tv Bloomberg Markets European Close Bloomberg May 13, 2016 11:00am-12:01pm EDT
york and 11:00 p.m. in hong kong . caroline: live from london, i'm caroline hyde. you're watching the european close on "bloomberg market." we are going to take you from new york to london to berlin in the next hour. here is what we're watching. the euro area economy grew slightly less than initially estimated in the first quarter. is it time to worry about the diverging economies in the region? betty: volkswagen continues to feel the pressure of its emissions scandal. forecasts.fit misses ireland's prime won aer enda kenny just second term last week.
we will have more from our exclusive interview. it is 90 minutes into the trading session in the u.s. julie hyman has the latest. the market continues its fall a bit lower. julie: the s&p and the dow heading more towards their lows of the session. the nasdaq just flipping into unchanged. on my bloomberg, i'm seeing it up a bit. we will have to check those numbers. init of a decline overall sentiment, which is already been poor. retail is continuing to be a part of that conversation, even though the overall retail sales number coming in above sentiment, mostly having to do with online sales. nordstrom's falling sharply, the company cutting its annual forecast in terms of sales growth.
it is looking for 2.5-4 .5%. to changes in spending patterns among customers. customers looking for lower prices. dillards missed estimates, but they are now rising. flipping over to unchanged even after that company's revenue trailed analyst estimates as well. gies we have yet to hear from, walmart. the company's first order comparable sales appear in line to slightly below consensus. -- first quarter comparable sales. we are looking at other areas creating downward pressure. oil is part of that picture. nymex crude down more than 1%. on the flip side, we have a higher dollar. it is at a six week high as the
dollar index goes up .5% today. wanted to get a quick check on gold as well today. changed.ld a little caroline: we are finally entering the green. we were on track for three days of losses and then turned around. the retail sales galvanizing oxx 600.00 -- the stoc retail up .9%. consumer driven by growth in the u.s. media down .25%. you talked about communications. a satellite company plummeting in the losing a third of its
overall value in one day alone. why? brutal profit warnings. a massive one. revenue growth completely flat. growth --ed revenue in a decline. some of moves in the auto sector proving interesting. 27 new passenger car eu.istrations in the yo volkswagen. -- with 25.4% market share for an eighth straight month, also i can is losing market volkswagen -- eight straight month, volkswagen
is losing market share. betty: i know we will be talking more about the auto sector in a little bit. let's check in on the first word news this morning. taylor: donald trump has picked can be a lucrative endorsement. sheldon adelson says he is backing from for president. he writes the alternative to trump being elected is frightening. in 2012 matt olson and his wife contributed $93 million to super pacs supporting republican candidates. the supreme court has managed to avoid controversy since antonin scalia's death, but that is about to change. on a slewbout to rule of controversial cases.
swiftcrooks have attacked , which is used by banks to move money around the world. this attack involved in unnamed bank. an italian coast guard ship carrying refugees arrived in puerto augusta in sicily today. at least 800 were rescued after reconnaissance planes spotted two boats in distress in the mediterranean. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am taylor riggs. betty? betty: taylor, thank you. it has been a wild ride for the markets. u.s. retail sales jumping 1.3% in april. the biggest gain in a year, and indication that consumer spending could help the u.s. economy recover from an early your slowdown.
this early your slowdown. -- from an early year slowdown. moving slowly with interest rate adjustments to a more normal level. level as toorrent low for today's economic conditions. caroline: now joining us for .ore is david stubbs -- where do you live when it comes to the u.s.? is the federal reserve desperately trying to talk up two rate hikes? david: the first thing to talk about is the june meeting. 6%, hardly a vote of confidence. i think we will get one rate hike this year.
there will be some sort of economic rebound after that week first quarter. eak first quarter. caroline: how global is the federal reserve's perspective likely to remain? they were citing problems in china. how much are they paying attention to brexit risks? i think they will be sensitive to the global central-banks. ,he debt contracts of the world currencies of the world have hinged on the dollar. we are seeing china be a lot more stable. this questions over the long run stability. -- these questions over the long run stability -- america is a
fairly closed economy. the main concern for those who -- it wille rates take a number of months for that play out. going to be a fed rate hike, it will be in the second half of this year. betty: what will that do to the dollar? will that be another headwind for corporate earnings? david: the weakness of the dollar we've seen this year has economicto a number of actors. we have the dollar being in a broad trading range this year. we do think it will continue to rise. just not in the manner it had in previous years.
q2 and q3 will give some sense of the dollar. the vicious dollar moves we've seen in the last two or three years is now behind us. if you look at the problems china has had committee issues -- a further rally in the dollar will not be good. is this why you see a bottom in the commodities bear market? caroline: i think -- david: i think we are in the process of seeing a very volatile bottom in the commodity complex. that does not mean there couldn't be a bad month in the coming year. that doesn't mean all commodities are going to bounce. are the onescopper we are most concerned about. we are at the beginning at the end of that.
that has enormous applications for asset allocation across commodities. that should put a floor under inflation and allow equity earnings to bounce back in the second half of this year. influences. it is a different era. investing in a narrow falling commodity prices for five years. that is about to change. caroline: our second biggest thing we want to talk about, usually housing, now it is how much outside the bubble that is the u.k. is brexit dictating more choices? david: it is surprising to me how much it is. i spent this morning talking to clients in japan.
almost half an hour was on brexit. i did not think this was a globally systemic issue. it is not like greece leaving and things being re-denominated into another currency. it is just a matter of time frame. global markets will react negatively for a day or two and u.k. assetsl see being affected in the coming weeks and months. there is debate about their economic performance longer-term. that will feed into a sense of political turmoil and crisis in europe and the eurozone. sweden, reluctant europeans not in the euro zone, questions over whether they should stay in the eu.-- in the that would not be good for the global stability of europe.
it is relevant for asset markets in the medium-term. it will take multiple years for this to play out. i do not think it would affect my asset allocation over that time frame. i do have a preference toward credit over equities in europe. i want to play the recovery. i thought gdp numbers were quite good. there is a genuine economic recovery going on here. to play that through things like european high-yield is the way to go. caroline: david, it was great to have you on. that is david stubbs from jpmorgan. coming up on "bloomberg markets volkswagen'sand -- european share narrowed for the sixth straight month.
there is a genuine economic recovery in the region. we are at 2.5 years of rising sales in the industry. gas is cheap, borrowing costs are low. people are out buying cars, catching up. what we are also seeing is that they are finding a more interesting mix in the industry now. there's 80's bands did incredibly well. -- first lady's bands -- mercedes-benz did incredibly well. they're capturing the imagination of the buyer and that is helping. caroline: at the moment, do we it is not that they don't
have the suvs out there, it is just the scandal tugging away at their market share ? ben: the scandal is the overriding issue. they have been sliding for eight months, the time since the scandal broke in september. s are not of rate the level we've seen in the other car companies. there are other self-inflicted wounds. is not quiteix where it should be at the moment. they do not have that line of modern suvs that people are looking for. still has a fairly attractive range of suvs and that unit has been somewhat shielded from the fallout. hasvolkswagen brand proper struggled. have a new suv, that is being rolled out.
maybe people will give volkswagen a second look. for the time being, they are still in the doghouse. betty: i want to turn to honda and what they are doing with their own situation with the takata airbag scandal. trying to get past this scandal by putting everything into one pot? that is pretty much what is going on. 21assive recall here, million and are cars they are adding to the mix. , ripping up the band-aid. we will throw everything into the mix and get the bad news out. we will have the provisions and we hope that we will be able to put an end to this. takataeing a major
this is the european close. a lot of new economic data coming out of europe today. euro area gdp was revised downward slightly in the first quarter. germany was among the countries at showing strength, expanding at the fastest pace in two years. richard jones. give us a sense of how you analyze the gdp data. fromd david stubbs jpmorgan saying it was not as bad as people expected. this has been on ongoing theme for a long time now. germany is doing fairly well. other parts of europe are not doing quite as well. you need to look at the economic data in totality. germany doing welcome of the rest of europe not as well -- germany doing well, the rest of europe doing well, this is
something you see in the european unemployment data. speed.ave that multi if you look at the chart, it looks like it is flattening out, perhaps turning lower. we are at a very interesting point. caroline: german debt outperforming. what is brexit adding to all of this? we had christine lagarde saying recession risks if britain exits the european union. really outspoken views about anti-brexit -- is anyone pro? richard: mark carney said have aay that we could technical recession if the u.k. were to leave.
volatilityterling against u.s. dollar -- we are at seven-year highs. that just encapsulates the vote. it jumped sharply as soon as the two-month tenor took in the vote. investors are concerned about the implications of exit -- brexit. they are uncertain of what's going to happen and therefore, volatility is high. betty: i want to talk about the economic numbers we've had. you have noted that we've seen a sharp uptick in negative surprises on economic numbers despite what we saw today with
retail sales and the jobs numbers. richard: looking at the economic surprise index we have on the terminal, today, we've seen we are headed in a direction that the fed is more comfortable with. what we've seen since the beginning of april, we've had and thesing estimates surprise has always been on the negative side. that is one of the things that has kept the fed from perhaps being as aggressive as they would have liked to have been after the rate hike in december. caroline: have a wonderful weekend. thank you for joining us, richard jones. let's look at how european markets are trading to end the day. four minutes away for the close. we are higher, up .4% on the stock 600 -- stoxx 600. ♪
i'm caroline hyde with eddie lewin new york. stocks finishing of the day in the european trading. -- you can see what the stoxx 600 it done. higher, a sudden spike the retail data coming out better than expected in the united states, helping push is higher. we are up .5% to end the week. on track for three days of losses, we got a little bit of oomph into the market. gdp data is playing away in terms of perhaps not as strong as have been perspective -- expected. germany really did come in with strong data. they outperformed greece, eurozone growth data, otherwise not really helping the spectrum. we want to be digging into what happened in terms of the cpi data. if you're looking at the debt
markets, german cpi turns negative for this month. this is if you turn into the ,loomberg, you can type it in german cpi data, you can bring up his chart and down we go. -0.3, this really is worrying people at the moment. why can't we see any sort of positive rice growth? german gdp data was strong, but what about the overall reduction that we are seeing in terms of price? us is why we see german bond yields fall once again. we are seeing money moving into the debt haven, money moving into in particular the long data german debt. 30 year debt we are now at 0.831. what sort of world are we living in a what sort of growth are we seeing and what's with fundamentals are being built into investor viewpoints? it's the fact that the ecb is going out there and buying government debt, and this worry about deflation is pushing
people into the longer-term debt. this is the 30 year german bond overall. an interesting day. see the stoxx 600 managing to end the day higher. i want to bring you up one more function on the stoxx 600. we are seeing this is what breaks down in terms of individual sectors, up nearly across-the-board .5%. we did see some red area in the consumer discretionary. folks.ly is your media betty: you were talking about european consumers, let's talk about the puzzle around american consumers. you can see that in j.c. penney shares, which initially plunged on the news about their abysmal first-quarter results. revenue trailing wall street estimates, reporting a drop in same-store sales in the first time in 10 quarters. macy's as well. this is a macro problem with consumers or a channel problem.
very likely if you look at the retail sales numbers like the numbers you pointed to, this might just be a channel issue, not an overall american consumer issue. however, want to bring up one chart that kind of ads to this whole mystery, which is the consumer comfort index versus gas prices. generally you see an inverse correlation when gas prices go down, consumer comfort goes up. you kind of seeing that through the years here with the wide gap between the two lines. but if you look very closely what's happening towards the end of this chart, which is 2016, both of those blue line gas prices and white line mean consumer comfort index, they are moving in lockstep. how does that make sense? wiring consumer prices feeling better? on the broader u.s. markets, abigail doolittle has more. abigail: we have the nasdaq trading modestly higher up about
.4% after opening lower. the nasdaq is also on pace to finish higher, set to snap a three-week losing streak. the best boost are the shares of apple based on the news that apple is investing $1 billion in a chinese right healing started. it's a bit of a blow to her in china. it does show is that apple is out there looking for new growth opportunities. pacific crest eddie hargrave without saying that he sees somewhat limited downside to the apple supplier. some may take from this he also sees an inflection point ahead for the slumping iphone sales. a slump that yesterday caused the shares of apple to variously breach longer-term support, which is typically a bearish event. we still probably are going to have a lot of exciting action and news ahead for apple. betty: any notable laggard today? afterl: western digital they were downloaded from
underperform. issues like higher debt levels and increasing share count. shares of western digital are down more than 60% over the last 12 months on weakening fundamentals. it seems that a turnaround is still out of sight. betty: abigail, thank you. let's check in on the bloomberg first world -- first word news. economythe euro area was slightly less than estimated in the first quarter. .5%, driven by the largest economy, germany, which wrote the fastest pace in two years. germany has record low unemployment and supporting consumer demand. a warning about the u.k. staying in the european union. it's is leaving the eu could erode london status as a financial center. it also says that home equity prices could drop sharply. christine lagarde spoke in
london. >> we are not doing it out of politics. this is not the job of the imf. we are doing it because it's a significant downside risk on a number one. and second, it's not just a domestic issue. i know it's a big domestic issue for many of you. but it is an international issue. taylor: the british referendum on the eu's june 23. in germany, angela merkel's government is prepared to invite iran's president to visit. in move that would signal germany wants better ties with iran. it also risks making israel angry. they are still members of her government who oppose the visit. all this according to people familiar with the matter. out atn, fire has broken a sprawling tire dump, sending up a cloud of thick black smoke visible for 20 miles. authorities suspect the fire was intentionally set. the dump is located in a town
not far from madrid, that holds about 100,000 metric tons of use tires. global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. i'm taylor riggs. betty and caroline. caroline: taylor, thank you. hasirish prime minister called the british referendum vote the most important decision in half a century. tensions are escalating higher, so what impact with a brexit have on the emerald isle? the irish prime minister david was an interview today. >> it's a decision for the british electorate, is not for me to lecture them, but clearly this is one of the most crucial decisions being made over the last 50 years. from ireland point of view, we want very clearly that britain should remain a strong uncertain member of the european union for various reasons. that excludes trade and the
impact on northern ireland. the fact that europe itself is much stronger with a strong britain. as a decision for the british electorate. >> is it all negative for ireland? some suggest you could see a huge influx of companies from sea,ss the irish particularly finance companies. >> you hear all kinds of possibilities. we are focused upon working in the interest of a stronger union and a better britain. and that britain should stay. clearly, we identified the fact that britain might decide to risk as a major strategic back in 2014. and clearly a decrease in aitish gdp would result in
contagious impact on ireland's economy. but we're focused on the fact that is important that the british electorate be fully informed or as informed as possible about the implications of the decisions that they must make. no one likes to be lectured by anyone else, but we have a unique arrangement with britain, since the 1920's. their irish people living in britain, and we take it is a particular interest in or informing those people who will have the opportunity to vote on the 23rd of june just how important this is. in ireland come over the last 40 years, we've had a lot of experience on voting on european referenda, with different treaties. people in this country are very well acquainted with the issues that surround the european project and the european process. irelandt point of view, has clearly made its decision that irrespective of the decision of the british people, we hope that it's a positive
continue but it would to be linked to the euro in your opinion, we made the decision the 60 to 40 decision a number of years ago. >> in some interesting referenda in the past on a number of european subjects, not always working out will you thought. to connect to the issue of the upside -- have you been actively banks,g european american banks, trying to make it very clear that you are offering an opportunity where from your point of view, not good outcomes could come into reality. have you been talking to the banks? have you been trying to make the case for ireland? >> no, we're not been actively courting the possibility of further investment here in it more to leave. know who wish to invest
full well the opportunities we offer. the number of years without extensive investment, both from corporate industry and the banking financial services and so on. those who were in a position to make investments know full well what ireland offers. in that sense, clearly, these are implications, but for us, it's important to have very close arrangements with downing street and having signed memorandums of agreement with britain, and that we work with britain in europe's interest, and britain's interest, and clearly coming ireland's interest that they should stay. but it's a matter entirely for the british electorate, of which a small proportion but a significant number of irish people that will have the opportunity to cast their vote on the 23rd of june. >> is talk about being linked to the euro area. this a lot of conversations taking place around europe at the moment as to whether or not we would see copycat referenda on eu membership trade would you expect that to happen in
ireland? it doesn't happen in ireland, where could it happen? >> ireland has made his decision, we are linked to the euro your respective of the decision that britain makes. because of the unique relationship that ireland has with written, our closest neighbor, with over $1 billion in trade across the irish sees over 400,000 jobs in both countries dependent upon that extensive trade, we look to the future as europe having the opportunity to actually set down standards in world trade for the next 50 years. that europe will be stronger by having britain is a central voice, a central part to play in that for the future. when we look very closely, we will continue to do so with britain. if the british electorate were to decide to leave the european union, ireland would still stand
up for britain and talk about those things at european level. but i could not determine what the outlook of what the response from the other country six -- the other 26 countries would be at that stage. ande are all alternatives outcomes that one cannot predict. for us, it's very important that we continue to inform our people, and that the british electorate are fully informed as the nature of the decision they must make, as to the consequences of the decision they must make, and it got to make of their own minds at the end of that process. it's now intensifying. caroline: that was our schools of interview with enda kenny, iran's -- ireland's prime mister. eurozone gdp versus retailers. we take on joe weisenthal. stay tuned. ♪
betty: it's time now for the global battle of the charts, or we take a look at the most telling charts of the day, what they mean for investors. you can access these charts on the bloomberg. kicking things off is joe weisenthal. joe: the story here this week in the markets was obviously the demolition of the retailers. today we got retail sales out that helps tell the story perfectly. i want to take out two different subcomponents of retail sales trade this line is department store sales year-over-year change. it's been negative all year, basically. you can just see a comments
below zero. a very ugly number. on the other hand, this blue line is non-store retailers. that's online, think amazon. that's up now over 10% year-over-year. couldn't get the split in the industry more clear than this chart. it's going on with retailers does not seem to be an economic story. people are spending, overall retail sales were very solid. it's just a huge secular shift in the industry from the green line to the blue line. on gan see that charge #btv 1305. betty: it's not that hard to solve. caroline: that was a killer charge. i'm all about the mobile shopping, joe. i wanted to focus in on the eurozone as the gdp data we had today really tore apart a few analysts i've been speaking to. many of them saying 0.5%, this is a green line. , looks your gdp eurozone
how painful it was back in 2009. we get a figure of 0.5%, not as high as had been expected. the performer was germany in the yellow. continues to outperform rmb much where eurozone tends to go. outperform,ged to it was or what 7%, the laggard is greece, down zero point -- -.4%. greece is really having to feel the pain, dragging down the rest of the eurozone. this is what the debate has been for the investment base. 0.5% of the eurozone, we will take that. 1304.g #btv joe: i like to go back. betty: both charts are great. i'm going to go with the theme
betty: live from london and new york, i'm betty liu. caroline: i'm caroline hyde. this is the european closed. time now for the bloomberg business flash. a look at the biggest business stories on the news right now. the vaio may need to sell assets of it goes ahead and takes over monsanto. accommodation could create the largest supplier of seeds and farm supplies. could help says it
fund the takeover. volkswagen is feeling the impacts of that emissions cheating scandal. it's now its lowest level in five years. bmw, mercedes-benz, and fiat chrysler have all increased her share of european sales trade. it's make or break time for fiat chrysler. the rebound, about to go head-to-head with bmws three series. the luxury sedan junior is on sale in europe. the critical launch the u.s. is set for the third quarter. latest business flash. now, let's talk apple. billion move to china, as the iphone maker faces pressure.
here with all the details as bloomberg's alex webb. joining us from san francisco, know it's early, but really, why china? dd atllion people using the moment? alex: china is the place where apple has endured a certain amount of pain, the iphone sales of slowed. it is potentially the biggest market in the biggest population in the world. getting access into another part of that economy is a huge thing for them. are they caroline: going into the ridesharing company because they want to get into people's phones and cause more use of apple play? or is this like google and a moonshot? maybe they are even getting more. alex: we do not know the exact nature of what will or won't be
shared between the two companies. this is the first official confirmation that apple has some sort of interest in the automotive industry. apple is doing something, developing some for of self driving or electric vehicle. system,into the didi gives them access to their driving data, that will help their autonomous driving push. theline: give us a sense of shivers this may be sending down uber's spine. they are saying we're going to see the ceo of uber go around to the headquarters of apple sooner than you might know. how will uber digest this? the ceo was relatively sanguine this morning. the post on twitter his girlfriend is an apple investor, and that makes her by inference didi investor.
they have service in china that can be used for uber globally. uber is a fraction of the size of didi there. they made some remote just comments, saying they are still beating uber in market shares. it doesn't help them and trying to pull back against didi. caroline: look on it -- betty: what kind of impact does this have on china for driverless cars? alex: when the ceo of i do in our office a couple of weeks ago in oury do -- baidu office a couple of weeks ago, they may place their technology into a third-party vehicle. china itself has its own self driving car. say -- we don't
know what's going on. if you can crack the hardest market in the world and trying out for a particular driver behavior, you can help in markets where things are more rigid trad. caroline: a when iphone sales are slowing down. alex webb, thank you. a fascinating story between didi, uber, and apple getting involved. the european markets end of the day of higher, they managed to call back is earlier losses. that's it, happy friday. ♪
scarlet: good afternoon. i'm scarlet fu. alix: stocks appear mixed, but the dollar rallying could hike rates. and bring on the political pain for brazil company finance chief inherited deep recession and a soaring deficit. kenny stimulate the economy while balancing a budget? scarlet: a merger of the auction space. compete with the like of southern reason christie's? scarlet: let's head over to the markets desk and check in with julie hyman. a better-than-expected retail