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tv   Bloomberg Markets European Close  Bloomberg  April 5, 2016 11:00am-12:01pm EDT

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♪ 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.
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we are 19 minutes into the trading day. hasn't julie hyman at the market desk the latest. julie: we are seeing u.s. stocks continued a pullback today. it looks like we are setting up for our worst day in quite a while. stocks of not move that much. the s&p is down. the dow and nasdaq up as well. -- down as well. services report showing an increase in five months. stocks still from the downside are pushing this attitude around the globe. then come on the corporate front , big news potentially on tax and version deals as the treasure came out last night with new regulations governing them calling into question whether this will be done with riser shares trending higher. said therom isi craig
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deal is trading as if it was 95% dead. a couple of things to issue here, one of them is the ownership structure of the company. how much will shareholders of pfizer hold. allegheny and over the past three years, can they be counted? then, there is the image of earnings stripping's which allows companies that do these to issue debt to their foreign parents which allows them to enjoy some type of taxes. this is causing a big ripple effect here. these are not the only stocks on that treasury ruling. julie: no. we have had a number of people come out and make comments about the ruling. even those saying they will not be impacted our. january to buyin back stocks at $32 billion. it said the proposed do is not an inversion. it said the rationale of the proposed combination is to drive
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growth as a global leader. not really stemming the tide in terms of the decline. however, we are also looking at a type of johnson control. deal two companies doing a as well. this was also announced in january at $3.9 billion in total value. we have not heard from these companies as of yet. tiger, interestingly, it got a foreign tax address in the 1990's after it was required by adt which had a bermuda address. finally, we want to look at the big waste deal that was announced in january. waste connections agreed to buy progressive solutions. it was going to be structured as a merger. it is in all stocks. both of those stocks are also down today. mark: julie, right across my screen, there you go. those are all of the industry groups.
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today, fordeclining the third day for the biggest drop since february the 24th. the stoxx 600 is down by 1.9%. one of the big falls today. by 2.7 it is europe's biggest engineering company. it is one of these issues expressing preliminary interest in dealing with msn electrics, power networks division. or the network power division. that is according to people with massive shares down by 2.6 today. the valley is exiting its steel adventure. the braziliant is company. it is selling 27% stake in the brazilian steel mill venture. they go with their german partner. it is symbolic. price is part of the strategy to dispose of non-core assets to bolster the balance sheet. it is part of a trend of the
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likes of anglo-americans and trying to reduce debt shares down by 4.5% today. want to show you the euro. the big currency forecast when it comes to success was the german lender of lenders bank. the sterling will be hit. interestingly, it says the breakfast buffet it will wipe out the euros biggest quarterly gain against the dollar in five years. where really stands out is it says that the ref concern is the number one reason why single currency will fall. the commitment to the ecb's currency stepping stimulus. it says the euro is going to fall to 109 by june the third and 104 by the end of the year. of course, we are at 11372 today.
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interesting call from the number one currency forecast. let's go over to bloomberg first word news today. vonnie quinn has all the latest from our news desk. isnie: d trump movement getting traction to save the primary. it was endorsed by wisconsin governor scott walker. he found a way to make mesko pay for the wall. the republican presidential front-runner said he would cut out billions in revenue by mexican immigrants. withdraw that if mexico made a payment of $10 billion to build the wall. democrats, pull show bernie sanders. clinton took in less at 30
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million. judge merrick garland needs us to more public and senators today. maine. collins of on thursday, the president will go to the university of chicago to argue that the senate should consider garland's nomination. global news 24 hours a day powered by 2400 journalists. thank you. i want to let you know that the president will be speaking about the news we saw yesterday from the treasury department that will make it much more difficult for companies to engage in tax inversion or corporate inversion. briefinge making a from the press room at 12:15 p.m. the president will be speaking at 12:15. moving on to a corporate story that has shocked many of those who follow.
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the disney ceo oh is stepping down. no reason was given for his departure. he will still remain at disney. he will have the role of special advisor to bob iger. so, exactly what happened? joining us now is paul sweeney, head of research for north america. this man has been groomed for nearly one decade to become the ceo. >> this is a surprise to disney investors. certainly, everybody in hollywood. tom was the cfo for a long time. he was being groomed for more than 10 years along with another executive. resume low left. i got the odd -- the deal to the uco.
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for the board to come back to say he's never a person is not surprising. >> there are some ports coming have -- you may not possess all the skills needed, and therefore, they were not willing to really bless them as the heir apparent. maybe, they would look outside of disney for some other options. >> i think the problem with that he actually ran a good secession plan. he identified to very strong able executives.
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groomed them over a long time to succeed him. it didn't work out here in the end. now, the company left with very few internal candidates. a lot of people think they will look outside the company. perfect world, they would've wanted to take an internal candidate. mark: who will succeed? paul: there are certainly a lot executives out there. number one, steve burks who is running nbc universal. ceo, oneather was the accompanies a disney bought. disneyash the work to for a while. he certainly had disney in his dna. nbc had a great job running universal. cannot think comcast will let him go. another case may be sheryl sandberg. executives ofior
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facebook. highly regarded in the marketplace. great job. paul sweeney. coming up, we will be sitting down with secretary of state john kerry. with the new energy finance summit. we'll get the take on clean energy and how climate is tied to national security.
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mark: i am mark barton. betty: i am betty liu in new york. the future of energy summit is underway here. my colleagues at the grand hyatt with a very special guest.
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thank you. we are joined by the u.s. secretary of state john kerry. our would like what the potential partnership between the private actor in a government with the climate change. what are you asking the private sector to do? >> make energy conscious decisions and her business. choices, we their actually have energy. move into an energy-based economy. be significant in terms of submissions and all the climate. it is the greatest economic opportunity the world is looking at today.
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millions of jobs to be created in macon's energy conscious decisions. by the way, when you power the plant more efficiently, you can say millions of dollars. >> are our ceos missing the boat? increasingly, major companies in the country recognizes. to do withengaged the climate change. pepsi, coca-cola, general election, where of a long list of american brand-name companies that are doing it. lots of other people are also engaged in lower levels. carrie: there's urge --ry: we would accounting is supposed to be --
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an exercise in transparent and accountability and truth. real figures, real accounting. the real accounting on energy today does not take into account what cost that we pay. payingrican taxpayer is $70 billion for hurricane sandy. the storms are more intense today. i cannot say that one storm or is the precise signifier, lecanto eight can tell you that the intensity of storms, generically is up as a consequence of climate change. we have more flooding. more drought. more melting of glaciers we depended on. migration of certain species of plant. certain species of animal. are migrating to find colder waters. there is a huge transformation taking place that has great potential negative consequences.
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david: i want turn to another subject. that is the islamic state. is that progress significant for americans and europeans going there? there is a reduction, but it is not shut off altogether. fighters thanr there were previously. taking more effective , tos to curb the travel affect the decisions that people are making. i have many communications centers that are beginning to reach out to the world, to islamic nations. to counter the false narrative of isis.
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15 members of them were executed. we presume that it was because they were trying to get out or not buying the narrative. this is what happens. as it happens when you try to get out, they will kill you. in fact, you are a prisoner of this. we see increasing incidences of fighters trying to run away or desert their position. even as commanders are urging them to fight. so, we believe we're making progress. still, isis is still a danger. it still has people who has positions in countries for the last. -- few years. it will require our diligence and our initiative. we are going to defeat and destroy isis. david: he pointed to the effective use of social media. are we doing to counter
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their use of social media? that is a great question. sec. kerry: we are involving her understanding of the metrics. but, we have an increasingly effective group of centers. they are staffed by air of spanking kurds, communicators, people who get onto social media and actively counter the false narrative of isis. people in saudi arabia are opening a major center with withdrawal religious leaders from around the world to help them speak about true islam. you know, it is a fact that i so mastered an early presentation in social media that was not counted initially. no, it is being countered, increasingly, i think people are learning more and more about the that is based.
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david: in the wake of the attacks in paris, some people are having issues with coronation in cooperation with european securities. what is being done to help that? sec. kerry: a great deal is being done. human before the attack, we had the foreign fighter search team heading to brussels to work with the authorities to try to examine where there might be some gaps and where we needed to do that or. we had the number of meetings scheduled again before the attacks. one of the things europe needs have talkedith we must begin to passenger name record system for air flights and travel. we need an early access screening system. so, that what we can do a better job.
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is in respect to the tracking, and, they have had privacy concerns. i think that they are learning, as we did at america with 9/11 that you have to take certain precautions and give up a little something to be safe. david: is that like in on your part? people can come from europe to the united states. at what point does that cause big threats to t united states? sec. kerry: yes, where one of the toughest screenings, it is much harder to get across the bond and get into the united states than it is to move through syria in new york.
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david: president obama has criticized some of our allies. >> we very united. nato is very united. nato is deeply engaged in afghanistan. deeply involved in a wreck. now, becoming more involved in the counter isis fight. now, becoming part of the migrations in syria. helping to secure the border with turkey and greece. nato is extremely active and involved. the united states is 22% of nato. other countries contribute reportedly. the fact is that what the president was talking about, in urging other countries to do more is that there is a pledge taken by every country to spend 2% of their gdp on defense. and, in number of countries in europe have not done that. that is what the president is urging.
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, andader sharing expenditure. david: people are worried that we will not have a lasting peace in syria. what, in your view is a realistic peace plan for syria? sec. kerry: the test is now. we will see what happens. we need a transition. we need to move to a secular governing body that represents all of the interest in syria. it assumes responsibility for the day-to-day management of the country. all they move towards the new constitution and elections. russia, he ran, saudi arabia, turkey. ran -- iran. many people are not capable of negotiating in good faith.
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see any way for a sock to remain, there is no way to end the war while he is there. -- dictator assad. that the iranians, the russians and others need to recognize that if you want peace , the dictator has to transition. how he transition is exactly with the negotiation will be about. david: thank you. secretary of state. thank you for being with us. we will go back to you betty. betty: thank you. u.s. western there with a secretary of state john kerry. a reminder to our viewers that president obama will be speaking at 12:15 p.m. eastern time. he will deliver a state on the economy -- a statement on the economy following yesterday's treasury department announcement of corporate tax and version. in the meantime, it is time for the business flash.
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a look at the biggest business stories now. grewmerican service sector for the first time in five months. service industries make up 90% of the economy. they make up construction to finance to retailing. , factory activity expanded for the first time in seven months. transcanada says the keystone pipeline will likely remain shut down for the rest of the week. invested in the oil spill and southeastern dakota. of a pumphed out station. 100 workers are trying to find the leak. and company that limits your thoughts to 140 characters will now bring football. twitter will show nfl games online on thursday. they have thursday games to reach those who drop cable television subscription. that is your bloomberg business flash. mark, where a few hours away
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from the european close. stocks are falling. every industry group is falling. the biggest drop for the stoxx 600 since february the 24th. we are down for the third day. we decline for 1.8%. in but one stock is falling germany today. it is an unexpected decline. have a look at the industry groups. every single one of them is dropping today. we have banks and energy. i will leave you with the currency and the european close minutes away. stick around.
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mark: you are watching the european close. with betty liu.
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stocks finishing the day in european trading. day andg for the third the lowest level for five weeks. they just drop since february 24. concerns about global economic growth. one of the big corporate stories today came from the french citroen. falling about 3% at the close, the most since september 2015. it predicted that spending on new models and technology will weigh on profits in the coming years. performance of the mass producers in europe. peugeot is down by 15%. u.k. services data showed a slight uptick to 53.7 from a
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three-year low the previous month. economics said the upcoming eu referendum are waiting on the economy. growth will be subdued this quarter. markit also released its data on services. slight improvement to 53.1 but not as good as the initial estimate of 53.7. that means the economy probably grew .3% in the first quarter. ecbh was the month when the pulled the trigger on stimulus. it will be fascinating to see what impact it will have on this sort of data in coming months. betty: let's turn to what's going on around the world with erik schatzker.
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: greece has suspended deportations to turkey and acknowledged that most refugees detained on greek islands have applied for asylum. the european union began sending back migrants yesterday but no transfers were planned for today. the vatican says talks are underway about a possible trip by pope francis degrees. it would coincide with the controversial eu plan to stem the flow of refugees. the world's largest sovereign wealth fund is being pressured to get rid of its tax havens. that's the latest from the panama papers scandals over politicians using a panamanian law firm to hide their fortunes. lawmakers denounced the tax havens and said their nations funds should divest. china has pledged to support you and sanctions against north korea. ofis banning most imports coal and i report. the sanctions were imposed after
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the regime conducted its fourth nuclear test explosion in january and firing test officials -- test missiles. betty: as mark mentioned, growth in the u.k. services sector remains sluggish. the latest market pmi ticked up slightly last month from a three-year low. the gains are below long-run averages. there are concerns that growth will remain sluggish as the so-called breaks it vote -- brexit vote moves ahead. view do you share markit's that the economy will slow in the coming quarter? yes. we broadly agree there will be a slight slowdown. maybe not quite to the extent that markit are talking about.
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pmi has not been a particularly good read of the pace of growth. waspace of growth in q4 surprisingly strong given the uncertainty of the brexit vote. there is reason to delay consumption of investment. mark: the brexit is the key risk. weather theomy upcoming months? weather thee it can uncertainty over the next few months. mark: it's what comes after it. >> exactly. there is so much uncertainty in thatbrexit environment investors do need to build in risk premiums to any holdings they have in the u.k.
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very good reasons to expect a sizable devaluation of the currency in order to get the current account fundable again. talking about a fundamental rebalancing story for the u.k. that is likely to be recessionary. betty: what kind of ripple effect with that have on the u.s. and global markets? or would it? >> that's a very good question. what we see potentially having strong ripple effects on the euro area -- it does depend on the steaks at the time. we don't see it as being an additive risk premium. we see it as being a multiplicative one.
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it really could have quite significant effects on growth and then on to the u.s. if everything is fine at the time, it is a much more benign situation and remains a u.k. specific story. i want to focus on the u.s. and the dollar. we had a strategist on earlier whoseorning who felt -- view is that the dollar is going to continue its softer path that we have seen the last few months. sees the stock markets continuing to rally. i want to play for you what tom lee said about this. >> here are some really clear signals coming through that give us optimism. one is the dollar is -- has been flat as a pancake for the last 15 months. it was the strength of the
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dollar last year that choked off exports, hurt s&p earnings. it's turning into a big tailwind. betty: is that they view that you share on the dollar? >> i suppose we would be a bit more bullish around the dollar and the risk environment more generally. there was obviously significant weakness earlier this year in bad environments the dollar does well. it's not necessarily just the cause for that. there wasn't really a fundamental justification for it in the economic data. as you see the continued run of spectacularot economic data, you should expect to see more of a risk on environment and we have had far. and in that kind of environment, the federal reserve's should feel more comfortable about moving towards the exit. in that kind of bullish environment of the dollar where the dollar can do well and it
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doesn't destroy the global economy. mark: when does the u.k. consider moving to use your rhetoric toward the exit? a lot i'm sure depends on the results of the referendum. there remains a massive disparity between what your community is saying, the economist community, and markets. it's almost a three-year disparity. when the first rate hike or cut? in line with the economic concessions and expecting the first one at the end of this year. markets have to price the profitability of brexit -- possibility of brexit. if you believe the bank of england will be cutting, that has a material downward effect in terms of the front end of the
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yield curve. so the market is not necessarily telling you that in a remain environment that the market will be on hold that long. it's telling you that balancing those risks off as a very long time. if we get the vote, u.k. stays in, you should expect to see a significant selloff in the front end as the market moves into pricing interest-rate hikes again. whether it can get all the way to pricing it towards the tail end of this year becomes the tricky aspect. because for all the talk of flip-flopping, he doesn't like to send a signal to the market in the inflation port that's materially different from the market is pricing. conditional market expectations. inflation will be about 2%. communication -- community is going to have to push back the end of your forecast. >> if the markets don't price
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it, the bank of england won't deliver it and we will change. that's the annoying circularity of these things. and morere much keener willing to lean back against the market than the bank of england. june see the fed hiking in and december of this year despite the u.s. economy being , pretty tough task for the bank of england -- rush, economist. what's going on over there? betty: european markets are done for the day. u.s. markets are still open. let's look at the major averages right now. the dow is still down about 92 points. the s&p is lower as well. we are following along with what we first started in asia and europe.
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numberough the services came in slightly better than what economists had estimated. abigail doolittle has more live from the nasdaq in midtown manhattan. one of the bigger drives is walgreens boots alliance. this after the drug company missed estimates by 1.5% and offered same-store sales of just 2.2%. the company is claiming that on a weak cold and flu season. downess has taken it back on the year as investors wait to see if the renegade deal -- write a -- rite aid deal will go through. betty: what about the big movers today? abigail: intercept
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pharmaceuticals is of -- up significantly. this would be the company's first drug on the market if it is approved. it has taken the high range of its valuation range oup. betty: thank you, abigail doolittle at the nasdaq. mark: battle of the charts. joe is back. i will square off with him. baltic dry versus german bund. get ready. botc is next. ♪
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betty: we are getting some breaking news. iceland's prime minister has resigned. this is according to reports from iceland tv and radio. was underminister pressure over the last several days after those panama papers revealed that he may have renovated from those offshore tax havens. local television in iceland, it looks as if the prime minister has resigned. time for our global battle of the charts where we take a look at some of the most telling charts of the day and what they mean for investors. you can access these charts on bloomberg. is markthings off today barton. mark: you can't do that to me
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today. this is the baltic try index. it's a key index of global trade. on february 10 it fell to a record low. it has rebounded by 63%. you can hardly see it. this chart goes back to 2008. atwas in 2008 that it peaked 11,100 -- 11,793. 96%. then it has fallen which leads to the question, what happens next? columnists, gadfly this improvement is a good side becausehe demand side the demand side may be passed its nadir. there is a supply side to this equation. because theor show
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world's dry bulk shipping fleet is still growing. itapping is cheap, making less attractive to clear the oversupply. so you have an oversupply, rates are rising. better rates are prolonging the oversupply pain and that means it's going to take a lot longer to clear the oversupply and could that have an impact on this index? betty: how much lower could it go? i want to welcome back joe weisenthal. joe: obviously in the first part of the quarter we saw the s&p getting crushed and then rallying back to erasing all those losses. not all positive if you look at areas of the world where you look at safe havens. two classic examples, the japanese yen, a currency that often rallies when people are
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nervous, and german bund's. let's talk about thichart th has dollar yen. this is german 10 year yields. both of those have been plunging lately. the yen has been on an absolute tear against the dollar. a rebound, there's a lot of interest in holding on to those safe havens. maybe a slightly ominous signal or at least it says something about market sentiment right now. mark has disappeared from his chart. which means joe, you win. welcome back to joe. much more ahead. mark? mark: big breaking news. the prime minister of iceland we are hearing according to the state television is stepping down.
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protests in the last 48 hours over his alleged connection to offshore tax havens exposed in the panama papers. we will get more on this development in just a few moments. take news breaking. the icelandic prime minister is stepping down. ♪
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mark: big breaking news. the fallout coming out of the panama papers scandal. the news is, reports coming from iceland that the prime minister has resigned. minister has faced mass protests since revelations that he allegedly benefited from offshore investment accounts in tax havens. joining us now from paris is bloomberg reporter greg viscusi.
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thank you for joining us. -- theseas if this revelations have caused their first victim. >> iceland is a particular case. this is probably the european country that came the closest absolute collapse after the financial crisis, even more than greece in some ways. it's a particularly sensitive subject in iceland given what they've been through, the problems caused by their banks. -- not all overseas accounts are necessarily illegal. in this case the prime minister had said that it had to do with the inheritance of his wife. it was something set up for a property investment in dubai. it might have been totally legal. but given iceland's history and the sensitivity of the population, it was kind of difficult for him to stay. mark: are you suggesting it's a one-off? that there will be further
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resignations -- won't be further resignations? pure speculation, probably -- if you look at the countries in which leaders were named, iceland is the most open and democratic and vocal from a free press point of view. next on the list could be argentina which is also a fairly open democracy. seems to have been able to assure everybody that he was director of a company without having any stake in it. we will have to see how that plays out. we are talking about russia, countries in the gulf. not exactly the most open free societies. probably there's going to be less of a fallout than you would expect from a country like iceland. betty: i want to talk about the banks that have been revealed in the panama papers. we spoke earlier with credit squeeze -- credit suisse about
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some of these offshore accounts. accept structures if they serve a legitimate purpose. clearly tax avoidance is not one of those. we don't engage in that. every account is certified to us. otherwise they have to leave the bank. when there is a structure of beneficial third party, we insist on knowing who is the beneficial owner. we will not engage in business with anybody who is not revealed. betty: what exactly are banks like credit squeeze -- credit suisse or hsbc, what do they need to do? an important makes point. it's not the offshore account that is legal or illegal. it's a question of whether or not the owner of the account declares it to the tax authorities in his country.
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that is at the end of the day the issue. we don't know from this document dump which offshore accounts that applies to. the banks will certainly be under a lot more scrutiny. this is not a subject that was born yesterday. this has been going on certainly since the financial crisis. we have already had action to -- low taxfshore countries to be more compliant and open and transparent about information. the list of noncompliant tax entities has dropped from something like several dozen to three or four now. has been a very ongoing process but the banks are certainly going to be under a lot more scrutiny. they sometimes have good reason to use offshore accounts but there's going to be a lot more scrutiny from regulators the press the public to ensure they are following rules as far as
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tax declaration. mark: could the panama papers be the tip of the iceberg? isyou have to imagine, this one law firm in one country. there's a whole bunch of other areas that are low tax entities. let's not be self-righteous and only think it is small little countries. midst.so in our mark: thanks for joining us. the icelandic prime minister gunnlaugsson has resigned following revelations about his personal finance. mark: the president will be speaking at 12:15 on tax and version. -- inversion. ♪
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>> it is noon in new york. >> welcome to bloomberg markets. ♪
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scarlet: i'm scarlet fu. alix: i'm alix steel. scarlet: in 15 minutes, president obama will speak on tax inversion's. this comes after the treasury's announcement to make inversions less financially appealing. alix: stocks falling around the world as safety trades rally. and an exclusive bloomberg interview. imf managing director christine lagarde paints an uncertain picture for global growth. alix: we are half way into the u.s. trading day.

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