tv Bloomberg Markets European Close Bloomberg March 21, 2016 12:00pm-1:01pm EDT
mark: we are going to take you between london and new york. banks willingan to pay their money to the ecb instead of lend it. what is holding them back? what theybs tells us think of the latest european measures. alix: gold is down but having one of its best years in a while. can it keep shining for investors? is it time to sell? through we are midway the u.s. trading day. we need to check in at the market desk. julie has been tracking it.
some individual stock activities. all three averages have little change. materials and energy stocks remain lower. oil has turned around. energy is taking a hit to date -- today. financials are also lower today. by morenterbalance defensive groups like telecom and health care, even within the groups there isn't a big move. i mentioned oil prices. we see some volatility in oil today. justs lower early and then took some zigzagging movements. right now, it's up by 1%. there is some level of optimism in the oil market. to the point of a drop in volatility and activity, look at the bloomberg.
this measures volatility by a different indicator. crude oil is in blue. we talk about february as the turning point, february 11. it was also the top in this particular voluntary -- volatility measure. it has come down. volume has also done down over the same time in the last couple of weeks. i mentioned a lot of movement on the individual stock level. it's up by 9% today. he will be stepping aside as ceo. bill ackman gets a couple of ward seats. with of this has to do accounting. this is something of a rebound in the stocks. we are also looking at a lot of deals today. sherwin williams is buying pal star.
-- valspar. a look at some of those stocks that are on the move. sherwin-williams both went higher. the some marriott a little bit lower. starwood is rising. sherwin williams is lower at this point. mark: potential deals are boosting chemicals. look at the stocks. 17 of 19 are trading lower. look at shares. in talks. and bsf are looking at a potential deal. these are people familiar with the matter. should these be left in the side of dupont and cam china? will they walked down the aisle together? shares are up by three x -- 3%.
shares have little change today. the role is going to split. he will become the chief executive. over the last six weeks, it's following today. it's following after a three-week gain. in duncan smith is a man who is against britain being in the eu. he criticized the government's budget last week. this is not about exit. it sees into the volatility ahead of the referendum. theling is falling against dollar. the trend has been a down one except for the boost we saw since the middle of february. vonnie: we are going to get a
check of news. mark: on his first full day in cuba, the president met raul castro. the president was expected to urge mr. castro to seize the opportunity to expand ties between the u.s. and cuba by addressing human rights issue and opening up economic access. he is the first u.s. president to visit cuba in nearly 90 years. the president will deliver a speech that will be carried on cuban television. he plans to meet with political dissidents. meanlized relations could big business to u.s. hotels and resorts. mariette received approval to develop operations in cuba. hillary clinton took aim at donald trump today during her address to the israel public affairs committee. she said israel's security is not negotiable. she has an unwavering commitment to america's alliance with
israel. democratic presidential candidate bernie sanders has surpassed mrs. clinton and fundraising for the second straight month. raised $43 million. mrs. clinton called and $23 million. she has more cash on hand. the u.s. supreme court's order in massachusetts to look at the ban on stun guns. the justices had an appeal that says she kept on in her purse for self-defense. the opinion does not strike down the law or say they are protected under the second amendment of the constitution. the opinion said the reasoning for upholding the law was faulty. belgium officials have identified another suspect in the investigation of the terror attacks in paris. the dna was found in a house
that he used by the terrorist group. he left for syria in february 2013. he was arrested friday in brussels after four months on the run. there were hundreds more radicalized people in elgin. -- belgium. global news 24 hours a day powered by our 2400 journalists in 150 news bureaus around the world trade -- world. they are trying to lend more money to consumers. scarlet: negative rates picked in. lending has barely move. let's bring in a reporter for more. why are banks not lending despite all the efforts to prod them in that direction. >> there are a lot of problems.
is stillean economy fragmented. germany is doing well. arrested, itsis was in the south. those economies are still too highly leveraged. they can't borrow. when you don't have the demand, people cannot are a. they can't win. the banks were in the middle of this crisis. they are weak as well. they don't have enough capital. they haven't been making money for several years. liquidity is not good enough. they can't really lend the money because they need more capital. they have been struggling to the
lever as well and decreased their capital level. are not the place where they can say ok, let's lend lots of money. time, banke same deposits in ecb are picking up here in isn't that the opposite of how negative interest rates were supposed to work? >> exactly. instead of getting money for your deposit at the central bank, when you're forced to pay for depositing money, that should discourage you. the alternative is not great for the banks. choice but tother deposit their money at the ecb. jumpedwhy deposits have six times what they were. this is excluding the reserves. all banks have to hold reserves at their central banks. that's a lot. the elephant in the room
is nonperforming loans. has that huge amount of nonperforming loans on their books. germany and france are eligible for the bond buying program and they don't have a problem there. how do banks lend when they have this on the books? >> that's a big part of the problem. that plays into the week banks. theseou have all government loans, or the balance sheet is stock with bad assets. you clean them up before you start making new loans. some of the countries did some of that. they move the bad assets at big discounts and the banks lost money. greece has loans that are bad.
if you don't get those out of the banks, you can have fresh money flowing. hurt thenegative rates banks profitability. is there a likelihood that banks might have to start charging interest on deposits? >> i talked to some professors and they argued that although everybody is afraid of negative interest rates pushing people into cash and money going under the mattress, that might not happen. everybody really is so electronic and everything is done electronically. even if they start changing retail clients, money might not go too far out. something that we see in this new world of negative interest rates. alix: thank you so much. up, will the recent
his price forecast for gold this year. he says the rally will run out of steam. he is the head of radel research. research. you raised your price forecast. the rally going to run out of steam? robin: it's been a perfect storm for gold. it's up 20%. there are some good reasons why investors have flocked to gold with all of the turbulence in global equity markets and fears about china and a hard landing earlier in the year. china is devaluing its currency. there is a lot of fear in the various streets. saw safefited as we havens into gold.
people see gold as an insurance policy. we don't know what is around the corner. something we have seen over the last few weeks is a western investors. you say you need more juice from those western investors. see that holding up? robin: we are very skeptical. you been incredibly strong today. we've already exceeded previous years. it's difficult to see this appetite continue. conscious.to be
aretwo biggest buyers seeing their economies slow. it's diminishing compared to previous years. you have to expect the u.s. to go into a session. we don't expect that to happen. you would have to see a collapse in act three markets around the world. you would have to see a continuation of the fear trade, which is not likely. we think the odds for a continued gold rally and now against it. you have a 2021 of forecast of $800 an ounce. scarlet: that's a steep drop from where we are right now. you said the rally is not built on a solid foundation. what are the conditions for sustainable gold markets. robin: fear. old orwant to be holding
want to be with gold, you see it as an insurance policy. no one really knows what's around the corner. you've really got to see continued falls in global equity markets. you're going to see fear in the fix moving back up again. we had that earlier this year. you need to see some further bullish capitalist. that's not really present. mark: this is my chart. give me a competitive edge with this wonderful chart, i show a rally for silver over gold. robin: it begs the question. if you're ellis about gold, i silver. it's cheaper.
axel: i think you have to look to the general credit policy. one thing it does is eases credit conditions in europe. the overall impact will still be muted by the new revelations. at the banks, we are not much more concerned about deleveraging. that's where the two measures that come in might help to soften and provide a more orderly deleveraging. it will take the trend. manus: i like what you said. the alternative to doing nothing would have been this on credit. you would advocate the alternatives to doing nothing is doing something, investing in infrastructure. give me a size of infrastructure investment you would do in europe for growth.
axel: there is funding for infrastructure. it's leveraged with a factor of 18. i think he would be much more important to have less leveraged, more funding it to go there. but the eib is doing in this program is taking our investment risk on behalf of tax payers. public-private partnerships need to be fostered. in europe, we have the best trained workforce. programsn economy that young people into the workforce. they drive investment into the new tech knowledge he. it will be much better than some of the existing infrastructure being actuated. manus: give me your thoughts in terms of this move toward the transmission mechanism and away from a lower euro. do you accept that? is there a shift in the ecb?
is there a move away from that? axel: the big surprise was the targets. the perception of the last policy meeting, that's what the market fell. the ecb has expanded its purchases. it has a program in place of 60 billion now. they added 20 billion. a main focus will be purchases of assets. that will provide a lot of impact for taking risks in the european economy. it will impact the euro. thatan important variable can bring growth back to europe. that's a big part of the package. manus: it's going to be tough here. talk about the challenges. this is the quarter where banks make or break their year. axel: i'm not going to add a guidance for the market on what our ceo has said or did what he
said was very clear. we talked about that before he went to the investor conference. the signal we want to send is in the market. bank profitability is going to be the business model. we see that our business model is holding up. weium to long-term, i think have a business model in place that will help us grow and help us be profitable. i think that's what many competitors look at to put in place in their own institutions. the business model is efficient. mark: that is axel weber there. we have a quick peek at the final numbers. it looks like stocks in europe will finish lower. it's down by 4/10 of 1%. this is what is in the currency space. this is one of the more interesting crosses. euro-dollar.d
that his increased in the u k after one of the senior members of the u.k. government resigned friday. sterling is weighed down by leaving the eu. it could cost them 100 million pounds and 950,000 jobs by 2020. i want to leave you with some individual movers. there has been some m&a talk today. -- psf has been boosted by a report that monsanto has looked at personal deals with them. the european close is just a matter of minutes way. ♪
today. let's take you through the final numbers. tthe chief executive is resigning after failing to satisfy the biggest investor. we do not know as of yet who will take over. shares are up i percent. investors are obviously pleased at that news. casino has been a french supermarket operator, and shares are out. he contends casino is using financial engineering to mask a sharply deteriorating core business. projects that claim. calm before the storm? i will be asking matthew beasley
all about this. june is of course when the referendum takes place. maturing inoptions three months have reached a three-year high relative to the cost of a one-month contract. yes, volatility dropped, but it is falling twice as fast. is there a bit of a storm but beneath the calm? something we will be focusing on with our next guest. alix: so much drama. for more on the s&p markets, our says intel's been from the beginning of the year may crop back up again. mark b.: now joining us, matthew beasley head of global investors is here. beneath thetorm
calm? energy companies benefiting from the rebound in the oil price. of course we will see more volatility out of the referendum. does this rebound? marketsu said, global globally, a rough start to the year. six weeks ago, markets were at their lows in february. the things we were worrying about back then are still very valid today. brexit referendum, that was unknown unknown, and now it is a known known, something we know we are facing. it is very hard, i think, to argue for markets to run away from themselves. alix: one thing that has changed in the last couple of weeks if the dollar tapering off the
rally. a weaker dollar. take a look at the bloomberg. this is a historical spread between the euro-dollar and emerging-market stocks. it is basically a fancy way of saying that emerging-market stocks like a weaker dollar. ,ere you have the euro weaker the dollar. here is the historic spread. it goes into positive territory, that means the euro is getting continuously stronger. that has continuously change. how much more jews do you think there is? meif you would have told that you and was going to do better than that had -- the reason it has not used the dollar has been stronger and held up until last year's federal reserve meeting when it became clear that expectations are far out from what they were
thinking. there is that relationship between the dollar, oil, and dm, a strong one. if they expect to see dollar weakness, that is of course good for emerging markets in two ways. good because of how emergency arkets are set up, but could given their reliance on dollars. mark b.: where are the earnings? they forecasted negative earnings. the eps estimate, the lowest since 2010. the stock 600, as we know, is moving upwards. startalysts going to boosting estimates? you have suggested that we have seen the outside, and they will have to converge. >> this is where i would get concerned. we are exterior think and
earnings recession. current thing cost is important here. if we see the euro weakened substantially, that can be positive for export in companies, but bad for domestic earners. when i comes back -- think about the outlook -- to growth, and the lack of a growth surprise, or a catalyst for a positive growth surprise. with markets getting ever so stretched, especially over the last 6-8 weeks, for me, something has to give. it will be markets ability to rally further, and giving what is the lack of downgrades. scarlet: i like how you put it. .bsent the growth surprise it means everybody looks back to the central banks for some sort
of action, even if they are deemed less potent than before. here in the u.s., they need to be careful with elections in november. to think the closest they can do anything is probably june? >> i think that is becoming continually accepted wisdom. the federal reserve will move, sooner rather than later, given the u.s. elections. at the same time, the data is mixed. the recent jobs report has almost adjusted a negative goldilocks. it is a question of things not , worrying about the fed moving to early and preemptively. we all have this very perverse situation where we are looking for not too hot, not too cold. you wanted to be slightly bad so that we keep the central banks' support globally, but not so bad that central banks, like the to early.serve, moved to ear
it is a very perverse situation in which they find themselves, and biting volatility has increased, and by volatility will be a feature of markets in the next quarter or two. mark b.: stock specific? >> i think it has to be. hopefully with these stocks are intimated to some extent from situations that are pretty hard. carnival, to-cola, name a few. >> these are all stocks that we see as outsized midprice. pretty close to fairly valued in most geographies. mark b.: head of global investors for 37 here in london. scarlet? scarlet: we are taking a look at how u.s. markets are performing right now. u.s. indexes are basically
little changed right now. not getting much catalyst from anything at the moment. we do have commodities and banks thisining this morning -- afternoon. this is after five straight weeks of gains. we want a little more detail on the individual companies making moves. let's check in with abigail doolittle, live from the nasdaq. abigail: we do also have the nasdaq struggling to trade higher. the last indecisive trade struggling between small gains and losses. boosting the index is biotech. today, the ndi is up 1.5%, perhaps stopping a two-week losing streak. and analyst says he thinks this is a snapback to downsize pressure, and he thinks investors have little motivation to jump back in on a sector that is down about 24% year to date. alix: who are the winners?
abigail: this is a fun one. tesla is up again, seven days in a row. it's best winning streak since march 2013. buy.tock be upgraded to a stock jumped back again from its 200 day average. it happened last april ahead of a 25% move out. perhaps some bullish action ahead for tesla. scarlet: let's check in now for lubitz first world news. mark crumpton has more now from the news desk. mark c.: thank you. donald trump's presidential campaign will add security to its events. recent rallies have seen violence. the front runner does not condone any of the fighting. cap -- p continues his
to be his campaign's main source of financial support, contributing $7 million in february. he has given his campaign some $25 million. trump supporters have contributed more than $9 million, including $2 million in february. that is all from the latest federal election commission report. ted cruz had his best month in february, raising $12 million. cvs-new yorka new times poll, more than 50% of americans approve of the way president obama is handling relations with cuba. most americans disagree with the planned to close the military prison at guantanamo bay. thaty state run news say they're looking for three militants. turkey has already been rocked
by six suicide bombing since the summer. the search for the militants comes two days after a suicide bomber killed himself, to israeli americans, and israeli, and an iranian in its temples busiest shopping street -- istanbul's busiest shopping street. global news 24 hours a day, powered by are 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. mark barton, back to you. mark b.: we will tell you who is in, who is out. that is next. ♪
charging the chief financial officer of improper conduct. scarlet: how will this play out? the it comes to valeant, concern initially was over drug distribution methods, then it moved to the financial model. nowadays financial control. talk to us here about the challenges that the new management has ahead of it. willleant's new management have to assess the value of its current asset base, and it's ality.s its option we haven't underperforming rating on the stock. we think the assets are going generic over the next few years, or already are generic, and hanging in there longer than
expected. our thesis is that there is not a lot to be done here with respect to growing the business. it's new incoming management will have to struggle with what kind of value it can drive with the existing assets. alix: who would you want to see as ceo? is a very that conservative business manager and experienced in crisis situations. alix: has that helped at all by bill ackman joining the board? >> no comment on that. i don't know what his qualifications represent here. case,t: that may be the but he has been very vocal and steadfast in his defense of the company. what did he get mark about valeant -- get wrong about valeant? >> he seems to think the assets are worth more than we think they are worth.
the question how much any of these assets could fetch on the sale. alix: you strip out the drama surrounding the stocks, what is actually value at the company? there is some value somewhere. by fax, it is still a valuable business. in the top 30 products, some of products --t lens those seem to have some value. we don't have a sense of the markets' worth. could be worth something. there are a few for many products.- remaining
alix: thanks so much. scarlet: another stock we are watching today is apple. it is getting ready to offer its usual spring refresh of its products. iphoneoing to update its offerings. we have a charger that illustrates how dependent they are on the iphone. 60% of itsmade up revenues in 2014, compared to 2010, when it comprised only 36%. scarlet: that is the chart of the hour. now we want to get to california, where the event will be held. cory johnson is standing by. what kind of buyers is apple trying to target today? cory: apple is not just looking for buyers who want to spend
less money. cheaperr and somewhat iphone. they're looking at buyers who have not upgraded from the iphone 4 and iphone 5 series. there are a lot of users out there -- by some estimates, as many as one quarter of users -- who will have difficulty running the most popular and profitable services of the iphone, such as apple pay, and whatever operating system updates are around the corner. apple is thinking about those things, keeping the users in the fold, after they have gone upscale, they are looking at going to the down market, and offering something to people who want a little bit less. scarlet: they don't want to lose them out to android. do we expect any commentary from the company on its battle with the department of justice? cory: today's event is not so
much about the products, in terms of importance, it is about context. context is slowing sales. is thented out context dominance of this headquarters -- the context of the battle with the department of justice and fbi. tomorrow, there is an important argueg where apple will its case in relation to what the fbi is pressing for in regards to this iphone. mayin the context, we very well expect commentary from tim cook and the executive. theyll have a look at what have to say about future i'll bring systems, and how they may be even more hack proof than the current system. scarlet: we will have full coverage of apple's event from cupertino when it begins at 1:00
scarlet: live from new york and london, i am scarlet fu. it is time now for the long-awaited global battle of the charts, where we take a look at some of the most telling charts of the day, what they mean for investors. you can see them on the bloomberg by running the future eature at the f the bottom of the screen. alix: just to point out, mark was trying to steal votes and earlier. you and me our best buds. is the rally we have seen in recent commodities like 2015?
let's take a look at the chart. this is what happened last march and april. rallied 15%. then, what did it do? it fell 24% in september. what are we seeing now? of rally that is 14%-15% up from the low of january. they look very similar. fall?e see a similar goldman sachs thinks part of the rally the -- the reason we rallied in 2015 is because in april and may we had some easing from china. you are not going to see that this time around. although, the position right now is very, very long. there is not much more room -- the chart number is 655. scarlet: nice positioning. symmetry.
you have a chart that has to do with metals. mark b.: we're talking gold, silver -- the cold-silver base. i love this chart. gold is just above $1200 an ounce. pounds pers ounce. we have looks back at history. i know you love your history lessons. 1995-1998, when it crossed 80, silver rose 36 percent. gold fell 24%. the second case, 2003. the final bit of 1995-1998, whet crossed 80, evidence is , and the ensuing three
years, once gold crossed the magical 80 barrier, silver, 470% higher in the next three years. it is a brilliant chart, and as 80 can see, we just crossed once again. we are ready had a guest on today, who, by the way, said i should be the winner. he said, get out of gold, get into silver. interestingly -- alix: hold on, he did not see my chart. mark b.: two out of those three periods, gold did rise. does, two out of three times, tend to rise. there you go. .carlet: i am partial to ratios i have to give you a point that you went out and got an outside opinion. because of the historical examples, i'm going to have to give the victory to mark.
thank you so much for the global battle of the charts. .ark b.: right back to you at the credit of that goes to phil kunz in new york. happenedeek at what today. we had a small decline for the stoxx 600. it was a case of commodities falling, dragging down the commodities space. ine a look at what happened the currency markets. to me, the most interesting was the pound-dollar. rising afterl risk a member the government reside on friday. bloomberg markets continues. stay with us. ♪
what this is >> this is live coverage from cupertino, california is all about tomorrow's hearing in riverside, california where apple will face off against the u.s. government. we break it all down for you this hour. first, i want to get straight to cupertino where cory johnson is live on apple's campus. we are expecting to see a new, smallerphone among a slew of tential other products. set the stage for us. at apple headquarters, one infinite loop is a place with a time at focus has been computers. the focus was ipods, the focus for apple entirely is the iphone here, 60% of the sales of that company come from sales of that product. trying to find a way to fill in and keep the users