tv Bloomberg Markets European Close Bloomberg September 12, 2016 11:00am-12:01pm EDT
i'm vonnie quinn. you're watching the european close on bloomberg markets. ♪ mark: we are going to take you from washington to seoul. we will cover stories out of denmark and the u.k. here is what we are watching. u.s. stocks are rebounding right now. we will get investors perspectives on when the markets will return to their summer calm. vonnie: in an exclusive interview with bloomberg, the vw cfo says they are using the reason to emissions scandal as a spark for change. -- catalyst for change. shares fell -- samsung shares
fell. samsung puts the brakes on its damage and to its reputation. let's have a look at where european equities are trading. gmm, this is the column, this is the equities column in the red. 2%, it is600 was down down by just over 1% right now. these are the currencies moving against the dollar. you can see yields rising across europe. question beginning to how much more central banks can do across the globe. some of the big movers include german utilities. fossil fueled fired -- fuel fired power stations.
it is a response to the shift from nuclear and follow fuels -- fossil fuels to wind and solar. rwe planning private placement of shares. those of the share movers in the last 12 months. shares down as much as 9%. this is overse -- the german companies concerns of jobs and operations at munich headquarters. this would be a $13 billion merger. food says sales dropped by
2%. u.k.on sales here in the have declined for seven straight months due to unseasonable weather hurting results. shares are down by 11%. let's get over to the markets desk, julie, are we still seeing green? just green, but more green than we were seeing earlier. we have seen u.s. stocks extend their early gain. the nasdaq is up two thirds of 1% after that breaking of the low volatility street. we had gone 43 straight sessions a 1% move. -- without a 1% move.
various technician saying the drop was perhaps overdone. we are seeing some buyers coming in. take a look at the futures and how they were trading overnight. up until the early morning, it looks like we were going to see perhaps an unchanged open. we have also seen a turnaround in oil prices. specifically at the last little leg up with saw, perhaps due to comments from the head more -- head of oil market research who said there is a scenario where both saudi arabia and iran can maintain face and agree in the coming months on a production freeze. oil up about 1%. movers have some big that we will get to later on. vonnie: julie, thank you. let's check in on bloomberg
first word news. >> while hillary clinton is recovering from pneumonia, her campaign is trying to recover from the way it handled the matter. video shows the candidate appearing to stumble as she was helped into a van after the 9/11 anniversary ceremony in new york. her campaign did not release basic details for eight hours. donald trump was asked about clinton's health on fox news. >> the coughing fit was a week ago. i assume that was pneumonia as well. something is going on. i hope she gets well and back on the trail and we will be seeing her the debate. >> trump says he will release more information about his own health soon. hillary clinton's top super pac will wrap up its -- ramp up its ad purchases. donald trump has been gaining on
clinton the polls and the first debate is coming up on september 26. china is deflecting criticism over north korea's nuclear ambition. a chinese foreign ministry for -- spokesperson said the crux of the issue lies the conflict between north korea and the u.s. china said the problem can only be resolved through dialogue and consultation. philippinent of the said u.s. special forces in the country must go. he says he will review the policy that lets u.s. troops fight muslim terrorist groups on the island. he says the presence makes matters worse. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. chandra, this is bloomberg. debateet's get to the
over central-bank policy which has been a key factor in the markets recently. the bloomberg team talked karenk lehman and kevin about central-bank policy issues. >> what you have got is a change in attitude from central banks around the world led by the ecb last week. more hesitation about doing more in terms of asset purchases. question is the effectiveness of the programs put in place. into september 21 when he fed and bank of japan are set to meet, there will be questions surfacing about how aggressive central banks will be going forward. what's more important? i think the fundamentals will way out here.
whatever happens here will be slight and we will take a pause and pay attention. i think fundamentals will drive what happens with the fed and i think the third quarter earnings reports will show a continuing trend which is good earnings from companies we have been watching and muted earnings for the rest of the market. i think we're going to take a timeout and pay attention. i think that is what we're going to see over the rest of 2016. >> what we have seen is a rotation into value, a rotation into the cyclicals. if you look at the ratio s&p tech stocks, you can see tech is starting to outperform value as well. does that continue if we do see an unwinding of that search for yield? >> what you are describing is the near-term dynamic. we came perilously close to recession like conditions in the
third and fourth quarter last year. we turned in the second quarter. that's why you are seeing value, industrials, financial start to improve because the idea is we avoided that and we will accelerate through the end of the year. is aboutr-term issue how fast we can grow from here. part of theg to be debate that is going to happen on the 21st. glisson frustrated whether or not the fed vote -- the question for us is whether the fed focuses on the near-term or long-term sustainability. >> on kevin's point about financials, if that's the case that -- if it is the case that the central bank will pull back, could they lead the market? i think it is tough to see the financials taking over the leadership of the market.
been a priority for the banks lately. they have had a hard time going back to the old ways. i do not see financials leading the market. i think what it thinks you described, technology leading the market. you see companies like facebook and amazon having the years that they have. you see old companies like microsoft and intel leading the market. that will continue to be a theme here. technology driven enhancements running the economy. i do not see financials being the leg up for the market into 2017. >> i'm going to ask you a question about education in global bond market. most highly be the educated individuals. is there a misunderstanding of what's happening in the bond market and what it means? >> there a two interpretations. programsat these qe
and aggressive monetary policy have pushed down yields. the other interpretation is that credit creation for example are creating an undercurrent of very ,eak pricing, low inflation maybe even deflation, which would argue for lower bond yields. it is curious to see which comes first. bond market tends to be more circumspect, usually feeding a different clientele. i think that that debate is a critical one and one that is being had on bond desks all over the planet. >> to come back to you, what are some of the challenges -- one of the challenges is to get away from this correlation. at what point is that break down? >> the correlation you're talking about is a short-term phenomenon. if you look for the search for
yield that has been a feature in or two. year if you take a longer perspective and step back and look at the relationship between economic ,rowth, the size of the economy that is what dominates in the long run. i can see a scenario where stocks or stocks with high yield potential have a near-term time where they underperform, but i don't think that's the case. it's a question of how much growth will we see and what is the ultimate earning power of companies and indices that you are talking about. kevin caron and market -- martin lehman -- mark lehman.
itter described the company situation. he said there were profitability issues and over investments. >> we are making progress. we are trying to provide a solution to our customers and to regulators. we have to regain the trust. we disappointed the customers. hard and weork very do work very hard. we are making progress, but we are far from fully overcoming the crisis. it is a long way to go. >> you feel the worst is behind you? >> the worst is behind us in a way that we have a very good understanding of what we have to deal with, much more so than in september. by don't regain trust just making statements.
>> money sauced be paid and spent on the cars. still has to be paid and spent on the cars. that,ody can guarantee but we know much more about the risks. we are assessing very carefully all of the risks and related provisions. we have a pretty good handle on it, but nobody can guarantee. there are some uncertainties. we are confident that with a good handle. >> will investors have to brace themselves for the next few series of financial reports that there might be more money set aside? results isng
critical. even without the crisis. >> it sounds a good trying to make efficiencies to be able to set aside future money potentially tied up with the diesel scandal, but three investment in your future. what about your financing as it stands? you have got a debt market that is flourishing largely thanks to the ecb. how does your financing situation stand? are you back to normal? >> we are not back to normal. that market was closed for us. luckily we have a strong clash -- cash flow. we of a strong underlying business. -- we have a strong underlying business.
we have strong fundamentals, we'll to come back soon to the capital markets. it is important for us to have flexibility. now the consumer base is the one to ensure that was locked in now. you are doing that in certain areas. is that the new focus for you? is it all about clean energy and new ways of mobile? that wee forecasting will be pure electric. we need to think about other opportunities which are relevant for the customer. services which are making the life of the customer better. read to find ways to bring that in our house so that it is a comprehensive package.
the block. it seems there's a disconnect in what the u.k. wants in with the eu is willing to give rose wider each day. emma: -- grows wider each day. countries coming out with its own demands. there is a growing chorus of eu leaders and politicians saying the u.k. can't have its cake and eat it. interesting to note that the u.k. -- it was said that the u.k. can't keep passporting. i like themark: frankfurt story. we have another story that says even if you wanted to move to frankfurt, paris or half -- amsterdam, there is no office
space. emma: that feeds into the narrative that we are hearing that perhaps there won't be one rival center, but rather that lots of different entities might pick up bits and pieces from london. a couple of weeks ago, the story was that warsaw was throwing its hat in the ring. the secretary of state for exiting the european union has been speaking to the house of be a and is saying it will to analyze the effects of brexit. is that the useful -- most useful use of his time? were getting into the nitty-gritty and decide what britain wants from this? emma: i think he is buying time. he didn't give a huge amount of detail.
it does seem to me that theresa may has a tight control of everyone else. she wants the narrative to be a single narrative and she wants to decide on the narrative. what we are getting now is people waffling. been a promiseas that britain won't reduce corporate tax below 17%. where did that come from and is it even possible to move it immediately? mentionedrne had large tax cuts immediately after the brexit vote. these are decisions made in a vacuum -- are not decisions made in a vacuum. you have to consider the diplomatic considerations as well. mark: no more mp david cameron.
his is part of theresa may's dismantling of the camera legacy? -- is this part of theresa may's dismantling of the cameron legacy? emma: you could say that. cameron said he doesn't support that policy. if he stayed on board, he would've had to decide whether to back her or take a different path. mark: there will be a by election. thank you, emma. that is it from us for a moment. the european close four minutes away.
we were down this morning as much as 2%, the most since june 27. it is the most since july the sixth. today we close at the lowest level since the 22nd of august. the intraday basis to the highest since january. what a difference a week makes from an action from the ecb and various comments from the fed officials and boj. that is the stoxx 600. this is volatility and the gauge of eurozone volatility. look at that. , today it rose by 20%, the biggest jump since january 4. it is the most since before brexit. on june 16, volatility rose to the highest since last august when china depreciated its currency. in june.o roughly 40 that is february below 40 and,
of course, the highs last year were in august. haveis volatility and we moved a lot in recent days, but we are nowhere near the highs of the last year. in adjusting story, it has become the biggest gainer in europe today. it is considering a sale of its remaining stake in the german lighting company. it is valued at 770 million euros. there is ghosts go capital according to people familiar with the matter. they could use the purchase as a potential first step to increase its stake further on making a takeover offer. siemens is focusing now on industrial goods, such as high-speed train, hospital equipment, and products and energy industry . shares are up 10% today. i feel we should finish with the ukip on market -- u.k.
bond market. the four-year low last tuesday was .09%. the 10 year yield fell to a record low in august. the boe meeting on august 4 sent the yield down to a record low. we're back above the level it was at that meeting. the first year yield is up to 1.5%. boe with ther the rank setting meeting on thursday fift. vonnie: i've been looking at the vix. remember the days where we cannot push and above 30? now we are back below on the vix. seeing a little bit of strength, but also down a percent. 25 on the dollar index.
crude oil is all over the place today, but now up 1% today. our focus is on yield because we have seen a 10 year yield back up to 1.69%. now at 59read is basis points, the widest we have seen in a while. pointing out that the two year yield is just 78 basis points now. only 15 basis points above the effective fund rate that would prevail with the fed hike next week. may the market is pricing in a hike as well. the dow is up 2/10 of a percent and s&p up 3/10 of a percent. the nasdaq making extra games as we cruise through the session come up two thirds of a percent. abigail doolittle is live at the nasdaq with more. abigail: we do have a recovery rally on her hands after friday's big selloff. trading higher and outperforming the s&p 500 and the dow. one reason why is health care,
the best-performing sector for the nasdaq today. what the big names are higher including amgen and th regeneron. amgen has a couple of key catalysts coming on friday. data will be out on sunday and it could be helping those shares. the company did release positive news on a stage three study around crohn's disease. we do have strength in the biotech, but the big boost for the nasdaq overall is by far apple. there was research out with bullish comments this morning. the team was kind enough to speak with us on the phone. this include steve and john donovan. they say the samsung note seven fiasco creates "a gift wrapped opportunity for apple." they have raised the firm's iphone unit estimates for the rest of the year, taking the december quarter numbers up above consensus.
is team says that the stock likely to continue rising into the all important iphone seven or iphone 10 year anniversary coming up next year. vonnie: lots of strength down at the nasdaq, but there was a big selloff on friday. could you see more selling ahead? abigail: when we take a look at a relatively near-term and a six-month chart of the nasdaq, and mrs. g #btv 439. the nasdaq did break a near-term range. this had been what everybody have been talking about. without support taken up, it could to just we see more downside. katie stockton, a technical analyst over there, has been calling for a pullback and told our team this morning that she is looking for all the equity indexes to potentially move down toward the 200 day. she says that will not
necessarily happen, but if we do see downside, she would be looking at support near the 200 day moving average. a could suggest that we see the nasdaq fall by 5% from current levels. vonnie: at the guilty live at the nasdaq, thank you. let's check in the bloomberg first word news. emma: a truce brokered by the u.s. and russia is about to begin in syria. it is to temporarily end the fighting. the u.s. role is to persuade rebel forces to observe the truce and distancing themselves from hardline islamist groups. the truce takes effect at 12:00 noon eastern time. former russian billionaire and head of you coil has found to and vladimir putin's rule after spending a decade in prison, but he says he will not run in the 2018 election. instead he announced a contest to find a challenger to putin. in prison onears
tax evasion charges. he was freed in 2013. parliament wants to postpone the repeat of the election. the government says it is hoping to hold the election this year. the constitutional court voided results of the election in which the former head of the green party beat the populist. he resigned as britain's prime minister after the brexit vote and now david cameron is giving up his seat in the parliament. told itv that being a backbench mp as a former prime minister would be a distraction for the government. meanwhile, the city of frankfurt has an unusual pitch to financial firms, considering whether to move from london in the wake of the brexit vote. authorities say it will be easier to fire bankers. the regional government is looking to loosen employment law. they are allowed to do that in the u.k..
global news 20 for hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. mark: thank you very much. a wild start to the trading week and global stocks continuing to slide with the exception of the u.s. equity markets. bond yields are rising and germany's tenure touching the highest level since the brexit vote. u.s. treasuries paring losses ahead of a speech by u.s. fed reserve board member lyle brainard. joining us now is paul dobson. just before we dive and come i want to bring our viewers up-to-date on the bank of england. it will start its corporate bond buying program on september 27 . we do not have a specific date, but we know also that they will spend 10 billion pounds over 18 months. what our bond markets telling us right now, paul? paul: bond markets are telling us that people are worried about
what central banks are going to be doing. have seenf that we over recent days started really in japan with the longest government bonds of their it is starting to push higher after yields to all-time lows. the concern is maybe the bank of soan wants the yield curve it is easier to trade off the banks to make money. of fed through into europe and the have seen a similar disquiet there. the european central bank was not quite as aggressive as people were hoping in terms of their bond buying plan for now we have the last opportunity before the fed meeting on september 23, the same day the bank of japan will make its next decision. mark: is there a sense that we are reaching the limits of the efficacy of central-bank policy? paul: i think that is one of the
concerns. been a lot of talk and a lot written recently on whether the fiscal sidings to take more the strength. maybe the government should borrow more rather than relying on the central bank to do it all. is a message that central-bank policy makers have been giving for a long time. it seems like we are at a point where that maybe start to take a hold. vonnie: a lot of central banks would not mind to see the yield curve steep and a little bit as long as it doesn't do any damage. how does the bank of japan managed to have this happen? paul: good question could the bank of japan has obviously been slipping up huge amounts of japanese government bonds for about years and longer. yoususpicion is that maybe do not want to go with the same aggressive pace and maybe they are going to change where there b they are buying.
it will give them an idea that something is want to change here. because market valuations are so stretched, because there's so much tension out there, i don't bond it's a great deal for market investors to get a little more wary and for yields to back up rapidly. vonnie: when we get this copper heads of review of the bank of and what it has up smellingill it roses? paul: all the central bankers are walking a very narrow tightrope. what is priced in is minimal, but it will be the fed that cried wolf. they keep saying they will raise interest rates and they never do it and the bond market becomes less worry they will do it in the future. mark: i asked paul donovan
earlier about the comparison to this bond selloff and the tensions that we saw in germany april.r the most famous was the bernanke tantrum. they have risen to plus .3%. i'm looking at the german bunds yield. we went from roughly three basis points to almost 100 basis points in the face of a couple of months. what sort of move would have to this bond selloff another tantrum? paul: the concern is obviously that there could be something of that i mentioned or even bigger or more extreme. last time around it was the bond market was the catalyst for the
epicenter for the selloff. this time, it seems to be starting in japan. on the other hand, a lot of the people we have seen speaking to today, with investors from europe and some of the strategists as well, they're coming out and saying that i think the market is overreacting here. the likelihood is that things will stabilize and find an equilibrium. on the flipside, you have some strategists coming out with a note saying they are expecting further increases in yield to the recently rapid as well. the markets are very tightly coiled. the selloff could be painful if it comes, but that is still probably the consensus view at this point. mark: thanks for joining us. stay tuned to bloomberg. said governor lyle brainard speaks from the chicago council of foreign affairs today at 1:15 p.m. new york time. we we carrying it live for you. this is bloomberg.
mark: live from london and new york, i am mark barton. vonnie: i am vonnie quinn and this is the european close on "bloomberg markets." samsung shares falling to the lowest in two months after the tech giant told consumers to stop using its galaxy note seven smartphone immediately and exchange them as soon as possible. the announcement comes after increasing reports of the phones batteries catching fire. joining us now from san francisco hi is cory johnson. apple comes out with a water resistant phone and it seems now like we need inflammable phones. what is happening here? how did samsung walk into this mess? that most phones are
inflammable, but fo perhaps this one is not. you can look at the $22 billion selloff of samsung shares today. even if it is twice as bad as expected, what is this all about? imagine the airline workers told to keep samsung note sevens off the phone. does their make a difference between the note six in a note seven? the notion is that this could have a great impact to the samsung brand almost immediately where we could see not a long-term degradation of the notion of safety around one of the samsung products, but the immediate reaction where the use of the devices are you cannot use the devices anymore. that is why the concern has hit the market so hard. the selloff and samsung shares goes beyond the squishy notion of brand problems. vonnie: it is funny. people are loyal to their
smartphone maker. will this be enough that you might experience a fire in a small number of cases -- will it be enough to make a change from samsung to another brand? cory: hard to say. what's really interesting is that there been a number of studies that suggest that people to switch off of the android platform to the apple platform are less likely to switch back. there are a lot more injured phones -- android phones in the marketplace and that is the concern from samsung. it is not from switching to entry onto the iphone and staying there, but there are some a cheap android phones. android is prevalent another companies and are not worried about profit margins. xiaomi is going after profit margins bects, project damned. mark: he has been nominated to the board, which allows him --
the son of the ailing chairman to take a more active role. that is just one samsung probably needs to. it's reputation is really in the firing line. how well is samsung perceived to be managing this? samsung as i have a personality like steve jobs, but they are close. the notion that his management could be reflected in the power of his son is something that the company's landing on. maybe there is inspiration within samsung let alone the ability to handle proms outside of korea, but the notion that this company could be saved by brilliant leader is so important to the way the company is run and the things that motivate their employees. that could be bigger much more than the outside handling of this problem. vonnie: we will continue to monitor the stock price at least . thank you, cory johnson in san francisco. mark: let's look at the biggest business stories in the news right now.
deutsche chief bank executive john cryan says asset management will remain as essential part of the company. he was respond to reports that deutsche bank might sell the .nit could in in a letter to employees, he said they should not be distracted by sales plans are mergers. restarting trading in its british property funds. julytrading was halted in after a surge in redemption requests in the wake of the brexit vote. thread needle agreed to sell 25 properties for more than $220 million. star board value is targeting irish drugmaker perrigo. it has disclosed taking off a 4.6 steak and it is criticizing its operational and financial mistakes. they said they rejected a takeover offer from mylan left last year.
vonnie: it is time now for our global battle of the charts where we look at the most telling charts of the day and what they might mean for investors. you can always access these charts by running the function on the bottom of your screen. kicking things off is joe weisenthal. risk parity is a popular rategy and it is the idea of constructing a portfolio that is long on equities and equivalently long risk treasuries. it is partially premised on the idea that the uncorrelated cancel each other out.
lately bonds and stocks have been moving together up and together down. we have saw that dramatically friday. one of the many funds that does this is down on friday. this redline marks the decline. it was the eighth worst day for the fund in five years. on this fear that the central banks around the world might pull back on bond buying and that money my not flow into the markets, everything was sold and the risk parity strategies got slammed on friday. you can really see how that they stood out over fairly long time. you can see that chart on the bloomberg at g #btv 3451. vonnie: i like it. very simple and illustrative. mark: let's get to ryan tantrum chilcothe. ryan: lots of people saying we 2.0. see a bund tantrum
and i thought we should see what that would look like. this is the 30 year yield. as you can see early last year, it rose about 125 basis points. that is a pretty big increased and that is why they called it the bund tantrum. i've used the japan 30 year yield rise and it has gone up 45 and that is ao third of what we saw during the tantrum. my take away is that we are not anywhere near there yet. i guess you could say that it could rise that way, but there's a note out saying they do not expect that to happen as long as the bank of japan and the fed did not surprise us with any disappointing or unsettling statements over the next couple days. #btvan see that chart at g
3458. vonnie: yields moving for different reasons, but i still like the comparison. .'m going to go with ryan co mark: if i go for ryan, it will be three in a row. hen though i love his chart, showed me something i really did not know. i'm going to throw it to the gallery and they will decide. it is done. joe wins. did: the only reason mark not vote my chart is because he heard me talking about it. vonnie: you are too sweet. tomorrow, we're going to have a big focus on argentina. stay tuned. more markets ahead. bloomberg.e o ♪
♪ matt: good monday morning. there covering stories from washington to berlin and soul at this hour. here's what we are watching after a rebound from friday selloff. investors await a speech from the fed this afternoon. before we hear from brainerd, we will hear from jpmorgan ceo jamie dimon, speaking at the economics club in washington. we will bring you his comments live in 30 minutes. and hillary clinton's health is threatening to mushroom into a political crisis after she stumbled over the weekend due to a bout of pneumonia. donald trump wishing her well, but he says he plans to release more information about his own health to reassure voters.