Skip to main content

tv   Bloomberg Markets European Close  Bloomberg  May 18, 2016 11:00am-12:01pm EDT

11:00 am
mark barton. you are watching the european close on "bloomberg markets." we are going to take you from new york to london to mumbai in the next hour. here is what we are watching today. u.k. -- we will get minutes from the fed's at room -- april meeting. new holes in europe show just a 23 -- new polls in europe show just a 23% chance of brexit. betty: annual earnings dropped for a separate -- second year in a row and burberry's. apple chief executive tim cook makes his first trip to india with the prospect of one billion new device sales. we will have details on his
11:01 am
visit as the company pushes for its first retail stores in the country. it is 90 minutes into the trading session in the u.s. i want to head to the markets desk where bloomberg's julie hyman has the latest. the decline of the inventory numbers we saw for oil. julie: stocks are sort of bouncing between gains and losses. the nasdaq remains in the green, but the dow and s&p, little changed. maybe that will change after this afternoon's fed minutes. take a look at the bloomberg for the imap. we have a pretty direct split between red and green. care financials, health are trading higher. financials getting a boost as we see bond yields move higher. on the downside, consumer staples and discretionary shares leading declines, and that's
11:02 am
because of target earnings. missedore sales estimates. its losses are accelerating here in terms of the stock, now down by 10%. the biggest one-day decline in about seven years. walmart, which reports tomorrow, down. costco down as well. says there is an opportunity for the company to enact a subscription model that people might be more willing to pay, say $30 a month, instead of one big, upfront some to -- sm an iphone.o buy this is something we have seen others do. he thinks this could reach a $1 trillion market cap. there was a social media alert for micron on the bloomberg. traders are tweeting about the
11:03 am
increased need for memory demand for memory chips with the iphone 7. that appears to be helping give micron a boost. western digital and brocade are also higher. prices have gone down from highs. an unexpected build in inventories at a time when supply was assumed to be constrained, especially with those wildfires in canada. finally, a look at gold and copper, which have been weakening today in the face of a rising dollar. gold off about 4/10 of 1%. copper down about 7/10 of 1%. mark b.: metals declining means -- this is the chart i wanted to show you earlier. better late than never. the stoxx 600, all the industry groups were at a high. we are awaiting the minutes from the latest fed meeting.
11:04 am
we have gone almost a month without the stoxx 600 registering a gain of 1%. there don't seem to be any triggers right now to boost shares. will that change after the minutes of the latest fed meeting? let's look at sab miller. they were saddled with charges related to african operations, costs related to the takeover by abinbev. it is settling assets, shuffling others around. it expects its performance to be crimped by the strong dollar in the year ahead as it prepares to be absorbed into the belgian ,eer maker that is abinbev which is down by 4.4% in the last 12 months. carlsberg is up. heineken is up by 11%. sabmiller is up 18%.
11:05 am
this is a company we do not talk about every day, a german company. midea is seeking to kuka.its stake in china's biggest maker of home appliances seeking to upgrade its factories and cut dependence on workers. shares are up by 23%. that's some gain. this is some decline. inflation in the euro area declining once again, confirming the earlier estimate. %, we last january's have been negative on six occasions. the only positive i can give started qe,e ecb
11:06 am
inflation was negative 0.6%. a year and a half later, we are negative 0.2%. draghi, the president of the ecb, will be hoping that march's boost to stimulus will stimulate inflation as well. we will be here to tell you all about it. betty: let's check in on the "b loomberg first word news." willce president joe biden announce new rules on overtime that may give more than 4 million americans a pay raise. it may also give them a reason to vote for democrats in november. the new rule says workers must be paid at least $47,000 before they can be considered managers that are ineligible for overtime pay, twice as much as the current threshold. onto california. it was a split decision last night for hillary clinton and
11:07 am
bernie sanders. the democratic presidential primary in oregon, while clinton claimed victory in kentucky. sanders is running out of chances to stop clinton. june 7, big tests are primaries in california, new jersey, and four other states. california water officials will consider dropping a mandate that requires conservation while the state is in its fifth year of a drought. the state water control resources board will vote on whether to give local water districts control of their own conservation targets. and, opposition activist groups say there has been an air raid on the central syrian town. people were killed. it happened a day after a similar attack on the same area. that area was one of the first to rise up against president bashar al-assad's government in 2011. british prime minister david cameron has outlined a new transportation law. calls for the
11:08 am
building of u.k.'s first spaceport and encourages the production of drones and driverless vehicles. it would also increase production's -- protections for customers who buy online. global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. mark b.: thank you very much. havehances of a brexit fallen to 23% from 24%, according to a firm called good judgment and its panel of so-called super forecasters. that suggests there is less uncertainty over the results and -- than opinion polls are signaling right now. i want to bring in simon kennedy. a couple of polls came out today. move from 24% to 23%. the probability of a brexit.
11:09 am
how do i become a super forecaster? simon: you have to work with bookp, who wrote a on the subject last year. he said that a chimpanzee throwing edit art board would have as much forecasting -- throwing at a dartboard would have as much forecasting skill. were able to show over time they had the ability to accurately.ions over 150 of them have joined him in a product called -- project called good judgment. 20%,rexit has been below and it has been higher. there is little risk of a brexit. betty: as a central banker, you would be closely watching global
11:10 am
events. the atlanta bank -- the atlanta fed bank president made some comments last night. >> the way i think of brexit is it is a consideration. mapkey thing is to try to whatever seems to be developing back to the real economy in the united states and ultimately back to our objectives. betty: but, simon, it seems like so far, though, if you judge the comments made here, is that there isn't going to be a huge impact on the real economy in the u.s. simon: that remains to be seen. bluebird intelligence is out with analysis -- bloomberg intelligences out with analysis that suggests the drag from the u.k. and the potential spillover into financial markets could push the fed's hiking cycle back another three months. you might want to see what happens in the brexit referendum
11:11 am
first and adjusted that -- and adjust to that. mark : why are the superforecasters and political forecaster, which we've incorporated into our brex func tion, polling average? leave, 40%, remain, 44%. he's near the superforecasters. some of the banks are 35%, 40%. why is there a disparity between this superforecaster, him, the banks? simon: they all have their different strategies. they are not just looking at polls, but who does the polls. they are looking at how past referendums work. most of them end up in status quo.
11:12 am
they are balancing those polls with that. philip tetlock talked about inside and out lot -- and outside view. they are doing some analysis. some people have ingrained positions. they see the world through a certain lens. forecasters try to come to it as an academic question with no prior experience or thought. mark b.: that's one of my aims in life, the the, superforecaster, when i leave bloomberg. betty: super anchor. mark b.: super co-anchor. simon kennedy from bloomberg. apple, next. betty: we talk about china, but what about india. apple ceo tim cook heading to india to find the next room -- boom in iphone growth. it could be more than one billion in iphone sales in the next five years.
11:13 am
11:14 am
11:15 am
live from london and new york, i am mark barton. betty: i am betty liu. bloomberg for the "business flash." americans may not be shopping at the mall, but they are still willing to spend at their -- on their home. lowe's raised its annual forecast. we saw yesterday home depot also reported better-than-expected earnings. investors who got in early on that dell bond sale are reaping the rewards of that. dell gained more than $300
11:16 am
million by this morning. ell is using the proceeds to fund its $67 billion takeover of -- saudi arabia may pay some of its bills with iou's. the saudis are facing a budget deficit this year. some contractors may receive on like instruments -- receive bond-like instruments for what they are owed. apple ceo tim cook is setting his sights on this massive market called india. during a 12 date trip to the country -- 12-day trip to the country, he will be introducing an accelerator program for i await the -- ios developers in bangalore. trips tim cook making this to india now?
11:17 am
>> india is one of the world's fastest-growing smartphone markets. apple wants to get a piece of the pie. so far, they haven't really been in the top 10 of the market. they need to compete better with competition like samsung and lenovo, which are far higher rank. so far, it has been challenging for apple, because their products are out of the range of most buyers, but they seem to be gaining some market share. they have grown about 56% in the first quarter of this year in india. mark b.: siddharth, what is tim india?plan for apple in is it to open a retail store? what is his vision for trying to tap into this immense market? hedharth: so, tim cook --
11:18 am
plans to open a couple of development centers, including and they tomorrow, opened one in bangalore today. apple wants to open its own single-brand retail stores, which are currently not allowed unless they get government position -- permission. they have been importing everything because they are a high-tech industry. allowing them to own their own retail stores -- right now, they use a distributor model. they also want to bring in a used, refurbished smartphone into the country, that would allow them to play at a lower price. so far, the government has not given them permission to do this. i'm sure they are going to keep trying. betty: i know price is a very big issue, as you've mentioned, in india. exactly what are the plans for tim cook and apple? so, apple is --
11:19 am
we met tim cook this morning. all he said was, we are here to learn, and we are not sure what that means. they are trying to break into the market. the market is dominated by the sub-$200 smartphones. apple would have to play in that market. they don't really have a product at that price point at the moment. if their plan to sell refurbished phones goes through, that would allow them to play a much bigger role in the market than they are at the moment. still, they are growing pity fast -- pretty fast, 56%. mark b.: thanks for joining us, siddharth philip in mumbai. pressuread, burberry, mounting on the chief executive to boost sales. details on their plan, next. ♪
11:20 am
11:21 am
11:22 am
mark b.: live from london, i am mark barton. bad news for burberry. ed 2017 profit expectations for the second time in a month. analysts reduced profit estimates. they hit a four-month low. joining us, andrew roberts. tell us about this multiyear turnaround plan. andrew: good afternoon, mark. a rpretty grim reading for burberry. they announced a plan, in sum, we can put like this. kate moss said a few years ago, "nothing tastes as good as skinny feels."
11:23 am
burberry seems to think the thinner they are, the better they will feel. job reductions are part of this. they are going to reduce the assortment of products they have. they are going to cut that by about 20%. they are going to put a greater focus on products like high-margin mag -- bags. this is an effort by chief executive and chief creative officer christopher bailey to reignite interest in the brand, which has struggled a little bit more than peers in what is already a muted climate for demand. mark b.: i have a perfect chart backing up what you just said, on our bloomberg, the mgmt function, which tells you how executives have done relative to their peers. christopher bailey became ceo in may, 2014.
11:24 am
since then, his total return is down 11%. his peers are pretty much unchanged. is it time to split the roles? he has two big roles. how can he lessen the burden? andrew: today, he deflected questions on that. i think he said he is surrounded by a fantastic team. at the same time, he ignored that there were skill sets -- he acknowledged that there were skill sets the company needs. i don't think they will rule out bringing in some support, but, at the moment, he is resisting any changes to the role. he is having to leave the business strategically -- to lead the business strategically, but he is also having to design products that people want to buy. i think that strategy ticks the boxes on the first of his responsibilities, but i think
11:25 am
the market will want to see more proof that he is going to deliver product they are going to want to buy. this raises the question of whether they actually bring in a chief designer to support him. betty: andrew, i want you to talk about the context of burberry and their competitors. are they performing worse? is this ever very issue, or -- i s this a burberry issue, or is well? luxury issue as andrew: it's a luxury issue as well. things are little tougher in the u.s. and europe. obviously, china has had a little bit of a slowdown as well, but that touched everybody. where burberry is struggling, aside from its product assortment and attractiveness, is is its -- attractiveness, is its exposure in europe. chinese consumers aren't
11:26 am
spending in hong kong like they used to. they are traveling to japan. so, for other businesses which at least have a decent amount of distribution there that they can control, those companies have something to provide that chinese consumer. burberry doesn't. it gets 2% of overall sales from japan. drink they speaking, that's just not good enough given the way the market -- frankly speaking, that's just not good enough given the way the market is evolving. mark b.: we are minutes away from the close. i'm rubbing my hands. for banks to survive or thrive, they must modernize. that's the conclusion from this new report. the author joins us next. ♪
11:27 am
11:28 am
show me top new artist. ah, ha ha. show me top male artist. my whole belieber fan group. it's not a competition, but if it was i won. xfinity x1 lets you access
11:29 am
the greatest library of billboard music awards moments, simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. mark: stocks finishing the wednesday's session.
11:30 am
it all happened in the last two hours. 2:30. day again, it has been a dominated by earnings. it also unveiled the multiyear turnaround plan based on a narrow product range, it's a guest cost purge in years, and online sales. most since 1.6%, the march. the worst performers in 2016 out of the big 4 -- burberry, 24% roughlyhristian your, 24 -- 15% higher. underperforming the peers on a total return basis since the chief executive took over in may at hermes. so nova, shares 7% lower.
11:31 am
it's the swiss-based hearing aid maker. missed estimates. a sell call on it. just turning to u.k. employment the jobs market is very much cooling. the men -- the number of people added to the workforce in the first four months of the year, 44,000. unemployment fell by 2000. 5%.jobless rate is at
11:32 am
we've stagnated when it comes to that. that is something the bank of england is looking at very closely, looking for evidence of wage pressures ahead of the referendum. companies are- reluctant to invest higher. betty: ifbetty: you are looking for someone to invest, you might want to invest in tesla shares because they are jumping today. why? there is an upgrade from goldman. they upgraded the shares from neutral to buy. the base target is at $250 a share. you see it is quite a premium from where it is trading right now. it is goldman's confidence in what they believe is the model 3, the razor rations for xp -- far exceeded what they expected. the shares don't count in my goldman sues, which is the disruptor factor of tesla in the auto market. i think goldman might have some
11:33 am
wind at its back. on ourto show you bloomberg -- it is a simple function if you just type in the stock price or tesla equity in an si. the shortages ratio for tesla. it has gone down and hit this higher 34% -- this high of 34%. to gel inlly started terms of the announcement on the model 3. we have seen a sharp drop. people are much more confident on what eli muska saying about the model 3. let's look at the broader u.s. markets. we are green across the board now, just slightly ahead of the fed minutes that come out at 2:00 p.m. eastern time. abigail doolittle has more from the nasdaq here and abigail: we do have a reversal here at the nasdaq. the nasdaq opening higher.
11:34 am
boosting the nasdaq, apples are higher on bearish comments from bernstein. we've got some pretty big things happening the charge recently a come after trading in a sideways range for about a year. .ast week, buying support reclaiming byaway support. the question is whether the buyers will continue to support the stock or if this is just a brief pullback before the downtrend out of the april highs continues to take the stock lower. stay tuned of this one. the continued battle between the
11:35 am
bowls in the bears on apple. betty: talk about the laggards. isgail: off the lows, costco lower. target's challenges are not a proscar -- a proxy for cosco, but it does have its own challenges, including inflation. this is follow-through from the sellers. the selling action earlier in april when the uptrend was broken and reverse. very summer scenario to last year that led into the august lows. so there could be more bearish action for the shares of cosco. betty: -- costco. betty: thank you. taylor: there is a new poll out in the u.k. that shows the biggest lead in three months for those who want to stay in the union.n
11:36 am
according to the survey for london's evening standard newspaper, 55% of those polled said they will vote to stay in the eu with 37% backing the brexit. the british labor market shows signs of slowing down in the first quarter. the economy added just 44,000 jobs, about one fourth of the game at the end of last year. of 5.1%.low putting hiringe on hold while they are waiting for the referendum on the european union. please have sidestepped a political conflict with spain. a decision on budget sanctions after spanish elections next month. they could impose a fine. the acting prime minister ran the risk of incurring penalties when spain breached its budget limit for a fourth year in a row.
11:37 am
official for hong kong is denouncing calls for the city's independence. the de jongh is highest-ranking chinese official to visit hong kong in four years. they said rocking the boat won't do any good. he also said separatism will harm the economy and people's livelihood. and i like this one. sotheby's has had a world record, $175 million at a jewelry sale in geneva. this stone, called the unique ink sold for $32 million by a bidder from asia who wants to remain anonymous. mark: even as global investment banks struggle to turn a profit, the capital markets industry as a whole thrived last year. report warns of a
11:38 am
long-term battled in the industry, saying that traditional banks must transform and divert in order to remain competitive. .oining us now is will roads thanks for joining us. tell us what the value migration next the means. how is the competitive landscape of the industry changing right now? will: what we really thought about in the report, the fifth year in, talking about investment banking forms that hasn't been a positive story, struggles from a reduction of costs and also capital increasing. on a performance basis, the banks have been struggling. but when we decided to look at
11:39 am
the overall capital markets' ecosystem, if you will, and looked at all of the varieties, the managers, hedge funds, information as far as the it wills, we found that continue to grow out to 2020. the question is which players will be in a better position to capitalize on those opportunities versus others, and what will the investment banks do about it? mark: let's answer those questions than. a, which players. b, how will the bank scope? growingset managers are and continuing to grow. trend drivingey those opportunities are the growth in assets under management and development and data and analytics. and who is in a better position to capitalize on what is
11:40 am
becoming the cornerstone of the industry, which is financial and the ability to synthesize the signals from the noise. betty: you talk about the thetal markets ecosystem, value migration's. i want you to explain that a little bit further. the: everybody within industry has fulfilled a traditional function. banks traditionally have helped companies raise funds through securities. and they also help their clients transfer risk. . offer post-trade services. asset managers place capital on behalf of asset owners. so everybody has a role to play within the market. the question is in the issue becomes, as data becomes more of a driving force within the has access toho that information, how might they explore additional revenue opportunities away from their core value propositions? ? betty: that's were convergence
11:41 am
comes in? wi that's right. ll: betty: explain that a little bit more. could they, for example, take a role in advisory? banks provide a lot of information to the market for free in the hope of generating trading revenue, indices, benchmarks, as such. should they providing those for free giving -- given the fact that services trading is down? mark: it has been the worst first quarter results for the investment banking industry in three years. what's the outlook? two to three to four year horizon looking for -- looking like for the investment industry? on howe are not positive the investment banks will perform on the traditional model. we don't know that there will be any major change in direction on the revenues. we think that flats and
11:42 am
declining performance specifically for this year, given the fact that they first scored against a be a bellwether emma doesn't historically bode well for how we will see them perform this year. really come around cost reduction efforts, the banks have been making strides, but they are getting challenge because of mitigation and finds. -- and fines. the capital costs is the real killer for the banks. the fact that they inflationary pressure of capital changes in regulation is really going to impact their ability to return value to shareholders. betty: thank you so much for joining us. a principal at the boston consulting group. mark: i'm rubbing my hands again. charts, ftsef the stocks versus a flattening yield
11:43 am
curve. ♪
11:44 am
11:45 am
betty: it's time to take a look at some of the most telling church of the day and what they mean for investors. kicking things off is oliver renick. go ahead. oliver: i know mark barton likes line charts. top line here, we will look at flattening your curve -- yield curve. this is a spread between the 10 year and the two year treasury bond. i think people know about this, this spread has gone real tight. it has been that way for a while. particularly this year as
11:46 am
investors push out for yields. in terms of the duration risk, what happens if you are a bondholder and interest rates rise, want to look at interest-rate risk from a stop respective. line here is the chance of a june rate hike based on fed funds futures. this is what happens when you have a spread that is so tight and people are so banking on this idea that the fed is not going to go in june, we have some comments from fed speakers yesterday and the chance of a hike suits up. it has got to the point were any. signal from the fed's pre-sharp. what you had in the start. -- the stock market is high valuations for defensive end you'll roxy's, consumer -- yield proxies, and consumer staples. , moreprepared for that volatility coming forward. betty: so jittery, investors are
11:47 am
you mark: -- investors are. this is oliver who last week was talking about the valuation gap between large and small u.s. stocks. . it's got me thinking about u.k. stocks, the gap between the ftse 250.nd the ftse it matters because the referendum is only a matter of weeks away. what we sin this year as they 100 outperform all -- and i say all, it's major european peers. how has it done that with the referendum just a month away? international index of minors and oil companies. thesef there is a brexit, companies can stand it. this chart shows us is valuation for ftse 100
11:48 am
companies have risen this year. the valuation for the other two indices has fallen by 15% this year. that means the valuation of the ftse 250 relative to the ftse 100 is at a one-year low. why are these companies getting battered? pretty simply, they are u.k. centric. the concern is, if the brexit happens, it is the economy they gets hammered, affecting the ftse 250. i love that chart. i love both of your charts. and i applaud you, mark, for honoring all over -- oliver. theink he is going to set trend again today, particularly
11:49 am
because we are watching the fed minutes later this afternoon. so i give the wind to all of her today -- to oliver today, mark. much more ahead on bloomberg markets. we are talking about a mental that you may not have heard of, niobium. we are going to talk about that in a moment. ♪
11:50 am
11:51 am
bloomberg now for the business flash. vw is trying to defuse investor criticism in the wake of the missions cheating scandal. vw is working on a plan to improve profits. hone has slammed bw for excessive pay vw
11:52 am
a polluted costs. ikea will sell 27 retail parts, a dozen in germany. payment system android payroll that in the u.k. today. . it is the first country outside the u.s. to support it. shoppers will be able to pay with android-powered smart phones anywhere that accepts mobile payments. alphabet calls the u.k. one of -- most advanced, conta advanced contact a list countries in the world. that is the latest bloomberg business/. -- business flash. to produceused stronger lines of steel for industrial pipes and aircraft.
11:53 am
arts there has been a bit of a buying frenzy, showcasing the growing appeal of the various boutique markets. it may be worth as much as $4 billion. ?ow do you discover niobium thomas: personally, i didn't discover it. it was discovered by michael hatchet in 1800. mark: very few companies have their hands on niobium assets. isn't that the case? and that's what makes it doubly interesting. thomas: indeed. there were three big producing mines in the world. the biggest one in brazil is owned by a private company called cbmm. it really has a strong grip on the market, able to control
11:54 am
production, supply and prices to a large degree. betty: is it hard to price? wife? -- why? thomas: it has to be a liquid market. the market is to liquid to provide a price for this market. betty: tom, the demand, talk about the demand for this and why it is on the rise. used in steel to make steel stronger and lighter. you can put a really small amount, maybe went with as a parts of steel and you can put maybe $10 worth into a car and use 100 kilograms less steel. it is really a great way of using less steel, making steel stronger and find new high tech for steel with these kind of properties in it. betty: greg burton was a man mentioned in your story.
11:55 am
never heard of it. how can an expert never have heard of this commodity that no one knows about? thomas: i've been writing about commodities for eight years. i know what is going on and i had never really heard of it either. there no real reason that you -- that youne it would unless you mini\/. there are only two other minds. one is controlled by brazil's richest families come in a for sale. when you were doing this story, did you discover any other commodities you never heard about just by researching this story? thomas: a couple, but we will keep them for future stories rather than giving the scope. [laughter] mark: thank you.
11:56 am
what a wonderful story. the commodity that nobody knows about. take a look at where european markets finished the wednesday session. it was a day of gains. we are awaiting the minutes from the federal meeting. of a commodities selloff today. gains in germany. gains in france. it is all about the fed minutes. still, it has been a months sin ,- a month since they stoxx 600 looking for leverage for the european market. that's it for the european close. ♪
11:57 am
11:58 am
11:59 am
12:00 pm
scarlet: good afternoon. we areere is what watching at this hour. the prospect of higher u.s. interest rates pushing up the dollar. we will get the minutes from the fed april meeting in two hours. scarlet: and the expectation of a fed rate increases pressuring the elements of steel. alix: so long time warner cable. it closed its $55 billion purchase of the provider. we will hear from top -- from tom rutledge in the hour. scarlet: we are halfway through the u.s. trading day. let's head over to julie hyman who has been tracking the moves.

8 Views

info Stream Only

Uploaded by TV Archive on