tv Bloomberg Markets European Close Bloomberg May 25, 2016 11:00am-12:01pm EDT
mark: live from london, i'm mark barton and you are watching the european close on bloomberg markets. we are going to take you from new york to london and milan in the next hour. here is what we are watching today. greece's 10 year yield pushing below 7% for the first time since november. creditors reached an agreement granting more than 10 billion euros in aid. we are live in athens. china is taking a greater interest in the feds actions, reportedly asking about the timing of the next rate increase. just how exposed is the country to the central banks move? uber planning an aggressive expansion in european cities, but can it compete with heavily funded trend -- heavily funded
public transport? thery: let's head to markets desk where julie hyman has the latest. how are we seeing the market today? julie: still holding up pretty well at study with the gains here with all the major averages continuing their upward climb. the dow jones leading the gains up by 160 point. the groups on the move, we see financials lead the pack again. have seen these bank stocks rally along with bond yields and this perception that the u.s. economy is improving. we don't have a big economic report like yesterday but energy is hanging onto gains as we see oil prices fluctuate in the wake of that inventories report. hpcentage wise, we've got enterprise on the deal to spin
off the enterprise part of the deal. transocean rising as oil prices continue to rise even as they are fluctuating. has beene energy gaining as well. let's take a look at oil after that inventories report. it has paired some of its earlier advance. we spoke to an oil analyst about the good and the ad in reports and it was a larger than estimated drawdown in crude reports. we did see a build in gasoline but there was also an uptick in gasoline demand. that is one of the things helping to support the price even as we saw the build in gasoline inventories. i want to check on the declining side of alibaba here. the company said it was being investigated by the securities
and exchange commission. consolidatedo with practices and related party transactions, so we will continue to watch that. biggest today again since february. what a return to form for the stocks x hundred. groupsingle interest except real estate and retail -- getting used to the idea of the fed raising rates either in june or july. and of course, greece received more aid. it is the day for corporate news. regis is one of the world's biggest operators of service offices and was upgraded to outperform at rbc. price target was raised to four pounds versus three pounds. their market position is unrivaled.
it sees significant expansion potential and strong structural growth drivers. seven of the nine analysts that cover this are by and there's an average price target of three pounds 60, implying a 14% upside. all about greece. the yield on the 10 year falling to the lowest level since november. but let's move away from greece. we have some breaking news. at&t is said to be interested in buying yahoo!'s internet business. yahoo! is in the process of selling its core business and we are hearing the sales process will continue for two or three more weeks. at&t will have to compete with others, including verizon. verizon is said to not have submitted one of the highest bids according to sources saying
at&t is interested in buying yahoo!'s internet business. all of this after yahoo! started a review of the company's options in february after pressure from investors and a sales turnaround. let's get alex sherman for a closer look at what is happening. breaking news at&t and other bitter. is weird because we were told about six weeks ago that at&t was not going to submit a bid for yahoo! and others followed our reporting on that. heard at&tlications was not going to bid for yahoo!. what we have learned is that they have bid and are still in the mix. rivalre verizon's biggest . we thought and at&t bid for yahoo! made some sense. these onlineo have
media access and it would behoove at&t to at least look at yahoo!, to challenge verizon's dominance there. so that was a bit of a surprise when we heard they were not going to bid. this is less of a surprise if you backup the lens and it perhaps put pressure on verizon to up its bid if it really wants yahoo!. we have learned verizon submitted a bid that was not one of the highest, which has links in this process to some degree. verizon knows the business so well that yahoo! wants to find out that if we are not going to sell to verizon, someone is going to outbid verizon, do they understand the business? this goes to private equity did not get the specifics on who made the higher bit, but we do know the higher bids have come from some
entities that don't understand yahoo! as well. that is what we have been told. so they have spent the last couple of weeks getting the bidders up to speed to figure out what are you going to do with yahoo!? it is a fascinating story. when is the endgame? that it are hearing will probably be a few weeks from this point, which is not a surprise. the idea that this thing major rag on until early june has been reported by others and fits with the general timeline of what something like this might take. bet andne is a good there will likely be a final deadline. everyone remaining will submit their bids and at that point, yahoo! will decide who they want to move forward with top probably on exclusive basis, and i imagine we will get more and
more of the details. has been an interesting reporting process. we got a lot of information up front on who the bidders were and then there was a lockdown from yahoo! and a lot of people around them when they decided we are going to tighten up on leaking information. had to work our sources hard to figure out that at&t is still involved here. to go to thent markets desk where julie hyman is tracking the reaction. julie: yahoo! shares were lower and now they have reversed -- they are not as low as they were earlier. i was looking at the wrong thing. 2% but aecline of significant leg up since this news came out. yahoo! shares falling along with alibaba. that had pulled down yahoo! as well and continues to do so but we are definitely seeing a leg up.
if you look at the bloomberg here, it looks a little more dramatic. here's the pairing of the losses we had been seeing in the stock. at&t has not been seeing much stock reaction in the wake of this. you are talking about a larger company in the terms of the effect of bid would have on it. i don't know what alex's hearing on the accretion front but seeing more of a reaction certainly in those yahoo! shares, which you might expect. sherry: what is going to be the end result of all of these bids and where do you think the two companies will go? alex: knows the prize that at&t is bidding. it's not really going to move
the needle and it's probably not going to move the needle for verizon either, though there are some synergies there. theoretically, verizon makes a little more sense and maybe they can afford to pay a little more money. in essence, yahoo! is probably rising because the threat of at&t is pushing verizon to been a little more. one other negative news we had is liberty is not expected to be a major player. maybe you could rule them out as the danst, but we have gilbert bid, bain is still involved, so there are enough other players that even a beleaguered asset like yahoo! may generate a small bidding war toward the end if these companies want to own yahoo!. sherry: we will keep watching the stock for the rest of the
day. thank you for joining us for this breaking news -- another bidder for yahoo!. greece and get on to turned to the story that broke a over last earlier night with a meeting of the euro area finance ministers concluding yesterday that standing down from its hard-line stance after joining the payoff. our bloomberg news economy reporter joins us. have we avoided another summer of greek myth content? i think we have. that's the main take out of this deal. it buys a little stability over the summer. we are not going to have any major incidents. liquidity boost that comes from the year-end clearance comes at a good time because there's going to be a big wave of tax increases, so that's
going to provide a bit of a hit to the economy and maybe a liquidity injection can help that. but for the prime minister, alexis tsipras, he probably won't be able to make a huge amount of political capital out of this because there's not much there on the debt and there's a feeling that the greeks have generally been quite wary and disillusioned with austerity. is probably too little too late. a big story was the imf doing a back, saying they would not do reform unless there was some form of debt relief, but it will probably get involved now but there won't be debt relief until the program and. are we surprised at the move from the imf? marcus: that was the other big story. one of the euro group statements
tens to be quite low on jargon and short on details. one thing we might look forward to over the next few weeks are a few more of those heads emerging, in particular the debt relief was broken down into short term, medium-term, and long-term timeframe's. wanted was for everything to be settled before they commit to more. but for the medium and long-term, the euro group ready much came down and said we are not going to bother dealing with this until 2008. so that was quite a change from the imf. you have lots of different levels of the imf. you have technocratic officials involved in the talks and political officials at a higher level and ultimately, the big decision-makers are the governments, of which the
biggest stakeholders there are the u.s. and western european governments in terms of clout. of internal pressure took place with me imf is probably a picture that will emerge in the future. but paul thompson, the european and of the imf came out talked about the imf showing flexibility. he was considered quite a hardliner. great to see you. more bloomberg markets next. stay with us. ♪
this is the european close on bloomberg markets. let's turn to a story that is very popular today -- catching the eyes of investors at the annual strategic dialogue -- china is planning to ask the u.s. about the timing of a fed rate hike according to people familiar with the matter. surprising given that chinese policymakers are preparing for the potential impact of policymakers. i want to bring in jpmorgan 'chief global strategist. the dollar could spike and the yuan could plunge. they are now basing it relatively to a basket of currencies. what could be the impact? could we see another january or august repeated here? don't think so.
i don't expect policymakers to give a straight answer and i think the federal reserve will make announcement in june whether they are going to raise interest rates are not. we talk about markets spiking or plunging, we are talking about 25 basis points. at the one of the jobs federal reserve is trying to desensitize the economy too small increases or changes in monetary policy because markets are too sensitive relative to its affect on the economy. sherry: but at the end of the day, the question is will they postpone doing anything at the last minute? that has been the problem all along. the fed is like the parents of a new two years old -- new two-year-old.
occasions, they have had the opportunity to raise rates and tighten policy and have stepped away. are increasing the pressure on themselves and they made it clear there were three them to that would lead raise rates in june. at those rates are satisfied, we could see some progress and a tightening of labor market. thinkget these come i do the federal reserve will move in june and they are justified doing it and should have done so earlier. have investors got used to the idea in the last couple of days? around toors coming the idea that the fed is about to hike quality in the next couple of months? david: i think they probably are.
seen a gradual improvement in the market here but a small increase doesn't hurt the global economy. i would argue that it hurts it. if you look at the futures market, it doesn't seem to be pricing in a fed move but i would be distrustful of the futures market. i think equity investors recognize the federal reserve likely to raise rates in june or july. meanwhile, china is trying to manage its currency. holding it fairly steady against the dollar, dropping it against the basket. if the dollar continues to strengthen, what is its policy going to be? fear of a piece of january when it seems to lose control? i want to add into that
question -- we had a wall street journal report saying that they tried to measure the yuan against a basket of currency. how probable is that? david: i think china wants stability. they are trying to move toward more openness and what we found is that we could not do that. them to move with a basket of currencies and it seemed they were setting up a big devaluation. from my position, they would want to maintain that stability. the real question is can central banks coordinate to stabilize currencies? sherry: and a whole different issue for japan. goldman sachs saying it is going to slide 13% against the dollar
this time next year. i can't predict that with any accuracy but i think they will have monetary and fiscal policy combined, it is very close to helicopter money. a very difficult situation for everyone. thank you very much. we have much more to come on bloomberg markets. stay tuned with bloomberg television. ♪
a contenderremains to acquire its core internet business. back in april, at&t is said to have decided against making offer. at&t's continued presence could fit against rival verizon which has long been considered a front-runner to buy yahoo!. the process is set to conclude in the coming weeks. fromsoft is backing away the smartphone business. the company will cut 1850 jobs and take a restructuring charge. most jobs will be cut at the base of the smartphone business they acquired from nokia in 2014. they have already written off most of the 9.5 billion dollar deal -- $9.5 million deal.
buyers were competing for a limited supply of properties. the median price of an existing single-family home almost $218,000. that is your business flash. mark: we are five minutes away from the end of this session and it looks like we will see the biggest two-day gain. toestors are getting used the idea that the fed could raise rates in june or july. the stocks euros 600 up and investors are cheered by the notion that creditors approved the 10 billion euro aid payment. the european close is next. stay with us. ♪
european close. was it raining there? it looks to have been. that was a live shot of london -- looks like we are going to have our biggest two-day gain since february. what a turnaround, ending a trend that began last monday , gains,ns, losses losses on alternate days. the biggest gain since february cheered by the greek deal. greece will receive 10 billion euros from its creditors. have we avoided another summer of greek's content? m&a us has lost attempt of its market value today, the biggest loss since 2008. the chief executive unveiling the new reboot of its clothing business which has been ailing for the last four years. embrace thed not new strategy, worried it is going to hurt profits.
the company will reduce styles to the clutter its stores and cut prices on some of its items and dialback promotions. cantor fitzgerald calling it evolutionary rather than revolutionary. investors were not embracing the idea. stagecoach, a big us company here in the u.s. with its mega bus ran being dropped from the stoxx 600. jpmorgan cutting its rating to neutral. the pace of growth in the u.k. , shares not as low as they were, still down by 1.7% this gives me the chance to use a function on the bloomberg terminal -- the chief executive
is leaving. analystsuestion from now is what would the new chief executive do. will he instigate further asset sales? he has announced this revised strategic plan in november and many said it was not ambitious as one of the most capitalized lenders. he ruled out selling new shares. will the new chief executive do that? in to his position in september 2010. the total return since then, down 20%. his peers saw a loss of .3%. saw unicredit underperform its peers when it comes to total
return and that tells the story. we will be taking a closer look at them later in the show. let's look at the broader u.s. markets because it is another day in the green. energy, werials and see u.s. stocks rising for a second consecutive day. this is the strongest rally in seven weeks. liveve abigail doolittle from the nasdaq in midtown manhattan. what are you looking at? fireil: you are right -- for the second day in a row. at&t said to be interested in bidding for yahoo!'s internet business. this is perhaps the second-best well-known name along with verizon. yahoo! is saying the sales process is likely to wind down in a few weeks and it looks like
price could be a sticking point. expect haitians had been for a range of $4 billion to $8 billion but the wall street journal is reporting verizon and other bids could coming in closer to $2 billion or $3 billion. we do have shares of yahoo! down more than 2%. the biggest boost for the nasdaq , helping the rally our shares of apple, up nearly 1% despite news of a setback in india. the fastest-growing smartphone market in the world. require india would apple to source components locally. be going on is what we are choosing to call the warren buffett rally. stocks are up 8% from the disclosure of the $1 billion position by berkshire hathaway. we can see the stock has rallied nicely. it broke the low the buying
support. on the announcement of this position, the stock is up 8%, perhaps going back toward the we have lots of technology stocks trading higher along with apple. sherry: let's check in now on the bloomberg first word news is morning. taylor: we are starting with france taking emergency measures to deal with refinery strikes that have caused nationwide gas shortages. the french had begun releasing fuel from their strategic reserve. panic drove it to three times the normal level and striking workers are unhappy with labor reforms being pushed by the french president. france is not taking any chances for the european football championship. about 90,000 security personnel will be mobilized for the event.
some will be french troops that have been guarding key sites since last years terrorist attacks. a leak in the european union could force them to extend protections into the next decade. of up to $44ficit billion if the country leaves the eu, it could lead to more spending cuts or higher borrowing and that. hasiled ukrainian pilot been released and sent home from russia. he was exchanged for two russian servicemen being held by ukraine. she was the highest profile prisoner in the conflict. militants seized part of the country. she said she was kidnapped on ukrainian soil. wants to seeunion more european content from video-on-demand providers. new proposals would force netflix, amazon, and others to
devote 20% of their catalogs to european content. andcommission says netflix itunes are just above that level right now. helpix says it will not european production increase. mark: thank you very much. the unicredit chief executive is leaving. will his departure mean significant changes in the banks strategic land? investors claim the plan was not ambitious enough to recapitalize the lender, one of europe's most poorly capitalized lender. fromy screen joins us europe. does this pave the way for asset sales and possibly a capital increase?
dan: the main challenge facing capital needs. we have reported in the last week that management may consider doing some asset sales, for example in their big internet bank. they could dispose of some of their assets in turkey or poland. they haveted earlier, always been against doing a rights issue but clearly, analysts have pointed out the to raised need anywhere from $4 billion to 10 billion euros in fresh capital they can dothink this purely by moving some disposals. it's going to be the top priority for the incoming ceo. >> how long would the successor to him last?
>> i think it's going to go quickly. the bank said last night when they made the announcement that the chairman will be leading this process. only take a would couple of weeks. probablyhe search will be concluded and they will come up with a candidate. i don't think they can go longer than that given the question of capital needs. who knows what markets will be looking like going forward next few months. i think things will move fairly quickly. external candidate more likely? dan: i ink so. he and his process or both were veterans at the bank and i think there is a general view within the board that it is time to go
outside. some of the names that have come up so far include marco marelli. the head of the bank of america operations in italy. we could see former heads of along withbanking others, so i think yes, there seems to be a consensus from going outside of the banks internal management. sherry: thank you very much. advance towardts $50 a barrel this morning. take a look at this chart. it did advance work but did not reach that level and this even when we had bullish numbers u.s. supplies declined more than expected, down 4.2 million barrels. it breached the
$50 level was back in october, back in november, and we have seen and 80% recovery but still failing to reach that level. big question is can oil make a comeback? not yet. intalked to matt miller berlin. i think sometimes you see a recovery but there is a lot of uncertainty. looking at the producing side at the sameabia, time, there are predictive growing in iran but we would probably have a tough year still.
>> what are you going to do with you are? it's expected to be even less than 13 billion guided you. what is the story? what are you going to do with capex? >> we continue to invest in world-class projects. we want to that, maintain flexibility around 46 billion u.s. dollars in the coming years. we could continue to delay projects if we decide to. >> a lot of people talk about how this is a saudi strategy to gain market share in shutdown shale production. they have been successful at that.
do you see market share gains and can you ride on the coattails of shut -- of saudi strategy here? >> we have to be prepared for the volatility that we see. need to improve on the projects and concentrate on what we can do something about. that was the executive vice president and cfo of norway's stag oil. we have breaking news right now carolinas the north community bank and bloomberg is reporting exclusively that it is said to be exploring a sale. of $1.4arket value billion. they have more than $7 billion in assets. you can see the stock spiking, up more than 2.6%.
battle of the charts, where we look at some of the most telling charts of the day and what they mean for investors. you can access these charts on the bloomberg. kicking things off is bloomberg .tocks reporter, oliver renick oliver: i'm a little scared but i can see in his chart the central intelligence agency. sort ofthe weird phenomenon that has emerged the past month or so in what is known as the low volatility etf. the 30 day ratio of realize volatility. what you are looking at here in the past month is when this white line goes above one, you are getting bigger swings in the low volatility etf which is not supposed to happen. this is supposed to insulate you from swings in the market.
typically, lower volume equates into stuff like staples and volatility which we know as of late have gotten very expensive. people try to move into those with a value play and they are subject to bigger swings on those key levels. they get a little more jumpy and ,hey are heavily weighted almost twice as much as they are in the s&p. been hearing so much about this because so many people are going into those etf's, but i guess volatility is back. what do you have for us? have debt on my brain today. greece has 320 billion euros of debt. it will receive 10 billion euros of aid, but that is a lot of debt and it desperately needs some debt relief. thatt me thinking, what is relative to gdp?
fair against the other big valved markets out there? that's the second biggest in the world. italy is 135%. top 10 countries in the world are eurozone countries ireland, spain, belgium and france. they are the other four in the top 10. ratio iss debt to gdp 80% and europe is 90%. but the biggest in the world by a country mile is japan. is 227%.o gdp this absolutely blew me away because i wanted to discover the lowest in the world and guess what, it is new zealand. , will you haveo
lunch with me today? i'm torn right now because i went to karaoke with ver. you included japan, new zealand and asia, so i will give it to you, mark. mark: i tried everything. i was a desperate man. oliver: somebody has more debt than greece. respect. but then they remind us that most of the debt is held domestically, according to the japanese. uber's chief executive is in brussels this week to push the uber pool program, saying sharing cars for the commute to work can change cities hit a road bump thanks to public transit already in place.
shery: a beautiful shot of the skylines in new york. live from london and new york, i'm shery ahn. i mark barton. this is the european close on bloomberg markets. shares of the conference in brussels include commuters sharing car rides together through services like uber pool. but this is already up and running in the u.s. and china and has to come the -- has to compete with a robust transportation system in europe. a bloomberg view columnist wrote about this. are we what it to the public transportation system -- are we
wedded to the public transportation system in europe? we are, much more than the people in the united states. brussels carries as many san franciscothe bay area transit system, even of san francisco of is seven times that of brussels. partyities in europe are well served by public transport, unlike american cities. the only exception in the u.s. is new york, which is an outlier. most people there use public transport. europeans if preferred car sharing, do their routes match very well? european cities are unlike u.s. ones because most of them are not planned on the grid and they don't even have defined business areas. lots ofe are going to
different places in the cities andpublic transportation traditional taxis are much more suited to the routes people take to work than carpooling. probably more effective in the u.s. because of the way the cities are the entire way of life, which is very different from the way it is in europe. how have other car fare -- carpooling services fared so far? their french services and in germany, there is carpooling.com. are long distance car sharing services, when you are going from one city to another, you can sign up with someone already going there in their car to travel with them. these services exist in the u.s.
servicesbut carpooling within cities are not very where it -- not very well developed in europe. there was a service like that which ended late last year because it was hugely unprofitable and the city was having to subsidize it very heavily. mark: thank you for joining us today. a great story on the bloomberg -- uber carpools are no match for public transit. have a look at the way equities finished wednesday's session. alternating on a daily basis between gains and losses. advanced sinceay february. that is the european close. bloomberg markets continues. ♪
scarlet: from bloomberg world had quarters in new york, good alix: afternoon. i'm scarlet fu. alix:i'm alix steel. don't fear the fed is the new mantra from global markets, rallying as investors price in, -- as global economy can withstand higher rates. scarlet: oil maintaining its showingnths high after continuing declines in the u.s.. we will look at outages in venezuela and nigeria. alix: and tutor is just one of many getting burned by a lack of hedge fund investments. where do investors go? will get those answers in this hour. halfway through the trading day. let's head to the markets where julie hyman has been tracking the moves.