tv Bloomberg Markets European Close Bloomberg April 27, 2016 11:00am-12:01pm EDT
headquarters in new york, i'm betty liu. mark: you are watching the european close on "bloomberg markets." we take you from new york to london in the next hour. estimates, the firm managing to avoid any misconduct charges. crude rose above $45 a barrel for the first time since november this morning. could it signaled the worst is over for oil? valeanhe spotlight is on t today. bill ackman set to testify in washington and answer any questions on drug pricing. what can we expect? betty: i want to mention that oil took a dive after those
inventory numbers came out. julie hyman has the latest. first, let's talk about stocks and earnings today because we are seeing some big disappointments with an earnings and stocks have also turned a bit lower here. earlier, they were little changed, but now, stocks near the lows of the session. some of it has to do with apple. we talked about the ripple effect to some apple suppliers. it is all a big cap tech that is feeling the pain. microsoft, amazon also trading lower. we will hear from facebook and amazon later this week. 78 takes a look at apple's earnings disappointments. there is apple's stock price. the last time earnings came in below estimates was back in 2012. this is the earnings related
implied volatility related to each of those various earnings reports. you can see that drop we are having in the stock right now. other earnings we are watching today, both disappointing and you can see shares are trading higher. international, the profit margins disappointing for this company. goodyear also coming in below estimates. betty: thank you so much. julie: should we look at oil? let's take a look at oil prices. we did see that big drop in oil. that coincided with the drop that we saw in stocks as well. down .5% after that weekly inventories report. too: that has not dented
much the fortunes -- the gauge is still the best performer on the index today. earnings very much the driver of today's gains. we are awaiting the fed, of course. oil and gas, the best performance. glaxosmithkline shares reporting the first increase in profits since 2014, we had an earnings beat as well. hiv medicines offsetting declines in advair. is norway's biggest oil company, look at the shares up by 6% today. earlier today, it announced profits fell by 37% for the first quarter. it was still a beat. profits unexpectedly rose. it reduced costs. offset the weakest oil prices in 12 years.
it is 75% owned by the norwegian government. joining bp in an earnings beat. we had u.k. gdp for the first .4%.er rising showing the lopsided nature of the u.k. economy. services expanded .6%. that was lower than the previous quarter. we had construction output also dropping. it plays into both sides of the referendum debate. the economy is doing ok, we need to stay in the eu. those against staying will say look at the global economy, look at china, look at the rest, there is something for everyone, but the global economy is slowing. betty: we have to put this to rest. the anticipation is killing me.
taylor has more from our newsroom. >> donald trump turns to foreign policy less than one hour from now come a day after winning all five northeastern primaries. the republican presidential front-runner will discuss trade and national security. trump has done to global leaders and foreign-policy professionals with his proposals, like his promise to ban all muslims from entering the u.s. trump has declared himself the present of nominee. that's presumptive nominee. z says he will be making a major announcement at four clock p.m. eastern this 4:00 p.m. eastern. lost to bernie sanders in rhode island but has 90% of the delegates she needs for the nomination. sanders says he will campaign all the way to the convention in july.
in chicago, dennis hastert will be sentenced in a hush money on accusations that he sexually abused for students while he was a high school wrestling coach decades ago. a plea deal indicated he might only get six months in prison. a judge has just he might impose a longer sentence. the federal reserve is likely to keep its options open for an interest rate increase in june. surveyed by bloomberg believe the fed will keep these federal funds rate unchanged the third straight meeting. joining us today from 1:00 to 3:00 p.m. for our special decides."the fed global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. betty: shares of parklands are higher today after the
investment bank said its revenue dropped less than expected. higher today. bank'shis is also the first report in two years with no notable provision for investigations. investment bank revenue falling less than estimated. does that play into the argument put forward by the chief executive that we don't need to sell off the investment banking arm? >> it definitely gives him a bit of ammo to say we've done better than our peers this quarter. all the people calling for us to either drastically shrink this or spin it out, there is value in having this. it is still not producing the types of returns we would like to see. he said more cost cuts are coming to that business. this is far from a victory lap.
betty: the revenue declines were smaller than u.s. rivals. michael: it had a good quarter in credit-rating. they got a lot of questions on the call about keeping up that market share. this is an outstanding quarter .or that business betty: looking towards the rest of the year, what exactly is going to help propel the earnings of barclays? what will be the main drivers for them? ishael: a big part of it getting rid of these one-off items. it is a lot easier for the business to shine through if you do not have billions of dollars in legal costs. their cards business is doing well, their consumers business in the uk's doing fairly well.
they have some good underlying businesses. a matter of allocating the capital correctly in bringing down the cost in the investment bank. betty: analysts have been saying what about barclays? michael: so far, a lot of not as bad as expected. quarter withclean no real fireworks. there was not too many surprises. it is just the business chugging along. betty: thank you so much, michael moore of bloomberg news on barclays's latest report. bill winters painting the picture of a portfolio in good shape as well after he took over at the bank last summer. he is liquidating some assets.
winters sat down with francine lacqua. bill: it has been going well. it is what attracted me in the first place. the franchise's great history, clients that of the bank well and like -- like the bank a lot. problems were expected, the external environment would be challenging. ire we are one year since agreed to join and it's everything i expected. we have a great underlying franchise and a ton of opportunity. ashave a ton of problems well, which i tried to be transparent about. we set out a robust program of
actions and we are doing it. we announced our earnings today. the profitability is poor. we said we would do a bunch of things and we are doing them. the market took earnings as something of an encouraging sign. i believe what the market understands is what our clients have always known. there is a ton of business for us to do. francine: is that a trend of things to come? better than expected, i'm not sure what that means. our stock has been up and down. not always on a lot of real information. we overextend ourselves in number of areas. they happen to be the areas that were hardest hit. probably not a coincidence. there tends to be more demand for money when they are in trouble. we are very transparent about the single name and industry
level concentrations. and we dealt with it. we said at the year and that we are comfortable with our portfolio. we have a lot more to do. we have a portfolio of assets to be liquidated. a work in progress between we have some concentrations we are still watching. we still operate in several difficult neighborhoods. in no way are we declaring victory. we try to deal with the problems directly. many potential buyers? will it happen by the end of the year? ever one of those resolutions, whether it's working out with a borrower over a sale or some combination involves some negotiation. to fact that we don't have
sell anything, we are extremely well capitalized now, we could absorb more bad news if we have to. on doing whaten is best for our shareholders. sight?ave a line in yes, we have a line of sight. we are working towards that. if we cannot get this value, we will not do it. that is the best way for us to protect shareholder value. francine: how many of those assets are severely distressed? bill: they are virtually all impaired. we took reserves at the year end. to reflect the fact that we intend to sell them. the implied loss was lower than the implied loss on the rest of our portfolio. that reflects the fact that it is a higher quality work fully
that higher-quality -- a higher-quality portfolio. what we did shortly after i arrived, we looked at our risk tolerance statements. , everyed at everything loan on the books that had been approved at the time and said, would we have done that loan back in 2010, 2011, 2012? the answer was no. they were just too big. loan above our current risk tolerance, we said we have to get that back within our risk tolerance. bill winters in the next goose of interview with francine lacqua. glaxosmithkline
betty: live from london and new york, i'm betty liu. mark: and i'm mark barton. this is the european close. there is an encouraging sign as real estate market and the busiest selling season of the year. pending home sales up more than expected in march. contract to buy previously owned homes up 1.5%. yahoo! has reached a settlement starstar board value --
board has been an outspoken critic of marissa mayer. the largest cable provider in the u.s. is defying the trend of cord cutting. come cast had its biggest first-quarter increase in nine years. -- comcast. the wall street journal says comcast is in talks to acquire dreamworks animation, the maker and "shrek."anda" dreamworks is exploring a sale. mark: let's talk about a major drug maker, glaxosmithkline. the stock is on the upswing today. strong earnings results thanks to demand for its newer drugs. witty appeared on
bloomberg earlier. andrew: i think we will see sustained price pressure in the u.s. can you deliver value for money, can you deliver innovation? if you can't, it will be a tough market. we have had more new products approved than any other company in the u.s. were allsix products launched into the u.s. at or below the prices of the previous generations of technologies we are now competing with. we are trying to establish our portfolio very much in step with the market. when you look at some operational point of view, what would a brexit mean? what would it mean from an operational point of you for your company? andrew: it would not have a huge
impact on a company like gs k. where we would have concern is around new regulations. a lot of people talk about the regulation of europe. left, we would have to operate under newly formed u.k. regulations. we don't understand the need for that and the uncertainty created going through that period. we are governed by the european medicine agency. we are not keen on seeing that unraveled or made uncertain. betty: that was glaxosmithkline ceo andrew witty. , oil reached $45 a barrel earlier today for the first time in many months. it has since pulled back in light of the end of the tunnel -- we will discuss that, next. ♪
mark: you are watching "bloomberg markets." betty: this is the european close. we are about seven minutes away from the end of the wednesday session. stocks are up, driven by earnings. we are still waiting for the fed. betty: let's take a look at oil now. around $44 ang barrel, but they hit above $45 this morning for the first time since november after industry data showed crude stockpiles declined for the week. stockpiles still at record highs. the stockpile buildup is what
spooked crude oil investors an javiero joining us is blas. but the whole stockpile into context. very close to the levels we have not seen since october of 1929. has had some conflicting data. the american petroleum institute informed us there was a decline in oil stocks in u.s. .hat provided some uplift we have data from the u.s. government saying the stocks -- that's where
we see wti trading more or less unchanged. mark: what is the big number for the oil companies? will encourage new drilling and boost cash flow. is there a magic figure? javier: you can look between $50 and $60. this is for 2017. when they think they can break even. they will be able to generate enough cash to paper for all the capital spending they need to do. four -- pay for the capital spending they need to do. things$60 consolidates to say, good, we outsourced the danger. it does not say these are the good times. for that, we have to see much higher prices. mark: all this despite no freeze agreement between all opec and
non-opec -- javier: saudi arabia change their opinion at the last minute. has some countries are now questioning the leadership of saudi arabia, we are not going to have any talks of freeze in april or may. we could have momentum going up to the june 2 meeting. i see a very small, slim chance. mark: javier blas. the european close is a matter of minutes away. looks like stocks will close higher for the second consecutive day. ♪
stocks will finish higher for the second consecutive day, driven by oil and gas companies. $45.arlier crossing butng off those highs, still, oil and gas companies driving today's gains ahead of the fed a little later. profit falling 45% in the first quarter for barclays. revenue in the investment bank falling less than expected. probably putting some of the pressure off the chief executive. he's been under pressure to shrink or sell the investment bank. ahead of the battle of the charts, just to annoy miller, i had to show this chart once again. inse are the big u.k. banks the last 12 months. lloyd's is the best performer,
down by 11%. standard down by 46%. barclays down by 33%. fallingbig u.k. backed in the last 12 months. they raised their full year forecast for the second time in less than three months. be their ownesults estimates, consumer spending more and of the euro 2016 soccer tournament. i want to tell you about total. profit fell by 37%, but it was an earnings beat. resilient refining earnings -- the biggest average slump in crude prices in the last decade. these are the big oil majors in 2016. shell is the best performer, up by 18%. the worst performer is bp.
you better tell me about apple. betty: we're watching apple closely. i want to give you a bit of a different angle on apple. of course, we see the steep today drop in the stock. that is nothing new. 25% sincelen almost it was inducted into the dow jones industrial average, making it the worst performer on the dow in terms of a stock since it was added to the average. american express was the worst performer, down about 19%. just shows you how far and fast apple has fallen. it is also interesting because, apparently, this is history repeating itself. a majority of stocks added into the dow jones industrial average have either fallen or underperformed the broader
market. maybe it is a jump the shark ment when you get added to the dow. abigail: we do have the nasdaq down today on those apple results. .he index is off its lows another drag today, buffalo wild wings, shares plunging after the company missed first quarter earnings. weakness was caused by discounting. this is a continuation of the trend with same-store sales decelerating from 2015. something that could reflect brand weakness. lows.ares have hit recent it will be interesting to see whether or not they can be supported in the future. betty: what about the other
bright spots in the nasdaq? andhe maker of oreo cookies ritz crackers, the stock is trading higher after the company beat first order earnings -- first quarter earnings estimates. the ceo is pursuing $3 billion in expense reduction. shares above the 200 day moving average. ease -- mondelez will trade higher yet. belgium has transferred a suspect in the paris terror attacks to france. -- abdeslam was arrested last month.
rejectedean union has greece's request for a euro area summit. euxis tsipras has asked for leaders to meet. eu says it's finance ministers can handle the matter. the oecd has become the latest in rational group to warn you cannot leave the european union. -- to warn the eu not to leave the european union. the british referendum is june 23. in venezuela, reports of looting and protests after the government decided to switch to a two day work week because of an energy crisis. the president says the public sector will work only on mondays and tuesdays for the next few weeks. a drought has threatened power
generation at the dam that is formain source of energy the city. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. investors anxiously awaiting the fed's latest decision at 2:00 p.m. eastern time. bloomberg will be bringing it to you live. investors will be watching for key signals. , dan maes.now -- dan moss. at the beginning of the are committed was 56% of traders somethinge would get by the time of this meeting and now, it is like at 0%. 56%?we really fallen by
dan: there were two speeches that caught people's attention. by guys normally perceived to be dubs. doves. that is why this meeting is really interesting. do they choose to set something up for june or choke again? i think this will be a carefully written statement. betty: slightly hawkish? dan: the international pressures they've chosen to highlight, while they are not quite out of the woods, they do need to acknowledge that the worst-case international scenario has not come to pass. china is hanging in there from global financial conditions have eased. mega-a recession bearing down on us and oil is up off the floor.
the brexit boat is just that's vote is ahe brexit boa week from the june meeting. are they closely watching the boj tomorrow? and the other big central bank, the ecb using as well? dan: the divergence seems to be about what the other central banks are doing rather than what the fed is doing. it was supposed to be all about the fed pulling ahead and the others going in the opposite direction. standing flat fed and the others going the opposite direction. mark: will we see the boj go in the opposite direction? half economists we surveyed say
they probably will be some further loosening of fed policy. a slight majority are probably favoring the boj doing something. what do something mean? it is considered quite unlikely they would cut the interest rate further into negative territory. that has not worked out too well for them. coupling that with more asset purchases or qe, or maybe just or say we need more time to see how it plays out. thatore of an expectation something will come from the boj this evening. talked aboutfink the boj earlier this morning. larry: the whole process of what japan is trend to do was
restimulated economy through aggressive monetary policy, but the second phase -- erik: what option do you have right now? to thehe has to talk prime minister and say i ran out of runway. betty: are we there? a desperate situation. abe ironically, the administration has been the one most inclined to pursue a reflation or strategy. kuroda has found himself the only one at back. abe increased the consumption tax. people like paul krugman paid him a visit and said don't do it. we will see what happens. the idea that the fiscal stream has to do something is a popular one at the moment. if you are a central bank, it's
like, ok, we are still the only ones doing something. do we stand aside just because you are doing nothing? it.e have to act, so be i'm done. i'm not allowed to say anything else. betty: daniel moss. tune in to our special coverage "the fed decides" starting at what clock p.m. eastern time right here on bloomberg television. -- 1:00 p.m. eastern time. mark: matt miller faces off against carl riccadonna. stay tuned. ♪
betty: it is time now for the global battle of the charts when we take a look at the most telling charts of the day. we are mixing things up today. you can access these charts on the bloomberg. this is one of my favorite moments. carl riccadonna, i think he makes his debut today. carl, take it away. : what i'm showing you on the chart here is productivity versus labor cost. nonfarm productivity, the white line here. what we've seen here in the last several years is this extended period of sluggish productivity
growth. it has been under 1% for 18 quarters running. thatlosest we even come to sluggish length of time in post-world war ii history was the mid-1990's and it was only half that long. why is productivity growth so sluggish? the answer to that question, i believe, is fairly straightforward. labor costs. we see labor costs in orange here. in past episodes, when labor costs spike, businesses acknowledge that, they invest to minimize their labor costs and spend on capital equipment and boost productivity as a result. mid-1980's in the commitment mid-1990's and mid-2000's here. we have not seen the flare up in labor costs. that should be coming. we are at 5% unemployment.
as long as job growth continues at a decent clip and the unemployment rate remains unchanged or grinds lower, we will get the labor cost increase and therefore, it will be no great mystery why productivity is sluggish. it will improve as businesses respond to those higher labor costs. mark: great chart. --ie: i have a chart mark: hang on, miller. carl's1082 chart. radioi just ran over from to do this. i can't be in two places at once. here, i have been wiped the apple price action. each of these flags are present
and earning -- an earnings surprise. positive surprises and green, negative surprises in red. this is the first time that apple has admitted to earnings expectations since 2012. down here in blue, you have the earnings related implied move. this is what the options market thinks the stock is going to do. it could go either way. , apple would3:15 move 3.3%. it could be up or down. we saw what happened today. massive move, someone made a lot of money, someone lost a lot of money here. if you are an apple shareholder, you are in the losing camp. apple lost $45 billion in market cap today. twitter's market cap.
chart you can see matt's at g #btv 1078. you are the judge today. got anf ever i opportunity to not award the prize to miller, it is today. he cannot hear me. of course carl wins. matt: thank you so much, mark. i love miller's chart, but carl is the winner. ackman's feet held to the fire at a congressional hearing this afternoon. will there be any bombshell? ♪
yahoo! shares, slightly lower after announcing a pact with star board to name for the directors -- four new directors. i want to bring in jeff mccracken. is this a surprise? eff: star board was running a proxy contest. they wanted to replace all or most of the board at yahoo!. the would have happened is sales process would have run, they would have picked a winner and star board would have replaced the board. you would have to run the process again or agree to advance that these people were going to be on board. it is four board members out of 11. the seem to be supportive of what's going on and the sale process can continue going forward. meyer issued a statement shortly after this announcement saying this constructive resolution will
allow management to keep our focus on are extremely important objective. -- grissom meyer -- marissa mayer issued the statement. jeff: we have said before that verizon is interested. verizon is the likeliest buyer. yp, the yellow pages company is looking to partner. , they willwins probably get rid of marissa mayer. wuld runrong the whole thing. betty: jeff mccracken of bloomberg news. mark: let's move on to the drug prices and valeant.
bill ackman scheduled to testify at a senate hearing today. , pearsonared statement said in part it was a mistake to pursue and in hindsight, i regret pursuing transaction were a central premise was a planned increase in the prices of the medicine. drew armstrong joins us now. are you surprised at all by that statement? surprised that they are apologizing ahead of a senate hearing where they will get yelled at her a few hours. -- for a few hours. they are saying this is not a central part of our business, these are just a few. look back into the first quarter of 2015, the two drugs were their number one and number four products. they've done tons of other price
increases. it is a significant part of the business. we have reported that over and over again. i think it will be a bit of a circus today given the line up on the panel. a lot of fun to watch, certainly. betty: are we going to learn anything new at all from this panel? drew: we've got mike peterson, ceooutgoing ceo, the former and former interim ceo who became the scapegoat for valeant. sitting --will be the ceo leading the company and the guy they blamed for a lot of the problems sitting next to each other. next to them is going to be bill ackman who has control of two seats on the board. ofuy who is not afraid speaking his mind and may have a
few things he would like to tell congress as well. , pop yourickets popcorn. this will be a good one. hiring change the the narrative here? drew: it removes a major overhang that everyone is looking at. who will come in and lead this company? more stable on footing. the stock has been up significantly since the announcement. this is a credible guy, he has run another drug company, he has a ton of experience in the pharmaceutical industry. he has his work cut out for him. but, he is not from the existing management team that has been tainted by a lot of the problems they have had since last summer when they first came under criticism for drug pricing and all the other things piled up. betty: drew, thank you so much.
we will have more coverage of the senate drug pricing hearing starting today at 3:30 p.m. eastern time on bloomberg television. give us one last look on how the european markets ended today. mark: another day of gains, second day of gains, still sitting on our hands waiting for the fed later. it was the oil companies that drove the stocks 600 higher today. boards rose today. it was very much in earnings driven day as well. -- an earnings driven day as well. adidas.s and what a day. "bloomberg markets" continues. ♪
>> from bloomberg world headquarters, i'm tracy alloway. here is what we are watching of this hour. it is decision day for the fed and while every hike is not expected investors are bracing for sign of future action. stocks are mixed after a disappointing sales forecast. tracy: comcast is in talks to buy tumors animation. the price i can be more than $3 billion. david: apple earnings may have disappointed with our high expectations for facebook. investors will see the comings worth its high valuation. halfway into the trading day in the the market desk with julie. julie: we have been muddling along today which is interesting given we have big earnings news