tv Bloomberg Markets European Close Bloomberg January 4, 2016 11:00am-12:01pm EST
welcome to the new bloomberg "european close." mark barton joins me. we're wrapping up the trade in the new year. mark: happy new year. the worst start to a new year ever as there is in equities route across the globe. rout across the globe. betty: we are going to take you from new york to london to men ilan in the next hour. we can blame what is going on. mark: betty, what a day. than 7% after two days of manufacturing -- two gauges of manufacturing contracted, one of them for the second month. sinceas not happened
2009, betty. what an effect on global equities. still, we have 30 minutes left of today's session. $200 billion of value. and what is more interesting, it is the worst ever start to a year. last year's worst-performing sector, betty, you know what it was. it was the materials sector. look at this, betty. weak chinathat w data -- or was encouraging data, betty. accelerated the most in more than 20 months, but german inflation was not as strong as forecast, telling us tomorrow's eurozone support might also miss expectations, which of course leads to the question, are we any closer to the ecb coming stock?o its 2% inflation
i should never have gone away. betty: [laughter] look what you brought with you, mark. but the strategy is still bullish on european stocks? it's fascinating, isn't it question of the december performance of european stocks was the worst since 2002. strategists, betty, save the stoxx 600, the european benchmark, will rise 6% in 2016. i put it down to the european central bank, betty. rise rise this year, we for five consecutive years. that's quite astonishing. minutes into 90 the trading session back in the u.s. i want to go to the markets desk where julie hyman is standing by and in the last few moments,
crude is falling off a cliff. julie: interesting trading. we had seen it higher because of an and saudiween ir arabia. now it looks like crude is getting back those gains. theay not be able to resist risk off on slot we are seeing .oday oil would certainly fall into that category. if you look at the major averages in the u.s. as well, we are seeing docs fall to session -- stocks fall to session lows as well as selling accelerates for all three major averages. you just heard mark say this was the worst start to a year ever in europe. tothe u.s., this goes back 2001. i want to bring back the imap. no surprising, a broad-based selloff in addition to being a
steep one. i want to highlight the energy play. energy stocks earlier had been unchanged as oil prices were rising. now that oil has given it up, energy stocks are down 1.5%. tech, consumer, financials -- anything to do with sensitivity to the economy has been doing worse today. we have been watching transportation stocks also falling. this is something we talked about last year as well. thatis something proponents say using negative sign for the overall economy. betty: who are the laggards for the transport sector? julie: a pretty diverse bunch. we had lower oil prices last year when these transportation stocks were doing poorly. there's an underlying issue. we have a different segment of the transportation universe,
from the transport of people to the transport of stuff. railroads, logistics, all of it declining at a time when there is a concern over underlying demand in the u.s. let's bring it back to oil prices. we did see how dramatic the movement was an oil prices in the past few moments. bloombergk at my terminal, the big plunge we have seen here -- and it's not a egg decline. -- it's not a big the klein. it's just how dramatic is the reversal. check in on the bloomberg first word news. courtney donohoe has more from our first word news desk. courtney? the 20y: a standoff president and congress. president obama cannot get done control measures through congress, so he may go to executive action. today he will meet with attorney general relet of -- loretta lynch. thursday he will have a town
hall meeting. have takena militia over unoccupied buildings in oregon. so far, police are staying away. offices in san bernardino, california where 14 people died in the terror attack have reopened. almost 600 employees came back to their offices. well to do buildings will be open, the actual conference center where the attacks took place will be closed indefinitely. saudi arabia cut diplomatic ties with iran after protesters attack to be saudi embassy and set it on fire. they were protesting the saudi execution of a prominent shiite cleric. refugee crisis is rocking western europe's long-standing open borders policy. temporary spot checks on the border with
germany from denmark. danish leaders were angered. there could be a logjam in denmark of refugees. global news 24 hours a day powered by 2400 journalists in 150 bureaus around the world. i'm courtney donohoe. betty? much. thank you so let's get back to that freefall in china. big missteps looming large over china. how is the government going to manage? they seem to be increasingly out of control. will 2016 be any different? mark: betty, our next guest calls it the china syndrome. it is one of his big three frames. happy -- jeremy cook.
happy new year. here we are, one day, one trading day into the new year -- and you have hit the nail on the head. well done. now?y: can i go home to move through 2016, the end part of 2015 was all about china, a little worry about whether the fed would hike rates or not. 2016 is likely to be the same, whether the problems we see in china will pressurize the fed into keeping its hand on the tiller a little more stable over the course of the year than some people are already talking about at the moment. a key move from the yuan we have seen. mark: we are down 5% since they devalue the yuan. fromwas one of your themes last year. you called it the "one time correction." how low do they let it go? jeremy: i think it could go as low as 680.
markets are expecting it to crack higher. i think this is exactly what the people's bank of china wants. now we are continuing to see a devalue wish and of the yuan. they need the stimulus. dollars to doughnuts, i think we thestimulus by february 8, lunar new year. this is play into their hands. the whole situation though, the movement of the dollar, right? which instead of a stronger dollar, we are seeing a weaker dollar or a weakening dollar after the fed rates move. what is going on there? so, yeah, looking forward to the u.s. dollar, we expect it to remain strong against commodity currencies by the lefte felled
of deflation and emerging markets. there are idiosyncratic risks elsewhere throughout the world. the u.k. referendum, for example, on his eu membership. continued fears the swiss national bank will devalue the currency. usd. a stronger it may not be because of fed action. it may be the actions of others that keeps the dollar strong this year. continue to rise like a rocket? will it be more choppy given this? think it will be choppy because the markets are still trying to get around the basis of how much or how much further the fed can go over the course of the next 12 months. maybe the easiest hike of the cycle has already come, that telegraphed.s so
we are so pricing at, what? 48? i think we have choppiness. talk jeremy, we have to about oil, because as julie was telling us a few minutes ago, the price of crude has plunged in the last hour. it was 3.6% higher. it has followed roughly 4% in the space of one hour. -- it has followed roughly 4% in the space of one hour. what is going to be the impact? pretty welcome a base effect for consumers out there, and consumers have run monthsthe past 15 to 18 as a result of these oil prices. we saw at the end of december, the u.k. economy, if they had not seen the consumption growth, the u.k. economy would have grown one .5% over the course of last year and that's the benefit
of the low oil prices. 1.5% overave grown the course of last year. it's not the inflationary bubble. it may help manufacturing, manufacturing capex. jeremy, good to see you. happy new year to you, jeremy. at european stocks. we are roughly 15 minutes away from the end of the first trading day of the new year and headed to what could be the worst ever first day of the year for european equities. the dax is down by 4.5%. it has not fallen that much since the end of august. that was when china devalued the yuan. it's all about china today. ♪
mark: "bloomberg markets welcome back to -- welcome back to "bloomberg markets" live from london, the euro being close. betty, we are seeing red right across our screens, art we? crude selling off at a clip. now it's is time for the biggest business stores. manufacturing took a big hit, selling off at the fastest pace in six years. by stronging hurt growth around the world. meanwhile, spending on
construction unexpectedly fell in the u.s. private residential building was up, but public construction more than offset that game, falling more than 1%. and the 51-year-old chairwoman of dreyfus commodities is pregnant with twin girls. to keep working until she gives birth. businessour bloomberg flash for this hour. now to the potential tie up of two take drug companies. scheier is in talks to acquire xl $432 billion in cash and stocks. tocould be another attempt acquire them, right, mark? mark: that's right, betty. just checking in on investor reaction, the stocks moving in opposite directions. shire down by 5%. let's break it down.
which we believe is $46, $48 -- is it a knockout price or not? guest: we looked at the analysis, at what companies can toentially pay to take it up two dollars. there are not many options out there. but in reality, there are a bunch of companies that could do quite a lot with this asset, such as the ones that are already in -- but they would never pass the ftc. maybe bio jen -- biogen. then there are other companies that need to do a deal, said they are doing a deal, such as johnson & johnson. that could work. at the numbers on paper could work, but the reality is, china's advantage is
having -- scheier's advantage is having its lower earnings applied to baxalta. mark: is it about expanding the global reach for shire? shire is a big player in one sector. this gives it a potentially strong leg in another rare disease area which is him a few you. it's difficult to see a specific can go or asset shire after that is a perfect fit. is rare diseases gives them a perfect fit. leadershipaxalta's in hemophilia is being challenged. sam: yes, they are coming up with products in this year and 2017 that will potentially compete.
shire could get from this deal could be -- the aunt 2017, consensus estimates are a little lighter for baxalta . the reality is there could be challenges there. hasshire, i'm assuming, done its homework and is looking and thinking they would be able to use history and the presence that baxalta has and the space to maintain a major market presence. mark: is it going to happen this week, yes or no, sam? sam: i don't know. it has been going on a long time. jpmorgan, the biggest health care conference is coming up next week or it if there was a good time for this deal, it would be before that. to see you.reat i know that you were on bloomberg radio earlier. big long day for you. sam fazeli.
worldlive from bloomberg headquarters in london and midtown manhattan -- you are watching "the european close." betty, look at that. only 17 stocks rising on the euro stoxx 600 today and it looks we are on the worst ever start to the year. you can't say much more than that. betty: and not much better here
in the u.s., mark. all the big gainers from last year tumbling, including amazon, netflix, and others. warren buffett is looking for a .etter 2016 berkshire hathaway investors planned to celebrate the beginning of the new year. in 2016.e down 12% noah buhayar joins us to explain what happened. .ou have four factors book value per share continued to slow, number one, right? noah: yeah, this is a big challenge for buffett. this is a metric he watches closely. it has been slowing down. like 2015, based on the analyst estimates, is going to be a below average year. even though it will most likely the s&ps&p 500 -- beat
500. buffetthe reason that is down is some of his biggest holdings were down as well, walmart and others? drag onat was a big last year. the stocks you mention trail the s&p 500. there is irony in that because publicly, warren buffett is known as an amazing stock ticker and those were real blemishes in his portfolio last year. betty: all right, thank you so much. noah buhayar. hard to be a buffett fan in 2016. let's head to our markets desk. julie hyman has a check on the markets. bowles not doing so well. julie: a few stocks trading higher. the s&p has been bouncing around the lows and making lower lows as the session goes on. it makes an attempt to go a little bit higher and goes
lower. that has been happening throughout the session, young as the session is. there are some stocks doing better today and i want to point that out. is rallying. wells fargo called it one of its top retail picks for the year. incidentally, the shares were down around 5% last year, so, recovering that in the first day of trading. gopro is another one of the underperformers from last year. fallen 75% since its ipo and it's even mentioned negatively over the weekend, saying that the stock would fall. nevertheless, we see that 2% rotation, not just from the good performance from last year, being sold today, but the contrary is true as well. gun stocks are doing well. rallying.sson president obama has been making more comments about gun regulation. he is supposed to meet with
attorney general loretta lynch today to discuss potential actions, may be signing an executive order. finally, 3g systems, one of the underperformers, down last year, update presented day. there are still gainers. there's always a few. "the much more ahead on european close?" mark: yes, betty. coming up two interviews you do not want to miss. an exclusive interview with loretta mester, and then another interview. the market close is seconds away. ♪
wrapping up the trading day. the worst start to the year for european market. mark barton in london wrapping up the trade. it looks like we are settling pretty much at the lows. mark: the worst year ever prior to today, with 2002, and the stoxx 600 fell by 1.7%. today, it looks like we are going to close around 2.7% lower. 6.8%third of last year's rally has been wiped away in just one trading day. every single industry group on , $264oxx 600 still today billion of value disappearing today. some of the big declining industries, they secretary down by 30.6%. last year, this industry group sunk by -- because of the weakening china economy.
it prompted of course the , csiing of trading declining 7%. no one would have predicted this. betty: i know we had that economic numbers out of china. we had our own manufacturing data this morning, but there was a mixed bag at of europe in terms of economic numbers. mark: the eurozone any factual data unexpectedly rose. every country that was surveyed actually showed an acceleration near the 50 line, which celebrates contraction and acceleration. not --man data rows but rose but not as much as expected. we are so far away from the ecb's 2%. we have u.k. manufacturing,
which unexpectedly slowed as well. the message in the u.k. economy is clear, it is primarily led by domestic spending. we are not going to see a u.k. rates hike until at least later this year. betty: mark, let's check in on the bloomberg first word news. courtney donohoe has more. the house returns to work today and repealing obamacare tops its agenda. thise such votes before, could reach the president's desk. adald trump's first campaign will begin airing in new hampshire and iowa. his republicanns rivals. his campaign says he plans to spend $2 million a week.
bill clinton spent the first eight months of his wife's presidential campaign behind the scenes and that changes today. he is headlining two rallies in new hampshire. will have more events around the country. traffic is moving again on the mississippi river, but with some restrictions. the mississippi rose quickly after 10 inches of raise -- rain fell. a stretch of the illinois river remains closed and it is still rising to near record crests in several towns. new pictures show the wreckage .f the sunken cargo ship faro is nearly two miles down. global news, 24 hours a day
powered by our 2400 journalists and. london, global investors getting a genetic start to the new year, and it is all down to china. betty: what a way to welcome everybody back from the holidays, kicking off the new year to some real fireworks in the market. panic that we see surrounding china and whether the fed is ready to change sellingt all if this continues, we are joined by steven wieting. what do you read into today's move? : historically the federal reserve has not begun a new tightening cycle in the month of december in the history of the fed. betty: what do you mean by that? teven: they have never begun a change in cycling course.
fin market conditions, illiquidity around the turn of the year exacerbates the problem. so the context for seeing events the lenscomes through of policy disappointment that we have had, in particular in the eurozone as they were big promises and little delivery, and the fact that the federal reserve has begun a tightening course and has pointed to this being a gradually tightening of steps. this provides the context in which we look at issues like china. currency, its equity markets, these will be factors for the world marketplace just as oil was in 2015. betty: does that mean that stocks are a dangerous place to be in 2016? think you need to look at the global economic recovery. what will be a modest recovery in american profits, and the
eurozone economy and japan is something that will be dashed by all of this. you could talk about a big selloff, then you wake up and it is february, and it is a different marketplace. some of the dangers of these policy disappointments that we had late in the year investments could not figure what it meant for the holidays. stephen, the dow is suffering its worst start to a year since 1932. the records have been broken. european stocks have their worst start to a year ever. i have got to ask you about a story we cover today about how strategists are forecasting european stocks, are going to rise 30% this year. they are talking about the dividend yield, valuations, the ecb. is that a little bit to optimistic? i suppose it is easier
from this level than from yesterday's level. i think the catching up we have in the eurozone to u.s. markets is on a solid course, and over time, i do think that we get there before the u.s. interrupts the global recovery. so i think that direction is clearly correct. profits in the eurozone rose 15% over the last year, the same measure for eps is up to and a half percent. i do not hardly disliked the u.s. market, but the fact that we had a good long recovery headed into a seventh year does not look the same leader -- the same way as the euro zone you had a double-dip recession in 2013. the ecb may disappoint us with its tactics, at 60 billion euros per month through march 2017, likely longer, barring large external shock, the eurozone should come further along.
betty: it sounds like there will be some opportunity in europe, that getting back to the u.s., i am scratching my head because the fed right -- rate hikes because the economy is doing better. we are almost about to hit full employment. why are we selling off like this? of the that is a bit issue, and talking about the panic versus the trend, part of what the phone did -- fed did is a bit of catching up. we look at the beginnings of policy tightening cycles, and this is a recognition of the good, ongoing recovery. the federal reserve sells it this way, that only with the strong economic outlook ahead will the federal reserve titan, but part of this is catching up and receive -- realizing the environment is unfolding already. now that unemployment has fallen
from 10% to 5%, and we can talk all you would like about unemployment in the united states. betty: accounting for millions jobs -- millions of jobs created. does this put in doubt some of the inevitable that we thought were going to happen in 2016, the treasury yields will come up , baby 23%, the oil prices are going to bounce back, that the dollar was going to strengthen. steven: some of those i think are not gibbons. long-term treasury yields will rise is sort of a false premise in the sense that the global recovery has not been strong enough for u.s. treasury yields to move up so much. policy rates abroad are very low across the world. you see much lower 10 year yields than the u.s. 5-year note. when you take a look at where we
are in the cycle, the idea that the federal reserve will do nothing but tighten for years on and is i think also a false premise. we have a flattening yield curve environment. up,idea that oil will move that is a shorter-term versus long-term phenomenon. it is not going to be as quick as many assume. i think the dollar is most clearly and they stronger fundamental trend and it is challenged by the fact that it has risen a great deal against emerging markets currencies, and that makes it difficult to make a -- immediate progress. what happened in china today is an example of how it is a multiyear trend. mark: the smallest -- the dollar is deflationary for the u.s. i talk about deflation because oil has moved from a 4% gain to almost 2% decline in the matter of an hour.
how is the price of oil going to play out across global markets in 2016? steven: one difference is in policy. u.s., policymakers focus on core inflation rather than headline inflation. ,n terms of longer-term tactics that might be the right way to look at it, but policymakers outside the united states tend to look more liberally at targets, and what they do with monetary policy when headline inflation sinks on oil, so it tends to exacerbate the policy differences. it is not likely to change the course of the fed and less dollar strength and economic weakness were to feed into broader core inflation in the u.s. betty: great to see you, thank you so much for kicking off the year with us. before we go to break, moving from markets to politics, bill clinton is back on the trail today, headlining two rallies today.
you see live pictures from where thew hampshire, national primary is five weeks away. this is his first solo event where he is headlining and campaigning for his wife, hillary. again.t is that time have you missed it? i have waited 18 days for this, a battle of the charts. what was the best-performing asset of 2015? im going to give you a clue, rum daiquiris and bob marley. ♪
mark: welcome back to "bloomberg markets," this is the european close. i am chomping at the bit. betty: i know you are, you cannot wait to talk about that chart. in the meantime, it is time for our bloomberg business flash, a look at some of the biggest business stories in the news. brazil is headed for its worst recession since 1901, according to a survey of economists who predict that brazil's economy will shrink by 3% this year. they are trying to control the test disinflation and 12 years without slowing down the economy. microsoft windows 10 is on track to grow faster than any previous .ersion of the operating system it is running on more than 200 million devices. is trying to build a system of gadgets and cloud-based software that work
together. for a second straight year, a record amount flowed into exchange traded funds. blackrock says it grabbed more than a third of the new funds. investors are using etf's to replace derivatives, including futures and swaps. that is the latest bloomberg business flash update. let's get a quick check on the u.s. - stock moves in the the dow has its worst start ever in 84 years. abigail doolittle has more live from the nasdaq. abigail: stockmarket selloff continuing here with the nasdaq leading the dow and the s&p on the way down, in part with weakness in the consumer discretionary case. the sector is down more than three and a half percent now and one of the worst performers is tesla. the company says it hit the low end of its range, bringing the
total deliveries for 2015 to just above 50,000. the bottom of the full-year forecast. this comes as a bit of a disappointment. less likely that ceo elon musk "aspiration" to turn cash flow positive in 2016 is unlikely to happen. journey to amazon, the single biggest drag on the nasdaq. shares were downgraded from a neutral to a buy. they think the growth related to investments may yield less upside this year than in 2015. betty: abigail doolittle at the nasdaq. it is time for the global battle of the charts, we take a look at some of the most telling charts of the day, what they mean for investors. joe weisenthal is joining us on this. happy new year.
joe: happy new year. everybody knows it is an ugly day. they are talking china weakness, but it is not all that bad. the chinese nonmanufacturing data came in strong, and here is a look at iron ore. streakn a 10 day winning . this is iron ore delivered in china, seen as an industrial gauge. other industrial metals in china getting a bit of a bounce. clearly there is the big selloff and manufacturing is slowing down, but maybe there are some signs that things are picking up a little bit. that is an extraordinary winning streak for i am or. -- iron ore. betty: do we know what is behind that? joe: the big test will be about data. if it is just a false breakout, it will decline. if you are looking for hope,
another thing that was good, macau gaming revenue, the best since january. betty: not all bad. nothing is bad it all were market is. korea, bob, from dac marley on the stereo, time to talk about the best-performing assets of 2015. the winner, if you strip out venezuela, jamaica. jamaica stock exchange market index jumping by 97%. , as index has 33 stocks market cap of just $6 billion. stronger investor safeguards and a rebounding economy, the average daily value is $700,000 a day. billioncompared to $7 for methods of the dow jones.
the best-performing currency out of the 153 we track at bloomberg against the dollar, the somali schilling. the dollar has plunged against the somali schilling, the shilling up 17.4%. this country has been marred in a civil war for the last quarter of a century and they are using toent military advances track investors to help rebuild the economy. lee, we areot least looking at the best rp me best-performing bond market. the best-performing local bond market is nigeria, where returns were almost 37%. this is a central bank that actually cut interest rates in november the first time in six years. counterparts in africa are tightening monetary policy in the face of weakening currencies. get your bob marley on the radio
, because these are the best-performing assets of 2015. betty: just based on bob marley and rum, i think joe enjoys a good daiquiri as well. we will have to hand it to you, mark, as a welcome back gift. mark: joe, welcome back, and i like the new -- the haircut. joe: happy new year. mark: happy new year to you. betty: furry is pushing into the next year with a spinoff from fiat chrysler and it is trading on the milan stock exchange. what is next for the luxury sport car company, that is next. ♪
ferrari striking out on its own as the spinoff from fear chrysler is complete. limit to the usefulness of the application of the brand in areas which do not reflect the exclusivity and uniqueness of the brand, and that is what we need to be careful about. he cannot take it everywhere. milleret's bring in matt who covers all things auto. matt, happy new year. since its sideshow in october, i know ferrari shares are down 10%. what is their plan? matt: the plan as you just heard is to try and put more things under the furry brand. -- ferrari brand. 7500 andady make about do not necessarily want to raise the price.
, theyill make a few more probably will have some more expensive bottles, but the idea is to try and find things like a resort maybe or a restaurant or hotel, something they can bring the ferrari brand in and take more money out of it that way. betty: matt, we will get back to the furry story but i know you just came on set -- ferrari story. matt: i just got off the phone with dammam and, the president of general motors -- dan ament, the general -- the president of about lyft.rs uber is a $60 million market cap, more people use it then lyft, and one of the biggest challenges has been their drivers being able to get cars on good financing terms, cars that are going to work for the job.
one of the things they are going to do right away is rollout rental hobbs or finance sales hobbs around the country to get more lift drivers -- lyft drivers in gm cars. betty: i think it makes sense. much.- matt, thank you so mark, walk us through the final numbers. ever the biggest decline for the european stock market on the first trading day of the year, and i'm going to go out with the numbers because they are so important. , 260toxx 600 down 2.5% billion euros of value wiped away. we will see you tomorrow. have a good evening. ♪
scarlet: i'm scarlet fu. alix: i am alix steel. stocks getting hammered after a selloff in china. scarlett: new regulatory etf's.ls stand to affect cliff,.l falling off a scarlet: the worst start of the year since -- julie hyman will fill in. julie: it depends on which index you are looking at. let's check on the