Transcripts For BLOOMBERG Bloomberg Markets 20160524

Over there. Im just going to get rid of this on the bottom. This is looking at existing home sales. This the outpacing we were talking about. You were talking about typically new homes being pricier than existing homes. Thats been driving that particular trend. Something else i wanted to mention it, this is the largest luxury homebuilder in the United States and Toll Brothers is beating estimates. The market for costlier home is holding up. Company says its deliveries were up 9 and the average 855,000 is aof significant increase year over year. If you look at the other homebuilders, they are seen a lift here. Its a pretty broad left across the industry before new home sales. That is emphasizing it. What about the broader markets . Julie weve seen a lot of strength in the market. Weve got a gain of about 1 . What interesting is nothing takes significant has changed since yesterday. Were talking about the Federal Reserve being more aggressive in the market have been pricing and. This is a pretty sizable rally. Financials of it helping to lead them of the gains we of been watching. One laggards that i wanted to mention is best buy. Those shares are lower on a couple of things. They trailed estimates and there is the departure of sharon maccallum, the cfo and chief it in a straight of officer. Shes been instrumental in the turnaround at best buy. Mark we have a rally here as well. The euro is at a two month low against the dollar. Every single Industry Group on the stoxx 600 is rising today. Again, there are loads of earning to tell you about. Europes biggest home improver is kingfisher. They had better than expected Quarterly Sales. Improvet should following todays figures because of the pdq strength. It says early in the Transformation Program is not being achieved or exceeded. Its a busy day for Deutsche Bank. They are investigating whether its inflated the value of securities in the mortgage bond trading business. Thats according to people familiar with the matter. Its last night, movies cut debt to one level. That is to levels above junk. It faces mounting challenges it carrying out the turnaround. The coceo responded and said his bank has never had or capital and could easily repay its debt many times over. Investmenthe big for tax in 2016. Weird down by 22 Deutsche Bank is down by 30 is down byit suisse 35 . Chairs are rising as much as 13 . Buy germanys wmf. Its going to make the world leader in professional copy machines. Shares are up by 8. 7 . Youy they may have helped lets check in on the first word news. Emma has more from the newsroom. Emma there are signs that explosion brought down the egyptair jet in the mediterranean. Human remains suggest there was a blast on board. He cant say theres anything that indicates what caused the explosion. Egyptian officials have said the terrorism is the most likely explanation for what happened and not equipment theyll year. French investigators have raided the offices of google in paris. Its part of an investigation into tax fraud. 100 investigators to part in the rain. Google said it complies with french law and is cooperating with the authorities. Brazils acting president is off to a rough start. Forcedget chief has been to step down over allegations he wanted to obstruct a corruption probe. Hes already been criticized for pointing an allmale cabinet. Its a boost for the british Prime Minister in his campaign to stay in the european union. Older voters are switching to decide. 65 went tors over vote to stay in the eu. Thats up from 34 in march. The referendum is unit 23rd. Shery global news 24 hours a day. Thanks. Gainreenback continues its rising again by 4 10 of 1 . Thats reversing yesterdays losses. The dollar is gathering pace that as expectations mount the Federal Reserve will raise rates as early as next month. The Philadelphia Fed president has joined the chorus. He sees two or three rate hikes this year. How much further really dollar rally go . The chief global strategist and he joins us now. You say the dollar is in it. The dx if you look at why, thats how a lot of people define the dollar, its not back near 100 like it was earlier in the year. That comes down to some structural consideration. If you look at the spread of a 10 year treasury, thats what has blown out multidecade wide. The euro has been tracking with that over the last 12 months. Real dollaring strengthened dollar weakness. So goes the euro. We are seeing some similar patterns with dollar yen as well. Get rate hikes this year. Shery its all about currency. The way that they are moving and the s p is moving. Running its been ticket for tech the dollar. You can get along the equity group with the current is weakening. Emergingmarket equities are different. You need the currency stronger. And u. S. Opean equities equities, the three main develop markets are seeing a range of trading. Get along those equities. Its a unique condition that i think is defined by the sort of collective currency in the process the emerging markets are undertaking right now. This processoes leave us . Where is it going to take us . Michael i think there is a competition between the major developed market central banks. As i was mentioning earlier that because the yields are so low in the eurozone and japan, that does putting structural cap on certain weakening trends. I dont think i see the euro going to parity with the dollar. Seen out of we have the fed is an incredibly important message. Basically, they have a global calculus. So long as the euro is low, Interest Rates in the u. S. Are cap. The dollar is the tightening mechanism. The fed has to have a global calculus in developing its policy. You are going to get a more volatile narrative over the next several quarters. The amount of information they have to process is that much more complicated. Currency ande china data is much stronger coming up, that will help to destabilize. Its going to lean on the fed in a very serious way. Mark we spoke to the barclays chief executive earlier. He gave his opinion on china. It check this out. To a drop to adjust in commodity prices. Ive got a lot of confidence in chinas ability to manage the transition in the chinese economy. We all may be a little bit too optimistic about the outlook for the global economy. I dont quite see the risk there. K are we to miss pessimistic . Very china has a they have a lot of what to chop. They have a deleveraging crisis. They have all kinds of debt. Get back gets back to the Economic Transformation and they are trying to do that in record time. I think he makes very good points. Atna has a lot of gunpowder its disposal. The process by which they are going through these evolutions is going to be fraught with twists and turns and volatility. Have a lot of the debt problem they have could be cured by a chinese tarp system. The chinese will solve for whatever ends up working. How they find it wind up getting there will be an interesting path. Mark thank you for joining us. Coming up, Congress Makes a promise to puerto rico. Can they keep it . Joins us next for a bloomberg exclusive. Mark live from london and new york, im mark barton. Shery you are watching Bloomberg Markets. Washington,to congress to step last week, rescueg the deal to help puerto rico from its debt crisis. Facesiece of legislation a major hurdles as congressional leaders work out the details and disagreements. We are joined by one of the architects behind the bill david we are joined by rob bishop. Bigressman, july 1 is the deadline on the horizon. Whats the likelihood this will get to the president s desk before that . Rob it will be tight. Its possible. The issue is we can have this bill passed through the house and close to being passed by the senate. It gives the market a better understanding of whats going to happen. Hard deadline . A rob not necessarily. I think once again we have to be further along in the bill. We have to give security and financial obligations to the market. It can go on beyond that. Deadline isxt big not until next year. There is a big election between out and then. Do you worry about that . This bill needs to come as quickly as possible to solve the problem. Taking it longer does not help the situation. I want to passes closed to july 1. If they blow through that and default again without passage of this bill, weve got problems and situations are going to get worse. The solution will be worse. Respect theoes this priority of the bond market . Thatse language specifically in there to make sure we dont blow through the parameters that are put their in puerto rico. The goal of having this oversight is to make sure we bring financial order to the island so everyone gets paid back. We are not picking winners and losers. Everybody has to be made whole. This is the task force to do it this creates process to do this. They want to be on the island and they want to go through this process. We have to do it as quickly as possible. Bill deal withs pensions . Rob that the exclusion of anyone else. Theyve got to be put on a financial order as well as helping grow the economy. Thats what this bill does. We have a board that goes down there and it comes up with the plan. They have the authority to implement that plan and make sure that it stays online. Thats the security that investors need and thats what pensioners need. We will solve the problem. David it seems like you enjoy the support of the white house. Said we are disappointed it did not have longterm medicaid solutions. Does this bill do enough to foster Economic Growth . Rob it does. The high cost of energy, we are going to be able to streamline the process we can lower the cost of energy. There will be a task force to work with energy zones. Crux, really what is the to bring jobs back to the island. Other issues are secondary. David it starts tonight and goes tomorrow. Are there any big changes that will be made . Rob i think once we pass this bill and i think were on the cusp of doing that. Both parties recognize have significant the issue is. He will show everyone who has invested that we have a path forward to solve this bubble that has been decades in the making. It will be successful. There is historical precedent for what were doing. Shery thank you, david. Its time for the business flash. These are some of the big stories in the news. A judge will get enough date on the settlement talks in the volkswagen cheating scandal. A tentative deal was announced last month. The option of selling their vehicles back to the company or getting them repaired. Hackers may have targeted more banks than previously reported. Exploited weaknesses in how banks connect. Iny stole 81 million february. They are boosting security members for member banks. There is another twist in the Sumner Redstone eagle drop. Two trustees of been added to the family trust. Replace two former trustees. Suing to block his removal. That is your business flash. You upere going to get to speed on stocks. Twitter is hitting a record low. Or Bloomberg Markets is right ahead. Mark youre watching Bloomberg Markets. We are looking into the market desks with some of the companies that are moving. Julie lets start with western digital. Though shares are up 4 . Im looking at very analyst up grades. Upgrade. Lking about an will beyst says they giving some Forward Guidance and that will be a positive catalyst to help eliminate uncertainty on the coming acquisitions. Up performy should appears over the next few quarters. Shares of twitter are trading at a record low. Thats as they roll out some changes to the way users use the service. Users will be able to retweet themselves. It will no longer count toward in 140 character limit are the stock is being downgraded to self neutral. This is becoming less of a musthave company. For it toy to large make sense on a risk reward faces. Thats helping push those shares down. Some of the declines we are watching today include cf industries. This company went up yesterday. Today its getting a trio of downgrades. Says this adds to pressure on the companys fundamentals. Though shares are down about percent. Analysts say there is nearterm earnings risk. Shery still ahead, it seems that tim cooks recent trip to india may not have enough. They face a major setback. Details are coming up next. Shery live from bloombergs World Headquarters in new york and london. The birth markets. Lets check in with first word news. Emma has more. They will meet in brussels today for the next step in greek debt relief. They will figure out how to give 12 billion in aid to the greeks. It will restructure 360 billion in debt by lowering Interest Rates and postponing payments. Markets are given a vote of confidence in turkey. Keep the minister will last man standing of a market frenzy credited with the economic boom. The people remain deputy premier. After praising the new relations between the u. S. And vietnam, president obama is using the second day of his visit to promote greater freedom for citizens. He said that better human rights would improve vietnams economy and stability. Atse long security lines airports of led to a shakeup at the tsa. The head of Security Operations has been replaced. Losnew chief has run angeles and yorks kennedy airport. High School Graduation for some couples. They were part of the class of 2016. They live in iowa. In 1997. Born global news 24 hours a day 2400 journalists in 150 news bureaus around the world. Lets do apple. Tim cooks trip to india may not have paid off. They are not going to be able to open Retail Stores in the country. This will be the year that the iphone takes off in india. Is the Group Vice President and senior analyst. Thank you so much for coming in this morning. We are seeing that investors may not be confident. 27 do you seewn room for upside . Yes. Nehal is the Growth Market so slow that you can no longer get growth out of the iphone. That does not matter. Where they do well is once the scurve,aches the thats when they gain market share. That means more than incremental users. They gain shares at that point in time. They are going to be gaining shares. In india, they are still at the very early portion. They do very well. Thats when you have high income individuals adopting a technology. They will do very well over the next couple of years. Become very price sensitive users. Right now, things are lining up extremely well for the next couple of years. Shery what do you mean by that . When we saw their recent report, we found out that apple may not be able to rely on china further growth anymore. They were down there 20 . What does that mean . There is a shareware people do not want to upgrade. They are extending the lifecycle of their product. Iphoneu had also for the 6 was a massive number of users into the ecosystem. The survey data that shows there will be a retention rate. Of will have new increments users coming over from the android ecosystem into the iphone. Mark have this news from india. We are running the story today. The Indian Foreign investment motion board ruled that apple must comply with regulations to procure 30 of it proponents locally to achieve the ability to open one of its stores. How much of a blow is this to apple . In is aone of its trend key marketing strategy. Nehal yes. Its a negative in a vacuum. Toectations with respect Opening Stores in india . I dont think there was a lot of expectations there in the near term. The survey data was conducted before the news came out. I doubt that most of the disciplines were aware that apple was planning to open stores in india anyhow. Gainingar that apple is brand value in india. Stores, 80 they would do even better than the increase in uber user base. My interpretation is the data is what it is. There is an upside the on that and that they not transpire. I think thats good relative to where expectations are. Mark whats the risk. I am looking at the anr function on bloomberg. Bullish analyst is more than you. Is 157. E target 84 of analyst have a buy recommendation on apple. What is the risk that you are too bullish . Isal mike price target based on eps estimates. That is a discount to where it has to be. The question becomes what is the catalyst to survive . To giveouve got yearoveryear iphone use. Weve been getting the deterioration of the stock price. I think thats going to push to 131. This year over year growth is going to be the same. We are on a sick of pitted upgrade. They have a stronger refresh cycle. Im not sure why that is. Result, we are to have the same growth system. Youre going to get two years of adjustment. Thats going to drive apple being a good longterm investment without the volatility associate with product cycles. Shery thank you so much for your time. Come, stay tuned for better returns from wall street is banks. More of this interview from beijing is next. Shery lets get straight to julie. She has breaking news for us. Beie monsanto is going to rejecting the offer. Its not a surprise. 122people viewed the price as a starting point in negotiations. The shares are taking a little leg up. This does reflect some investors skepticism that even at the two sides can agree on a price, regulators will allow a deal to go through. Weve heard some rumblings in congress about possible concerns about deal happening. You can see those shares in european trading taking a leg lower. Thatrs is reporting monsanto is rejecting the initial offer and is seeking a higher price. We will bring you more developments as we get them. Mark lets have a look at whats happening to markets in europe. 49 minutes away from the end of the trading session. Stocks are up. The euro is down to a twomonth low against the dollar. The trend since last monday has been one game danes and one day of losses. Industryhe moving groups. Thats the best performing bank up by 3. 4 . Which bank was downgraded my moodys. The bank is never had more capital. 2. 8 . Is up thanisher reported better expected Quarterly Sales in the u k and france. Basic resources are up. We saw sterling rises much is 1 against the dollar. Testified. Lawmakers had some interesting comments. Creatingendum is uncertainty for the economy. Paperslling data remaining. Things are fairly changed in coming up with a deal that would give more money to the embattled country. Lets head to the u. S. Abigail is live. She is at the nasdaq. Abigail were looking at a fullblown rally. The index is up 1. 5 . Microsoft is higher. Microsoft Office Revenue is poised to accelerate. There is a Cloud Business based on a survey the firm conducted with public cloud customers. He sees more than 15 upside on a stock market that is down by 8 . He is calling for a bit of a turnaround. Mark what is helping the nasdaq . Abigail gopro shares are soaring. That is four days in a row. That is the best winning streak in four months. Multiyeard a partnership with red bull. The stock is soaring today. There is the question that go pro has been down anyone percent over the last 12 months on a string of earnings problems. Partnershipll tell can turn that situation around. Thank you. Shery thanks, mark. Its time for the Bloomberg Business flash. Sony is forecasting annual profits that missed estimates. A chipe being hurt by factory damaged by an earthquake. Had forecast this would be its most profitable year in almost two decades. Moodys has cut Deutsche Banks credit rating. Just twowered to levels above junk. The longterm deposit rating was cut to 83. They face mounting charges carrying out the turnaround. The ceo says the bank has never had more capital and could be played replay its death many times over. Toyota is recalling 1. 6 million vehicles the u. S. To repair faulty airbag inflames. They are made by the japanese company. A federal regulator set up to 40 million more cars could be recalled. 29 million have been recalled before that. That is your latest business flash. Much more still ahead. Is rejecting the offer and seeking a higher price. We will get the latest when Bloomberg Markets returns. Shery reuters is reporting monsanto is rejecting the offer to seek a higher price. Weve been following these developments. When we hearing . Understand monsanto is reject the bed. This is not a huge surprise. Since the offer was unveiled share,ay at 122 per monsanto would probably reject the bid. They will seek a higher offer. Mark the shares in monsanto suggest investors have much confidence in the deal. Buyer is suggest that going to have to raise it shares . Simon monsanto shares have traded at a discount since payers offer. There is skepticism this deal could go through. Its a question of the Regulatory Approval it might he needed. There are other deals in the space. We have dow dupont getting together. Are subject to regulatory scrutiny. Were not quite sure how those will play out. That may have ramifications. Shery what do they hope to get out of the deal . Simon they are the largest seed company in the world. Its a preeminent producer of these products. Produce pesticides and crop chemicals. It seems a pretty good fit. There is very little overlap. Thank you so much for your time and jumping in of this breaking news. Get ready for the richest and glitzy is weekend. That is just some of whats being offered at this years auction. This is the 36th annual charity event. Attendees spent 16 million. He joins us right now. Good morning to you. Good afternoon from london. Thank you for joining us. How much pressure is on you to break the record amount that was raised a couple of years ago . There is a lot of pressure to put on a great event. Its a big honor to lead the wine auction. It does so much for napa valley. The bidders are all super generous. Its going to be great. Lot . What is the best lot 22 . Thats 400 bottles of wine. 15 what do you think is the best lot . Agustin there are a couple that are pretty exciting. I think the warriors one is great. You get to go see the court side game and travel with the team on the jet. You get a championship game from last year. Thats a Pretty Amazing lot. Dinner hosted by robert parker. That is some of the best wine in the world. Thats a pretty special event. There is a great to italy. There is to south africa. Bottle thatne time is a onceinalifetime thing. Great thiss that are year. They have done a great job. Shery i dont think i can afford any of these lots. Year, your auction fell shy of a record high. It was 16 million. How much you expect to raise this year . Agustin i dont know. Its hard to predict the auction. Ive been going since i was a little kid. Hard ase you its picking the stock market. Its hard to predict how its going to go. But i can tell you is we have amazing lots this year. For those of you who may be coming, we have a great event. We are bringing a fabulous chef from argentina to cook for everybody. We have one of the most renowned salsa bands to liven up event. Its going to be a lot of fun. Do you see any different trends in the industry as you work through the year . Agustin could you asked that question again . You see any different trends in the auction market . Agustin we have a core group of attendees that have supported the auction for a long time. You are trying to bring in new wine aficionados every year. Were going to have a strong contingent from the silicate valley. Is a great relationship between napa valley and silicon valley. That could be a special treat this year. Shery thank you so much for your time. You can read more about luxury at bloomberg pursuits. Up, everyone from mark carney to barclays weighs in on the u. K. Referendum. We will have those comments. Ecb vices the president. Thats a quick look at European Equity markets. Stocks are rising today as the euro falls against the dollar. Weve had some better than expect news from the likes of kingfisher. They reported betterthanexpected Quarterly Sales. Performing is included and i will show those in. We continue to focus on Deutsche Bank. It was downgraded at movies. The european clothes is minutes away. Stay with us. Shery it is 11 00 a. M. In new york, for clock in london, and 11 00 p. M. In hong kong. Im sherry and standing in for betty liu. Im mark barton youre watching the european close on Bloomberg Markets. Mark we are going to take you from new york to london next hour. Here is what we are watching today. Russia is returning to the International Bond market. One bank is making it happen. We would give you the latest on the. At. Shery green across the board with tech and financials leading the gains. European shares are also higher thanks to the falling euro. His mark carney makes final appearance ahead of the Eu Referendum next month. He says the central bank has been a neutral party and the brexit th