tv Bloomberg Markets European Close Bloomberg July 12, 2016 11:00am-12:01pm EDT
mark: 30 minutes left in the trading day. you are watching the european close of bloomberg markets. we are going to take you from new york to london in the next hour. here's what we are watching today. global stocks rallying. earnings season kicking off on the right foot. vonnie: one layer of uncertainty removed when theresa may takes the prime minister spot tomorrow. there is a rush to get all the new leaders in place. the farmerwo of airshow. its --.ushing we are live at the event, chiefng with the
executive of airasia. julie: records for the s&p and out. we have been watching these levels over the past couple of days. the nasdaq is higher year today now. that is a milestone for that index as this risk on rally comes back. let's look at what groups are on the move. it is reflective of what is doing well and not so well. screenen on the indicates the economy is doing better than economists are estimating. more defensive groups are doing more. we have traffic numbers from
various airlines. american airlines -- u.s. airlines boosting stock up. this agreement will add to its pretax earnings by about $1.5 billion. we are watching natural gas producers. prices should appreciate to four dollars by the second half of 2017. natural gas,eing little change. natural gas country -- companies continue to rally. both stocks doing very well. neighbors international footprints should give the
company a less volatile earnings. fleet status report a gave on july 1 might be indicative of minor signs of life in the offshore drilling sector, which has been depressed. finally, seagate is one of the best-performing stocks in the s&p 500, gaining 20% after the company came out with preliminary numbers that the -- that beat estimates and announced job cuts it had been planning. to 65 hundredes people by the end of fiscal 2017. mark: 30 minutes left of the tuesday equities session. ,his is the equity column austria, italy, spain, luxembourg, up. for the fourth
consecutive day. longest stretch since july. still 3% below the june 23 close. i love this chart. it is my favorite chart of the day. it shows the correlation between and the s&p 500 and you can see the correlation .75.ughly that is the highest correlation since the height of the eurozone debt crisis in 2012. what a period we are in now as the s&p hits new highs. daimler earning expectations. benz division sword
-- the company mercedes-benz division sao oared. down 25%. daimler down by 25%. sticking with autos, peugeot slower due to brexit. european auto sales to weaken rather than collapse coast brexit. nault -- rent out -- re down. hillary clinton and bernie sanders are scheduled to onear at a campaign percent
a portsmouth, new hampshire. bernie sanders is finally signaling his support of the nominee. hassan. now, maggie you can watch the event on bloomberg. let's check in on the bloomberg first word news. courtney has more. obama is onesident his way to dallas to meet with the families of the five officers killed last thursday. the president will speak at the memorial service. mr. obama will meet with george w. bush. lives in dallas and will speak at the service. paul ryan is taking another shot at obamacare. affordable care
act for what he says has premiums.le >> people are sick and tired of double-digit premium increases. obamacare is failing. it is collapsing. it is going to ration medicare, denying choices, and it is making it harder for families to afford health care. >> last month, ryan proposed a racing obamacare. latest poll for bloomberg politics, white voters with a college degree back clinton over donald trump. romney one that grew by 14 points. holding -- is calling a court ruling no lymphoid.
china claims territorial rights to more than 80% of the cell china sea. land in theimed area and bill runways and ports. news 24 hours a day, powered by journalists and analysts in more than 120 countries. mark: thank you. let's get back to markets. is there no stopping the ftse 100? it is up more than 5% since the brexit. the ftse 250 has had a different fate. in richard saldana.
sterling rising for a third day. brexit fears diminished. >> not disappeared, we are not out of the woods. what you have seen over the last few days, markets become kolmar, starting to reset. there is uncertainty with brexit. we saw strong payroll numbers out there. europe will be fine. fact we are going to have a new prime minister tomorrow rather than the uncertainty of this dragging on will help to calm nerves. mark: the ftse versus the ftse 250. if you have a second, look at
the chart. at one stage, the ftse 250 was down 14% on the 27th of june. it is up by 5%. they are converging, aren't they? were you expecting that? markets have been rational and some of the price movements. what you are seeing in some of the ftse 100 companies, about three quarters of the revenue is overseas. those companies have fared well. companiesnk about that have assets in dollars, bp, it has rallied nicely on the back of this. the 250 struggles more. you see the pickup coming from the 250. people are getting more constructs on the u.k. as well.
it removes the uncertainty going forward, having the prime minister in place. see whatill be to fiscally governments do. we have seen the bank of england, the bank of japan almost back stocking markets. central banks cannot keep doing heavy lifting. there has to be fiscal response. we have seen sterling rebounding. vonnie: the bank of england will encourage martin's. the bank ofm -- england will rally. picksf theresa may summerhouse? be inever she picks to the cabinet, the key will be undertaking those fiscal stimulus measures.
cutting corporate taxes a good thing. about foreigne investment. anything that can be done to canurage foreign investment only be a good thing for the economy. whoever is in play now will have to focus on the fiscal agenda as well as the bank of england. how can they expand fiscally? the sterling is weakening. fiscal stimulus was not on before the brexit vote, why should it be now? the reality is governments need to be thinking long-term. short-term in terms of impact of budget deficit. governments need to think longer-term about things like infrastructure spending etc.. encourage investment back into the european economy.
mark: it is a cheap time to borrow. you have record of -- record lows. >> that can only encourage investment. people need to be thinking long-term. mark: the search for yield pushes equities higher. >> i think so. what you have seen as part of the unintended consequences is large distortions in asset classes. i use examples of the staples stocks. it can grow the dividend. the important thing is to find grow ahead ofn inflation. that will be another big conundrum. mark: thank you. monitoring events in portsmouth, new hampshire. and bernienton
sanders scheduled to speak together. they are appearing any moment now. endorseis expected to his former political rival. you can watch the full of event on bloomberg at live go. you see jeanne shaheen speaking. we heard from the governor of new hampshire a few minutes ago. you can watch it on our live events channel. this is bloomberg. ♪
york. i am vonnie quinn. mark: and i am mark barton. changes inack to the the u.k.. theresa may on track to succeed david cameron. liste we look at her to do and what she has on her timeline, i have to ask you the question i asked you off air. we want to know who are going to -- the big four. >> the big challenges is going to be balancing the cabinet. sunnis to unify the parties. before five big jobs, she will need to be careful about where she weighs them out.
the business secretary, he is -- for promotion. the really interesting one will .e george osborne some people are talking about him as foreign secretary. -- he isions have not keen on a trade type role. -- challenge is going to be playing this game of three-dimensional chess, where you have to keep everyone happy in real time all the time. mark: it she will no doubt find the formula.
>> the first week to 10 days will pass quickly. a load of decisions she has to take. to brexit, she will have settle who will be the chief brexit minister. her first day will be wednesday of next week. after that, she gets a pause. friday of next week, parliament goes into recess. basically, august, the second half of july, she will have to ,ut everything together beginning to think about what is britain's negotiating status.
vonnie: the immediate steps will be appointing cabinet members and discussing the physicality's of brexit and so on. what will she do? will it be an austerity budget or a spending budget? >> we expect her to stick to the timeline. calmessage has been one of and stability. she saide first things when she launched her campaign , about 10 days ago, one of the first thing she said what she was going to break with george osborne's pledge by 2020. is saying tohe people is the age of austerity is not over. fiscal side of things, it is likely we will see --
half percent gain for the dow jones. if you look at the nasdaq, gaining by half a percent. a nice pop for the nasdaq. crude oil futures are rebounding. now, 46. mark: bernie sanders is endorsing hillary clinton for president. .hey are holding me joint event there you go. -- in every state in the union who worked so hard on our campaign and the millions
of contributors who showed the world that we could run a successful, national campaign individualll contribution. [applause] 2.5 million of them. together we have begun a political revolution to transform america and that revolution continues. together we will fight for a government which represents all of us and not just the 1%.
[applause] a government based on the economic, social, racial, and environmental justice. i am proud of the campaign we ran here in new hampshire and across the country. campaign won the primaries. are watching bernie sanders and hillary clinton campaigning across new hampshire. they will campaign for the 1%. these are live shots. this is bloomberg. >♪
the tuesday session, closing up in a four-day stretch. vonnie: the international airshow in england is underway. some of the biggest aviation companies are there and guide joints and test guy johnson is joining us with tony fernandez. guy: tony fernandez is with me. this guy is airbus' biggest customer. we have to find out where he sees the business going through. i am assuming you did not pay less rice? -- list price? , i would not be standing here if i did. mark: this is a buyers market? tony: it is. foras been a drive period
aircraft manufacturers, timing means everything, and we are very happy with what we have done with airbus. there is plenty of liquidity on top of the fact that we are disposing a lot of our older aircrafts. cash is not the main issue. are the interest rates around the world really going down? tony: that is another reason for buying what we are buying. pressure as itny rises. we do not think that fed will rise anytime soon. guy: this is about the brexit story? and: we capitalized on it we are very happy with what we have got. guy: where are you going to use the airplanes? tony: right now, asia is playing
catch-up. slots but wereat need more capacity, but there are no slots so china, hong kong, parts of indonesia are all places we are looking at. guy: the 321. tony: we have been able to negotiate a good, competitive pricing that gives us a low-cost arian's gauge. -- variance gauge. i would love to have the aircraft now. guy: what is happening in the indian market? it has long been a tricky one. the government has done what it said it is going to do. it is not exactly what we would like but we are very bullish in india, and i think we will get to the requirement of 20 aircraft sooner than most people expect.
is asia on the effect that china can keep the show on the road? tony: we are going to have a record profit year. people want to fly. the market is huge. this is a noisy plane flying over. tony: we have to launch a i think people in the west are fixated with china, but there is a lot more to asia than china. i have worked with china and it is fantastic. listing, where are you, what are you thinking? tony: it is very early stages. i do believe in looking at it.
we think nor asia -- north asia is a big profit. days.very early aboard position, the statement that came out was correct. from our own position as leader of the company we should be looking at it and i will continue to look at it but the board is right in saying that nothing serious has been firmed up. it is very early stages. guy: brexit, localized to the u.k. or a global effect? tony: it is obviously going to have a global effect and it has. in time to come, brexit does not impact asia so much. it impacts confidence. i give credit to david cameron
for all he has done in terms of british exports and we are a large part of that. i wish they would have stayed in europe. itare going to get on with and britain has to get on with it. it has made a decision and it has got to move on. guy: i do not think anyone can hear us anymore. tony, thank you for the conversation. , i will throw it back to you. mark: guy johnson with airasia group chief executive at the international airshow. live from london and new york, you are watching "the european close," mark barton with vonnie quinn. stretch sinceg july 1, highest since june 23. it is jumped by 5.4%.
3%the last four days, still below june 23 levels. ftse volatility has fallen in recent days. it is incredible. the ftse 100 powers to a bull market, yesterday rising 20% from its three-year low in february. we have this incredible move downward for the ftse volatility index. in september we were in a five-year high and we have come down to almost half of those levels, quite incredible moves. that is reflective of the diminishing risk that is perceived. days,versus dollar, three sterling has risen for a third consecutive day and it has gained 2%. this is the longest winning stretch since may 19 in today's game is the biggest since june 30. this is a sort of theresa may
moment when andrea leadsom yesterday dropped out of the race. sterling was lower against the dollar and as you can see, it has been on an awkward trajectory as we await the coronation of theresa may as prime minister. i want to show you how we are witnessing and even version to safety -- and even version to safety. fore is the real appetite risk and the flipside is bond yields are rising, bond prices are falling. this is the u.k. 30 year, tenure, and two-year. year, 10 year, and two-year. appetite foris an risk reflected in equity markets across the globe. vonnie: the nasdaq up higher as you alluded to, hire five days in a row. let's go to abigail doolittle who is live in midtown manhattan. pretty impressive.
abigail: it is the nasdaq's first five-day rally in more than a month and we have the nasdaq again the psychologically important 5000 level. perhaps most important or impressive, for the first time this year we have the nasdaq trading higher on the year. a broad-based rally for the nasdaq. one of the top point movers, american airline shares are up day, having their best since september 2014. up more than 35% since the brexit bottom on june 23. taking american a lines higher today is they expect to see a boost of $1.55 billion from credit car dealers -- deals. their rating has been taken from a by two way hold. this stock is the down and is still despite the strength, down
more than 20% year to date so mike lindenberg must think the risk to reward is more attractive despite the dynamic of falling fares and rising wages. it'll be interesting to see how this plays out. vonnie: you are mentioning much of the strength is coming from tech. abigail: apple and microsoft are among the biggest boost but probably the most impressive, seagate technology shares are up nearly 20% after the company preannounced its fiscal third-quarter to the upside and announce they are cutting 6500 jobs. another beaten-down stock, down more than 50% from its peak in 2014. you might think there is a turnaround in play but bloomberg analysts think there could be long-term issue still it play. if you look at a chart of
seagate, we see a long-term downtrend. we see the big rally up off of the bottom in february, up nearly 60%, but the stock is likely to face the selling pressure soon. phenomenal chart. thank you. on the bloomberg first word news, courtney collins has more. courtney: bernie sanders has endorsed hillary clinton for president. the two appeared in portsmouth, hampshire. he was still officially running for the nomination until today. you can watch the event right now on your bloomberg terminal at live go. meanwhile, a house committee is questioning loretta lynch about the hillary clinton e-mail case. lynch says she is crowd -- proud of the investigation but refused
to talk specifics. >> i received and accepted their that the decision thorough year-long investigation be cleared and no charges be brought against any individual. i understand that this investigation has generated significant public interest, it would be inappropriate for me to comment further on the underlining facts of the investigation were the legal basis for the recommendation. michael: wench -- courtney: lynch also defended her's vision not to recuse herself. two trains italy, collided head-on, killing more than 20 people. reports say rescue workers pulled survivors out of the wreckage. it is hard to believe these numbers. officials had estimated the ireland economy
grew 7%, but it was three times as much, 26%. this is due to the number of u.s. corporations that have relocated to ireland. becomes partincome of ireland's gdp even if they do not create any jobs. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i'm courtney collins, this is bloomberg. get to a bloomberg exclusive, erik schatzker sat el, and theydrea orc talked about the risk of the financial jobs leaving the u.k. because of the brexit vote. andrea: most probably we will need to consider moving a number of our countries. in the still have a base u.k. and we'll deal with them the way that we deal with them today.
we will most likely be booking from other countries. the part of the business that is eu business done from london would need to be done from elsewhere. aboutnow we are talking 5000 people who you employ currently in london, how many of them are we talking about moving? andrea: i think it is very difficult to tell because at the moment people are not segmented into people who deal with booking from other countries, people who deal with the u.k. only, people who deal with the european union. that will take a lot of work to establish exactly what needs to be dependent on the current agreements that we have. i would say it will have a significant impact and that ubs is a swiss organization that has not been part of the eu, has had plans to replace for a long time to follow market development,
but i would not say something that is at our doorstep tomorrow. i think it is something that we have some time although not much -- not as much as i would like. erik: one thing you have shown an ability to do is prepare for and adapt. it is one of the reasons i'm trying to push a little bit because the world needs to know what the implications are for london as a financial center and for all of the banks that operate there. when you say significantly, are we talking about half of your people and where are they going? zurich? frankfurt? paris? the jury? andrea: when i say significant people, it would be a significant percentage. i cannot tell you how many. it would be relevant enough for everybody to be concerned that this will require a complete reassessment of our model going forward.
the second thing is where will they go? it is quite unclear at the moment. i am sure you have followed the french and german governments, a number of governments are making if i may call it, a case for people to move to their jurisdiction. at the end of the day, they would like to import wealthy people who spend, who earn, who create jobs for their economies into their own centers. what is the choice? it will depend on infrastructure, on the nature of the deals one can have in each and every one country, will depend on what the shape of the rest of the eu will have at that point in time. speakingndrea orcel with erik schatzker. a major milestone in the democratic race for president is happening now in towards myth,
new hampshire. -- in portsmouth, hampshire. bernie sanders has just endorsed hillary clinton, saying it is time for democrats to rally together to defeat donald trump. clinton is expected to speak any moment from now. you can watch the full event on the bloomberg at live go and on our live events channel. ♪
function at the bottom of your screen. joining us is dani burger. investors and u.s. equities are acting more independently than i have in the past three years and that is a good time for market health as we approach the highest. we are approaching those new highs and have already beat them. i have the s&p in this blue line. the white line is the cbo we implied correlation index. pointt reached the lowest over here that we have in three years, which essentially means investors think stocks are not going to be moving together. that is a good sign, meaning that stock picking is back as we reach new highs. that will be important as we approach the corporate earnings season to see what companies are doing. vonnie: i like it. what is the number?
dani: you can see this one at btv-2035. vonnie: mark? mark: i want to bring you in my delorean and bring you back to march 5, 2009, the last time bank of england cut interest rates 2.5% from 1%. a long time ago, which got me thinking, however u.k. assets fared since that last raise -- rate cut as another is expected on thursday? the pound has fallen by 6.7% against the dollar, the 10th best performer against the dollar in that time. the best performer was the new zealand dollar which is up 44%. u.k. bonds are up 30%. eurozone bonds are up 44%. the best trade is the ftse 100, 83% higher.
500s swamped by the s&p which has risen 200% since the last day the u.k. cut rates. back to the future. mark, you win because i would totally take a stand in a delorean. you just had me at delorean, doc. i would not necessarily want to go back to that particular day. chart.onderful mark: coming up, the british open is beginning this week. we will look at the business of evans, cio ofe the pgo tour. this is bloomberg. ♪
endorsed hillary clinton. that is official. hillary clinton is now speaking at this campaign event in new hampshire and you can watch that on live go. hillary has taken the podium. to the business of golf, the pga tour has 600 players and thousands of volunteers. the sport is embracing technology in new ways. joining us is the cio of the pga tour, steve evans. how important is this technology userse more -- to entice and levers to the game of golf? .teve: it is really important we think our sport is really difficult for people to understand and while using tech knowledge he we can gain insight that will help people understand it whether they are at the golf course or on the web or the
telecast. mark: are you fighting a rising tide? if we look at the stats on the national golf foundation, golf is in decline to matter what metric you use. how can you fight back? is trueirst of all, it that participation in the sport has declined although that is starting to come back. what is important to us is more important than participation, consumption. our consumption numbers are actually up so we are encouraged and we think we need to work hard. on top of that, the industry in general is doing a lot to reinvigorate the game, particularly in the youth area. mark: i have got to ask you about the olympics because it is a very hot topic with many golfers choosing not to play in the olympics because of the seeker virus -- zika virus.
is it the real reason or the major? steve: i am probably not the person to ask. mark: who is going to win the british open? steve: i have not done any statistical analysis that i would put dustin johnson and zach johnson at the top of my list. mark: thank you for joining us, steve evans, the cio of the pga tour. a look at our european equities finished the tuesday session, the fourth day of gains for the stoxx 600. the longest winning run since july 1, gains of 1%. a small decline in london. bloomberg markets continues. ♪
>> from bloomberg world headquarters, i am shery ahn. fu int: i am scarlet london. here is what we are watching. warning that structural forces are weighing on the future of u.s. economic growth. nigel chok joins us with the latest. outgoing eu commissioner jonathan hill joins us live from brussels with his thoughts on the future of the capital market union and theresa may. scarlet: an exclusive interview with the ubs ceo. he tells us where he thinks markets are headed and why ubs is preparing for a reversal.