tv Bloomberg Markets European Close Bloomberg April 8, 2016 11:00am-12:01pm EDT
on bomberg markets. ♪ mark: we will take you from new york to london in the next hour. economistrmer chief gives us his take on negative wantsst rates and why he qe2 boost europe's economy which he says is recovering slowly. releasingyd blankfein his letter to shareholders, we will tell you what he is saying about the firm and the state of the economy. mark: a first interview with the ministernance deputy about the state of the european union as it faces challenges from a potential brexit. continuing negotiations.
90 minutes into the trading day in the united states, let's get to the market desk where julie hyman has the latest. backjor averages bouncing although giving up some earlier gains. the leader is the s&p 500 up by two thirds of 1%, a commodities led rally. energy shares up 2.2% as a group. financials -- a bounce back in many of these groups that have not done as well on the week. , we are watching them as we see him bounce back in the u.s. dollar versus the japanese yen, rising for the first day in six but not seeing a dollar higher across the board. slowing forces -- versus the pound and euro.
it is still a negative week for the s&p 500. down 8/10 of 1%, the worst week in two months. it has been a top he week. we have been -- a choppy week. risk on today. mark: quite a week for commodities. julie: it has, in general this year we have seen rising oil, rising natural gas, a rising stock market that means, that has not happened this week. stocks fell, oil having a big up week, it's best in two months, up 6.3%, sorry that was today's performance, 6% higher today, 7% on the -- 8% on the week, natural gas rising on the week as gold rises also. in this one graphic, it shows you risk on an risk off at the
same time, gold has been the place for safety in times of turmoil. it has been a confusing week. mark: oil and gas are leading us higher. these are the industry groups on the stock 600, oil and gas up and basic resources up by 2.8%. food and beverage, health care, the best-performing group over the week. the stock 600 up by 1%. stockare the banks on the 600. most of them italian lenders. saidhief executive officer that financial institutions in italy are intensively working on a solution that would see private investors participate in this fund that will be supporting the recapitalization of trouble to lenders, these loans that are on the books of italian lenders, up to 360 billion euros.
pressure from the european commission, the ecb to tidy up their balance sheet. hope for this fun to come into action is boosting the italian stock market. axel springer is a big name, the german newspaper publisher, owner of business insider, shares rally today, up 8%, it has been upgraded by jpmorgan. in eight time it -- years it has been overweight, it has reached a tipping point according to j.p. morgan after five years of profit stagnation. from print to digital will start to bear fruit boosted by strong growth in on my classifieds. we are at 50 right now. listed in london, the u.k. explorer that is focused on africa, shares were .ower that rebounding, up 1%
it says blows from a production vessel at his flagship field offshore will be further delayed by two weeks as it says it will have to review its output guidance. this is a stock that has benefited from the resurgence in the price of oil since it fell , january 20,r low it has risen by 58% and rebounded today with a gain of about 8/10 of 1%. betty: let's check in on the first word news with vonnie quinn. appealate on the apple in its iphone privacy case. vonnie: the government pressing ahead for the demand apple help it track into a drug dealer's phone in brooklyn. it is appealing in apple's favor, the decision after the fbi successfully gained access to the california shooters without apple's help. the most pivotal case regarding
privacy. texas authorities say two people were killed in an apparent murder-suicide at an air force base in san antonio. you are which you -- watching live shots. deputies responded to an active shooter at the joint base, san antonio locklin, the home of air force basic training. they are continuing to investigate but do not believe .nyone else is involved arrests have been made in relation to the brussels attacks, they may be announcing one-day -- to help look for a suspect. office refuseds to provide more information. saying parisces attack suspects was among those arrested. , bernie sanders
backing away from a suggestion that hillary clinton is not qualified to be president. said "we have to find act -- fight back" but said she was qualified and on her worst day would be better than anyone on the republican side. dayal news 24 hours a powered by our 2400 journalist and 150 news bureaus throughout the world. mark: thank you. the imf former chief economist says that even though the global recovery has slowed, it will not stop. he was asked how we got the g can economies to add buoyancy to their economic growth. >> recovery is slow. some people worry that it may stop. it is slowno,
because the future is not very exciting. growth will be slowed for a long time and consumers are not eager to spend, firms are not eager to invest and that slows the recovery. the demand is weak because the future is not exciting. that is my diagnosis. some people are probably more worried. write theill not green book at the spring beatings as you have before on financial stability. have negative interest rates work? >> i think they probably work. think itlike -- i interferes with business model banks which are complex. even though they do something on the macro side, i prefer regular seems to affect banks as
well, is easier for banks to do -- deal with. i would prefer that over larger negative rates. earlier and you are talking about stimulus and that draghi has to do more but what does the yen mean and what does it tell us about kuroda's policies? >> i did not get all the question, but about japan, the policy does not seem to do miracles. i think they have done everything they can in terms of qe, they have not gotten inflation up, they need to do something. i have argued they should work on inflation and try to get an increase in wages and decrease in prices whether they try to get it in directly through qe, that is what they should be focused on. >> if you were a policy maker or
chief economist of the bank of england, how would you assess global risk for brexit? brexiteems to me that the in the process -- end process. the eu will create uncertainty. it is starting and will go on for a long time after the vote. the result of this will be dropping investments by firms which will way to know which way to go or how to make decisions. it will lead to a depreciation. it may want to decrease interest rates. it may want to increase them. imf chiefformer economist olivier blanchard.
one million users in the last three years. t-mobile u.s. has one customers with aggressive prices and promotions. a st. louis jury sided with philip morris in a class-action lawsuit, the $1.5 billion suit alleged the company the seed smokers by claiming light cigarettes or safer than regular ones. the jury sided with the company after deliberating less than an hour. luxury handbag and shoe maker missed -- prada estimates, they say it is struggling to adapt to slowing demand. that is your bloomberg business flash. goldman sachs moments ago releasing its annual letter. lloyd blankfein seeing commodity stabilization ahead and lots of consolidation. boundd trading will be when economic growth returns. we bring in erik schatzker.
give us the worldview according to lloyd. erik: the cycle we are in will last for longer because so many or near thes are at zero bound of interest rates come a change from last year. last year, lloyd blankfein and gary cohen, the president and ceo saw an opportunity for some consolidation in growth. and a better outcome than where we are now. however, this caveat, a direct quote, we do not see how a world of zero or negative interest rates could possibly be the new normal. lower rate of -- economic growth is substantial particularly now that it is the world's second-largest economy and we see room for fiscal policy expansion in some countries and options for monetary policy if meaningful growth proves elusive.
an undercurrent of optimism. in, ofme we are unconventional monetary policy and crazy dislocations across the world will at some point finish. betty: do we have that same undercurrent of optimism when he looks at the investment banking world? erik i would say so, last year was an important year for m&a but it is still below peak levels. goldman says there is still some room to run from m&a activity. ifpoints to these industries not right for consolidation, presenting the possibility for consolidation, industrials, energy, a no-brainer. , anotherame goes, food challenged industry and media and telecom. there may be some pent-up demand among corporate clients for public equity markets for ipos or secondaries when conditions improve. mark: in the interest of
fairness, you were highlighting yesterday about jamie dimon's letter, saying it was 50 pages long, how long was this letter? erik: eight pages, one page longer than last year. lloyd blankfein he does not take to the page the way jamie dimon has historically. he does cover a fair bit of ground. tidbits to share with you if i may, he spends time talking about how goldman has cut costs. one of the way they had done that is in compensation and benefits, while headcount is up 11% over the past four years, cop and benefits expenses are down by $270 million. they did it by hiring younger and more junior employees and by shifting what is now 25% of the firm's total staff to low-cost locations like salt lake city, dallas, warsaw in poland and
singapore. it is worth adding, you have heard lloyd blankfein say he believes goldman has become a technology firm, not so much a trading firm, for the first time i can recall, a standalone section in this eight page letter devoted to goldman's focus on technology and how important it is. mark: he talks about his areas of needs, a long list, like jamie dimon yesterday, he mentions the upcoming referendum , china, a number of other things. erik: china, the presidential election, the referendum in the u k the possible brexit, volatility in markets, and regions consumed by possible conflict, some of the issues that are generating unease. questions suchat as whether technology is displacing jobs on a permanent basis, and whether monetary policy has reached its limits of affective outcomes are no longer
esoteric, they are mainstream questions, not just for people inside goldman sachs that for the rest of us. we know that to be true. betty: other than the page counts, how would you compare the two letters? erik: less optimistic than last year, this undercurrent of optimism. goldman sachs benefits when the economy grows, when people like lloyd and gary are predisposed to wanting a better outcome for the world, aren't we all, a still -- still a little bit of that. betty: thank you. mark: still ahead, we will hear from nouriel roubini, he tells us why he thinks a brexit could be the beginning of the end of the european union. ♪
markets. i am mark barton. betty: i am betty liu. bloomberg's francine asked nouriel roubini what is going on with the yen. nouriel: part of the strength with the yen and the euro has to do with what is going on in the dovish, they, very will hike only twice this year at best, some fed governors talking down the dollar. int is creating, i was europe this week and japan recently, some degree of frustration echoes in shanghai there was an agreement that there would not be any attempt for competitive evaluation and in japan and in the eurozone,
there is a since the u.s. is teaching and trying to push down the value of the dollar in a situation where growth is improving in the u.s. and inflation is going higher in the u.s., inflation expectation higher in the u.s. while in europe and japan, inflation going lower and growth is faltering. a bit of the beginning of currency tensions. if not a currency war between japan and the eurozone in one side and the united states. if you think that is something janet yellen is doing deliberately, mario draghi will probably add more stimulus, what are the options left for japan? a further move for negative territory and helicopter money? japan will have to decide whether to ease more in april or june, in part the answer depends on whether shinzo abe will postpone the tax hike
next year and will there be a supplementary budget. he is saying i will not postpone the conservative tax hike but he is bluffing i think, the economy is faltering and you cannot have another fiscal drag next year. on the fiscal side but with inflation going lower and growth toor, the yen is becoming strong, the -- they will have to do more. we mayit is a concern thought limited to the eurozone and u.k., this will probably have implications on the whole world. nouriel: it does because if they decide to go for brexit, many -- it will create uncertainties about not just written that the future of the european union -- not just britain but the future of the european union. -- in spain, they say
me too. some of the nordic members of the european union like the swedes will say without the u.k. in the european union, europe is becoming more eurozone and i do not want to be a member of the eurozone. it could be the beginning of the end of the european union. greecehe tension between -- brexit -- if you have brexit on one side and the greek exit, the beginning of the end of the european union and the eurozone. nouriel roubini on bloomberg surveillance earlier. europe, stocksin are rising today, down over the week.
europe 600 up by over 1%. banks and insurance are the best performing industries -- industry groups today, the biggest weekly drop for autos since january. banks are down for the fourth consecutive week. the euro against the pound today is lower. it is rising over the week. the weekly winning run sending to its highest level for well over a year. the european close minutes away, i was big to the german deputy finance minister. ♪ show me movies with explosions.
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looks like we are down for the fourth consecutive week. the stock 600 and last six months, yes we have come down by 3% but since the 2.5 year low on february 11, the stock 600 up by 10%. spanish home prices, what a big story. ine sales climbed by 50.8% february 2 34 -- 34,007. a real sign the property market is healing as prices stabilize, the economy expands and carlos slim is among those betting on a recovery. home sales -- prices have fallen by 40% since 2007 at the best performing industry group this week on the stoxx 600
is drugmakers, a wonderful chart, the difference in earnings expectations for drugmakers versus the stoxx 600 and those expectations differentials are at record highs, investors -- traders are boosting earnings expectations or drugmakers, cutting their earnings expectations for the stoxx 600, that is white at record disparity and white drugmakers had the worst quarter in seven years, have had a real good run this week at least. will it last -- we shall see. betty: the yen has fallen to end the week but a big week for the yen against the dollar with the dollar losing over 2.6% against the japanese currency. mark: you said it, japanese finance minister says that rapid yen movements are undesirable
and the government will active necessary. jones. us now is neil the job owning is increasing, what will it take to take the japanese minister of finance intervene for the first time since 2011? >> we are getting the key words we used previously, when there was intervention, the one-sided speculators, not reflected by fundamentals, these words and phrases which are key precursors to intervention. current levels, i do not expect there to be intervention. there to beect dollar purchases at this level, it is too high. either we go below 100 which we probably will do. or we need to see a fast market, the speed is more important than
the direction. the dollar yen declines rapidly it becomes like a vacuum of liquidity, like a flash crash type scenario. to --hey have every right mark: the last time the intervene it was with the help of others in 2011. tsunami andy and -- the nuclear accident, what a goat unilaterally, would it need permission from the united states, how would he go politically if it intervened when g7 ministers have been disapproval of intervening. >> shinzo abe is one of those this week as well, high-level officials, politicians are suggesting that we getting the currency is not a good course of action.
at current levels, i would to on the front of currency intervention. last time we saw physical intervention, the dollar yen was extremely undervalued, the yen was overvalued massively on a fundamental basis. my understanding previously was there was an agreement at times as to the level. 110 is not the same as 80. buying camephysical in, 108 is not that kind of level. in terms of the fundamental, if there is an orderly market and a steady course towards 100, in my mind i would take no physical intervention. verbal yes. unless we see fast market type scenario. then there would be physical intervention. betty: i want to jump in and move from the yen to the dollar.
the greenback itself. i am curious as perhaps seeing the decline and not just the dollar against the yen but in the counterpart, mike that might spill over and be beneficial to the u.s. economy seeing a soccer cash -- soccer dollar softer dollar? >> some official banks want to see a weaker currency to export your way out of a conversation of undesirable scenarios. it potentially is with the weaker dollar ahead potentially. with the dollar, what makes it fascinating, it is strong versus some and quite week versus others. it looks weak relative to the yen.
it is performing well against other currencies. , oninvestors what is chief the path of a weaker dollar trajectory, is to pull back on rates. we have had janet yellen be more hawkish but there is a chance we get no rate hikes this year in the states. .hat has taken the dollar down i do not think it has fully run its course. mark: we talk about brexit, how do we make money out of it? let's say you want to bet in the next months. sterling is down versus other major currencies. from here on in, what is the best way of making money i betting against the pound? which -- how can investors make money ahead of the referendum or is all the money already made?
>> stay away from euro sterling because the euro will suffer in addition to the pound. we will get a domino impact on the spreads around the eurozone. , cable ishe best way ok. that is where the market would go. the majority of the weather the -- the majority of the liquidity will be there. good one.ould be a the yen benefits from risk aversion some risk all caps in areas. the yen and the swiss will be bought as safe haven tight currencies. shortly sterling against the swiss and yen. my bet for most sterling if you believe in brexit. mark: thank you. betty: let's turn back to u.s. stocks. stocks are higher but all of
their highs of the session. consumer discretionary health care stocks turning lower in the red. more wherelittle has checks are not doing well. well.hs are not doing >> the worst rack is the health care sector, especially biotech. downgradedn stanley its rating to an underweight from an equal rate. after their liver drug one fda panel approval yesterday. they were concerned that the thel would fail to endorse liver drug for later stage liver disease and it could affect labeling and commercial prospect, shares of intercept pharmaceuticals are down sharply over 40% over the next year. another biotech trading lower is they pushed out from 2017,ch 22019
she has lowered her price target lower to $116 per share from $120 per share, they are down on the day but flat on the week. betty: thank you. let's check in on the first reviews with vonnie quinn. vonnie: the european union is postponing its by a week, they do not want to go into it does coincide with the referendum on eu membership. now the eu summit will be on june 28 and 29, the referendum has become a key date about britain's departure. brazilian president has canceled her appearance at a ceremony in greece. about the olympics. she is facing allegations she allowed her administration to boost spending ahead of her reelection campaign.
she has denied committing crimes. spacex is another big launch, an unmanned falcon rocket is set to take up late this afternoon. there dragon spacecraft will attempt to bring supplies to the international space station, including an inflatable module that may one day be used or tells. -- for hotels. global news 24 hours a day howard ir 2400 journalists and 150 news bureaus throughout the world. mark: i will be speaking to the german deputy finance minister about brexit and the european migrant crisis and much more. ♪
♪ betty: it is time for global battle of the charts where we look at the most telling charts of the day and what they mean for investors come accident on the bloomberg by running the function featured at the bottom of your screen. joe weisenthal kicks things off. of the big stories is the risk off situation in japan, bidding up the yen and selling off stocks. not across the board people are selling across everything. chis chart came from and hsb note. for five years, they have moved together. has tumbled,nikkei the tokyo reit has been on a rally. japanese investors are looking for income generated assets.
we are seeing an interesting divergence, not everything japan is tumbling. you can find that chart on the bloomberg. betty: not everything is awful in japan, investment wise. mark. mark: where is the love for swiss stocks, the benchmark stock index is down by 12% this year. the fascinating part is the dividend yield on companies is at 3.7%. compare that to the 10 year bond -.36%, a disparity at 4%. that is a record but investors remain bearish, they have withdrawn money from a tracking benchmark for five weeks. swiss stocks used to be the haven in times of a storm. the banks, credit suisse and ubs, they have been dragged down
along with the entire european banking sector. tx port markets like china, concerns about them are knocking the likes of swash. even though we have seen this rebound in european stock markets, the swiss smi has not rebounded as much. will investors reconsider their stocks. says it is a matter of time before investors reconsider their start because swiss economic reports are beating analyst expectations by the most since 2012, and europe, trailing estimates by the most this year. chart. give the swiss some love. betty: i will have to disappoint you because i will end with a little bit of optimism on this friday. joe weisenthal gets the win.
newshing gears, breaking overseas, the third suspect in the brussels airport terror attack has been arrested. according to a report in the wall street journal, rested along with the others in that terror staying. that,we will come back to still ahead on the european close, i will speak to the german deputy finance minister. talking about potential brexit and the european migrant crisis. ♪
german finance minister. if i can start with what is happening in greece, how close deale between -- to a between greece and its creditors to unlock another round of bailouts? jens: good evening to london. it is the three institutions negotiating with greece and seeing how far we are but we need the pension reforms which is quite crucial any privatization fund which is very crucial to germany. that was the issue to merkel and , theas were talking about 50 billion privatization fund has to be before the ready -- before the review, and when we had the review in april i hope, then we can talk about the rest. mark: greece has a 2.3 euro payment due on july 20. do you think the payments will
be forthcoming before then or will be have a repeat of last summer which was the summer of nervousness for financial markets ahead of the third bailout? everyone wants to avoid the situation we had last summer, we definitely want this. the european institutions do and the greeks as well. we should find a solution and have a review by that -- by then. we have to have pension reform in greece and privatization funds set up before a review. when it comes to this. it could be done in april. or in may. it is not up to us, it is up to the greek government and the parliament to deliver what was promised. mark: what role will the imf play in this proceedings from now on? will they be forthcoming or contribute to the bailout if there is not a firmer haircut on
greek debts? have a procedure we ,greed on in july of last year there has to be a review and after the review, we talk about if andat the circuit -- the circumstances of debt relief. are they really necessary? the interest rates are not the biggest problem of greece. pay back anyave to loans right now for the next 5, 6 years, the biggest problem is how do we get growth in greece and that is what we should talk more about. had we get more investments and jobs and step-by-step the gdp goes up and perhaps there is no debt relief necessary. we have to talk about this after the review and then we can decide if there has to be some debt measures. no haircut. that is not possible within the treaties.
we could talk about the treaties but first of all we have to talk about if they are really necessary and if that is what really is helpful for greece or would not it be something else. mark: what worries you more, greece or the prospects of britain leaving the european union? jens: actually both. are on track, we have a plan and know where we want to be. when it comes to the brexit, it is up to the british people. now ings uncertainty europe and britain for the economy and for the continental economy. everyone is waiting for this vote so we can go on. i know that there are some people in britain saying
afterwards, it we might have left we might get some other agreements with europe and can somehow take the good things like the free market, it is always different if you are part or a member of the family or a neighbor. that should be in mind for those who think they can take the good stuff. we had nouriel roubini standing where you are and he said if britain leaves the eu, it is a massive blow to the eu project itself. you could see the eu project unravel. is that a scenario you are thinking of? european project is under pressure from several issues, severe issues, the brexit, the eurozone debate, week leaving, several big european countries and the migration crisis.
europe is faced with what might be the most serious one in its -- the european union in its history and we have to face all of these crisis together. the brexit debate is part of it but a crucial part because great britain is the second-largest and an within the eu important partner for germany when it comes to the free market approach and free-trade. mark: you mentioned the refugee crisis. we had figures that the arrivals of asylum-seekers in germany decline for a fourth straight month. in march. is it too early to declare a trend? we have seen, the closing of the austrian border brought the numbers down. we have days on the german austrian borders the number is almost down to zero is still one
million in germany that have to be integrated and given asylum procedures. on the other hand, we have to see it turkey, how sustainable it is an see what is happening in libya. perhaps we have a new government there, i hope it works. from all sides. we have to find a treaty, agreement with libya that brings back the people we rescued from the boats any better any and see andy -- and bring them back to where they came from. the whole thing of the smugglers is ending. we have to help turkey and libya and the other countries with the refugees. we might have a chance to bring people to europe but we should bring over the weakest, not the strongest. mark: really quickly -- jens: it is too early to make a
trend. mark: will angela merkel keep her job, does germany need a new leader amidst the refugee crisis because of the way she has handled it? no, she will remain the chancellor, we have a stable political situation and stability is very important for the european union. mark: thank you sir for being so brief with that answer, a pleasure talking to you. european equities, where they finished the friday session, i will leave you with this chart and i believe you betty, have a great weekend. ♪
betty: good afternoon. week is the end of a rocky in stocks and oils seeing a rebound while investors are for clues and was forecast to be the worst earning season since the financial crisis. >> the yen takes a step back after five straight games. el-erian's take on the fed balancing act. secretarytreasury hank paulson says china faces serious challenges. are halfway through the trading day on the final trading day of the week. let's head to julie hyman. the gains in the markets are about half what they were earlier. from the earlpo