tv Bloomberg Markets Bloomberg February 4, 2016 11:00am-12:01pm EST
close. mark barton joining us as we wrap up the trade. race thing ofnd a the lossing -- of the losses in the europe. mark: we have fluctuated between gains and losses -- reporting a biggest quarterly loss since the financial meeting. the european close starts right now. betty: we are to take you live from new york to london and berlin in the next hour. tell us about the trade today. have been up as much as 1.1% and down as much as 1.5%. we were down for four consecutive days. losing stretch for almost four weeks, but we crest higher with 30 minutes left on
today's session. it is a day dominated by earnings. i want to bring up this magnificent shot highlighting the massive nature of today's credit suisse declines. shares have plunged to their since 1992. off goodwill, it set-aside provisions for litigation, drop in trading deepened lawson's as its -- also is losses and accelerating its cost-cutting programs, including 4000 job cuts, citing a particularly challenging environment. what a big decline in credit suites shares today. but it is not a bank leading all the other banks lower. this is a swedish lender.
look at the increase on the intraday charts. the biggest rise in three and a half years. it reported profits that beat expectations and record low interest rates helping curb credit losses. definitely a tale of two different banks. super thursdayas with the bank of england and the big surprise out of that was? who forn mccafferty, the last six months has voted for a rate hike decided to join the crowd. in interestge rates. was significant. he cited muted wages and a slower price pick up. growth, itt its reflected concerns but it does forecast inflation above 2% in
two years. does that tell us the market is too bearish? let's get onto productivity because i gather you were less productive in the fourth quarter. i wasn't, but i want to mention some breaking news on a story we were just following -- sumner redstone is stepping down. namedpe delmont has been chairman of viacom. there were questions whether he was going to gain the chairmanship the same way les moonves did at cbs. take a look at where shares are trading after the news came out -- a plunge there in viacom stocks when you look at the charts. reacting negatively to this news but sumner redstone at 92 years old is handing the reins over to his protege.
stocks areore on how trading. bloomberg's julie hyman has more at the market desk. julie: just to say a word about viacom, i don't think that was entirely unexpected. actuallyey have underperformed to some degree. they are still higher on the session, but as you mentioned, a sharp leg lower. stocks have had a germanic turnaround to the upside as we have headed throughout the session. if you look at my bloomberg, we have looked at this chart so frequently. this is the s&p 500 versus oil. oil has been higher for much of the day and stocks are only now catching up. an entire correlation?
that could be up for debate. we have come down just a little bit in terms of this correlation but still there the highest it has been in about two years time. if you look at the groups contribute most to the gains today, it is actually not energy. aterials are up the most on percentage basis. interesting that it is not necessarily energy driving some of the gains. given very interesting how dominant the dow has been. the gains are mostly coming from a few stocks? i'm going to call up for something on my bloomberg -- this looks at the biggest movers by index weight. if you add up the few largest movers, they are accounting for the preponderance of the gain.
that includes stocks like caterpillar which is seeing a big percentage gain. be getting seem to on any particular catalyst. it is more just a bounceback effect. large cap tech has not been performing well. andncials are bouncing back caterpillar has been leading some of the gains today too. let's check in now with the bloomberg first word news with courtney donohoe. courtney: members of the houston most of the talking on the hearing at out of control drug prices. they had hoped to hear from martin shkreli who had jacked up the cost of a life saving drugs by 5000%, but he claimed his speak.ot to
shelley is facing criminal charges of securities fraud. obama is looking for $5.5 billion to fund a first jobs program aimed at the nation's youth. it is part of the budget the white house is sending to congress next week. the money would be divvied up from the states through grants. the president will propose reducing the bite of the cadillac tax on health insurance lands. unions haved complained that tax will not be imposed until the year 2020. protest against government pension reforms turned violent. demonstrators fought with police, throwing firebombs. police responded with tear gas. workers will have to pay higher taxes to prop up greece's pension system. i'm courtney donohoe. mark? much more coming up today -- we are about 20 minutes away
from the european close. not just super thursday -- investors are paying attention to the u.s. jobs report. we have mohamed el-erian, the former pimco chief executive joining us thanks to our very own betty liu who is going off somewhere. it's a secret, but i will tell you during the commercial break. ♪
first-time claims for unemployment benefits at more than expected last week. the four-week average has exceeded 280,000 for the third week in a row, indicating hiring has risen a bit of historically low levels. the january jobs report comes out tomorrow. there is a new threat to corporate profits -- worker productivity dropped by the most in almost two years. that leads to an increase in labor costs. productivity has languished as the end of the last recession. part of that is companies being reluctant to invest in new technology. airline traffic up last year by the most since 2010. let toce in oil prices cheaper airfares and led to a ..5% increase demand grew fastest in the asia-pacific region. that is your bloomberg business flash for this hour. turning to a big stock mover in europe -- shares of credit squeeze plunging, down 11% after the swiss bank posted its
in sevenuarterly loss years. what's the trouble at credit suites? mark: the bank set-aside francine lacqua spoke earlier with the chief executive. whether this will be the big story for 2016. it is good news. knows what happened in q4 and it has produced very promising results. we said we would grow our three core divisions. so that is good to see that profitable growth is there. our investment bankers had a difficult 2015.
between the a lag activity and results but it has had its best fourth quarter in last five years. one division where we have had pressure and negative results. have sufferedkets from the current market environment. we have a number of positions that are a legacy from our old strategy, and as we turn into a in new strategy, we are cutting them aggressively. those, so thaton division lost about 900 million. francine: should you have been more aggressive with the cuts in realigning? by 37% in twothem months. we have been quite aggressive.
it is what it is but that is why we have capital. the bright spot in all of this -- there are two theories on the table. litigation -- the future is uncertain. you remember our previous conversation, i was quite irish about 2016. the 6 happy we raised billion. more importantly, a pressure of 3.3, so a strong position to get into 2016. littlee: asia was a better than expected. how do you explain that? been veryhave explicit that we are prioritizing. recruiting about 70 or 80 a year
people are coming to us because we have balance sheets on the as we say we are going to invest in asia -- because we say we're going to invest in asia. 3 billion positive in the fourth quarter and we see these trends continue in january. francine: what is the situation you will struggle with most in 2016? guest: no question global markets. of commentary on the fact i did not give a talk on the provisions. that was proven very quickly. where would we be today without that investment target? we want to retain the flexibility. one we are doing, we have big success which is our
equities. equities has been a risk and if you look at the stream of income, it is very stable. fixed income is still very volatile. is getting outng activities and moving toward whatever is more consistent. francine: what would it look like post overhaul? guest: [indiscernible] when will we have more details of what it will look like? we said we would be between 83 billion and 85 billion. we have already shrunk it the low the target. same for leverage.
pleased withry the way the organization has handled the challenge of reorganizing the entire company. raised 6 billion in time,l and at the same for profit in switzerland and in markets,ing very tough it is not easy. have bonuses as you would imagine, so it is a tough cocktail to absorb. total bases about 11% and four division that has underperformed, about 30%. that was francine lacqua speaking with the ceo of credit suites. still ahead, daimler, the
betty: we are live from bloomberg's world headquarters in midtown manhattan and in london. you're watching the european close. mark: and i'm mark martin. we are about nine minutes ahead of the thursday close. it has been a mixed session. london, declines in frankfurt and paris. the euro is at its highest level in three months against the dollar. it seems whatever draghi says is not taken on board by the markets. downing, a little bit
against the quarterly report. bund yields higher and just finishing off with that euro intraday chart, it has been quite a move. againstn for the euro the dollar which would be the 2011, insteadince ecb did not do as much as expected in december. draghi finding it difficult to do base his currency, buddy. betty: he is indeed. stocks are paring back with more momentum. the gains we saw about half an the s&p and nasdaq now in the red. the dow is holding on but losing steam. only up 47 points. it had been up triple digits
earlier this morning. julie hyman has a check on not just the markets, but on retail. looks like oil took a tumble the same time stocks did. maybe that is coming back into play in this already volatile session. retail is one of the groups weighing down the session. ralph lauren -- the worst stock decline almost two decades after the company cut its forecast for this year, saying revenue will by 1%. up it had forecast a gain of between three and 5%. the company has been struggling with slowing traffic. froman larson came over gap to run ralph lauren. he's as the company will offer a long-term plan in the late spring. we have the same store sales numbers for the company going back about three years and they have been choppy, taking a more negative turn as it has been
struggling more. but that's not the only pain we are seeing in retail. slow fourthg quarter weighing down its earnings. there have been a lot of concern about the department consists -- apartment stores industry. it set itself strong holiday sales but early november and january were particularly week. then there is the owner of victoria's secret. the company's preliminary earnings ahead of estimates, however victoria's secret sales fell 4%. the estimate was for a gain of 3%. to performdy works better than estimated and did raise its dividend. if you look at other retailers, we see those stocks decline as well. betty: thank you so much.
talk about daimler because after a record last year, it is paring back its expectations for this year. it is the world's number two luxury carmaker. italy sees a gain of less than 5% in revenue. in 2015.her lower than more aboutto talk daimler is our man on the button when it comes to europe's auto industry, mr. hans nichols. this is interesting because it struck a cautious tone, but it has had a cracking year in china , hasn't it? hans: here are two numbers for you -- 33% as the growth china had last year. 1.7% is what bmw did in china. that is what is causing a lot of concern about daimler.
they are not going to match that banner year they had in 2015. compare what they did overall globally, they are about at 4.7% growth. the market in china is slowing. in 2013, it was 16%. this is a way of saying it's going to get more competitive in china. he of state rebates coming into play in october. we will see how that affects the longer-term sales outlook and then you have the market volatility. this is a company that had a great year. it will be hard to re-create this year. $7.2 billion is what they're going to spend on development. by that time, you will be able to afford a mercedes. we won't talk about what you drive on air. we know you are a man of fine taste. i am excited about the
mercedes e class sedan. why are they cautious? hans: as of china. from the chairman -- we spoke to him earlier and if we have time come we can play it. if not, you and i can fantasize about whether we would drive a mercedes or the m w or whether we are chauffeured around like our colleague in new york, betty liu. we will try to play that sound a little later. daimler is one of the stocks falling today. the stoxx 600 down about 10%. the market closes just a few minutes away. ♪
their thursday session. lower gains in london because of the exposure to oil and commodity companies. that's the nature of today's session. at the stoxx 600. we've been up, we've been down and it looks like we are going whichse a little bit low means we have not had again in february -- four consecutive days of decline. this is the big corporate story of the day. credit suisse -- i've brought up the chart from 1990 through 2016. why is that. credit suisse announced its biggest quarterly loss since 2008 and shares have sunk by 12% , now at the lowest level since 1992. provisions for litigation and a drop in trading atthe securities loose --
securities. it has been a big week for oil reserves and shell actually matched estimates today. we had earnings fall by 44%. it is the smallest decline out of all the biggest oil majors who reported so far. shares at likes of bp have been/-- they are struggling. it is a real headache. the mere fact that matched expectations set its shares up i 6%. betty: it was expected the bank of england would hold on their interest rates, but there is a change in the view of where we might get other move on interest rates. mark: there is. for one, in mccafferty decided he was a dove.
he had been a hawk for six months. they all voted to keep rates at a record. this chart shows you expectations of interest rates ahead of today. is the this -- this morgan stanley gauge telling the amount of months to the next rate hike. we are at 30.77. that's two in a half years until the next rate hike. pretty bearish. economists are going for the fourth quarter of this year. what is significant is the move up in january. the bank cut its growth and inflation forecast, but it did maintain its inflation forecast over the horizon. that was significant and wage growth was revised down for the
year. ian mccafferty doing a bit of a flip whopper after six months. alsoank of england is thinking about productivity and i know there was a big piece of data in the u.s. today on that. for the fourth quarter, the last three months of last year, our productivity pretty much stayed sluggish and actually fell 3%, the biggest drop in two years. beenroductivity has languishing since the end of the recession, but what is more trouble -- more troubling is unit labor costs rose the most in eight years. it shows that companies are trying to hire more workers but not getting as much productivity out of them as they would like. going to cut into corporate profits and if that happens, there is a fear of recession.
-- wes something we are are keeping our eye on ahead of the friday labor report. england, theank of its growth and inflation forecast, maintaining its outlook for a gradual rate rise. the minutes and the monetary policy, the view is more likely than not, the next move in rates is up and that is consistent with the forecast. volatility taking hold of global markets, there's grumbling of a possible cut. chiefg us now is the economist at fangio gordon. it's suggesting the next move could be a cut. guest: what is interesting about
the report today is the conditional assumption which takes the sterling, they sort of stuff you are showing on the index, actually in the last five or six trading days, since they put pen to paper, that has started the ford sterling curve likely between 13 and 35%. i actually think the market has that one wrong. there's quite a lot of evidence that core service sector bit hard is actually a for two years. a lot of those transitory factors on oil and commodities, it is inconceivable to expect those two had the same impact they have had. form a, it remains on course to stay put. interesting to mention the
services activities -- pmi showed competence within atvices company -- companies their lowest in three years. the u.k. faced a lot of risks and it was interesting to see them mentioning the -- mention the referendum. it is a catalog of risks for the economy going forward. on first pass, you would say that is comfortable expansion territory, but look at forward activity, it's a much more bearish picture. you start to see purchase managers going there's a lot of risk outside the borders that we can't control and one crucial one inside the borders -- the timing of the eu referendum. any cfo worth his salt right now is saying i can sit tight for five months and at starts to
take the edge off activity when be bank, the chancellor will looking for an excel a ration rather than a slowing growth. betty: if i can bring you back to what's going on here and the fed reserve policy. there's the big jobs report and there's concerns whether we will see a robust number. mohamed el-erian writes in his robustpiece if we do get numbers, that could reduce short-term anxiety and wall long-termven the policy. isn't it true we want numbers to be consistent with the view that the economy is slowing and the fed can move on rates? in the fact right that there's a potential for upside shock. we saw william dudley say the u.s. economy cannot decouple from the rest of the global
economy. if the u.s. cannot, the u.k. surely cannot and i think it tells us everything we need to more and more colorado -- correlated across multiple jurisdictions. see the fomc even with strong jobs numbers moving alone. talk to me about the euro today, rising to a three month high. ecb% since the december meeting went surprised many by not being as buoyant as it could have been. our central bankers finding it difficult to weaken their currencies? look at the yen since the negative interest rate policy. the yen is now higher despite plunging on friday. is this going to prove a headache? -- theyt is a headache
were talking about lining up more stimulus in march but the doj is stimulating more and we simply don't know in terms of guidance but the best guess is they are going to loosen further over the course of 2016. it is a race to the bottom. very difficult to restore competitors when all your competitors are doing the same game. is the next move in u.k. interest rates? give me the month and the year. [laughter] 2017 for me, i think we're still 12 months out from here. mark: there you go. simon, good to see you. betty, february 2017. he put his neck on the block. go.y: there we you pin them down.
let's get a quick check on how stocks are moving right now. a big pair back of what we have seen. the s&p and nasdaq rapidly losing steam. on.dell is barely holding abigail doolittle with more on why the nasdaq has turned down so much force -- pull back. abigail: tons of volatility early on and now flat. it had been down just a little bit. behind this is some of the technology names. that is -- one stock down is gopro. they missed estimates and management offered a bleak forecast. apparently demand for the hero camera line is shrinking. its down more than 90% from
peak, down 60% from its ipo price, more than cut in half. and other technology name helping to balance out the nasdaq is yahoo!. it has been the couple of volatile days for the internet portal. onestors were disappointed concerns are on whether they can pull off a turnaround but investors seem to be somewhat calm. upgraded to aen buy from a neutral on the likelihood management will consider strategic alternatives considering how disappointing the outlook is. on all of this, they are testing the buying support of last year's lows. it will be interesting to see how that pays out. betty: thank you very much. the board of viacom has just d asd philippe dauman chairman. rain forthe end of the
sumner redstone. i want to head out to los angeles for this because it was some board -- some boardroom drama with shari redstone saying she does not think they should be chairman of the company. what should happen -- what happened here? it sounds like she is on an island. according to people who know what was happening on this sherry wascall that the only dissenting voice. it was a 10 to one vote, including sumner. philippe has spent a lot of time currying favor with sumner and the rest of the board and he has a lot of people who are loyal to him and it's going to take more than her attitude to change that. betty: so what happens to her? she still has a say in both companies and when her father dies, the power and
control of natural amusement, which owns cbs and viacom does past through -- does pass through a trust in which she is a member. i think she can curry favor but at the moment, les moonves and viacom have sustained control of those companies. sounds like she may have the investors backing when she fit for thee is not chairman's role because the stock went off a cliff after the news. as we were talking about earlier, that stock has not performed well. there are certainly a number of investors who want there to be a leadership change. one activist in particular has published a lot of statements, but they don't exert a lot of control when it comes to these companies. felipe has been talking about how the struggles viacom has endured are not his fault and
withcompany is dealing changes in viewership and measurement that are beyond his control and he's doing everything in his power to change it. it sounds like he has convinced the board that is the case. betty: what happens next? i guess business as usual is what analysts are saying. it remains to be seen if she will have another play and we don't know about sumner's health . there is some speculation that this suggests he's getting his affairs in order. then again, he has been ailing for a while. so it depends on his health and what sherry has planned. betty: thank you very much. her bloomberg on first ward news with courtney donohoe at the news desk. courtney: u.s. officials expect a bomb caused the next version aboard a somali airliner.
one passenger was sucked out of the plane and two others were seriously hurt. the bomb may be the work of the shabbat militant islamic group. john kerry says syrian peace talks will resume. talks were suspended yesterday for at least three weeks after syrian forces made major progress with a new offensive against rebels held areas being backed by russian airstrikes. to honorlled on russia a treaty on airstrikes against all civilians. looking for last-minute super bowl tickets? the average ticket is going for $4900, down slightly from earlier in the week. is cheapest ticket available $2800. day,l news 24 hours a powered by our 2400 journalists in 150 news bureaus around the world. been looking for
some tickets for the super bowl. do you know anyone who's going? betty: me. i am going. who's going to win? the most undeserving person and though worst person to ask about football. but if i would place my bets, i would put it on peyton manning. it could be his last super bowl. that's all i know. battle of the charts is next. i want a mug or a hat or something. betty: a battle of the charts trophy. mark: that's a good idea. we need a proper trophy. i will be looking at a few laggards of 2016 from the periphery countries. ♪
betty: time now for our global battle of the charts. you can access these charts on the bloomberg by running the function featured at the bottom of your screen. kicking things off is matt miller. i have silly charts to choose from i didn't know where to start today. this is a fan favorite. this is the triple bearish etf on oil. it is three times puts. the green line is the market cap of this super bearish etf. it comes down almost by half, a 43% drop in basically three
times bearish bets on oil. write about that time, oil turns up and it could be with less shorts in the market, this could be a bottom forming for oil. miserableas been a 2016 for the italian stock markets, particularly for the banks. 600 --tperform the stock look at the italian benchmark. by a bank that has lost half of its value. the concern is bad loans. yes, we had some agreement between italy and the european commission. many said it doesn't go far enough, but this was an index which out performed europe last year. it is having a horrible 2016. is it time to buy italy? betty: did you buying italy or
the best heart is it started last week while i was still there. some of the most fun about going to rio is to watch the practice. carnival started as a pagan ritual that the church co-opted and now it's just a celebration to have as much fun as you can before lent. eatingl fun part about there is the somber schools. big a deal to them as the super bowl is to us. where do we stay when we report on the olympics on a bloomberg special? where do we stay? guest: that is a tough question. famous for having great services. after many years of experimentation, i wound up staying at the plaza hotel equivalent. it's like staying at the dorchester. hear. that's hard to
everyone told me just stay at the palace. this year i finally did and now i see why. get the only place you can western or asian quality service. betty: thank you very much. things got heated this morning on capitol hill during the house hearing on rising drug prices. martin shkreli smirking as you can see throughout the hearing, refusing to testify or answer any relevant questions. of counsel, ice invoke my fifth amendment privilege against self-incrimination and respectfully decline to answer your question. while he declined to make any comments, he is not taking the fifth on twitter, which is bizarre. these imbeciles represent the people in our government.
mark: crazy stuff. betty: it is one of the most popular stories on the bloomberg. we have been watching the markets come down from the highs in the u.s.. how about in europe? mark: it was the fourth day of the kleins. the longest losing run. it was pretty much down to credit suisse. the biggest quarterly loss since the financial crisis. that is the european close. ♪ we live in a pick and choose world.
choose, choose, choose. but at bedtime... ...why settle for this? enter sleep number and the ultimate sleep number event, going on now. sleepiq technology tells you how well you slept and what adjustments you can make. you like the bed soft. he's more hardcore. so your sleep goes from good to great to wow!
from bloomberg world headquarters in new york, good afternoon. alix: here is what we are watching at this hour. the turbulent markets have even the bulls scared. he will talk to one of wall street's biggest bulls and why he's lowering his forecast for the s&p. scarlet: linkedin is expected to post strong earnings today, so why is the stock down 14%? alix: and we will show you who is still making money at $30 a barrel in oil. scarlet: julie hyman is keeping track of all of the moves. give us a sense of what is happening as we hit midweek. are seeing a surge in volatility as markets are all over the map. we are halfway through the session and already we have gone negative and positive for several times. it seems as though there's not a lot of rhyr