Transcripts For BLOOMBERG Bloomberg Markets 20151208

I want to give you a quick check on how the markets are trading. Stocks are pretty choppy this whole session. We are well off the lows of the day. Stocks were essentially down right out of the gate this morning at the opening bell. Data showing another month a weakening chinese trade. A slump in Global Demand has driven the declines in energy and Commodity Prices this year. As we heard overnight, chinas imports declined for a 13th straight month, a record. The dow was down as much as 245 points early in the day. But it rallied within 25 points of being pretty much unchanged. They ledted health, some of the comeback in stocks. A second straight down day for major averages. Oil is little changed after touching the lowest level in seven years, following a petition by opec to essentially abandon their production target. Output target the of 30 Million Barrels a day and endorsed 31. 5 million at its december 4 meeting in vienna. Before the nasdaq has led that come back, the main stock responsible for the comeback is on. Xi one approval from u. S. Regulators. Lets get a check now on some of the headlines making news on bloomberg first word this afternoon. Mark crumpton has more from the news deck. Mark Vice President biden told ukraines Parliament Today that the United States has the countrys back in its battle with russia. Vice President Biden the United States will stand with the ukraine against russian aggression. We relied on an rallied the rest of the world to ukraines cause. Mark he also said the United States will never accept russias takeover of crimea. But he wants lawmakers to keep their own house in order. Republican president ial candidate ted cruz has announced a bill that will give any state the right to reject a refugee for security concerns. The bill would require the federal government to give 21 days notice to any state receiving a refugee. It would also allow the governor of a state to reject any refugee without what is called adequate assurance that the refugee does not present a security risk. The attorney for Oscar Pistorius says the olympian will try to appeal his murder conviction in south africas highest court. Pistorius will remain under house arrest. Last week, the south African Supreme Court of appeal overturned his lesser sentence of manslaughter and convicted him of murder in the 2012 shooting death of his girlfriend reeva steenkamp. 24 hours a daye at the new bloomberg. Com. Thank you so much, mark crumpton. Its importttling slump, a record 13 months of decline coming in november. That data feels fresh fears of an economic slowdown all around, all while fed gets ready to raise Interest Rates next week. Doug, are you a little more nervous after today . Doug they are trying to rebalance their economy. So they are going from manufacturing to consumer. They have a lot of consumers out there. They are the biggest beneficiary of low oil prices. So their economy is going to do well ultimately. Betty but not so far though, right . With. They are still 6. 5 but you see a lot of manufacturing as headline news. You have to look at the Consumer Services side of china. I think it actually looks ok and they will contribute a lot to Global Demand like they had been over the past year. Therest china too much bearishness sentiment. China is going to contribute betty . I dont think there is any chinas want to contribute to growth. Betty i dont think there is any doubt that china will contribute to growth. But many fear that it will get worse before it gets better. Doug europe is up 1. 5 in the ecb today. 1. 9 in 2017. Japan, we thought they were in a technical recession. They revised their data. It is actually around 1 . The u. S. , everything is good about the u. S. Economy, especially the consumer. We think that will continue. We think energy actually recovers close to 50 in 2015, which will betty based on what . Demand. Sed on growing a lot of these projects, they could not just cancel it. So it has taken a long time to reduce supply. If you look at all most any measure, the u. S. Is the marginal contributor to energy in the market. We think that comes down. And then you get a quick reversal. Betty a lot of people we have had on talking about oil differ in the sense that they say things, changed after seeing what opec didnt do on friday, which is basically allowing saying, you know what, produce whatever you want. Just go ahead and do it. More people are saying to me that oil prices will head lower, that they are not going to rebound. And now the picture is even less clear on oil in 2016. Doug it was definitely a concern when oil reached 40. It is not the cartel. It is saudi arabia. They have all the reasons for not doing it. They could change their mind tomorrow. They could start producing less. But what i think is they dont have the power that they used to have. Again, the u. S. Is the marginal contributor to mark to oil supply. They have been cutting back. It hasnt shown up in the statistics yet on oil, but you are going to see supply starting to go down and demand start catching up. That is going to change the dynamic. And still, energy, low Energy Prices are good for emerging economies like india, other are a lot of importers in asia, to your point. And some are getting fatter with what has gone on with lower oil prices. What about the fed . The million the Million Dollar question today is, given two days of selling, given the volatility, multiyear lows, almost a record low here on iron ore prices, is that enough for the fed to hold off on raising Interest Rates . Doug no. The reason the fed will start raising rates we call that normalizing its because the economy is good. The consumer is good. If you look at every sector of corporate earnings besides energy, it has been all positive , even though thirdquarter earnings are negative. Its the consumer, health care, technology. Its been all positive. That is how you see the andficiary of u. S. Growth low Energy Prices, low Interest Rates. Its time to start normalizing, even though the other central bank betty one and done . Doug no, 1 in 2016. Even though the European Central bank and China Central bank are divergent in policies, that is to help their economy. Thats why i think Global Growth 3. 4 next year. Betty a rosier outlook than we have heard from others. I appreciate it, of course. This is why the markets are like this. Where there is a seller, there is a buyer. Thank you, doug. Much more ahead in the next when he minutes a bloomberg markets. Washington is abuzz with a lot of talk, including donald of all ban to band ban of all muslims. Amazon shares have more than doubled this year. Can the company continued to cash in during the Holiday Season . We have your amazon options trade. And what is really driving the . Oil slide the oil slide . We will bring you the story of crude. Betty good afternoon. Congress is facing a friday deadline for funding the government. Negotiations are over a trillion dollar budget and are moving pretty slowly. One includes lifting a ban on crude oil, what to do about refugees, and extending Corporate Tax breaks. Can a deal get done . Joining us now is senator bob casey. Senator, thank you so much for joining us. The republicans say that, if we cant get a longerterm deal ane, we might put in place stopgap measure. Will you support that . Senator casey i dont think that is the right idea. We should complete our work this year and give people the certainty that they have the right to expect when it comes to running the government and meeting the reasonable excitations of taxpayers. No family, no business would run the way the federal government has been running the last couple of years. We should not be held up by some ideological stand by people here in washington. Lets sit down, negotiate, compromise and get this done by the end of this week or early next week. That can be done and that should be done. Have spokenone we to says it can be done but the devil is in the details. Ther republicans have differentiders on top of the spending bill, things that apply to Corporate Tax breaks, revising certain tax breaks, legislation allowing Syrian Refugees under the country. What will you accept and what wont you accept . Senator casey i think we have to separate the two. The funding the government negotiations is one. That is what i am talking about not putting ideological rider on the spending bill. Sfolks should reframe from that and negotiate like adults should. The second part is a separate bill, which would be the tax bill. That is a critically important bill to file. I think we could probably do this and finally get some permanency to tax provisions that help families, working families, like the earned income tax credit, the child tax credit, which helps families who are struggling, at the same time providing or extending the most in the most cases, good, sound, common sense tax provisions for businesses that still needs about. Betty i believe they are separate, but they are tied. So how do you get this whole deal done then . Enator casey it is difficult we dont have a lot of time left. But i think it can be done. It is always hazardous to predict a date certain or an hour. So by the end of this week betty would you accept a temporary measure if they cant get something done . Senator casey i am not going to say a hypothetical yet. Priorities, making sure that the government is operating in that we are making the right investments here in secondly, providing certainty with regard to tax policy if we do those two things in general i know there is a lot of work to be done yet on both i think we are going to have a much better end of the year. We can couple finality on those issues and i probably left off two significant bipartisan achievements. One on education and secondly on transportation. It would be a good way to and the year with some consensus on making sure the government is operating and making the right investments and also helping families who often dont do too well when tax provisions are worked out. In this case, we can help children and make a longer investment in children and working families. Betty speaking of hypotheticals, washington, some of your colleagues have been talking about this hypothetical ban that donald trump wants to implement against muslims from entering this country. From those of us who have not yet for those of us who have not yet heard his commons, i want to play this for the viewers. Donald J Trump is calling for a total and complete shutdown of muslims entering the United States until our countrys representatives can figure out what the hell is going on. Betty senator, what are you hearing from your constituents on this . Im hearing what a lot of people are hearing. Number one, its wrong. Number two, it is inconsistent with our values. And number three, the helps our enemy, which is isis. It helpst going our enemy, which is isis. We are not going to do this. It is dead wrong and it would actually help isis. On the flipside, as i understand it, in your district in your state, a pretty significant syrian refugee population in allentown, for example, what steps might you or too protect essentially help others in your state or those around them understand that they are there, that they are not going to pose any harm . What do you do with those refugees that are in your state . The potential problem here in terms of folks coming in could be the visa waiver program. I have already supported and many people in washington who are serious about this are supporting changes, constructive changes to the visa waiver program. That is a much bigger area of concern. When it comes to the refugee program, those refugees have to go through about a teen stabs, levels a review that no other group of people in the world go through. They are appropriate reviews of Syrian Refugees. As you know, number announced a week ago, that over four years, a littlethan 200 more than 2000 refugees came in and none of them have been terrorists. The potential problem is the visa waiver program. We should fix that. Time, have the same a more robust and a thorough debate on taking the fight isis. That should be done by the congress, which means we should have a vote on the authorization for force. We should focus on cutting off isiss financing. We should have a renewed focus on killing terrorists and make sure that we take steps. The federal trade commission is asking a federal staplesslock proposed mortgagor oppose merger with office depot. The two companies are bound to fight the government challenge on this. A group led by China Resources holdings has made an unsolicited offer for fairchild semiconductor. Theoffer is higher than 2. 4 billion oh in semiconductor update agree to pay for fairchild us month. They will review and consider the new offer. You can always get more Business News at bloomberg. Com. Inll ahead, stocks are lower the choppy session today. Next, we will take a look at options, including a trade involving amazon. Betty welcome back to bloomberg markets. David is standing by with todays options. David kevin, we have been talking about the volatility all day in the stock market and the oil market. Kevin we have been all over marketvergence from leadership, how oil and energy has been impacting overall s p 500. Youn the options market, see a lot of traders hedge their s p 500 exposure. Youve got a potential rate hike , so that has financials and it as well as oil, which is impacting the energy sector. The nasdaq 100 market, you are not seeing that hedging. You are seeing bullish bets. That is where the market leadership is. Just like how amazon, facebook, netflix, the real leaders and have pushed the market up. Vix having a good day but not anywhere near the story ties. Kevin a lot of people are starting to hedge going out into january in the s p 500. Tracks t thevix that is what thevix tracks. David i want to get amazon. Kevin amazon is at an alltime high. It led the market. It is a topfive constituent in 500. But the stock has run up into earnings. Earnings are anticipated in late january. So you can actually sell a 630ary option for the strike, which is more than 5 below where the stock is trading right now, and get paid 2. 2 . So you are just selling the 16 he put. At 665 so you wont get as much options premium now, but its a great strategy because they dont pay a dividend and it does run up into earnings. The risk reward is, basically you have to buy the stock at 630. As is great strategy for someone who wants to own it at a lower level or get some options premium. If he goes below 630, youre exposed to the stock at that level. But you would be compensated for it and you have that 5 cushion on the downside. David kevin kelly, thank you. Still ahead, the state of oil how long before a rebound comes . We are going to speak would david shanker, one of the top Oil Forecasters according to bloomberg. 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. Betty live from bloomberg world headquarters, youre watching bloomberg markets. Afternoon, ed crumpton has more from the news desk. Alone was arranged for he androok a week before his wife opened fire at a Holiday Party in san bernardino, california. Fox news reports authorities are examining a 28,500 deposit into his bank account in midnovember and whether that deposit was used to purchase guns. With an end of week deadline approaching, secretary of state kerry is in paris meeting with ban kimoon to reach an agreement to fight global warming. Secretary kerry we talked about where we are in the negotiations of the steps we need to take in the next three days to be successful. He has been working diligently with a lot of the delegations. We appreciate his leadership. Mark secretary kerry also criticized those who doubt Climate Change is real. He says the refusal to recognize the threat is insane and insulting to everything we learned in high school about science. A Government Watchdog Agency says the nations biggest air traffic facilities do not have enough controllers. The situation demands, in his words, urgent action. Those facilities include new york, dallas, denver, and chicago. Americans should buy Health Insurance will not be able to avoid the penalty next year. The obamacare deadline for getting coverage is january 31. The penalty has been waived. Sleigh, but federal Officials Say the rule will now be enforced. You can get more on these and other breaking stories 24 hours a day at the new bloomberg. Com. Betty thank you, mark. Weve got less than three utes to the close of trade less than 30 minutes to the close of trade. The nasdaq has tried to climb back here into the positive territory. The nasdaq is outperforming s p, trading flat slightly down. Behind the fed performance is the 63 . Taking a look at tech, the fan trade is doing quite well right now. These big internet names continued to trade strong into the new year. Tallon says there is a surge on online shopping. Catalyst going into 2016. Alexion pharmaceuticals is up nicely and boosting the biotechnology index, which is about 2 . Alexion is up on the recent approval of a drug that treats a rare disease that also leads to premature death. Betty thank you so much. Prices. Oil speculation that opec will keep output elevated has been weighing on the market. But what exactly is going on in oil . That is get lets get some Straight Talk from austin. Jason, you are the goto expert on oil. What is going on . Do we blame opec . Jason theres a few things. I think you can blame opec. I was in vienna last week. There was an expectation that they would at least roll over the production. But instead, they decided tonight even mention any number. I think that caught the markets quite a bit off guard. In the q a session, the president of opec said, you think of the new target of where the production is right now, which is around 31. 5 Million Barrels. This was a bearish sign and caused the price of wti to close below four dollars a barrel on friday. It was a critical Technical Support level that was tested for an interim basis for weeks set off alose technical selloff on monday. Betty all the longs are getting unwound . Jason i think that might be some of it. There is also some volatility before the opec decision. There was a rumor and a story released that the saudis were considering cutting production. That turned out to be fake. That caused Short Covering the market. You also hauled he also have longs coming in. And what turns out to be the most price the most bearish of price actions. That led to the downward pressure. You got a lot of automatic triggers. When chu you are closing before 40 ones, you have a lot of stops right at that level. Unwoundwhat really those longs on monday. Betty we havent seen these levels since 2007. This is before we hit the really big global recession. Reflecting aces possible recession. Are we at risk of recession . Have a book coming out in january called recession proof. If that is any kind of parameter ford, there is a number of things. If you look at u. S. Economic data, industrial production, the Manufacturing Index those have all the seller rated. Retail sales those have all d. Celerate retail sales, car sales, lower than before the recession. If you look at the pace of Global Growth, 3. 1 the expectation for Global Growth this year come also the lowest levels expected since during the great recession. Oil thee to say, is outlier or is it now catching up with all the data we are looking at . That may actually be the state of affairs. You have a lot of data points pointing to a deceleration. Betty there are a lot of data points you made exceptions to the we are seeing record auto Sales Numbers here in the u. S. We are also seeing pretty brisk jobs growth. That is what the fed pays attention to. That seems to be a good indicator that we are not going to be headed into a recession. Jason there is a couple of things i would say about that. The first thing is with jobs. Jobs and unemployed men are lagging economic indicators. While the fed is setting policy around it and we have been expecting all year that there would be hikes to 50 in december, we still see that that is partially the core inflation story is that the job good, but we see it slowing by the middle of next year. We see the Unemployment Rate falling until midnext year and then rising up. As for auto sales, a love that may have to do with the lending standards being reduced around auto loans. So you have prime auto loans. So that is artificially boosting those level of sales. Betty on a final note, back on oil prices, the whole supply and demand situation right now, it is clearly out of whack in terms of too much supply. Start tot we really see it seems like there is a free fall in production. When will we see supply cut back . Jason youre going to see it in the year ahead. In the beginning of november, there was a warning issued by the fed, the fdic and the office of the comptroller and the currency in the United States about how critical the bad debt cash. The oil you saw a big jump in the bad debt number. Financial institutions, you can bet they will be washing that. If the fed issued a warning, that is something people will be watching. That means in the year ahead, youre going to see really credit in the Oil Gas Patch for independent oil companys to be cut. Youll see reductions, off x reductions, and reorgs throughout this space. Betty thank you. Much more ahead in the next 20 minutes. Stocks are still in the red. But they are off their lows of the day. What is he hind todays trading session . Mall what is behind todays trading session . Tonight, an interview with bill s. Bill mari betty welcome back. Its time for the bloomberg is less flash. Wall street may get one more shot to derail tighter rules for investments. Congress is considering a 30day delay to the rule. Job cuts are on the way at morgan stanley. The bank will cut 1200 Workers Worldwide and take a 150 million severance charge in the fourth quarter. Morgan stanley is cutting back its fixed income trading business. Public Health Officials are working to determine what sickened more than 80 students that eight in chipotle in the most recent days. They areieved that isolated case of the norovirus. You can always get more Business News at bloomberg. Com. Would exploret the possibility of buying who if the company decides to sell itself. The word today from the verizon movesome such a would build on verizon. Marissa mayer may be pursuing the wrong strategy. Bet to be ade a Technology Company when marissa came. In our opinion, yahoo is a content company. Aol fortified them as a media company. Thatnk that is the point has been more difficult for yahoo . They need to get back to their core. Yahoo as a standalone, if they got back to the core of content, we would be excited about that. If not, we wouldnt good we wouldnt. Discussing ae been clump of commodities. These are all the many topics in the show coming up next. Hittingy, we are luckier lows under commodities. , going lower in dramatic fashion. Of big events today was the the Anglo American news on cutbacks. More news. Ng, i see there is a london listed metals company. Ofreceived these signs companies throwing in the towel and cutting dividends. So far, it has not been enough. Betty we were talking with jason about this. These are things you would see during a global recession. We are looking at numbers now in oil prices, a level we did not see until the recession from eight years ago. So what is going on here . Joe that is a really good point. This is this option from a few years ago that chinas appetite for commodities was limitless. Through all the exploration and production and mining you would do, it would pay off. Comes waynsumption down, maybe the world will not going to a recession, but these assumptions undergirded all this commodity investment come out. Not only was there an idea that there was a Huge Consumer of last resort, but everyone was investing in them as speculation. That seemed to drive the price up. You have that going away, the fed going way. Seey anecdotally, you hedge funds crowd into the same trade. A lot of them are energy trades. Joe everybody site you had to have energy exposure. It seemed like a pretty way to diversify. Of hardiked the idea assets to protect themselves and basicntral banks currencies. There are all the stories of people told themselves for reasons why you need to be in hard assets. Have these longterm investments coming out at same time. Betty thanks so much. I know we are going to see you in the next hour. Joe a lot to talk about. Lynch releasing its 2016 market outlook. Basically modest Global Growth and the start of a slow emergingmarket recovery. So a little bit more i wouldnt say bullish, but not devastating in terms of the outlook for next year. Close, we are approaching it. The s p headed for its fourth loss in five sessions, a second straight decline. Heres a look at some of the most heavily traded stocks today. Betty welcome back. Markets are closing for the day in just about 10 minutes. For some, it could enclose any sooner. It has been a volatile session. Remy basically, as we head towards the close, our markets are headed for a second down day in a row. The s p 500 is down half a percent. The dow is down the most. The nasdaq looking into the green, well call that flat right now. Lets take a look at the health of the 10 sectors. You can see nine of the 10 sectors are in the red. Materials down the most. Industrials down by one and have percent. Energy stocks are very volatile today. 1. 2 . Ets take a look at crude it has been very volatile today. Hat is the word earlier today you can see that it fell to a low not seen since february 2009. Then we see a pickup back here. We are just that the flatline minimally into the red. Ets look at the vix aboutlatility index is up 8. 9 to about the 17. 4 mark. Its steepest drop in more than two years friday as equities rallied more than 2 . Lets head to specific markets choose me, specific stocks. Pharmaceuticals is on the move and one of the top performers. It is up by 5. 6 . And drug that treats a rare deadly genetic disease, one approval from federal regulators. Finally, lets take a look at. Ransport stock Southwest Airlines down 9. 1 . It leads the industrial shares lower. The airline abandoned its forecast for a possible increase in a specific benchmark revenue gauge this quarter. That is stoking investor concerns that the industry is struggling to prop up airfares around the country. United rentals down 3. 5 . Basically, volatility is the name of the game today. As you said, people just cant wait to get out. Betty thank you so much. Whitney, a name wellknown on wall street, some breaking news on her. She will be overseeing an equity portfolio for arch capital. Arch capital saying that whitney will manage the managers for the insurer. 800 creep or fully of million. She started her own hedge fund. But that closed after she made some illtimed calls on uni bonds, mastiff also uni bonds. Meredith whitney is joining arch capital. If you minutes into the trade, we have our Bloomberg Starks reporters to talk more about oil. Some of our guests have said this right. Seeing this rally and all the prices. But we see some winners, too. Peopleu see a bunch of that were short energy really coming out on top right now. And especially on speculation that come as a certain closers positions, they take profits on the short bets. We could see a rebound on the Energy Stocks that have been hit over the last three days since opec basically said we are not going to cap production. Jpmorgan raised their single. Tock Energy Outlook to a buy there perhaps looking to buy the dip. Barclays is saying that Oil Producers are now they upgraded them a little higher. There are people across the street thinking maybe the and of they are betty maybe this is a turning point then. Joe right. On oil, people have called the bottom on that and that has not worked out for them. It still remains the leader of the year but a lot of it has weekend. We have seen weakness from a season target. And some of the travel related stocks have weekend. Betty why is that . Amazon is trading at alltime highs. There is a little bit of a mixed story. But it is interesting to watch the leader of the year we can aken. The other thing that could be feeling the bearish overnight,china mobile growth is slowing down and one of the big losers in the us and he today was the overall the Raw Materials stocks. That could drag the market down. Right now with the fed about a week off, people are looking to take their cues from anywhere. With china the main story right now, we could see some further weakening. Betty thank you so much for joining me. Miss . You what did you miss . Is up next. Joe we are moments away from the closing bell. I am alex wiesenthal Joe Theismann joe weisenthal. Alix and i am alix steel. Whatd you miss . Stocks closing lower. The s p following for the fourth time in five days. Crude at the lowest level since 2009. Joe the question is whatd you miss . Alix Energy Shares sliding. Are we at the bottom or still sinking . Joe are we ready for the fed rate hike . We take a look at bank of americas 2016 outlook. How demographics drive our economic future. We have the charts. We have to begin with the markets. It was an interesting day. Data, chinese trade Global Stock Selloff as imports and exports disappoint. S pave the