tv Bloomberg Markets European Close Bloomberg May 2, 2016 11:00am-12:01pm EDT
you're watching the "european close" on "bloomberg markets." ♪ mark: we are going to take you .o new york to milan signs of strain from the italian numbng sector as investors a new ipo. will the rescue funds to be enough to keep the industry going at go vonnie: it is a major energy deal gone bust. how investment bankers have called off the proposed merger. what is it signal to the rest of the oil markets? mark: ferrari, the chief executive is leaving. what is ahead for the luxury carmaker? we are 90 minutes into the training day. let's head to the market that's
with julie hyman. bit,ocks recover a little but bouncing around from where they began the session after we had a big decline, the largest since early february, we are bouncing around. you can call it after those declines but the nest and when the worst of the three major averages. i want to point out we saw a downturn in oil prices that wasn't exactly matched by what we saw in the stock market. i just mapped oil prices in yellow versus the s&p 500 in white. here was the downturn in oil. they are now coming back down, but we are not seeing the same sort of correlation that we see at certain points. if you look at the groups that are moving, consumer discretionary and financial holding up well. energy is slightly lower. so is technology. dig into consumer discretionary and if you look at the best
performers, you have the casino ofpany, came in with a drop 9.5 percent, but better than the 13.5% that we anticipated by analysts. amazon getting a lift perhaps from positive comments from berkshirefett at the hathaway meeting. he praised jeff bezos saying he is a good leader of the company, that could be giving it a left. we have been watching apple as of late. the stock is down for the eighth straight session. we have not seen a losing streak leasthis for apple and at 10 years. it has been quite unusual. want to compare it without the bet. one of the ways we like to track the two is to look at the market cap comparison. out of that the largest company -- alphabet, the largest company in the world.
bigger than google, but the gap is shrinking obviously as apple shares continue to pull back. mark? mark: look at the function which shows you which volume is like. the average volume is about 30% to 50% below the daily average of the last 10 days. it is a bank holiday in london, but it isn't a bank holiday the rest of your. volume is down. news,are some corporate the regions biggest insurer, first-quarter profits rose a quarter of percent. deutsche bank is in the news. u.k. regulators faulted deutsche and serious lapses to the wort money-laundering capping a review that lost the bank -- that launched the bank to make
changes. -- ferrari has 8 a new ceo. the chairman will become the chief executive officer and will be replacing the former chief executive. responsibilityll for managing the carmaker. he is chief executive of fiat chrysler. frannie to make the luxury brand, not just and automaker. shares were up as much as 4.5% in milan. they are unchanged. strong as ever first-quarter. today, watch out for spain at
midnight. parties have to form a government. if they don't, there will be another election in late june. the election took place -- the yield on the spanish 10 year has .ome down from 1.96% to 1.58% uncertainty has not hurt the spanish bond market. they had been growing by pointing percent in the last quarter. this by the uncertainty, the economy seems to be going from strength to constraint. looks like we will have an election in late june. vonnie: we will have a dedicated conversation later on. let's check in with bloomberg first word news. >> u.s. secretary of state john kerry is trying to work out at least a partial truce in syria. geneva, john kerry met with the saudi foreign minister. the u.s. and russia may come up with safe sounds in the city of aleppo to protect civilians. the civilian military says it had been targeting military.
in baghdad, a car bombing has killed 18 shiite prisms -- pilgrims. islamic state has claimed responsibly. in the u.s., only a handful of detroit public schools are open because of a teacher stick out. teachers are angry because the school district may not be able to pay them over the summer. detroit has emergency funding until the end of the school year. attorneys are about to start dividing prince's estate. an overseer ofed the estate. .he singer left no well under minnesota law, his estate will be divided up among his surviving siblings. the estate could be worth hundreds of millions. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. vonnie: thank you so much.
shares of the italian bank took a big head. .nvestors snubbed the move leaves the bank's rescue fund to buy almost all the shares. our european finance reporter join us. how much of a below is this? why did investors snubbed this ipo? was set up to ensure for theuld be a buyer shares as it became apparent in recent weeks. and individual and but -- money managers and investors would not buy up. a stock sale demanded by european regulators and faced a very firm deadline. it now focuses investors on what's next. this is a difficulty that they
will be having. more partly, it was set up with a dual role of backing fundraising by banks, but also to soak up some of the bad debt that is weakening italy's lenders. there is a pile of bad debt that the fund was designed to soak up. with so much of the fund's assets focused in the bank's equity, some are wondering if there is enough to soak up the debt. mark: what his plan b? is plan b? if there aren't enough funds, what happens then? early to tell. the expectation is that they will put funds to use to buy up some of the loans and that will ease pressure on some of the other lenders that were weakened by the fact --
of $1 billion. put it into context. it versus the ones he typically speak of? clearly a much more smaller back in $1.5 billion it is raising is a value of the equity after fundraising. it is more of an indicator of antiment and an indicator of curve in the market. you have seen valuations drop steeply in the first quarter since the start of the year. you look at a time stocks go down more than 20% since january, which is leading to these very, very difficult conditions. banks like unicredit,
and i mark barton. this is the "european: vonnie: it is time for the business business flash -- bloomberg business flash. it was below estimates and a big reason that there was a solid rise in home building. home construction was a bright spot for the u.s. economy and that is expected to continue for the rest of the year. manufacturing rose at a slower rate in the u.s. last month. factories still struggling with weak global demand. fell at theg index level that indicates the line between stagnation and growth. ande is a big transaction the paper business. the largest company in the business has agreed to buy warehouse spurs unit. international paper says once the deal is done, annual cost savings will be $175 billion.
that is your bloomberg business flash for this hour. delta airline ceo ed bastian officially becomes ceo of the carrier today. they discussed the state of the industry and delta's relationship in washington. ed: washington is really important. we face a lot of challenges on the international side. gulfareas has been the carrier dispute around subsidiaries. we need washington to take -- to pay attention. there is discussion on whether the u.s. is being taken advantage of? we don't believe in any of that, but we believe our existing treaty should be enforced and there is a clear violation happening and that is one thing i will be very vocal on.
>> beyond the objections that richard raised, beyond the objections that you're going to raise, what more can you do? thewe need to keep attention on this. there is no easy solution. we want the state department to enter into consultations with their colleagues and we want to make certain that everything we built for the future is and opportunity where you have a healthy, vibrant u.s. industry, not just a delta industry, but a u.s. industry for a fair and level playing field. we can compete with anybody if given the opportunity. but if you are asked to fight with two arms tied behind your back, that is unfair. vonnie: that was delta airline ceo ed bastian. mark: bloomberg television is seen as a broadcast all over the world. growing to the middle east. bloomberg middle east launched. he gave his viewpoint on what it would take to sustain current inflows in emerging markets.
>> first of all, continuing deterioration of the u.s. economy, which means the fed will not make moves to raise rates. that is number one. continued weakness in the u.s. equity market. what you are saying after three years of underperformance of emerging markets, now you are seeing a flow back away from the u.s., poison the u.s. dollar, and you are seeing that with the currencies getting stronger. i believe we are at a turning point for emerging markets. >> let's tighten that up a little bit. no more hikes for the fed fisher? the fed told us to. it was only to the end of the year that they had to fulfill their promise. >> no more hikes? >> it is possible, yes. >> a softer dollar? >> yes. terms of the oil story,
you mentioned brazil. the impeachment threat that more.s, stocks have had a my question is is impeachment priced into brazil? >> no. however, we have seen a big rise in the low point. when you are at a low point, the percentages are great. when you are looking where we are headed to the previous highs, we have a long way to go. another 200%? >> would you add more money to brazil? >> we are adding money to brazil. >> what is the other biggest opportunity? because they have been closed to us and many other investors for the most part because of sanctions. lifted, ofs are course that would depend on what happens in the u.s. and the
elections, then you could see a big, big surge in russians stocks.- russian day, despite the what he says, what he's able to do is not a question because of the checks and balances in the u.s. system. >> looking at emerging market bonds, what is your favorite e.m. currency at the moment? >> favorite e.m. currency right now is the brazilian riel. >> how much? >> i can't say. [laughter] >> emerging market bonds, nearly six -- nearly 6% returns. if i said e.m. stops, he him bonds, em currencies. what is the biggest out for?
>> it has to be equities at this stage. the two bricks are doing very well, india and china. you can get a real upsurge their combined with the big growth you are seeing in china and india as well. i don't see a big devaluation. you have seen a gradual weakening. you're looking in the basket, if you're looking at the basket there will be more weakening. >> anymore because from china? >> i don't think so. mark: mark mobius is there from bloomberg market middle east. vonnie? vonnie: what comes next for halliburton and baker hughes? after the 28 billion dollar oil merger collapses. we will break it down, coming up. ♪\
♪ vonnie: live from london and new york, i'm vonnie quinn in new york. mark: and i mark barton. this is the "european close." vonnie: halliburton is going to have to pay baker hughes after the two called off their merger. from u.s.ame regulators in the justice department. end, let's bring in and are from our princeton bureau. why are people surprised this did not happen? andrew: i think people are a little surprised because halliburton and baker hughes
said they were committed throughout the entire process and stayed steadfast of that commitment. there were skipped this -- there were skeptics along the way. towas going to go from three two, and that is what ultimately killed the deal. vonnie: they were committed. but it didn't automatically suit the consumer and those who are going to buy the oil services. that point, there were only going to be two competitors in many markets. andrew: that's right. the focused shifts for baker hughes.
going back to the drawing board and thinking how they are going to go ahead. they are doing a $1.5 billion stock buyback. the question is continuing to cut costs. the plan now that management needs to prove to investors is how they are going to execute on that. halliburton, they have dug themselves in a little bit of a whole. even though they are taking share in north america, the international portion of the expansion in the market share peace, which baker hughes was going to help with, is compromised. in the ultimate winner in schlumberger. now they don't have to do with the new baker hughes and halliburton company. tok: there was a narrative baker hughes at the deal went through, or if the deal didn't go through, it would be a disaster. has that narrative been put to buyingh today's news shares, dead, and simplifying the organization? so.ew: yeah, i think from a financial standpoint,
baker hughes is in great shape. after you account for the stock buyback in the debt buyback, they will have close to $2.6 billion worth of cash. i think the question it is more of the operational footprint and how the company looks going forward as opposed to the financial wherewithal. they have a great balance sheet and enough cash. andrew, got a nice chart showing have a two shares performed since the end of 2014 when the deal was first announced. they are neck and neck all the way through. when it comes to m&a and the oil services industry, is it the oil services industry? andrew: we have seen smaller bowls on acquisition that is not been too publicized.
given the fact that maybe some of the bank lines were cut as much as people anticipated. might be coming to the end. we are in the lower for longer period. the big guys are going to get bigger and some of the smaller guys will still be challenge as time goes on. for: andrew, thank you joining us from bloomberg intelligence. if reminder you can find bloomberg intelligence and its full analysis of the terminal. european equities, it is a bank holiday in london. stocks look like they iaae-m"
stocks are finishing up the monday session. let's take you through all the action. this is the chart i want to show you first. stoxx 600, looks like we will be lower. after the biggest fall in two months. we did see the games rise in a second month in april. that is not happen since november. back highlight -- bank holiday here in london. 50%ks are trading 30% to below daily averages. that tells you the mood in europe today. the mood among a tie-in lenders -- the mood in italian lenders. you can see very clearly, a italian lenders, smothering the ipo. the biggest rescue fund in the nation had to buy almost all the shares. italian regulators had just
ruled that they are not eligible for listing in milan. that means atlanta has to buy all the shares. they had bought all but 7%. that means it has to spend 1.5 billion euros snapping up the chairs. -- snapping up its shares. italian lenders getting hammered today. they agree to sell their card payment division. it is a deal valued at over one billion euros. shares down by 1.8%. big news on the manufacturing side. manufacturing had little changed. interesting news that of germany, italy, and spain. we had contraction in france. market economics save the gauge
points to anemic factory growth in the region. the plus side, the report showed the price declined in april, but -- consumered prices are down by -.2%. , which isy did grow the strongest growth in a year. anemic is not the sort of word you want to hear from the likes of analysts when you are describing the manufacturing industry. vonnie: but i think he will take anything that is not dead. in the u.s., we had a similar type of economic data with manufacturing data out as well. there were good things in there. i am keeping my eye on the fix -- vicks. it is relaxing a little bit.
dollar index showing more weakness. stronger yen, look at that. one handle lower there for the yen. this is also related come on the weaker dollar, we saw gold top $1300. stronger today by more than half a percent. -- more than .5%. third of a up a percent. not willing to give up just yes. the nasdaq up a 10th of a percent. bloomberg's abigail doolittle has more from the nasdaq. nasdaq slipping between small gains and losses, one of ers.worst performanc
44% andstimates by offered a below consensus revenue guide for the company pasta fiscal fourth-quarter -- for the company's fiscal fourth quarter. company'sves the quarterly dividends is unsustainable. weakness in the piece he market has gone away. there could be some more downside ahead for the shares of seagate technology. vonnie: trading lower than on a negative earnings report. any stocks higher on a positive report? --gail: amazon is that this is the biggest boost to the nasdaq. amazon very dissimilar to seagate beat earnings estimates by 88% on retail strength and cloud strength.
there are a few concerns including the possibility of prime membership slowing and increasing competition in the cloud. gappedon all this have bullishly higher, but still below the record high. perhaps other investors share those concerns. vonnie? vonnie: abigail, thank you so much of the nasdaq in manhattan. taylor has more from the newsroom. --the pressure is on, both the pressure is on to help saw puerto rico's debt crisis. it has another $2 billion coming due july 1. investors may agree on debt restructuring. congress is working on a rescue plan. the departure hall at the brussels airport has reopened since the terrorist attacks in
march. the suicide bombings killed 16 people. authorities say the airport should be 100% capacity by middle of march. soccer,premier league ofister is within two points and what unlikely championship. being to is relegated a lower league. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. i'm taylor riggs. sergio marchionne is adding another kept his workload. the ferrari board has named him chief executive taking over from the former ceo. ferrari raised its forecast of the year. isning us from milan
tommaso. we knew this would happen. we spoke to someone familiar. not a big surprise to us in bloomberg. >> not a surprise. maybe for some competitors. is thatinteresting marchionne had full responsibility for ferrari. now he has to find a way to boost profits. he starts today as ceo. revise -- ove was to he was very cautious. afterts to revise upwards profits rose 10% in the first quarter. a good quarter for ferrari. vonnie: will he make money on
things like merchandise you go -- like merchandise? this you need to sell more cars? >> in today's statement, they say they are revising to expand the brand. what we have understood is that on one side, they will boost merchandising for the formula one activity. on the other side, they will try to make products with the same explicity that they had in cars -- exclusivity that they had been cars. we may see someone off products in different areas. they have not specified it yeah. unveil. year, they will
conference. erik schatzker is standing by with tim massad. erik? erik: tim acid, good to see you. -- tim massad, good to see you. the industry is under attack. the rallying cry that wall street needs more regulation. as where you said, do you see room for further regulation, and if so, where? people thatre some say repeal, and others that say we have not done anything. neither one is true. we have put in place a very good framework. that is in place today. we have a few pieces still to do. a lot of what we are doing is focusing on fine-tuning it and making sure it is focused on areas of greatest risk and that --doesn't burden and users
doesn't burden end users. we are also looking forward. we're looking for two concerns i cyber security. the list of challenges that financial services and markets will face in the future, is at number one on your list? tim: if you had to name one, that probably is. everyone is concerned about cyber security. it is an arms race with trying to keep up. erik: what is number two who, number three? tim: we are looking at automated trading from the standpoint of what the potential for disruption that this can cause you go want to make sure that people can use automated trading strategies to make sure they don't have algorithms that cause problems. also, looking back at all the things we've done post financial crisis, looking at the combined
effect and make sure we have it setting right. erik: as a regulator, how do you know when it too much regulation? tim: you have to look at how these things affect the market. market evolve constantly. market structure changes. you have to be ready to take a look at that. it has to be a data driven analysis. erik: are there any things you have done in the post crisis environment where you see the need to dial it back? tim: it is more fine-tuning it. there are a number of areas will be a taken action to make sure that we're focusing on areas of greatest risk and not causing unintentional consequences. particularly for commercial firms that use these markets routinely and toward the cost of the crisis. erik: time is running out for this administration. what more can you do?
tim: i have an ambitious agenda. finalize our rules on margin that were unclear. taking collateral for uncleared swaps that protect against leverage. that is a companion to requiring clamoring for standardized swaps. we have to finish our capital role. position limits is important. erik: when you get those both done? tim: i hope so. erik: hope is a another thing. tim: we well. beare not trying to prescriptive. firms have to engage inadequate testing to show they are meeting best practices. we are hoping to do something on automated trading this year. erik: how much work is left to be done to harmonize the markets you oversee with the international framework? we have made a lot of
progress on things like clearing regulation, margins were unclear. we are looking at trading rules. there is more work to be done, but again, it will be ongoing. there is no area of this that is harmonized across the board. erik: in percentage terms, where are we? tim: in terms of harmonization? [laughter] i don't know if i can qualify that. the g-20 leaders agreed to reform the derivatives markets using the same principles. that was a big step. it is more it -- it is more of a question of implementing reforms. it makes it hard to harmonize fully. erik: there is a lot of concern over the amount of available liquidity and cash bond markets, in high-yield as you go lower grade. what is your perspective that go
-- what is your perspective? tim: on the whole liquidity question, it is worth looking at. effects't seen dramatic due to regulation. there have been studies on the fixed income market in the u.k.. we worked on one in connection with the treasury market. inhink you have to look at the way that the market structure has changed. these things are worth looking at. about some concerned of the implications of what we have done in terms of clearing members and their ability to provide clearing services. it is our looking at, just needs to be data-driven. erik: you don't think is a matter of the withdrawal of the bank balance sheet and the proprietary trading dead have an impact -- trading debt have an impact that go tim?
we implemented reforms to make the system more resilient. withave to balance that the potential effects. also a matter of how you are measuring it? the people complain about is the ability to do large transactions. erik: one important component of the fixed income markets is credit swaps. muchec has not done as work on it. do you have any sympathy for market participants? sec is committed to getting b's things done. they have obviously had a lot of i knowon their plate -- the sec is committed to getting things done.
they have obvious he had a lot of things on their plate. with them ain touch lot on this. they have recently taken steps. i know she is working on it and you have to ask her that. vonnie: technological disruptions is what you will be talking about at the global conference. to what degree is it a concern tha? tim: it is more of a promise. it is further technological innovation which can lead to good things in terms of creating better ways to record data and maybe to reduce costs and reduce efficiency. exactly dealing with instability. tim: it is less about disruption and more about technological innovation, which is a thing
that we should support. what we are trying to do is make sure our rules don't stand in the way. some of these applications are still a ways off. we are following them and are in touch of who is working on them. erik: chairman, thank you for your time. youni, -- vonnie, back to in new york. time for the bloomberg business flash. is said to be disappointed with their lighting business. the dutch company is considering an ipo according to people familiar with the matter. they took an evaluation. ae company is set to expect final decision soon. outecb may start phasing the 500 euro note. europe is calling this the
currency of choice for criminals and terrorists. the ecb is trying to abolish cash altogether. apple has its eyes set on a new headquarters in london according to the sunday times. to take overalks the office space for the powerplant. your bloomberg business flash. asiag up, manufacturing in versus april's market returns. ♪
vonnie: you can access these charts. kicking things off, we have joe weisenthal. day. is pmi someone could kill the pop-up on my computer screen. the middle of 2015, most of these lines were below the 50 line signaling they were in contraction territory. but now they are above the 50 line signaling expansion. korea, mostaiwan,
of them are above the 50 line which means the majority of asian countries are growing again. the trend is higher. a good time for the global economy. interesting. i see that japan is the worst performer. mark, take it away. mark: joe has never done six lines. that is a first. good for you. vonnie, sometimes i like to look in the rearview mirror. looking at the best-performing assets and april. in at number four, local bond market in egypt according to bloomberg world bond. the return of 6.5%. number three, ukraine equities index with the return of working .6%. -- 14.6%. in the last 12 months, it was down 42%.
this was the worst performing benchmark over the last 12 months on the world bond indices. zambia'sr two, best-performing currency in the last month got a return of 14.1%. number one in april, the best returning asset is crude oil, 21.5% higher. the best return since may 2009. vonnie: you never don't amaze me, mark. for a second, i thought those two charts would be vexing. mark, you are the winner. stay watching "bloomberg markets."
>> from bloomberg world headquarters, good afternoon, i'm alix steel. stocks rebounding from the worst week since february, traders slowing expectations for rate hike in june after data showed manufacturing slowed last month. global leaders convene at the milton global conference. our guest from the conference, senator harold perdue. puerto rico will default. the u.s. territory will miss a deepenayment that could the island's financial crisis and put additional pressure on congress to act.