tv Bloomberg Markets European Close Bloomberg April 1, 2016 11:00am-12:01pm EDT
live from london, i am caroline hyde. going to take you from new york to london in the next hour and this is what we're watching. u.s. stocks a recovering from early losses right now after this morning's march jobs report. adding two hundred 15,000 jobs last month, but european stocks remain lower in energy posting losses as oil prices live. betty: saudi arabia reveals plans to create the world's largest sovereign wealth fund that could eventually control more than $2 trillion in assets. caroline: apple drops one of its biggest heart suppliers, adding phillips. we look at the supply chain shuffle ahead of the release of the iphone 7. betty: about 90 minutes into the
trading session here in the u.s., about half an hour away from the european close. let's head to the market desk with julie hyman for the latest on the rebound in the market. julie coke all three major averages are in the green. i guess good news is not bad news anymore. it changes on a dime as we know. we are seeing all three major averages now up. it looks like the oil effect has been shaken off to some extent. look at the dow in particular. at the lowest it was down as by 47. 117, now it is up what are some of the main gains we're seeing in the dow? take a look. time to buy the stock at of the closing of its acquisition of visa. it could happen as early as today. though shares higher. home depot mentioned positively saying it is less
likely that and come with outsource its pharmacy benefits management to the united health unit. mcdonald's is rising him a price jpmorgante over estimates. franchise structure in asia, structurally important and could improve free cash flow. mcdonald's shares are trading at a record, up more than 7% buspar this year. the onlyocks are not one says saw a price swings. julie: the 10 year is another example where, look at this, we talked earlier the yield was little changed to even slightly down. now we're seeing it spiked back up, which is what you would expect even the numbers we got this morning. 1.80%. gold prices, we've seen some swinging around.
initially, we saw a little bit of a bump up following the jobs report, now gold prices are heading lower. not seens has necessarily swings, but it is still dragging down energy shares. still lower on the day by nearly 4% after saudi arabia said it would not be freezing reduction until iran freezes production. oil playing a big factor in europe. we saw asia go lower, europe followed suit. this is your i met function. what is the worst performer? as was the oil go lower on that exclusive interview we have with saudi arabia saying they are not going to freeze unless the whole of opec to come including a rent. c, including of ope iran.
at someve a quick look of the stocks we should be watching. an outlier, a riser today, we see it gaining, currently up 1.8% as we head into the close. cable beenider of bought out by vodafone. .edge funds are rising a great story being written by our colleagues in bloomberg news saying elliott management, the activist investor, buying up because they think it will force up more to buy it. have a look at the pound. talking about the volatility of the pound throughout last quarter. it goes lower once again. we are seeing it at -- the euro is gaining versus the pound. br4exit -- brexit
nears. ray nico focus is on islamic state and president obama will try to rally international support for an effort to keep terror groups from getting nuclear materials as well as other weapons of mass destruction. growing concern islamic state may target nuclear facilities. north korea is thumbing its nose at the nuclear summit, fired another short range missile just hours after leaders from the u.s., south korea, japan agree to work closer together to deter north korea's nuclear program. to lawnt obama goes school next week to push his nomination of judge merrick garland to the supreme court. mr. obama will go to the university of chicago to argue for senate consideration of the until judges nomination. obama once taught at the university's law school. global news 24 hours a day powered by our 2400 journalists
in more than 150 news for heroes -- bureaus around the world. added 215,000rs workers in march, more than forecast by economistss. unemployment rose slightly to 4.5%. climbing to the highest in two years while average earnings also rose more than expected. what does this mean for the markets? how will influence been officials? whont to bring in financier joins us now from his university cameras in philadelphia. professor, you take a look at the numbers today and do you still stayed your forecast of about 19,000? >> i think so. i thought this was a very good jobs report. i really concentrate on the participation rate. it did rise. this has actually been six consecutive months where the
participation rate has either risen or stayed steady. i had to go back to the 1990's theet another period were participation rose. and why that is so important, that gives the fed more time. we are creating a lot of jobs. if we have more people looking for those jobs, it will not press that unemployment rate below 5%, which would be the factor that i think would trigger another said rate increase. so this supports janet yellen's dovish position earlier this week. i thought it was a good report. betty: if you look deeper into the report, look at the waves pressures, right, professor, were you had average hourly earnings up 2.2%, more than expected, in fact, a little bit later today, we had i a some prices paid, that measure came in much more than what estimated.had
won't that put pressure on the fed, looking at those summers, to raise rates sooner than expected? >> we're only one tent above on the wages -- one tent above on the wages. i'm not really worried about the wages. it was a bigger surprise on the ism number that came out. that is a pretty volatile number. yes, we see gasoline up almost 20% from the low early february. we're going to press on that inflation rate, but i think the fed is going to tower at that for a while, especially if an implant assays at 4.9 5%. we definitely won't have a rate increase in april, even though that was declared a live meeting. june, we still have two more labor reports. it is in the distance, but i think this supports the dovish position. i think this is ultimately good for equities. i have taken the position i
don't think we're going to get a good rally equity market unless we really see earnings begin to recover from quite a downfall as we saw in 2015. but i think that is a possibility the second half of the year, and that supports what i think -- i think we're going to be between 17,000 and 18,000 for a number of months backing and filling, but i think we have a good chance for 19,000 by the end of the year. should not be looking at the chinese manufacturing data they can stronger-than-expected? u.k. manufacturing and european manufacturing? everythingto look at , caroline. it is true. one of the reasons people say, jeremy, why do we have such a big house back? major reason.is a there was a big fear january,
february, a big devaluation from china that could set off a currency war and all of southeast asia. then when oil was plummeting , thato $26 a barrel, wow was scary. both of those factors have normalized. china is looking better. notyuan has appreciated, depreciated as i think china is trying to tell the hedge funds, it is not going to be so easy to make money off of us. yes, there is good news from china on the stability there. i think that is brought the relief rally, but i don't know if we can really push to new highs without earnings getting behind these increases. jeremy, just taking it back here to the u.s., i'm going to throw some other numbers at you today because we had a lot of economic numbers. we have sales numbers coming out from the automakers analyst every major wind, gm, ford, i
just saw a headline come across about toyota axle he saw a decline in march sales. they missed estimates. to me, that is a warning sign that maybe this bullishness is not all that warranted. >> we have had some very strong automobile sales over the whole last year. yes, a little weakness now. again, maybe it is associated with 20% increase in the gasoline prices. theher thing i noted in labor market report that i don't think has gotten sufficient attention is that hours worked, which were very depressed last month, i thought were going to bounce back and they did not. even know the job numbers look weak.hours worked are that is one reason why gdp estimates, i think, we just ended the second quarter , excuse me, the first
quarter yesterday, the numbers look like they're going to be one to 1.5. that is not really good enough, i think, to really spur a strong moral -- bull market. we need faster growth on the gdp and stronger earnings going forward. see those selected signs of weaknesses, and that is why don't think we're going to get a lot of momentum in the next few months. betty: stay with us for a moment, jeremy siegel, we will have much more with you. we will talk also about investing strategies and he mentioned earnings. what are we going to look for when the earnings reports start to come out from the last quarter, but also the current quarter? we will be back. ♪
new york, i am caroline hyde with betty liu. time for a look at some of the biggest business stories in the news right now. a sign american factories are emerging from their worst slump since the last recession. u.s. manufacturing expanded in march for the first time in seven months. factory bookings were the strongest and honest a year and a half. the outlook for overseas else has improved because the dollar has lost some of its strength. elon musk, tesla motors is making a bid for the mass market. 3, muskg the mobile hopes will expand its customer base and lead to sustain profits. more than 115,000 fans placed orders in the stores for the model three. deliveries will begin next year. that is your business flash. let's get back to our guest. betty: we are back with school of business finance professor jeremy siegel who is a wall
street bull. there are some signals in the market that better days may be ahead for equities. a rush to fund them attract the risk is high yield corporate debt and some analysts a the high-yield rally could mean an uptick for stocks because credit spreads rather than widening are tightening yet again in the high-yield market. jeremy, does that mean stocks might continue this rally we saw from february? >> obviously, tightening spreads is, you know, a risk off situation, which is good for the market. i think there's a lot less anxiety about the high-yield bond market than there was last wereary when oil prices collapsing. i also think -- and this is a mery important general the -- we are beginning to see a shift in those investors that
are saying, you know what? i'm never going to get good yields in bonds come in the banks. the fed may raise a quarter point, but i may have to seek out equities. why have utilities done so well? why have the dividend paying stocks done so well? i think we're beginning to see a movement that could be for several years going toward the good dividend paying stocks. i really think that we have a dynamic that could be very, very positive for the stock market going forward. caroline: how international does this go? we saw that her performance in the first quarter, the biggest since 2003. does that optimism spillover to this part of the atlantic? >> the good news about europe, it is cheaper than the u.s. 13, 14is selling for times earnings. where 17, 18. we had really depressed earnings
last year, which we need that bounceback. we've had a great bounceback in the emerging markets while they were devastated, but on the historical basis, they are still cheap. when i look around the world, i see value in equities. when at time to buy is sectors often gone through a really difficult time. i see valuations. europe.not avoid i would not avoid japan. i would not avoid emerging markets just because they've had a dead run. i think there is a you they're going forward. dollar,ow about the jeremy? you and i talked quite a bit about the impact of the dollar on earnings. do you expect the softness we have seen is in fact going to be a continual benefit to earnings? well, there's no question that the rise of the dollar last year was a major contributor, although oil is more important
in depressing those earnings. the second-most in wharton factor to present -- important factor was oil. people thought that i look at the analysis of five dollars or six dollars off s&p aggregate earnings, which is about 5% or 6% at current levels. though,forward, even yes, we're positive rates and they are looking up, the very dovish stance of janet yellen and the fed i think is going to keep a cap on the dollar going forward. and i think stability and maybe for the recovery in the commodity market is going to help those emerging-market currencies also look good. so i don't think the dollar is going to provide headwinds into 2016, anything like what we saw last year.
betty: i am betty liu. caroline: and caroline hyde. we're in new york and london. saudi arabia is what we're watching. it is preparing for the twilight, the oil era they created a $2 trillion fund. a big step for the kingdom as it wins is up off the country's most prized commodities. sitting down the dimity crown prince -- deputy crown prince mohammed bin salman.
jon had details with his excuse of interview. >> he has this obsession about moving the saudi economy away from oil and basing around something new. this $2 trillion fund into which aramco will go is amazing. it is enough to buy google, microsoft, off of that, the whole lot of them, the warren buffett them all of those things could go into one thing and it was still have change to spare. into that fund will go aramco. have an industrial arm, though at land, property. roughly twice as big as any other or more than twice as big as any other sovereign wealth fund. caroline: more than twice as big. what a phenomenal story. sure to break it down what it means for the oil markets, -- here to break it all down and what it means for the oil markets. we did see the phenomenal wealth. but this story, this exclusive, had such a movement on the oil markets as well. break it down. it seems to be about the
so-called freeze with opec production. ntries and not ok countries are meeting this month whether to freeze at current levels. a few days ago until today, the perception the market was the freeze was possible, even iran was not joining. with the deputy has made is saudi arabia once every country to join the freeze, not only saudi and other opec members, but russia, iran need to participate. if they don't, then saudi will not freeze. that is in the price of oil 4% down today. also, is it a bit of a bearish call that we're seeing such a phenomenal sovereign wealth fund being built to diversify the biggest exporter of oil? is this saudi arabia telling the rest of the world -- >> if you read our stories this
morning and this afternoon on the bloomberg terminal, if you read between the lines of the whole interview, the message is saudi arabia is not expected high oil prices anytime soon. this preparing for a period of which the war will just rolled will not consume as much oil. -- -- will not consume as much oil in the world. important,is very when the crown prince said high oil prices are the benefit of theging more money to coffers of saudi arabia, to the budget. but also it means the life span of oil, the hydrocarbon h will be shortened. we have seen it this week. tesla is announcing the tesla 3. investing in more technologies and new energies. the saudis have come to the realization that $100 oil may not be of their interest. mean in 20ntially years or 30 years, the world
doesn't need more oil because we're all driving teslas. the very important message from the crown prince, saudi arabia is very aware that if he wants to sustain oil demand for years to come, he needs to moderate oil prices. caroline: fascinating. thank you very much, javier blas , phenomenal story. have a look at bloomberg.com. at what is happening in european markets. talking about the volatility of the oil market, but we're seeing volatility in stocks down 1.5 percentage points in one day alone, seen all of the gains of march wiped out. ♪
are finishing up the day in europe. the market it was a down day. stocks are down 1.4%. take a look at happened in energy stocks are in -- stocks. this is when the worst performers on the date. brent tumbled. we will not see saudi arabia police if iran doesn't. also seen volatility on the upside. keep an eye on certain stocks are in we have a bit of an m&a speculation. metals did do well today. chinese manufacturing came in better than expected. it is gathering steam against the pound. check out what's on my terminal right now. i've dug into the bloomberg. i want to show you the
euro-dollar on a longer-term basis. versus thes weakest euro since back in 2014. you have to go back to 2014 since you saw a zero spot 80. pound is weakening. manufacturing is not coming in as high as expected. --re is indeed of course of fear of brexit. european stocks are down for the day. american stocks are still on the open. isgail do o is -- too little in the nasdaq. abigail: this is one of the biggest drags on the nasdaq, american airlines. the analysts are downgrading american airlines and many airline companies to hold.
there is a chance of economic slowing. it could have a negative impact on is this travel. ago, we said that american airlines was facing a number of had wins. issues facingt of american airlines. they could trade back down toward the bottom of a trading range. what about some of the standout stocks? abigail: we have regeneron. the biotech giant is soaring. met the primary endpoint in two separate studies. data and the results are pretty flawless without concerns around health or safety concerns. that's pretty decent. it could be a drug for the two
companies. the stock is down sharply from its record peak last year. abigailhank you doolittle. let's check in with the news. ramy: we've had to belgium and the prime minister and key cabinet members met to discuss when the bomb damaged airport can reopen. authorities are hoping that passenger flights can resume soon after a terror attack killed 30 people. the police unions are checking passengers at the check in area. greece is pressing ahead with a chance to send refugees back to turkey. they will allow those returns to start asking as monday. refugees who landed after march 20 would be put on boats and sent back to turkey. kicks u k, a minimum wage
in. the economy will lose workers and gain efficiency. that is the forecast. david cameron's government has boosted the minimum wage to $10.35 per hour. that will prompt companies to invest in technology instead. the new ebola case has been confirmed in light. . it's the first case since december and it comes after official said the outbreak did not qualify as an international health emergency. it killed more than 11,000 people in sierra leone, liberia, and ginny. in virginia, the cia accidentally left explosive material on a school bus. been writing that bus for two days before it was discovered. it was part of a dog training exercise. students were never in danger.
caroline: thank you. that's a fascinating story about the cia. --opean stocks have fallen started the second quarter in negative territory. theturnaround came after eye a sum reported that the manufacturing expanded in march 1 time in seven months. it's added more fuel to the improving economic picture after the jobs report came in ahead of estimates. what does this mean for a fed rate hike? marcus, it's great to have you on the show. what are you expecting? to this year? : that was written into it could there is a chance of june. islly, what the fed has done communication policy and they
have lobbed that out the window. we are back to being very careful and cautious. she got her first hike in. she proved she is not some crazed person looking for nothing but qe. she hasack to what always been, very careful. i think the june hike was a 50-50. .ow it's clearly less unless there is some very strong data. the payroll today was good. retail and construction were good. there are some slightly good use -- news. look at the isn, that was pretty good. it was a bit of a goldilocks as far she is concerned. not too hot, not too cold. the fed is clearly doing the right thing and there is no
point in rushing it. from charles evans that they are happy to push the envelope with inflation. more of the same. help me pick through the data. we are up 3/10 on the dow. why must the selloff matter? --erased all of our games gains in one day. marcus: the report was rubbish on a liberal -- levels. the yenly believe that weakened. the dollar strengthened today and that's not going to help japan. we heard rumors that they will finally put the plug and delay the sales tax hike. they will go for that in the summer. we will waive the stimulus packages from there.
the chinese numbers were good definitely. jump in the more mid-cap measure. it wasn't brilliant and nobody really trusts the chinese numbers. there are a lot of moving parts there. i was down -- japan was down heavily. they are going to try and ipo. they are not going to cut production anytime soon. these measures are more important. the payroll number was less important after what they said on tuesday. need moreif we didn't confusing news on the oil market. we had a guest on earlier. he said the economic data was sort of a goldilocks scenario.
sees a scenario where the dow will likely end this year 19,000. is that too bullish in your view? marcus: i am modestly optimistic for u.s. equities. .t's the least dirty shirt the bond market in the u.s. is the highest yielding of all major bond markets. look at the negative curve in japan. now the ecb is trying to take the credit curve. equities, is there reason to be strong in pain a dividend? it's all me compared to the other asset choices you have. 19,000 is a little bit strong. if it looks like we are getting out of the manufacturing recession, service sector had a wall as well, it may not go into recession. superstrong, that
will probably read correct as well. the u.s. is doing fine. it's going ok. most important i thought was the participation rate. we are attracting back to the workforce in the states. that's exactly what the fed wants to see. it's nothing enough to get excited yet. it's in the right direction. it's a benign environment for stocks. look at the vic's, it's back down to those nine levels. we should have a reasonable uplift in stocks. betty: marcus, thank you. marcus ashworth. we have much more ahead on bloomberg markets. , we will hear from another investor. what it means for the fed.
the ecb expanded its bond buying program to fight deflation. manufacturing grew less than forecast in the u k it equaled the lowest since 2009. weaknesses may underscore doubts about whether the u.k. expansion can be sustained. that is the latest business flash. hedge funds are trying to snap up shares. the company ceases trading ahead of acquisition. they are trying to build a stake. to say that thinking here is the german judge will force them to increase the offer price. man well helped break the story. -- are theyis trying to achieve? a battle.en it's been in court for a while. it's been a few years since the
acquisition. the legal battle is still on. they are betting they will show a little more value and so more shares. they expect the judge will force them to put out more money on the table. vodafone doat does in response? >> they are trying to wait and see. they look atlicly the offer. it was $.87 per share. ongoing.en there is an investigation with an independent audit. wellclaim the company was 100 four cents per share. they are trying to find the value. vodafone has been making a
venture in the netherlands. they have not stopped dealmaking. in this case, they are paying too much. was $.87 a share in 2015. 100.were seeking more than caroline: that's quite a premium. thank you for breaking that story about some last-minute buying. you are going to be looking at another key investment. betty: we are turning back to that big story of the day, the jobs report. that was more than forecast. keen talked to bill gross about the jobs numbers. >> we did better than expected.
,obs are doing about the same about 200,000 plus. those are good numbers domestically. ist strikes me about the fed they are clearly countering moves by the boj and the ecb. out, the dollar is weak or by 5% against both the euro and the yen over the past month or so. that's what wes saw for the moment. that grabbed yellen's attention. clearly, markets are confused to be bullish about this report. us theview with reticence that she has to act.
you wrote about that so strongly in your latest report. >> hopefully she recognizes it. she is in charge there to my way of thinking. i think she recognizes those jobs are not necessarily translating into economic growth. we've seen industrial production flat and to some extent down. we have seen other statistics in terms of retail sales being flat. we have a forecast of the first quarter gdp at .6% from the atlanta fed. robust not suggesting growth besides the jobs situation. she has some domestic caution. she has some global caution as well as emerging markets. tom: is this to america's she's trying to manage and deal with?
>> certainly. she's trying to do it all by herself. it's all on janet yellen's shoulder. she's trying to some extent to balance that out. view, she's doing it incorrectly to the extent that interest rates are low or negative in some countries. that has negative implications for job growth. cutbacks day by day. they can't generate the same profitability. insurance companies, pension funds, even the household saver is affected. america's, it's too conceptual ideas. on the samestock model. is there anything in this
report that should dissuade yellen from a moving come june? >> the dissenters and there are a few of them, evans and they wouldd pollard, point to wage growth as a forntial down the road june. i think several of them suggested that two moves in 2016 are what we should expect. they are data dependent. it's up to the global situation. thinking, they have to normalize interest rates or else. they have an opportunity in terms of 200,000 plus jobs. it looks like a likely month to do one of those hikes. that was tom keene.
betty: it's time for our global battle of the charts. we look at some of the most telling charts of the day. you can access these on the bloomberg by running the function featured at the bottom of your screen. kicking things off his julie hyman. julie: i don't have a jobs related chart. not really. we areome economists say employment.
we are pretty much at full employment. rocky, whys of chris look at the report at all? he is looking at inflation and i decided i would as well. let's take a look at inflation. today we get that average hourly earnings number. we are still seeing it year over year. the number the fed is really looking at is the core pce. year-over-year, we are seeing it run it 1.67%. that is below the inflation target. if you trying to inform yourself, you now want to look at these two elements. yearat basis, we are not -- there yet.
betty: the fed has taken care of one mandate, now it's inflation. it's your turn. caroline: i am talking about apple. i'm talking about the pain some of the european suppliers are feeling. they been kicked off the list. this is a german maker of led chips. it's no longer as important. this is the supply chain. revenuews you how much they get from all of its customers and suppliers. check out one he customer. apparently, they are less important. they have been kicked off that top suppliers list. they have been replaced by the lips.
they managed to go up toward the end. they looked with a market valuation. apple struck them off the list of key suppliers. it's an important one. this is a great function. you can run it on your bloomberg. see all the suppliers when you want to dig into the details. great point. we can't really see it very well. we have much more ahead on bloomberg markets, including the ceo of -- ♪
from world headquarters in new york. i am alix steel. the jobs report was solid, but it did contain signs of slowing labor growth ahead. stocks were higher and any fracturing information helped. in an exclusive interview, saudi arabia reveals they are preparing for a post-oil air with a mega fund. note miss my interview with john companyn he make the profitable again? alix: we are halfway through the trading day. let's go to julie hyman with the latest. it's a tough day.