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tv   Market Makers  Bloomberg  July 31, 2015 8:00am-10:01am EDT

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good morning. i'm matt miller. sacrlet: i'm scarlet fu. matt: we have commodities challenge. it might not be good. we could see some big drops. let's get over to vonnie quinn at the breaking news desk. >> let's wait and see if there are any adjustments that need to be made. the analysts were looking for $1.11. the second quarter, upstream volumes increase. that is an increase there. refining results should benefit. we want to have a look and see whether refining margins can make up for lower crude oil prices in the case of exxon.
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second-quarter revenue, $74.1 billion. that is the number that we were looking for for revenue. once again, second-quarter earnings per share one dollar. $74.1 billion, second-quarter revenue. scarlet: thank you so much for that first read on exxon mobil results. we have alix steel. this is our moment. she is busy looking through all the numbers. this earnings per-share number. matt: versus almost three dollars last year. it is an amazing drop. alix: we do want to hear where the miss actually happened. the common theme for earnings has been production and job cuts. what they do with production is mattering a little less. can they keep their dividends? do they have cash flow to cover
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it? that is the focus. every quarter, it is usually production, production production. that came in bang in line. those metrics matter a little more. we are getting a reading on capex comeing in at $8.3 billion. scarlet: we were talking about production. why is it significant to meet production target? alix: big oil has had a tough time growing. it is important that they keep these production targets study. exxon has had an aggressive growth profile for a major. expectations are down sequentially. last quarter, they made about 4.2 billion oils -- barrels of oil equivalently. matt: how is it going to look going forward if they start reducing workforce labor? alix: we should make a
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distinction that exxon is in the best case scenario. they are an outlier. they did have a big monkey on their back in the form of xp l energy acquisition -- xpo energy acquisition from a few years ago and there is still an oversupply , but they are in a cash flow world better than anybody else. they might not need to cut from their dividend. scarlet: there is annexed on exceptionalism that we are talking about. vonnie:alix: yes. they are cutting their share of buybacks in half. it is all about dividends. matt: we have more breaking news. in the form of m&a. i want to go to bonnie for that. -- vonnie for that. vonnie: it is a $2.45 billion deal. berry plastics is based in
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evansville, indiana. the stock price is rising about 3%. the price tag is at $2.45 billion. avintiv is a closely held company. we will see a little bit more about what of into -- avintiv does. it will create a global leader in plastics with that acquisition. scarlet: thank you so much for that update. matt: by the way plastics must be getting a little bit cheaper. berry plastics takes up avintiv for 3% of exxon mobil's quarter. scarlet: companies that rely on oil related products are seeing some m&a. when we seeing him and a with big companies -- m&a with big
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companies? alix: it could be happening soon. because of the fall in oil price, they could be getting less for reserves. if they continue to see lower oil prices, hedges are rolling off. that could spell doomsday in 2016. valuations could come down. scarlet: all right. allied steel -- alix steel keeping an eye on everything. matt: what a pleasure to have alix steel onset with us. scarlet: the top five things you need to watch. commodities are extending their worst monthly slump. oil was already in a bear market and it rallied and now it is in another bear market. a bear market within a bear market. matt: who was the citi analysts
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to set it might hit $20? not that that was a long-term forecast. our people as bearish now as they were the first time oil had its big drop? alix: no. citi still thinks there could be $40 oil but current production cost, capex cost and job reduction will lead to a tighter market perhaps third 2017. -- through 2017. you are going to want to watch for the non-opec oil non-us the big deep water projects that take years to come on. of those production forecasts miss, you are going to see trouble. matt: we have a number of commodities guests to speak with in the next couple of hours. we are watching puerto rico.
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their public finance corporation will likely fail to make it $58 million payment due tomorrow. the corporation was created to help puerto rico finance various governmental activities. this will be the official default of puerto rican debt. then you will see all of the creditorstogether to try to restructure the loans. scarlet: we have a quick take function where we give contacts to puerto rico. it has the population of oklahoma. yet it has more debt than any u.s. state after california or new york. matt: what is the quick take function on bloomberg? scarlet: it will get you smart on anything you need to know. puerto rico has been criticized as america's greece. matt: they said, i would tread desk loudly trade you greece for puerto rico. scarlet: i don't think schaeuble kids at all. let's head over to julie hyman.
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julie: thank you. talking about the hotel industry. intercontinental denied merger talks with scar would -- starwood. starwood fell sharply yesterday. a starwood acquisition by intercontinental would create the world's largest hotel operator. starwood is exploring strategic options. if it is not going to be intercontinental, if this denial is correct, then we will have to figure out who it could potentially be if it is not going to be these two getting together. scarlet: i wonder if airbnb is forcing hotel operators to consolidate? matt: i think it definitely is. there is a creeping m and a trend in hotels. scarlet: their business model has structurally changed. matt: absolutely.
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i'm going to bring your number four. we have today's economic data to watch. consumer sentiment, numbers for july, they come out for july at 10:00 a.m. it has not been pretty for this last month. obviously, you see a lot of other economic indicators. what are we looking for? current conditions. 106 was the reading last time. we will see. i think the forecast for 94, as far as sentiment, that would be better than last month. scarlet: we are leading up to next week's release of data, which includes the core inflator and jobs on friday. at number five, moore oil company earnings are in the pipeline. it is a miss on the bottom line. in 21 minutes, chevron will be
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reporting earnings. they are the number two u.s. oil company behind chevron. -- exxon. why would chevron come out with giant cuts before earnings? alix: great question. maybe to get ahead of it and do something different. we heard a lot of job cuts from shell. it is not unusual that we would hear that. i do want to point out that where the integrated model is going to work this quarter and where it has not worked in the past is in downstream operations. it is basically the products that we make. that has been really crushing it. revenue came out at about 1.5 billion dollars. that is up year on year in terms of quarters.
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almost $6 billion year on year. matt: we just showed a chart highlighting job con announcements. scarlet: thousands for schlumberger. matt: if you are going to announce earnings that are a dollar from this year you have to show investors that you are doing something about it. chevron is expected to announce earnings of $1.16. that compares to last year's quarter of $2.58. scarlet: i like to point out the year ago number. the consensus has been brought down. you compare it to a year ago. that is where the rubber meets the road. alix: how about six years? this is exxon's worst or mint in
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six years. -- worst performance in six years. the refining business become so important and it will be something to pay attention to. chevron's integrated model was a bad thing are these guys. everyone wanted exposure to the shale companies and these were the unloved that sisters of the oil community and now this is really helping them survive this downturn. they made money. that is something. scarlet: you were looking at this earlier in terms of earnings overall. alix: although, results have been much better than estimated. scarlet: alix steel, thank you so much for hanging out with us.
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and for giving your intelligence. matt: these two women are probably the most well prepared. alix: that is only because you are contrasting yourself with us. scarlet: smack down. [laughter] matt: what you missed at 4:00 p.m. eastern. scarlet: we have chevron breaking in about 15-18 minutes. matt: they are expected to earn $1.15. we will bring you rob leary president of asset management. they have $869 billion under management. ♪
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>> there are cheers in beijing today. the city has been selected to host the 2022 winter olympics. no snow in that city.
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if it did snow it would be black snow. scarlet: pollution. matt: pretty polluted. the only other bid came from cause extent -- kazakhstan. beijing will become the first city to host both the winter and summer olympic games. more top stories for you. the troika has returned to greece for the first time since alexis tsipras became prime minister. they are meeting in athens for the minister. he needs the organizations to come through with a $93 billion bailout. that has caused rebellion among some members of his own party. investors have sued american express for losing its lucrative agreement with costco.
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they say american express failed to inform investors of the importance of the relationship. cosco accounted for 8% of the revenue last year. fitness fanatics cannot get enough of soul cycle. we will see what investors think. they have acquired for -- apply for an ipo. they have a cold like following -- cult-like following. there are 38 studios across the country. scarlet: let's get to our guests. our first guesses from tia. now almost 100 years later, it has grown into a full-fledged financial services firm. here to discuss how the firm is doing and what is next is rob leary, the president of asset management. >> great to be here. scarlet: great to see you.
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we see commodities, emerging markets. tell us about the correlations you see across asset classes and how you work to avoid that inter-linkage. >> it is an incredibly turbulent time in the markets overall. our investment performance has done incredibly well. part of it is because we are so well diversified. one of the things we really like about a well diversified portfolio is that balance. 40% equities, 44% fixed income. we feel very good about the balance overall. scarlet: what do you give up to get that lack of correlation. do you give up liquidity? >> we do. we are a very long-term investor. whether it is an global real
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estate or commodities or other investors, we take long-term on credit and other investments. we find a way to give up some liquidity in order to get higher returns for our clients. we also go with uncorrelated asset classes as a way to balance portfolios. matt: you have 5 million individual clients. 15,000 institutions. you manage my mother's retirement fund. iowa's think of tiaa -- i always think of tiaa cref as managing investments for teachers, but that is his only about two thirds of your client base. >> we are very [laughter] happy to have your mother. >> but that is our core business. we provide financial services for those who serve others. about a third of our client base
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is third-party asset management globally. everything from retail investors to pension funds around the world to all types of investments. matt: you don't have to serve one stolid -- solid constituency. are you still able to make ethical choices in your investing or you do that social investing where you would not buy shares of the maker of an assault rifle? >> we have a long history of socially responsible investments. it is something we believe a lot in. we have about $20 billion and in that area. that is an area we are looking to expand in. we try to be a global asset manager with a conscience. if people want specific socially responsible investments, we can honor that. scarlet: stick around. you are going to stick with us to talk more about socially
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responsible investing. we will be back. ♪
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matt: we are back with rob leary, president of asset management for tiaa-cref. before we get to social investing you talk about the individualization aspect of what investors can do with your fund. have you make that possible for everybody to tailor portfolio to what they want? >> for those in our retirement system, we offer all types of individual advisory to help them taylor as much as they want. more broadly are mutual funds are offered around the country
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and increathe world. they have the ability to do that directly with us or through a financial advisor. matt: are you seeing more people become active in their own investments? >> we are seeing that. people want individual attention depending on who they are. increasingly, we are able to offer that in a user-friendly way. scarlet: part of people getting involved is investing in a socially responsible way. i wanted to bring in a quote from one of your competitors. here is what he told us. >> we are not doing it for social change. we don't make laws and we don't bring about social change. it is about investment risk. if you look at those industries they have not done well. scarlet: what do you think of
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that? that divesting does not drive change. whether it is from a gun maker or fossil fuel company, the social responsible investing is not about change? >> let me clarify. callister's would not be a competitor of ours, maybe a client of ours. they are a large public pension fund. our constituency is everybody from the teachers and professors you mentioned and a lot of people have different goals. somewhat more risk, some want less risk. generally speaking, we try to stay away from somebody like investment decisions and the like. in our passive portfolios, they represent a broad, diversified market here. it is really impossible in those situations to make those kind of choices. we try to give our investors of all kinds the full panoply of
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investment choices. for those who are particularly socially conscious, we give them specific funds targeted to them to make the choices they want. matt: you have taken alternative investments a lot more global. what are the winners for you? you mentioned passive funds. we talked to someone is that active investing is the way to go from here on out. >> i agree. we have had this incredible bull market after the financial crisis. passive has turned out to be the way to go. it was an elevator ride on the way up. i think in the last two quarters, we have seen the number of acid integers -- asset managers have distinguished themselves without the benchmarks very well. i think that will continue. i think we will continue to see volatile markets. i think this is the time to think more about active
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management overall. that is another area in evolving markets. matt: thanks so much for joining us. >> thank you very much. scarlet: we've got some breaking news right now. a deal involving ups. let's go to vonnie. vonnie: $1.8 billion in cash is what the deal is based on. we learned about this earlier on. it has become official. it is happening today. a deal between coyote and ups. this is the third largest logistics deal in the industry this year. xpo logistics later that month bought a european counterpart. a deal in the transportation and delivery business. scarlet: ups has made a number
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of acquisitions. matt: we talk about m&a prevalent in some areas. m&a are prevalent in some areas in the oil industry because they are not earning as much as they were in the past. you will see smaller players he bought up. others are making money hand over fist because their fuel costs have dropped. scarlet: chevron numbers have just crossed, what do you see? on a: -- bonnie: we will see if that is the final figure. we might get adjustments. they are looking for an adjustment of $1.13 on adjustments. it is a difficult environment for these big, large-scale oil companies. there was a loss of one point 04 billion dollars in the second quarter.
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second-quarter revenues for chevron came in at billions of dollars. it is a big mess overall in revenue for chevron. scarlet: thank you. bonnie just updated us on the upstream earnings in u.s. and internationally. negative $1.04 billion for upstream earnings. for international upstream earnings negative $1.8 billion. matt: they will fire 1500 people , shall will fire people. we are looking at a 0.2% gain. we were looking for a 0.6% gain. you're not looking at the information in employment that would have driven the fed earlier to a rate cut.
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it is quite a bit less 50 basis points then we have seen in previous months. it is not rising as much as analysts had anticipated. costing more than an iphone. you have to take it for three months. is it worth the risk? we will talk about it next on "market makers." ♪
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scarlet: breaking news and the health care and we have the health care editor for bloomberg news. it has to do with anna ebola vaccine? >> merc and global health organizations have been running a trial in guinea where the outbreak has been the worst and killed over 10,000 people. they have done a 4000 patient
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trial. they put it in health-care workers on the front line. they found it was 100% effective . it is a huge deal for public health, for people in that part of the world, for health workers who attempted to fight the outbreaks. scarlet: is this going to make money for the company? >> it will not be a huge moneymaker. other health organizations will be paying for these types of things. it means that you can send people into these outbreaks. you can vaccinate people and economies will not shut down for months while an outbreak is going on. matt: that is incredibly good news. the story that we originally booked you to talk about is a two or for hepatitis c. it is expensive. we are talking about an actual cure? >> it is a drug that is a massive breakthrough.
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because of the cost of the medicine -- scarlet: $1000 a pill? >> more than $1000. it is to wipe out the virus in your body in 12 weeks. we did comparisons. this pill actually sold better than apple's iphone in its first year on the market. scarlet: in terms of revenue? >> apple, for comparison in 2008 it was less than $7 billion. this thing will not keep going up in the same way as the iphone but it is the biggest drug launch in or missing goals. matt: to be fair, i love my iphone but not as much as i love not having hepatitis c. if i did have it, i think i
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would give up my iphone not to have hepatitis c. scarlet: are there follow-ups? >> in 2013 gilead brought out their first pill. you still had to take it with other drugs. it was still a massive moneymaker. a year later they brought out the next generation pill combined it with another medicine, relatively minimal side effects and the fire us was gone in 90% of patients. -- and the virus was gone in 90% of patients. matt: now also very exciting, it is friday. we play the yearbook game. she is in the media and entertainment business and graduated from nutley high school in new jersey in 1959. scarlet: i like that it is a
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woman. it is rare that we find pictures of women who are high up in the business world, who are high enough up in the business world for people to guess. usually it is white men. matt: she graduated from the utley high school -- from nutley high school in new jersey in 1959. scarlet: we'll be back with more. china winning the right to host the winter olympics in 2022. ♪
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scarlet: a live shot of hong kong. it is friday night in the
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southern coastal chinese city. the winter olympics will be held in the chinese capital. china edged out kazakhstan to host the games. for other countries dropped out before the vote. you wonder if the procedure of -- if the prestige of hosting and olympics game is fading. you cannot tell me it was close. >> it was. matt: both choices were equally bad is what that says to me. >> it highlights that there is list interest in doing this. if you highlight kazakhstan, who has had the same presence since 1991, the chinese government will not allow not a democracy, so that might be the way that it landed.
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if you look at the two proposals, beijing has all of these hotel rooms that they built for the summer olympics. they will repurpose a lot of the arenas. some of the alpine events will take place in other cities many miles away. there is not a lot of snow or mountains near beijing. scarlet: do you see the mountains? they have hardly any natural snow. >> they say they will have to have a lot of man-made snow. something going against them is that it does not look that our pine. scarlet: these photos were taken the between anyway 20 and 23rd, two weeks before when the olympics would take place. they have to start stockpiling now. >> a resort town on the water is an awkward place for the winter of ethics. scarlet: it is where someone
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goes to summer. >> if you look at the last five, sochi cost $5.7 billion. it is interesting. we do not know how much russia paid. if two one billion dollars. a lot has to go into the infrastructure. matt: here is the thing. every time there is an olympics, every time there is a world cup, we talk about how no one makes money, the cities lose out, no one wants to do it -- but everyone wants to do it. it occurs to me that it is not a popular thing after the fifa bribery. when we think that russia and quatar paid off fifa to get their world cups, is it possible that they paid off when they
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only have a bid from kazakhstan and china? >> i will not speculate, but the bidding process has been changed to make it less susceptible to bribery. matt: i'm not saying that beijing would at all go around that procedure -- >> you look at boston dropping out of wanting to host the olympics this summer. there is a public opinion component. 90% to 95% of the population wanted the games. boston could never get over 40%. scarlet: and the boston mayor did not want to sign on that taxpayers could be liable. matt: and in china, you vote what ever you are supposed to vote. scarlet: 90% to 95% approval. president obama is warning that components of the nuclear deal
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with iran is putting the squeeze on congress. he said the politics of the deal would be tough for lawmakers and that he can tell when they start getting "squishy." they're also sponsoring trips to israel for some members of congress. congress has approved a temporary highway spending bill and send it to the president for a signature. three months will give congress time to negotiate a longer-term plan. there is a reports that the next generation apple tv will be revealed in september. it will have more storage, a touchpad, and an operating system with voice control. it would be the first major change cents 2012. -- since 2012. matt: i never use voice control. scarlet: it never works very
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well. matt: coming up, more on chevron's earnings, and its plan to cut costs on commodities friday. ♪
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matt: we are dead in the heart of burning season. julie hyman joins us with the earnings movers you need to be watching ahead of the opening. julie: after the close yesterday, they are rising by nearly 8%. they topped analysts' estimates. booking is one of the important measurements for expedia. they were up 27 percent, that includes the chinese company they are in the process of selling called elong. their growth was up 35 percent. expedia rose yesterday. they are in the process of
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acquiring orbit. regulators were on the way to approving the deal. that is something we will be watching for. linked in is another we are watching. they have been accelerating since they reported their earnings initially down 2%. there are now down 8%. the company is saying their annual forecast increased, which would normally be good news, was due to the acquisition of their education website. there are concerns about the core linkedin business, that is why we are seeing drops. it looks like most importantly, in the eyes of investors that the cfo is departing. they say it is normal in the process of the company, that it is still young and it would be changing its cfo. matt: julie, thank you for that
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update. a big drop for linkedin. it is interesting what is going on in social media. chevron released earnings. a steep drop in oil prices seems to have taken a serious toll on the bottom line. joining us is the resource managing director. thank you for spending the time. why does this mean for jobs going forward? you see a volatile commodity situation. will these companies regret cutting headcount if prices bounce back up? paul: if the prices bounce up quickly. we are in peak demand season globally. the concern is that we will see lower demand in the back half of the year. you have to be careful about where the dollar goes. certainly, from a fundamental
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standpoint, we are oversupplied. of focus number will be the latest report from the u.s. production and if that is correcting. most do not think it is correcting fast enough. scarlet: i would like to provide perspective. the lowest profit more than a decade after low energy prices prompted the breakdown of oil and gas fields. are we in the third inning or the eighth inning, if you were to make a baseball analogy? paul: we will be waiting for the conference call. we need to understand more of what they are doing. generally speaking the write-downs will get worse as the company's complete their filings. in terms of endings, we are in the second or third. it will be exacerbated by the fact that so far we're averaging
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not far off of $50 oil. last year we averaged $90. this is the beginning not the end of the right to down process. scarlet: chevron did not raise their dividend last time or today as far as i can tell. if they do not do that this far, chevron would lose its status as a dividend aristocrat. paul: i think they will raise, but they are now conserving casts. it is scaring people, there is no question about that. matt: is this a trend you will see going forward? demand going down with more alternative energy sources being used, for example, in cars? will there be a continuous drop or will there be some and to push demand back up? paul: demand is strong globally.
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tesla sales are miniscule. people are looking at the 30 or 40 year view and thinking in the future we will have solar panels towering electric cars, and that is an issue for the long-term value of oil companies, for sure. matt: there are a lot of hybrid cars that are not teslas. thank you for joining us. the world resource managing director at wolf. it is friday. we are playing the yearbook game. we are showing a woman who graduated in 1959. scarlet: that makes her in her middle 70's. matt: she went to nutley high school, new jersey. that is where stephanie ruhle grew up, the state, not the county. scarlet: three guesses. ♪
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♪ ♪ (ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store.
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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. scarlet: tgif. matt: absolutely. scarlet fu with me, matt miller. scarlet: growth in latin america, and an exclusive look at the latest luxury suv. matt: this is the xp90. it is very important for volvo. they have not read done their suv and 12 years. it was incredibly popular when it first hit the market.
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they lost some luster. they hope to gain it back. scarlet: we will reveal who is in this friday's yearbook game. 1959, nutley high school. matt: two of the world's biggest energy companies have been rocked by the worldwide oil rich. exxon mobil has its worst quarterly performance in six years. exxon made have to do more cost-cutting than planned. chevron's profit was its smallest in more than a decade. lower energy prices caused him to write down the value of their oil and gas fields. we heard from an analyst that they are only in the second inning of the right to down. forecasted revenue heat expectations, that was contributed to an acquisition. there is concern that linkedin
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is slowing down and its core business. scarlet: who was july's biggest loser? bloomberg tracks 93 stock indexes. juliet has the story from hong kong. juliet: knows a prize which market won the award for the worst performing. the shanghai composite had its worst month in six years in july. there was unprecedented government intervention. support measures lifted measures by 18%. this week, evaluations returned unsustainable, saying that they rose 8.5% in one sitting. christine lagarde remain bullish. scarlet: on the biggest loser in july. they james has something to celebrate. it was selected to hold the
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winter olympics. beijing does not have a lot of natural snow. most of the outdoor competition will take place 40 miles away. the only other cities to bid for the games was almaty in kazakhstan. matt: soul cycle, the high and chain complete with loud music and candlelight filed for an ipo. soul cycle might have a cold following, even i took a class though i barely survived. will it catch on? leslie? thank you for coming on. this is obviously -- or at least it was trendy. is it still as popular as when i took the class? leslie: it is still hard to get into the class. a lot of the cold loyalists -- cult loyalists sign up at noon
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every day. matt: it was a great workout, i will say that for sure. it is definitely not sent ring that i would -- i don't think i have the stamina to do that on a regular basis. leslie: or the bank account. for a single class in new york it is almost a dollar a minute, which for me helps me work harder, because i think every minute counts, but it is not something you can do on a regular basis. it is a treat workout. not something you dread going to. it is a party that you pay a premium for. i think that is part of the reason they have become so successful. scarlet: if it is $34 for 35 minute class, it will probably get a cult following in the day
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area or l.a., but what about the middle of the country? leslie: that is the big question. even gym chains are much cheaper. my sister spends $25 a month compared to $200 here. matt: if you're going to join england knocks -- equinox it is a couple hundred bucks a month. leslie: and you look at a couple hundred bucks a month versus a $34 a minute class, you are paying less for an entire month for a membership in the midwest. leslie: you have seen very little cannibals -- very little channelization. you want the extra encouragement. matt: they have cycling classes
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with loud music -- leslie: but they do not have the instructors and the candlelight. it is more of an experience. and the calorie count. if i look at the computer on my bicycle in a regular span class it is may be 300 calories. and so cycle you can burn as many as 700. scarlet: you wonder if this is a new york city bubble. does it translate? can you scale it outside of the city? it seems insane people would pay $34 for 35 minutes on a regular basis outside of this area. leslie: that will be a huge question at the road show as this company seeks to price its ipo. you have a class pass with all of the different spin classes.
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spend classes are offered at home. will soul cycle be able to compete with this particular niche offering, and will it be able to be translated outside of this city? matt: the soul cycle class is $.75 a minute, and there are 14 hundred minutes and a day. that is about the same -- $1000 a day. thank you for joining us. thank you for joining us, it will be interesting to watch this ipo, coming out. scarlet: or you will relapsed in a bear market on friday. how long should you expect oil to remain challenged? your price insight from barclays, next, on oil. ♪
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matt: beach days may hate to see july goal but energy bills could not be happier. oil prices are in a bear market in new york, and the bloomberg commodities index dropped to a 13 year low. michael cullen is the head of research commodities index at barclays. we were just talking about this. there is no reason for demand to go up. at least the old tech companies are not slowing production. will we see more of this in august? michael: what saudi arabia is dealing with is a high amount of crude for a domestic power burn. over the course of the next couple of months they will not need that much. what they have done is they have
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got back their outfit. not only from saudi arabia, but iraq, we think they will run into loading problems with a high output from the south. there is the geopolitical risk in the north and turkey. we saw a 600 barrel a day pipeline bomb. these risks seem to be raising the price of oil over the course of the next -- matt: can i ask, we have been talking about commodities that are produced at cheaper levels then they're falling prices are currently. copper is one. gold is another. we heard that saudi arabia can produce oil for $10 a barrel? mr. cohen: what we need to pay attention to is over the course of the next two to three years, is is new drilling going to occur at these price levels?
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this morning, we said there are a lot of projects that have not received a final investment decision. these companies do not necessarily want to approve them in this spirit of volatility in the market. that is what the saudis and the oil tech companies are trying to do. they have essentially added this element of volatility into the market and have made it difficult for other companies to sanction new projects. matt: they are adding capacity so that competitors cannot add new wells? mr. cohen: they are keeping their output high to make sure they can reclaim the market share they have lost. our price level has remained the same. scarlet: the direction? mr. cohen: we think, that given
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the move and the curve, we are bullish for 2016 and the balance of the year. we think the market has the impression that we think is false. the market is extremely overweight. in reality, and the next couple of weeks, and maybe by the end of the year, the market will be waking up to a picture that is tighter. scarlet: what does it look like versus the last upswing? mr. cohen: the difference is supply and demand. it is a more constructive picture, in terms of demand. we are on the view that in a year two-year basis, it could be 700,000 barrels a day higher than it is currently. on the supply side it is different. we have the addition of the shell producers that are react -- the shale producers that are
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reacting quicker. what we have seen is over the course of the last couple of months, as the dollar has moved and the macro sentiment has changed in relation to what is happening in greece and the chinese equity market, that has filtered into the sentiment. matt: thank you for joining me. the head of energy and commodities research at berkeley. scarlet: this morning's headline. alexis tsipras turned joy got into a dirty word. for the first time since he became prime minister, he will meet with representatives of the ec you, imf, alexis tsipras needs them to come through with the bailout.
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high profile job cuts at barclays. 100 50 employees are being let go by the investment bank. the bank is looking to reduce the size of its fixed income operations. statewide in california, water use fell 37%, that was better than the reduction ordered by the governor. the devastating drought is now in its fourth year. those are your top headlines. matt: latin america will not grow this year, but there could be good investment opportunities in the future. that is coming up next on "market makers." ♪
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scarlet: the commodities slumped
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is driving current market currencies to their biggest decline since the global finance oh crisis. rizzo has lost 10% of its value against the dollar. it is down to 21%. brazil is not alone, the entire region is feeling the pain. latin america is trailing the other regions in the world. are there opportunities in the region? our next guest thinks there is. matt, i know you were excited. matt: i was excited to have jack on. he was the global head of equities at lehman brothers. he was at newberger berman for a long time. you spent a lot of time in south america. what about investing. it is in turmoil.
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is there any place to go if you are a disparate -- a distressed investor. jack: i think it is a little early. you have to get through this election. the argentinian election. argentina waits for that to happen. it will go through a cycle. it will be an interesting place to invest. they have a lot of energy where i used to fish. they were probably extract it and keep energy prices low. brazil, i do not think we have seen the bottom yet. scarlet: it could get uglier? jack: it could get uglier. the u.s. and europe are growing. you are not seeing the growth in the emerging markets that you have historically. scarlet: in latin america you have the issue of the fed hiking
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rates which will take away a lot of interest in latin america, and you have commodities. and you have the idiosyncratic problems in the countries that is exacerbating what is going on externally. in mexico you have oil falling when they are trying to open their oil sector. it is a lot of bad luck. jack: i would look at mexico as a shining star among the latin american countries. they are doing some elements of reform. their natural growth rate is 2.5% to 3%. with telecom and oil it is 4%. if i was putting money they that is where it would be. matt: is it a good place relative to the other latin american countries? jack: in terms of rule of law? i do not think it is any worse
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off. scarlet: a lot of people have been saying that mexico has been the shining star, but it is yet to pay off. jack: one of us is going to be right. they have new people in the era of telecom and oil. i think if the economy improves it would change the elements around the what you would call the lawlessness as well. scarlet: we will continue this story on latin america. we'll be right back. matt: we'll hear more about what alexis tsipras is doing. it is interesting. ♪
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scarlet: this is market makers. we are back with jack rivkin. also joining us is that bloomberg markets executive editor. we are focusing on emerging
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markets. you have an angle today? >> it is based on katia's story. once upon a time emerging markets were good for competitiveness. now the pain is getting to be too much. we are seeing central banks intervening in the market. how much firepower do they have? matt: we just saw a chart about a emerging market's pain. how do we define that? >> is currencies keep weakening at the same pace and looks like it will be the worst year for emfx since 2008. scarlet: years of strong currency in emerging markets they were complaining. this is welcomed to a degree. it is getting to the point, is it going to spur inflation or
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create volatility hazardous to our stability. our investors going to flee with their local currency? jack: with paper for a strong currency? katia: no i don't think they would. they're intervening to an extent, but they are not trying to reverse the trend. they're just trying to keep things from spiraling out of control. and, it is not every emerging market. jack: a lot of them are commodity oriented and commodity prices will stay low for a very long time. katia: brazil is basically signaling it will be the end of their hiking cycle. matt: bring us to number two. katia: number two is connected. it is the pain and commodities. we have to talk about what a
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painful month it has been. jack: commodities are not tied to the dollar, they are tied to oil. we have an oversupply of oil. oil is the biggest input to cost in commodity when it comes to extracting and refining. when that cost comes down and you can have a dollar contribution to overhead by continuing to mine you will do it. we will have an oversupply in broad commodities for a long time to come. scarlet: with that apply with soft commodities as well? jack: it is a big input there as well. matt: yesterday they said that soft commodities might be oversold. something like offer, oil, and gold does not help the goal 10,
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wheat, corn, or soybeans. -- coal tin wheat, corn, or soybeans. scarlet:just to give you an idea of some of the pain that actually happening in the market right now, we had another coal producer filing for bankruptcy yesterday. and we had brazilian minors selling a mind that was once valued at $600 billion at one dollar. jack: one dollar might have been too high. in the coal sector, its metallurgical coal for the most part radio have a steel industry here, we don't need metallurgical coal. we are in a time where we will see accidents happen. we are getting back into whatever one has been saying hasn't worked, it's going to start working now. it is active management. you are going to get into time where when you actually do your homework, you will of winners and losers. matt: let's get the number three. tracy: here's a positive story.
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it has been a terrible month for commodities but a great month for italian bonds. matt: the most corrupt european country. jack: not necessarily. tracy: the 10 year yield is down 54 basis points in july. which is amazing considering we just saw unemployment data from italy that shows youth unemployment is at something like 44% right now. jack: that's why it is happening. we are qe1 in europe, there's going to be qe2 and qe3, that will keep rates down there. italy gets the benefit of that. they need the qe. tracy: good point. topsy-turvy markets in europe. would you get bad news everything rallies. matt: transparency international is an organization that measures corruption.
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in europe, this year for the first year and five, they ranked italy even lower than greece bulgaria, and romania. previously they been able to form a little bit with the greece, but a slippery slope. scarlet: thank you for our guests. we need to get to -- matt: we have breaking quinn. bonnie, when you got? body: the eu has opened up an in-depth probe into the fedex tnt transaction and set a deadline for a review of that deal and merger the deadline is december 8. this was being tapped by fedex for an acquisition. we learned about that back in july. we have a deadline that's going to happen by december age. if you remember, the tnt express
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had almost acquired by ups previously. but that didn't go through. we will see if this goes through. scarlet: thank you, vonnie quinn at the breaking news desk. matt: into more m&a and the shippers. scarlet: because of the ups purchase. matt: jules, what have you got? julie: stocks opening up higher but exxon mobil is on the move. chairs accelerating declines here. exxon mobil by reporting its worst quarterly performance in six years. because even though the company reported a drop in its numbers, a drop in its profits specifically, the drop was even more than analysts had anticipated. perhaps even more importantly, the company cut share repurchases for the current quarter. that is something one investor called really a shock because
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exxon has really been returning cash to shareholders. the fact it cut it sharing purchases in half to $500 million is something that is definitely hurting the stock price this morning. it also cut spending on major projects as many of its competitors have been doing. as for chevron, it posted the lowest profit in more than a decade. we know what is behind this. the lower commodity prices taking their toll on the energy producers. a quick check on linkedin here the company raising its annual forecast but seeing a lot of the growth comes from education services company it bought people are concerned about its main business. its talent solution business, the core business actually saw a revenue up 38%. that is not good enough it seems for investors today. they fell off shares by 9%. matt: we have disappointed with twitter which started out as a
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surprise and turned to disappointment when jack dorsey was frank with investors. then you have disappointment with facebook when mark zuckerberg asked investors to please be patient. and now you have real disappointment in linkedin. julie: you look at their pace these companies have been on in years in terms of the pace of growth. now they are getting to a different phase of their lives, particularly when you looking at facebook, something of that size. they are investing more in the business and trying to look for the next leg up of growth, it's not going to come from the current business. you have these growing pains and different cycles and their businesses. matt: growing pains. scarlet: that's why public trading is when growth is ended and your best prospects are earlier stage. julie: when none of the rest of us have access to it. scarlet: julie hyman, thank you. we are playing the yearbook game and this woman touches all
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forms of media. that's all the producers are telling us. she looks blonde. matt: she does look blonde, though many blonde women are not necessarily blonde. scarlet: 1959, net lee high school. media entertainment. matt: it's part of the new jersey pizza triangle. i'm not sure what that means. scarlet: i think they filmed the part of the sopranos there. matt: if you have a guess as to who this is, tweet us. matt:scarlet: you can also tweet him it. matt: even can also tweet at market makers. it's a bold new design for a company that does really need a double new design. volvo has the xe 90 out, a huge hit back in the late 90's. they haven't redesigned it in 12 years. we are going to find out if this
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can help the company drive forward. ♪
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matt: in 2010, at china company bought volvo for $1.3 billion. after five years, the automaker is finally introducing a new car that promises to give the competition a real run for its money. will the new xc 90 get you back into the volvo showroom? take a look. >> i am here with hannah elliott. she has the brand-new volvo xc 90. people have been dying to get their hands on this car to get a ride in it. we will be some of the first people who actually do that.
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let's go. people talk about this is a game changer. you told me they haven't redesigned it in over a decade. >> it's been 12 years since they brought out the new xc 90. people could afford to go elsewhere if they wanted a new yesterday, audi, mercedes, bmw, they have new options. why would they go to volvo? this has got to be the way the volvo enters into the luxury suv segment again. matt: it's not like i thought it would be. >> the start under $50,000. matt: it seems like it has as much luxury. i noticed the real wood handling plus this looks really sweet. >> it's really beautiful. it's a big point for volvo because now they are owned by a chinese company, they really
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want to bring the message we are still making swedish project in sweden, they put our flag and tag on these and the whole exterior feels very scandinavian. when they delivered the car they sat me down for 20 minutes to walk me through all of the technology. you have cameras all over the place lane departure assisted they have a thing called pilot exist which actually drives the car for you, including steering and braking and at speeds of 30 miles an hour. matt: it's a thomas as long as you are doing under 30 and i can offer on the highway. what do you think about the driving experience? >> the first impression is you are very high up. the vantage point is very high if you like you have a great survey of the land. the visibility is amazing. the panoramic sunroof really miss you feel like you are in a
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spacious interior. the lighting is great. we have almost no blind spots to speak of. that's all great. for big guys you love plenty of room, no problem. i noticed some lag and acceleration. on paper it's a fast suv for sure. it doesn't have a lot of torque in the lower ranges. i don't really think people will care. you definitely notice that when you go from driving a turbocharge. matt: pretty impressive, large, very large ledger is vehicle. what is your overall take away? >> a plus. my love how it works. it's very affordable. it has a luxurious inside. great job so far. matt: thanks to hannah elliott from bloomberg pursuits. she gets these cars and she always has a really interesting take. she knows a hell of a lot about cars.
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i thought when i interviewed her and get her take because i was excited to see this. scarlet: i was surprised by the price tag. matt: $48,000, that's a real entry to the soccer mom, wealthy suburban market. as is going to be a killer. scarlet: such a hot car when it came out and that it trickled away and no one talked about it. matt: it was huge. people loved it. if you don't redesign a car in 12 years, you lose customers. that's what happened here. scarlet: xc 90 with matt miller on the road. something else we are watching in terms of product launches. when amazon announced a push to order -- but not april 1, we thought it was an april fools joke. people are so lazy they can't even get up and go to the store. it is real. it's also here. for $4.99, users can purchase -- buttons that allow them to organize and purchase specific
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items from amazon each time. 18 brands are currently producing -- participating. matt: you have a button -- scarlet: it go straight to amazon to tell them you want to order 20 macaroni and cheese is. matt: do they haven't for beer? scarlet: maybe. matt: a push to order pale ale button would be sweet. scarlet: amazon, matt miller is making his request. afc celebrating its 60th anniversary, and the chain is rolling out the memories bucket. in not only holds her delicious chicken, it also doubles as a bluetooth photo printer the connection or phone to wirelessly print pictures. really? they are giving a few of these buckets away. this is not fake. it is real. matt: so you take this big bucket of chicken, which is
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delicious, obviously. to a party or picnic and then you print out polaroid photos of yourself on. it sounds -- i wouldn't think of it myself, but it's kind of brilliance. scarlet: everyone is looking for a printer, the printer never has inc.. matt: but then your photos are sticky. you need to bring a vegan along to pull the pictures out. scarlet: original extra crispy? matt: extra crispy. i'm not so sure those chickens are raised in a humane way so i don't -- scarlet: you don't eat kfc? matt: not as much. i worry about the factory farming. scarlet: we sit here and talk about when we were kids we see mcdonald's once a week or kfc once a week. now no one does that. matt: we are probably better
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off. it's friday, which means we're playing the euro game. we come back we reveal the name of this media and entertainment maven, you probably already know, i've gotten a million tweets about just say it already. scarlet: there have been a few others. she still looks fantastic. class of 1959. tweet us your guesses. we will reveal the winner at the end of the show.
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matt: we have our picture from the road game, class of 1959 from new jersey. tweet is your guesses. he will reveal the name of this media maven. we go over to julie, don't tell us who it is. julie: i can't take the
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suspense. we are new to the top of the hour and your the end of the week and that means only one thing. not the yearbook game, is also etf friday. while the world has been focused on the drama in china and europe this year, israel has been quietly turning in its best performance this decade. here's a look at the etf to track israel. he knows everything there is to know about etf, i think. any much. including the fact that we are seeing this performance on the part of israel. let's go through a couple of these etf and how they are done. >> if you look at july, israel is at the top of the leaderboard. you take a step back, they are up 17 or 15% this year, which is a lot considering what europe and other developers are doing this year. when you look at play that was easiest, israel is a fascinating case study because i call it a bit of a lost country when it comes etf's. well it's a developed market it's a small country so when you
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look at a big developed market index like this israel is a .6% weighting. if most people own israel through that. they are not really feeling israel. that's why they have this value out here. the big one uses the msci israel is yes. it has about 140 million, is not huge, trades about $1 million with a shared today. it's your typical country, meaning heavy financial, top-heavy meaning some companies make up a big waiting tebow makes up a 24% weighting. julie: that's the biggest company in the country. eric: that's a classic way to look at it. it's fine for a lot of people. another one takes the alternative approach. this one basically says it thinks global to provide local. it a lot of israel companies do
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not primary list in israel. they list in europe and new york. this etf is 30% nonprimary listed israel companies. you are getting more tech and health care companies, which you may want. this is the same situation we see in china where alibaba gets lost in the shuffle. this one catches those guys. this year, it is slightly underperforming because of the lack of exposure to teva. is a lack of what you are looking for, not as to that -- not who is winning or losing. this is double the shares. is attaching for a 59 basis points. those of the two main ways to play. julie: then you have another one. eric: i do. we said which ugs had a tempers and exposure to israel. one is a pure fun cyber security etf, the sort of feel-good story of the year it's up 21% this year.
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11% israeli companies, i was talking to the guy who started this. he said a lot of people in them is real -- the military in israel started cyber secured a firms. it's a hotbed. julie: that when you're getting more volatility. eric: it's about equal to the s&p. it's not a lot. a lot of country's are very volatile. this thing is about double the volatility of the s&p 500. julie: i'm thinking of companies like fireeye or palo alto networks. every time you get a report of a hack attack we see them tend to shoot up and then they come back down. i imagined that in etf tracking company like that would be equally volatile. eric: that's right, but the thing with uts is if you invest one of those cyber security stocks, you are looking at volatility about double the etf. even though hack is volatile, it if you average it, it would be double etf. as a whole, it very volatile. julie: interesting stuff on
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israeli etf. and now the big reveal. scarlet: we've been waiting for this. numeral. -- from role. it's diane sawyer. that is was among guest. it's not either of those people. matt: people are guessing the only women they know and media. scarlet: i heard meg whitman as well as another alternative. three strikes you're out. none of those people. it is -- matt: martha stewart. scarlet: no orange jumpsuit. matt: we have a couple of tweets. this jersey girl martha better known as martha stewart, beautifies our daily lives and makes killer orzo cups. scarlet: that's what she does so well. matt: i don't know what orzo is?
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scarlet: who knew martha was so old? matt: marissa mayer is like 23. do we have a guesses? scarlet: diane sawyer, someone guest meg whitman. he wasn't really paying attention. matt: almost everyone knew it was martha stewart right away. stephanie wrote them because they're both from new jersey. matt: that's the end of the show. ♪
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. .
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scarlet: 10:00. matt: welcome to "bloomberg
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market day." planet fitness is coming next. scarlet: it's been more than 30 years since tom cruise dance into our lives. >> ♪ scarlet: mission impossible clearly not risky business. but he's not doing too bad either. matt: i love risky business and i loved mission impossible. i swear, the guy has hardly ever made a bad movie. scarlet: he has made a few bad movies, but not very many. we debate that in a moment because i know we have breaking news. betty: julie hyman has more. julie: maybe mission impossible can help confidence. sentiments worse than estimated.


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