tv Bloomberg Markets European Close Bloomberg March 8, 2016 11:00am-12:01pm EST
mark: this is the european close. we are going to take you from london to new york. this is what we are watching for you. mark carney is under fire in the brags it debate. exit debate. some say he is undermining the 's credibility. vonnie: some big-name sponsors ties with maria sharapova after she admits to failing a drug test. what this means to the world's highest-paid female athlete. we will hear about the lack of female representation on
corporate boards in america. they make up only 20% of all board seats. the -- let's head to the markets deck -- desk. julie: stocks are falling toward the lows of the session. the nasdaq is down by nearly 1%. we talked about the various factors that have put pressure on the major averages. data out of china and japan, the commodities. it, stocksseen accelerate declines and we have seen the thing with oil. it's down 3% in new york. the bti is down. we thought it would be good to look at the correlation. this was the past year of that correlation. ofhas remained high for all 2016. it took a little bit of a dip. now it's coming back up.
when one is going in a particular direction, the other tends to be as well. what effect does this have on stocks, specifically energy shares? they are so enough quite a bit. the financials. they have resumed their selling as well. there are concerns about the banks exposure to that. defenses are doing better today. utilities and consumer staples. mark: the safety trade is back? julie: yes it is. you could look in other assets. you can look at u.s. treasuries. we are seeing some buying yield on the tenure. it's down to 1.8%. gold futures are bouncing back, not a huge bite in gold today. the dollar is falling versus the japanese yen. people are looking for a place to hide for today.
it looks like stocks are going to fall for the third day in four. that is the best winning run since october. put it down to china and those disappointing trade figures on the exports and the imports side. that is what the trend is today. that's what you need to be watching on the function. we are looking at all the stock sticks hundred. every is up 6% today. speculationting on that there is a potential takeover. toberry asked its advisors help prepare for a bid after a mystery bidder built up a stake of 5%. we do not know who that printer is. sales decline.
fell 1.8% in the last 12%. supermarketin the industry are easing. mark carney testified before members of parliament. probably not. the big impact from carney were his comments on the impact of brexit on investment. that hurt sterling. in bonds are up. this is a lovely chart made by my bloombergy -- collies. it shows the spread between the u.s. 10 year and the u.k. 10 year. this is the widest spread in a decade. the disparity between views of where it's heading are widening. if we will probably see another
rate hike in the u.s., not in the too far future. the u.k. next rate hike is so far in the future there's no sense talking about it. the spread is the lightest in almost a decade. vonnie: at one point, the doe was the one. let's check in on first word news. courtney has more from that is dax -- desk. courtney: republican voters in four states cast ballots. the big prizes michigan where double-digithas a lead. results may show if ted cruz or marco rubio have picked up any momentum. hillary clinton leads in michigan by double digits. bernie sanders is still doing better with younger voters. it's too soon to say what sort of -- greece will get.
he spoke with bloomberg and an exclusive interview and said that predators will be heading back to greece. >> from the commission, from the they are going back to athens and they are going back tore with a common purpose conclude the review as fast as possible. greece still has to turn up a number of reforms. courtney: global news 24 hours a day powered by our journalists and 150 news bureaus around the world. much.: thank you so the very special guest is coming up. the countdown to the ecb decision is thursday. we will talk with lorenzo. we will also talk with a former member of the ecb executive board. ♪
vonnie: live from new york and london, i am vonnie quinn. mark: you are watching the european close. even in places where the rates are still positive, stanley fischer shared his views on the policy tool yesterday in washington. >> the negative rates of been used in five countries by five worked banks, they have somewhat better than many expected. he went on to say the fed would prefer not to go there on negative rates.
belowy lower its rate zero on thursday. a former member of the ecb who is the chairman joins us today. thank you for joining us today. ecb need to announce more stimulus thursday? lorenzo: they will have a new forecast. at 2% target of inflation is getting further away, they need to do more. i think the market expects them to do more. mark: what would you suggest the eb -- ecb do? lorenzo: they have levers to use. upfront theto amount of government bonds they are purchasing and try to have an impact. probably there is the issue of negative interest
rates. there is a conflict of interest here because i am a banker. that is not something that is helping banks. i think they can compensate the negative effect of excluding certain amounts of the deposits that the banks have with the central banks. trying to mitigate the negative impact on negative rates. vonnie: you wrote in the financial times last week and the factwhich you said that monetary policy is the only game in town is problematic. if banks don't play their parts, it could become deafening. are you saying we need more and more central bank stimulus? how does this end? the impact of monetary policy is not as strong as we thought. it's still there.
what we need in europe in particular that we did not have for a long time is to start the process of deleveraging and reducing them out of debt in the public sector and the private sector. this has worked in the u.s.. they have have limited qe4 six years. now we are one year of qe in europe. -- earlyt's of it easy to start thinking about stopping. this has to go on. vonnie: you have to make a choice. do you add to bond buys? do you do something completely different? what would your prescription be? morezo: i think buying bonds up fronting the program could be more effective. further cutting rates has two problems. it weakens the transmission mechanism which is through banks. assetsces the amount of
the bank and the ecb can buy. assets not want to buy which have a negative interest rate. if you cut further the rate of interest, you are reducing the assets you can buy. vonnie: i want to bring up a chart that we have replicated. it's a private chart. it's inflation that the ecb likes to look at. it's called super court inflation. we have replicated here. you can access it through your terminal. the opposite in direction from the inflation member we have been looking at. where is inflation in europe? is it gaining steam? you have the impact of oil prices which are pushing inflation down. haspe central bank indicated its pushing inflation ahead. at the indicators, what
we are seeing is inflation for this year is going to be lower than expected. if oil prices stabilize, there is a chance of moving toward it. you need central-bank action. i think that what we will know thursday. say draghi needs to use the forward guidance kit once again. are you a fan of that? what is being postulated is promising to overshoot the inflation goal for a temporary amount of time. is that an effective way? the use of forward guidance? we keep policy lose. lorenzo: they tried before starting qe. it did not really work. you have to put money where your mouth is. really want interest
rates to remain low for some time, you have to prove that you are going to implement it. what matters in europe is market rates. that was the difference between you need to europe, really intervene in the bond market to keep market rates low. mark: does the ecb face losing its credibility as some policymakers have said? how close are we to that? lorenzo: i think it depends on where it can achieve its target of 2%. it's not percent tomorrow. it's 2% over the short term. mark: will he reached the target? lorenzo: i think he will. mark: is that 100% he will? lorenzo: i think he will do whatever it takes. mark: why hasn't he done it?
he said it bring out the big bazooka, do what japan did. there are risks. action, youe an have to balance advantages and disadvantages. this is a new territory. you are buying assets. you want to be sure that you are not tripping the bolt. are conservative and incremental. if it doesn't work, they try more. there is a medium-term objective. you don't want to rock the boat when you the bazooka were shooting at a mouse. you have to trust the central bank to manage. it's a difficult situation. it does not depend on monetary policy. policies,her certainly it would help.
it's not entirely in the hands of draghi. i think he will do what is needed. above: it's already back 110 again. that channel is exhausted for the moment. what do you see the channel being for the ecb? i want to ask you about the fed. what about the fed raising rates again it? lorenzo: the fed raises its rates, that will help adjusting the exchange rates. strong way ofs a getting out of the situation which is behind the u.s.. europe needs a weaker euro. if you have a combination of big announcements on thursday and maybe in june a rating increase if the u.s. economy is
continuing to improve, the market will take it relatively well. i think this will help the rebalancing of goals that you need. vonnie: you say the u.s. needs the weaker euro. is that pretty? -- pretty? -- parity? mark: the you think it will reach that after thursday? december 3, it raised 3%. there is a resilience. the euro has an account surplus. that strengthens the exchange rates. the lowther hand, interest rates and qe we can. the balance in them will move the euro toward a weaker position. i'm not sure if this will bring it to parity or not. more to talk
mark: this is european close. i am here with vonnie quinn. is now the chairman and we thank him for joining us. we talked about what the ecb might do. the impact on the banking deeper.let's dig a bit have policymakers miscalculated the psychological effect of negative interest rates? lorenzo: for banks it's a reduction in the spread between creditor and debtor rates. the margins are going to be increased.
banks have to find a way to go around this negative rate. they have to charge fees or diversify products. incentivize that new relationship between clients and banks. we are thinking about that. selling more products and charging differently. the positive effect is you have in front of you clients which are getting better and better, more solid. though interest rates are helping them to get better and becoming more solid. the quality of the client is improving. perspective,ur what is the most efficient and effective form of's kilis. is it ltro's? i would like to see
other policymakers do their parts. physicalroom to have stimulus. mark: does that pop up demand? lorenzo: some countries in europe, germany certainly has, you need structural improvements to make this more favorable for investments. the economy is still blocked. there are labor markets that need to be changed. other policies. the bank of england, mark carney was dragged into the politics of exit. let's listen to a soundbite from one of the things he had to say. >> economic questions are
important. they are not the totality of the considerations that people will reflect. making and be nothing we say should be interpreted as making any recommendation. vonnie: you are out of it now. you can give us your thoughts on brexit. lorenzo: i am not a central banker. i can speak my mind. i am not any longer a central banker. i think it will create up. -- a time of uncertainty. people will think twice before making investment decisions.
if a prince it happens, you need to start an initiation. how this will go, which sectors of the economy will be penalized is not clear. i think investors will just wait. this could have a lasting impact. the less uncertainty have, the better it is for investors. mark: is there a financial hub that will benefit the most if britain leaves the eu? which financial hub might be licking their lips? lorenzo: it's going to depend on the negotiation that takes place after. i think it's not in the interest fightopeans or britain to each other. they will find an agreement. it's not necessarily going to be an easy agreement to achieve. it might take a long time. no -- nod, there are
uncertainty is better than certainty. biggest worryyour out there in the macro world? lorenzo: it's more micro. the challenges that banks have to invest in technology and to protect their clients, that's very important. the new ways to generate at , total -- generate capital be useful to society and make people understand that banks are useful. the european close is just a matter of minutes away. do stick around. ♪
let's take you through all of the market action. flight to safety was the reality today. there was a china reality check. sinces the biggest drop may 2009. imports included its streak of declines. wanted to show you the big decline in industry group. this is the basic resort index. the stoxx 600 fell to a low. then theized and since basic resources index is up 28%. the stoxx 600 is up by 25%. --ources have been hit hide hard today. burberry is the top the pile. it's up 6% today. there is aeculation potential takeover officer. burberry asked his advice is to help prepare for of bid after an
-- a mystery investor build up a stock of 5%. i am dying to find out. shares of tesco received a boost today. mark: has there been some respite in the supermarket industry? there is the suggestion of guests. we have data from being number one revenue. that is an improvement on the previous figure. streaknded its revenue to eight. sales growth one up .5%. that's the most since october. it's a tough time for amazon. push intotrying to the market. shares in tesco are up 1.9% today. it's a fight to the
death of their among the grocery retailers. we are getting a little boost in volatility. vex -- fixlow 24 the x. fix -- vi the crack spread is next. we are seeing that widen out. brent crude is above a 40. more. to show you but how far down that has gone. this would be a gauge of what the market is expecting mario draghi to do. it has gone it to -22 basis points. britain's potential withdraw from the eu is causing a widening in the stock market.
from jpmorgan.ex hurt most by an exit from the eu. this is the most since 2014. let's bring in our stock reporter sophia. thanks for joining us. there is a bit of a disparity. this hasn't done badly in 2016. sophia: there is a huge rebound stocks and energy companies. that held it back in the past five years. that's why it's been underperforming most of the market. the's why it's been one of most hated margins in europe. it still one of the most under weight in europe. in thepositioning commodity sector and the mining sector is being played out with
the pound. you can see the pound has dropped so much versus the dollar this year. versus all currencies, that is because of brexit. carney talked about not really raising interest rates anytime soon. that was quite a big benefit to the big exporting stocks. in a,: as you bring him there is a soundbite from what he said earlier. he was under pressure and he referenced what you said. let's have a listen. in terms of the hierarchy of risks, i would not put that near the top. there are risks remain in the european union. vonnie: he was talking about hierarchy.
there are greater risks out there is what he is saying. sofia: i think it's quite dangerous to ignore risks, vonnie. we are not talking about panicking. just one week before the scottish referendum, fall -- volatility measures jumped 20%. you don't want to be on the wrong side of that trade. stocks that would be affected are already underperforming. they be investors who learn from their mistakes. maybe you should look at the risks before they actually it you. these stocks? we've got a retailer, we've got a home builder. we have banks as well. sofia: let's start with banks. it would be obviously that banks are a measure of risk.
any risk aversion and banks will be sold off. me, imagine telling and the it does happen referendum vote in june might trigger cameron it rethink the scottish referendum. now we think it barclays, lloyds, they would be really hit. just last year we were thinking centraling the first bank to hike rates. that has been the big theme for this year. banks can't be profitable. move them, don't that's really bad for profitability. mark: thanks a lot. see you soon.
stocks here are done for the day. it's deteriorating. the s&p 500 is down three quarters of a percent. the down -- dow is down about percent. the nasdaq is down three quarters of 1%. the abigailwn to doolittle. abigail: one stock that is declining is jetblue. shares are plunging after a negative outlook for the first quarter. this is after revenue has fallen for the month of february. down 8%.revenue they are blaming storms. the stock just crossed across average.
there may be more macro concerns at work. vonnie: some of the winners in that sea of red. i see walgreens. abigail: urban outfitters needs $.51 per share. that is a penny debtor on a year by year basis. baird's likes the merging story. this is what is turning the stock around for 2016. the recent pizza store acquisition may drive more shoppers into stores as planned. a lot of analysts were scratching their heads when that came out. thank you so much. courtney donohoe has more from the news decks. -- desk.
the measure was drafted after the november 13 attacks in paris. but of the provisions would impose jail time on technology executives who deny access to encrypted data. the european union is getting closer to turkey on a deal to stem the flow of migrants. german chancellor angela merkel says any agreement will take time to work. that may be a signal that it will not help losses. campaignedave against her open-door policy. there is a penalty on north korea. north korea's recent nuclear missile test. entrykorea will prevent of any ship that has visited north korea in the last six months. global news 24 hours a day powered by our journalists in
more than 150 news bureaus around the world. vonnie: thank you so much. maria sharapova had some big news yesterday. she failed a drug test. >> a few days ago i received a letter from the ietf that i had failed a drug test at the australian open. i did fail the test and i take full responsibility for it. three of her sponsors have also spent their relationships with the world's highest-paid female athlete. let's take a look at what this means for her. joining me is the head of the sports business desk here at bluebird. are you surprised that sponsorships fled after this announcement? she said it was a drunk she had been on for medical issues. she is a brand juggernaut.
she has been the highest-paid female athlete for 11 years. that has to do with her brand our and her ability to sell things. worth $70ontract is million over the course of eight years. there is a strong financial and set ties these companies to her. there may be some incentive for them to back away in fact. if she is banned from tennis. they did jump fast. i think we have bigger scandals recently where the benefit of the doubt has been allowed. janet: this was a swift response. i was surprised by that. i think there is more heat on sponsors these days to be responsible and responsive when athletes that they align themselves with admit to something as serious as this. what is the cost?
it's crude, but that's what we do. what is the cost to share a public? janet: she has to give her money back that she won at the australian open. she won about $300,000 for advancing to the quarterfinals. the value of her sponsorship is much greater than that. , $23akes 80% of her money million last year, and sponsorships. it's unclear how much of that she will forfeit. mark: a good portion. can she come back from this? is that it? janet: i think it has to do with how long her van is. she is 28. she has had injuries. if she is blessed with a four-year ban, it would be very unlikely for her to come back at 32. vonnie: will it take a hit?
janet: i think it's hard to say. i think it's ironic that it's a candy brand. i can't say. vonnie: there is a review underway. janet: i think she would like to play in the olympics. and that isnned, upheld, she will not be able to play. mark: thank you for joining us today. of theup in battle charts, gold is up and iron ore is up. ♪
vonnie: it's time for our battle of the charts. this is what they mean for investors. access these on the terminal. joe: the huge story today have to be japan. i think i've already done this a couple of times. i am fascinated by what's going on in sovereign debt in japan. let's take a look. these are three different 10 years. it's already negative. this is the zero line. this is the 30 and 40 year yield. it's collapsing. the costsually lower the u.s. to borrow for 12 months. people are locking their money up at this point. slow growth has negative rates. this is extraordinary. vonnie: you don't want to behold
hoping that bonded to maturity. that's insane. joe: $5 trillion of japanese debt is at a negative rate. mark: this is goldman sachs versus the commodities basis. it's falling to a six-year low in december. gold has rebounded. u.s. data will reinforce the strongest dollar. this will drag down prices. iron ore, what a day. biggest rise ever. goldman sachs says the market funds -- fundamentals are unchanged. the current rally is only a brief low. look at copper. copper has rebounded by 15%. goldman sachs says it's time to short copper.
it's finishing finally with the price of oil. we've seen a rebound of 19% since february 11. prices will have to remain lower. rebalance toto take place. oil will fluctuate between 20 and $40. if goldman sachs is to believed, this upward trend eight got a last. -- isn't going to last. difficulty, technique, joe is the winner. mark, you were almost there. don't forget to check at those charts. the european close is still ahead. here are some statistics to chew on.
mark: i am mark barton in london it. the europeanis close. women are only 20% of all corporate or cheats in america. -- is that the boards are old boys clubs. earlier, stephanie ruhle sat down with the vice chair of ge and talked about women at high levels. >> we should have more women in key leadership positions, whether it's government, business, academia. women are 50% of the population. i'm a big believer, i believe
that diversity equals innovation. i mean gender and nationality. mean innovation coming from diversity of thought. if you're in a boardroom, i know this. diverse more perspectives, more diverse experiences to advise you and help represent the shareholders. is going. the world it's about more input. stephanie: the concern is in practice when you see more proxy fights and the rubber hits the road, the numbers aren't there. end of thenk at the day asking ourselves is this person good, not are they like me, are they good? i am joined by stephanie ruhle. he wrote a piece in this this week. of s&p companies
have women on ports. activists investors have taken boardd eight -- 108 seats. the amount of women they have put on those is five total. when we talk about activists up,ng in and shake things they are continuing this old boys network. activist investors are being slouches in those seats. they are putting top professionals in. performance in 2011 has underperformed. he was down 11%. the s&p was up 1.2%. it's begging the question, when we talk about corporate governance and the need for innovation and long-term votes happen proxy and companies are under attacks, it seems like the old boys
network continues. vonnie: can there be a mandate like they have in europe? stephanie: we are asking the question, if we know the research is there. 21,000 publicly traded companies were surveyed. ports are in a position to improve net margins by 6%. she put the commodities business at jpmorgan. do. we need to >> it matters. it's not simply at the level of board governance. it's also fundamental at the foundational level. becauselove to tell you i am a female ceo that i have changed the fabric of the diversity make up my own company. the reality is we are challenged
and female representation within the development community, even within my own company. stephanie: you have extraordinary activists who have made things better. for do extraordinary work women in philanthropy. they are not nominating women for board positions. why? mark: what is carl icahn saying about this notion? he said no way. he has worked with and supported those women. the women he is speaking of were already on those boards. he has nominated none out of the 42 he put on board's in the last five years. when they say they don't have the expertise, i asked carl. heap the 34 your old guy a nine separate boards.
have theen don't expertise, i'm not sure somebody who only has 15 years of personal experience. why aren't we pushing? talk about it in times of volatility. companies are under attack. let's go. the candidates. research shows those women are helping those company perform. do check out her story in bloomberg businessweek on newsstands. before we go, take a look at where markets are trading. you have the s&p 500 down. the dow is down 4/10 of a percent. this is the markets. -- bloomberg markets. ♪