. I am vonnie quinn. Markets now. I will bring you the earnings from American Airlines. The revenue overall, 19. 6 billion. Earnings pershare coming in ,head of analyst estimates three cents ahead of what anticipated. Revenue more in line with estimates on an operating basis, it is comparable to estimates. Billion is what analysts had been looking for. Taking the liberty of mainline aircraft in calendar 2016. I will keep going through the report. What will be interesting on a conference call, will it talk about travel worries linked to the zika virus in south america . They may get questions from analysts on that front. That has been a concern of some airline investors. Stephanie talking about expedia and that they have seen less travelers going to paris following the terrorist events. Well see how it affects travel.

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