tv Bloomberg Markets European Close Bloomberg April 21, 2016 11:00am-12:01pm EDT
close" on "bloomberg markets." ♪ we are going to take you live to new york to paris and the next hour. mario draghi staying the course defending the stimulus policy saying they just need more time. tragedy facing pressure from german politicians, who claimed the ucb is working retirement plans. betty: president obama heading to london where he is expected to talk to prime minister david cameron. exclusively to talk about the impact of the , and the brexit chairman of lloyd's of london. producers and other
will meet to discuss a production freeze. oil prices are falling. said it will not be a part of any deal for now. 90 minutes into the trading day in the u.s. let's get over to the markets desk the julie hyman. in the u.s., things are improving. if you look at the major averages, we turn higher on the nasdaq and s&p 500, although the dow -- the s&p is slightly higher. looks at the dow is hanging on to a little bit of a decline. bottom line, the s&p and dow little change in mastec is getting a lift at the moment -- change in nasdaq is getting a lift at the moment. we have a lot of mac pro moves -- macro moves.
verizon, it's magic estimate is saying some of its labor negotiations will put pressure on its second-quarter earnings. coca-cola without with earnings yesterday. down 6% over the today period. -- down 6% over the two day period. think thet suntrust metrics that came out from coca-cola were fine and they were puzzled by the drop of shares. the price target being raised $50 per share. today, it is below $44. mattel -- barbie sales falling. united continental saying its passenger revenue for each seat flown amile -- seat
mile has been reduced. i want to check on a headline coming out that viacom and dish have agreed to a multiyear renewal. they had been negotiating over the past several days over viacom content going to the dish services. yesterday, indicated they may be able to come to an agreement. it looks like they have agreed to that news. we are looking at the individual stocks. if you want to look at the here, it, my bloomberg shows clearly the reaction to this headline coming out. you can see a surge in these viacom shares up around 9% on this headline coming out.
earnings-related for what it may mean to viacom and dish's numbers going forward. mark: we are slowly pulling back from the lows of the day. earlier, we were down 1.0%. performers upbest 1.5%. they were the worst performance they were the worst performers of 2016. phone operators continuing to curb network investments and pushed to software and services failing to boost growth. it is trying to sell more tv and cloud software to cope with increasing competition from the likes of technologies and nokia. we will hear more from the ceo this hour.
up to watch shows on "game of "sons of anarchy." thrones?"to "game of betty: i don't want to be because once i start, i will not be able to stop. mark: i am with you, betty. i can say the it for my retirement. [laughter] let's check in on bloomberg first word news. vonnie quinn has more. vonnie: president obama is trying to persuade saudi arabia and other states to contribute more. they discuss ways to strengthen the u.s. against militants. -- weremain in our fight
remain united in our fight to isil.oy increase the fight against isil and the coalition. says theye president are committed to help the gulf states to defeat isis. they said the public should be allowed materials. they said the investigation did any role by high-level saudi officials. an explosion has killed 13 onple and a chemical plant mexico's southern gulf coast. the oil company says 130 workers were heard. the blast could be felt as far
six miles away. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. i'm vonnie quinn. mark: big news coming out of the united states. , charles, has been speaking, and says volkswagen, the german automaker and u.s. parties has reached an agreement. you remember that boomer has been running a story that pw agreed to set aside $10 billion to resolve claims by the u.s. government and lawsuits by american car owners over those gged to cheates ri pollution controls. and u.s. says vw parties have reached an agreement. the accord gives people options. we need more details.
how much of the $10 billion figure would be paid to car owners as compensation, or used to buy back repaired vehicles? what it resolve all civil claims? there still are a number of questions. we are getting some detail. the most interesting element is that consumers will have an option, including buybacks, and the accord does affect most cars and lease returns. we don't have a bigger. vw has agreed to set aside at least $10 billion. we have not had that figure confirmed. the judge says the admissions deal offers substantial compensation. we will have more about this story without -- throughout this hour. the ecb is leaving the benchmark
-- 0%.t zero below thehas been ecb's goal and showing little sign of a pickup. is druggy's monetary policy working? pimco. us is manager of is druggy's stimulus working? what is your perception? hi, mark. i think it is working. info to know the of what would happen if they did not have the policies in place. when we look at the results in the real economy and the unemployment rate, it does not look as if it is working, but without the monetary policy, the
situation in the euro zone would be worse than it is right now. bankersong some central , saying we have reached the ofits of the effectiveness central-bank monetary policy. do you concur get-go -- do you concur? i certainly concur that the marginal efficacy of each additional dose of monetary easing is declining. there are declining returns in each round. that seems to be taking place. i concur on that. i would disagree that we reached the end. draghi. draghiuestions -- mario brushed off those questions. he did indicate that they are
willing to purchase more assets and keep on doing that. that is where if more stimulus is needed, that is where it is going to come from. betty: andrew, maybe the monetaryis not windows easing is going to end, but how long is it going to last? it seems liked it is never ending. is that the scenario that europeans are coming to terms with? yeah, you noticed he used patients at least twice in the press conference. one of the dangers they got here is a low rates of growth and low rates of inflation. they have become the new normal. he made reference to the united states, but alluding to, it can get better. you noticed he did not make reference to japan where you need a lot of patience as a citizen there. what the central banks are
really asking for is this grand policies, all three structural, fiscal, and monetary policy to get a recovery. the monetary in there. the fiscal could do more. and the structural is a little bit lacking, and that is what they are asking for. betty: ok, given that, where is holdingsing to their in europe, and where are they trimming? what is looking attractive, and what is not? andrew: when we are looking for income in europe and we are focusing on behind yield markets, on the external, emerging markets, debt securities, some pockets in the acid-backed securities market -- market,cked securities you have to get your expectations out of the eurozone
. given the interest rate level, it will be low. mark: is there a scenario whereby in the event of a brexit the european markets voting to leave the eu. u.k. assetsing many would be sold off. is there a scenario that there will be a buy if they vote to leave the eu? andrew: there is a scenario that yields will decline if the u.k. citizens vote to exit the european union. does that make them a haven given the liquidity in the market? probably not. the treasury market has a lot more liquidity to it, and that will be a better form of a haven, not necessarily from a brexit exit, but was below are to the treasury market. still, somek it is
of the core markets in the eurozone that would partially benefit from an exit, but again, given the low level of yields and the ability for those ofurities to provide a form insurance is not that great. mark: andrew, great to see you as always. managing director at pimco. up, shares, coming plummeting. we will hear from erickson ceo saying additional layoffs are still a possibility. that story is up next. ♪
happened. a federal judge saying there is an agreement involving flagon and u.s. claims over those great pollution tests. it will give consumers, in which volkswagen would buy back their cars. leastagen would spend at $2 million on the settlement. the judge said the deadline for volkswagen to say how they would fix the cars. mark: let's talk about the big stock plunger. erickson, become a big fall. shares dropping more than 14% from yesterday. the biggest drop in four years. the company reports a fallen demand light russia, brazil. hans vestberg said he will ramp up cost-cutting efforts in additional layoffs aren't off the table. he spoke to "bloomberg surveillance." flat in sales
compared to first quarter. went up compared to 2.1% last year. we have had weakness. marketshe emerging really getting an impact on the investment level. countryside brazil, portugal, the middle east are more stable. om: 11% of employees leaving as a right size and truly restructure. do you need to do the same? your employment account is like intel.
the program is ongoing. we had a major headcount reduction last year. we are rightsizing in the markets where we have lower activity. we are in a moment where we are adjusting our capacity in service delivery. tom: ibm needs new technology. the are reinventing international business machines again. what is the pressure on you and your team to find new architecture, new technology y at ericsson.
him at the oil summit in paris. >> if the freeze will help the -- you will see another sanction against iran. she also tracked down the secretary-general of opec who answered questions about opec confidential demise. that --r many times functioning as long as there is oil in iran. asks questions if opec's recent moves is making
the group more relevant to the oil market. validit is a very question, but oil is creeping higher and that is something many of the producers will be happy about. they would want some sort of action on production. something.how you the saudi might be smiling. saudi's stocks are enable market, yes, that's a five-year low. on january 20, that was when crude hit its 13 year low. the saudi bench markers risen by 20%, which as you know, betty, is the term for a bull market. it enjoys the likes of dubai, in reachingnd qatar that achievement. there is some good news out there. what is driving that?
they are so dependent on the price of oil. just the rising price of oil, which is up 55% since january 20, it is the hope that the deputy crown prince will diversify the economy by raising nonenergy revenue. the plan is to do that by 100 billion by 2020. they want to create this monster sovereign wealth of $2 trillion. exciting times for saudi arabia, even if the oil prices aren't as high as they want. click look as the equity -- quick look at the equity markets. look at your heading lower.
on this thursday session. the stoxx 600 was down as much as 1.07% after the ecb announced nothing. they are slowly clawing back most of the losses finishing lower for the first day in 10 so no stimulus from the ecb when it comes to stock returns today. , vw has reached an agreement in principle with u.s. regulators and car owners. they have agreed to set aside at least $10 billion to resolve civil claims by the u.s. government and lawsuits by american car owners over diesel vehicles rigged to cheat pollution controls. deadline to reach agreement by the federal judge. we are getting small details and we will bring you more details in the next 20 minutes.
vw was $76cap for billion before the scandal broke in september and it went as low as $47 billion and it has clawed its way back to $66 billion. it has improved since the scandal broke on september 18. erickson shares are hammered today finishing the session down by 14%, the biggest drop in four years. first-quarter sales missed estimates and phone operators continue to curb network investments. it is pushing into software and services is failing to produce revenue. 14.5% lower but that's nothing compared to this company, stoya, look at that decline. company notrtising on the dax, it's on the m-dq
ax, with shares falling. the short seller was betting against the stock and the founder of muddy water capital says her company has overstated its cash flow by including acquisitions in its gross calculations as well as buying companies that have close ties with its own executives. stroeer, theyt to say the report is far testing contains nothing new and it is defamatory. they are reasserting its underlying business outlook is excellent and nothing has changed from its publication. unexpected outlined organic growth rate of around 10% in the first quarter and full-year revenue near 1.2 billion euros. it ended its initial statement by adding it will make sure to
protect the rights of its shareholders. what it a for the stock, down as low as 33%. you are watching jobless claims? oppositee complete when you look at jobless claims. if you are a bull on the market in the u.s. and the economy, we had jobless claims dipping now to the lowest level since 1973. i love the way one analyst put this -- you are least likely to get fired in half a century in the united states. for theood news employee. the big question is, what does this mean for wages? when will we start to see wage growth pick up? let's look at how markets are trading. investors are looking at what's
going on overseas. abigail doolittle has more live the the nasdaq areaabigail: nasdaq is trading slightly higher in contrast to the s&p in the dow and the differences by a tech which is trading sharply which isiven by biogen up nicely for the day. they beat first-quarter earnings by 7%. big number so there was a slight revenue miss but investors are looking past that. eric schmidt says the company is treading water on the top line but made up or it on the bottom line. can they keep that cost-cutting effort going and will they manage to make some sort of attractively priced acquisition considering so many biotech companies are trading cheap? betty: you have been hearing a lot about rv today. can you tell us what's going on
with mattel. abigail: it seems barbie is a little less popular than she is to be. the firstled in quarter causing mattel to post a wider than expected first loss. -- first-quarter loss. we have a lot of analysts who are positive saying this was driven by currency headwinds and one analyst who is bullish is linda weiser was recommending to aggressively buy this stock. months, we see the weakness is wiped out the near-term support. the 100 day moving average suggesting that some of the medium-term buyers are supporting this one. we will see if that continues. betty: thank you. negative rates are here to stay in the eurozone. mario draghi expects the rates to remain where they are for an extended time. the negative to low rates has
been painful for the insurance industry. joining us now is the chairman of lloyd's of london, john nelson. thank you for joining us. low rates are not good for insurers returns and investment returns. do you see an and insight? >> of course there will be an end but in the foreseeable future, it was no surprise what we heard from the ecb today. indicatorso leading which would indicate to us that it was likely there would be any sort of hardening. concern is that obviously, central banks are running out of ammunition to stimulate. it may be that there has to be more structural economic reform to get things going. for example, liberalizing the eu regulations or that sort of thing is going to be more important. also investments but for the
insurance sector, obviously, low interest rates is an issue. for us at lloyds and in the general insurance sector, we are still generating reasonable returns on capital. difficult year but we still generated returns of about 9%. therefore, we are losing our in investments. capital is coming into the industry which is putting you to pressure on premium rates. we have a kind of perfect storm. therefore, the most important having for lloyd's of london and our role is to regulate the lloyds market, is to make sure we keep the underwriting prudential and we don't take unnecessary risks. mark: is the old-fashioned way going to happen again? >> in what sense? mark: rates are down and lots of excess capital and negative return ton will we
the old? like to see ind an ideal world is a gradual increase in rates. i don't see that happening in the short term. i think we have had a relatively of claimsiod in terms for the last five years. we have had relatively benign claims and if they picked up which at some point they will because we have had an absence of natural catastrophes, that will harden things as well. i think the days of the traditional orthodox insurance cycle, one would have to say it's going to be different in future because insurance itself is becoming an asset class for capital markets and investors because they see the returns that we make. betty: some people say it's not just the short term but it could be the medium or the long-term outlook where we may be stock in a low interest rate environment. some might say you have to pivot
your business to look at where you are. you may be getting more returns on a permanent basis. are you going further out on the risk curve? what riskier assets are you looking into? >> you're absolutely right. the challenge for the lloyd's market and indeed for all insurers is to innovate and as the world changes and business models change, so the insurance industry has to react to the changing risk landscape. you are seeing that happening. you have for the last two or three years with things like cyber risk, specialist items like drones and automated vehicles. we need to create new markets that is have a usp and something lloyds has always been in the vanguard of which is innovating and making sure that the risk mitigation we are providing is more and more relevant to the new business
models that are coming along. that is the first thing but the second thing is we have to get more efficient. lloyds is investing significantly in terms of modernizing the plant warm and making it more user-friendly and developing new markets geographically. we have made huge progress in south america, southeast asia, and china and we have to do all of those things in order to mitigate the pressure on our traditional business. betty: just a follow-up, speaking about new frontiers, the eu referendum, the u.s. president will arrive in the u k and that's one of the top rings he will speak to the prime minister about. what you think of this heightened awareness of brexit? >> first of all, for lloyds, and i would say also for the financial services market, the
whole service industry in the u k, it is very important that we remain in. we are making the case strongly and have quite a few weeks to go for the campaign. in our case it's for three reasons. that the eu gives us passport rights from the u.k. and the 27 member countries. round about 15% of our business is in continental europe. it's not the biggest part of our business, the biggest of them in the united states but it's an important part. the second issue is that the eu provides bilateral free trade agreements with third-party countries. if you look at the market that we cover, we operate in over 200 companies and 90% of our business is outside the u.k. there you see the importance of us operating under the eu. the third point is that 90% of lloyds capital comes from outside the u.k. one of the attractions of investing in lloyds, it if you
are an insurance carrier, is that you have access to the eu by virtue of the fact that london is part of the eu. reasons, we are very keen that the vote goes the right way. be waitingd obama into the political fire? could goendum debate against him. >> that is always a risk that i would say that the united states is our most loyal friend in terms of the u.k. have a big trading relationship with the united states. in lloyds k's, 40% of our businesses in the united states. we are the number one provider of specialty insurance in the state which is unusual for an overseas operation in a domestic market. the u.s. is an important relationship. president obama
is quite entitled to say what he believes is in the best interest of the world and the united states and the united kingdom. that is something which i think is perfectly ok. over and above that, when you go around the world, you hear other political leaders saying the same thing. i have not yet heard a single visit in the countries i other than being bewildered by the fact that we might leave the eu. mark: great to see you and please come back before and after the vote. john nelson, lloyd's of london. betty: great to have him on. let's check in on first word news. vonnie: thank you. expected countries are to sign the paris agreement on
climate change tomorrow. under the agreement, countries set their own targets for using emissions and carbon dioxide in greenhouse acids. it's not legally binding but countries must up eight them every five years. in moscow, the israeli prime minister met with vladimir putin. he expressed concern that sophisticated weapons from syria and iraq could end up in the hands of lebanese militant group has below. ah has been, hezboll supporting syria. russians have a response to provocations by a wing of al and they saypo opposition groups must end their ties with the revolutionaries. the second is 90 years old today, the longest-serving monarch in british history and has rain for city four years. she met with well-wishers outside windsor castle.
the houses of parliament tonight will be lit up red, white, and blue in her honor. news 24 hours a day powered by air 2400 journalist in more than 150 news peers around the world. mark: still to come under european close, we are following the breaking news on volkswagen. it has reached an agreement in principle to settle u.s. government claims over the emissions cheating scandal. ♪
it was announced this morning by a judge in san francisco and monetary details have not yet been finalized. joining us is jamie butters. describe to us how much this puts to rest the settlement of the claims against vw on the emissions? >> not much at all. the details, to the extent, it helps to set aside any risk for investors that this and they are at loggerheads with the regulators and it will turn into a nasty lawsuit. for consumers, if you own one of these almost 600 thousand noncompliant vehicles in the u.s. and you thought today finally seven months after this came out i will know what i can do with my car, you'll just have to wait two more months at least. june 21 is when they will come back to try to have a final settlement and they will have another meeting in the meantime but they don't have fixes worked
out and i don't know what people -- what money people get. the judge said they are making good progress. nine months after it all comes out, maybe we will know what will happen. aside $6.7 billion. we have carried the story all day that the deal struck today was for $10 billion. there are theoretical figures with the total cost could eat to some ranging as high as $42 billion. are we any clear on that? >> not since the report of last night. the $10 billion lines up with the original $7 billion but that original figure that was originally set aside as a global number four fixes. if it's going to cost them $10 billion to fix those in the
u.s., it's more than they had initially expected. vw quickly said and they knew it would require more. the other cost whether it be criminal penalties from the justice department or the shareholder lawsuits in europe, that will still be hanging out there after we get the california thing settled. we don't know what that will cost. the $10 billion that our source said for the repairs, there is anotr big chunk that will come out of this california case which is the remediation. it's the funds to undo the damage they have done to the environment. what arefore we go, the other claims out there? there is a shareholder lawsuit in europe. there are still claims in europe. there is the vague investigation by the -- there is the big investigation by the justice department. they are doing a two track investigation like they did with bp.
they are in the civil case in california along with customers and dealers but they are also running a criminal prosecution that is technically separate and allows them to go after more from their. then there is the cost of remediation which will be billions. as wonder -- it's a matter of whether it's a few billion or several billion. mark: thanks for joining us. thank you so much. coming up on battle of the charts, i face-off with joe to take a look at mario draghi moving markets. ♪
stalwart, wiesenthal. : i'm going with a chart i run almost every week or it it looks at underlying strength in the labor market. it's a chart of initial jobless claims not seasonally adjusted, just raw numbers. pink line is the 52 week moving average that smooths it all out. you really get a deep sense of the trend. at this point, you figure things would be bottoming out and we would reach a level that we can't have any further decrease in initial claims but it keeps going down. we keep hitting new downside records and once again, the 52 week moving area of nonseasonally adjusted homeless claims it's a new low. it's extraordinary how few layoffs are happening in the u.s. economy and that speaks to labor market tightness.
it's one sign that it should be kicking in. you can check out that chart. betty: good to be an employee these days. joe: there is a good chance he will not get laid off. betty: we need to think of a nickname for you, mark. swing-o-meterhi doesn't seem to be working. it moved by 1%. in the last four ecb meetings, back in october, we had a 2.9% swing. 4.9% in december when mario draghi did not do enough and january 3 .2 and march. he said that was probably it and we had a 5.2% swing. that was the biggest swing in four years. today, the swing was 1%. swing-o-meter not
working? cutit projections are being even as that project -- a project that mario draghi will do more later this year. betty: the no word, swing-o-meter. with that but i am going with joe and the u.s. labor market. we have to think of a nickname for art -- for mark barton so tweet me any ideas. mark: nothing rude. andy: president obama british prime minister david cameron will give their news conference tomorrow. ♪
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scarlet: from bloomberg world headquarters in new york, i am scarlet fu. >> i am tracy alloway. it is the ecb decision day. the central bank is watching carefully for any inflation drag. under armour is running circles around critics today. they talked analyst estimates and raised the forecast. and carson block revealing the latest short in an exclusive interview with bloomberg. why did a german advertising firm capture his attention? scarlet: we are halfway through the u.s. trading day so let's head over to julie hyman. what is moving and what's not? julie: a busy day for earnings, that is true. there is a lot to sift through. you are