tv Bloomberg Markets European Close Bloomberg August 31, 2016 11:00am-12:01pm EDT
i am vonnie quinn. mark: you are watching the european close on bloomberg markets. we will take you from new york to sao paulo and cover stories from the u.k. and mexico. here is what we are watching today. back to work on brexit. the first timeor since the summer recess, adding that she will not try to keep .ritain in the you -- eu voting underway at this moment. the latest reaction. why investment bankers at the biggest security firms are seeing $2.5 billion in bonuses
melts away. we examine how economic challenges and stock market decline and volatility are changing the industry. mark: 30 minutes away from the end of the when a session. we turned negative after rising yesterday. this is the equities column. other indices are turning mixed. we are heading for a second monthly increase. banks are the best performing industry group rising a .5%. the most since february 2015. a lot of individual stocks to tell you about today. today rising as much as 7%. the biggest move since june last year. winning customers a big promotion. four years after the mobile shook up the
nation with a low-cost offer. shares are up 4.5%. it is a conglomerate. it is reiterating the 2016 target to improve profitability after a drop in construction sales. order showed signs of improvement. signs of stabilization in the french construction market. overall shares falling 3% in line with expectation. almost half a million customers average revenue. by 1.7%.e up eurozone inflation did not take up today. look at that. the same as the previous month. economists looking at indeed -- increase of .3%. we have had a host of data
recently. this tells us the euro zone economy is not weathering as well as it was initially. executives are warning orders may suffer from political uncertainty. .2 is a long way from the ecb target of just below 2%. bring on mario draghi next week. 90 minutes into the trading day. abigail doolittle has the latest. >> we are looking at losses. alldow, s&p 500 and nasdaq trading lower. for the dow and s&p 500, we have these two indexes on the red -- in the red. for the s&p 500 for the first time in february. the nasdaq still higher on the month. the big story among the market, oil plunging on the day.
a surprise build up 2.3 million timess, three expectations. when we do take a look at the , we see what the build looks like. it did cause oil to fake a sharp downtick in the session. not surprisingly, weighing on the oil stocks, including exxon mobil and schlumberger. on paper the worst day since august 1. we see what the build looks like. itnot all about the department f energy data. mainly about that, but we do have pressure from the dollar. the dollar is trading higher. higher the last four days, up after the more hawkish comments from fed chair janet yellen last ride a at jackson hole. abigail doolittle.
thank you. checking in on the bloomberg first word news. lawmakers are likely on the verge of ousting suspended president dilma rousseff. the peach mint process coming to an end with the vote taking place right now. accused of using an accounting tricks to hide the size of the budget deficit. the acting president will be sworn in if he is removed from august -- office. donald trump has called mexicans rapists and threatening to build a wall of monk the border. he will fly to mexico to meet with the president. he offered to meet with trump and hillary clinton. he will lay out the latest plan on immigration. hillary clinton will go after trump later today in a speech on american exceptionalism. clinton will speak to the american legion convention in cincinnati.
expected to criticize trump for accepting alliances. there was a security scare at the big international airport in frankfurt. a person entered a secure x for -- a secure area. this prompted german border police to order passengers to be rechecked. therefore called it a precautionary measure. global news 24 hours a day powered by more than 26 hundred journalists and analyst and more than 120 countries. may said she is committed. there is no turning back from the june referendum. next will look at the
steps we need to take and the opportunity. we continue to be clear we are going to make the best of it. that means no referendum. we are actually going to deliver on this. mark: getting perspective on this. i've reporter for all things brexit. once -- great to see you again. >> we have had the summer of silence. the prime minister hiked in the swiss alps, and now they are all back. the tone set is the one they left on the holidays for, which is that brexit will happen.
lawmakers at home are wondering what does that mean? articlearticle 15 -- 50, that is not going to be invoked until next year. they do want to know what we might see. what about our relationship with the customs unit. a lot of questions that the pressure being imposed. had a quietwe have time from theresa may, the prime minister, the gap is filled with all sorts of commentary. if you want to be a part of the single market, you will have to pay. that seems to be the view. it seems to be no easy access. you wonder how it will work, how the deal will be struck. >> there are all sorts of models out there. you go like canada talk about
the plus model, a trade deal for goods. again, while there is a vacuum that will be filled by people such as ourselves and think tanks, but until we know what the details are, the business, to may be worried as you try work out what the uk's asking for. you remember the eu countries will have their own red lines. dimension ine 27th which they are all trying to draw a red line. vonnie: it will all depend on what tresa may does what the corporate tax rate. drophe u.k. i guess could theirs to 12.5% or pick a number out of the air, right? >> the former chancellor george osborne hinted that corporate taxation may be something you would look
to reduce before the end of the year. you look at apple yesterday. by the eu with a hefty tax bill. if the u.k. can provide a more alluring tax regime for companies such as apple, then certainly that will help take the pain of brexit away and provide a boom for multinationals. we are in the eu for next year. there is already pressure from other countries to say watch oue , do not necessarily start your race to the bottom of the tax rate quickly. vonnie: you're still in the eu for at least two more years. vonnie:part of the problem, the central dilemma has not gone away and will need to be solved, and that is what the u.k. will
do on immigration. what conversation does that get decided in? >> that will be at the center of .he debate that will be what theresa may and angela merkel are trying to work out. it is whether she wants to maintain access to the single market. if she can match what we have through bilateral trade deals she may want to go that front. certainly immigration, there is message that immigration was an issue, and she certainly cannot go back on delivering thereort of fix for what is a problem. that will boxer and to some extent in this negotiation. vonnie: you should read his brexit bulletin every day. simon kenzie. poisedis says brent is to rally. just how much? that will be next. this is bloomberg ♪.
mark: live from london, i am mark orton. what are we 17 minutes away from the end of the session. -- i am mark orton. vonnie: i am vonnie quinn. am mark barton. on bloomberg survey, he outlined the case for a short and long-term prize, as well as opec capacity. >> the market is perceiving a lot of reasons to be short, and a lot of reasons to belong. which will be right? a lot of this is whether you focus on the rebound the u.s.
wildcats will have an supply. >> the 200 day moving average. it works here. with aly range bound flat line 200 day moving average. what is the citigroup call? 48 for this quarter. 52 next quarter. 65 brent by the end. it should work higher. morris, great to speak to you. does it mean there is no shell cap on the price of oil? we talk about 50 at the price where they turn off the cap. is that a price analysis or does it change five years from now? targetis really a moving . the moving target has to do with one of the things we do not talk about all the time, and that is oil inh does it produce the united states? that cost
level keeps going down. that really models the picture. we have never really been in a situation when we are in a cost deflationary era. a big experiment for what the rebound will be. given that, i do not understand why there is not a cap. it means oil can break decisively above the 50. it can be made of, but the price of oil going lower in the lawyer -- lower and lower, then it will be capped. that looks at the moment the initial $50 target is one that leads to the completion of wells that have been drilled but not completed. this is associated with a big kick up in drilling. we're seen a modest hiccup in drilling. now it seems to be tapering off
he cut the price movement is not there to allow the drillers to go back. we have a bunch of token producer companies. libya, page area, venezuela. these can be a very big slide. the difficulty of calling a cap -- cap is we do not know what will happen. limited spare capacity. what if we get 2 million barrels a lost production in venezuela and nigeria? tom: how did you know where i was going? opec output. here is total output. this is a long chart. it means a little bit of convection to greater output. if you add two zillion barrels to where we are, you get up to the suppose it capacity about 46 million barrels. >> i would have that redline a
little lower than where you do. what you probably count between the delta and the red line is capacity from places that have not been producing like nigeria. i will go with that, but the bottom line, do you see any lessening of supply out there? opec is close to capacity. iraq that has gone almost full out. for increase.uch saudi arabia is a hair under 11 million barrels per day. mark: citigroup head of research earlier today on bloomberg " surveillance." coming right up, wiped out. within $2 billion in bank bonuses as the bank struggles to make a profit. this is bloomberg ♪.
vonnie: live from london and new york. i am vonnie quinn. mark: i am mark barton. 10 minutes away from the end of the closing date in london. vonnie: a look at some of the biggest business stories in the news. jetblue made history today. it will a flight between the u.s. and cuba and more than half a century. the plane left fort lauderdale, the trip to cuba. u.s. airlines will be offering dozens of daily in week we flights tween the u.s. and 10 cuban cities. deutsche bank shutting down of radio report it considered merging with commerzbank. cryan says germany's largest lender is looking to get smaller. cutold risky assets and
thousands of jobs. shares are down 42% this year. that is the bloomberg business flash for this hour. investment bankers are watching bonuses multiple way. financial stocks have plunged this year, wiping out $2.5 million. losers, creditst squeeze who shares have falling close to 40% this year. suisse.it some might say this is an intentional consequence of the regulations that were put in -financial crisis. >> exactly. this was a line to -- designed for my long-term interests with the institutions they have been employed by by previous years. as we see banks going through and the shareing price is down in the dumps.
they are looking at the next few pay times and looking that they may not be worth quite as much. the bonus cap has come in. this has prompted banks to raise the fixed salary. it cannot be taken away unless it is incredibly financial -- special circumstances. this has bolstered the guarantee portion of bankers pay, which they will take a little bit of comfort from that but certainly skillat much seeing the of the decline in the stock options. >> if you are of performa, you right? -- ifbonus, you are a performer. >> we are very much talking about generalization here. if you bring in a massive transaction, you will still get
that. across the board, shares are going down. the flip side could be, banks valuations are very low at the moment. if we see green shoot recovery going into autumn and christmas, the shares could jump up. anything awarded at the lower prices could be worth much more. vonnie: businesses are changing so completely of these banks. many businesses thriving just a year or two ago do not need that many employees. could we see a slimmed down workforce still make a big bonus? >> that is what banks are trying to do, bringing in more money limit humanion and misdeeds in the banking industry at the moment. we may see a very slimmed down, highly skilled thinkers who were pulling in more than they were before the crisis. you are getting
paid and shares now and will suffer alongside it. does this scare away talent from london, from europe's big investment banks? twicet make talent think if your bonus is shrinking by double-digits? >> the most desirable places after london in terms of pay would be new york. the trouble is, american banks are facing a similar story. they are downsizing and looking to bring in new people. based work for a new york in london, you are still subject to the american role. if you can make the trip and work for goldman, you will not be subject to the rules anymore. it does look like an attractive escape route but not one that many people look to make at the moment. vonnie: stephen morris, thank you for joining us in london. mark: most read stories, number
six on the chart. europe's bankers see $2.5 --lion in bonuses banish vanish. take a look at where european markets are trading as we head to the close. we are literally five minutes away from the end of the session. we are looking for work on the day. on the day. we are looking to close higher for the month. down for the day, higher on the month. that means we have risen on the stoxx 600 for the second consecutive month, the best monthly run since may. stocks looking like they will finish lower today on this top 600, put the. you are watching the european close. this is bloomberg. ♪
lower. we were up for most of the day. turning lower at the end of the day. banks are leading the advance. leading the gainers. decliners, basic resources, oil and gas. those sorts of companies are declining. we are rising for the second consecutive month, best monthly performance since may. this is the big decliners on the stoxx 600. u.k.,s a company in the building supplies. , revenue up by 13%. it is too early to assess the impact to brexit following weak trading in june. relatively flat in july and august. markets remaining price have a competitive. likely will downgrade due to challenging markets in the u.k.. shares have fallen 21% of the u.k. referendum. results, shares sank
by 24%, the biggest drop since 2003. shares are down by all as 10% today. i want to look at lenders in the u.k.. the biggest gainers. this is the stoxx 600 bank index. biggest gainers and losers. some of the italian banks continuing to lose money. we will talk to lorenzo codogno about that in a second. on a monthly basis, this is the best performance for european banks in february last year. yes, we did see many banks plunge. the big banking story was regarding deutsche bank and commerzbank. germany's manager magazine suggested deutsche bank was considering a merger with commerzbank. the chief executive said the largest lender is looking to strengthen than when asked about the media report -- strengthen when asked about the media
report. a big piece of data in the u.k., consumer confidence jumping five , regaininginus seven on must have the ground it lost the previous month because of brexit. the measure of how willing consumers are to make the afterses also improving slipping in july, as did their expectations. personal finances, more evidence that the data is not as bad as many had feared here in the k post-brexit. but it is early days. vonnie: we will be watching bit by bit him a data point by data point. in u.s., i am watching the dollar because it is continuing to strengthen, happening impact on other currencies including the yen. quite a move in the last week for the yen. waiting on the bank of japan to announce perhaps some kind of more stimulus, maybe an elephant package of stimulus measures. we will see.
weakeningthe yuan versus the u.s. dollar. the china currency is one to watch as well. we have not looked at it for a little bit. early july.since it is interesting to watch the offshore we can more than onshore. china does not have controls over the offshore. a quick look at treasuries. ,rading in their tightest range monthly range, in 10 years. that would not be a surprise to any of us that have been watching the yield daily. 79 basis points for the 10 year. i want to point out that bill gross is out with a new note. here is a quote --
addressing janet yellen. later today, he will be on "bloomberg markets." we will see -- hear more from him at 1:30 eastern. stock movers.k on i do go: twitter, shares higher on the day. day sincer their best august 15 on speculation the firm could be bought out by off a bed. lots of speculation recently that twitter could be bought out. we are looking at a bullish chart. first, the stock is back above its moving average. reversede movement has the downtrend and it appears to be on what could be a pretty strong bottoming pattern. there could be more upside ahead for the shares of twitter. i hear there's breaking news. vonnie: we have breaking news.
we're looking at headline saying the deere do for the one sent to planting operation is being opposed by the united states. this just crossing the wires. the justice department is suing to block the deal as anti-competitors. the media reaction is lower for shares of deere. dropping further. the agriculture sector is seeing consolidation wave with pending deals. i guess that is one of the reasons behind the justice department suing to block this particular deal as anti-competitive. we have to look more into this because it would seem with prices down and difficulties in the agriculture section, that would be the obvious time for some deals like this to go ahead. let's check in on the news with courtney donohoe. british consumers are showing eagerness to spend after holding back in the wake of the brexit vote.
gf case has household confidence index rose five points in august, making up almost half the ground it lost in july. a measure of how willing consumers would be to make major purchases also improved. denmark is warning the u.k. that brexit will not wipe out the country's obligations to the european union. the danish government suggest britain should not be allowed to stop paying toward eu projects that began while he was a member. the u.k. kate about $17 billion --the eu budget last year paid about $17 billion to the eu budget last year. japan faces increasing pressure from china over disputed islands in the east china sea. the defense ministry wants to develop longer-range anti-ship missiles. the prime minister abe has been boosting military spending since taking office back in 2012. canada's economy have the worst contraction since the financial crisis. wildfires put a damper on oil production and the gdp fell and annualized pay of 1.6%, exports
plunged 17%. it exports of cars, metals, and consumer goods all felt. in venezuela, the political opposition will try to seize the streets of caracas with the biggest margin years and pushing for a referendum to allow maduro . wildlyhow he is unpopular and the economy is suffering with triple digit inflation. maduro is planning a counter demonstration. global news 24 hours a day, powered by more than 2600 journalists and analysts to more than 120 countries. mark: let's turn to the economy of italy. new data released today shows that the italian unemployment rate, as you can see, came down a smidgen, down from 11.6 to 11.4%. consumer prices fell on a year-over-year basis. the country faces the challenges
of rebuilding following last week's deadly earthquake. joining us now is lorenzo codogno, former chief economist and director general of the italian treasury. great to see you once again. the a tie-in economy staggered -- italian economy staggered. why is italy the laggard when it comes to economic performance right now? >> it is a laggard right now. it is difficult to say why, but my view is that it is probably a combination of supply-side sectors -- and other words, probably a number of reforms have been implemented in the past and certainly, i knowledge the current government has done lot but a lot more needs to be done. secondly, a huge squeeze and 2012, 2013.mand in i think the economy is still recovering from that huge
squeeze. finally, i think there's been a cause a credit crunch during the crisis. credit crunch during the crisis. basically, not enough credit to the economy. although the year on year rate of growth, of credit aggregate has been positive since the beginning of this year, it is probably not enough. mark: are we close to a banking fix or not? >> the situation is so rather fragile. i think the next few months will be key on a number of counts, including the banking situation. clearly, italian banks are ready trading as distressed assets, so there is the potential for some kind of rebound and repricing. the median to do long-term outlook is still pretty poor, in my view, because there is a need to change a business model and .hange to improve profitability
that will be done probably over time. in the meantime, i think it will be a huge restructuring in the banking that will probably come pretty soon, over the next few months, if not quarters. at no more than that. vonnie: a terrifying chart the other day about the amount of italians leaving the workforce ted.use they are de-motiva the largest number of people leaving any workforce in europe. what can be done to get ,onfidence back to the italians make something happen for them? clearly, there is lack of confidence at the moment. but to be quite oxidants -- but mentionedain, he today's data on unemployment. unemployment is pretty stable. why is that?
because employment is rising, despite the number that we got for july, which was pretty weak. the trend since the beginning of the year has been for a gradual, not particularly exciting, the gradual and steady rise in employment. which is combined with increasing participation, which is a positive. italy goingowth for forward. as a result, unemployment is pretty stable. this is an encouraging sign. one of the few encouraging signs on italy right now. that increases real disposable andme for households supposed economic growth. sooner or later, we will see the strength of the domestic demand, particularly in cymer side -- consumer side and developing. vonnie: what kind of physical changes does the government need to make? clearly, the ecb will do what it can but that is on a europe-wide level. that is a big issue right
now. over the next few weeks, the government will have to revise economic projections and public finance projections, and it will be a very tricky exercise this time because, clearly, the government is trying to get as much flexibility as possible in brussels. but there's not much leeway for that. indeed, it is facing a lot of troubles because of the earthquake, because of requirements coming from the economy, because of lack of economic growth. the target projection for this year was 1.2 percent. probably, we will be close to 0.8 percent. inevitably, the deficit will be somewhat higher. so what is the government going to do? my feeling is particularly following the decision on spain and portugal come a i think it would be kind of difficult to resist the call for flexibility here. my guess is one way or the
other, the italian government will manage to get some flexibility. mark: and the ecb will keep a lid on italian bond yields. ago, near a record year 1.99%. thank the heavens for ecb when it comes to the italian bond markets? >> it is a positive, certainly, development for the a giant bond market. it is not just the ecb, it is a global environment. , we have a situation where investors are struggling to find any kind of yields. it is not just italy. if you look around the world, there are countries that have a much lower return than italy and sometimes much more riskier than italy. it is a global phenomenon. italy is not an exception. with a high level of debt to gdp, italy benefits a lot from
the situation. although, i have to say also the inability by the ecb to bring inflation back to target is also not a big factor, which runs against italy in the situation. clearly, when you look at the debt to gdp dynamics, it is not the matter of -- it is no gdp. with inflation, it is difficult for the government to turn the debt to gdp trends. mark: the first, interviewed lorenzo, 1998, vonnie. anniversary, year lorenzo. two more years. you just got to hang in there and we will have a little party. ie, you're not even a twinkle in your mother's eye. >> thanks a lot. mark: coming up and battle of the charts, your judges had fun. hat on.our judge's
for ourit is time global battle of the charts were we take a look at some of the most telling charts of the day and what they mean for investors. kicking things off today, danny berger. >> if you recall from a few mere hours ago, we had a crude report showing stockpiles rose more than predicted. that sent energy shares tumbling as much as 2%. this one particular group of investors that are going to get burned by that, and that is the folks in this etf right here. etf, which hasdr
a lot of investors in it. flow offebruary, we had oil. look at where i have this box down here. this is more than 900 million worth of inflows to this etf. this little section is the biggest month of inflows for this etf in 16 months. there are a couple of reasons behind this. oil, crude has had a good month. that had these shares up 4%. after today, it is only 1% for the month. some big changes for this group in this etf that has been doing pretty well. you can check this one out at g #btv 3176. vonnie: what have you got to be that? mark: comic predictable, but i
like to get nostalgic -- call me predictable, but i like to get nostalgic. best performing assets across all asset classes. what a few surprises this month has thrown up in the bond market, treasuries with her worst month since last year. look at the u.k. sovereign bond market rising, for month post up best run since january last year. u.k. bonds have returned abruptly 3% this month. let's get to currencies. the dollar on track for its first monthly gain -- out of the 31 major currencies we track your a bloomberg, the best-performing currency is the colombian peso. after falling9% 45% in the last two years. it is up by roughly 3.8%. on the stock front, the best-performing major equity index out of the 94 we track, index.nterprises
what a turnaround after last august when we had the evaluation. top of the chart, brent crude. you know why. looking ahead to algiers. hi hats -- high hopes ahead of the opec. a mere 11% over the month. the best-performing asset out of the four. i am feeling nostalgic. vonnie: i have to give it to mark today. that was a wonderful presentation. always surprising winners at the end of every month. i had almost forgotten it was the last day of august. we will do it all over again. coming up, a live report from brazil as we wait for the results of the final vote on the future of president dilma rousseff. this is "bloomberg." ♪
live from london and new york, i vonnie quinn. mark: this is the bloomberg close on bloomberg markets on bloomberg television. vonnie: let's turn to a developing story, live pictures or you will be -- there you go. brazil, the senate getting ready to take its final vote on the fate of president dilma rousseff . the result expected to come at any moment. latest?the >> they have not started voting yet. they're discussing if they should split the vote into one that was strip rousseff of her political rights for eight years and one for to lose her term. they are still -- there's a lot of back-and-forth than that. the supreme court justice presiding the trial is try to decide what they're going to do
on that. vonnie: who decides that? is this a new development suddenly? >> this was expected. they are trying -- it is not clear if there try to delay the vote or make sure she does not lose her political rights for the next eight years as would happen if they voted all at once to impeach her. are expected. we have had them in every session. there's a lot of back-and-forth. this is not a consensus issue. there are a lot of lawmakers fighting the impeachment still even if it looks like she is going to lose. mark: once the outcome is confirmed, the likely outcome, how do we expect the real to perform and stocks to perform? until the last month or so, both those asset classes, had a stellar 2016. >> there are a lot of investors telling us that most of the impeachment and most of the hopes of the political change are already priced in. some still see room for gains in
the currency and rates and in stocks. stock -- wemore will not see gains as we have seen them so far. today, the markets are taking a dive as well with oil will stop we have seen both stocks are negative over the past two hours or so. mark: you have told us how this is a multilayer party system. it is a tricky system with all of those parties to agree on anything. push through the necessary structural reform the economy needs? >> that is the million-dollar question. that is what investors are waiting to see if he is -- if he does indeed become president, what will he be able to do and what will the finance minister -- what are they going to get through considering this political fragmented system. right, julia.
we will continue to follow this story throughout the next hour. thank you. mark: take a look at the european markets. what a day was. we were up for most of the day, but we finished the session lower. we finished the month higher. that means european stocks rose for the second consecutive month . the best-performing industry group in august was banks will stop yes, 8.3% higher on the month. best monthly performer since february 2015. the month is over for european stock markets. "bloomberg markets" continues. ♪
from bloomberg world headquarters in new york, good afternoon. matt: we are covering stories from new york, south hollow, to your hunt is berg. -- johannesburg. nejra: stocks on track to close out what would be an eerily calm august. matt: keeping a close eye on brazil, whether to remove dilma rousseff could come at any moment. nejra: donald trump lending a quick trick to mexico surely before the republican presidential nominee is slated to give a speech on immigration in phoenix. are nearing the halfway point of the trading day. let's head over to the markets desk. abigail: it looks like the