tv Bloomberg Markets Bloomberg January 12, 2016 11:00am-12:01pm EST
hour. it is another bumpy session so far. european stocks set to close higher for the first time in further as china took steps to stabilize its financial markets. he european close starts right now. >> we will take you from new to london to paris in the next hour. us. kicks it off for we thought we were headed for a big rally but we have come off a bit. >> we are still up and tuesday seems to be the lucky day ecause last tuesday was the only other day the stoxx 600 has risen in 2016. today gains end a four-day losing streak. the declines in asia we rise .2%. and shanghai
hina stepping up efforts to stabilize its markets through rhetoric by government officials and intervention. 15 much 19 industry groups socks 600 -- stoxx 600. resources were higher earlier, they are lower now falling with the other commodities. bloomberg commodities down to 19.99. three fallen.big automated rally today. volkswagen among them in germany up by 4% today. the first two-day again for since december 24. we had an industry group orecast an acceleration in chinese sales. tuesday, betty, is our lucky day. won't ask you what your lucky
day s. >> i will have to make up one myself. the pound though declining to dollar st against the since june 2010. what is going on here, mark? output fulling the most in almost three years. warmer than usual water reducing nergy demand and manufacturing o output with a worst than forecast performance in november thelighting the weakness in manufacturing industry and fears e.u. a u.k. exit from the which could result after the pcoming referendum and fragility of the u.k. economy traders, nvestors, economists to push back the forecasts for the first u.k. hike. we will talk about that. but that's why we are seeing the pound get hammered against the dollar. lowest since june of 2010. betty: i will raise you another chart that shows sort of how
and low the oil prices are going, right? this s this is the crude oil volatility beginning of anticipated swings in the oil markets. yesterdayit is closed at the highest level since february. that, number one, traders are profiting on the volatility. a lot of there's uncertainty about where crude oil goes. uncertainty and pressure on crude oil prices we re getting headlines right now opec may consider convening a meeting before its scheduled to possibly talk about bringices and, who knows, back production targets. but let's not speculate too much. meantime, i want to check on the bloomberg first news. courtney donohodonohoe.
courtney. the suicide bomber responsible for the explosion was a member islam state. it was in the historic area of istanbul. were killed, nine germans. another 15 wounded. theey's prime minister says bomber belonged to islamic state. e pledged to battle the group until it is no long area threat. he supreme court struck down the florida system for imposing death saying it doesn't give jurors enough authority to ecide whether capital punishment is warranted. the ruling is in the case of a a 1998 icted in stabbing. he was sentenced to death after recommended execution 7-5. sergeant boberg dam is back in a koert arolina military charged with desertion and before the enemy. he must decide whether his trial or be heard by a juror
judge. democratic presidential candidate bernie sanders is endorsement of mo moveon.org. they have been at the forefront causes.al it says he was supported by 78% of hits 340,000 members. hillary clinton got 15%. global news 24 hours a tkaday journalists.r 2400 once: the big global story again is icon. speaking exclusively on rodgers gave his outlook of why the turbulence what we different than have seen in the pass. im: there's a major difference in the world in 2016 and 2008 and china does have debt now. it is nothing like america or britain or portugal or some other countries.
you are going to have bankruptcies in china. i hope you do. bet kwreu bett bett betty:mark. mark: he is taking a wide view. investors are bogged down with day-to-day volatility. e go through what is happening in china. would you be a brave man to bet in the ewan clines -- yuan. we had senior government the one way ing downward bet is not sensible. the official rgue reshrpbs the thing is the is remarkably similar to september following the initial stabilized. the spread connected the down side and it calmed down.
what happened in january was another surprise, the u.n. much weaker and there is a rerun of the same story. whereby the attern und underlying trend for the u.n. is n the down side but it is the not that the officials do want this instability or disorderly depreciation but take it one step at a time. that similarity is quite concerning. as much as i would like to officials that is the last time we are going to do a lot of effort to restore financial stability it within 2%o keep bounds in order to become members of the basket. those promises may ripping a at the moment. mark: more money market rates
levels five record times monday. record close. at the edge g undermine china's efforts to make the kwraufrpb a key funding urrency and intentioniial financial market. how tricky is it to achieve that over maintaining control it amidst this economic slowdown? observingonal view is september over september and now the case that s there are two conflicting factors. want the yuan to be a reserve currency widely of and has the credibility a rufrb currency. at the same time you have the you may need that further depreciation to help the recovery. the balance as a whole does slower lly point to a
weakness. so i guess the chinese approach has been take it one step at a time. it may shock you first but we will make sure it doesn't selling pressure and from an investor's point of view if that is the revealed more.ence i would expect even if they say nothing more comes i will bets for more. is certain is the curve is spaepenning. o -- steepen the -- steepening. but those measures don't seem to be having a great impact. like six to 12 months forward and 1 trillion of debt by corporations and that debt is becoming more expensive. down become more expensive the line if the fed keeps hiking. ou need to buy the dollars it repay that debt and it is concerning at the long end of curve where the demand is from those in need of dollars 12 road it is the
stable. betty:one more on china. he chinese will say you are looking at the yuan all long and rbtd be watching it against a index, a baskets, not the dollar because if you were to look at it that way you see they would say we are not devaluing our currency, it an uncontrolled movement of the yuan. >> i agree. didn't a stat that attract considerable attention and away from the dollar and ndex to provide the reference for the yuan. from that point i would think that highlighted the down side for the kwraufrpb against yuan.ollar -- the euro is kind of getting close to multi-year lows so from that point of view you would expect if that is there the basis of their future exchange more weakness and
could come. are think investors ustified in expecting further weakness. initial shock followed by trend ty but then the seems to remain one which still. betty: there's a great article on bloomberg talking about the entral banks overall, not just china. maybe we are focused on china because they are the world's econd biggest economy and whatever they do we warm. -- watch. t says most central banks are devaluab devaluing currencies. them out calling except china. >> it is a risk. what the chinese are doing could fuel more currency wars. it is not competitive deevaluation. we have those vertically integrated supply chains but it about boosting exports
but if certain central banks try push too much to i understand state the praorbgs of currency encourage other central banks to do the same. currenciesk of which the ext or which take away depreciation the strongest trading china's main partner, we think the geez tolerate a relatively situation. mark: how much further can sterling fall? a lot of research is coming out re we waking up, the banking research financial community peers you and your waking up to the risk or is to this ething more pound-dollar decline in 2016? the pound is drawn by
two factors. brexis which may have increased given recent polls and migrant crisis in europe. of it is driving it to the down side. data has been disappoint the. hike -- it is really the matter of evaluation. starting with that, the concern there come what it may will be a period where fixing investment could slow down significantly. given the close to 5% current deficit in the u.k. that means the pound will have to balance e sharply to the foreign assets u.k. is holding against pound. that could be a drop. ur central view is we believe u.k. will stay in e.u. and while risk is significant the
a little surprising to see the gain earlier in oil penning the face of inventory report in u.s. tomorrow. 2.5% nearing wn $30. $30.64. talking about the negative sentiment we have been earing on oil prices from many analyst analysts. oil goes so go stocks. the tionally we are going same way as energy shares weigh on the major averages. oil and stocks pare dvances we see the dollar maintain some gain although it has been off the highs. .4% at the ut moment. o not surprising you would see that correlation, inverse between oil and dollar. to put a fine point on it we
have the terminal for all three together. the dollar in green, stocks in yellow and oil in white. stocks and oil going down as the dollar goes higher today. something we are watching is copper in the session. to a been hanging on little gain and that has turned negative. lcoa lower as we talked about on earnings and sales that fell. freeport is being hammered again gold and not a comfortable place. f you look the past two sessions it has been in free fall you could say down 30% over the past two days. remember, that is on top of very already in 2015. of all of that. still ahead, the new bank of governor says the e.c.b.
is betty: live from bloomberg eadquarters in midtown manhattan and london the european close. >> nine minutes to go, betty until the session wraps up for day. e.c.b. faces a battle with sluggish economic growth an prices on top of diverging policies with the federal reserve. interview the new banco of france governor bank policy is effective and they can take further action if necessary. >> inflation is too low but acing the situation we have been active and effective.
look at our decisions of december 3 last year. decreased rates at minus 0.3 programs ed purchase it march 17 and said we would reinvest the principal. is effective. this is important. we had many studies converging that this policy including this decision will half a percentage point of additional inflation the year, 2016, and almost same for growth. for the future let us first look economic data. this is the most important point. needed i stress the if, we capacity.tools and mark: we are joined now from the e.c.b. orecasting inflation of 1% in
20 2016, and with oil prices below the to fall e.c.b.'s projection of oil for wonder whether the e.c.b. is going it need to tools nt those further that the bank of france governor is talking about. task for be a tricky the bank of france governor who took over in november. of course, the job comes as he says the e.c.b. that of course e.c.b. is ready to implement ore action, to implement more tools but he didn't want to exactly what that means furth further. went into a .c.b. minus 0.3% in december. didn't confirm either whether that means more bond.
the uncertainty of the is move from the e.c.b. going to be. however the new bank of france overnor did tell me that the urrent stimulus should add about a half personal point to inflation and growth this year eurozone. he also tried to be reassuring aying the european economy is picking up. as for france he said france and needs more reforms monetary policy can't be the only game in town. mark: caroline, lots of policy makers are meeting in paris today. the binge of england -- bank of gathering rnor and o discuss the challenges of bolstering prices when interest levels.s at low what has come out of the gathering today?
carolyn. -- a oline: they didn't discuss lot of divergence between the united states federal reserve e.c.b. or december and japan doing. a lot of people came to say to the former bank of france governor who was heading the past 12 years. you had the vice chairman of the fed. e.c.b. apnd carney from england.of fish of future in case crisis negative rates would be tough to very implement quickly in the united states because that could strength in money markets. the i.m.f. managing director who made the trip today said the pace of normalization etween the united states
monetary policy, the european will be keynese one in the next phenomena months months because tightening with the u.s. coincides with more easing in and japan. that could mean further rise to of course that would have an impact on the of emerging markets. metal she said oil and prices are likely to say highway. mark: the bloomberg commodity 1991.lowest since ♪
feeling like 1991 again because we are hitting that level. here in the u.s. the markets have turned red on the dow, and the s&p is flirting, about to turn lower. what about the european markets echo mark: it looks like we are going to close higher. we were up almost a percent above these levels. that commodity index tells the whole story. china is the biggest consumer of commodities. fears about an actual chinese slowdown is reduced -- has reduced the purchasing of commodities, and consequently commodities have -- the bloomberg commodities index is a gauge of 21 materials. it is down 5%, fallen for six consecutive years. i had a chance to see how far it since 2008. it has fallen 17% since 2008. it looks like in europe we will
finish the session higher. i am sorry to sound like a broken record, but once again the miters on the back of the decline, they were leading those declines. randgold resources. these basic resource companies the become index tells the whole story. it does indeed. here in the u.s., you guys are higher, but we are turning lower , the dow off right now just by 12 points, but it has been insignificant decline from the highs of the session so far. the s&p is flirting with it slows of the session. the nasdaq, interestingly enough, is still keeping on to some of it -- it has declined but it is holding onto gains. let's check first word news with
courtney donahue -- courtney donohoe. courtney: turkey is blaming an islamic suez died -- and islamic state suicide bomber for the explosion. 10 people were killed. nine of them were german. 15 were wounded. turkey's prime minister says the bomb lost a islamic state. he promised to challenge the group, and it is no longer a threat. legislation would bar kim jong-un's regime, the hard needscy lawmakers say it to build weapons. a panel of experts say existing united nations sanctions on north korea are not being enforced. president obama delivers his final state of the union address tonight. this one will be different from others. instead of laying out a wish list of legislative proposals, the president is expected to focus on what he considers his administration's successes. you can watch his speech tonight
live at 9:00 p.m. eastern right here on bloomberg television. the news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. betty: an important message in the president's address will be whitecovering economy as house economic adviser jason furman noted. in 2015 wereers the most optimistic they have been in any year for over a decade because wages are rising the fastest they have in the recovery, the unemployment rate -- atovering at the the fastest rate. hensarling serves as chairman of the financial services, the house financial services committee. congressman, thank you for joining us today. despite the juniors we are seeing now in the markets,
particularly on the back of the decline in oil prices, the president is going to come out and run a victory lap. but the economy -- is there no credit the republicans can give to him for an economy that has recovered millions of jobs? as you pointng: out, the white house is billing this speech as a victory lap, and it will probably be the shortest state of the union ever. it should be only a minute or two. the facts are these. since president obama came into office, the average american is down. their income their take-home pay is down. the average american family has less savings. the average american family, when it comes to health care, under obamacare, they are getting less and paying more. they are very anxious. it is one reason people continue to be pessimistic.
we are engaged in the longest, slowest, tepid recovery in the postwar era. -- with other recoveries, the average american family would almost have $11,000 more in income, and 12 million more people would be back to work. it is obamacare and dodd-frank slowing us down. the president's policies are hurting working americans. betty: i want to get to dodd-frank in a moment, but some of the democrats -- the democrats would say, to counteract that, we have put together proposals to help some of the poorest in the country, such as raising the minimum wage , and republicans have overwhelmingly declined or blocked any effort to do that. why not put together a measure that at least helps the wages on the lower front of the american populace? rep. hensarling: it is exactly
what republicans are trying to do. we are not trying to make poverty necessarily more sustainable. we are trying to get people out of poverty, take people who are underemployed and make them fully employed. betty: including hiking the minimum wage? rep. hensarling: we do not need a minimum wage. we need maximum opportunity, and everything the democrats have done from obamacare to -- we have entrepreneurship at a generational low. we are not getting new business startups. without new business startups, you are not getting the job growth you need to help american families grow their personal household economies. minimum wage can help some people, but it hurts other people. ofcuts off the bottom rung the economic ladder for people trying to enter the job force. what we need to work on his maximum opportunity, and that means fundamental tax reform, regulatory reform, building an
economy from mainstreet street up, from washington down. we have enacted almost every single one of the president's economic policies. we, congress, under a previous democratic majority, got the stimulus. he got obamacare. he got dodd-frank. we had the largest monetary stimulus in the nation's history. so why notay not -- take some credit for the economic recovery as well? rep. hensarling: i'm sorry, the question again, please? betty: so why not take the credit for the economic recovery we have seen in the last eight years as well? rep. hensarling: what we have is an economy that is underperforming. we should have an economy, if it was just growing at the average pace of 3.5% -- instead, it is limping along at 2%. that leads to misery in worng people's lives. the economy is still not working for millions of working americans. the baseline you ought to be
using is going to help the -- is what a healthy economy looks like. not at the depths of the great financial crisis. that is like saying, you know, how are you doing today? well, i am not dead. not dead, but it is not performing as a healthy economy should for working americans families. betty: you look at the broader context -- this is a global economy that seems to be in a slowdown, and at the same time you have seen measures, certain benchmarks that measure the economy that have grown. it is not just jobs, but the stock market has more than doubled at the time the president has been an office. are looked atrs and they say the president has done a good job. i only have limited time. i want to get to dodd-frank because you mentioned how it is putting community banks out of business. burdens onory financial institutions. to give a sense, we looked at
the publicly listed financial , and theyon the s&p have seen tremendous growth in their stock prices since the beginning of the president's term. it is an imperfect measure, but it shows that it has not been a complete miscalculation, that it has not been as jacksonian as some in the republican party are saying it is. underensarling: dodd-frank, the big wall street banks are bigger and the mainstream banks -- the main street banks are fewer. they are dying an unnatural death from the sheer weight, volume, complexity, cost of dodd-frank. so this is completely opposite what dodd-frank promise. yet we still continue to have a wall street bailout fund funded by taxpayers that was written into law. what we have seen is free checking cut in half at banks
for working families. we have seen bank fees go up. of the seen the ranks unranked increase. we have seen fewer credit card offerings, perp programs go away. dodd-frank has not worked for working americans, so that is why the house financial services committee in this congress will put forth legislation to help working americans that will functionally repeal and replace dodd-frank that is something we work toward for working americans. betty: congressman jeb penciling, chairman of the house financial services committee. do not miss our coverage of the president's state of the union, hosted by brendan greeley. ♪
mark: welcome back to "bloomberg markets," live from london and new york. finishedheck -- we higher for only the second session this year. gains in london and frankfurt and in paris. it was autos that drove the advance. secondng higher for the consecutive day for only the first time since december 24. we had an industry group forecast, and acceleration in chinese sales. basicttom of the pile, resources down by 2%. the big headline in the last 10 minutes. the bloomberg commodity index falling to its lowest level since at least 1991. u.s. stops and our little chain, doesn't it, betty? in the u.s., if you are
talking about at least on the other side, right, we are seeing those losses continue. but we are kind of stabilizing with the lows of the session. the nasdaq can keep some of those gains, in the green. abigail? abigail: unlike the dow, which turned modestly into the red, where slightly green, giving back a lot of green -- a lot of big gains. upside after as an the company offered a disappointing outcome last month on its earnings call for the company said they had a very withssful holiday season strong sales. the problems plaguing lululemon over the past year have been inventories and discounts. suggested that might be over. perhaps the problems that claim the stock. it has been down a little bit over the last year. perhaps it has become to an end. it is important to remember the
stock made very high shortage risks. it could be a short squeeze. so much,ank you abigail. abigail doolittle at the nasdaq. we are talking about the need for speed. the rolex 24, endurance car race kicks off latest month. mark, i understand there will be supporting slick rides on the track. for the first time this year, lamborghini. let's head to bloomberg's self-proclaimed lemberg aficionado, matt miller. he is president that she is with the president of the international motorsport association. matt: so great to be here, scott with president of -- there has been a massive renovation. dr. daytona rising. -- s the
$400 million renovation. i think it predates the first true stadium motorsports facility. if you have been to daytona before, you will appreciate the after from what it was. it is stunning. the highest expectations have been exceeded. matt: you merged with grand am to bring this into one thing. how is it going as far as getting american viewers and families? >> it could not be better, the short answer. we come through the merger period, which was a series of seemingly unending compromises because we were trying to blend rather than have one go away and why continue, we truly blended the two championships together. this year, 2016, is the first time we have a fresh start. in our gt comment content and gt categories.
what you see over my shoulder is a gt lemans. all of them are competing with each other, and the gt classics our top-tierd say terms of manufacturer involvement, but there are prototypes. matt: i know it well, and i am so glad that lamborghini is in full disclosure. i am a big fan of driving the cars. americans have done incredibly well in this series. >> that is about to take another factor as well. coming through grand am as well, most recently with an hour whether tech championship, they wehner, a daytona winner, a series champion. now you have ford coming in, this ford gt.
it will make a debut over the next 24 hours a daytona. that rivalry between ford and ferrari at lemans, the rivalry between ford and corvette and america, 2.0. matt: it gives me goosebumps just thinking about it. you guys have the reservation. the television situation is still kind of up in the air. alwaysrts, it is not easy to watch the races. how will you take care of that? scott: we came out of an inner with speed channel, and every -- a channel dedicated to motorsports. that was our programming back in the day. with the evolution of speed into fox sports one, is very broad-based. we find ourselves had a searching for some attraction, great partnership, great relationship with fox. we are focused on improving the
ratings, the viewership. the online capabilities are second to none. the challenge we face, with a 24 hour event, it makes it difficult for any broadcast network to embrace that, so it is a combination of coverage across a couple of different channels as well as live streaming, and more traditional races. it makes a nice three-hour tv block. we have switched it up, added some content, added some elements to the broadcast revenue that is well received. matt: we appreciate it so much. watch it online, right? 24 hours. do you have time? mark: i always have time. you can read more about luxury cars, so your destination for the finer things in life. programmingnny and -- and propertying. coming up in battle of the
betty: you are watching the european close. i am betty liu in new york, with mark barton in london. yes, that is the picturesque skyline of new york city you are looking at. it is really cold, though. i am told we may get our first snowfall this winter. time now for our global battle of the chart. global chart. we will show you what it means for investors and for viewers, and you can access the chart by running the function feature at the bottom of your screen. is juliehings off
hyman. julie: i am talking about the currency of the day per to we have been watching the difference between offshore and onshore. that is what i have graft here. you have the spread that that is what i have graphed here. we have essentially had compression of that graph, with the stability that the pboc has tried to inject into the market. after allowing it to devalue over the past week or so. so that is one of the things that originally, as trading began today in europe and here in the united states, one of the tongs that was reassuring, investors. but that seems to have been melted away since we got the compression between offshore and onshore. a relief was overnight, but will we see the gas widening? julie: that is the thing. there is unpredictability to the regulation in china, and people
are trying to forecast where the chinese currency is going to go. having very little luck at doing so because of the imperfect ability. toty: mark, we know what avoid, which is china. you're talking about what the buy, right? mark: if stocks fall further across the world, it is time to buy. goldman sachs is neutral on global stocks right now. so it begs the question, what should investors be buying? what he prefers, european shares because they are cheaper. he says the reason companies are brighter, at least this leads to the question, how cheap are european stocks. there is the chart of the day. at 14.37 600 is valued , estimated earnings. you can see this is the cheapest in one year. back on december 29, the index point one time6
zone. we come down because the 6% decline in the stoxx 600 in 2000 and 2016. -- s&p 500 is valued at .64 at 15.64, the lowest it has been in over a year. the average analyst projection was five point -- a project 10% earnings growth and says the ecb is supporting the economy as well. goldman sachs projects that 18% pick 100th intock the next 12 months from monday's how should you whether the turmoil? stables and health care companies. it is not to bear on u.s. equities. it recommends investors keep their allocation to u.s. stocks, although it does say that they
from bloomberg world headquarters in new york, good afternoon. i am out steel. here's what we're watching at this hour. the dow is in and out of negative territory and now back in the green. the bloomberg commodity index at a 25 year low. enoughina's efforts be to calm investors? him -- for oil prices to drop. to an hundredar $60 per barrel. and our twitter investors losing confidence in jack dorsey's efforts. uncertainty about the company's future. let's head more to the markets desk where julie hymas