tv Bloomberg Markets European Close Bloomberg May 26, 2016 11:00am-12:01pm EDT
mark: i am mark barton. you are watching the european close on bloomberg markets. ♪ mark: we are going to take you from new york to london to milan. this is what we are watching today. commodities on the move. and brent crosses $50 a barrel. iron ore rolling to $50 overproduction issues. vonnie: saudi arabia set to probe think currencies products as a new currency code of conduct report is rolled out. it's changing the fx industry under way? mark: the real madrid goes against athletic oh for the league title. we are breaking down the massive lu of europe's biggest football ofb -- massive value
europe's biggest football club. vonnie: the latest, julie? after the two-day rally we have seen, it is not unusual after the activity we have seen for stocks to take a breather. as mark sebastian, an options trader we talked to yesterday, pointed out, now we are getting into the holiday weekend. people have put on their bets. for theere have left long weekend. drivers are in the red, but not by much. the dow's losses with a decline of 47 points. of can see an exact flip yesterday. yesterday we saw cyclical groups leading gains. the defensives lagging. it is the opposite. consumer staples on the rise today and materials/energies/financials/te ch declining. oil prices have been bouncing
around after touching $30 a barrel in london trading and wti in the u.s. it seemed to follow on the heels of the durable goods number that came below estimates. .il is off 6/10 of 1% energy stocks are seeing that follow through from the now declining oil prices. energy was the best-performing group yesterday, a flip flop of yesterday. exxon, chevron, marathon -- a few of the falls we are seeing. dollar tree out with numbers that beat estimates. they saw better traffic. they have been cutting costs. is cutting costs and beat estimates. even excluding items that beat estimates and rose by 3%. hp following on the heels of the hp enterprise news am its beatingand merger, estimates.
cost cutting is part of the story. u.s. foods, the biggest u.s. ipo, the company raising zero point $2 billion, selling shares at $23 apiece. they are rising by 8%. it was worthice 4.9 billion dollars. the value is rising along with those shares. mark: we have been stuck in a .25%, one quarter of 1% number trading range. we are lower by 1/10 of 1% on the back of the to-date 3.5% rally, the biggest in three months. oil stocks are falling, they were rising along with crude. oil has come off of the high of $50 a barrel. this is the big story, by a country mile. the stock move. -- popularanual espanol needs to so stock and asld suspend its dividends
uncertainties could leave to provisions of 4.7 billion euros. in 20 --ady sold stol sold stock in 2012 to boost its capital basis. a legacy of the crash in the property market in spain, the shares are down by 25% to a record low. interesting reports from citi. they have been looking at european bank currency exposure to the u.k. ahead of the referendum in four weeks. it is breaking down revenue and loan exposure i region. non-u.k. banks exposed the u.k., the bank of ireland, santander, deutsche bank, it highlights berkeley having limited u.k. exposure, less than one half the u.k., lows to domestic focus banks are more exposed. santander is down by 2%.
that was an interesting report. big news out of the u.k., the latest gdp number was released earlier. we saw the figure the same as the preliminary estimates, .4%.h of what is new is showing that consumers are resilient ahead of the referendum. household spending rose by .7%, the fastest pace in a year, offsetting declines in export in business investments. will feelpicture debate about the impasse, the therendum, is having on u.k. economy. what is not debatable is that the economy is slowing. .4% in the last quarter versus .6% in the fourth quarter. on sterling, 146.79, down 1/10 of a percent versus the u.s. dollar. first word news, taylor riggs has more.
donald trump has hit the magic number according to the associated press. number of delegates needed to clinch the republican presidential nomination. 1238, one more than what is needed. he was put over the top by small number of unbound delegates that told him they would support him. oilp is going to shale company to give his first major speech on energy in bismarck, north dakota. it is a state eager to hear how he could help the oil industry overcome its worst downturn in a generation. a bill allowing those those tovivors of the 9/11 attack sue saudi arabia. house republicans and democrat say it could invite legal retribution from the saudis
against the u.s. military. copper oversight from the epa. congress is preparing to send president obama the biggest overhaul of rules concerning chemicals and for decades, giving the epa more power. companies like dow chemical's pushed for the bills because they wanted consistent rules to follow. global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. i am taylor riggs. .onnie: thanks the roller coaster start to the year for stocks is showing signs of evading the average weekly intraday swings for the oil country world index. they have been narrowing in two months. guest is next optimistic saying despite flatlining the market continues to trade near an all-time high. joining us is patrick spencer, the vice resident of equities at robert baer. there has been no record high for over a year.
some saying that is not a good leading indicator. where is the earnings growth? give me your thoughts. on manyit is not occasions you get flatline markets. that is not a concern in our mind. earnings were down 10% in the first quarter. you would think the market would get hard on that races. it barely moved. that tells me there are better times ahead. we at baird look for a 2% earnings growth. the fourth quarter will be up quite sharply. if the earnings picture is slightly better given the market has not moved on and 11% decline, the market will begin to pick up. mark: the records are just around the corner. you know i like to put you on the spot. is that what you are suggesting? .atrick: i am suggesting that
last time i said it was rare to see equities yielding more than on's. timesas happened five since the 1930's. every time the market moves up substantially the following year. the only year it wasn't was 1929. brent is picking up in the market, which encourages me. it is being led by the value stocks. the sentiment indications, the american to the association of investors intelligence, the indicators are the lowest in terms of bulls. our clients are underweight in the u.s.. owned.es are under mark: it showed just that. vonnie: an indicator, i have it pulled up on my bloomberg. you can look at it. you have the aaii sentiment
reading. it is on a bit of an upswing, which can be a contrarian indicator. couldt mean the s&p 500 be ready to go lower, contradicting what you just said? basis that the market has held up near record highs and the earnings were down 11%, i think it is anticipating earnings will pick up in the second half of the year. lowernly, in terms of a dollar. economic indicators, that you have seen recently, would indicate to me that the earnings numbers would support that. we have got into the space where yellen is thinking about raising rates. to only do that if the economy can handle it. the economic indicators that she, you, and i are looking at say they are picking up. they are above 50 and growing, indicating that world growth is
growing. it is not fantastic or dire. in that environment, equities can do very nicely, especially given the valuation. vonnie: what if the fed raises in june? a sound bite from bill gross, the bond king, from erik schatzker's conversation with him yesterday. bill: i think they will move in june. i think that because the second order is looking decent. instituting a 3% come back from the first quarter. jobs will probably be adequate in terms of growth. the dollar has gone down instead of up. the stock market is close to its peak. for all those reasons, and enter conditions and real economic statistics, this is their time, if ever, to move. morenk janet yellen is
dovish than some of the governors and presidents. vonnie: where is your conviction that if the fed moves equities will take confidence and go higher? patrick: if you have looked in rates,t interest 2004-2006, interest rates were rising and the market went up. are-2009, interest rates going down and the market went down. it doesn't mean because interest rates are rising the market will be affected. you are talking 25 basis points. they will only be raised if the economy and handle it. if the economy can handle it, indications for earnings are optimistic. on that basis, equities look interesting. mark: what is on your mind with regards to the u.k. referendum? it is four weeks away. it would be remiss of me not to mention it. barring utility measures and haves of hedging, assets
fared remarkably well since february. is that a worry in any way? patrick: not actually. the bookies have always been right on the direction of these outcomes. i went into a bookies earlier into the week. they say the u.k. will remain. the implications are quite severe if we do exit. bookiesasis that the expect the announcement to be gottive, i think -- they the scottish referendum right, the election right -- follow the money. i, personally, feel we will remain. personally, once again, my heart says we should be out. , saysd, my economic head we should remain. personally, i think the market
is saying we will remain. i think the market would be more worried if we weren't. i think the ftse will be hit hard if we come out. the areas that won't be hit are the smaller stocks. that are theones most shackled by the regulation and bureaucracy of russell's. -- of brussels. personally, i think we remain and the market is discounting that. mark: vice-chairman of equities at robert baird. world leaders meeting in japan for the g7 conference. among the issues debated is the risk of a crisis for the world economy and the upcoming u.s. presidential election. we bring you the highlights, next. ♪
vonnie: live from london and new york, i am vonnie quinn. mark: i am mark barton. this is "european close" on bloomberg television. vonnie: the biggest stories in the news -- investigators are examining computer breaches at a dozen banks using the swift global payment method. the probe is finding irregularities similar to those in the theft of $81 million rum anglo --'s central bank. most of the banks that may have been hacked are in southeast asia. protesters demonstrated outside of the mcdonald's headquarters, demanding workers be paid $50 an hour.
chain.nt to unionize the that is your bloomberg does this lash. mark? -- bloomberg business .lash question ma mark: shinzo abe made a comparison to the 2008 global financial crisis. bloomberg has more from hiroshima. the japan prime minister sounding a warning of a lehman crisis at the g7 leaders summit. resenting data to his fellow g-7 spiraling into a crisis if appropriate policy measures are not taken. abe cited the fall in commodity early from 2014 to the start of this year. a similar move that we saw eight .ears ago the comparison could play into
shinzo abe's slant of domestic policies. we heard the prime minister saying he would delay the sales tax hike if there is a lehman event or earthquake. there was doubt coming from the other g-7 leaders about abe's reference to this high risk crisis. we heard from president barack productivity about on thursday night and stressing the need to ramp up economic growth. president obama: we have discussed issues of the global economy and the need to continue to accelerate growth. to use all of the tools at our disposal to make sure that we are not only putting people back to work, but also helping lift wages. yvonne: other topics on the agenda was the risk of a trump presidency.
what it would mean for the global economy. as well as china. g7 leaders have agreed to work together to tackle oversupply in the chinese economy after warnings before the summit talks started. the g-7 nations did not go so far as to call out the country by name when it came to dumping. hiroshima, japan. that was your v -- n in was yvonne man hiroshima, japan. oil $50 a barrel. nymex crude and brent down to the $49.45 a barrel. euro-u.s. dollar, 1.1179. 109.72.ar-yen
vonnie: live from london and new york i am vonnie quinn. mark: i am mark barton. " -- this islacqua "european close" on bloomberg markets. vonnie: confidence in the u.s. market after it was rocked by scandals.g joining us is the bloomberg fx reporter. the 30 page document, a recommendation as opposed to anything that can be enforced? give us a flavor of what is inside. lananh: do the right thing is the broad sketch of the
document. it says to traders and market participants, do not mislead your clients or lied to customers. it gets down to the basic is this practices and recommending better standards or behavior. i do not rank they are reinventing the wheel. there talking about being more fair and transparent. vonnie: not to make light of it, but are they using it as a dark board? board?rt not a regulation or rule. it is a code of practice that his principles-based. it could mean that there is a broad interpretation of what behavior will look like later on . that could mean that if you do something that is a little shady , maybe it falls out of the rules. mark: there are no sanctions, no body to punish and fx trader if
he/she contravenes any of these principles? .ananh: that is precisely it these are principles. if someone were to behave outside of these principles, it would be up to regulators to look for other laws to prosecute them. in terms of the actual principles, what it comes down to is people are very skeptical. it sounds like regulators that i've spoken to say it is like telling people to do their jobs. telling a 7-year-old to be fair and not my. -- not lie. mark: how does this time to what is happening in saudi arabia and traders betting against the kingdom's peg? lananh: it addresses one of the things that is the most thorny. the product that people trade is money of thend
country. it ties in well because it shows it is tricky for financial markets to exist while also being regulated and controlled by government. mark: thank you for joining us. lananh nguyen from bloomberg. a great story. groupief executive of cls , the man at the helm of the new fx principles will be on bloomberg tv at 2:00 p.m. eastern he is one of the driving forces of the new code of conduct. look at where european markets are heading as we approach the close. we are four minutes away from the end of the session. will stocks rise for the third consecutive session? as of now, stocks are up by .03%. ♪ okay, ready?
this is wonderful. am go function giving you flavor of what is happening in bondquities, fx, debt, insurance, and commodity markets. 600.s that stoxx up by roughly one third of a point. it will finish barely changed after an enormous two-day rally, the biggest in over three months. investors pausing for breath after the 3.5% increase. daily mail and general trust, the publisher of the daily mail, shares falling 13%. the most in 16-years. it reported a drop in profit because of weakening demand for print advertising. the chief officer martin morgan says the declining ad market sets that the media is now
to deliver an operating margin of 10% this year. the earlier projection was 13%. shares down 11%. ol shares 16% lower. falling to a record low. shares, to sell more repair its balance sheet, it might suspend its dividend. thebank sold shares after stress test showed it had a capital shortfall in 2010. this is a legacy of the residential collapse that occurred in spain after the financial crisis. to talkerfect moment about the spanish economy. how it has rebounded. look at the gdp. spanish growth, .8%.
the nation, at the same time, is grappling with political gridlock. you have had no government since december. the election will take place after the u.k. referendum. household consumption up .9% from the previous three months. basically a sign that the economy is weathering this a political gridlock. and a label market that has been battered but is showing slow signs of healing. the spanish economy growing .8%. many eurozone economies above growth of that magnitude. vonnie: for sure. see the dow, we jones industrial average down 1/10 of 1% or 20 points on the s&p is unchanged. the nasdaq is unchanged after economic data this morning. for more on the nasdaq have a we go to abigail doolittle in
midtown manhattan. at the go: we do have the nasdaq fluctuating between gains and losses. basically unchanged. outperforming significantly are the shares of netflix, higher by 2.3%. higher for a fifth day of our oh, the longest, best winning streak in more than one year. higher on the news from the financial times saying apple might be interested in buying a media company. they do site an executive at apple saying they could broach time warner. those familiar with the situation say netflix could be an interesting fit. we have shares of netflix climbing into a range of approaching resistance. this chart, overall, is bearish in the fact that the uptrends are reversing. we could see netflix move back down. on this news of a possible acquisition, that could be the thing that could cause these there technicals to fail.
it will be interesting to see how this plays out. vonnie: some of the movers lower, momentum stocks like expedia are down. abigail: the worst performer in the nasdaq is missing by the march order, well below. a deepn states this as valley situation as netapp moves towards businesses such as flash. vonnie: thank you. checking in on the bloomberg first word news, taylor riggs has more. electricalfrance, workers have joined strikes at oil refineries, cutting power output. eight france refineries have walked out, leading to shortages. they are protesting president how long's labor reforms. businesses are warning economic
damage if the strikes continue. european union is escalating a spat with turkey. john claude unger says turkey must stop its anti-terror laws if it wants piece of free travel in europe for turks. he said he would scrap a landmark refugee deal if the eu does not loosen travel requirements. germany is running into a problem trying to expand the military presence in global trouble spots. they need airplanes to send troops around the world. there have been long delivery delays with the new airbus transport. germany is the largest customer for the airplane. the defense minister will buy aircraft from the airbus rivals. the bank of england keeping a close watch on the property market. governor carney says mortgage lending for investment properties could threaten
financial stability. record low borrowing costs have fueled a demand for rental homes. there is a concern first time buyers are being squeezed out. global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. i am taylor riggs. vonnie: thanks. its 2015ng adding to rally. wci and brent rising above $50 a barrel. brent touched the highest level since november and bti him in the highest since july. u.s. inventory now last week amid disruptions in nigeria, venezuela, and canada hampering production. decline?l oil joining me is the bloomberg news reporter, will kennedy. the disruptions in nigeria, canada, and so on, the market might be balanced. when those disruptions end, what
happens? there's clearly a lot of oil supply in the world. some of those disruptions, especially in nigeria, show little sign of ending. canada will come back when the fires are out and people go back to work. venezuela, there's not a chance for production to come back soon. what extent does oil rebound, the higher it goes the more likely it is that shared oil producers come back online. price, how quickly does oil that has been knocked out of the market in the u.s. come back? a lot of people are focused on $60 as a place where people come back into the market. it remains to be seen. people have never been through the shale cycle and it could take longer than people expect. yvonne: it could drop back when supply disruptions are fixed. is inre saying the bottom and we have been in the middle to high $40 level for a while
now. it makes you think it will be that much of a difference? talking aboutre supply, the other side is demand. talking about demand globally for gasoline. people are buying bigger cars, emerging markets are buying more cars. gasoline demand is rising quickly and we are adding one million miles a day of demand globally. that is having an effect of bringing the market back into balance more quickly than analysts expect. vonnie: will we see that through summer driving season? that is where we focus every year, but this year it feels like a sidebar. will: it is a sidebar. what we have seen is gasoline demand be strong. people are buying cars and driving more miles. into the driving season, you will see that trend accelerate. really strong gasoline demand numbers this summer. mark: let's start with this chart. it demonstrates the convergence
in prices of iron ore and gold. it is an absolutely fantastic chart. iron ore is the white line. gold is blue. the white dotted line is $50. 50 at the same time. does that demonstrate the contrasting future fortunes of both commodities? will: it is quite fun, isn't it? $50 is quite arbitrary. a cross today. it shows a lot about how the two markets have responded to the clashing commodities. oil, we have seen supply out of the market and people shot down production. prices are rallying in iron ore. profitable, and could bring new lines onto the market. we have seen a started by a billionaire in australia. we are seeing pricing. mark: the other chart is the price of gold.
this is the white line, the blue line is the dollar. resurgence on expectations the fed good hike has dented gold. to roll over, which ubs said and is $1150.ting not everyone is bearish. there are a lot of bulls. it is an interesting market. will: you can see it was one of the standout performances. a lot of people would like gold back. the surprise statement was more hawkish. we will see. there are aople -- lot of people who think that this rally has some weight around. mark: thanks to will kennedy. vonnie: thanks, will.
u.s. house bigger paul ryan is speaking at his weekly news conference. we're waiting for this one. i am worried that he may, in fact, endorsed donald trump. that has not happened yet, but he has started speaking about donald trump. you can see he said he had a very good and productive call with donald trump. you can watch the entire news conference live at go or bloomberg.com/live. we will be monitoring for any endorsements, which may be pending. mark: we will keep watching that. he is one of the most well-known and colorful leaners in the u.k.. what is richard branson, founder of the virgin group, think of brexit with the vote in less than one month? he spoke with bloomberg television from sydney. devastatedwould be if we were to pull out of europe.
it has been wonderful, i think, for europe to have great britain as part of europe. it has been wonderful for great britain to be part of europe. i am old enough to remember the days before we were part of europe. if i wanted to export my products to europe i had to pay a 35% tax. if i wanted to import products tax.europe, i to pay a 35% that the rocker seat of all these things going on, we could not take employees from europe, we could not work in europe, we cannot live in europe -- all of these barriers have been taken away. andpe that sense prevails ehen push comes to shov people will realize it would be enormously damaging to europe and great britain should great britain walk away.
aletico for the league title. real is tied with manchester united for the title of the most valuable football club in the g the according tokcn estimated valuation is $3.1 billion. joining us from global head of sports. thank you for joining us. how do you quantify the valuation of these football clubs? what is the valuation method? >> first of all, thank you for the opportunity. at the top end of the ranking we actually have real madrid and manchester united with a value of 2.9. our methodology is a multiple of revenue approach. the revenue is basically that ised by a effect adjusted by each club to take into account certain specific parameters.
parameters for each club. mark: out of the top 32 clubs which you looked at, 1/3 of the value is concentrated in the top three. which includes barcelona. are the rest catching up? >> yes. there is a high level of concentration. club, real madrid, manchester united, and barcelona basically make one third of the organizational value of the 32 clubs, 26 point billion euros. they had 70%. that is very strong concentrations. at the top end. this does not seem to be very different from other industries. what we can see from the report is that there is a strong concentration of english clubs in the top 10. in fact five out of 10 are actually english clubs.
there areu say parameters, surely you do not look at revenues. there is a comparison with what they actually pay for talent on the and what that could bring in for the future. a p/e ratio? >> what we are doing, we are basically looking at everything in our analogies regarding past financial performance. we are looking at public available financial statements in certain parameters. we go back to three years. basically, we add a multiple of revenue. actually justify the following five parameters. one is a now -- is a market value related to the broadcasting rights and the size of the broadcasting in each market. this is one of the reasons why, for example, english clubs are so dominant in this valuation
, because the deal signed by the english premier league. approximately two .4 billion euros is massive in comparison to other leaks. -- other leagues. they are still very far beyond the premier league. this weekend, we look at the profitability. we look at the popularity. we look at the ownership. then we look across at the social engagement. as i said before, popularity. let's not forget, that everything starts on page. the value is a very important factor in our formula. theassumption is that higher the value, the higher the chances you will win. , which are ab greater success on the pitch and england this season is leister
city. they are not included on the list because they did not play a european competition. will it be on the list next year ? what sort of valuation does leister city have now? >> a good question. i was going on that one when i was completing what i was saying. it is not the direct correlation between input, the investment in the club and in buying the best players. the output, which is the sports success. an example of leister city is a good one. i do not think leister city will make the ranking next year, because if we keep exactly the same parameter of thinking, the top 50 clubs, and the top 50 city will leicester not be part because they're are not able yet to reach the top 50. mark: great to see you.
vonnie: you are watching bloomberg markets, i am vonnie quinn. it is time for the global battle of the charts when we look at the most telling charts and what they mean for investors. you can access these on the bloomberg by running the function at the bottom of the screen. kicking things off is chart person x and air -- chart person ordinair.
a bonusst deserve point. probabilityxit index. it is a mouth full, but it matters. it is the go to measure for gauging whether the u.k. will vote to leave the eu in four weeks. to this measure, the likelihood of the u.k. remaining is 81%. it was at 82% earlier this week. the juxtaposition is in the blue line. pounds, dollar, one month volatility premium. premium is the important word. one month implied volatility today has risen to the highest level since 2010. implied volatility versus the dollar, relative to historical
swings, has risen to 7.72 percentage points from 2.56 yesterday. investors, right now, are paying a record premium to hedge modulation pound's over the next months. interestingly, the polls remain. investors are very cautious. #btv 1457. vonnie: you have a hard act to follow. dani: i will do my best. the price of crude compared to the latin american currency index. at the bottom, s&p 500 energy companies. look at how closely the price has been tracking each other this year. as we have gotten to this month, we have fed concerns, policy issues, political issues.
the spread is starting to widen for these asset classes compared to oil. perhaps, the oil hypnosis is wearing off vonnie:. vonnie:simple, and a great presentation of great charts. i think i made up my mind. mark coming might've had first mover advantage, but you win. thank you, very much. you're welcome back anytime. end at the european markets of the day. it was a day of small gains. look at the stocks europe 600 up by 1/10 of 1%, rising for a third consecutive day. bloomberg markets continues. ♪
scarlet: good thursday afternoon. alix: here is what we're watching at this hour. oil had $50 a barrel for the first time this year. investors are still looking at data for food on whether a fed hike is coming. scarlet: and donald trump has hit the magic number. he has the delegates needed to clinch the nomination for president. alix: is apple considering diving deeper into media? we'll look at a report that apple is considering a time warner bid. scarlet: first, we are halfway through the trading day. we need to check in with julie hyman. julie: we had a two day gain but