Skip to main content

tv   Bloomberg Markets European Close  Bloomberg  May 27, 2016 11:00am-12:01pm EDT

11:00 am
this is the european close on bloomberg markets. ♪ mark: we are going to take you from new york to london in the next hour. here is what we're watching today. global stocks are the highest close in three weeks as havens like gold fall. will it hold its performance after fed chair janet yellen speaks later? shery: fell short of more aggressive language suggested by japan. we have a wrapup. we are talking to one of the most high-profile throw brexit economists in the u.k..
11:01 am
mark: we are less than an hour away from the european close. let's take a look at the biggest movers of the day. those are the equities, those are the currencies, and the commodities. look at the colors. it is a mixed day today. fivehe stoxx 600 is up half a point. investors are- twiddling their thumbs ahead of yellenlen speech, preview at harvard. 3.3% is theain of biggest in a number of months, february to be exact. let's get to one of the big stories today. france's biggest insurer sending its division here in the u.k..
11:02 am
when he takes the helm in september. it'sell of sunlight and business will allow acta to switch its business to affect management. shares are up by .7%. 4.9%. are rising by the most sense to thousand nine. this is the swiss drugmaker. since 2009.he most compared to another of its treatments in people with inviously untreated lymphoma a phase three trial. it has raised its price target to 330 swiss francs from 339. it says the date that was a surprise as a readout from the survey was expected next year.
11:03 am
these are the big drugmakers in europe after the last 12 months. roche is 6% lower. all the big drugmakers are following this year -- falling this year. -- sold ¥120 billion in samurai lawns today. this is the biggest deal in the japanese debt market. the french bank offering subordinated notes. the issuance included ¥53 billion in seven-year yields at seven .82%. -- 7.82%. it follows like of america earlier this month. these are the three big lenders and france.
11:04 am
bnp paribas is down by 4.3%. let's go to the markets desk. julie hyman has the latest. julie: it is looking sunnier here today than yesterday. we are not seeing a big game, but it is again. -- a gain. investors look to janet yellen and her interview later today. even if she might not talk about monetary policy, there is hopes that she will do so. taking a look at some of the movers today, we're watching google and oracle. a big jury verdict. oracle had claimed that google used some of its software as the origin of its android phone. a jury threw that out. oracle has said it will appeal this.
11:05 am
legal experts say does not have much of a chance here. alphabet up by 1.7%. we are looking at some big earnings related gains for individual companies. we talked about the cosmetics retailer earlier, up 10% after it saw a boost in traffic. it sought increased sales. is a cloud-based software company, it is coming out with earnings that beat estimates. heelsts, falling on the of other retailers, beating estimates. thanrt is doing better department stores. they have had to overcome weakness in oil today. julie: it seems the correlation between oil and stocks has not been in effect recently.
11:06 am
we are seeing oil prices lower as stocks are higher. the run on oil has been extraordinary. look at the bloomberg. i am looking at the daily basis of the move in oil. we saw it reaching above $50 a barrel. this measures the change, the percentage change in top to bottom. jump in oilng a 90% prices from the lows to the highs. it has been a remarkable high. when we see oil down today, it looks like up cause after that -- pause after that huge run. your first run news. >> the search for that missing toptair flight has narrowed 83 mile wide area in the mediterranean. signals picked up on the
11:07 am
on on the dayons of the crash. they are trying to locate the black box like recorder. president obama went to the first city destroyed by an atomic bomb and call for an world without nuclear weapons. theas in hiroshima where u.s. dropped the first atomic bomb in 1945. he did not apologize but expressed remorse for those killed in the war. hillary clinton is expanding the ranks of her donors, bringing in new donors. butlers --ed 125 bundlers. almost none of them were among disclosed by her in 2008 or those disclosed by president obama in his campaigns. marco rubio may be having second
11:08 am
thoughts about not running for reelection. softened's and -- declaration that he will become a private citizen in january. his decision could be crucial in keeping the senate in public hands. the golden state's itse-year boom is losing luster. governor jerry brown is forecasting that revenue growth is slowing along with the economy. a sputtering stock market has hurt, and california voters may decide to end a tax hike. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. thank you so much for that. a g-7 meeting has come to a close. sevenaders of the
11:09 am
countries that represents more than 64% of the net global wealth say downside risks are growing for the world's economy. we are there with the latest. g-7, warning about the lehman crisis. the prime minister failed to get that language into the policy communicate during g-7 nations talked about how their strength and resilience in their own economies to avoid falling into a crisis. thato actually bring growth, the recipe behind it remains tangled over geopolitical issues. there are questions of how this plays into japan's domestic story. up fact that they did bring language of the lehman crisis, signals he may be delaying that failed tax hike. there could be a decision on that as early as next week. as far as brexit concerns, in
11:10 am
the 11th hour that was thrown into the policy communicate. leaders saying that it does pose serious risks to the global economy and could potentially reverse this greater global trade and investment along with jobs greeted with it. bloomberg, japan. g-7: the latest on that meeting today in japan. much more coming up on "bloomberg markets." we're 20 minutes away from the close of the friday session. we talked to a treatment for next. here's a look at the weekly performance, up 1.6%. heading for its third straight weekly advance. we are 30 minutes away from the european close. ♪
11:11 am
11:12 am
11:13 am
♪ shery: live from london and new york i am shery ahn. mark: i am mark barton. we are 18 minutes away from the european close. shery: thanks. it is time for the bloomberg is flash. in the lifeakeover sciences technology business. ei whichreed to buy as makes electric mice -- sei which makes electro microscopes. tot represents a 14% premium sei's closing price yesterday. the city's newest condo towers are opening with many owners heading for the exit in miami. that a thirdimated
11:14 am
of the units in some high-rises are back on the market. that is your bloomberg business flash for this hour. the center for economic performance at the london school of economics has issued a critique on brexit. it breaks down the arguments on brexit which includes that the u.k. will see a 4% u.k. gdp gain. mark: patrick minford is a professor of applied economics at cardiff university. thank you for joining us. if i could start with this report. the authors of the report have come out with the statement like this. minford's liverpool model was
11:15 am
predicting enormous job losses from the introduction of the minimum wage in 1999, multiple reports have shown there have been no increases." let's get to the study where you try to disprove the treasury's model and the u.k. will benefit from a brexit. small changes and trade costs have tremendously large effects on trade volume according to their model. each country purchases only from the lower-cost supply, in reality everyone does not simply by from the cheapest supplier. what is your rebuttal? patrick: the point about what happens when we leave the eu is we leave a highly protectionist area. many people don't realize how
11:16 am
protectionist the eu is. they raise prices of food 20%. they raise prices of manufacturers on average about hundred percent through protectionist policies, not just terrorists which are not so important, but trade barriers of other sorts. that is why there is all the fuss about leaving the eu. they realize we will be outside of these trade barriers. what we say is when you leave the eu, you face, of course, you are outside the eu and you sell barriers,across trade you also lose trade barriers to the hall world. the price comes down. instead of these high protected prices that our consumers pay, they pay well prices.
11:17 am
what will happen here if we leave the eu, we will become a hong kong. everyone will sell their stuff here like they do in hong kong. in hong kong, prices are a lot lower. if you go to any free trading place, prices are lower. it is a move from protectionism in which you have regional free trade, a walled garden, very protected, very cozy. producers love that. leave it and you enter the global world at well prices. that is good or consumers. consumers will pay a lot less. first, trade satisfies the gravity equation, and second, the eu has been trade creating, not just a tool for trade diversion. this shows that the consequent is a brexit in trade and living standards. this is economist
11:18 am
doublespeak. when our model is is plain vanilla. it fits the behavior of localization. -- globalization. it protects how globalization has changed the world. that is a good #. when you have to -- that has been a good benchmark. that are muchices higher, that changes the structure of the economy. there is nothing unusual about our trade model. people that are unusual in this weirde lse who have a trade model. it is hard to understand. these are all associations. mark: it is a bunch of economist mouthing off each other's economic models.
11:19 am
there is a difference in models. there is a fundamental difference in the treatment of models as well which i think is easy for the public to understand. what the hell is he has done is the eu, itwe leave will be terrible for our importers. bewe leave the eu, it will difficult for exporters, but great for our importers. there is a symmetry here. we go to free trade. what they are saying is free trade is not good for us. this is crazy. every first-year student of economics knows and lse admits that in general free trade is good for you. if you move from protection to free trade it has got to be good to you under plain-vanilla theories. somewhere they have not gotten that, and they have fiddled the results. when the exporters have a
11:20 am
terrible time, when we leave the eu, but the importers don't have a great time. that is completely inconsistent. shery: what about the pensioners. that is another claim by the treasury, he will lose out. patrick: what the treasury have done is taken those lsu equations -- lse equations and suit them up to get bigger negatives. the question is why the treasury, if you get the bad results from trade that the treasury claim, then you get better results across the entire economy. if you take that results of long-term across the economy because of trade, then you get better results for pensioners and loads of other people as well. quickly, polls are showing it is going towards the remain cap. campasn't the brexit
11:21 am
managed to get its economic message across? the treasury message seems to be more prevalent out there. patrick: i think the treasury message is based on this deceit. mark: it is out there. patrick: it is out there. mark: people believe it. patrick: if you tell a lie, or deceit, let's not call it a lie. a misrepresentation. the treasury do exactly the same thing. it is all doom and gloom, but they forget that consumers will have a great time. prices will come down. mark: is your message getting across? patrick: not yet. we have been deluged by all of this message. it has only been now that we've been able to catch our breath and it's going to everyone what they have done. the lie that they have perpetrated, or the deceased.
11:22 am
we will pull back this economic argument. mark: do come back. just after the referendum, we will chat more. minford, attrick cardiff university. more bloomberg markets next. stay with us. ♪
11:23 am
11:24 am
♪ shery: welcome back. shares of phillips jumping today. it raised $890 million or it's parent company. it is up 11.4%. we are seeing and opposite withng -- as we sat down the ceo to talk about where there is growth ahead. >> we have a strong investment case backed up by strong cash
11:25 am
flow generation. newre looking forward with shareholders to continue to expand our global leadership, driving led lighting and changing lighting services. >> i should think of you as a growth stock? >> if you look at the company at this point in time, we would be seen as an income or value stock. there are many parts in the company that are growing. i think with the time, her profile will turn into a growth profile. mark: eric rundle at speaking earlier. marketook at the ipo this year. look at the regional breakdown. that is in the top middle of the screen. these are the issuances we have
11:26 am
seen, asia $13 billion, a look at america. the performance college to the shows the-- column average performance in asia, 23%. north america, 10.6%. i'm going to put on your because if you look at western europe, it is the same. look at the bottom half of the screen. it shows you the best and the biggest ipos of the year. if i had more time, i would tell you more. that is the latest from "bloomberg markets." we are four minutes from the close. it looks like stocks will close higher. ♪
11:27 am
11:28 am
hii'm here to tell homeowners that are sixty-two and older about a great way to live a better retirement... it's called a reverse mortgage. call right now to receive your free dvd and booklet with no obligation. it answers questions like... how a reverse mortgage works, how much you qualify for,
11:29 am
the ways to receive your money... and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home and here's the best part... you still own your home. take control of your retirement today! mark: there it is. it is a bank holiday weekend here in the u.k. and a holiday
11:30 am
weekend in the united states. we are live from london and new york. i am mark barton was shery ahn. stocks going to rise higher for the fourth consecutive day. looks like they will finish higher for the third consecutive week, something them not done since march. it looks like it is the best weekly advance since february with a gain of 3.2%. investors are waiting the fed chair janet yellen at harvard university. this is the story of the day. the biggest ipo of the year -- royal philips raising 750 million euros and ipo of its lighting business. pricing their shares in the middle of the range at 20 euros a share. that is where it started the day. they are at 22 euros.
11:31 am
of the 25% stake valued the company at 3 billion euros in the ipo underscores the shift from making equipment and consumer goods for the global health care market. what a day. what a first day for philips lighting. interesting day for the steel industry. steela's biggest company had its price target raised from 34 euros. that is on higher 2016 estimates. earnings are rising due to strong momentum in the eu. it maintains a hold rating on valuation grounds before today. earlier today, the world biggest steel company was up for a fourth consecutive day. it was on a four-day advance of 60%.
11:32 am
some of those games have come off because today it is down by 1.4%. i want to show you the mouthful that is the bloomberg correlation weighted currency index for sterling because this is the best performing major currency this week. it is up by .9% and rising for the fourth week versus its main developed market peers. ,his is on the bcw i function the longest running since july when it fell to the lowest levels of april 2014. it has rebounded 4% since. you witharding statistics. all you need to know is that we are seeing a rebound in the pound because of improving polling for the remainde camp. shery: you mentioned fed chair janet yellen speaking at harvard university later today. that is what i'm looking at because she is receiving a medal
11:33 am
for having a transformative impact on society. she will be talking about herself mostly, but we have tried to get any clues we can about a possible rate hike. go, whatok at wrip traders are pricing the possibility of a rate hike. that is up from 4% early last week. the odds of the fed raising rates in july climbing to 54%. the dollar now headed for its best month in more than a year. fedourse, a lot hanging on chair yellen speech later this afternoon. that will be taking place at 1:00 p.m. in the afternoon eastern. to stay for that -- do stay for that. mark: i want to make one of my church very large. -- charts very large.
11:34 am
to the ecb's governing council meeting in vienna, look what economic data points will be driving markets in the short-term. richard jones is here. were you impressed with that? richard: i was. easy making the charts bigger on these charge could let's start with today's which came in stronger than the previous estimate. you have a clever chart that shows the comparison. richard: i really like looking at the pmi data, which we will look at in the second chart. the great thing about pmi data is that it is forward-looking and it is very broad based. mark: here's the pmi data versus gdp.
11:35 am
richard: as the pmi data goes, so goes the gdp. if you look at the blue line where we had the peak in gdp and the white line where we had th peak in pmi, they peaked in the summer of 2014. as it has gone lower, the gdp has gone lower. this last little downturn that we saw in pmi with disappointed data this week might put a little bit of downward pressure on gdp in the second quarter. sort of forecast are we looking at for the second quarter gdp? many people thinking that we will see a rebound like we have seen in previous years. and the the market people who put together this pmi data say that given the slowdown that we have seen in hiring and ervice the slowest since 2009, that might mean we gdpdown hiring and then
11:36 am
growth will not be nearly as strong as what we are looking at , which is the atlantic gdp forecast. mark: explain. the atlantic gdp forecast is considerably stronger than the zer 0.7% the market is common for. this represents the dilemma for the fed. they have got to look at this when they make the decision next month and in july as well. see thesually we seasonality factors affecting the first quarter gdp. with this revision, where you pretty much expecting? richard: i think it was very much expected by almost everybody in the market. the revision was maybe not as strong as everybody expected, but people expected it to be 0.9 and it came at 0.8.
11:37 am
the interesting thing for the fed is do we get the sharp rebound in the second quarter? pmi data says maybe not and other forecast say maybe we do. mark: this is what i was doing at the bottom of the hour when i was facing you. you will see my chart and just th in just a second. probably not as exciting as previous ecb meetings, but this to me is a chart that's very exciting. tell such a good story. the ecb will probably adopt similar language than we did last time. they want to see the fruits of our labor and let our impact of place. have done take one of the interesting metrics that we look at and one of the goals that the ecb had when they started qe was to get their balance sheet of to levels that we saw in 2012. mark: these are the two peaks, aren't they? that is what you said in
11:38 am
september 2014. richard: qe is going to go on until least next year so they will exceed the balance sheets from 2012, so from that point of view, mission a couple o couple accomplished. richard: the pmi data in europe was weaker as well. ,he ecb says we have the tools but we have yet to see that really take hold and i think that is the thing investors are looking at going forward. mark: thanks for joining us, richard jones. let's now take a look at the broader u.s. markets. onare seeing the s&p 500 track for the biggest weekly event, rising 3/10 of 1%. , butow is up 2/10 of 1% fluctuating a bit ahead of that
11:39 am
speech that we have from the fed chair janet yellen this afternoon. abigail doolittle has more live from the nasdaq in midtown manhattan. abigail: we do have the nasdaq trading higher, in fact at session highs. not helping the nasdaq today are the shares of apple, down 3/10 of 1%. off the lows very much so. the stock had been down 1% earlier today from a downgrade of negative to mix. conditions in china have failed and inventory is kits. despite pres press -- price cuts. shery: what is boosting the nasdaq higher right now? richardabigail: both share clasf alphabet after alphabet beat oracle in a lawsuit with a
11:40 am
whopping $9 billion claim. this is positive news, but when we take a look at a one-year chart, we see the uptrend is reversing. the most recent quarter was lackluster. it is reversing in waves on that trading range. it tells us that there is a pretty intense near-term battle between the buyers and sellers. because of the uptrend reversal, it suggests that there could be despite strength today some bearish action ahead for the shares of alphabet. shery: let's check in on the bluebird first word news this morning. taylor riggs has more from the newsroom. whole: francoise along hollande says unions cannot dictate laws. workers at french refineries walked out earlier this week, creating a nationwide shortage of gasoline. four out of five of the refineries are halted.
11:41 am
in italy, business and consumer confidence unexpectedly fell this month, a sign of growing pessimism in the euro region's third-largest economy. italy's main business lobby expressed doubts about the economy strength. gdp is forecast to rise just over 1% this year. trade group has weighed in against leaving the european union. automakers are now saying that -- subjectd suggest them to terrorists. tariffs. rafael nadal is out of the french open. he was scheduled to play in a third-round match tomorrow. moments ago, we got the government's forecast for the atlantic hurricane season. there is a 45% chance it will be near normal. last year was slightly below the average with 11 named storms
11:42 am
that included hurricane joaquin, which killed 33 sailors aboard a cargo ship that sank. the new season begins on tuesday and ends on november 30. dayal news 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world, i'm taylor riggs. shery: still ahead, it was a busy may as corporations around the world went on a bond vendor. we are taking a closer look at corporate credit activity next. ♪
11:43 am
11:44 am
11:45 am
shery: a gorgeous view of the big apple as we had to the memorial day weekend. live from london and new york, i ahn.r shery mark: this is the european close on bloomberg television. coming up on bloomberg business flash to that, let's have a look at some of the big business stories in the news right now. the world biggest private equity property investor plans to sell several hotels in europe for more than a billion dollars. according to people with knowledge of the matter, the blackstone group of hotels are in london, dublin, amsterdam, and operates under coat and doubletree brain nd. royal philips raised $859 million in an ipo. to list theided
11:46 am
company in amsterdam after failing to sell it privately. tech companies have an insatiable demand for bandwidth. two of the largest are teaming up on a big intercontinental project. microsoft and facebook built a 41 mile undersea cable stretching from virginia to spain. deliver faster online and cloud services to customers of both companies. it will be completed by the fall of 2017. that is the latest bloomberg business flash. companies are going on a bit of a worldwide borrowing binge . nonfinancial company debt will be in excess of 200 $36 billion -- $236 billion. we are seeing plenty of activity in europe on track for its busiest may ever. joining us now is sally bakewell
11:47 am
.o why are companies borrowing so much right now? moment where in a we have some of the most favorable borrowing conditions on record. if you are a treasurer, you are looking around to see if you can borrow euros at 1%. you can borrow dollars at about 3%. you're going to want to lock in those kinds of rates for 5, 7, or 12 years. that is what we have seen recently with some of the biggest companies. we have had craft and johnson & johnson. we have had dell. it's not just the volume of yields we are seeing. we are seeing the emergence of long material data. they want to do these for a long time. we had phillip morris selling a eurobond for 20 year maturity. we had coca-cola partners selling in 2028. they are taking advantage of
11:48 am
this nirvana of borrowing conditions. mark: the backdrop is the likes of the boj and the ecb sending interest rates negative. sally: easy. exactly. is this easy monetary policy that striving cost down. you're going to see the european central bank exhaust its corporate bond buying. the emergence of the bond buyer is pushing more companies to sell because they know they will have demand their and that return is pushing prices up and yields down. shery: why are investors prepared to buy this debt and at the same time accept these low yields? sally: it is the easy monetary policy that has pushed some $9 trillion of bonds into negative yielding territories. if you are an investor, you're going to do everything you can and thaty yield at all
11:49 am
includes going to a riskier assets such as corporate debt. we are seeing a lot of demand. for example, the dell deal is for $20 billion, but it received orders for some 80 billion. there is some serious demand their. high-yield see more issuing this month because investors are being pushed up the risky asset curve. mark: one of the best month on record. was expectation for the month? sally: of june is likely to see a bit of a decline, possibly about half of the volume we see now. the companies are going to continue to take advantage and issue opportunities. mark: thank you for joining us today. is definite title of the day companies go on worldwide bond bender. that is the award for sally. coming up in battle of the
11:50 am
charts, i'm battling alo liver. it's the shorts in the u.s. versus the shorts in hong kong. ♪
11:51 am
11:52 am
♪ day --it is that time of our global battle of the charts, where we take a 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 by running the function futures at the bottom of your screen. kicking things off is oliver renick. simple,i have something
11:53 am
but it's something pitiful because people in the market have been waiting for this for a long time. i'm talking about short covering. people buying back shorted stocks. this is shortchanges. index, basically the average of all stocks listed in u.s.. lag, so thisnth basically shows you that shortchanges have been climbing higher as people get speculative and worry about where the market is going. right here is the goldman sachs most shorted stocks in the market. is a rolling index. here's the october debt that we had in 2014. it came down a little bit, but not a whole lot. we had august shortages that went real high. this right here in the past month is a big move.
11:54 am
after all this buildup, we are now at levels of short interest that we of not been in the past year really in at the same time, that most shorted index pops up and then we are definitely seeing the short cover rise. this is relevant because people have been wondering when is this buying power going to come through. i think it is now. shery: we are seeing this rally and we're thinking why is this going on. simple but good. oliver: beautiful. shery: let's head to mark.. that chart does not look very simple. what are you looking at? mark: i'm worried about you. i'm worried that you are homesick, so i've scoured the bloomberg terminal to find something relative to hong kong. and i have found an absolute cracker because this turnover on the hang seng index is at its level low for the year. the blue line has
11:55 am
rebounded from that february low. it tells us that there is no momentum behind this rally, but forget that. forget the fact that we are just looking at turnover because when you look at short scales relative to total turnover, it is a completely different story. this is exactly what history is telling us. look at what happened in 2014. i'm looking at the three spikes in the last five years. look at that spike. look at that spike. and look at that spike. this is short turnover as a percentage of total turnover. look at what happened to the blue line following ghosts spikes -- the spikes. it gained and it gained and it gained. they gained by an average of 19%, which is what gets to
11:56 am
what's happening right now. short interest as a percentage of total turnover has been higher since 1998. is it time to buy the hang seng index? 1482.v shery: i love how you play to your audience, but i have to say that that chart is too messy for my taste. i like simple. oliver, you take it because your chart is circling. -- so clean. mark: i will keep it clean. good to see you all over and shery. we finished the week. ♪
11:57 am
11:58 am
11:59 am
alix: it is noon in new york and 5:00 p.m. in london and midnight in hong kong. scarlet: welcome to "bloomberg markets." ♪
12:00 pm
scarlet: from bloomberg world headquarters in new york, good friday afternoon. i am scarlet fu. alix: i'm alix steel and here's what we are watching at this hour. the yellen countdown begins. stocks coming to a high in three weeks. in an hour, she will speak at cambridge. will she give away the timing of the next rate hike? scarlet: the need for transparency and biotech firms. we explore the issue with an extreme academic from stanford and my most published findings are false. alix: getting out of town this weekend? get ready to wait. airport are expected to spend millions the summer to avoid long security lines, but will it be enough? we will look at the tsa solution and what that means for your travel season. scarlet: you are not going away, are you? alix: i drive.

14 Views

info Stream Only

Uploaded by TV Archive on