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tv   Whatd You Miss  Bloomberg  October 25, 2016 3:30pm-5:01pm EDT

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be available to handle voting rights complaints. officials say they will have fewer observers at the polls than in 2012. that is because the supreme court opinion -- the exact number of monitors untilot be revealed closer to election day. former secretary of state: powell says hein will be voting for hillary clinton. andupported president obama has expressed this dane for donald trump. the federal aviation authority has granted 36 waivers to commercial drone operators looking for expanded flight approval. the agency says 71 others were rejected because a majority had "incorrect or incomplete information." drones flying for hire a stay within 400 feet of the ground and within sight of the operator. a united nations official says
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junkfood is a human rights concern. the representative on the right to food says the rise of industrial food production along with trade liberalization has let large corporations flood the global market with cheap, -poor foods. the process forces poor people to choose between economic viability and nutrition. effectively violating their right to adequate food supplies. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. this is bloomberg. ♪ >> we are 30 minutes from the close of trading here in the u.s., life from bloomberg's headquarters in new york. u.s. stocks with
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commissioner shares leading losses. is -- the question markets around the world has loan to a crawl. for?are investors waiting about one hour we will get an update on apple and whether sales of its newest phone will help and its earnings recession. ,nd after unsuccessful test twitter can be slowing down its workforce. all this ahead of its earnings report on thursday. was a close catalyst think a check on where the major averages stand here in the u.s. although we saw declines across the board we did not see major declines. the story seems to be not a lot of volatility. as we settle in towards a election, we got some negative news on the consumer side, confidence numbers down. nasdaq. over to the
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at a decentking pullback for the nasdaq. this follows yesterday's big 1% they and in fact yesterday nasdaq put in a new record lows. -- isag today really cut coming down to technology. the biggest drags include out for that, facebook and amazon. perhaps investors are uncertain ahead of the earnings reports are those companies. the big one today is today after the close, apple. investors are eagerly awaiting this. expectations for apple were very low as demand for the iphone 6s was weak and revenues declined for the first time in a decade. now many investors and watchers seem to think that apple is back. in fact, most analysts are pretty optimistic about the upcoming quarter and the guide. -- expect
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at gp morgan, he is bullish on the shares before the december quarter, he thinks the -- it could fall short. 45 million iphones used. looking for a 75 million units. looking for 72 million iphone units in that december quarter. there are other analysts looking for well above the consensus. the guide on the iphone demand for the december quarter really could be the key for the stock going into the end of the year. whether or not it hits that 75 million iphone units or falls short -- they're been other moments like this in past quarters when there is this important a juncture? >> interestingly, yes. this is a longer-term chart of apple. a period very reminiscent of the
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current period was 2012, 2013. then we have this big return when the 5s started to exceed expectations. 6s disappointing now. we see the big move up. the one thing to note is there was a period of consolidation after initial gains from the decline. it would not be surprising here if apple does get a little before that allow. but this chart would suggest that over the medium to long-term, apple may be trading higher. >> thank you. on the way atts twitter. the company may eliminate around 300 jobs, about 8% of its workforce, that is according to people familiar with the matter. this comes after the company has struggled this year with an absence of growth and a declining stock price. we bring in the bloomberg
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intelligence director of north america. paul, there is honestly a lot of things not going his way. i we witnessing a slow dismantling of an institution or is this part of a slow turnaround? paul: i think we are on a downward trajectory here. we have seen the revenue growth slowed substantially in that has begin -- been because the user growth has pretty much plateaued at a little over 310 million users. this is an internet company that is looking to scale its growth and the fundamental pillar for growing the company is going your user base. ort attracts advertisers that drives profitability. this is a company unlike another social media company such as facebook where the growth has slowed. the question is, does this has what it takes to turn around, or should the company be sold? we have been through both baths with really no end in sight. than havingng worse
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a fire sale for yourself as having a fire sale that no one shows up to. this is eerily close to blackberry. is that likely to happen here are will a -- will something emerge? paul: maybe at a lower price there will be interest. there were some strategic buyers such as google, maybe even disney. some private equity firms took a look. when you think about social media platforms out there, there are not that many. when you look at twitter, there are 300 million users. presumably in someone else's hands there would be value, but there were no takers. if the basis continues to erode, that may track -- attract interest. >> become when is controlling costs by firing workers. twitter is unprofitable. is there a path for profitability? paul: we typically do not find
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that at technology companies. the typically do not have it in their dna to cut costs to get profitability. grow the top lines very rapidly. they are not known for managing costs. this is an industry that pays a teacher ms. amount of stock-based compensation to their employees. that is all -- it is a vicious circle when the growth rolls over. that is where twitter is spirit and is typically going to be a situation. they can either fix the user growth or they cannot come in which case there is a different story here. i want to bring up a fundamental graph here on twitter properties. this is looking at the margin where you are showing a yearly change for each quarter. there has been improvement. i think about improving margins. is this -- how far is this going to get them to where they need to shave off their losses that they are experiencing? paul: the face of slowing
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revenue growth, they have no choice. it is the antithesis of what you typically like to see in silicon valley. it sends a very signal to the rest of the valley in terms of retracting and -- attracting and retaining talent. it is something they have to do. it is clearly a short-term cash flow management issue for the company. if you look at the consensus estimates on the street, revenue growth continues to slow down. i think becoming has to step back and say if that is the scenario we are faced with, we have to manage our costs more aggressively. was a barrier to entry was always low, someone could get instant messaging and someone else did. if you are a betting man, would you say that in the end, this is a standalone entity that manages to find the goodwill again, or does it fade off into someone else's arms? an assethink this is
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that probably belongs with someone else. we had a founder come back in about one year ago. his mandate was to reignite user growth either through technological changes, marketing changes, product changes or sheer for support and audi. eprson --f personality. it has value, just not with his current structure. maybe with somebody else with a bigger platform will put on. maybe there could be a way to grow the business. oliver: twitter is now down over 4%. it is right on track with some of the big losses we have seen. becoming up, we're going to speaking on the subject of global inequality. ups to say about what global -- much more coming up from bloomberg. this is bloomberg. ♪
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♪ >> this type for the bloomberg business flash, a look at the business -- sumner redstone is suing his former girlfriends over the millions of dollars he lavished on them. he claims the women committed elder abuse. he seeking more than $150 mi llion in damages. the women have not commented. dozens ofaid to have software engineers in canada building a car operating system. that is according to people familiar with the matter who declined to be named. it is a rare move for a company that typically stays close to its california headquarters. many of the engineers were hired over the past year and about two
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dozen came from blackberry, which is a leading automotive software provider. chevron is expected to decide this week whether it's 28 year string of annual dividend increases will continue. the energy producer has pledged to shield investor payouts, but with the worst and delay -- oil slump in a generation, they have cash flow or -- any change would come tomorrow. that is your business flash update. years, we have0 seen in quantum -- income inequality rise over the world. and the last says two to three years, income inequality in many countries is actually stalling it has the potential to decrease. with us now is the leading scholar on the subject. he is a former lead bank economists.
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the unfortunate thing you have explored is that while it did lift up the wealthy and increase corporate profits, it left a key group outcome and that group is now acting out around the world. that is not just the pores of the pork but this band of middle-class. why is that stalling, what has changed? guest: what happened, globalization has lifted everybody. but there was one group -- there was also a group of very poor who do not gain that much. but the group that really do not gain much were the people who in a global sense were kind of upper-class, upper-middle-class. but they come in their own countries -- these were people from rich countries -- they were little -- they were lower middle class in those countries. like ine examples western europe where similarly these groups of people have not done very well.
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>> this is all encapsulated in your famous elephant chart. this really shows the lack of real wage increase for a significant portion of the population. the 80th percentile. that would be the middle-class and rich nations. guest: that would actually be lower middle class, beginning of middle-class and rich nations. in this chart, globally speaking, they are not really poor. but in their own countries, they are in the lower part of income distribution. that is where the problem begins. oliver: when you talk about the way to combat this inequality, for a long time of assumption was to have these western powers that have the most strength influence around the world. --ir model for battling it is that still the case, do we need to rethink how we apply that? guest: i would say it is still mostase because the
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powerful countries are the riches. but the success of china make some people reconsider what one can learn from china. because it is an incredible success, which is now lasted almost for four decades. china inw made middle-class country with potential to become actually upper-middle-class and a rich country. i often mention to people that china now has the income level of the poorest eu country. but if you take urban china they are towards the middle of the eu. this is a great success and maybe makes somebody think about what the rest of the world can learn from china. >> that is a really good point and i think it is often overlooked, that as global inequality rises, we are seeing inequality within china increase as well. it does not get as much play. chinese president talked about that. he addressed it obliquely in talking about the global
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inequality. you thought that that was not all, that he brought up global inequality is a something that typically leaders do not discuss in that context. guest: it was absolutely novel. you have the words of global inequality use. number, which a is even more unusual because people talk about inequality in broad terms, they do not put a number on it. a very interesting development and i believe it was very unique because it is -- it essentially shows a globalized picture of the world. when you talk about global inequality, we treat every individual in the world is equally important. that was no. >> -- that was new. >> it listed of the poor and there was a price to pay. stayed relatively wealthy. however, the real problem is
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what happens in the 95th and a percentile. the wealthiest got this -- disproportionately wealthier. are they right to say no more globalization? bringceta, no to tpp, charis back. -- tarriffs back. guest: i do not believe such policies would actually help them. i think that actually they would -- such self-defeating houses would further their position. but i agree that they do have a , not onlygrievance because they can see that their incomes have stalled while the incomes of middle-class in asia have gone up, the more importantly as you mentioned, the incomes of the top 1% in their own countries have increased a lot. i understand the grievance but i do not believe the policy that some of them suggest would make
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sense. oliver: i think that is a great point, because there are these forces here. one is a disenfranchised part of the world community. in america right now we are experiencing in the election. there is also the global fight against inequality. elected officials, whether it is clinton or trump, and in europe as well, the fact that they will have to accommodate those people who are so upset -- is that going to delay the greater progress on this global inequality scale? guest: it is very tough to answer that. i do believe going back to the original question, i do believe there is much greater sort of conscience now and awareness of the importance of inequality. partly and think ironically it is because these people have acted out. the brexit and the movements in europe in france and in this country. thatsomewhat optimistic the new administration in the u.s. and i think the new administration, different governments like the u.k., they
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will take inequality the messick late much more seriously than before. in that sense, i am optimistic. that may be why we are seeing the stalling of further increase that we mentioned. >> always good to have your thoughts on this. he is going to stay with us. lead bank economists. stick with us as we discussed the role of politics after this. we're still watching apple. after the bell, has not moved much today. this is bloomberg. ♪
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♪ we're back with the former lead economist at the world bank. he is an expert on the topic. a lot to get us started with a chart of the euro-dollar. the euro-dollar is the white line here and it has dipped below the year and forecast for
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the current period. the forecast calls for a to be at 1.10 at the end of 2016, currently at 1.08. this is of course, as investors -- right around the time when the fed will raise interest rates. you are beginning to hear of a corded effort to normalize it. we have to get rates backup. there are still regions of the world where they are not going away. that has had people fleeing for yield. for long-term the trend has been out to the end of the yield curve. the danger is with that crowded trade is now looking like it will go the other way. have a look at the sheer volume of government bonds that are 10 year plus induration.
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in 2016, a record 733 billion this year alone. that is more than double. it is now 6 trillion paper out there. it was a number that might grab your attention. a 1% increase in rate will shave 2.1 trillion off of global investment. put one trillion in losses to global investors. --re is also these are great charts. i'm going to do one more to show a news trend. we're looking at what we were just talking about. this is the instances looking at monthly since the beginning of the year of the terms trade and tpp. you can really throw anything in here. must often -- let's toss in nafta. i want to bring in bronco to reassess what we were discussing. these topics are
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becoming very prevalent in the presidential race. regardless of who wins, what can be done and what needs to be done here in the u.s. to lead this fight against global inequality? u.s. needs to lead the fight against u.s. inequality first, because the tools that the u.s. government has are the tools about national inequality. whoever wins the next election is going to pay much more attention to u.s. inequality and to all of these people -- with some good reason -- have the case to be sort of feeling unhappy with the way that things that evolved in the last 25 years. in the sense i'm quite optimistic. there are actually measures, including infrastructure, that everybody talks about. one up, greater redistribution. and of course education, which is crucial. oliver: quickly, will they get
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used? the tools are there. there is a certain amount of consensus that things can be done. ♪
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>> we are moments away from the closing bell. oil dropping one and a half percent. i'm scarlet fu. to our followers from twitter. >> we begin with our market minutes. stocks sagging into the close. report forready to the s&p 500. the worst day in two weeks. if you look at the different sector groups, nine of the groups fell. >> not a great day. some of the old laggards were week again today. i want to look at some of those sectors in stocks here. there were big movers on the
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day. let's start with the sector level. consumer lagging the most. a big move down, a couple standard deviations. a lot of right on the screen. index goingmmodity down as well. one of the few groups was utilities, doing ok. they have had weakness over the past couple of weeks. a couple of specific stocks that were moving. procter & gamble, under armour. under armour getting really whacked down 14%. gm and the auto space not doing as well. 200% more than the 30 day average. png doing pretty well. they are going to revive their
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sales. , the best ticker on the bloomberg. around 20. it's feeling a lot more bearish. amanda: have a look at the bonds today. here is the u.s. 10 year. i want to see the yields climbing. we had mark carney testifying. some question whether we would learn his fate. he said it is a personal decision. no policy change whatsoever. this is a volatility of treasuries. since 2014.t levels this is the expected price swing. level, next lowest
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week's meeting will do nothing. people are looking ahead to december. 80% expectation into next year. we are going to trade sideways. scarlet: trend sideways is a nice way of putting it. -- i want toout talk about the pound. as treasuries gained the bank of england governor said there are limits to policymakers willingness to look for overshoot. that suggested looser monetary policy is not a given. a rate increase could be necessary. chile and peso -- you had a surge in copper prices. and speculation of a change in government next year. there are some mayoral
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elections. that could point to a more market friendly government. you are seeing the dollar decline almost 2% over the last two days. >> we have been talking about oil. we get a read on inventories tomorrow. one of the big issues has been whether opec would be able to rally and keep a lid on output. the answer seems to be no. iraq, iran all playing by their own rules. now there is increasing speculation opec will try to put pressure on shale producers. unlikely to happen. you know who might not be getting pressured is russia in terms of oil output. see you this the blue is looking at where oil
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is. the white line is looking at russian crude at point -- output. just a highlight what is speculation even if there is an opec agreement or some kind of settlement on production perhaps russia is going to be doing their own thing. keeping those high levels. amanda: it was so simple when there was just one cartel controlling the prize. drink a starbucks you are part of the deal here. that is the coffee favored by starbucks. drought conditions, a rising consumption. you can see that off the chart today in terms of 40% higher. houston until that lines up in your cup? scarlet: those are today's market minutes. we have pandora reporting earnings.
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it reported a result that missed analyst estimates coming in at 352 million. there was an adjusted loss of $6.6 million. the outlook is not much better. when you look at fourth-quarter revenue, full-year revenue y as the adjusted loss was seven cents. at the very best it met estimates. in other ways it fell shy of what analysts were looking. >> we solve this whole category on the time warner deal, both of those stocks following. weekhis is moving into a
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-- weak period. this may be a bad timing issue or pandora as it reports. oliver: in terms of their -- it wasthis is bouncing down in the aftermarket but ultimately it does well the past couple of quarters. we have a lot of other earnings. we are going to look at whole way and apple. we will bring you those numbers as soon as they cross. this is bloomberg. ♪
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scarlet: now to the year ahead conference happening now in new york.
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david is speaking to paul tudor jones. student of chopra.chopra -- depak i thought he had really cool glasses. we got to be great friends. he taught me how to meditate. he says i have this students who has this idea. use capital not just to create profits but to create justness. i don't know how to -- not necessarily what to do. maybe you can get your friends on wall street and help us think this through. that was the genesis of it. to have this favor meeting. as we got into it it became
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really interesting. we started to peel the layers of the onion back. this was in 2011. i didn't even realize at that time there was a $4 trillion industry around socially responsible investing which i think speaks to the fact that even though i have been on wall street for 40 years, i don't think when people think of companies monday don't think about anything other than tell me about its earnings, tommy about its profitability. tell me about how much money you can make me. as we went through the whole first inclination was this is going to be great. we will find an inquest -- index on corporate justice. this will be a great way to my ira which somehow i think i have probably done the
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worst job investing that personally. this will be great. output in companies that are also very just. -- i will put it in companies that are also very just. i would liken it to the internet today. not trying to say i am al gore who invented it. the people who started arpanet had no idea what it would turn into. when we first started down the road of just capital and creating a just index, i had no idea it would transcend or will ultimately transcend something beyond just investment applications. i think it actually has a chance to be so transformative at scale and impact of a variety of constituents. the world that
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to how in, when it comes we interact with companies, you've got five stakeholders. you've got shareholders and use -- we, and we have this 50 year legacy of milton friedman who said the only purpose of a company is to make profits for shareholders. they are one. you have the consuming public who utilizes their products. we have their employees who depend upon them for their income and their lives to build entire professions around them. we also have communities, local communities where companies operate. then you have the planet. businessink of the
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ecosystem, those are the stakeholders. be againstan justness. how do you define justice -- justness? >> one of the reasons why i didn't know there was a social responsible investing industry was because there wasn't a convener. entity that some was the centerpiece of it. one of the reasons is because over index, they were environmental sustainability or social inequality, or economic inequality. is whoeverroblem creates those indices can always bias.used of having some could be a conservative, a
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liberal bias, and environmental bias. people has always made at theately look askance socially responsible indices. i think what's going to make the are index different is we -- what we have done is we went to the american public. we took a clean sheet of paper and we started with focus groups around the country and said if you had to define this blue sky concept of corporate justice how would you go about doing that? factors,08 different then we went and we did a practically demographically representative sample of 50,000 americans and found out from them exactly what they thought were the most important drivers
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of corporate justice. these come up with criteria. how do you apply those to companies? when are we going to able to have your list? so again the one thing that i found, it's the most difficult, challenging -- it is an exercise milersquires really good -- modelers, mathematicians. i would implore anyone listening, we are a not-for-profit with an $8.5 million budget. a 25 person board. we need help. our job is to simply give the , thecan public the little little person who does not have a voice, to give them a voice. our job is to be an honest broker for what they think
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constitutes corporate justness. what we have done is we have taken their ideas and basically took those 180 factors. we consolidated into 36 components. we aggregated them into 10 drivers. drivers, the two most important are what do you pay an employer? do you pay a living wage? pay and benefits is number one. yearogether these two this , we have actually done a beta test, these constitute 50% of the index. >> how do you determine which companies do well on that? >> interestingly we are having
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to collect something in the neighborhood of 75,000 line items. what we are going to do, we're taking the 1000 largest companies in america. we're going to rank them from one until 1000. this year we are going to index. our first america's most just index. the most just companies in america. be first effort is going to by sector. >> there are 32 sectors. we are not in the shame game. we will probably release the top 75% and we won't break the bottom 45%.
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one. will be a number those 32 companies will be able to use our seal. keep going. >> they will be able to use our seal. they will be able to apply them to their products. preliminarily america's most just index, if you go back and look at their performance , theyhe past 10 years have outperformed significantly the basic stock market. that?t is one to do with once you get it out and it is reliable, a lot of institute pension plans have a responsibility to return as much money as they can to pay their obligations.
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how does that balance with this? ? >> i would say this. , i see this as being so transformative. see the concepts of justness equate with corporate performance. equatese performance with share prices. i think that when we release this it is going to ultimately impact investors which are going to impact corporate board rooms. equally as important is what it is going to do to consumers. ofgine you have a choice
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buying two boxes of cornflakes. i'm thinking five or 10 years down the line. one has the just seal and one doesn't. which are you going to buy? between 19 ands 26 in the work force. they are concerned about the type of company they work for. more so than i have ever seen. at thesehey will look rankings and that will greatly impact where people want to work , where they continue working. that will also drive behavior. if i go back to the five constituents, where we have lived for the last 30 years until the last -- was paul twitter jones at the year ahead summit. scarlet: tripoli reporting
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earnings, third quarter comparable sales down 22%. analysts were looking for a drop of 19%. this is worse than believes. billion dollars. big news here for chipotle is the outlook for 2017. they're looking for a $10 earnings per share. approving up to $100 million in a program for stock buybacks. >> we seeing a narrow reporting the stock isl -- getting a lift. it is beating on the eps, on the revenue, $680 million in sales.
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they are raising slightly their targets on the eps. this stock has been down a little bit. oliver: what is not getting a pickup is pandora. it is down 5% in the after markets. 8%.we are down almost part of this is their adjusted yearly revenue. 1.4 to 1.35. lower than what they had expected. users overall were flat. we are going to talk about samsung phones. they have a tendency to score higher than apple in one key metric. this is bloomberg. ♪
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scarlet: apple report earnings any minute now. charts usingthese the function of the bottom of the screen. investors will look for any commentary on what the galaxy note 7 problem is having on apple. this chart highlights the differences between apple and samsung. what a difference five years makes. in 2011 j.p. morgan upgraded samsung. all 40 readings were a by. -- a buy. you can see samsung was perfect in october 2011. since then we have seen it drop off and for a brief moment rated higher than samsung. these are analyst ratings. apple has -- they have samsung be by a long shot.
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shipments of iphones and revenue declined. 23% drop in revenue. we will beumbers watching closely to see whether we can find some improvement. oliver: we have also got an estimate here that is breaking off from the norm. apple'sooking at earnings expectation of $1.65. the price has diverged from that of bit. we have the watch, we have the iphone. sales, we have to figure out what is going to happen. we will get back to that next here on bloomberg. this is bloomberg. ♪
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just reported results for the fiscal fourth quarter. of $ share that is a penny better than the consensus estimate. revenue missed estimates. fourth-quarter revenue was $46.9 billion, in line with the average analyst estimates. i'm looking at the headline here. let'sms of gross margin, look at the first quarter gross margin. the consensus estimate is for 38.9 percent. apple tends to lowball.
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when you look at the shares the first reaction here is gain up 2.5%. always going to be closely watched. billion. expectation was for $75 billion. will satisfy.that it is that forward guidance that is driving some of the excitement here. some numbers we are watching for is how they are faring in china. you mentioned the gross margin. >> 38%. almost there. just a little bit better than anticipated. you mentioned greater china sales. billion. that is shy of what analysts had in the third quarter. sequentially a bit of a decline.
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we had a little bit of a lag as they announced how sales were going. 35.5. though we have moved away on the ipad those numbers are a little bit better than expected. average selling price was $618 and $.72. there was that concern it would be coming down because of the addition of the mid range. armie half of those sales . me.ur me -- are amanda: they are seeing higher than expected holiday sales driving higher with margins. something that investors so far
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are liking a lot. scarlet: for a deeper analysis let's bring in john butler. the number everyone was focused .n was the iphone unit number 45.5, slightly better than what analysts had been anticipating. >> it is not about this quarter. it is about the holiday quarter. shippinge 7 began september 23. they really did not have a lot of time between then and the end of the quarter. but we are seeing here may be preorders. that soldl stocking through. next quarter is what is important for them. it is going to be very telling. a lot of things are benefiting sales right now. you have the note 7 debacle.
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you have a whole base of these iphone 6 users now holding 2-year-old devices. there is potential for upgrade. scarlet: this is on t live. we're live blogging apple's results. thecook has said that company has reported revenue growth of 24% of the services business. that is not a big part of the business. amanda: it is an important part. i'm curious what you think of the china number. huge potential there. is that a disappointment? >> china is something to watch. we know it has been week over there. they are struggling with slowing growth. not just apple but the overall economy. it is a quarter to watch.
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i look forward to that fiscal first-quarter which is the calendar fourth-quarter. that is when this game really begins. the big swing factor is samsung. .hat would include china samsung is a big vendor in china. they have pulled the note 7 from the market. that is up against the iphone seven plus. they have a little more than they usually do. oliver: let's talk about the swing factor. the galaxy was a big competitor until this entire thing blew up. what are investors going to be looking at to determine whether or not they are seizing on that opportunity? i think there will be a bit of that. this is the opportunity to attract those users that have
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been on the fence. the iphone 7 is a great devise. they did a very good job with that. .he price points are high they are higher for the note 7 as well. some song only competing with the galaxy asked 7. not the note 7. you have everyone migrating to these larger screens. i think the ball is in apple's color. -- in apple's court. amanda: for all bloomberg intelligence reports check out the bloomberg. emily chang has just gotten off of the phone with apple cfo. she joins us with more. give us the highlights. emily: just got off of the phone with apple. the headline here is a beat for the forecast for the holiday quarter. they believe it is driven by huge customer satisfaction.
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the new camera and the new colors. every time they add new colors people get excited and interest in the second generation of the apple watch. constraineden so from the beginning, specifically he said we are seeing some level of supply constraint from the moment we launch the phone which is hard to me saul on the iphone 7 plus. we are looking at several weeks before you can actually get an iphone 7 plus. this is a pop does problem they want to address as soon as possible. they are hoping to be in a supply and demand balance as soon as possible. the average selling price has increased from last quarter. they have introduced cheaper phones. those have been quite popular the more popular the phone is revenue goes down.
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revenue goes down. because of the introduction of these new phones, we have seen the price increase to $619. $23 more than it was. the big question is samsung. how is apple going to benefit from this massive recall of the note 7 smartphones? it is difficult to tell at this point because they are in a situation where supply is constrained. we can do is constrained. we have the highest amount of android switchers we have ever had. or people coming to the android platform because they are looking for a better experience. he touted their ability to marry software and hardware. the other thing, what is happening in china. 30% revenue decline year-over-year. we did ask about this.
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he said whenever you look at emerging markets he said it is important you look long-term. two years ago he compared 2015 to 2014 saying compared to 2014 we are up 52%. an annual growth rate of 23%. we have this extraordinary upgrade cycle. a lot of people were trying to get their hands on that iphone. they have come back down now to a normal level. it is difficult to compare. they are confident performance will start improving. they are gaining market share. the improvement they are saying is very broad based around the globe. >> in terms of services growth that seems to have taken a leg up as well. pokémon go was very popular at the start of the september quarter. how big of a role did that i have? emily: apple gets a 30% cut of that.
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this is in the services bucket. pokémon go did give them a boost but it did not move the needle when you're looking at services. some would point out that while .he services are growing it is not nearly the size of the iphone business. billion when the iphone is bringing 10 times that. growthn opportunity for but the iphone is continuing to drive the revenue of this company. scarlet: great stuff. thank you. let's get a recapture of apple's results. earningsurth-quarter
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per share, a penny better than anticipated. revenue missing analyst estimates. $76 billion.s because emily mentioned it is driven by the iphone, the iphone unit sales fell slightly better than what was expected. i want to jump in and look at what is happening after hours. .he stock did turn around we are now down about over 8% getting closer to 116 on the stock. whatever is people are focusing on has shifted away from the projections and getting more assessment on what is happening right now in terms of sales, the first sales declined in more than a decade. year-over-year. with more back
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after this. this is bloomberg. ♪
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scarlet: we just got apples this -- fiscal results. we are here with john butler. we want to bring in shawn harrison who joins us by phone. when we look at what we know by apple so far, matching analyst estimates. the average selling price was down due to strong iphone sales. -- whatng growth grew would the results prompted investors to be more bearish? >> they are focused on the
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growth margin. are seeing anou upside in revenue and expectations. many of us would have thought would have benefited from a stronger iphone plus demand. why isn't gross margin higher? something else going on? is the remix dynamic -- is very mixed dynamic? amanda: when you look into the projections do you see mitigating factors? as revenue look tighter? apple is sounding very bullish. >> they do sound very bullish. .se of revenues at the midpoint nicely ahead of consensus. that is going to be the big question on the call. china is still a headwind. that will be a focus as well. falls onto why
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are we getting the earnings lift with the sales surprise? we were just talking about the supply demand relationship. supplyore an issue of situation. why? >> it is a makes of issues. one thing we may be saying, if you rewind to the launch of the s. theyd -- six had to burn off some inventory. i think that reflects the misjudgment on their part. they probably approached the seven with a more conservative approach in terms of inventory in the channel initially. year,move into next inventory will be less of a problem. the bigger issue that was just mentioned is china. not just dealing with the
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economic weakness. you are dealing with different competitors. apple is not the only one rushing into that void left by the note 7. scarlet: apple says 52% of its revenue more from international sales but greater china sales were down 30%. amanda: pretty significant. it is one place that is going to be closely watched. one question, when you look at themargin pressure, disappointing projections. what is your bet on what is happening in that front? is it the cost of getting into the chinese market? >> i think john made a good point. .hey ramped up more slowly
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maybe they were expediting into the market. the additional cost of getting phones in the market. verizon does not expect supply verizon does not expect supply demand dynamic to normalize until the fourth quarter. there's likely some cross there. they are relaunching the mac line. there may be some cost we didn't anticipate related to that. it is a later relaunch. oliver: addressing your call on you reiterated your price target on apple saying it --buy. accepting upside to volume buys. we will need to get questions related to the longer-term dynamic at work here as well. if we get into a super cycle next year with the new form
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factor that could drive demand. great high margins for business as well. let's see if the gross margin dynamic is more of a temporary issue versus a permanent downturn. i think there are other factors at work. that continues to help out the stock. amanda: we are looking at the apple watch here. other product revenue down 22% year-over-year. at one point does it become a needle mover? part of the decline was new product launching way in the quarter. the apple watch is a good product. it is not a needle mover.
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it is just not going to move the needle. the two biggest needle movers our services and the iphone. amanda: are you happy with what you are seeing on growth? good job.e doing a it is going to take time. they're looking down the road and they are running out of categories. they have computers, they have the phone, what is next? the what's next is services. i am watching services. it is very high margin over time. i think it warily represents -- it represents their future. >> thank you so much. as well to shawn harrison. this is bloomberg.
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oliver: we are still on apple, digging further into earnings. let's bring in the research manager. he joins us on the phone. thank you for joining us very let's talk about the watch here. we have been focusing on the phones. this is one of their potential growth areas. what did you see in the numbers? >> when you look at the numbers, the watch is buried in other product categories. if you just take a look at the revenue. -- the watch is not making a meaningful dent.
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you listen to what tim cook said in the past, beating expectations, it says to me the expectations volume wise are low. only recently do the second-generation devices, out. clearly there were not enough to stem the decline. and it doesn't stem the decline for iphones in general. >> i want ask about this margin pressure. it does him to be focused on the average selling price. that may be what is driving the disappointed reaction. averagely softer on the selling price. is that going to correct itself? or is that something apple is
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going to have to contend with? the end of the third quarter is when they pressed down hard on the reset button. leading up to the new devise launches, you are looking at significant cut send decreases. that is going to have a downward pressure on asp. devicesook at the newer , we're looking at some refreshed tablets. expect some rebound. we saw much higher premiums. points. price now we're dipping down to the base level watch at 269 to 299. that could drag down revenue for
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watches as a whole. >> a great take. thank you for being here. to know what you need to gear up for tomorrow's trading day. this is bloomberg. ♪
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scarlet: apple reported fiscal fourth-quarter earnings. the average selling price, six or $19 lower than what anticipated. >> lower prices drove margins down. oliver: next quarter when they start buying the apple watch for a gift. ahead, boeing and comcast.
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>> and we will get oil inventories. watch for an effect on the price if they rise. oliver: i will be watching tesla to see what elon musk has to say.
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mark: with all due respect to colin powell, we call that dog bites man. first, just in time for scare.en, and obamacare republicans are on offense after the obama administration announced health insurance premiums under the affordable care act will go up by an average of 25% next year. many are dropping


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