tv Bloomberg Markets European Close Bloomberg April 12, 2016 11:00am-12:01pm EDT
you are watching the european close on bloomberg markets. we are going to take you from new york to london in the next hour. here is what we are watching -- shares of a italian banks are jumping around today after a massive 5 billion euro fund has been created to help struggling banks used capital. will it be enough to encourage growth? one of thebetty: luxury is slipping. can demand for pricey goods recover? what impacts have the terror attacks had on the bottom line? mark: and the relationship between barclays and the premier league is winding down. what top sponsors will fill the
sponsorship spots? we are 90 minutes into the trading day in the u.s. julie hyman has the latest, including the breaking news that russia and saudi arabia have reached a deal on oil freeze. we know that saudi arabia and russia have made this agreement, but interfax is citing an unidentified informed diplomatic source. has not confirmed this report but we are seeing a market reaction because saudi arabia has indicated it does not want to freeze production. in oil here inup the united states and saw a spike up in energy stocks. this news asup on well. beenproduction as we have
watching is obviously at issue here. globallyn oversupply that has been putting pressure on prices. me -- recently, there has been a pullback from those indications, so we have been watching those production numbers. oil is also lifting the market off of its lows. that production number i was talking about. at the highs them of this session. 500 and if you look on the intraday chart, you can see that leg up we have had.
already doing well today for many reasons, including the increase in oil. we talked about chesapeake assets todging its extend its debt line. marathon doing some asset sales as well. we were lower on the stoxx 600. they have reached a deal to freeze reduction and bounced from being negative for the afternoon to being up by .25%. oil stocks rising on that news and banks have been very much in the spotlight.
one company which controls company -- they have about a 12% stake. rising as much as 9% today. debeers increasing its diamond sales, a sign of recovering demand after a slump last year. that was a rise from january. it's been significantly stronger and these have been how the big miners of fared -- have fared.
quickly, shares of daimler and the other big german automakers, mercedes-benz boosting its sale twice as far as bmw, putting it on course to achieve it. 31% in shares down by the last 12 months. shares down 57%. they have had a horrible year but big news today from mercedes-benz. check in on the bloomberg first word news with matt miller in the newsroom. matt: two men have been charged in relation to the brussels bombing and others have been detained in relation to the paris attacks. they were involved in renting an apartment that served as a hideout for the palmer who
attacked the brussels subway on march 22. the detentions follow a morning search of the belgian capital. a judge will decide whether they should remain in custody. pro-government forces in syria are launching an offensive today, trying to retake a strategic hilltop village. sinceea has been held 2012. crash killed two pilots. it will bank said freeze its plan to create 250 due to a new state law that limits antidiscrimination policies for lesbian, gay, and transgendered people. they will retain the people at their software development center. cuba may be running out of beer
due to the boom and tourism from the u.s. last year, the number of americans this thing the country visited -- went up 77%. isa up a main brewery reportedly considering opening a new plant to keep up with demand. day,l news 24 hours a powered by our 2400 journalists and more than 150 news euros around the world. a lot happening in the banking world today. italy's fund to help struggling italian banks went through last night. mark: but the amount is a mixed response from investors, italy's financial institutions are crippled by bad loans.
there are 360 billion euros of bad loans. how does that figure, how does fund?ary with this guest: the question is whether italy is providing of lack stop to ensure that even if some investors don't like the ipo's of the italian banks that at the very least, there will be some entity, in this case an italian fund being set up to come and buy it. you may remember when the u.s. treasury did its stress test of the banks in the u.s. in 2009 -- treasury said if we
can't raise capital, we will get him. we had assurance all the banks will do it. italy is constrained from going out the money into the bank because of the rules of state money there. to get money from insurers and banks and so they are limited to how much they provide. there may be a chance this would work, but we will see if we have to raise that amount. it has been three months since we had an effort to strike at the bad mood problem. would you guess that this is the
last final attempt to deal with this mountain of soured loans? does it draw a line in the sand because the biggest the kleiner's on the bank index today are italian lenders. biggest decliners. the expectation might be that they have to go back and see if they can create something a little more powerful. they want to bring private bring in thed securitized packages of bad debt. there will probably need to be a bigger source of funds behind that to enable that to an -- enable it to happen. they: i want to talk about -- about numerous. how is that going to strengthen their position?
u.s. banks are really lucky because they have -- if you look at japan, the negative rate is difficult in the economy is weak. it is a tough place to be. you are probably not helping yourself that much. citigroup deciding to pull jobs out of europe is a sign that both in the u.s. and europe, they see problems in their ability to trade there. there's a weaker environment in the negative rate environment. in terms of shrinking back to core areas, you are seeing that thataces like mark lays have exited operations in asia so they can focus on the u.s..
banks a lot of european pulling out of latin america. almost as if it is putting to rest for now this idea of a big global bank. guest: you hear this all the time from jamie dimon that they are only doing this because their climate -- there because their clients want it. they don't only work for their clients, they work for their shareholders. what seems to be winning out is the shareholders desire to make out on the operation. clients want a lot of things but it doesn't mean you can always provide it. where can they compete most effectively? mark: jp morgan kick things off
tomorrow and goldman sachs has is the worst start to a decade for investment banking. what is going to be the takeaway? guest: a lot of these banks are expected to have a decline in revenue. goldman not as bad as sachs where it's expected to be by almost one third. one thing to keep in mind is as expectations fall, they end up beating those expectations. analysts in the run-up to , some kind of sense of things from the company -- don't be surprised if jp morgan comes out with numbers that are better than estimated. but it is not likely to be a great quarter. bankingstment
environment was pretty dire. it is improving a little bit. the crackdowns will hurt the m&a what we were just talking about with china and regulation. that of what would drive as far as how things look for the second quarter going forward. thank you very much. later today on bloomberg television, emily chang will sit down with an exclusive interview with peter thiel, covering all the hot topics from silicon valley and falling valuations among unicorns. ♪
betty: welcome back to bloomberg markets. i'm betty liu in new york with mark barton in london. we've been watching moves and oil this hour after a report from interfax saying saudi arabia and russia were seen agreeing on a freeze in production. that is huge. that report citing an informed diplomatic cert -- diplomatic source. it is already moving the market. with more on the outlook for it we spoke with two analysts who gave their take on how oil prices influence the inflation outlook. like tohe way we
describe it is the data is clearly pointing to a much stronger economy in terms of looking at the lake -- the labor the way theyand like to describe it is the data suggests three hikes this year. tom: where is that dynamic going to head in the next quarter? guest: the hope is that the data will improve. the labor market is strong and we have seen i is some numbers pick up. the fed certainly wants to change the view that it is not hiking. vonnie: should we be more open-minded about a rate hike in june from the fed? there's a lot of time between now and then, but i think we will start to get
indications. if the data response, june is very much in play. francine: even if it is strong enough, what does it tell us brexit? the global economy does weigh on the feds decision-making process. there are wildcards out there and the brexit vote will occur -- i think it occurs right after. oil migrates south, what's the impact on global gdp? depends on what horizon you are looking at. we actually find it is more negative because you have the impact for. and you have the offsetting factors. think about oil and the
broader macro context, one thing i have changed my thinking on, i'm beginning to think we have one big endogenous system in the sense that oil determines the currency and currency determines oil. critical.is hydrocarbon dynamics endogenous within the central bank thinking or can they partition it out egg zogenix lee? lee -- ogenix x changing your view on china changes global inflation. that is why correlations are high compared to pre-crisis tears compared to other markets. that was on bloomberg
mark: you are watching bloomberg markets. i'm mark barton in london. betty: this is the european close. mark: let's talk about fashion. lvmh missing analyst estimates and shares falling as much as 3% on the news. sales hurt a drop in tourism after the attacks in paris and russell. new biometric visa requirements are weighing on european sales. let's bring in our bloomberg analysts -- was there a view
that they were more immune than others to these factors effecting luxury? the categories it covers in a price point has amended. the other side would be what happened in q1 last year. worriesat are the big for the luxury goods industry as the earnings season kicks off? industry will say we are only looking at 1% growth. it is about maintaining digital platforms where they have it. is trying tooncern determine where the trouble is since it is all about cuency given what is happening with the strengthening of the yen and so
much going on. asian tourist not buying louis vuitton banks, then who are the next buyers? guest: we have just come off the call, so if we look at china mainland, it is quite flat. chinese travelers are traveling. in the 24% of luxury goods and they are buying abroad. domestically, the u.s. is quite strong. europe is doing very well, including in tourism. down but there is very much growth out there. who is doing best?
andt: we have 3% from lvmh minus nine. we had categories that are doing better, so within louis vuitton, you got perfume and cosmetics. one thing i would add that is of the closeecause of the dkny jeans brand affects their leather goods which is why the stock is down 2%. if we add that stock in, the growth rises. the european close is second away. have a chic at the equity industries. oil is leading the rebound. ♪
european close. stocks finishing up the day in london. what take you through how the stocks europe 600 finished today. we were dipping lower on that news from interfax that saudi arabia has reached a deal over oil production freeze and shares rebounding. looks like they will finish at about .6%. at the best performers, are there any italian banks in their? look at the decliners. performinghe worst 10 banks -- italy has created bond, butbillion euro the big question is is a five to dealro fund enough with 360 billion euros of sour loans? i just spoke about fashion and a
big story from lvmh and first-quarter sales rising less than 3% because of a drop in tourism following terror attacks in europe. shares were down and it looks like they are going to rebound. this is how the big players have fared -- no one has done better than burberry and no one has done worse than hermes. christians dior is little changed and quickly, i want to finish with the world's biggest supplier of perfume scents reporting first-quarter sales growth that beat analysts estimates rising by 5.8% and driven by a demand in fragrances. something is going on, but the shares did rise by 3%. that is quite a chart there, mark, just after our
conversation about buying handbags and shoes. open andets are still we got a pop from that interfax report. abigail doolittle has more on what is moving in tech shares. abigail: we are already seeing some volatility here, one of the better performers today, the best percentage performer is alexi and pharmaceuticals. commentk is higher on saying the cholesterol drug is tracking ahead of consensus. reporting are stronger initial usages and it points to a long-term potential being discounted by investors. this stock has been trading in a range and it appears buyers are getting interested. what about outside moves
in biotech? abigail: today's big mover is horizon pharmaceuticals. the stock is plunging after offering a sales outlook that is below consensus. whatdespite reaffirming some investors and -- what some investors think to come. brokenlers have really -- stock, pushing it below a pushing it below buying support. matt: today is today -- today is equal pay day, marking how far into the year women have to catch up to men's earnings from the previous year. president obama is going to designate the house that serves
as the headquarters for the national women's party as a national monument. the designation protects one of the oldest standing houses near the u.s. capitol. president obama's supreme court pick had a meeting with chuck grassley. grassley as opposed to holding hearings on his nomination. he scheduled to meet with pat toomey and lisa murkowski. she originally supported hearings on the nomination but later changed her mind. is. navy secretary ray mavis facing off against the marine corps leaders resisting the recruitment of women for all combat jobs. he will address leaders at camp pendleton in california. they have sought to keep certain industry and combat jobs closed to women. flat amir putin highlighted the ability of russia and the united states to cooperate.
to members of both countries aboard the space station. it was on april 12 and 1961 that eureka garin orbited the earth to become the first man in space. news 24 hours a day powered by our 2400 journalists in more than 180 news euros around the world. back to the get global economy. the imf cutting its world gdp forecast. time of a prolonged slow growth has left the global economy more exposed to negative shock. inflation and you k coming in higher than estimated. sinces the fastest pace after clothing prices increased as well. the cio of brooks
mcdonald. i want to start with the news from interfax. we hear that russia and saudi have reached an agreement on an informedeeze citing an diplomatic source. we have been here before -- it leads to the obvious question. do you think oil has bottomed? assuming we get no deterioration in the global outlook, it probably has. our view that oil price in the long-term is in a new trading range which historically is its long-term average. good news for the global economy and probably a reflection of the fact that maybe the global economy is going to avoid a recession.
the imf saying a prolonged time of slowed growth has left exposed to negative shocks. how concerned are you about these shocks? guest: very concerned. high debt levels, lack of demand, excess savings are part of a long-term problem. with demographic trends and productivity not just in the u.s. but in europe, japan and china, growth will stay that way from a cyclical and structural point of view. consequently, whatever growth we have is fragile and prone to risk. u.s.: looking here in the on the earnings season, it doesn't look like it's going to be a good earnings season at all. how do you protect yourself and hedge against that?
that's a good question and u.s. are is one of the good directions over the next few months. that u.s.tations are earnings will struggle to be positive and start the year very weak. front,not on the profits that's the revenues front alone. earnings don't disappoint from here on in and provide that that is the case and most companies are able to give some form of positive guidance and i think guidance will be the key as well as the numbers here. companies are able to not disappoint and come out with some guidance and i think the market can look forward to 2017 when it is expected earnings will be better.
one word of optimism -- the previous two or three years, the stocks of each year, global economic growth has been overly optimistic. we are starting this year where global growth and earnings forecasts are pretty pessimistic. the bar is pretty low in terms of any surprises that could come in. you are allowed to give up a little optimism there. guest: cautious optimism. betty: mark was talking about inflation in the u.k. we are going to get our data in the next few days. should we be paying attention to it? guest: in our view, no. bankers would thatme no change because would be a sign that the monetary policy is starting to work. it could be a sign the global
economy has stabilized after the growth scare we have been through and it would be a sign they've got some control over this inflationary trends that have dominated for the past few years. secretly, they will be quite pleased if inflation does add higher toward their targets. mark: you are modestly underweight u.k. equities. guest: it is obvious that there is a lot of uncertainty about what will happen in june and on confidence in investment in the u.k. a brexit vote would lead to a two-year process of it seemstion in which
unlikely -- we cannot presuppose what would happen, that the with access to the eu would not change in this would have a big effect on the u.k. and its european partners. on countries more globally who are integrated into the current set of arrangements. of brexitare risks weighing more on the ftse? it's outperforming many of its outperforming -- it's outperforming many of its european peers. because i think many u.k. companies are companies with strong earnings revenues overseas. that filters down into the mid-cap stocks as well, so i think that is a big factor.
plus, the u.k. market is cheap, so on most metrics, it is cheap relative to the u.s. and sterling has depreciated significantly over the last six to nine months should be a beneficial factor to the market moving forward and also has a supportive central bank in the bank of england. to outweigh some of the negative and the impacts likely to have on an economy that is already slowing from a stock market point of more about theh global economy and the beneficial impact on the sterling moving forward. investor officer at brooks mcdonnell international. we will have more on the global growth forecast coming up at 2:00 eastern time when we talk with the imf chief economist. still ahead, we will talk football. the big change of game plan for
barclays -- it will no longer be sponsor for the premier league in the u.k.. we will get a look at what is behind the mood -- behind the move. president obama giving remarks at a new monument in washington, the house and museum that was home to one of the leading women's rights organizations and was the first national monument to honor women's equality in the united states. you can watch the full events today. ♪
london, i'm betty liu. mark: i'm mark barton this is the european close. -- time for a look at some of the biggest business stories right now -- the international monetary fund's warning of a prolonged time of slow growth and raised the risk that the world will slide into stagnation. the imf says the world economy will grow 3.2%, down from a projected 3.4% in january. jetblue says it is expanding its meant first-class service. the carrier will add the service on some cross-country flights one week after the airline decided to up doubt of a bidding war for virgin america. ortho says it will stop using a chemicals widely
believed to harm bees. they plan to phase out by 2021. they will change three products by 2017 and other products later. that is the latest bloomberg business flash. one of the biggest partnerships in football is about to change -- barclays ending its reign as the title sponsor for the league which will now have several top sponsors instead of just one. its 15 year ending association? it's a confluence of two things. premier league is growing like a clap and doesn't think it needs a title sponsor. if you look at the olympics and
nfl, they don't need a title sponsor. the name speaks for itself. as far as barclays are concerned , when they signed up in 2001, it was three cheap then and they were trying to grow all over the world, trying to get into asia and africa where people might not know who barclays is but they knew who the premier league was. they were paying 40 million pounds and everyone knows who we are. we don't really need it anymore. it is going to have links to the premier league. it will be the official bank. are they following the likes of fee for -- fifa rather than having a title sponsor? guest: exactly. you have nike and ea sports are
the game partner there. there will be a beer coming up and i think they could raise as much as 17 million pounds through these deals which is more than they were getting from the exclusivity with barclays. we all associate the premier league with barclays, but what were the benefits of being the title sponsor? that advertising these is amazing with 212 territories. the premier league has grown so much. it generates about 3.5 billion pounds a year and all of that needs to be turned into pounds. x andys does all the four has all of that banking work. and it is ironic that as they finish their title sponsor,
we could have the most incredible finish to a premier league in history and probably many leagues in history across the world. in footballght be as well. we live with more resources than ever before and the best talent is concentrated in a tiny group of teams. we have lester who is at the bottom of the premier with ,alent no one had ever heard of three wins away from winning the premier league. it's hard to think of any time where this has happened. will be a party in leicester if this happens. keep an eye on that. football. much more ahead at the top of the hour. emily chang is going to sit down with an exclusive interview with peter thiel and they will be covering all the hot topics in
betty: time for our global battle of the charts where we look at charts of the day and look at what they mean for investors. charts bycess these running the function futures. kicking things off again is joe weisenthal. are you going to give mark a run for his money? joe: we got the small business optimism survey in the u.s. which asks a lot of questions about how business is going. there's always one question they ask where they say what is the single biggest problem we face today? one answer they face is sales. in 2009, they are complaining about lack of sales.
that has generally been trending lower. labor market tightness. that was very low in 2009 because it was easy to hire workers back then. to the end of go this screen, we can see they are stalled out and more businesses are complaining about sales again and the number of his mrs. complaining about the availability of quality labor has declined. is not aks like this trend you necessarily want to see. that is a fascinating conversion. joe: you have to watch it, but not necessarily something that is too good. joe has robbed me and cast a spell on my chart. for line joe has moved to two line joe.
to desperately bring my chart up. this is what happens when you do for lines. i got a sneak peek at your chart and you had eight lines there. you are going crazy. mark: can i do battle of the charts -- it was all about inflation. the big story was inflation and inflation expectations picking up as well. the difference between the five year bond and inflation rate that has picked up since the lows of february. joe: no one wants to win this one.
bring uparently i can a few charts about how european equities have fared today. then i will throw it back to you. for you, technology works. it was all down to the news from interfax that russia and saudi struck a deal on oil production and those are the best performing sectors. i will leave it with you and find the tech man. i will see you tomorrow and thanks to joe -- let's take -- let's go straight to emily chang's deal -- interview with peter deal. -- peter seale. ♪
scarlett: from bloomberg world headquarters in new york, this is bloomberg markets. crude crying -- crude climbing to a new high after saudi arabia and russia have agreed to an oil freeze. being raisedstions about the rescue fund and we will head to rome for details. and emily chang will be speaking to peter thiel and his take on silicon valley, yahoo! and the apple encryption case in just a few minutes. you are looking at a live shot there. are halfway through the u.s. trading day, so let's check in with julie hyman to get a snapshot on how we will