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tv   Bloomberg Markets European Close  Bloomberg  April 14, 2016 11:00am-12:01pm EDT

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you are watching the european close on bloomberg markets. we will take you from new york to london in the next hour, here is what we're watching today. the bank of england holds off keeping its benchmark rate at a record low, mark carney warning they won't rush into action with the potential for a so-called bricks it -- brexit. betty: facebook shares are arriving today after losses. the partner now saying the data was authorized. mark: shares of nestle are rising today. nescafe and espresso sales boosted the market.
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the coffee business heats right up. ok, 90 minutes into the trading day in the u.s., let's get over to julie hyman with the latest. inie: we are muddling along the u.s. market. all the major averages still have little change. the s&p turned higher but not by very much. we have mixed earnings news out today. so all of that is not giving much direction to investors. take a look for the groups on the move, it is a mixed picture with an equal amount of red and green on your screen. red is winning out at this point. technology is moving lower, energy, health care and financials are helping to lead the gains today. i want to take another look at the banks on the back of earnings. first quartera
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profits are missing analyst estimates but the shares have been higher today. wells fargo missed as well and it is falling. shares are down -- i should say, profit was down. and blackrock, little change. not putting that much of a damper on the shares. as for technology, taiwan semiconductor's, one of the biggest suppliers of chips to apple, it forecast second-quarter estimates below analyst expectations. intel is out and pacific crest is out. they say their results will likely miss estimates and cj is tumbling after the company cannot with a pulmonary report that missed estimates as well. as we are seeing stocks muddle along, we are not seeing much safety. that is what we have seen lately. as you can see, we had the come down in the vix.
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it is not gaining any traction today as stocks are starting to turn lower. gold prices as well -- we have seen a similar pattern. a run-up in gold and then it has come down as stocks have been recovering. and that happened with the yen as well as we saw a similar pattern there. this is the dollar versus the yen and then the dollar bouncing a little bit. overall, not much safety here. mark: julie, you can look at me. i am over here. muddling along, beautifully put. although we are for the fifth day in the longest winning stretch with food and beverages as the best-performing market. sales figures add nestle, europe's biggest company as it happens. itv shares are up i 1.2% today.
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there could be a takeover of canada's entertainment one, that is according to people familiar with the situation. bessie, i will ask you a question. how they has had the -- has your life?been in betty: you have stumped me on this one. what am i missing? you have to have young, young kids. betty: i am with the teenagers. [laughter] mark: it is peppa pig. i will put this in perspective. it would bring to itv atv billion inworth $1 worldwide retail sales. she is big, especially in the arson household.
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we have shares of the u.k. largest professional recruitment agency. jumping as much as 7% today, the most since 2008. they had strong growth in europe , adding confidence to europe and support in the rest of the world. there you go. look her up. you will never see the world in the same way. betty: all right, i will. let's check in on the first word news with matt miller. matt: a powerful earthquake with the preliminary magnitude of 6.5 knocked over homes in southern japan. witnesses say water supply was cut off. police said people may be trapped in the rubble. there were no immediate reports of casualties. officials say there is no risk of a tsunami. japan's meteorological agency says the earthquake was centered , northeast ofrict
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the only nuclear plant operating in the country. belgian prosecutors has ordered -- and five others arrested in connection with the attacks and paris and brussels. he has admitted to being the man in the hat, seen leaving brussels airport the morning two suicide bombers detonated explosives, killing 16 other people. blewther when a bomber himself up on a subway train. the new york primary is days away and presidential hopefuls hillary clinton and bernie sanders will return to the debate stage tonight. it is being viewed as a crucial opportunity by both camps. to break atrying seven state losing streak. the secretary of state ahead -- state is ahead by 10 points.
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and the fuel tanks of nasa's only remaining spatial is headed to california where it will land is part of a permanent display with the endeavor. the new home will be in the california space center. global news, 24 hours a day. powered by our 2400 journalists in more than 150 news bureaus around the world. mark: coming up. i'm going to speak with lucio vinhas de souza. he is going to give us his take on europe's economic growth. ♪
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betty: live from london and new york. mark: this is the european close. betty: it has been 1.5 years since the european bunker strategic investment was launched. the mission is to help overcome the investment gap in the eu with private investing. so is the european commission satisfied with is -- with its efforts to get europe growing again? joining us now is lucio vinhas de souza, head of a think tank. i imagine it has been a very challenging time to try to get europe going again. how do you feel about the progress so far? lucio: thank you for having me. i would have to say that in some areas, we have seen courageous
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shifts. -- when he can to power about a year and half ago, in some areas, especially those related to the financing of small enterprises, the plan has been more successful than what we expected. just to give you an idea. in terms of what we have managed to do with our small enterprise. we have in less than eight months, reached 60% of the total amount of financing that we expected to mobilize throughout the three year life of the plants. over and above our most optimistic expectations. betty: so what do they say to you is the biggest worry or concern when they are trying to
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refinance and commit capital? lucio: i think the most significant constraint that enterprises face in any european context was the access to capital itself. europe is awash with liquidity, as we know, but that does not immediately translate into capital for investment. because of the risk perspective of banks. so we have taken the risk away from those investments and therefore, they are unable to access capital that they would not have been able to use for investment or job creation. drop of the euro zone economy, one would have to say it is improving. but it is still a long way from achieving consistent growth of more than 1% or 2%. how far away are we from
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consistent, long-run trend growth in the euro area? lucio: thank you for the question. i think it is important to realize how far we have come in the past four years. if you remember, we had years of negative growth, both in the european union and in a euro area. now, we are in the fourth year of gross with consecutive growth. admittedly, it is below what we would like to have and we certainly think we can do better, but europe has clearly returned to consistent growth albeit at low levels. we have millions more europeans back to work. we clearly need to do better and we aim to do better. we hope that with the implantation of the policies, we are going to get to that point. mark: unemployment has improved but it is still above 10%, where
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it has been for the better part of five years. if you split up europe, you have huge disparities. low unemployment in germany, 20% unemployment in spain. if you look at youth unemployment in peripheral nations, it is even higher. i am sounding like mario draghi but not enough is being done to address the structural problem, is it? lucio: that is absolutely true. --have encounters that have the levels of unemployment and youth unemployment are still unjustifiably high. that is one of the reasons why one of the components for the priorities of the commission is exactly to support the structural reform in the european union. that is one of the key political priorities and actually, one of the main priorities of the
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investment plan itself. as you know, the investment plan has three components. financing, communication components and the reform component. ovet we can do to impr business environments -- and also what we can do -- it is clearly one of the priorities that we have. mark: how much further can the european central bank go? in its effort to try to stimulate growth? the experiment in unorthodox measures continues, as it did on march the 10th. how much further do you expect will be necessary to boost growth, try to get inflation back to that target of 2%? thank you for the
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question. as you are aware, traditionally the european commission does not -- due to the need to respect the full independence of our monetary authority of the european union. what we have say is that we are fully supportive of all of the measures that have been implemented by mario draghi so far. and we believe we need success of the measures. the fiscal policies at the european union. mark: it was worth posting you -- worth pushing you. answer on thet an upcoming referendum that is taking place here in the u.k. on june 23. many are talking about the impact on the u.k. economy, if britain votes to leave the eu what about the impact on the
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area economy if such an eventuality occurs? lucio: all that i can say about that is that the european union leaders have made a concerted effort to take into account all of the requests of the british government. the union believes that we have a fair proposal for the recognition of the relations between the union and the united kingdom, and we look forward to presentation of those expectations. that is as much as i will say about the subject. betty: i want to bring us to the united states, where you are right now. how much is the fed policy and theyill they or when will raise rates and what is the data showing us, and the uncertainty -- how much of that combo kates your mission in europe? lucio: thank you for that.
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indicated that the european commission typically doesn't take an issue. betty: but it is more about the economic environment? -- new york, where he lived for many years. the behavior of the federal reserve -- it is something that in my past life i dedicated a significant amount of time and work without necessarily clarifying results. it is not usually a very profitable game to try to second-guess what monetary authorities will do. mark: thank you sir, for joining us today. it has been great talking to you. lucio vinhas de souza. i hear you have breaking news?
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betty: yes, breaking news on steve cohen. -- to get around the ban on raising outside capital that has him put in place by the fcc earlier this year. apparently, he has formed a firm to invest in illiquid security, to raise outside capital. in january, he was banned from supervising hedge funds that manage outside money until 2018 under a settlement with the sec. he reach that deal. supervise one of his traders who was convicted of insider trading. again, steve: it's forming a firm to get around this restriction. mark: let's talk george clooney. still ahead, the world's biggest food company eating estimates
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with some caffeine. ♪
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betty: i want to reiterate the breaking news. it was out just a few minutes ago. steve cohen is forming this firm which would be allowed to raise outside capital. earlier in january he was banned until 2018, restricted from raising outside capital. but he is apparently able to do this. he has indirect ownership. the firm is formed to invest in illiquid security. so it looks like he is on his way.
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the sec ruling came out saying that it would been raising outlying capital. mark: let's check out nestle. today's first-quarter estimates beat estimate. the first quarter growth rate is the slowest since 2009. the world's biggest food company is struggling to get consumers interested in frozen pizzas and convenience meal. let's bring in matthew boyle who covers european consumer stock. growth --h the slowest matthew: yes, the slowest growth since 2009 but the most interesting figure was there pricing. the pricing was the lowest in 10 years. which basically means that nestle is going to walmart and saying, we are raising the prices of our ice cream and they
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are saying no. we can't. that is not happening. so that is what really is constraining the growth. mark: isn't there a view that arees for the raw material at the bottom, which might give it some ability to boost prices? matthew: they might. it depends on whether they will be passing those along to consumers. so palm oil is a huge commodity and it is at a low. will be passing those along to consumers. so palm oil is a huge commodity and it is at a low. it should be a better time for be passing those along to consumers. so palm oil is a huge commodity and it is at a low. it should be a better time for these guys and the question is, what do you do in this slow growth environment? mark: what is the answer to that? matthew: they are innovating. talking about a reverse conditioning shampoo. you and i have been washing our hair wrong all of this time. you should condition first and then put the shampoo in. they also have new deodorants. mark: it sounds like a gimmick to me. matthew: let's see if anyone buys this stuff but nestle is
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innovating coffee as well. they have a new machine in the drink- we refuse to little cups of coffee so they have redesigned the machine for american taste. mark: and you are in shock that thate never had a cup of coffee. i don't drink coffee. it is a competitive business. ja be holdings is highly inquisitive. matthew: it is getting competitive and even more competitive. nestle had to throw a lot more money at marketing which is why they had the boost in coffee sales. made it a lot of acquisitions, trying to roll out the coffee sector in a challenge. let's see how nestle response. mark: are the anywhere close to their long-term organic growth target? it is the elephant in the room. matthew: they are not going to
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achieve the 6% growth rate and nor should they. we are in a slow growth environment. we are using negligible growth, negative growth -- you are not going to hit 6% in this environment. mark: great to see you, thank you for joining us. we are about 3.5 minutes away from the equity close today. it looks like stocks have risen for the fifth consecutive day. it has been a day of gains and declines. a choppy sort of day. a decline for the ftse because of the predominance of the basic resource companies. food and beverage, led up by nestle. ♪
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mark: live from london and new york, you are watching the european close. stocks are finishing the day higher. let's take you through the
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action. this is the intraday chart. it looks like we will close higher for the fifth consecutive day, the longest winning streak since early march and the big reason was food and beverage companies led higher by this company here -- nestle. the world's biggest food company reporting a stronger than estimated increase in sales. faceed by marketing in the of increased competition in the coffee space and this is europe's biggest company by market value. it gets a quarter of its sales from the unit that includes nescafe. these are the big three food companies. you know lever is up by more than 12%, nestle down 4%. ermes, burberry, christian do your, i wanted to show you these.
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they reported weaker than expected sales that are predicted this year as the earnings will be in the lower estimates. stock is the most down than in six weeks. a dismal week. revenue growth missed estimate growth and product posted the lowest annual profits. the chief executive of burberry is doing two jobs that once, can he be the creative officer and the chief executive? this is how are very shares have fared. they have underperformed. they are down by 12% and the other three are up by 20%. can he do two jobs at once? i certainly can't. betty: i can't either. [laughter] betty: however, the bank of england does have dual mandates. they kept their rates unchanged. tell me, the highlights were the comments on brexit, right?
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mark: yes. they may already be weighing on the growth. officials they consider the implications of policy and they have a significant implication with asset prices and the pound. they intend to react "more cautiously to data in the lead up to the vote on the 23rd." on july 31,time, 2007, we were at 5.75% but that was a long time ago. , 2009, .5%. ask ross walker about that in just a second. betty: we will, because according to a bloomberg survey,
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investors are pushing back the timing of a u.k. rate increase to as late as 2019. discrepancy, of course, reflects the uncertainty with the brexit wrote. is ross walker, the senior u.k. economist. they are ramping up the referendum, aren't they? what does that tell us? ross: that was the main new information in today's minutes. they are acknowledging the downside risks that we have seen in a number of surveys around briggs it. heightened uncertainty, risk for business investment and at the same time, they are trying to assuage fears by signaling that the likelihood of a preemptive pre-referendum policy change is very low. in general, i think there was a
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bigger knowledge meant of the downside risks. mark: it is a case of -- they can't do anything until after june 23. and if the u.k. population decides to stay in the eu, will we see market forecasts for the first rate coming much closer to where economists like yourself are? ross: i think, yes. today we have a 45% probability of a court-appointed bank rate cut before the end of this year. a lot of that risk must reflect concerns over the aftermath of leaving boats. it doesn't remove all of the downside risks in the u.k. but it does take away a significant amount of uncertainty. therefore, the markets would be bringing forward the time of the first hike. betty: we have been talking a lot about the impact, over whether they stay or go.
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the impact on europe but what about in the u.s.? is this a headwind that we should be paying attention to? ross: it is interesting. i was in the states a month ago and for the first time, u.s. investors were talking about the issue. and they were talking about it in the context of whether, if we were to see significant market volatility in the u k and european markets, whether it would influence the feds june policy decision. so the u.k. tale maybe lacking the u.s. dog. it may have indications beyond the u.k.. betty: betty is it just sent to? could there be a fundamental impact? ross: most businesses that are surveyed do show concern about the outlook for demand. we see the example of investment
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spending running at two-three-year lows. if the risks were to materialize , and we know investment spending is a cyclical component, you could see a significant slowdown in u.k. gdp growth. cap's a technical recession, but during consensus phocas -- consensus forecasts, maybe around 1%. mark: if we vote to leave, what is the response of the bank of england? would you think the likely response is likely to be? ross: what we got today in the april minutes was a clearer sense of the balanced risks as seen by mpc members. in other words, they are more obviously focused on the downside. i think it brings into play what the markets are pricing. there is the chance of a rate cut and the boa thinks the floor
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is around zero and we have heard -- mark: other banks say be lower bound has been reached, might that be the case? ross: they feel that there is probably 50 basis points of cut rates. that they are sounding skeptical about the amount of negative rates, as to whether it could go that low. but 50 basis points, that is where they start qe. mark: the week when we saw inflation pickup, is this the week that finally proves inflation, which has been hugging the zero rate for the best part of a year, it is finally let loose? it is creeping on an upward trajectory? ross: i'm not sure it has been let loose but we do have clear evidence that we are forcing our way out now. and you look at the u.k. core inflation, it might be a little exaggerated by airfare increases but the u.k. is a long way from
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the deflation that is plaguing part of the eurozone and japan. we are closer to our target than we are to deflation. so i think the picture in the u.k. is more nuanced. ae idea that we don't see rate rise until 2019 or 2020, to me, that seems extreme. mark: inflation in the eurozone -- there isn't any. --ause the earlier of summit the earlier summit was boosted to zero. it is still a far cry from 2%. it was as low as -.6% last year. do you see inflation moving up towards 1%? let's not be too ambitious. ross: in the eurozone, only very slowly. if you look at the stimulus that they.s. authorities --
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were successful in stimulating some economic activity that today, the americans and the british authority are struggling to get inflation back up to target. in the eurozone, the demand looks fundamentally weaker and unemployment looks twice as high. mark: good to see you. that was ross walker. thank you for being here. betty: let's check in with other news in the bloomberg first word news. matt miller has more. americansa rare move, are conducting joint controls with the philippines in the south china sea and ash carter says nearly 300 troops, including air force commandos will remain in the philippines through the end of the month. it is part of a military buildup . russian president vladimir putin
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is reassuring the nation during his marathon call in tv show today. he promised the economy would rebound next year. ahead of the show, russian spent more than one million questions to putin. levelsed lead or copper have been found in the water in 19 detroit schools. the district says it is working to fix the problem and is providing bottled water. families have been notified. let is a toxin that can damage child brain development. trump is the most unpopular presidential candidate in a decade. only former ku klux klan leader was more unpopular. that is according to an abc news washington post poll. he is viewed unfavorably by 67% of americans. meanwhile, the unpopularity of ted cruz has reached the highest level yet at 53%.
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john kasich is at 39%. global news, 24 hours a day. powered by our 2400 journalists in more than 150 news bureaus around the world. i am matt miller. betty: coming up, we are looking zarre we could call it a bi situation around facebook. stocks tumbling yesterday before recovering. we will give you the full story. ♪
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mark: you are watching bloomberg markets and i am mark barton. betty: this is the european close. mark: rapid technology innovation has created
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challenges and solutions to financial security. 101 month, hackers stole million dollars from bangladesh, a reminder that criminals are using systems against them. one of the world leaders on hacking discussed cyber terrorism with ryan chilcote. >> we are watching situations around the world. we want to see the types of new attacks because we know that even if something is new, we will see be rest of the world have it in a year. >> i want to go back to the incident highlighted by another security firm where they set hackers got into a bank and moved the ruble by 50%. have you seen any more attacks like that since then? how susceptible are the fx markets to hacker attacks? >> the story you are talking
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about, it was unpredictable by hackers. we didn't realize they could do that. we didn't see any kind of attack with the same skill but i'm afraid that it is very possible. and now, we are close. we are close to the definition of the cyber terrorist. because it is very close to attacks on the financial services. not to steal money but to paralyze or destroy them. >> right, because in that incident it wasn't accused. it was just alleged that they place half $1 billion of orders and moved the ruble. financialtens the security of a country. >> that could derail a nation. >> and you think things have moved on that much that this is a real thing? >> the situation is going from bad to worse. they're criminals.
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we have assumed that they are able to attack even very well protected inc. networks. i'm afraid that the next step is more attacks. because this technology, it cracks the bank. the criminals work for money. him ford guys will professional criminals to hack financial systems, not to earn a profit but to paralyze them. a cyber security expert there with ryan chilcote. european markets are done for the day. betty: that's right. u.s. markets are up and running. i want to get to abigail doolittle from the nasdaq. abigail: yes, in terms of technology, this stock -- it is the worst today. shares are plunging.
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revenue is down by 14%. margins are expected to be worse by 2.7%. apparently the weakness happened in march and came out of china. the reaction is pretty aorist. price targetthe down to $22 per share. the stock could move down by another 20% and prompt the selling pressure which could push shares of technology through the recent lows. betty: you are also looking at facebook, which has been volatile. abigail: yesterday, shares of facebook traded in a range of 5.5%. massive intraday swings. initially much higher on a positive reaction to the developer conference in san francisco but late in the morning, reports surfaced that ad parlor said that facebook ad spending had dropped. later in the day, they clarify
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to bloomberg that the data was incomplete. the stock did recover and was flat on the close and today, shares are higher by more than .5% but the stock is still below a 10 day moving average. the last few times this is happened, it has proceeding -- it has proceeded a downside. we could see big downside for facebook into the first report on april 27. betty: abigail doolittle, thank you so much. with facebook, shares are moving today. cory johnson joins us now from l.a. and tell us, -- nice glasses there. >> you would know. you have a great collection of glasses. betty: tell us about ad parlor. what are they doing? >> bearing facebook partner with deep access to the advertising platforms. if you think about facebook as more of a fire hose with so much information coming out of
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facebook with advertisers bidding in real time on users with characteristics, what is happening with the advertisements is known in some ways by some of these partners so ad parlor came out and did a conference call. and afterwards, a jr. analysts got on the call and offered a suggestion that facebook advertisements were slowing. we don't a what he said but it was enough to alarm a lot of people. and there was a suggestion that these guys really did have a true indication of what was going on. that they would actually know what was happening with facebook advertisements. betty: is the reaction indicative that investors are nervous about their advertising growth? cory: i think it is really interesting. clearly, this is an overreaction. become many came out and said it was a jr. analyst who misspoke and didn't have the context and didn't have the data -- really backing away from this, rapidly.
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was ons time, facebook stage with different executives in san francisco talking about how great things were going. as abigail pointed out, there are technical issues of the stock trading on a 10 day moving average -- whatever, whatever. what has been going on with advertisement and facebook is interesting. we have a chart that shows the advertisement growth, the revenue growth for advertising on facebook was slowing down. well, this is a different charge. the first chart actually showed the after asthma growth going down and then the last couple of quarters, it did pick up. so if you look at the ad growth slowing down, it was a concern but facebook fix something. 87% of the advertisements are mobile. and this chart shows you the
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sequential change in the numbers. this is when you can see the sequential change, it dramatically turns around in the most recent quarter. so we will be looking at this closely next week. betty: cory johnson from bloomberg in the l.a. bureau. much more ahead. we will dig into the breaking story. steve: forming a new firm to raise outside capital. we will have the details in a moment. ♪
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betty: live from new york and london, i am betty liu. mark: i am mark barton. let's get back to the big story. betty: be big news on wall street is steve cohen forming a new law firm in order to raise outside capital. miles broke this story.
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explain this. how is this helping to raise outside capital? miles: it is a newly formed money-management firm registered with the sec. the registration was approved last month and basically, they will be forming private funds to raise capital from outside investors. mainly that will be wealthy individuals and institutions. it will be charging fees that will help to cover the cost of running his family office. betty: tell us about the relationship between this firm and steve cohen. miles: he is the owner. he owns 100% of the firm indirectly through a holding company that was formed in march. he will have no supervisory role so he will not be able to do any
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money-management for the firm. betty: so he won't be able to in his office, will they be employed by stamford harbor? they have about 15 employees. the top people at stamford harbor also hold the same positions at point72, such as the president of .72 is also the president of stamford harbor. betty: do we know any details about what it will invest in and how much they are raising? miles: they haven't said how much they are raising and in fact, through a statement, they say they haven't made a decision on whether to raise outside capital. but these funds can invest in virtually anything. and the filing with the sec, the
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registration said they would invest primarily in illiquid securities and private securities, that sort of thing. to they do have the leeway invest in currency markets, come out as he is, bank loans -- currency markets, commodities and bank loans. the registration says investors are not allowed to voluntarily -- betty: right. , with bloomberg news. thank you. mark: i will leave you with this. this is the chart for the stock 600, it finished up for the fifth consecutive day. ♪
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alix: it is noon in new york. scarlet: welcome to bloomberg markets.
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from bloomberg world headquarters in new york, i am scarlet fu. alix: imf alix steel. stocks are fluctuating today, trading around the highest levels for the year that the big drag is technology shares, they plunge and we will have the latest. scarlet: in europe, bank of england officials are weighing the possibility of brexit. a bloomberg poll gives a 24% chance of the u.k. leaving. alix: plus, dennis lockhart says he will no longer push for a rate increase in april. inflation is still at the top of the mind of hollis -- of policymakers. scarlet: we are halfway through the trading day. let's head to the markets desk where julie hyman has been tracking the moves. when it comes to equities, we are moving to io


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