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tv   Bloomberg Markets European Close  Bloomberg  July 25, 2016 11:00am-12:01pm EDT

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mark arden. you are watching the european close on bloomberg markets. -- i mark barton. we are going to take you from philadelphia to london and cover stories out of turkey and japan in the next hour. here is what we are watching today -- german business confidence falls in july. signaling the biggest economy in europe may have withstood the initial shock of written's vote to leave the european union. written's vote to leave the european union. a seriesies -- vonnie: of investigation at ericsson led to unease. and nintendo plunging in tokyo by the maximum amount of 18%, we
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will look at why the company says the financial and if it's on the pokemon go craze will be limited. have a look at how european equities are trading. we are 30 minutes away from the close here. the global macro movers, you will see norway down, denmark, 1% lower. the stoxx 600 was .8% lower. been drifting downward and we have moved into negative territory. are coming off the back of two weeks of gains, the longest winning stretch since may 27. is 1.3%he stoxx 600 below the close. some interesting corporate
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group say a rank joint takeover of william hill benefitsmpanies see for their in-store and online operations. william hill said it received a preliminary approach from these two companies but it was not clear if this would enhance their position in the industry. 5.3%. up by phillips reporting better than estimated profits and says earnings will improve with shares up 2%. this is a company facing stiff competition from chinese manufacturers. really quickly on the macro
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basis, we had business confidence with sentiments deteriorating. the business climate did fall to 108.3. the median estimate was for a drop to 107.5. 90 minutes into the session, let's get over to the markets desk. shery: let's look at breaking news. from the largest bank in florida by deposits said to be working with ubs to explore a sale. we are hearing this from people familiar with the matter, saying they are receiving interest from a potential suitor. 7% after we heard the
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breaking news. for the last two months, we are now hearing the largest bank in florida is exploring a sale with ubs. this week is all about investors. we have the fed and the doj and corporate earnings. nasdaq down and the reversing gains and this is reversing that rally we have seen for the past four weeks. i want to take you through the bloomberg.on on the consumer discretionary unchanged but losses being led by energy companies with oil at the lowest since may 9. u.s. producers are increasing
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drilling for a fourth week, the longest run since august. energy pulling down stocks and chesapeake is also down. some missed estimates on that. that has been pulling down the stock market today. check in on the bloomberg first word news with courtney collins and our new york newsroom. courtney: it is day one of the democratic national convention in philadelphia and the party is facing its own unity problem. debbie wasserman schultz has announced she is putting at the end of the week after leaked e-mails showed committee staffers tried to undermine bernie sanders. this morning, she was heckled at a breakfast meeting. >> [indiscernible]
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courtney: four months, sanders supporters called for her to step down. sanders is among the speakers tonight. police in fort myers, florida they an overnight shooting at a nightclub was not terrorism. age fromms ranged in 12 to 27. in southern california, a raging wildfire has forced the evacuation of about 20,000 people. 50 fire burned through square miles in brush north of los angeles. authorities say it is only 10% contained. and vladimir putin will not atend the opening ceremonies the olympics.
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countries entire track and field team has been barred because of the government back doping program. russian athletes may take part if they have clean records. global news 24 hours they powered by more than 2600 in morests and analysts than 120 countries. mark: the fallout from last in focus as vote is the outlook for britain positive economy darkens. a major challenge for policy makers. how much will that provide members? let's bring in a european .conomist how much tolerance is there within the bank of england for accelerating inflation? surveyedmists we have
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have looked at inflation possibly going above the bank of england plus 2% target sometime next year. guest: we think there will be quite a bit of tolerance. got means inflation will well above the 2% target and we think they are not done yet with the depreciation. are looking for a 25 basis point in the next meeting in august. data, because ,e're not getting any hard data the cbi manufacturers confidence which fell to the lowest level since the recession, we have that combination of services and manufacturing pmi fell to the
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lowest level since the last recession. does this point does toward the next recession? is this what the latest round of data is telling us? guest: you are right, we haven't got any hard data at yet but we have some weakness. come offhat might have with a different result of the referendum. but now we will continue to see some weakness on investment. think we are not forecasting an outright recession but we gonk investment growth will into negative territory and take growth much lower. hire inflation will light into consumer spending and we will see a slowdown in consumption as well.
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but aother recession difficult outlook for the u.k.. vonnie: it partially depends on where you think silver is going to be. steady, but where does it go in six months? we have a call on the pound to fall and you have to think about how the u.k. economy is financed. as the market gets more about growth going forward, we can see the pound taking another leg driving that is what is it toward 4%. the big fall, you are going to get a little less with inflation. what are you targeting?
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guest: we are looking at the pound in the dollar at 120. another big leg down. this week, we get euro area gdp. the index showing a big slide, but the trend is upward and so far, we have not seen any indication as to that changing. it might even be a better indicator if i change it to the yearly chart. guest: the pmi was quite resilient and we have others with relatively positive data, so it is important to keep things in context. of one-off effects and you are not going to see anywhere near the .6 you had for the eurozone.
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but in terms of the latest data, the eurozone seems to be weathering through some of the brexit indication. determined and what kind of response and political response the eurozone will come up with with some of the threats post by brexit. spread betweenhe the u.k. to year government bond and the u.s. to year government bond and as you know well, the difference in yields has widened the most in 16 years as the deviation between central banks become clear and apparent. do you expect that spread to widen further as we await the fomc's latest meeting this week? think we have just
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shift back in terms of the fomc calls so we no longer expect a rise. one in terms of may not beat particularly strong. the u.s. will find it quite hard to tighten monetary policy into the future. thank you for joining us. stay with us. -- moves executive helping the telecom giant out of its slump. this is bloomberg.
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vonnie: live from new york, i'm vonnie quinn. mark: and i mark barton. we are about 18 minutes to the end of the monday trading session. let's get to the markets because big changes at ericsson today. shares at the swedish telecom giant up on news that the chief executive has been ousted. he had been chief executive for over six years and came under scrutiny in a corruption probe. profits have taken a hit in the face of stiff competition. debt moving to stable. this?ch of a shock is he's been under immense pressure in recent months. guest: he has.
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although the actual day is unexpected and the timing might be awkward, they promised to double down on cost cuts. the truth is he has been under pressure for months. it's not just the share, it's the allegation of corruption and anded business practices increasingly, the company failed to deliver on profits and sales over the last four quarters. mark: and the company detailed further cost cuts last week. what does today's news mean for that? guest: i don't think it means as much as one might think. the cfo is going to act as interim ceo while they look for promised tot and he forge ahead with the cost cuts as planned and says he will
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deliver on them. vonnie: tell us more about these probes. business in every country in the world you can inc. of. anything tobes have do with those transactions? global company and stems from the late 1990's. the problem is when she sells telecom equipment, it's how willing they were to disclose and how forthcoming they were in disclosing the various probes they were under as opposed to the actual practices themselves which have been completely halted. he is getting 9 million
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krone on his departure. he was under consideration to be the next microsoft ceo, so he is clearly somebody in demand. what will he do next? question.t's a good i think the rumors of the microsoft job are from bygone years when they were dropping out at a five-year high. more recently, he has taken on a job at the swedish olympic committee. i'm sure we will see him somewhere and corporate sweden or corporate europe. vonnie: thank you for your continued reporting on erickson. close up, the european with turkish investors poised for their best day on sales. ♪
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vonnie: live from london and new york, i'm vonn quinn. mark: i'm mark barton. we are nine mitts away from the close. vonnie: turkish stocks are poised for their best day since the failed coup attempt battered investor confidence he year ago and the lira is seeing a rebound. we had an exclusive interview ministerturkish prime and asked about the country's economy and plans for growth. attempt had an economic damage that has incurred on the turkish economy. s&p immediately decreased our rating and i think that was not an ethical stand. it was taking benefit of the situation. we are a nation which has overcome a big coup attempt. we have struggled to keep
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democracy running and these such agencies should not be rushing into the situation, should not be deciding immediately. we would expect them to wait and then decide on this measure. this was something that was saddening for us. the turkish economy does not deserve this if you look at the indicators. when you look at european countries, the debt is considerably higher than our debt. when you look at the gross national income, the debt of turkey is around 30% or 32%. this is 116% in the european union and in oecd countries, it is 93%. at the criteria, there's almost no country in the european union that has met this criteria. since the 2009 global financial crisis, turkey has a very smooth performance.
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the banking sector is very strong and the capital's efficiency ratio is 15.5%. this is almost double the 8%. taking into account all these factors, what criteria do you have to reduce the ranking? this is not based on any scientific or economic criteria. decision.eological we have no doubt about that. there has been damage but i'm saying this just to give you an idea of the dimensions of the damage. a crisis with the russian federation about the russian aircraft, there was some movement in the economic indicators. the movement in the economic indicators have been similar to that. it has not been a devastating effect on the turkish economy. this is not subject to change.
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there was a simple fluctuation to the exchange rate and the interest rate, there has been some movement but these were temporary. i do believe in the coming days, they will go back to their normal levels. turkish prime minister there in an exclusive interview. and 4:2025 in new york five in london. have a look at european equities -- stocks holding on to gains. they dipped lower and are higher once again. best winning run since the end of may. what kind which show of choppy trading we have had in recent months. the dollar is higher, commodities are down.
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oil related commodities falling. more gains in harris and rang for. have a look at the flip side of the dollar strength -- weakness in the pound. the euro is lower against the pound. against thebounding yen and the euro slightly down. of data with german confidence showing small deterioration, but ahead of expectation. the 10 year yield up to .81%. the european close is literally four minutes away. this is bloomberg. ♪
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you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. mark: from london and new york you're watching the european close. stocks finishing up the monday
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session. let's take you through all of the market action today. will be close higher? as of right now the stoxx 600 is up for the first day in three. we areted downwards but coming off the back of two weeks of gains first biggest run, best run since may the 29th. than the day of the u.k. referendum. and it's been a busy day for corporate news. let's start with switzerland. reporting in the first half profits and high private bankers, business growth has improved since the first quarter. boosting asset management by 4% this year record 311, at the close, the world's biggest luxury goods company shares up by 1% today.
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they sold to the g3 group. one year after the founder of donna karan departed, a rare to run lvmh, it failed this label that once was synonymous with workplace or successful u.s. woman. same sort, with the of news, the world's biggest cosmetics company agreed to acquire i.t. cosmetics. the largest acquisition is interesting adding more than 300 skincare and makeup products to its line. to spurcounting on that growth at the time when it is facing a slowdown in parts of asia and latin america. vonnie: we couldn't decide whether he was pronounce "i.t." or "it." mark: i just a guest.
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vonnie: so was i. their lower today following you guys in europe. rise vicks, you see a nice but it is not at all preaching fear yet. u.s. 10 to ask, the year yield 1.57% it is unchanged. 3-5 year space, that is rising. oil, look at that, i'm of the decline for crude. futures down. another weakening momeny for -- moment for the yen. we continue to want that. the major indices are lower, the dow down half a percent. .2%.nasdaq down caseil: as is often the
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for the nasdaq, trading down just a little bit. unchanged, but a lot is happening beneath the surface. today selling pressure again, while minor when looking at the index, broad-based is selling sector tradinge higher. those of the consumer staples ahead of the earnings report on wednesday. whole foods market on upgrade to outperform. as for what is dragging today it is all about technology. apple, microsoft, and qualcomm, the biggest is apple where shares are down half a percentage. after the close, investors are 9 in adjusted.2 earnings. what is pretty amazing, that represents here -- huge year-to-year declines. you could make the case that the bar is set somewhat low for apple to perform well when they report tomorrow.
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but, a bloomberg reporter and separatist go makes it very interesting point which is the 1 quarter apple's 5 growth streak came to an end back in march on increasing competition in china. take a look at this chart starting back in 2013 we see apple in orange, the other bars are chinese competitors. apple climbed right until 2015, then declined. to just beappears starting. it could suggest there is some more to go. mark? mark: abigail, thanks a lot. votednth after the u.k. with the eu british banks will report their second results. investors will be watching for another round of cost cuts thanks to brexit as they prepare for a potential rate cut when it meets next week. joining us now with a preview of u.k. bank earnings is stephen morris. is it fair to say the earnings aren't as important as maybe the cost cuts and the impact of
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brexit? stephen: they will look for any, jim ceo's about profitability targets being cut. perhaps some branch closures and businesses being shut down. they're looking at a really bleak revenue outlook. really uncertain relationships with europe. mark: who is in the most trouble? theyen: llod's and rbs, remove the risks they had all of the world three years ago for expansion. they're looking now this is proving to be a bit of a hindrance to them as they are very reliant on things like u.k. mortgages and the boe said to cut rates, it is looking like outlook iss out dimmer than it was before. vonnie: in the past that could cost cut a little bit. is any way to do that? they have an
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cost-cutting now for eight years. it is unclear what more they can do. banks are looking at digitization to cut employees from branches. there's only so much fat you can come before you get to the muscle and the bone. i don't think we can be too far from there. anything?rope sales, stephen: bond trading has been good at the u.s. investment banks. andhsbc which to a big securities could see the benefits flow from that. which has a big securities could flow with benefits from that. all of last yr beinaded down because of their exposure ischina where the economy slowing. that is being seen like a useful diversification away from the
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slow markets in europe and specifically in the u.k.. we could see the share prices rise cents brexit. mark: what will we learn, they will be grilled on brexit, what will we learn from the chief executives of the big five? ephen: to be perfectly honest, probably not much. the big issue for them as passport think. not being able to operate across the euro region. we might get some hints of some cities like frankfurt and paris that may benefit from this. at this stage, the banks are trying to save -- say as little as possible to avoid rocking the boat. mark: thank you for joining us. 4:37 in london, vonnie? vonnie: let's check in on the first word news. democrats that last week quoting over the republican unity problem. now just as the convention is about to begin to have one of
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their own. the democratic national committee's chairwoman debbie wasserman schultz will resign at the end of the week over leaked e-mails. that committees staffers favored hillary clinton and tried to undermine bernie sanders. the fbi is now investigating the leak. scotland's first minister is talking about independence again. rather. faces a hard than a soft exit the european union. scotland says they must consider their options. >> the u.k. we voted to stay apart up in 2014, it is fundamentally changing. the outlook for the u.k. is upheaval and a perfect ability. it may well be that the option that offers us the greatest certainty, stability, and maximum control over our own destiny is that of independence. sturgeon has raised
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the prospect of a second referendum of independence to keep scotland in the eu. authorities in germany are trying to figure out if a bomb explosion in germany is linked to terrorism. a searing refugee blew himself up near a music festival. 12 people were wounded, authorities say that price before the manner tried to commit suicide. he had been denied asylum last allowed to--but was stay in refugee housing for stability village of rio de -- refugee flunked housing. the olympic village in rio de janeiro has flunked a stress test. global news 20,000 a pound by more than 2600 journalists in more than 120 countries. i couple of minutes after
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the close of european trading will get active our brexit coverage. where do we stand? when will formal divorce talks begin? over that mean for trade deals, gdp, living in the u.k.? oversees ours, he brexit coverage. what a wonderful piece, the beginners guide to brexit. i will just ask you all the questions. let's start with the first one, when will talks begin? >> that looks easy, to some extent. sometime next year, theresa may will trigger the article 50. we have seen some conflicts within the government already about just when it could be. theresa may has been pretty firm it will be in 2017. that was the message he took to berlin and paris. mark: what will the post eu
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regime look like? is nothing to do with a gregory subject. we are such a limp, canada, lots of different models and relationships with the eu. the u.k. might have to have a bespoke relationship. the brits are saying they want maximum access to the single market. and minimum free movement, of no start foris negotiations. has been onlackrock bloomberg credibility talking about less market access and more freedom of movement. you kind of -- in each aside gives up a little. these are things that will be negotiated over two years. there will not be driven by the
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need of soundbite headlines. it will be a pretty complicated. norway, canadian models are in favor in some quarters. stephanie: vonnie: when will banks be able to operate across europe in the meantime? a trillion dollar question for the banking industry. they should be able to operate for the next couple of years. the u.k. will still be a member and will still have these passport thing rights which allow them to base operations in the u.k. but raise money in the eu. are among thebs banks that's a failure to retain that relationship is going to cost british jobs. they talk about how important it will be to include those in the negotiations. vonnie: what trade deals will be struck outside of the eu? can this be negotiated before article 50 is triggered? simon: they cannot formally
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negotiate because they are member of the eu and part of eu membership. you surrender your right to trade deals and never think of through brussels. but they can do is pencil deals in. e international trade secretary is traveling to america looking to line up that, thinking once britain is out of european union the reaction he has so far -- he spoke with fruitful talks with canada. to drumpretty hard job up trade without being able to sign any deals. wasn't an armageddon markets, to be fair? probably was to the pound it got a record 30 year low. it overall, stocks have done pretty well.
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the ftse was up this morning boosted by that weak pound. mark: what about on a dollar basis? that is what we've to keep reminding ourselves. on the global markets the doesn't seem to be as much concern as people thought before and thought of the u.k. economy, it is a question on if we rethink if how bad is this in six months when we are in the recession some of forecasting. mark: will talk more this week. simon, great to see you. our brexit coverage at full berg -- bloomberg. vonnie: hillary clinton is speaking at the veterans of foreign wars national convention. we have live pictures. this campaign stop comes as the democratic national convention gets underway in philadelphia. so far, clinton has an mention or thathacking scandal the fbi will investigate the breach.
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you can watch remarks in full on your bloomberg at live go. this is bloomberg. ♪
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mark: some breaking news from air france, the european carrier says the two unions have called for a strike. the strike will be called for between july the 27th and august the second post of air about 75% ff could strike and it will cancel flight on that day. pilots escalating a long-running contract dispute. the latest details crossing the bloomberg a few seconds ago. vonnie: mark, the pokemon go craze is trending today the most
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since 1990. hopes that the worldwide hit would revitalize shares are disappearing as companies and investors realize nintendo's limited stake in the game. we should mention that the still a nice little for nintendo even if you take out the 18% decline. joining us now is jeremy who covers the tech sector for us from london. jeremy, investors knew this. they knew that pokemon go was a partnership. why are they punishing the stock today all of a sudden? jeremy: this was well known among institutional investors that nintendo did not have a large economic interest in the game. they have said they thought that maybe retail investors got a bit carried away with the hype over the game and bit the stock up at your medically was also some extent a sense that while the game is of limited economic impact for nintendo in the near term, in the long term of this does become a lasting craze that
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this will have a big benefit for nintendo stock. vonnie: two is certain extent it was comment out of nintendo itself that caused this drop. nintendo trying to get in front of something, to calm the market down and not be overpriced? jeremy: the timing of this was interesting. nintendo put out a statement reminding investors that it only had a 13% economic interest in the game. the stock has fallen as a result of that. i think this was an attempt to deflate the hyper by nintendo. it may have been an attempt to fromhe potential upside pokemon go in the back pocket to some pointiny day at later. and number of analysts have said today that the time was very curious. as of the company would normally make this announcement is part of the normal earnings which the company will report on wednesday. mark: now that the exuberance has somewhat deflated, here
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turning our attention to other matters within the nintendo empire. when with a launch in china, and also consoles and other mobile games. what will we do about these issues? jeremy: intend of has a lot of things potentially up its sleeve. we may hear more about that on wednesday. china is on the people are looking at very carefully. you to bill requires locate you geographically. china somewhat limits the services on smart phones. it may not be possible for the game to take off their the way it has in other geographies. mark: thank you for joining us today. telling us about the slight diminishment at the pokemon go craze. up next, battle of the charts. what more could you want on a monday afternoon? ♪
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is time now for our battle of the charts. you can access these charts by the way on bloomberg went running the function features at the bottom of your screen. kicking things off in studio -- maker of ther, the gigantic earthmoving construction equipment it's a great proxy for the global economy. every month it would out new data of machine sales by region. that is a for the way of breaking down what is going on in different countries. we have a pop-up, we are about to kill it. sorry about that. thank you for killing that. we have monthly machine sales and various regions, asia, north america worldwide you can see starting in late 2013 or mid-2013 it will he fell off a cliff. this blue line is asia.
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from a year down 7% ago. it is the one that is clearly taking up. yellow is north america, it is flat at this low level. worldwide in white also not doing very well. sign, are looking for one that seems to be at least not decelerating as much as it was. check out asia, at least based on caterpillar sales. you can see that chart. vonnie: i love that chart because it is how things are going. ira member some of them jpmorgan who was a caterpillar analyst explaining that. now there is secondhand the sales continuing. that is partially why sales are down so much. beautiful, love it. mark, welcome back. mark: the only thing that will pop up is me, he'd go this is a chart created by robert. it is a risk on, risk off gauge.
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he has taken it from 2007 to 2016 and you 2007 as the peak, as -100. you can see what has happened in between. basically, this chart is based on 18 indicators, six equity indices, five sovereign bonds, to currency rates, to commodities and a measure of liquidity. it is a wonderful chart. in day after the referendum the u.k., we had a drop of eight points, roughly similar to what an devaluationyu and august 1 nothing like the levels we saw in 2011, the height of the european sovereign debt crisis. absolute basis we saw minus seven the day after the referendum. after the chinese yuan
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devaluation we went to minus 1. nothing like the highs to lows height of the financial crisis will to what a wonderful tour the bloomberg is that you can create your own risk on risk off index. vonnie: i wanted to say, five golden rings and there are one of the things you listed. mark, you are the winner on your first day back, thank you. all right, thank you for watching. take a look at where the markets and today -- end today. time for the first day in three. the stoxx 600 up, bloomberg markets continue. ♪
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>> welcome to bloomberg markets.
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>> good monday afternoon. amanda: there covering stories from san francisco, washington, tokyo this hour. u.s. stocks remaining conscious at a policy decisions from two of the world's major central banks this week. yahoo! was $5 billion sale put an end to the company's two decade run. we sit down with the global chairman a jpmorgan and a banker on the deal. amanda: nintendo shares are plummeting after the gaming company warned that this smash hit pokemon go whatever limited effect on the progress because it does not actually produce the game. ♪ >> where halfway to the u.s. trading day, let's head over to the markets where shery ahn has been tracking the movements. shery:

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