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tv   Bloomberg Markets European Close  Bloomberg  March 18, 2016 12:00pm-1:01pm EDT

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mark: a breakthrough in brussels , eu leaders reached an agreement to stem the flow of migrants. turkey reportedly agrees to in exchange for a quick path to eu membership. alix: stocks poised to end the week higher among confidence central banks can spur growth. mark: -- scarlet: the story of how a british team with a tiny payroll that big hearts is a pending soccer economics. -- but big hearts is a bending soccer economics. let's check in with julie hyman.
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in the medical industry, origin technologies, which is formed by a group of former executives operate to buy the company force 16, 10 pressure -- $1.5 billion total, the shares are surging. the big increase in the shares which have been bumping along and the straight line upward. $ at 15 -- taking a look at some of the other things, all three major averages trading higher, near the highs of the session. despite the bounce we have seen in stocks as far this year, over the past couple of months, we have not seen forecasters change their 10. -- tune. the s&p 500 has had this bounce from the lows.
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s&p 500 forecasters, the strategist from wall street, have not adjusted their forecast upward. they cut at the beginning of the air when it was awful -- beginning of the year when it was awful, still around $21.50 the average forecast. the s&p 500 is now in the green for the year, following on the doubt yesterday. -- the doubt yesterday. -- the dow yesterday. outfitters, one surprising to me, rounding out the top three. health care shares bouncing back after losses early in the week. finance is a big part of the story today. u.s.ean banking, gains in financial shares. oil not doing anything
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after a huge rally the last couple of days. julie: it was up 1.5% today and took a turn for the worse, interesting not proving more detrimental to stocks. gold prices had been having a big rally and now have been turning lower, down 9/10 of 1% with a more risk on scenario. mark: doesn't seem likely we will see the fifth consecutive week of gains for the stoxx 600, this is the five-day chart. a rebound from yesterday lunchtime. over the week, down a quarter of 1%. since five weeks, february 11, when the stoxx 600 got to its lowest level in 2.5 years, these are the best three industry groups. energy stocks up 21%. autos up 18%.
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--ig resources, 34% rebound basic resources, 34% rebound. cutting estimates from where the stoxx 600 will be at the end of 2016. two months ago, they were saying we would see gains of 12%, now ,nly going to see gains of 1% blame one of the worst earnings season in a most nine years, and blame having fate and central banks to boost equities. this is a lovely chart. the valuation of the euro stocks 50 versus the s&p 500, the euro stock is trading 13.7 times estimated earnings, the s&p is trading 17.2 times estimated earnings. the difference is the whitest in almost a year, may be a good time to buy european stocks on a valuation basis. some might say big news from
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ubs, it has raised its bonus pool by 14%. how they are faring versus its peers, i have normalized it at 100, we know all banks are falling but ubs is performing the best, down a mere 16%. the others are falling between 30% to 40%. ubs the big winner among the investment banks. alix: let's check in on the first word news. more from our news desk. >> senator bernie sanders says he still has a path toward victory in his presidential bid against hillary clinton. he is rejecting suggestions she is all but locked up the nomination. in interview with the associated press, senator sanders related upcoming primaries in several western states, including arizona and washington, and april contests in wisconsin, new york, and pennsylvania, would
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offer him a chance to catch up. president obama lease for cuba on sunday, and will have a beating with the president and will hold with -- he will attend a baseball game between a u.s. and a cuban national team. the first time major league baseball has been played in cuba by a u.s. team since 1999. in brussels, the european union and turkey have reached a deal to curb migration across the ig and see. turkey has agreed to stop his love migrants from its shores to greece, the first destination for many migrants trying to reach europe. in return, eu leaders will try to speed up turkey's request for membership in the eu. the head of the u.s. chamber of commerce says donald trump and senator elizabeth warren are threats to the u.s. economy. donohueterview, thomas said politicians who support trade restrictions for more oversight of financial firms are shortsighted. welley figure out it plays
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, they listen to elizabeth warren, who is all of a sudden, she is the pope in terms of what is except double in this religion. inare making -- acceptable this religion and we are making a fundamental mistake. >> he said exporters and consumers benefit from international trade and shoppers will pay higher prices if terrorists are increased and u.s. manufacturers will face pressure in selling their goods in global markets. global news 24 hours a day powered by our 2400 journalist and more than 150 news bureaus around the world. back to you in london. eu leaders just reaching a deal with turkey over the refugee crisis. we are live in brussels with the very latest. how does this change the refugee crisis in europe? know one wanted to thing about this deal, what you
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really need to know, is this, starting this sunday, something we have not seen since this refugee crisis began, the european union will start to the port -- deport refugees and mark -- in the eu and send them back to turkey appeared that is unprecedented, something we have not seen at all and something the european union hopes will begin to not just stop the flow of refugees, but reversed the flow and send them out of the borders of the european union. versushat did turkey get what it wanted? gets is a promise , an agreement from the european union to begin to take refugees and migrants from turkey into the eu within the body of a legal framework. turkey gets a burden sharing from the eu.
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refugeess 2.7 million that it has taken care of. that is something right there. the on that, turkey gets a bit of cash, 3 billion euros in addition to the 3 billion they were promised at the end of last year as compensation for helping out in the refugee crisis. for turkey, that is not insignificant, equal to about 1% of their gdp. beyond that, turkey gets a promise to accelerate -- bring more life into its bid to join the european union union. turkey has been trying to join for the last 11 years, the eu saying we will help with that process. they say you still have to meet the criteria. they are also getting these are free travel for its citizens. -- visa free travel for its citizens. they should get it faster. from an alliance perspective, the eu and turkey are getting
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closer at a time when turkey is feeling threatened by russia. scarlet: something turkey had been pushing for. will this plan work or will we need to see european leaders meet again to discuss this? >> they will have to meet again. only agreed to take in 72,000 refugees from turkey within the legal framework. this is just to get the ball rolling in terms of a resolution. us beyondt, refuge that, refugees that went to the european union let turkey for a reason. many of the refugees have not turkeyom the south of and they will be looking for other ways to get into the eu. there is concern that it closes one corridor, a perilous journey across the sea from turkey to greece, but will open up another as the refugees and migrants look for another path from libya to italy and we have seen that
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over the last few days, 2000 refugees and migrants arriving on italian shores because they are afraid that the window for them is closing. mark: great job, thank you for joining us. up on the european close today, all three major central banks have decided to leave interest rates on hold, is it a sign that policymakers attitudes towards austerity are changing? the u.s. dollar heading for is worse like in four years, candy slump get worse, we will ask a currency strategist. riches story, how an english football team rose to the top. ♪
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scarlet: here to talk more about how central banks can deal with such a quandary is a senior
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economist at axis investment manager. i will leave the fed for alex and scarlet. what a day for the sterling. was dollar downside but the biggest gains for sterling against the dollar since 2009. is it a great read up to -- yesterday's minutes that many went into the meeting believing there would be discussion of a rate cut. that did not materialize, a less dovish meeting that some had hoped. >> i do not think there is any view, the governor has said it several times, many members have said several times, collectively they think the next move is upwards, they do not know when it will come. the? -- that is some of the distortion like in sterling, if we leave the eu, we think sterling will far sharply does
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fall sharply. if we leave the eu, the bank of england has to put more stimulus and that is having an impact on interest rates. one of the members came out and said he could vote for more stimulus. hopeis what caused this that someone might break -- break ranks. >> i do not think he is suggesting it will do that now, just that it will be possible. the rest of the committee is to the view that the economy is we do not think he tightening will come through for some time, not this year, but still the way the mpc. with financial markets doing what they are doing, that makes it more appropriate for central banks like the fed and bank of england to tighten at some stage. fed,et: you brought up the
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we have had a couple of days to digest what the fed has done, it's dovish stand on reducing interest rates target forecast to two rate hikes as opposed to four. what more can we say about what janet is predisposed to do this year? wille has shown that she be responsible not just to the data dependency we have known for some time but to what financial markets do, no surprise given the volatility over the last quarter. if the financial markets, the conditions tighten without the federal reserve having to do any change in monetary policy, that is well and good for the fed and abel stanback. if we see anything in financial conditions, if it is consistent over the next three months, the fed is likely to have to do more itself to try and slow what it sees as some pressure coming through in the domestic economy. the dovish fed has been read on the basis that the dots have
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changed from four to two. the market never believed the fed would move at all this year anyway and they still do not believe it. the fed that we think is shaping up for a june move could save the market -- could make the market realized there is more tightening that is priced in. alix: what kind of volatility would you expect with that repricing? >> you start to see financial conditions tighten. you have a number of other stories. when we think back to where we were in early february, concerned about china, the chinese authorities were talking about issues. very concerned about the europeans progressing down the -- we have seen certain relief, perhaps not unrelated to the energy sector. the background sector in the global economy looks better and that has taken the pressure off
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of the fed. gaveet: janet yellen promise to overseas development, notably china, she did not say so but that is what everyone is thinking, what china data point will investors fixate on until we get that tightening? >> i am not sure it will come down to a specific data point. led data point was it that markets to believe china would implode and saw a significant weakness or what data point some markets change their mind? it is not as simple as that, a fear of what is coming through in china and any data point that adds to that fear, particularly run a in dental sectors -- if you see plain sailing gdp coming in slower as the chinese are thinking but not falling off a cliff, not necessarily going to upset the sentiment. mark: there was a view that central banks were running out of ammunition, the ability to surprise us, standing back over
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the last few weeks, you had to think the doj surprised us by taking rates negative. ecbfed was more dovish and probably added more stimulus then we would have expected. does that prove there is still ammunition? they have the ability to surprise? >> they have the ability to surprise, that is not the same as more ammunition. the ecb has shown a central banks can be creative. almost the way they would pursue negative rates because they were boxed into a corner elsewhere and they have shown they are willing to think outside of that and provide stimulus among other avenues. the efficacy is you have -- we are not convinced that take up will be massive and that maybe something that worries the market later on that shows markets and central banks are rethinking. when we think of the federal reserve, it looks like it is quite appropriate.
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we are worried the fed has lost credibility, they were saying hikes and the market was thinking none. the fed is able to influence markets, even by reducing expectations. markets did not believe them in the first place. scarlet: as you look back, have central banks assured in more calm or volatility following policy announcements? >> in the short-term, added to volatility because the uncertainty. the nature of where we are in the cycle and markets considering central banks reactive policy. mark: great to see you, thank you for joining us. we are talking leicester city later and he will be eager for them to trip up to win the league. that is a later discussion. the final check on stocks ahead of european close.
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stick around. ♪
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mark: you are watching the european close. i am mark barton with scarlet fu and alix steel. european equities are up for the day, slightly down or the week. 600 is up by a third of 1% and gains for the dax. the bond market today, interesting moves in spain and the u.k. the u.k. yield is down for the week. that is the one-year chart. other yields. the spanish bond market is interesting because the yield has fallen for five consecutive weeks, the most since august
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2013. similar move for the italian bond market, also yields falling for five weeks. draghi'sy mario stimulus program a couple of weeks ago. the currency markets today, sterling against the dollar, up for the third consecutive week, that is the euro dollar, up for a third week against the dollar and the pound up against the dollar or a third week. the biggest winning run since october 2015. that is an update on the markets in union, the european close is a matter of minutes away. ♪
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mark b.: live from london and new york, you are watching the european close. i mark barton.
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stocks closing in london. a mixed day in europe. have a look at the industry board to my left. this is the stoxx 600 industry group for the day. most of them rising. just four declining. not enough to take the index higher for a fifth consecutive week. travel and leisure, the best-performing industry. i love this chart. it shows the valuation of the and versus earnings estimates. it is brilliant. there is a huge diversion. this is the estimate for the next 12 months. you can see them coming down. actually, they are at the lowest level since 2010. at the same time, the valuation times stock 600 is 50.3 estimated earnings. you see stocks rise from the
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february low. you see the estimates fall. upl be see analysts ratchet their sentiment jacoby will be key bri on that chart. , arise communications german company agreed to buy it. let me show you the shares of a french power company. of 10% today. today.0% there has been lots of speculation about the future of this proposed power plant the ceo resigned last month, saying, the project would put the company under too much financial
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strain. scarlet: a big move there. we're looking of course at u.s. stocks rising. it is the third straight game for the dow. it is the sixth day of advances. has a raised its loss for the year. it is now up for the year, along with the dow. scarlet: taking a little bit of a breather today. there are continued calls for oil to trend a little higher. bank of america making a call that it could push $47 and come back down to $39. nonetheless, a little bit of optimism. now, time for a look at some currencies. the dollar coming off of an eight week low today. mark b.: analysts and investors iseling down on the dollar --
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the rally over, yes or no? >> i don't think we have the end of the dollar rally yet. i think markets are forced to reprice. if you look at the underlying dynamics in the u.s., and inflation -- starting to show signs of a stirring of inflation. i think there is a case to be made that the fed should still june. in suggestshat still there is an opportunity, or there will be a realization, that the dollar is a little bit oversold, in particular, over the past few sessions. alix: there is a conspiracy theory out there that perhaps the central banks got together over in shanghai, and said, beer going to stop targeting our
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, we will keep the dollar low, all to alleviate pressure on the pc kobe. what do you think about that? >> there is nothing like conspiracy. i think, in a sense, if you think about what has happened over the course of the last few sessions, in terms of the dollar selloff or some currencies that have moved very genetically, include both the euro and the yen. buyert necessarily a big of this nice conspiracy theory. i think it is an interesting one continue toand will permeate through the market, but i'm not sure it has any real stance. scarlet: it is compelling. the rest everything up so nicely in one package. at the same time, we hear from other members, i'm thinking
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peter pratt, who indicated there for further rate is this damage control after mario draghi's? >> i think you could argue, with the euro trading towards the high of the year through the course of the last 24 hours, could have maybe been a reaction to the appreciation. i think it is a combination of those two factors. if you look forward, inflation expectations could also be starting to trend lower again. i think it could have been a degree of damage limitation just reminding the market that even changedhey seemingly their target, but get credit expansion, they are not ignoring the influence and impact of the euro, and they would like to see it a little bit cheaper. i would not se be surprised if it moving back.
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alix: one to make it cheaper. the fed did not make their job any easier on thursday. you think officials are just as surprised that the market is reacting this way to monetary policy? >> i think the problem we haven't markets is they tend to with very strong convictions related to events. i think that is what happened with the dollar reaction of the fed on wednesday. i think that market is a little ambitious. that yellen times was trying to find any justification to say, we don't need to push policy higher. increasing degree of policy change we have seen from the central banks in the past
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few weeks, adds to the volatility in markets. that is something that perhaps the central banks would be good to learn, sometimes saying little is good policy. mark b.: sterling's rebound -- is that it, or as we get closer to the referendum, will the downward spiral continue? >> as soon as we had the referendum announced, sterling volatility rallying strongly. we have seen some be bound. -- rebound. as you were discussing, the market getting a little ahead of itself anticipating discussion. i think at these levels, it does provide some value, in terms of selling sterling against the u.s.
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over the next two months, as we run into the june 23 day, opinion polls suggesting a possible brexit -- mark b.: they have proven wrong many times over the past two years. >> they may well say, let's react accordingly. i think that is the way markets will be characterize for the next 2-3 months. alix: the last currency has to be the yen after the last rally. do you think that doj will intervene? >> i think they will be mindful of the strength of the currency. we have seen the minister of finance make sure they're watching foreign-exchange closely. but we do see the squeeze in markets in the middle of the thatean session, a meeting
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screens the market, always it is the bank of japan coming in to intervene. i don't think they will do so just yet. i think the best position for the doj will be to stand back. they have seen the u.s. forces thed back into positive for year. that was just the long buys we have seen looks inconsistent with the british dynamics feared at the that is the best way for the doj to encourage began to yen tock higher -- the move back higher. torlet: we want to turn out the u.s. markets. abigail doolittle is live at the nasdaq in manhattan with more company movers. abigail: it is a green day here at the nasdaq. the nasdaq is up half a percent at this time, similar to the s&p. one stock moving to the downside and has been one of the biggest drives all day is paypal.
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citing valuation . the stock is now, he says, trading at a premium. this perhaps suggests it may trade back down into the trading range of an ipo formed last summer. alix: what about the noticeable winter? abigail: there is a top stock which is adobe systems, after they've beat their first quarter estimates. cells above estimates. apparently, the strong performance is being diverted by momentum in the cloud, also, subscriber to a system. today's gap higher, the system hit a record high, is above the trading range.
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ed.en, those gaps are fill we will see is adobe systems falls back in the weeks ahead. scarlet: let's check in now with mark crumpton with the headlines from the news desk. mark c.: thank you. the united states is calling for a meeting of the un security council to discuss north korea's latest ballistic missile launch. they fired a missile into the sea earlier today. this comes week after the security council impose more sections -- sanctions for another north korean missile launch. a prosecutor's office and belgium says the fingerprints of r have beenttacke found. this comes after one person was killed and four people arrested in that action. he fled paris after the attacks
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that left 130 people dead. u.s. senate is on easter break as leaders continue efforts to shut down talk that they should hold hearings and vote on the supreme court nominee. hatchican senator orrin broke with ranks to say he is considerable, but not until november. the world health organization is deploying specialists after two ebola cases were announced. this comes afte hours after crvn side the outbreak was over. global news 24 hours a day, powered by are 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. back to you in london.
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mark b.: brace yourself for this. two brilliant charts pitting china against oil. only one wa winter. don't miss the show down in the battle of the charts. it is barton judging. ♪
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mark b.: it is a big one. time for the global battle of the charts. we will take a look at the most telling charts of the day. you can access these charts on the bloomberg by running the feature at the bottom of your screen. looking forward to this. alix, k get off.
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oil. i'm talking about oil rally may be a bad thing for incentivizing investors to hedge. this represents producer, merchant short, position. ever since january, it has rallied of two of record high. you compare that to the oil price, this yellow line to when oil bottomed, february 11. both of them have been rising in tandem. goes, they are hedging. anything above $40 per barrel, you will see more hedging. -- it is must the id. it can cap any rally we may see.
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be ready. scarlet? mark b.: so, as prices rise, we see producers hedging. scarlet, beat that. scarlet: i'm so ready. this picture has been making the rounds on social media. mark zuckerberg going for a run in china. this blew up the internet. the skies are gray. people are criticizing him for forwearing a facemask, running through team among square -- tiananmen square. the higher the lines go, the .orst quality that air is there is a slow buildup. there is a different range. green is ok, healthy. yellow is unhealthy.
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orange is very unhealthy. above here is hazardous. it has been hazardous as early as early march. if that's a very unhealthy a few days ago. mark b.: i love the hedging chart. ofrlet, by throwing in a bit multimedia. that is the first time that has ever happened on battle of the charts. i'm not sure i like change, but i'm going to give it to you, bringing in zuckerberg was the thing that did it. well done, scarlet. scarlet: i just needed mark zuckerberg he can manager in. that would have topped it off. mark b.: well done, you deserve it. still ahead on the european close, it is march madness in the unites eight. for the rest of the world, could our lowly english soccer team win the title? that story when we come back.
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scarlet: we have some breaking news. you're looking at live pictures from belgium. there are reports of a police raid on the paris attack suspect. he has been shot and wounded during a police operation. french president francois hollande says the operation is linked to the paris attack. there could be three people arrested in the belgium rate. that would be the fugitive who was perhaps wounded and being held. there are report identifying him as much. this is a live shot of belgium,
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where the situation is developing. alix: there is a cinderella story sending shockwaves across the sto soccer world. last year, the teams that in last place. scarlet: it is more than a last of first story. it is about economics. somehow, they are winning on a shoestring budget. i was joking around and say that they are kind of like the old .ays -- oakland a's it is more than that. >> it is more than that because in the premier league, the salaries are so far this print. they have had a total payroll of less than 60 million pounds. compare that to chelsea who had a payroll of over 200 million pounds. mark b.: this is unheard of. me being a big manchester fan. >> i'm very sorry about that.
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mark b.: they spent hundreds of millions in the last two years on players. they are peanuts compared to that. >> it's true. plenty of people, including investors in manchester united, have noticed. call put to of a donexecutive, they have this on a shoestring, why don't you do this? i don't imagine those are questions that executive like to answer. against success financial success, doesn't? if you win the league, you get more money, you enter the champions league, and the circle of money kicks in. >> it absolutely does. the timing is wonderful. as you well know, the premier league is about to embark on a contract,adcast
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getting $8 million over the next three years. alix: do well for keepers. the golden ticket. either comparable circumstance here in the u.s. to teams doing something similar? >> i think what we are familiar with our things like moneyball. there have been some comparisons drawn -- here, there are salary caps. in baseball, you are very discreet, measurable, analytical points. we know baseball statisticians have been using them to great success. i think they're trying more that in soccer, but sometimes it is a little bit of magic. scarlet: talk about the market value, and whether the owner is looking to open thwn them. >> there is no indication that he is looking to own them, but
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he has made great value. he brought them in 2010 -- bought them in 2010. the person who sold the team has estimated that it's worth could be as much as 300 million. mark b.: this is a once-in-a-lifetime thing. there is a famous player here, one of our greatest ever, he icester wins, it is the most unlikely triumph. this is something you don't see? >> soccer fans know this is absolutely unheard of. doalso said that he would his first season's broadcast next year in his underpants if they went. mark b.: the odds of them when
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they were 5000 to one. i gather someone has already cashed in. >> someone cashed in and really the first 72,000 pounds. now they are the odds on favorite. mark b.: great to see you. thanks. it would be a fairytale for their supporters. let's remind you of how europeans equities finished the friday session. it was a day of gains. over the week, european dogs finished marginally lower, ending the fourth week of ns for equities. bloomberg markets continues. ♪
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>> from bloomberg headquarters, good afternoon. i'm scarlet fu. >> and i'm alix steel. rick reeder says companies are behaving like it is. withnum prices have soared other commodities. higher prices come with a cost. surges saying the worst could be over. >> we want to head over to the markets desk with julie hyman. julie: we have a gain in emerging markets. we had a mixed session in asia. stocks in the u.s. are rising the highs of the session.


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