Skip to main content

tv   Bloomberg Markets European Close  Bloomberg  February 25, 2016 11:00am-12:01pm EST

11:00 am
live from london, i mark barton. this is "the european close." vonnie: we are going to take you from new york to london in the next hour. here is what we are watching. shares of lloyd soaring after the bank increased its dividend payout after fines from past misconduct may be coming to an end. the bank has its biggest boost since 2011. saffron'sll look at four year earnings, coming up. 4-year earnings, coming up. hearingsnd more from
11:01 am
on capitol hill that just wrapped up moments ago. market, what went on in today's market action? mark: it is not every day the stoxx 600 shrugs off the shanghai composite index, but that's exactly what happened today. that is exactly were we are today. the number one reason, this company, top of the leaderboard, lloyds banking group. dividend,reased its introduced a special payout, indicated it has reached the end of charges for wrongly sold payment protection. cutting jobs,any closing branches, investing in technologies -- essentially to buffer these record low interest rates that are hurting margins, hurting revenues. look at the share price. 13% higher, the best days since 2007. story for theat
11:02 am
company -- they missed estimates the flagship brands, lost share in the united states, even actually as the market showed marginal improvement in the period. underlying the need for the brewer to complete its deal for sab miller. that would include new areas for growth. it is strong latin america. vonnie: and i'm sure you do not mean the percentage of alcohol content? mark: [laughter] vonnie: the u.k. economy has --wn, but what is the change nevertheless growth? nnie, it was growth, vo yes, bank in line with the earlier estimate, down to the domestic expenditure expenditure
11:03 am
-- domestic expenditure. expenditure by household, net trade subtracted 4% from growth. we had exports the climbing for a second consecutive quarter, as fellas business investment the most in two years. is there momentum for the u.k. economy? by our wonderful survey bloomberg news friends upstairs -- upstairs where i am standing at least. say is the u.k. votes to leave the eu, there is a 40% chance of this economy will go into recession. that is important. that is some uncertainty and as you know, the economy hate uncertainty. right, we are 90 minutes into the trading day here in the u.s., so let's head to the markets desk or julie hyman as the latest. including natural gas, julie? will look at that
11:04 am
in a minute. we are bouncing around between gains and losses. a wells to mention fargo strategist has been the latest to cut her target for the s&p 500 for the year-end. , to join the5% 100, and of course that is above where we are now. adams, martin adams is citing and a lot ofces, the things the strategists are citing. take a look at the imap on the bloomberg. we have the mixed picture we are seeing, with more defensive stocks doing better today, plus the financials -- lloyd's of london helping to some degree -- shares andmodity discretion and technology leaving. oil prices are moving lower. we have not seen as much of an effect on u.s. stocks today, down 3%. though energy shares are lower,
11:05 am
it is being counterbalanced by the defensive group. vonnie: a little teaser on natural gas? julie: natural gas at its lowest -- 1999.ce 90 99 only at one dollar $.69. this drop-off is when we got the inventories report. natural gas supply down for the 11th straight week. i believe we have a chart of the change in supplies going back, and what is interesting is we you seen this decrease -- would think this would be good for natural gas. down forrn is the work natural gas is lower than the drop at this time of year, going out of the colder season, when there is less demand for natural gas. and there is concern that the work down in those inventories is not enough to alleviate the
11:06 am
pressure on natural gas prices. all of this is speeding through these natural gas producers. talked about chesapeake energy a lot this year, the company paying down some of its debt. shares areebt -- down sharply. also in devon energy and southwestern energy. pretty sobering. courtney donohoe has more from our news desk. courtney? courtney: good morning. we will start with apple and the fbi. thefbi director says that case may set a precedent for access. james comey testified. he said the agency is not trying to send a message. director komi: this is the thisst -- director comey: is the hardest decision we have made. i have tried very hard to keep
11:07 am
the bureau out of president setting business. next republican debate is tonight. donald trump has gone after the last republican nominee for president. he tweeted that mitt romney was a fool who blew the 2012 election, and that was after romney speculated a bombshell may be lurking interim's text returns. kalamazoo, michigan, investigators are trying to determine what caused and uber innocent gun down citizens. he is charged with six cows of murder. and elon musk has announced spacex will try another launch into space. it was delayed last night due to bad weather. they will attempt to land on a floating platform in the
11:08 am
atlantic ocean. elon musk has set expectations low. he says he is not expecting a successful landing. global news 24 hours a day powered by 2400 journalists in 150 bureaus around the world. i'm courtney donohoe. mark? courtney, thanks. coming up -- french aerospace group -- french aerospace provider safran reporting earnings and bernard delpit. that's next. ♪
11:09 am
11:10 am
and newve from london york, this is " the european
11:11 am
close." i am mark barton. vonnie: and i'm vonnie quinn in new york. safran reported a earnings mostly line with expectations. mark? mark: let's take a look at the shares right now. they are following -- not as much as they were earlier. they when ad with what lies ahead for the -- here to share with what lies ahead for the company, bernard delpit. delpit, thanks for joining us. guest: good afternoon. mark: we mentioned the charge in est engine for corporate jets. are you sure you know how to fix it? guest: we have written off all sttangibles on the silvercre program. and having reviewed the program, we agree on what has to be done
11:12 am
and the new schedule of this program, so we know exactly how to do it, and that is why now we are in the inff terms of intangible assets. yes, we know how to fix it. you: is there a plan b if do not know how to fix all of the issues? no, there is no plan b. there is no need for a plan b because we know how to fix it. we will be on schedule for the new program. those who may not be full of familiar with the company 50% of your revenue comes from propulsion, and then defense security, so energy prices, crude oil prices will be very important for your company. how has it impacted earnings so far? sorry.i'm i did not hear you very mwell.
11:13 am
vonnie: the price of crude dropping as it has, what impact has it had on your earnings? guest: the price of oil? vonnie: yes. guest: it has had no impact -- or i should say it is had -- it has had a positive impact on our customers, the airlines. you may know the financial situation of the airlines is really good today, and it will isp the airlines for what that has been very good, very strong in 2015, increasing on 19% in u.s. dollars. this helps the airlines for the businesses. mark: the other engine everyone sir, theetrested in, engines being built for the a320
11:14 am
neo. leape be confident that will be on time, performing properly? you can be. this morning our ceo has clearly said that it is on track, on spec. we are very confident we will deliver this program. it is really on-time, yes. mark: what else investors are interested in are the buyer metrics unit. au shrugged off questions little bit earlier, but can you assure me that investors will get your reasoning if you were willll the company, they understand your reasoning when you have the capital markets day on march 14? of course, i will not
11:15 am
theent on rumors regarding business. the only thing i can say is they have done a very good job in by5, with sales increasing 23 percent, with 11% getting terms. both of these sections of identity and security did very well. the security business was -- has done a very good job in 2015. that is the only thing i can say. as you mentioned, we will host a capital market day in london in march, and we will tell you more about our strategy. ark: does it seem there is rationale for selling the unit? it does not seem that there is one from what you have just said. again, we will give all details regarding our strategy and how we want to run the -- as youof safran
11:16 am
know, security represents , and we10% of safran will give all details needed for the investors' strategy. citing security is one reason why britain should stay and the european union. i would love to hear your view as a frenchman, a man involved in security and an aerospace, do you personally, do you as a company have a view on whether britain should stay in the eu? well, i can only speak on behalf of myself. i think that keeping britain on community,e european the european union is, i think, needed for the business. but i will not speak on behalf of safran. sorry for that. mark: very quickly, sir -- just
11:17 am
on the matter of buying and you wouldmpanies, have noticed that another aerospace company has shares plunging. it has had trouble getting around its issues of delays. you showed interest in that company a while back. could it be of interest to you? because you of course know how to sort out, to lean production? is this the type of company you might be interested in? guest: i'm sure you will understand. i cannot comment on other companies. the only thing i would like to comment here is the set of results that we made. i cannot and will not comment on other companies' industrial situation. vonnie: thank you so much, bernard delpit, chief investment officer -- chief financial officer at safran.
11:18 am
software that would allow the fbi to crack into hardware used by suspected terrorist. >> some things are hard. some things are right. something's or both. this is one of those things. ♪
11:19 am
11:20 am
andie: from new york city from london, you are watching "the european close." i'm vonnie quinn with mark barton. abigail doolittle as the latest from the nasdaq in midtown manhattan. abigail? of the worst performers -- shares plunging even after the chinese internet estimates in revenue. apparently this was caused by a near tripling of costs associated with the company's
11:21 am
online gaming segment. rated. under on thethe biggest movers index is apple. the company remains in the spotlight as apple continues to fight the government around digital privacy. interestingly "the washington that apple may be trying to make an iphone that is even harder to hack. it will all probably come down to earnings and revenues and whether the negative revenue growth extends into the june quarter. athnically, apple is holding $92. above $92 is probably bullish for apple. below, you could see apple drop down. vonnie? vonnie: thank you so much. tim cook joined " abc world news on locking theid iphone would be "bad for america to he went on to say that he
11:22 am
thinks that apple is making the right choice. tim cook: we know doing this could expose people to incredible vulnerabilities. this is not something we would create. this would be bad for america. it would also set a precedent that i believe many people in america would be offended by. when you think about those, which are known, compared to something that might be there, i believe we are making the right choice. fbi director james comey testified to the house intelligence committee this morning, and he replied to the tim cook interview. these sanomey: bernardino investigation is not about as trying to send a message or set a president. it really isn't. it is about as trying to be confident in our investigation. i do not know what lawyers and judges will think on the legal side. i just do not know. turn to ours
11:23 am
correspondent who has been covering this from the beginning. chris, the heads of each organization publicly speaking out. what happens now? who gets the next word? will be: the next word apple's legal filing to the court. everybody is waiting for it. apple will reply officially tomorrow. we will get this full glimpse into what apple's full legal defenses. not had any have extraordinary amount of time to prepare for this. do you think they would have seen this or something similar coming down the pipe and have plenty of evidence to present already? reporter: i think this has been brewing for a while. these san bernardino case kind of blew the lid off the whole issue. you have apple and the fbi in a very, very public addle over all of this and both sides have been getting there -- battle over all of this and both sides have been their talking
11:24 am
points ready. apple is saying they cannot be compelled to write software that does not exist and this is a free speech issue, too, and the fbi is saying this is a law enforcement issue. both tides are pretty dug in. mark: is this going to be conversationugh and negotiation, when there seems to be a big separation between the viewpoints? are working one a few different levels right now. this will play out in the courts for a while. everybody expects whatever the initial court ruling is, there will be an appeal. this could go all the way to the u.s. supreme court. at the same time, apple and the fbi and other people are saying let's get to this in congress. let's have some kind of law actually passed by congress. nobody knows what that is going to look like. this is going to play out on a couple different levels. for a wild now -- you will see
11:25 am
it play out in the courts, in congress, in the public sphere. heard another soundbite from tim cook. if you would not mind indulging us and we will chat about that, chris. stand talle need to and stand tall on principle. our job is to protect our havemers and our customers incredibly detailed information on their phones. there's probably more information about you on your phone then there is in your house. our smartphones are loaded with our intimate conversations, our financial data, our health records. they are also loaded with the location of our kids in many cases. not just about privacy. it's about public safety. argumentsese are the you would anticipate, right? the fbi will have a great comeback to these arguments? mr. cook iss,
11:26 am
making somewhat of an emotional argument and he's making a lot of good points in the sense that the smartphone today is a gold mine of information. it is a gold mine for government. it is a gold mine for hackers. apple is saying they are standing up for the privacy and security protections of their customers and they certainly have a business interest in doing that as well. the fbi director today talked about how he does not necessarily look at this as setting a precedent, but i do not know who believes that this will not set a precedent because it is. mark: chris, thanks for joining us. a quickly got european markets -- -- a quick peek at the european markets. investors are shrugging off the decline we saw today in china. ♪
11:27 am
11:28 am
11:29 am
mark: investors in europe
11:30 am
shrugging off this 6.4% decline we saw in the shanghai, as it. the stocks -- shanghai composite. a big decline are in the euro area. delivering airliners seats will take longer than estimated, the latest in a series of said acts. zodiac shares getting hammered today. mario draghi, further food for thought ahead of the meeting in two weeks time. euro area inflation rose below the estimates of .4%.
11:31 am
the 2% level is here, as you can see. cpi in the euro area has not been 2% for the best part of three years. lloyds banking group, what a day. shares biggest gain since 2010. we have a special dividend. this is the breakout even price for the government. nearly below it. the government still owes roughly 10% of lights but it has made roughly 50 billion pounds. vonnie: right. richard.w to explain to us -- we turn now to
11:32 am
richard. explain to us why lloyds did well. we see the banking index rise today. >> i think those are still concerns for the u.k. and your and banks -- european banks generally. lloyds is pretty clean when it comes to those kinds of concerns . 97% of its assets are focused in the u.k. is in3 billion pounds order and gas, a very small part of its exposure. they are able to pay more in dividends, which is what investors are looking for.
11:33 am
vonnie: with this be enough to get investors more confident. richard: it really does buck the trend here in europe. there is concern about the eurozone and the economy and negative rates 80 way at the profitability of the banks -- negative rates eating away at the profitability of the banks in your -- in england. cleaner, lessare legacy issues, highly profitable, and capital june or two. capital generative. it's what a lot of the other banks are tried to emulate, the u.k. institutions all following in lloyds's footsteps.
11:34 am
barclays has big decisions to make. we see their earnings next week. maybe they want to become cleaner, more simpler like lloyds, too. it is certainly being rewarded i investors. -- rewarded by investors. the government's rib is almost at stake. if markets improve, it will say goodbye roughly to 10%. richard: exactly. if the u.k. leaves, we could be stuck with the lloyds share a little bit longer because that will create volatility. riskis a great amount of it has with relation to the u.k. economy in the event of a break. votes to stay, we
11:35 am
could keep the 9.2% stake in a bit longer if we vote to remain. shares.g leap in lloyds investors economists and voters are weighing the consequences of the so-called brexit. we are being quite unambiguous saying, if written leaves the eu, thus run rating would go down a notch. we think that britain has been benefiting from the membership. has been a magnet for inbound investment, not only from the rest of the eu but globally. it is our belief that a lot of this attraction of britain, among other things, but also that it is a member of the eu and it is therefore an integral part of the largest trading area in the world. boston.ffrey klein in
11:36 am
let's talk about the brexit possibilities. the big decline has clearly been in the pound against a whole range of currencies. when does it start to spread across all asset classes? does it spread out all ahead of the referendum? jeffrey: we have to look back to the scottish referendum and the general election in the u.k. last or to see how far does can be from actual results. we want to take that with a grain of salt. -- theink the polls may markets may react to them. the financial sector will be greatly impacted. europe is the home
11:37 am
market, if they u.k. were to leave the european union, certain regulation would be put in place and it would be difficult for them to compete. that is the core area. we know the financial sector is a leading indicator for where the market is headed overall. todaywe did a survey which says, according to economists we have spoken to, if it happens, there is a 40% chance of a u.k. recession. is it difficult to come up with a figure? jeffrey: it is difficult to come up with a figure because not everything adds up right away. alan'sot a tough of sheet event that would take
11:38 am
place. it would evolve over time. there -- balance sheet event that would take place. it would evolve over time. it would be a depressive effect for a while. not good for equities. probably not good for corporate bonds as well. be for periods of depressed activity. many of the trade relationships with the eu would be traded, renegotiated to smooth the abruptness of a move away from the eu. vonnie: the other thing we need to worry about -- and this might happen just given that there is going to be a referendum, never mind that the referendum is a yes or i know -- it kind of opens up the possibility of more countries wanting to secede. jeffrey: certainly the idea that other countries ask for special
11:39 am
concessions as well is likely to take place. i think this is part of the evolution of the european union and certainly we are getting close to maybe another step in where that goes. i don't know this means the ultimate dissolution of the european union. remember, countries are still fairly engaged in that union. free trade it -- free trade agreements continue to abound around the world. so i don't think trade agreements are going away. it simply that trade hasn't been leading the way in terms of policy lately. that could turn around. were economic growth to accelerate this year as the imf thinks it may. vonnie: mark: are you -- vonnie: are you anticipating continued volatility? jeffrey: volatility is the trend here. not to the downside or to the upside, but a lot of volatility.
11:40 am
continue, not only because of the election environment, the lackluster earnings environment, but the brexit: and some of the things going on in china. issues,e a number of negative interest rates. more volatility is what we see coming. vonnie: thank you so much. let's check in on courtney donohoe. courtney: we look at the refugee crisis. greece is warning that the refugee crisis could lead to a humanitarian disaster on its territory. plan to stop refugees i greece's northern border. greece wants to -- once the wants europe to go ahead with its relocation plans.
11:41 am
calai is home to thousands of migrantss hoping to get into the u.k.. critics say closing the camps may not solve the problem. the u.s. will send the united nations security council a proposal for new sanctions for north korea. american diplomats who want -- american to clement's want china support because china is north korea's biggest trading partner. >> the san bernadino litigation is not about us try to send a message or establish some precedent. it is about trying to be competent in investigating something that is an and that -- an active investigation. i don't know how lawyers and
11:42 am
judges will think about the limiting principle on the legal side. i don't know. courtney: james committee agreed with tim cook on one issue. it may have broader circumstances. let's stay on apple. i'm going to hand it over to abigail doolittle because she is at the nasdaq. abigail: apple is one of the big point movers. tim cook continues to fight for digital policy, refusing to unlock the iphone of the san bernadinothe terrorist attacks. the companies making the phone a lot harder to tag -- to hack into. probably bell
11:43 am
watching especially close, whether or not the negative revenue growth forecast for the march and extends into the june quarter. -- march quarter extends into the june quarter. the iphone maker is the biggest number in the index. one stock soaring, lending tree after fourth-quarter earnings. the street was looking for $.72 per share. the company also raised the revenue in a bid to outlook for the rest of the year. the ceo says growth is coming from all areas of lending. outperforming the nasdaq in a huge way and probably to the
11:44 am
frustration of investors in the very high, short there's interest of 25%. vonnie: thank you so much. we are going to miss our mark on the next segment. mark: she thrashed me yesterday in the battle of the charts. ahead of the election tomorrow, i've got a chart of metrics that shows huge improvement in the country of your birth. ♪
11:45 am
11:46 am
11:47 am
japanese 40 year government bonds that will mature in 2056 yielding below 1%. extraordinary low yields. vonnie: it is both simple and
11:48 am
terrifying. this on can see bloomberg. judgment.m reserving i have to see what mark barton has for us in mark: this -- forest. -- mark bartont has for us. mark: big election taking place in ireland tomorrow. i've got this wonderful chart, the four key metrics. in 2012, the a line. that 15%. we've come down to 8.6%. borrowing costs have come down for the irish government.
11:49 am
we are below 1% in ireland. look at the gdp. was 2008dp contraction to 2010. in the last year, the economy grew an annual 7%. it outperform the entire you -- eu area. one of the reasons for the slump in the irish economy was a property market which sank a 20% . it's rebounded almost as much as 20% through last year. year to date by 7%. it leads to the question -- with such a successful period of -- thence, why is question is has the rebound been fair on all families? disillusionment within comments -- with incumbents. vonnie: it is the story of a divided electorate.
11:50 am
i like that you put the gdp line in green. mark: i didn't tell you where you could find this on the terminal. g#btvbb8. we know ireland relies a little bit on american companies. you need to dry little target home. i like to go supranational when judging these things, but i will give it to mark. joe: fair enough. ahead, bordeaux has long been known as europe's wine capital. now it is setting its sights on a global audience.
11:51 am
11:52 am
mark: had some headlines across the bloomberg terminal of
11:53 am
wording to deutsche bank, barf says it didn't consider further measures were needed. in, the special stock regulator, has ended its investigation of deutsche bank. spending power the british economy through a 12 straight quarter of growth. increased household spending helped upset declines. resigned.
11:54 am
-- hugo boss ceo has resigned to the board says it will find a successor without delay. latest business flash. vonnie: although it is a various years subject, bordeaux, the region in france is the subject of today. they are trying to reach a global audience. i thought they had. mark ellwood knows the region well and joins me now. who doesn't know about bordeaux wine? mark: that's a great question. i think what bordeaux a string to do with this new museum is position itself as the world capital of wine and not just say, hey, we make rate wine. -- great wine. as a museum, will they be empty bottles? mark: rather than old bottles
11:55 am
sitting around, it is a lot of multimedia installations, talking through the story of wine. they are really trying to say we know about wine. we on the world. mark: what about this hangover chair? this is the only thing i am interested. a, what is it? b, how can i get one? c, unless does it cost? mark: i think it is an amazing innovation. it says that you will be punished for drinking too much. you sit there. if i've since said, mournful music. but it seems to me like a place you can have a nap. vonnie: it's not that terror table. have -- there they teroir table is where they have
11:56 am
wine from all over the world. they tell you about how they take her of wines while the table shifts to different ter roirs. mark: have a look at how the bosses finished today. big gains despite a massive slump in the chinese stop market. today.all about lloyd's it raised its dividend. introduced its special payout. ♪
11:57 am
11:58 am
11:59 am
1:00 p.m. in hong kong.
12:00 pm
scarlet: welcome to bloomberg markets. scarlet: good afternoon. : emerging market funds may be having a quarter to forget, but that may be why exactly big names are dipping in. we will look at the big is developing world stock funds. scarlet: james, a comments before congress on the privacy case. he calls it the hardest russian he has seen in government. : what does $30 oil mean for solar demand? the ceo of sunom power, which is breaking records in the industry area scarlet: -- in the industry. decent numbers, durable goods better than expected. julie: a gain of nearly 5%.

55 Views

info Stream Only

Uploaded by TV Archive on