tv Bloomberg Markets Bloomberg April 5, 2016 10:00am-11:01am EDT
♪ betty: we are going to take you from new york to london to são paulo in the next hour. we are half and outreach of trading session. stocks are lower following the downturn in global equities. the highest levels of the year. investors waiting to see what will be released in the latest fed minutes. they are out tomorrow. and in analysts take on the risks facing the global economy, and why she says she's ready to move ahead with negotiations after several days of exchanges. betty: the first element is begin to fall in iceland. a look at the law firm at the center of the panama papers.
shell companies moving money to far-flung places. julie hyman have the latest economic data. accelerating for the first time in five months, coming in at 54 and a half. 54.3 was the prior reading. predictingave been 54.2. this services industry accounts for about 90% of the u.s. economy. we're talking about a very important figure here. economists say we're looking at moderate expansion. but the s&p and the nasdaq down six cents of 1%. followed by about a quarter of 1%.
perhaps overwhelming this economic data is the general global concern that appears to be manifesting itself this morning. we're definitely seeing a risk off environment. that is perhaps most evident in the japanese yen. we are seeing a rally in the yen, the dollar falling over the past recessions -- three sessions. the dollar is at the highs it has been in a year-and-a-half. versus all ofing its trading partners. change in today's major currencies versus the japanese yen, basically read on the screen. all of these are fallen versus the rent. yen. people going into the yen, which presents challenges for japan, but it is also evidence of this
risk off sentiment that we have seen. betty: and the big corporate news had to do with inversions today. julie: the treasury department announcing the rules on a tax aversion deal -- in version deal. what it will mean for allergan anheuser. shares plunging by 16%. how much dealmaking allergan has done over the previous three years, and whether that can be theted in the market cap in deal with pfizer. how much of the new company will allergan shareholders own based on these calculations? many analysts are calling this deal into question. analysts say is there a plan b for pfizer? they could pursue make a share buyback targets and other deal assets.
they are holding up a little bit better, but there are questions about other deals and other companies as well. may hit applens earnings by 15%. mark? european stocks falling for a third day in four, a five-week low today. pushing shares of energy and basic resource companies lower. i wanted to show the convergence between the stoxx 600 and brent crude. this is the one you chart. you can see how they have converged since august of last year. the lower chart shows that conversion. negative correlation last year in may, june, and july. moving closely in lockstep, and doing closely again today. in the individual stocks story i wanted to look at the french
automaker. shares falling as much as 7%. spending on that new models and technology will weigh on profits in the coming years. all of the big three mass automakers, i have normalized this at 100. by theve been hit emissions scandal, down by 19%. didn't pickuppmi from a three-year loan last month to 53.7. but a word of warning for market economics. it says that global on maturity and th -- global uncertainty and the upcoming referendum are weighing on the economy and will some dude in the coming quarter. respondents, survey
cited brexit as a factor amongining executives -- executives. let's get to bloomberg first word news. vonnie quinn has more at the news desk. >> thank you. the donald trump movement is hoping to gain traction in today's wisconsin primary. has a current lead over him. also, polls looking at whether hillary clinton is leading in younger and working-class voters. bernie sanders have a slight lead to better needs to clinch all the nominations. clinton raised under $30 million
in the last quarter. president obama's nominee for the supreme court is sitting down to more republican senators today. -- later this week president obama will press his case for his nomination. iceland's president is rejecting attempt by the prime minister to dissolve the government and hold new elections. thousands of people protested, demanding he step down after allegations of offshore tax accounts. he has denied any wrongdoing. mark: thank you very much. political dangers galore in the
global economic outlook. that is the message from the imf directed -- directing manager. morning,e for this bloomberg friend sling walk well -- bloomberg francine lacqua asked her about that. >> we see slightly lower, but also downside risk of it higher on the horizon. we do not see much in the way of upside. we believe that these three key risks that are china chains of business model, and as a result , and lower commodity price the tightening of financials as a result of new monetary that has just begun, and more probably will come out, as the three key factors on the economic front. on top of it, we feel very concerning geopolitical threats
that have an economic impact on many countries around the world. ,> and then we have of course brexit. is that in your list for this year? >> it is clearly part of the uncertainty that we have at the moment, particularly in the european union and concerning the financial sector as well because of the size of the financial sector that london represents. >> you talked about china and your comes about the debt load there. bank action can growth or very low growth and economic round. are we looking at another recession? >> i would not say that china has no growth. it is really something to write home about if we had more of those countries. but we see the chinese authorities is being determined to tackle some of the
fragility's of the system. when all leaders come out to reinforce the fact that they well restructure the state on saw one drag, we on growth in the change of business model. you do not need as much construction, you do not need as much of the heavy duty manufacturing that have been done for decades in china. that is a restructuring which will imply a lot of hard work, a lot of manpower being retrained. balancees a lot of nott revisions that will have any part in the longer term. >> you do not worry about recession, the? ough?
if all this concerning news were to come true? >> what we fear is this sort of very new mediocre that i have warned about in last year. , no new jobs, no high inflation, high debt amount all of those things that should be low and that are high. continuing that trend. we call for policy actions and when i have named three-pronged approach which combines structural measures, fiscal policies and monetary policies. the three together, not just one lot ofhe other, we see a monetary policy at the moment, but we need the three, and we needed fast. >> the conversations the officials were having and grace. does that change a relationship
dramatically with the greeks and the eu countries in general? >> we continue to be focused on addressing the greek situation by negotiating in good faith with a twofold objective. one is to restore the financial stability of the country, and to give it debt sustainability. number two, to equip that economy with the competitiveness, the productivity, structural reforms that are needed. it has to be independent. the objectives are not changed. i have a team on the ground at the moment. we will do so in good faith. francine lacqua there with the imf managing director. the gloomywill outlook shakeup wall street? betty: don't miss our exclusive interview with u.s. secretary of
mark: live from london and new york, i am mark barton. betty: and i'm betty liu. you are watching bloomberg markets. time nothing to bloomberg business flash. the biggest stories in the news right now. a billion lost nearly dollars, but the ceo says the bank is in control of the risk that it takes. , veryional risk is quote
well-managed. he faces confusion over losses on risky in trade -- fixed income trade. a special board committee has done no additional accounting issues that will require more restatement. promises to file the report on or before april 9. and the company that limits your thoughts to 140 pictures will now bring you pro football. they have run the right to show thursdays nfl game on line. twitter and nfl. that is your bloomberg business flash. it is risk off as you can see. equities across the world are selling today. gloom,l of this doom and
there is some optimism. -- biggest all on the street bull on the street is here to make his case. his calls have really messed. missed.y you feel good about a rally this year, but our clients feel good about the market? >> they do not. they are still pretty pessimistic. they think they have a lot of recession risk. short interest is the highest since september of 2008. more stocks are short today than in 2009. betty: what you are confident that stockwill go up? >> there are clear signals coming through about this. as is that the dollar is flat as a pancake the last 18 months. it was the strength of the
dollar last year that choked exports and her s&p earnings. it is turning into a good tailwind. the dollar is now down year-over-year. the weaknesses 30 billion in sales to the upside. i think earning estimates are going up. mark: it will be interesting to see what this means for the oil price, if you are right. i keep looking at the correlation between the oil price and major indices such as the s&p 500 and stoxx 600. what is going to break that correlation, because as we know we have gone from a negative correlation, and they are moving closely in lockstep right now. >> i think that correlation makes a lot of sense as long as oil is below $50. putseason being lower oil and was pressure in the high-yield market. therefore the core lesion should be pretty high -- correlation
should be pretty high. we think dollar weakness will help, and futures markets are telling us that oil has bottomed . i think oil bottomed in february, which is another reason to be bullish. to morganier we spoke stanley's chief equity strategist. here's what he had to say about european stocks. >> you do not have a earnings growth in areas of health care, of tech, you do not have a ,asket of consumer companies which are the biggest game in town globally. is for a vacation. that is the one angle i can agree with. is is not for stocks, is that a bit harsh? >> it is. andtake a 60 year series,
the compound and return is the same. we have a global strategist tallying that just published a piece. european economic momentum, while it is not great, is improving. the stocks have been flat as a pancake since february. i think it makes sense that they should have a catch of trade. plus the tourism. [laughter] betty: europe is good for vacations. , he talkedn the u.s. to one of our bloomberg reporters. what he believes is counter to what you believe. be weakerocks will rather than stronger because you have no corporate repurchases which is a key source of demand for shares.
moment thatt is a that is a true statement. retail investors took $2 trillion on the last six years. short interest is that wonderfully dollars sold short. -- $1 trillion sold short. let's take a step back. retail investors are about to two put a lot of money into the equity markets because they are trend followers. hedge funds cannot keep this march 9.larger than at the moment, this is the only game in town. that is the lie of the last hundred 20 years. the saver is individual, an individual has been selling. betty: where do you see that inflection point? i hear what you are saying, they
are seeing the gains, but when are they going to do this trade? >> that is a really great question. there he bit unpredictable. we have been writing about this whenever there are not liquidators, the market struggles. weeks, retail is putting money into the stock market. they talked about allocations going up. becausee to rebalance s&p and perform credit in the first quarter. there is actually a demand going into summer. betty: we will continue to keep our ion that, and we will have you back throughout the year -- eye on that, and we will have you back throughout the year. the disney ceo on unexpectedly -- coo
mark: live from london and new york, i am mark martin with betty liu. let's go over to the markets desk julie hyman has a look at the stocks standing out so far in u.s. trading. let's start with disney. julie: yes. the company's chief operating officer stepping down, surprisingly. he was being groomed to succeed bob iger as the chairman and ceo of the company. his leaving creates some uncertainty about the succession plan and could mean that an outsider will run the company, sinceuld be the first 1984. i wanted to bring in headlines that are just crushing. -- crossing.
aware of the treasury guidance and will take time to go over that guidance. if you want to take a quick look at our bloomberg, the shares were falling and coming back a little bit following these headlines. but there is this revolt effect in the market from these treasury guidelines, and any company that has a pending international deal is being scrutinized by investors and in many cases being punished. we will get two more members later. back to you. next on bloomberg markets we will talk to the lawyers behind panama papers. ♪
thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. live from bloomberg world headquarters in new york and london, i am betty liu. mark: and i am mark barton. this is "bloomberg markets."
let's get to the first word news. vonnie quinn is that the news desk. vonnie: china is getting most imports of coal and iron or, the main exports. the move comes as north korean leader kim jong-il intensifies nuclear activities in defiance of u.n. sanctions, connecting tested versions in january and testfiring missiles. greece is suspended relations to turkey and acknowledging that most refugees have applied for asylum. they began sending migrants under the agreement with turkey. in brazil, president dilma rousseff's legal team is urging congress to reject impeachment proceedings. a committee on impeachment may make a full recommendation to the house next week. south africa's parliament is expected to debate a motion to remove president jacob zuma from
office come this after the country's highest court says he violated the constitution. the motion is unlikely to pass because it requires a two thirds majority for approval. the ruling african national congress party has supported zuma and enjoys a comfortable majority. the mayor of atlanta is banning taxpayer-funded travel to north carolina, following a preventing -- new law preventing antidiscrimination laws for gay and transgender people. and theon city council governess washington, new york, connecticut, and minnesota. global news 24 hours a day powered by our 2400 journalists in more than hundred 50 news bureaus around the world. i am vonnie quinn. betty: time to get you caught up on all the action around the world. let's bring in -- let's start in has seenre the nikkei a rise in the japanese yen with the risk off trade, meaning the nikkei stocks fell 2.5%.
pity much all the indexes in asia dropped except for those in china, which rose 1.4%. the dance and ferment is cutting its key interest rate to a five-year low. we have details from him by. rep -- from him by. -- mumbai. >> this has been on the same lines as produced by the bloomberg survey. rate at acut interest time when inflation in india has been steadily declining. the latest consumer price inflation was 5.8%. adding to the fact that the government of india in its latest budget stuck to the fiscal consolidation plan reducing budget deficits and the message from the narendra modi administration was clear -- we have done our job, do yours. that is what the governor has done this time around. another important action taken by the governor as far as liquidity's concern come he has
tweaked reserve ratio requirement that induce more liquidity into the banking system. for now, borrowing costs are lower but it is going to be a long while before the rate cuts actually continue in the near term. equityet's check out the markets are faring. we are about an hour away from the tuesday close and every single major western european force is in the red today. stoxx 600 down for a third day and all but one stock falling in germany today. an unaccepted drop in factory orders. check out the industry groups. group isgle industry falling on the stoxx 600 today, led by autos, basic resources, oil declining, metal falling as well. look at the euro versus the dollar, and sterling against the dollar. euro falling for the first date in seven seconds the dollar today. decline continues, the worst performer out of the g can currencies. -- out of the g 10 currencies.
the yield is falling for a fourth consecutive day. the greek two-year yield, betty, rose 175 basis points yesterday, rising yet another 90 basis points today. let's get back to the united states. bloombergs abigail doolittle has the latest live from the nasdaq. you will looking at 2 movers from starting with apple. abigail: we are, mark. apple is trading lower on the day although it has started to harris losses of it. pepper jefferies telling bloomberg radio earlier that the apple earnings could be hit by 15% by the inversion rule. this after treasury yesterday said it would be targeting when multinational companies try to reduce the u.s. profits on various financial dealings. despite what he is calling threat, apple remains his top pick and is more than 50% upside
potential to his $172 raise target, mark. mark: and tesla is already having a volatile morning. what is going on. abigail: it is indeed, market is at the down as much as 2% earlier, slightly higher moments ago, now down slightly. this after a big two-day rally after the loss of the model three. what is causing the volatility today is the fact that the company said first-quarter vehicle shipments missed the 16,000 the local unit forecast by 7.4%. however, they did reaffirm the full-year view of 80,000 vehicles, at least 80,000 vehicles. isthis, credit suisse rushing an aside, saying it has to do with component tortoises. -- component shortages. he says there is a strong model s order to man and spectacular interest in the model three. mark? mark: abigail, thanks very much
in the. from thee fallout so-called panama papers is starting. the icelandic prime minister is facing a no-confidence vote in parliament in response to revelations he and his wife had an investment account in the british virgin islands created with the aid if the panama-based law firm syntel -- at the center of a global leak. request fromd a the feminist or to dissolve the government and called for a new quick election. the prime minister is apologizing for walking out of an interview when a bloomberg reporter asked him about the controversy. of prime minister should always be ready for any questions, but i was surprised because i did not know what they were talking about. betty: ok, well, during the interview, he did walk out of the interview because he wasn't comfortable --there he is --
with those questions, mark. mark: meanwhile, betty, the law firm at the center of the controversy -- out bloomberg reporter spoke before the story erupted. how did you interview them and why did you interviewed them? it is timing of this that amazes me before this icij consortium study broke. blake: right, well, i got the interview the week before i had for someng around time. they have a link to scandals in various countries, including brazil. some of the employees of the local franchisee brought in for questioning in january. we were curious to talk to them about the business to the business of creating offshore companies. mark: they were already sounding in retreat, weren't they, blake? just remind our viewers what
they actually do. right, so, they incorporate offshore companies. that is their main business. they have been diversifying away from that into legal services and asset management, but the essence of what they do is create offshore companies and sell them and nowadays they seldom to lawyers who are intermediaries in many cases who turn around and sell them to -- sellelse will stop them to someone else. betty: all right, i want to learn more about these 2 partners. tell us a little bit more about who they are. he has german roots and has been in the panama law firm industry for his whole career, and fonseca used to work at the u.n. in geneva, which is when he was lured into this world of offshore companies and decided to open up his own company. that was in the 1980's.
soon thereafter they partnered dutch the business boom good base sold 200,000 offshore companies. betty: and now what is the relationship like? blake: well, they are still partners. there is a bit of tension. ramon is involved in politics. he was a special advisor to president juan carlos and step down to defend the company. that has created a bit attention because his activities in politics have drawn some fire from his political opponents. -- is itean, is panama a tax haven, blake? how did it become this key port in the offshore investing business? caake: well, of course fonse would say that the u.s. is a
bigger tax haven that panama and they may have a point. the tax justice network ranks the u.s. of a panama in terms of being a secrecy jurisdiction. offshoregan a hub for committee creation in the 1920's when a group of lawyers basically adapted the local requirements for opening a company to the laws in delaware, which are known for protecting ownership, information about ownership. it has been an industry for some time but it's worth boomed in the night -- it sort of boomed in the 1980's. betty: ok, thank you so much. blake schmidt in são paulo for us on this growing store, the panama papers. still ahead on bloomberg television, new york is one of the states trying to transform its energy system. we will hear from the energy chairman. don't miss our exclusive interview with u.s. secretary of state john kerry. he will be on bloomberg at 11:00 a.m. eastern time, 4:00 p.m. in london.
betty: this is "bloomberg markets." i am betty liu in new york, with mark barton in london. new york is one of the states trying to transform its energy system. in the next 14 years in hopes to have capital energy use coming from renewables. joining us from the new energy finance summit in new york is the chairman of energy and finance for new york, richard kauffman. richard, thank you so much for
joining us, really appreciate it. this is a pretty ambitious goal for new york to have half of their energy use come from renewables in 14 years. how exactly are you going to be able to achieve that goal? richard: well, thanks very much for having me. i think one of the things i would point out is that the current policies -- and this is true not just in new york but around the country -- has resulted in an energy system which is not only very energy-inefficient, it is also financial-inefficient, and my background is actually in business and finance. as one measure, the average utilization of the power sector 54%, built state is for the hottest few hours or days of the year. customers pay all year long. in the last 35 years there has been a revolution in other capital-intensive industries and improvement of capacity utilization through adoption of new technology, through changes in financial incentives, and
changes in business models, and the past policies in the electricity sector have retarded all that and it is thought the past policies have been rebuilding the old-fashioned system of tesla and westinghouse over and over again as opposed to building electricity grid of the future. attempt anso in your initiative to reform our energy use and our system, what have you found has worked? in the two years that you have announced the new energy initiative, what has worked so far? richard: well, i will give you a really good example of something not very farened away from this conference, which is in brooklyn and queens, which is an area of low growth. conrad, the local utility, business as usual would have been is that over $1 billion on thew substation to meet
growth, and it probably would have had an average capacity utilization of 54%. so instead of doing that come which would have been business as usual, they went to market participants with the problem of low growth and some information , and elicitedem from market participants theynative solutions, and were really surprised by what came back from the market, which is a range of solutions that included demand response, energy efficiency, solar, storage, combined heat and power. oft new solution, instead costing well over $1 billion, is going to cost $200 million, so all customers will benefit because there is less capital being spent. it will also save all customers money because it will be less peak power purchase and the power is always the most extensive, and it will be cleaner. itknow this will work and will be replicated more broadly whenever utilities are going to commit capital. , ity: on a larger scale
looks like we have lost the signal. nope? we have you. ok, richard, for a moment we lost the signal to you. nothing happened to you but it happened on our side. based on that, you mentioned the solar. i know solar has been growing by leaps and bounds in popularity in new york state. are you going to look towards other renewables, though, outside of the solar and wind, or are you going to really focus on those apple -- those as the path forward? it is theell, i think question of building an energy system that has the cost and reliability benefits of the traditional central station production and destination system with the innovation and flex ability of distributed solutions. the great thing about all distributed solutions is that in the aggregate, whether it is
solar, storage compromising or technologylls, , is thatges demand these distributed solutions, particularly in areas where there are strengths, will provide value not only to those customers to take advantage of the solutions, and they can get lower our costs and improve power quality and reliability, but it also benefits all customers in the system because it will reduce system costs. that is where the essence of what it is trying to do and it takes us out of the net metering debates that are occurring in other states. betty: ok, all right, richard, thank you so much. really appreciate it. richard kauffman, chairman of energy and finance for new york. we will be joined by zack greinke john kerry who is speaking live right now, joining
mark: beautiful day here in london. one of the leading fashion designers, tommy hilfiger, is in london to launch an exhibition celebrating the rolling stones' musical heritage, featuring over 500 rare artifacts. manus cranny caught up with tommy hilfiger at his office in london and began by asking him about the stones' role in fashion. >> well, they created rock 'n roll fashion, i really believe. before that you would look at little richard, elvis presley, rock 'n roll stars coming from the states in the early days, but i think the stones took that and evolved hit or moved it to a whole different place.
many of them are female now. and in the past, all of them were male. rihanna,ok at beyonce, katy perry, miley cyrus, many of they aree pop stars, iconic fashion brands onto themselves. manu: i love what he said that we move from the male dominance of the space of being the vanguard for brands to females. you have to choose between, let's say, kim kardashian, adele, and the duchess of york to put your funeral clothes on, who do you think could drive the brand? 3 very different people. tommy: i don't know if the duchess could drive a brand like kim could, but i would prefer to dress the duchess of york because i think she has a certain class and grace, sophistication.
kim has a 9 million instagram followers. she can write a fashion idea -- drive a fashion idea. you look at others like rihanna, beyonce, or gigi hadid. you look at models, actresses from hollywood, musicians, and she who has the most instagram followers -- manu: 10 million. tommy: more now -- have the ability to drive a brain. manu: here is the evolution. you have seen every incarnation in fashion. you designed it, you are the vanguard, but with instagram, twitter, facebook. what you actually enjoy the most? i've been looking at her twitter account, it is fantastic, but what is it that draws you? instagram, twitter, facebook? tommy: all of the above, but
instagram for me is inspiring because i am a very visual person. i like seeing photographs and i like seeing a lot of change, a lot of evolution. i don't like to do well in the now. i like to look ahead. like to see what is coming up rather than looking at the past or the present. that takes a moment. i'm always looking at what next. manu: take me to a future paradigm. take me to retail in the future. between being able to touch and feel at purchase online, for you, what is that experience? tommy: you need all of the above. it is called on the channel. -- omni-channel. you have to be up-to-date with technology, you have to have great e-commerce, you have to have mobile apps, you have to have a good mortar, you have to be digitally advanced. you need it all.
many people like to touch and feel. many people like to buy from their phones. in china, over 60% of young people are shopping by mobile now. it shows you that in the future, that may be the case in the rest of the world. the majority of the people will be shopping by mobile app. we have to be either ahead of the times or we have to be right on point. point,eing right on taking from the runway, runway closet,hone and into my and that is a revolution. tommy: well, it is click and buy. it is being driven by the consumer. the consumer is the ultimate judge. he and/or she want immediate gratification. they see something, they want to buy it and where that night or the next day. they don't want to wait six months, they don't want to wait three months could otherwise, they will go and buy it
somewhere else or find it elsewhere. mark: bloombergs manus cranny with an exclusive interview with fashion icon tommy hilfiger. quick check on european trading. 35 minutes ahead of the tuesday clothes. -- close. stocks are down in every industry group is trading lower. it is all about global economic ancerns, but if you betty: lot of concerns is to the u.s. as well. much more ahead on bloomberg television. we will be sitting down with secretary of state john kerry at the finance am it. we will get his take on clean energy on how climate ties to national security. ♪ secretary kerry: great big hole in the middle of america.
♪ we will take you from new york to london to paris in the next hour. here is what we are watching today. john kerry joins us live. we will talk with him about national security, clean energy, and much much more. u.s. stocks trimming declines after data shows a growth in the service industry celebrated for the first time. walt disney have to look outside the company for its next chief executive. we are 19 minutes into the ad