tv Bloomberg Markets Bloomberg July 14, 2016 10:00am-11:01am EDT
bloomberg television. ♪ vonnie: we are live in new york and london in the next hour covering stories out of japan and italy. jpmorgan kicks out running season thanks to a rise in fixed income trading as the global bond market rallies. lows --ank keeping cost cost? low? mark: keeping banks at record lows. one of the biggest public debuts of the year. we will hear from the cfo from the new york stock exchange. let's check again on the bloomberg first word news. new brexit czar
says that they will leave the european union. david davis was named secretary of state. negotiations could continue. theresa may has mocked boris johnson's negotiation skills. become -- johnson accused president obama disliking the legacy because of his kenyan background. the chinese passenger plane may test flight in one of the areas in dispute. china had noled historic claim over the south china sea.
donald trump is promising to reveal the person he has chosen to be his running mate tomorrow morning. team haveate and his been meeting with indiana governor mike pence and newt gingrich as well as jeff sessions and chris christie. meanwhile, on capitol hill, republicans are demanding more transparency in the treasury department and the federal reserve. they want treasury secretary jack lew to release plans for a crisis. republicans and a obama administration have clash as to whether the government can prioritize debt payments. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. this is bloomberg. mark: 90 minutes left in the session. stocks trading higher for the fifth day after falling .1%. higher led by autos
and chemicals. still the european benchmark. the big event was the event that never was in the bank of england. investors pricing an 80% chance of a rate cut. you did not happen. economists we surveyed said it would happen. there was a disparity between investors and economists. we will see loosening in august when the bank of england releases its latest quarterly inflation report. it also holds a news conference. sterling, ahead of the vote, ftse, was up 1% and fell a third of 1% and is come back since then. june 24,he ftse since the day the referendum results became apparent.
best-performing developing stock market in the world come up by 5%. it relies on the domestic economy and down by 3%. one stage post referendum, down by 14%. how did sterling react to today's surprise? -- the decision to do absolutely nothing and keep rates unchanged at .5%. sterling, up by 2.5% after the vote. it is come back from those highs, but still up by 1.2%. it is up for the fourth day in five after falling by .7% yesterday. it is still 11% below the close on june 23. a quick look at the bond markets. yields rise today on the two-year, on the 10 year, and on the -- we have seen rises across the curve. let's get over to the markets desk in new york, bloomberg's
julie hyman has the latest. julie: thank you jpmorgan. it's earnings from the bank that has helped power stocks higher so the doubt s&p once again at new records. now, the s&p s should say --the nasdaq rising today. if you take a look at what is getting the most is financials. the imap showing financials are in the top spot with a gain of 1.25%. utilities are declining today. it is a pretty broad-based rally. jpmorgan is part of the reason why. though shares arising after the company said second-quarter profits fell, but not as much as analysts say. the company's core loans performing better than anticipated. it's all profits rise in its
various business segments. shares are up by 2.5%. you will hear much more about jpmorgan in the comments the company made on the conference call including comments from jamie dimon on the results of the u.k. vote. we did not just your from jpmorgan today. we got numbers from blackrock. second quarter profits are down. 3.7%. beat average estimates by a penny a share. they are up 1%. the current rally inequities may not be justified. progressive numbers topping estimates as well. switching get from financials, i want to mention young brandt. pardon me, the other banks that are reporting tomorrow. young brandt, shares up by 4%. company coming up with second-quarter estimates that beat estimates. bear --or ksc and paco
kfc and taco bell sore in the u.s.. in china they share, it will see 2% to 3% growth. the company also said that so far in the third quarter, and u.s. talk about transactions have been positive. they did fall in the second quarter. the company is confident it will not have to raise prices anymore this year. that is the latest on yelm brand -- yum brand's money. is the brexit vote me for banks of the rest of the year? spoke on their earnings call about what needs to happen. >> we are hoping the political leaders are very sensible. to think through the process.
i ambusinesses time, talking about years, to adjust to the new reality, which we don't know what it is. are -- we are joined by erik schatzker. talk to us about jpmorgan's tone. there seems to be a hopeful tone from jamie dimon. at the same time, we are seeing there was anger because he had made unhelpful brexit remarks. erik: american bankers, and , they are caught between a rock and a hard place. on the one hand they need to be realistic about the future for whosake of their employees want to know what is one to have and to them. on the other, they have a relationship to maintain the richest regulators, and of
course, the british government, which is changing before our theory eyes. jamie dimon has been very outspoken in the past, but today, took a conciliatory tone. very first question was about brexit. it is one of the great unknowns, right? one of the great uncertainties that hover over the future of the u.k. in the eu. underneath that, there are two big questions. what happens to clearing and past 40 -- what happens to clearing and passporting? vonnie: of course, they can't answer any of these yet. none of this has been negotiated. is there a plan in place at least and jpmorgan for different scenarios? it is fair to say that the
are just beginning to put those plans into affect right now, but they can be -- but they cannot be very detailed. have they settled on how many thousands of employees would need to be moved from london in the event that passporting ceases to exist? to a representative of ubs, he could say a significant number of employees. ubs will need to change its business model in europe. you can safely say the exact ubs or anyapply to non-u.k.-based bank. mark: what is the outlook on the dow? erik: jpmorgan has been cutting costs. one of the things -- look, bank earnings come down to two things.
, what you can generate revenue, and what it cost to run a business. revenue is something banks cannot count on a lot. to the degree that jpmorgan beat analysts's estimates was mostly because he did better in fixed income than the analysts were expecting. the thing that jpmorgan has control over is the cost. on that front, it is quite remarkable that jamie dimon and his other executives, have been able to get more and more expense out of the business. --y cut their expressiveness because their expenses almost by $1 billion. it is striking. is down toead ratio what i believe to be a historic low for the bank. in this environment, were global
growth is a big question mark. with the uncertainty of brexit layered on top of that and the questions about china and the fed on hold forever. in bonds, it is hard to generate revenue. they continue to try and make efforts on that front. it is striking that they can keep doing it. kudos to -- >> i want to make a point that is interesting. uncertainty is that for investment banking. corporate confidence goes down, ceos don't go good about doing deals. jpmorgan try to advance on the conference call which is this -- because of uncertainty, because
of brexit, of course, it is likely that european, u.k., global growth will be lower than they might otherwise have been. ceos are incentivized to do deals, mergers, acquisitions because that is one of the few ways they can cut costs and boost bottom line. furthermore, they said the impact of brexit and was central banks are doing in an effort -- it is obvious impacts on exchange rates. to the degree that some currencies become cheaper relative to others, it is an incentive for corporate executives in those strong currency markets to do more cross-border deals. call it silver lining. vonnie: fantastic summary. thank you, erik. julie, you have breaking news. julie: client has begun trading the biggest ipo.
inhave seen a big increase 30%. there was a lot of demand for this ipo. raised $1.3 million -- $1.3 billion. there is a dual listing in the u.s. and japan. looks like again the demand is reflected of what we are seeing. shares opened at 42 and are seeing a big increase. already, we have an initiation with a buy rating over at jefferies. another indication of the strong demand and the bullish sentiment regarding this company. -- wel he run the company will hear from the ceo of the company. vonnie: julie hyman, thank you.
jarvid is the new secretary. it is been quite a 24 hours when it comes to shaping cabinet. he is a guest on bloomberg as well. check that out. the pound got a big bounce, the bank of england's decision. u.s.of gains over the dollar after the boe. the economy real from britain's decision to the european union. did you anticipate anything?
we were leaning in the direction given the signaling that probably 25 basis point cut was coming. a statement on qe next. it was a bit of a surprise. because the easing caused by the pound partially did the job for them. financial conditions have not been tightening. sayne side, one could brexit aside, several aspects of the u.k. economy, particularly the service sector are rolling over. i can see why giving -- we are getting revisions to the forecast in a couple of weeks. i can see why from the perspective they want to wait
and see the two meanings as one package. it is a matter of time. today is no different. how has oppenheimer manager and analysts change since the brexit vote? >> we did not change much. while brexit was not are based case and restructure the portfolio around a non-event, we put in place hedges. what we did on the night of the event, late, early morning here in new york, we cornered that short position in the pound. that is really the only meaningful change. as you might recall, we were over waiting emerging markets. profits on the e.m. currency side.
the movements have been large enough, quick that it feels safe to take some of those profits. mark: many people talk about a new equilibrium for the pound. do you think we found it against the dollar? this new level? is it around 130? it further on the downside? >> that is a great question. we ran all of our currency valuation models. on the pound versus the dollar, a 20%ly 130 feels about under evaluation, which is on the extreme side. on the euro, less than that. the pound is cheap. it is important to remember the large shop we had come 12% in a couple of weeks, it is frontloading a lot of the economic weakness and policy easing that we are talking about. to 140, ink the 130
your own words, those of the right words, it is a new equilibrium. mark: the big industry group that investors are shaking their heads about of course is banks within the industry. italian banks. the concern is that it becomes systemic in europe. will a solution be found to ensure it doesn't? >> we are seeing the right headlines. both merkel and event see what a solution. they respond to two different electorates. that is the face keeping game they have to do. there is a strong case for the tie and makes to be resolved on a couple of grounds. talk about legacy problem. do ant ground, we can exception to the feeling rules -- to the bailing rules.
the most important factor is unlike all of the other countries, but 50% of the bond holders are retail depositors. it is the same base as taxpayers. out or bailing in remains in the same pocket. vonnie: thanks for joining us in studio. mark: coming up, julie has a look at the early stocks moving, including shipping stocks, planes, trains, and trucks. this is "bloomberg." ♪
london. it was supposed to close -- it was supposed to report after the close. the shares are 2.5% higher. --saw by anticline, because it saw costs decline. other railroads are on the rise. delta second quarter profit beating analysts. delta is higher. other airlines are also getting a boost. vonnie: still ahead, jpmorgan raising the curtain on bank earnings. this is bloomberg.
let's check in with bloomberg first word news. >> u.s. secretary of state john kerry meets with vladimir putin in moscow. carrie will layout a potential deal that could avoid an escalation. he will share information for targeting masonic states -- targeting islamic states. prime minister has tough choices to make. those tos him enough change the constitution the u.s. imposed on japan after world war ii. supporters want him to alter his pacifist article 9. meanwhile the population of japan keep shrinking. the world's fastest aging population fell the most on record last year. the government projects that unless the birth rate increases,
it will contract by 40% in 2020. justice regrets making comments about donald trump. thewas frank about republican nominee in a series of recent interviews, even calling trump a figure. she promises to exercise more discretion in the future. the republican convention gets underway monday. offeatures a number politicians and celebrities, but there are notable absences. cofounder will be featured. other speakers include four of trump's children, and house speaker paul ryan. missing from the line of our bush,ents george h.w. george w. bush, and john mccain and mitt romney. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world.
this is bloomberg. the: 59 minutes left in thursday session. it it is dominated by what the bank did not do. --did not cut rates to put it did not cut rates to 2.5%. waiting for the quarterly reports in august. they signaled that they would be loosening. pricing and doing 80% probability ahead of today -- investors were pricing and probability. the ftse was up 1%. bank of england sully third of 1%. sterling continues to rise.
the euro is down again. the sterling against the yen. this is great stuff. the sterling has risen 8% against the yen. rising yields today. italy and innd london. u.s., maybe not as enthusiastic. financials doing well. j.p. morgan chase you cannot bank earnings. you saw the s&p 500 was up. diversified. big industrials are up as well. transportation and construction are doing well in that sector. consumer discretionary up 2/10 of 1%. mark: jpmorgan setting the bar high for bank earnings this quarter. 3%.nue increased nearly
shares are up and response. for the resteans of the banking industry, we are joined by ubs securities analyst brendan. did this change your assertion that jpmorgan is worthy of a premium and valuation in the current environment? >> it reinforces the assertion, right? we saw strong results in the helped.revenue, which was always viewed as a strong risk manager. and volatile times, this is the type of stock investors want to own. mark: what is the trading environment want to be like from here, brennan? we saw fixed income trading up 35%. tosaw equity trading up 1.5%
1.6 billion. what is the carry through from here? july, and august 10 to be as -- july and august tend to be a lot more thin. that is largely expected. it is embedded into our numbers. jpmorgan did remarkably well. it is my sense that the strength they have in their makro businesses -- the rates businesses, are probably really helpful. i think that city is the most likely firm to show pretty solid results this quarter. we get city early next week, excuse me, tomorrow. vonnie: there are a few things
that will be tailwinds that won't be around. what is the global economic environments? there's jpmorgan suffer? suffer?jpmorgan >> jpmorgan's results still be our estimates. headwind,rate was a which offset that. gained onlyope added a nickel. still better than expected results. if we see the slowing economy, banks are usually dependent businesses. if we see a slowing microenvironment, we will see negative repercussion on bank earnings and velocity from here. that is what people are so worried about. that is why we have seen over
the last six to 12 months, a large part of these banks no sideways. investors are trying to get their head around how do we balance low evaluations versus potential earning headwinds from higher credit costs, weaker net interest markets, and maybe slower loan growth. vonnie: erik schatzker was telling us it is the slowest they have been in the history. it is for cost-cutting now. other there any more things jamie dimon can cut? >> banks have been trimming and rationalizing businesses for some time. at this point, you get to the question if you will be hurting your revenue. this is always a balance when you are trying to cost cut. are we taking some of them revenue potential? investment banking businesses go through the secular shifts, that is a balance we are trying to strike. what we recently started to see
is an increase realization that the recovery from previously levels, we are seeing structural cuts to the expenses in order to adjust for the new reality. sorry, mark, go ahead. mark: i want to get a question on brexit. what about the post-brexit landscaper banks like jpmorgan? it is the u.k. that is going to be had, not jpmorgan itself. what about advisory? what about trading? how is brazil going to hurt the banks like jpmorgan? >> right. that was a big topic of conversation. in fact, one of the questions i asked of jamie and marianne. it is really early to know for sure. there is certainly cost
uncertainty around jpmorgan. they don't know how many people they will need to move around. it is unclear how the access in the single market will work on the u.k. a lot of that will be dependent on trade negotiations between the u.k. and the eu as a move forward. -- early to know for sure too early to know for sure. revenue and the revenue impact, you are right to say that m&a, there is uncertainty and uncertainty is never good for trying to get transactions over the finish line. however, jpmorgan struck a remarkably optimistic tone in their call from on the outlook for volumes from here. we should continue to see good underwriting. mark: great to see you. thanks for joining us given your in take on jpmorgan. looking toif you are
despite being little known in the united states, in those millions of active users, most in asia. the cfo -- ing : i am here was to executives from line having a pretty good day. i am here with the chief global officer at line. also the chief financial officer at the messaging app. let's start with you on how you are feeling today. a lot of people are wondering, having raised $1 billion in this ipo, what are you going to do with this money? >> first of all, i am there he with -- i am very happy the initial response from investors. it is a great response.
we will strengthen our services. investing. you are the numbers man. where will that investment go? will be focusing on four key countries, japan, taiwan, thailand, indonesia. at other interest is looking the investment opportunity for the technology. betty: what might that look like? when you say more investments, you mentioned some of the country's growing two or three times in some places, what kind of investments are we talking about? acquisitions? organic growth? what are we talking about? makinguld say, we are joint ventures with leaders in
each different area. betty: how about the u.s. here? how important is a u.s. market going to be? it is still a small part of your business. vision -- we our want to optimize our platform service. it is a one-stop service. ok.y: so the u.s. market is a dream for line to enter this market. there are quite a few are ready well-established. we're talking about facebook messenger. plan on rivaling and competing with them when they have three, 4, 5 times your user
base? offrom the perspective computing, we consider the kind of message are competition is over -- messenger competition is over. we are a one-stop service. you can enjoy music, and gaining. -- you can enjoy music and gaming. we are the best company in this area. one-stop service for line is a messaging platform. i am looking at the revenue breakdown and obviously gaming has been big. the digital stickers i saw on the floor. i noticed that advertisement is becoming more and more important. how are you going to increase advertisers revenue? ago, game revenue was
covering almost half of the revenue. looking at the last quarter, the game an advertising has become equal. ad, we thinkrmance this new entity will be leading the course of the advertisement side. we think ads could be a big part of the revenue. betty: would you go into different types of products to leverage that a advertising money? are facing a performance ad based on scalability. there will be new initiatives. betty: what markets are you not
in that you might be expanding into? or are you happy with for you are right now? i am satisfied with focusing on -- betty: thank you very much. i am looking here, 42.36. we are holding steady on the stock. back to you, vonnie. vonnie: betty liu at the nyse. greg clark was the secretary of state for the communities secretary.
alternatives to the $62 billion takeover. talks aboutrevising a possible combination of their chemical business the company's board is split with some favoring a takeover. delta airlines posted estimates -- posted results that beat estimates. expects passenger revenue to fall in the current quarter and it will cut plans to cut growth in the final three months of the year. european commission has launched an attack against google. regulators say the search engines use result in its own favor. googler is also -- google is also accused of restricting
advertising platforms. that is your latest bloomberg business flash. vonnie: mark, thanks. something about saying made in italy makes. things more luxurious. that is true of fabric. even fabric found in cars, planes, and yachts, the italian fabric maker is famous for its ultra soft material. chances are you sat on it and smoothed over it with your hand. chairman. talk to us about the impact of the brexit vote on your business. seems there will be uncertainty and some instability. time will tell to find the effect. brexit isthe company,
not at the top of our concern. we will continue to grow, with a toplobally global company, operating a different types of industry. vonnie: yes. fabriche most amazing developed by japanese scientist. very interesting history. tell us how you have been growing and why there is more demand for luxury fabric now. we have been growing, leveraging on versatility. our material is extremely versatile. it can be presented in 1000 different ways. it is applicable to many many applications. in order to exploit this versatility of material, we have a very reward relationship with top designers and creative people.
they a means by which express their creativity. and they come back with a number of ideas. from this process, it is stemming innovation. today, we have a strong presence in the automotive industry, and also in interior design, and especially for headphone, tablet, smartphone. versatile, is so they can be used in the most extreme fashion an application. sorry? quickly, whatvery is the important point? point is made in italy.
we have proven evidences that this is a value, especially in asia, china, japan, and the usa. this will be a driver of our growth. mark: we got to leave it there, but thanks to talking to us today. chief executive officer. made in italy, very important to this company that produces this very special fabric. coming up on bloomberg television, it is the "european close" next. we are diving into politics. theresa may clearing out her predecessor and she begins a new era. the "close" is next. this is bloomberg.
european close on bloomberg markets. we are in new york and london for the next hour, covering the middle east and the campaign trail in the u.s. as well. sterling rallying after the bank of england decision. the central bank keeping rates at a record low, possibly weighing stimulus for august to keep the economy going post brexit vote. vonnie: and kicking off earnings theon to a beat thanks to global market rallies. mark: it's the first full day with theresa may as prime minister. we will discuss who is in and who is out.