Transcripts For BLOOMBERG Bloomberg Markets 20160108 : vimar

Yahoo is now reconsidering a sale of its main business, rather than a spinoff. Its main web business, that is. We will be getting more details im sure throughout the hour with this scoop again by our reporting team. You can see shares spiking by more than 3 . Broadening out to the major averages today, weve seen quite a bit of bouncing around right now. All three major averages are very little changed, even after that jobs report. Somethings counterbalancing include continued worries over whats going on in china and volatility in the markets there. If you look at the s p, speaking of volatility, over the course of the session theres been quite a lot of bouncing around. The s p get a little more decidedly negative in midmorning before recovering. Just been bumping along a little changed for the rest of the day. Some of the winners during the session include some of the natural gas related stocks, were seeing natural gas higher today. Consol energys, viacom also participating in buying in media. On the downside, we have some of the retailers doing poorly. Gas gap coming out with results worse than estimates in terms of sales, holiday sales, particularly for old navy. Kohls following along with it and seagate suffering from a down. Today along with competitor Western Digital. Lookingo surprise here, at the commodity close in a few minutes, well is having a big influence on the market. Julie this is a chart weve been looking at a lot over the past few months. As a will in the s p 500. Its hard to tell where one leaves and the other begins. Well is the a line, the s p is the aligned. The movements are very much in tandem today says the correlation between them has been on the rise. Oil prices if you look at the week, we are talking about a very weak start to the year, now down 10. 72 . Barrel dip below 33 a earlier today as whats going on in china weighs on it. Something adjusting, david. We got the Weekly Oil Rig numbers about an hour ago. They actually showed a decrease in rigs. Normally that would cause an increase in oil prices. It didnt happen. David julie hyman, thank you. Lets check on the bloomberg first word news. Ramy inocencio has more. Ramy first we had the mexico, where president says the fugitive drug lord el chapo has been recaptured. Back in august, the u. S. Government offered a 5 million reward for information leading to the recapture of guzman. Hes been taken to one of most he escaped one of the most secure prisons in july using a sophisticated milelong tunnel that opened up in his shower. Bells and investigators think they know where the pair attackers built their bombs. A prosecutor confirmed today traces of explosives were found last month and a brussels apartment. Also discovered were fingerprints from the man sought in connection to the attacks in november that killed 130 people. Members ofhill, Congress Want tougher sanctions on north korea for its latest Nuclear Weapons test. Leader nancyt pelosi says the new measures aimed at kim jonguns regime could be voted on as early as next week. Each of north koreas three Previous Nuclear tests led to a tightening of international sanctions. U. K. , is not london fog, but london smog they are dealing with. Its only eight days into the new year in the city has already failed the eu smog limits for the entire year. Levels of nourishment dioxide in west london exceeded the limit 19 times so far. The biggest factor is vehicles with diesel engines. A warning, cut your Alcohol Consumption to less than one drink a day. New u. K. Guidelines warned that any level of Alcohol Consumption raises the risk of cancer, and that both men and women could should consume no more than six pints of beer or glass of wine a week. The government is advising people to have several alcohol free days each week. Global news 24 hours a day, powered by 2400 journalists and more than 150 news bureaus around the world. Im Ramy Inocencio. David the big story is the u. S. Job report. Topping even the forecast filed by bloomberg and revisions at 50,000 jobs for the previous two months. It was a strong finish for jobs in 2015, but will the momentum last . John williams, president of the San Francisco fed expressed confidence that it will. Jobpect job grace growth to be strong in this year, and very strong come into asiana bulimic continue to drift down to about 4. 5 during the year. David the u. S. Jobs report comes in the midst of market turmoil centered around the turmoil in china, plunging commodity prices, and the Global Effect of a stronger dollar. Joining me is michelle myers, economics,ctor of and steve wood at russell investments. Thanks for being here. Michelle, let me start with you. We have to talk about wages. We had the White House Press conference a few minutes ago saying theyve administration a disappointed with where wages are. Its still a point of weakness. Michelle i did say that the one point this disappointing. We saw no change in wage growth. Yearoveryear, you see a modest up tick to 2. 5 . Thats largely because last december was so weak. It was favorable base effect. I think it is a bit of a puzzle. We are seeing rapid job growth, well in excess of what we are seeing in other indicators of the economy, including gdp, and a recovery at 5 . And yet, we are not yet realizing much in the way of wage growth. Perhaps its a matter of time. Maybe we are not yet at full employment, or maybe we have to fall through full employment and pull that estimate before you realize the momentum in terms of wages. David good to be youve had people who were outside of the labor force coming back in, thats a factor this depressing wages . Michelle thats the idea of hidden slack. Thats weighing on wage growth. If you simply look at the unemployment rate, its not a sufficient measure of measuring the amount of capacity there is in the labor market. Haves the case that you this underutilization, or people it could be engaged but are not yet quite in the labor force, if they come back in, that does bring downward pressure and wages. If you look in the last three months, we do have a pickup in the Labor Force Participation rate, so thats one potential theory. David let me ask you have his number complicates things for you as an investor. We have others writing about the goldilocks number today. In terms of what the fed might do in the future, how does this number kabul gittings Going Forward . Thee this number speaks to fact that the fed is under no pressure to do a thing it doesnt want to do. The economy is improving, the labor market is improving, wage pressure is not going to force their hand. The fed right now can set a schedule, and keep that schedule, theres nothing forcing its hand. Right now, i think the fed is going to look at this wage dont we had in july and august. A lot of the things we saw them, were beginning to see now. Tohink the fed will begin get more data dependent than they would have anticipated a couple weeks ago. David im going to ask you what we saw yesterday. This number placated markets a bit. What do you make of we saw in china and around the world yesterday . Steve this is one of the older stories. The chinese economy did this already. Its going to decelerate to 6 or 7 because the Chinese Government wants it. Thats a stated goal, theyre going to get with a want. What weve seen over the last couple of years in a commodities space is a repricing to the new growth rate. The chinese equity markets are very volatile, they are choppy. We look at chinese growth is a contributor to global growth, we dont see a recession in the u. S. , with theres going to be a lot of volatility and challenges, but the best Case Scenario right now is the 2016 look a lot like 2016 in terms of aegon the growth. David the me ask you about the note you and your colleagues are written on the heels of this job report. You talk about the unevenness of the u. S. Economy. For this report into some broader context because you looking at the u. S. Economy writ large. Michelle that was in the perspective that you have this divergence between the good side of the economy and everything else. For example, manufacturing will continue to fall covered some 50, and suggesting we are in a mini recession, if not more than that. And a factoring side of the economy. And yet, the service side of the rest of the economy is still expanding. Thats what driving continued growth and jobs and in terms of gdp. It is uneven. I think theres a lot of uncertainty right now. Theres uncertainty because you have this divergence. And uncertainty because we dont exactly know how the weather is playing a role. Presumably, there was some upside to december payrolls, given how warm the winter was, or has been so far. That could potentially reverse. Theres a lot of uncertainty as far as analyzing the data. David i want to ask you about the fed come at it might do in the future. Would love to get your forecast in terms of how often the fed might raise rates in 2016. Im curious about the importance of the jobs number to the fed now that rates have begun to rise. Is this the thing they are looking most closely at . Steve i dont advise the fed. I try and forecast the fed. As long as dr. Yellen and company have looked at the labor market as one of their most important indicators, we will continue to look at it as being important as well. If you look it inflation getting closer to the 2 number, its not quite there yet. I thought there were couple of pieces of data. One is with the vicechairman said last week, they are getting into a zone where they think three or four rate hikes the share would be appropriate. And also what happened with European Central bank. Theyre looking for not only expanding but deepening their quantitative easing. Europeans are beginning to from 2014. If he gets wonderfully into the dollar, which will tempt on inflation. I think the fed is going to be more cautious, but i expect them to get back to policy. David steve, michelle, thank you. Coming up in the next 20 minutes of bloomberg markets, bill gross warns for a tough time for bonds of the fed relies on job growth. Of rateghts on the pace hikes, china, and this weeks market turmoil coming up next. And steve cohen will be able to manage money again, but not until 2018. More on that developing story. And too big to value, why ipo the saudi aramco would be so a story, it might change the markets. David well be back to bloomberg markets. Time for the Bloomberg Business flash, it would be the news right now. Stephen cohen will once again be able to manage client money, but not till 2018 as part of a settlement with u. S. Regulators who accused cohen of failing to supervise a former trader at sac capital. His Family Office will also be subject to routine examinations by the sec. He neither admitted nor denied allegations he failed to supervise. In the first time in more than two years, Goldman Sachs and Morgan Stanley are trading more below their book value. This after the two largest equity trading banks dropped more than 3 yesterday. Both report fourthquarter earnings this month. And donald ross senior, a former ceo at new York Life Insurance Company has died. Ross doubled the companys assets by adding mutual funds in the 1980s while shunning junk bonds. Tenure, he oversaw to less the growth of more than 100 , topping 50 billion. Donald ross died at 98 years old. The Bloomberg Business flash. It said the markets desk where julie hyman is a check on company movers. Julie and assorted selection. Time warner is one of them, weve seen media as a whole perform well. Warner, interesting story, there were reports that 20th century fox might be interested in making another bid for the company. Then, the company denied that speculation. But the shares remain higher, they are authorized the session, but they do remain higher on the day. Sun edison, one is really volatile stocks, plunged yesterday after the Company Announced plans to be capitalize recapitalize. Shares are up 6 . A couple of analysts have mentioned the Company Policy really the company positively. Hes moving to the sidelines after all of the selling weve seen. Apple suppliers are in focus out with preliminary results for fiscal thirdquarter that were below its estimates, as well as analyst estimates. To 1. 6ared losses percent. Seagate and Western Digital also down today, downgraded on a we get look for personal computers. These are both hard disk drive. All of these Companies Get about 2 to 3 of revenues from apple. Apple, the other hand, is actually bouncing back today after some we performance recently. Its up by more than 1 . David julie, thank you. Lets go back to this mornings blowout jobs report, reporting a whopping 200 92,000 jobs added. Bloombergs tom keene and Michael Mckee ask bill gross how the numbers might influence fed policy on raising Interest Rates. The three or four fed steps that took stan fisher and janet probablyem to confirm, are on track, at least in turn of the verbiage. Dont big its possible to raise Interest Rates by 100 basis points in this lever global economy, which reflects a stronger dollar. I think the fed, at the moment, well talk that talk. Tom they will talk that talk, but with the humility of the first four trading days of the year, even with the 340,000 statistic, with revisions, is this the Federal Reserve that must Pay Attention to International Affairs . I think so. As i mentioned yesterday, they go in and out in terms of their statement or their emphasis on Global Affairs, certainly in the past several weeks and all weve seen with china. To my way of thinking, they have to take into consideration Global Affairs and the movement of currencies. Will they . I think its number three or four on their list. Financial conditions are probably down the scale, to the extent that market settle. Perhaps they will mention it, but not react to it. I think ultimately, they should. Given that, how do you explain the reaction of markets and the fed reaction to that . After what happened the last couple of days, we saw bond yields in the u. S. Go down tremendously. The dollar did not rise, it fell during that period. How is the fed specific about this . It is confusing, mike. And you are right. It did fall relative to the one. To the yuan. The compared to emerging companies, were talking about china and china has devalued against the dollar. We are talking about mexico and brazil and other important countries, 50 of gdp. The dollar strengthening. It pays to look both ways, in terms of developed and developing. I think ultimately, the fed has the world central banker, lets face it, the fed is the world central banker, and they have to become his and of the effect of that stronger dollar on emerging markets and developing countries. Those countries over the past three or four years, basically are taking out a huge amount of inlardenominated money terms of sovereign over debt within their own countries and ultimately, a stronger dollar at some point leads to problems, and in some cases, defaults for developing countries. Do you worry, as some have suggested over the last couple of days, and we could be in a situation where they cant pay those debts back and we are looking at another financial crisis . Flexes some companies, certainly some oil related companies. I wouldnt go so far to say petrobras, thats ever known for the most part. But certainly, some companies that are associated with oil and emergingmarket countries and associated with commodities, as you know. The commodity indexes at a cyclical low. Oil. Not just any company that makes their money and services their debt with commoditybased revenues is a risk. Continue, i know the National Team used to work for bill gross at pimco, now over janis. The new National Team is the Chinese Government. The Chinese Government is trying to get through the day, and i guess they got through the day friday. Im guessing, bill gross, you cant say all clear on that some old the tumult in chinese equities. How can anyone . Wrapped in addle mystery wrapped in a conundrum. Wasbasically, what they did unfixed the currency, but they bought stocks and manipulated their market in another way. I think investors are very concerned, not just with financing in the currency rate Going Forward with the economic 5 wth rate, china suggested to 6 , other statistics electricity consumption a generation, and lending basically suggest Something Like 2 to 3 . With bill gross talking tom keene and Michael Mckee. You can watch the entirety of that interview on the terminal or at bloomberg. Com. Still ahead on bloomberg markets, steve cohen can manage money again, but has to wait to do it. Whats next for the billionaire, after the break. David welcome back to bloomberg markets. Im david gura. Steve cohen will be managing client money again, we just have to wait two more years to do it. To talk more about this is bloombergs keri geiger. We learned about this through an fcc statement this afternoon. Keri weve been waiting for a while. It does seem to be like a good deal, and a happy ending for steve cohen. At one point, during this whole process of the investigation, the sec looking into sac N Steve Cohen himself, they had considered seeking a lifetime ban on trading. Now we have another two years of very from what weve reported on in the past, successful Family Office in terms of returns and money, and when hes able to get back to his investors, and now i would imagine, considering the kind of dismal performance that weve seen with so many hedge funds in 2015, you probably going to see an enormous amount of interest for people wanting to get in oN Steve Cohen right when that man ends. Ends. T ban david weve seen people going to smaller operations. Other indications he wants to get back in the game . Keri i cant speak for steve cohen, but he ran a very Successful Hedge Fund for very long time that had an incredible track record for returns and a lot of happy clients. Of course, until department of justice and the fcc kind of came down on that. Im kind of foisted to reconfigure and come up with this Family Office structure. Its hard to tell what hell do. I do know there will be interest in this. Of course. People want to make money. Obvious the, the markets right now are giving people a lot of concerns about the outlook for 2016 are we going to see more bad returns for hedge funds in the year ahead . Theres someone out there who can make you a lot of money and has a track record for doing it, people want to put their money there. David to be clear, he did have to admit or deny anything. Keri its great for him, it doesnt look great for the sec. They made a point to trying to get people to admit to wrongdoing in their settlements over the last couple of years. Years, he didnt have to admit or deny, so executive settlement for him. David keri geiger with bloomberg news. Still ahead on bloomberg markets, the Worlds Largest oil producer says its considering an initial public offering. Why is the move being met with skepticism . David welcome back to bloomberg markets. Im david gura. Ets start with the headlines Ramy Inocencio has more from the news desk. Ramy in mexico, president Enrique Pena Nieto says Joaquin El Chapo guzman has been recaptured. He wrote in a twitter account, mission accomplished, we had an. In august, the government offered a 5 million reward for information leading to the recapture of guzman. He escaped from one of the most secure prisons in mexico using a sophisticated milelong tunnel that opened up into his own shower. A philadelphia officer that was ambushed overnight is expected to survive. He was shot 13 times at close range while sitting inside of a police car. The suspect is not in custody and the city commissioner said that he confessed to the shooting and said that he did it in the name of islam. President obama has vetoed legislation to repeal his Signature Health care law. Many measures push by republicans lawmakers in 2010 but the first two clear both houses of congress and make it to the president desk. That legislation would have cut funding for planned parenthood. The state department has released another 3000 emails from Hillary Clintons email account but admits to falling short of their court order ged goal. Released 82 t has of the 55,000 pages of emails mrs. Clinton turned over since she left office. Day. L news 24 hours a Commodity Markets closing in new york. Lets take a look at todays movers. Futures fell, snapping the biggest fiveday rally in almost a year. The metal has outperformed other commodities this week as 4 trillion dollars was erased from global equities. Day but for a fifth rebounded slightly onthejob support that we got this morning. U. S. Umber of rigs in the fell slightly. Saudi arabia remco is considering the Worlds Largest , around 10 julian dollars. With oil prices at historically low levels, the question remains why now . Joining us now is tina davis. Let me ask you to put this into some context. Compare this to the biggest producers here in the u. S. Or russia. This is a huge company. Thend is enormous, 10 times reserves of exxon. It produces more than the entire u. S. Does. So when you talk about huge potential ipos, this could be bigger than most gps, so its astonishing. Whyd put this into context saudi arabia is considering this. [indiscernible] talk about the pressures saudi arabia is facing now. 30 oil. This is a nation that did very well when oil was in the triple digits and they have had to retrench. We saw them cut the subsidies they have for water, electricity, gasoline, so the people inside saudi arabia are now feeling the effects of low oil prices. David this is a country where most people have benefited from the countrys oil, a big part of the countrys gdp. They have run on for so long. It is really a sea change in the way they operate if this happens. David i mentioned potential valuations. Talk about the difficulty of assessing this company, and it it were to go public, what can we learn . behind the scenes at saudi aramco. It is a very close lipped black box corporation. If they went public, they would have to be more transparent, there would have to be independent audits of their reserves, so there have been questions raised about how much oil they actually have. For the first time, somebody could independently go in and look at that. David any indication for a timetable on when this may happen . The prince said in the next few months. If they are going to roll out something as big as the Parent Company which is up in the air that would take quite a long time to get together in terms of the underwriting and how the sale would go. David tina davis, thank you. I want to bring in gordon johnson, managing director at axiom capital. A of that conversation we were having and look at the Global Oil Market. What difference could this make it this were to happen . With thek the issue Global Oil Market is, if you look at what caused the downturn in oil prices, it was really only 3 Million Barrels of Oil Oversupply which caused inventories to be built. I dont see this as a major game changer, i see it as a company that would provide clarity that some people say are a black box. David tina mention the role of cheap oil. Saudi arabia has played a role in that, going back to the last opec meetings, the outcomes of that, and the new role saudi arabia seems to be playing in opec. They have kind of dumb themselves in a little bit. Gordon the key thing for us come in the u. S. Market, you had a lot of easy to drill wells, and that is providing a lot more oil than people expected in the u. S. The question is when that ends. We think it is probably toward the end of the year. That is on the supply side. What about on the demand side . We think that things are going to get worse in china. Exchange inreserve china, record outflow. That suggests that things are going to get worse. The question is when china will fully correct and that will be a twoyour dynamic. David you talk about the demand that china has had for oil. What has it been like . Gordon it has been massive. If you continue to have weakness in china, there could be a couple million impact on oil. Any respite for oil prices soon. In fact, we expect them to continue falling. Let me ask you about the backandforth we have seen between saudi arabia and iran. When you look at geopolitics in that region, how big of an effect might that have on oil prices Going Forward . Gordon significant, but people are expecting iran to be rather, the global country to be more inclusive of iran and that more supply to the market. We think that will be more of a head wind versus a tailwind for prices. David we have heard iran say, if this package were to go theugh the u. S. Senate, markets would be standing by with a ton of oil to put into the market. Might this complicated that at all . Gordon i dont think so. About you had a note out sun edison announcing some debt restructuring. Youre not impressed with what they had to have to say . Older, youneck we have to be upset with what happened. Effectively, you are being diluted. The issue for sun edison is simple. Put a lot of eggs into one basket, assuming people would be for a while. T the stock was higher on some headlines that came out but that does not answer the question if they can make it through 2016. With this announcement yesterday, there are more questions than answers. David you look at clean energy development. How big is leveraging still . Gordon across the industry, there has been massive leverage as companies have built these projects effectively on balance sheet. A lot of Solar Companies were assuming that this euphoria was going to state existed and that was incorrect. Now you have a bunch of companies with billions in debt of projects they built that they hoped they could sell. The question is what they will do with the projects and that is what investors are missing. You have some Chinese Company looking to go private, so there are issues for the solar guys. We have seen a lot of Big Companies abandoning projects for development, increasing production. If things were to improve, how difficult to get back online to get back to those projects . Gordon i dont think its extremely difficult. I want to highlight there is a risk to the negative oil thesis. The risk is the fed basically reversing their policy. We are actually going to cut rates. If that becomes market psychology, then youll have a decline in the dollar which will cause investors to rush back into oil, commodities. However, for that to happen, we think the data has to get significantly worse. As that happens, the price in stock will come down. David gordon, thank you so much. Managing director of alternative Energy Research and axiom capital. Joaquinp, drug kingpin El Chapo Guzman has been cut again. We will dig into the mexican president s war on drugs. And yahoo is changing its tune on selling its web business. Iphonesabout demand for sending apple stock into a tailspin this week, so why are shares higher today . David welcome back to bloomberg markets. Im david gura. Mission accomplished. That is what mexican president hEnrique Pena Nieto announced when he announced the recapture of El Chapo Guzman. He called him the worlds most powerful drug trafficker. What does this mean for mexicos war on drugs . Joining us now is brenton case. What does this mean for president pena nieto . He vowed to find this guy six months ago, good news for him. It is a triumph for the president , or mozart, a triumph after one of the biggest the oscars since hes been in office. When Chapo Guzmans in july, it was the second time in 15 years that he escaped from a max and security prison in mexico. Tunnel that was about a mile long and with lighting, ventilation, a motorcycle that went on rails. The guy escaped in style. David talk about how the government has pursued him, as the government is trying to track him down . This was a very involved manhunt. It was a relentless effort. Pena nieto was able to bring him in in early 2014, 1 of his early tryouts in office. Huge embarrassment when he escaped. He sent everything he had after guzman to try to catch him again. Original navy squad that caught him in 2014 may have gotten him again this time. David there was pressure when he was last in prison to be extradited to the u. S. The Mexican Government has resisted that. Any sign, in light that yet this escape, that that might be on the table again . Will certainly be considered. We will have to see how the Mexican Government reacts. Certainly, it was a giant humiliation that they had said when he was caught, that first, he would be tried in mexico, and then maybe the u. S. Could have been after 300 years, a direct quotation from the attorney general at the time. This time they may have to reconsider the view and think more seriously about maybe action letting him. When you look at the significance of capturing this guy, is it, in large part, symbolic, or has the effort to find him done something to reduce the violence of the drug wars in mexico . Probably mostly symbolic. The violence tends to flare up when there are two competing gangs that are trying to win the same territory. Guzman has always been seen as the leader of the settlor cartel, one of the most successful groups, most powerful group within mexico, one that win large amounts of territory. If this contributes to greater drugtition with rival gangs for certain border crossings or other areas, we could see violence go up. Time will tell. David we appreciate that. Lets turn to a developing story. Considering selling its main Internet Business rather than a selloff. Alex sherman help to break the story and is with us. It seemed like earlier this week we were focusing on an accelerated push to get a spinoff through. Talk about how this has come into the four again. Alex yahoo realizes they may not have time on their side and that was the initial thinking. The market value of the Internet Business is zero today, so we may as well wait and give ourselves a chance to turn this thing around. Marissa mayer had children recently, so she comes back and basically, lets say, put this on pause for the time being, that the Media Attention died down a bit. What we are hearing is in that process, there has been a shift of thinking. Maybe they dont have as much time here. Proxyrbird goes to a fight, everyone could be out before the market can readjust, so we could be in a position where we have to sell and its just a matter of time within 2016, lets say, to do that. At whathen you look they might sell, what do we know about the value of those assets . A lot of people are still flummoxed by what yahoo is today. What is potentially valuable . Tech they have their ad platform. That was part of the reason they bought aol. You could marry those platforms, if they work. Cnbc has a story out today that says there is a lot of ad fraud within that. Yahoo but that for 700 million. Yahoo has all of its internet platforms. We have heard estimates ranging from 2 billion to 8 billion, depending on who you speak with. Its hard to know. It probably ends up being somewhere between those two benchmarks. There is a sale process. Yahoo continues to work with advisers. They have not actually selected a bank to say sell this thing. Today we are still talking prematurely about the sale. We are saying that thinking is evolving. Expect something maybe this year to happen. When they do sell the company, we will see who comes to the forefront. Our sources and other Media Outlets have said that verizon , at tely to bid, iac possibly. Multiple bidders. The chance they could get the price to go up a bit. David as somebody who has followed the story, it seems like there is some hunger from this week we had star board saying we dont have time for the board together any longer about what melissa miami do. This may provide clarity in quick order. And it stays off a proxy fight. Its possible that the activists back up and say, do that. That is what we are looking for, monetization of your assets to some degree. Do that, and then you can take care of the yahoo japan and alibaba stake. Yahoo would then become a Holding Company for those two, and then you can figure out a way to spin or sell those, depending on your options, based on a tax standpoint. Apple stock isp, higher today after a very rough week. Is the worst over . David welcome back to bloomberg markets. Im david gura. Its been quite a week for apple. Higher today but earlier the stock took a beating falling below 100 a share after analysts warned; the iphone may be losing its grip on consumers. Worse thanned and expected Quarterly Results blaming sluggish demand for its mobile devices. Lets bring in emily chang from San Francisco. This seems to be a theme becoming a theme, that demand is not as high as it could be. Reports earnings twice, so these are the on audited financials. We will get the audited financials in a couple of weeks. Right now it looks like they are missing on profits, operating coming ing in the 5 billion, less than what analysts estimated. Its not been a great start to the year for samsung, as it has been for other smartphone makers, shares down 7 this year , and down the last three years. Obviously, this is another sign of softening demand for smart. Hones worldwide of course, concerns about a slowdown in china specifically, a huge market for samsung. Samsung has been getting hit at the high and low end. Competition for apple at the low end, competition on the low end in china. We have been talking about apple for the past few days. Xiaomi is also missing 80 million sales targets for the year. The market, it seems, is changing. Either customers are not upgrading as often, or they are waiting for newer phones, or they are quite happy with what they had. It is not a good report from samsung. David i want to ask you about some folks in washington. Josh earnest talking about some folks paying a visit to Silicon Valley here to talk about Cyber Security with executives. Able toinly being demonstrate their ability to protect some of privacy is good for their business model. Having that technology be used by terrorists, im not sure is. They would know better than i. Im not involved in running their business and and not able to look at their numbers, but i do speak with a lot of confidence in saying the vast majority of these Technology Companies are run by patriotic ricans and i do believe and you can ask they are more liquid have the conversation. Ith you than me but i have confidence that those Companies Run by patriotic americans are not interested in seeing their tools or Technology Used by terrorists to harm innocent americans. David josh earnest talking about groups of americans heading the Biggest Tech Companies in the world. The government has been try to get them to come around to the idea of putting a backdoor into the technology to allow the government to surveillance if need be. The attorney general Loretta Lynch and fbis director and james comey is talking with these executives about these issues. It is wellknown that terrorists are using these platforms to communicate, but the company do not want to get information to the government because they dont want to be seen as spying on their customers. Trust to beot of rebuilt since the revelations of edward snowden. To find ays are try way to give them access. The companies have maintained a fairly hard line. We heard from tim cook who said if we give anyone a backdoor, that means anyone can get in, not just the good guys. David thank you, emily chang. You can tune into her show tonight at 6 00. She will have michael chertoff. I want to go back to julie hyman quickly. Julie we have another news instrumentsng texas and Analog Devices have decided against an acquisition of maxim integrated products. Had said it was hiring Goldman Sachs on strategic alternatives. Shares are heading lower. [inaudible] holding study today, not doing much. Texas instruments down 2 . We will be right back with more bloomberg markets. York, it is 3 00 in new 8 00 a. M. In hong kong. Welcome to bloomberg markets. And 4 00 a. M. In hong kong. Welcome to bloomberg markets. Good afternoon, im betty liu. 2016. Week to start the markets are taking a small breather today. They are still declining, though not as much after all the turmoil sparked by china. All on pacedaq, s p to finish the week 5 lower which banks the question, are shortsellers having a banner 2016 so far . Bearish bets against the s p are hitting fouryear highs as volatility remains a name of the game. And could yahoo soon be on the blocks . The company could be backing off of its spinoff plans and looking for an outright sale of this web businesses. Pressure growing from activist investor star board. We are one hour away from the close of trade. Julie hyman has the