tv Bloomberg Markets European Close Bloomberg July 18, 2016 11:00am-12:01pm EDT
♪ we will take you to istanbul and tokyo in the next hour. here is what we're watching. soaring on the news that softbank will acquire the company for $32 billion. the 43% premium pay. bank of america posted higher profits in each of its four main businesses. bond trading revenue increasing. we will get an analyst's take on the recent quarter. then, focusing on investment in turkey. failed coup attempts over the weekend. whether it is time to buy and sell amid the latest turmoil.
>> let's get you caught up on where european equities are trading right now with 30 minutes to go. i wanted to take a check to give you the big picture appeared we have been closely watching turkey today. you can see turkey's benchmark index has closed down 7%. one of the outperformance today, we have seen it rebound after losses that we saw on friday, that you can see there. up one point. -- 1.5% on the dollar. european markets, the stoxx 600 up about .3% at the moment. not seeing huge gains but we are seeing resilience despite the geopolitical risk. i am highlighting what the best and worst performers are. there, best-performing stock on the stoxx 600 today. let me give you some context.
it hit a record high after thebank agreed to acquire u.k. chipmaker $432 billion, a 43% premium on friday's close. we really did see the shares gain after this all happened very quickly in the words of the chief executive officer. i wanted to show you how sterling is trading against the euro . we are also seeing it higher against the euro, up almost .5% there. this after the bank of england , saidmaker, martin weale -- before the central bank considers additional stimulus. vonnie: we will get a check on the u.s. markets now. julie hyman has the latest. julie: ginny more traction in the u.s. it looks like we could see some
record closes. the s&p 500, the nasdaq doing the best of the three major averages today with a gain of .5% and that is on the strength of technology. take a look at the s&p 500, going back to june 23, the day before the u.k. vote to leave the european union. we have a drop in the wake of it and a gain overall of about 2.5%. with standing or rebounding from the aftermath of that vote, and most recently, that failed coup attempt in turkey. also, the terrorist attack in nice. a lot for the market to cope with and it has coped quite well. in terms of today's session, take a look now. the green is gaining ground as the s&p 500 has been gaining ground. energy the top spot and in the bottom spot within tech, usual suspects are lending the most to the rally.
heavyweights, microsoft up as well as other chipmakers. a deal with softbank agreeing to buy arm holdings. if you look at arm's shares, rising as are other chipmakers. electronics companies, sky works also doing well in today's session. on the flipside, we have got oil moving lower today and that accounts for the weakness we saw in energy. in part because there was some speculation on friday with the unfolding of events in turkey, that there might be some supply constraints. things that could be contribute into the decline in oil and oil stocks as a result today. vonnie: thank you let's check in now. courtney has more from the newsroom. the highest ranking of the police officers go on trial
in the freddie gray case are going acquitted. involuntary manslaughter, reckless endangerment, and misconduct in office. freddie gray was a black man who died after he was injured in the police fan. acquittals and a mistrial. the latest on the story we have been reporting on all morning, louisiana state police are calling it an ambush. the gunman who killed three officers and wounded three others in baton rouge was "certainly seeking out police." the shooter was identified as a former black u.s. marine. two weeks after baton rouge police killed a black man. the republican national convention in cleveland, delegates close to donald trump are still deciding ways to disrupt the gathering. him.s both for and against many of the republican party's top elected officials and donors are showing their unhappiness with trump by staying away.
trump would make it tougher for immigrants linked with terrorism from coming to the united states. trump and mike pence were interviewed on 60 minutes. mr. trump: there are terror nations and terror states that allow in our country. we will have extreme vetting. there will be extreme vetting and we will have extreme vetting. they will come in and we will know where they came from and who they are. said the u.s. will have unbelievable intelligence to fight a war with the islamic state. global news 24 hours a day powered by more than 2600 analysts. i am courtney collins. this is bloomberg. >> let's get back to our big m&a story. softbank agreed to buy chipmaker arm.
shares of arm hitting a record high. premium over arm's's closing price on friday. joining us is lumbar technology reporter jeremy -- jeremy. why -- it is aee bet on the internet of things. to gain? arm have besides a lot of money? jeremy: it is hard to turn that down. a substantial investment on the part of arm and softbank is committing to invest heavily in arm. double the workforce in the u.k., to keep the headquarters in the u.k. i think arm is getting a lot of financial support. spoke to the arm's ceo. what did he have to say? he said they did -- this did not have to do with brexit. both arm and softbank
saying brexit had nothing to do with it. that is interesting. you look at the price, the pound's fall may have made the price cheaper. softbank saying arm stock has risen since the brexit vote, so actually they performed very well. they say if we had done the deal before brexit, we could have paid 15% less. arm sells a lot to u.s. companies in asia, so they are relatively unaffected by that aspect of brexit. of course, they have a lot of engineers that come from other countries, including the eu, and there was concern about potential immigration issues going forward. softbank was saying they hope it is resolved going forward. culturesll the combine? will they combine well or might there be potential for difficulty there?
isemy: i think softbank saying they will leave arm to his own devices -- its own devices. i think they will allow it to operate as an independent unit. where there are synergies, i think softbank uses a lot of handsets in the mobile phone business. a lot of handsets have arm designed chips in them. i think there is a potential culturally that they will fit very well. it is hard to anticipate there will be a major cultural >> with the way softbank -- clash with the way softbank runs. much debt atas so this point. what happens to sprint and are there other losers? jeremy: i think that is a really good question on sprint. you had the ceo of softbank saying he thinks sprint can
stand on its own and it will not need another cash infusion or a loan from softbank, that it will be cash flow positive going forward. i think you have softbank saying it does not expect needs any support. other losers in the deal, that is hard to say. some armed competitors -- some arms competitors. thanks to bloomberg technology reporter jeremy kahn. up next, eu ministers meet in brussels to discuss a series of pressing issues including fighting terrorism and turkey. it is the first session from boris johnson. we will have a live report. this is bloomberg. ♪
vonnie:vonnie: live from london and new york, i am vonnie quinn. europeans is the market close. time now for the latest bloomberg business flash. blackstone group will capitalize -- rental landlords. according to people familiar, blackstone expects to take -- home in the first half of the next year. it would go public as a real estate investment trust. yahoo! may face job cuts after the sale of its core assets. a new owner is likely to emerge soon from a lifelong bidding battle. ceo marissa mayer has already eliminated thousands of jobs and analysts say a new owner may cut another 3000 with a third of the current workforce. yet onweale is not sold
the need for an interest rate cut in smart. he says he needs to see more evidence. there will bew is some long-term hit. why should a long-term hit have implications for monetary policy in the short term? well, if people can see that coming, then there is a perfectly good argument that they may cut their spending ahead of the long-term hit looming. case, that is the provides a classic argument for easing monetary policy. a 90%cing in about probability that the ecb will cut rates in august. that is your bloomberg is this flash for this hour. >> european union, foreign ministers, and john kerry met in brussels today. ryan is standing by in brussels. brian, they have all warned the
turkish president that he needs to respect the rule of law as he reasserts his role over turkey. brian: the eu has a partnership that is four months old in turkey whereby the turks are helping to help stem the flow of refugees through turkey and greece. greekfugees landing on shores have fallen tenfold over the last few months. the turks are doing their part when it comes to that deal. the onus is actually on the eu to hold up their side of the bargain and deepen their partnership with turkey by giving the turks visa free travel to europe, by kickstarting those membership talks with turkey that have been going on forever. not do eitherto of those or to push back, that
could lead to real problems with the eu . . nato has standard spirit have a listen. >> nato also has a requirement with respect to democracy. will indeed measure very carefully what is happening, the level of vigilance and scrutiny is obviously going to be significant in the days ahead. >> you see there that warning from the united states. having said that, the united states needs turkey in terms of its operations in syria and we saw that over the weekend when, as a result of the coup, the u.s. could not lie it jones out of the turkish airbase. it also needs turkey in terms of credibility. it is the largest country within nato with a majority must own population. -- majority muslim population. the barrier for what it would
take for a separation, a real divorce, is pretty high. the cousin the reality is the west really needs turkey right now. was also boris johnson's first. how did that go? no inflammatory commentary on turkey, i hope. no.: boris was on his best behavior. he has offended many of the foreign ministers here, but if they felt offended, they were not showing it. we heard from the eu foreign policy chief saying she had a very productive dinner with boris johnson last night. in fact, all toy seven of the other foreign ministers were supposed to be there. they said they were not going to have the meeting because of the events in nice. they private sleep -- privately told us they do not want to sit down with boris johnson. it was a working and pragmatic conversation with boris johnson. we will ask him how he think it
-- how he thinks it went. thing is toeresting see how interesting the united states develops. to that end, on his way to london, he will be sitting down with boris johnson. we will see the relationship between the u.s. and the u.k. and how that goes from here. >> is anyone asking why boris johnson is there? he has a role there, but he made a comment that britain will always be a part of europe. what does he mean? it won't he. britain is formally part of the -- formally part of the .uropean union what they really want to know from boris johnson is where he fits into the negotiations. there are three leading those talks to her and i am him what
dollars, $.36 per share. the company set fixed income to 2.6 revenue rose 22% billion dollars. net income dropped. -- toldaul miller tells bloomberg today this is an overall win. quarters haveo been tough for bank of america and a lot of that is due to the flattened curve in the lower rates. but they did very well on the investment banking and trading side this time around. the extensions were, you know, probably the lowest we have seen for a while from these ties. they are still working through some of the tough situations they were put in through the crisis. this is one of the better quarters we have seen them have in a while. >> equity trading revenue is still down by 7.6% and wealth management also down .2%. .itigroup has a really high bar compare bank of america to his peers.
>> jpmorgan and the other guys are much bigger on the other side of the business. yes, when you get really strong toding, those guys will fall the bottom line. bank of america is still working to a very heavy expense base that they have to get through before they trade at a premium. but relatively speaking, bank of america had a good trading and investment banking quarter. >> equity trading was down but fixed income was up 22%, twice as big as their equities? click yes. it is much more important. >> they beat estimates on earnings per share revenue. in fairness, year-over-year revenues are off. the thing that intrigued me is the return on capital equities that you mentioned. >> the bottom line is, they had
a strong quarter a year ago so you are right it is flat year-over-year. the third and fourth quarters of these companies were really tough. spinning the wheels and getting back to where they were a year ago, a very tough interest-rate environment and a tough trading environment to over the last couple of quarters. it is tough for banks in general to earn money today and for bank of america, they will surprise on the upside. >> the other question was the banking unit or provisions, basically a slower pace portfolio improvement. that is also different from citigroup and jpmorgan, showing underlying cymer weakness. what do you make of that kind of read? is hard to read into that he or your not getting the real data. but yes, still being tough out there and it is still a struggle.
out, bank ofnted america perhaps more than its peers are vulnerable -- is honorable. what happens with net interest income? paul: it will struggle. relative to the jpmorgan's of the world, bank of america tends to be more assets sensitive. is muchinterest income more exposed to the swing and interest rates here rates going up and down like this is really tough on them. miller.was tall bank of america shares tend to agree with paul, although if you look at the last year, they are down 22 and three quarters percent. happening right now, theresa may is giving her first address to parliament. they discussed the softbank deal at the beginning of her remarks.
deterrent with fellow lawmakers, there you go. she is saying the arm to deal shows the u.k. is open for business. we have yet to hear anything on turkey but we will continue to follow the headlines and bring you any updates. with take a quick check on the european markets. we are four minutes away from the european equity market closed. you can see the stoxx 600 up .4%. ftse 100 up .6%. resilience in the face of risk.itical sterling up .8%. this is bloomberg. ♪
stocks finishing the day in european trading. all of take you through the market action. i want to start with the stoxx 600. this has been gaining, closing some 4/10 of a percent looking at europe's equity benchmark. the resiliency despite geopolitical risk around turkey, the failed to over the weekend. we are ending higher -- the failed coup over the weekend. we are ending higher. looking at the grr function on the bloomberg. it is tech stocks that have been leading. 3.5%.logy stocks up some the stoxxt gains in 600. if we look at the specific stocks, it is arms holdings, up 41% after softbank agreed to acquire it for $32 billion.
a 43% premium on the arms closing price friday. you can see this jump up 42%. the biggest jump on record for arms, and a record high today on that news of the acquisition by softbank. a lot of moves, largely led by technology. vonnie: thank you pay looking at some different indicators that tell us how things are looking in the u.s. indexx index -- the vix showing calm. in currency, weakening for the oda, which is a boon for kur and the ministry in japan. by 1.2%.0, weaker the lira today, some re-tracement of some of the from friday.
stronger now by about 1.6% versus the u.s. dollar. the dow up 1/10 of percent in american stocks. the nasdaq up 6/10 of 1%. the arms deal helping. let's go to the nasdaq now, where abigail doolittle is standing by. cautiousafter a tepid, open for the nasdaq, it is now up 6/10 of 1%. similar to europe, it is all about technology. namesf the best-known including apple, alphabet, and facebook are out. but it is really about arms holdings, up 42% on the news that japan's softbank is buying 30 $2 billion.or softbank saying they like the steady cashflow.
amd up five point 8%. they report thursday. we will see if those gains hold will see if -- we those gains hold. netflix shares up higher. on 2.1nts per share billion dollars of revenue. the big story -- will this quarter be clean? quarter, they guided down. investors will pay close attention to what does international growth look like relative to domestic. after the earnings report, when we look at this chart, it move by netflix could 11% up or down after this quarter. this chart put together by bloomberg show a netflix is the most volatile post earning of all of the stock in the s&p 500. just wanted to show the possibility of a volatile move. thank you pay let's
check in on the bloomberg first word news. >> the latest out of louisiana. authorities say a gunman sought police officers and ambushed six. three were killed and three others were injured. the gunman was killed at the scene. he was identified as a black former u.s. marine. we are learning more about the investigation into the terror attack in nice. a prosecutor says the attack was premeditated. investigations say that the man had searched the attack in orlando. that turkeyng reinstating the death penalty turkeys appeal to enter the eu.
germany said that a country with the death penalty could not enter the eu. and the u.k. will not abandon its leading role in europe, according to boris johnson, who was named the country's top --lomat after britain left voted to leave the eu. keep the invective of the people and leave the european union, but that does not mean we are abandoning our leading role in europe. courtney: johnson said the events in turkey and france underscore the importance of working together. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. collins.tney vonnie: thanks.
oneturkish president under is being asked not to use the failed coup for an authoritarian crackdown. joining us now is bloomberg's riad hamade. is a operating normally in istanbul today? yes, as far as i can see. there is traffic and people on the streets pay what is not normal is the sweep of arrests and firings going on. now for a 500 people either arrested or fired from their jobs in the judiciary, including in the interior and finance ministry. over 2500 people either arrested or fired from their jobs in the judiciary, including
in the interior and finance ministries. among: is there any talk economists that the turkish central bank will need to do er?ething or is it blowing ov riad: it is not blowing over. stock market slowed down 7%, while the currency has rebounded a little from its big slump friday. it has not made up the losses completely yet. the central bank has taken measures and said it will provide liquidity, among other things. a rate cut.t they were expecting a 50 base surveyed economists before the coup said. revisingomists are those now pay the consensus seems to be that the bank would
keep the rate cut to a 25 point rather than 50 aces point cut -- basis point cut. vonnie: bloomberg's riad hamade. amid all of the turmoil, could there be opportunity? hermes us now is investment management's gary greenberg. that afternoon. great to have you in the studio. you have made the comment that when you look at turkey, it is hard to see, even with what andened over the weekend democracy on a firmer footing. if you are an investor looking at turkey, how much do you have to separate economics from politics? gary: it depends on the time horizon. if it is a year or less, politics do not present much of a risk. if you are looking three to five
years or longer, the policies of executive presidency, it could be difficult for you. -- for shorter term investors, you could separate the two. >> going forward and looking ahead, you see there may be a relief rally, or your firm sees that. what are you basing that on? valuation, the economic performance of turkey? gary: turkey is growing decently for the world we have today. valuation is pretty cheap. we see the market at around 1.6 standard deviation cheap versus the rest of emerging markets. and emerging markets themselves are not very expensive. so it looks like a cheap market in a cheap allegory. so there is potential -- in a cheap category. so there is potential. we think there is a good scope for a rally back to 5% or so, or
me the -- or maybe even 10%. -- e: vonnie: its deficit is helped by capital inflows, so what do you buy in turkey, in terms of assets? gary: my team is just involved in equities. we look for stocks that are good quality but inexpensive. we have two names we are involved with. hawk bank and ayegass. at less than half a book. in do not get cheap stocks an environment where everything looks rosy. sometimes you have to buy things that could get better, because they are priced for a giveaway now. vonnie: so it does not concern you that economic fundamentals
are deteriorating slightly? inflation above 7%, unemployment above 9%, and so on. concern as ahings lot. which is why we are only neutral in turkey. if the central bank cuts by more than 25 basis points tomorrow, we think there is risk of the currency deteriorating. we do not like the unorthodox approach to the administration is taking towards monetary policy. bought thed you monetary policy, because it is the central bank stepping in to reassure markets. what are you expecting from the rate decision? gary: we expect a small cut. the administration is very keen on keeping growth growing. they need a mandate. economic growth is what provides them that mandate. so they have been against
interest rate hikes for years. i see that continuing. broaden theo conversation to other emerging markets. the you think emerging markets stocks are likely to outperform developing markets, even with political turmoil? gary: well, we have playful inmoil everywhere, even developing markets. the u.s. is no stranger to it, unfortunately. beening markets have underperforming. , whichare getting better is not to say that there will be a rally. >> what markets are you looking at been? gary: india still looks good. troughing,hing, -- in terms of a cycle. and the goods and services tax could be passed there. we think taiwan has some great companies in it. good.elds are
capital discipline is good. and the technology is excellent. you can find lots of great companies in emerging markets. and currently they are at a discount. vonnie: what about the idea that india and its central bank governor parted ways. what do you see in terms of the central bank action in india? gary: we will have to see who gets appointed. we think a responsible individual will be appointed. and the candidates in the running now, generally, look good to us. we do not think the recovery or the discipline is going to get derailed. >> gary greenberg, thank you. leees fund manager's portfolio manager. the republican national convention kicking off today in
schatzker and described why he is behind trump. >> the world is shattered. it is at a tipping point. will we need is leadership. it is not being the best military strategist, not being the best at foreign policy. that does not lend well. vision, thathas a can inspire people, that can take that vision and make it reality -- what i will do is give a glimpse of what he has done in the past. and the character and integrity of the man inside the donald. you told me that your support for donald trump was not political. so why do this? because standing on stage and speaking to 2500 party delegates is a decidedly political act. tom: it is a decidedly active act. if you look at the world today,
and you say "i do not want to participate," you are going to participate by it all being taken away from us. there is no good news anywhere in the world. no good news at home. you look at the social and balance, and the status quo is not acceptable. it is not about hillary. hillary is chairman to slay qualified. it is about the status quo -- hillary is tremendously qualified. it is about the status quo. no one wants to go through this marchevable bataan death in order to get to this job. leadership, money, power. i am just behind the idea of someone standing there, saying what i will do is chip away the status quo. whether he gets there or not, this dialogue is great for america. erik: so you support donald
trump for leadership, as a break from political tradition and the status quo. what about some of the other stuff that people have issues with? you are the grandson of lebanese immigrants. do you not have some personal issues or concerns with some of the anti-immigrant rhetoric from donald trump? impulses itc triggers and some americans -- nativism, xenophobia, even racism. balance.s a delicate he has taken the politically incorrect route. i am lebanese-american. i grew up with my best friends as sunnis and shias. and this idea of islam, in my mind -- donald will tell you it is not a negotiating tactic -- but as someone who deals with them every day, it is a pretty good negotiating tactic.
-- friends, our best allies saudi arabia, united arab -- are subject to the fundamentalist terror inside of them. they do not want it. they want to stand out. it is a few out of the billion, 800 million muslims. america has to have a descriptive foreign policy that is firm and supportive. >> dallas tom barrack speaking earlier with bloomberg's -- that was tom barrack speaking earlier with bloomberg's erik schatzker. >> the housing boom in london may soon end. london's home values may fall more than 30% because of the decision to leave the european union. some business will have to leave
the u.k. in order to retain access to the european single market. folks login said -- volkswagen said it would compensate u.s. dealers hurt by the emissions scandal. halfcandal affected almost a million diesel vehicles in the u.s. latest business flash. coming up, battle of the charts. i will battle head-to-head with joe weisenthal. this is bloomberg. we can take a check of the markets for you. european markets closed higher. the stoxx 600 up 2/10 of a percent. some resilience even after the political turmoil in turkey. than 40%, after softbank agreed to buy it for $32 billion. this is bloomberg. ♪
battle ofr our global the charts. you can access these charts by running the function at the bottom of your screen. kicking things off is joe weisenthal. joe: there is obviously a lot going on in the world. brexit and the failed coup in turkey. but there are important developments in the u.s. some data released friday i want to call your attention to. the latest on inflation and wages. the yellow line is the tracker that tries to figure out how much everyone's wages have gone from the year before. it is up 3.6% year over year, the highest since the crisis. gain for x-over-year energy.
even other measures of inflation have been generally trending up. how the fedks about is not making progress on inflation, but data shows a going in the right direction. keep an eye on these trends. you can see this chart on the bloomberg g #btv 2131. that one is down, but you are seeing signs of inflation pressure building. vonnie: nejra, what do you have? nejra: i am looking at arm holding after the deal of the day, hitting a record high, jumping the most on record after softbank agreed to acquire it for $32 billion. look at this. arm was the seventh most shorted stock on the stoxx 600 last week before the deal was announced. short interest as a percentage ofthe free flow, at the end
the chart there, was close to a six year high. short sellers cannot be too pleased with this move. i looked at the relative strength index, where it is somewhere at 91 on arm holdings. 70 and above means it could be time to sell, that the stock is overbought. so will the short sellers turn out to be right? vonnie: all i can say is ouch. i will make an executive decision and it will be a tide today. -- a tie today. later today, tom keene will sit down with imf managing director christine lagarde in an exclusive conversation at 1:00 p.m. ♪
u.s. justice department. prosecutors are scrutinizing whether fiat chrysler violated u.s. securities laws. at thesem looking stock now. it has taken a leg down. it is still showing green for the day. it is still up about 3/10 of 1% at 677. they had been up 2 1/3%. so investors not really selling off the sales. >> and the spokeswoman for fiat chrysler did not respond to a call seeking comment. we can tell you a chicago area dealer alleges fiat chrysler inflated u.s. caals by paying dealers to report more car sales than they did. chryslergain, fiat under investigation by the u.s. justice department for fraud, accog