tv Bloomberg Markets Bloomberg September 14, 2016 10:00am-11:01am EDT
vonnie: we will take you from new york london and cover stories in germany and japan in the next few hours. create the to biggest buyer of seeds. both companies coming up in 30 minutes. shows latest survey donald trump in a battleground page of five percentage points, pushing the peso lower today vonnie:. vonnie: interest rates will slip
lower in japan. 30 minutes into the trading day so let's head straight to the market desk where julie hyman has the latest. julie: we are seeing a in the major averages. they have not yet changed and may have flirted with the negative three fully before positive. after the swings we have seen in the past couple of days, things have calmed down to some extent. that is true not just in stocks but to some degree in the other asset classes as well. let's take a tour. if you look to the vets, we see it come down a little bit, still at elevated levels. the 10 year yield coming down yesterdayzable spike to its highest level since late june. the dollar index up. here is oil.
, ahead of the 1% weekly inventories for it. the question is after three of 1% plus moves in the major averages, what happened now after the a lot ofy lunging investors have been calling for for quite some time. in --s a couple of the indicators. we will come back to it later. other big stories, there is the chart, here it is. this index looks at cross asset risk strategies. saw a correlation, an unusual correlation among different kinds of assets, also reflected in the bottom where we have stocks.
we saw the correlation turned negative at the end of last week , stocks and bonds moving in tandem, a little unusual, and this is one thing investors are looking at. is it possible the volatility will continue? that is the big corporate story of the day. 128 per share, that is the agreed-upon price. crycan see this is a far from the price. it will get regulatory approval and you will talk about that more later in the show. thanks a lot. 90 minutes left on this wednesday. we were lower literally a few minutes ago. down for five sections. that has not happened since june 14. holding onto gains today.
a big focus on the luxury industry today. it percent lower, biggest drop for the luxury retailer since 2010 today. midterm annual sales growth target, dampening prospects of the luxury goods market, no longer forecasting annual 8%.nue growth of the instead, it has an ambitious goal for growth. earnings did beat analyst estimates. this is the best performing luxury company in europe, shares getting absolutely hammered today. it says first-half operating profits will probably declined by 45%, adding to the gloom spreading across luxury goods industry. shipue excluding currency
through august, missing estimates. it is grappling with another year of declining exports. against spending is aggregated after france and belgium. shares down by 3.7%. sku data out of the u.k.. unemployment down still after the 11 year low, 4.9%. adding jobs in the three months since july. 31.8 million is the highest on record. in -- since july alone, the unemployment rate fell the lowest since september of 2005. another piece of data proving the resilience of the u.k.. bringing the bank of england tomorrow. >> a big week. thanks.
lisa has more from the newsroom. >> thank you. russia's warning u.s. backed rebels in syria are violating the cease-fire there. the trees began monday and appears to be holding. russian authorities say artillery shells were fired 23 times mostly from areas can fall by rebel forces. they say syrian troops have not returned fire. withdent obama meets today -- americans have this will watch for any sign that they will get this one of the fastest-growing enemies in asia. business groups in the u.s. complained economic sanctions have shut them out, by some 7%. economy is off-limits to the american economy. president israeli saying his condition has slightly improved. the condition remains serious one day after he was rushed to the hospital. he is in a medically induced coma but regains consciousness
from time to time. record-breaking winds and heavy rains now headed toward china. the winds hit up to 117 miles an and hundreds of flights were canceled and at least nine people were injured. global news powered by more than twice as hundred journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thanks. data continues to come in stronger than estimated. two week low after the market remains resilient. investors are bracing for policy decisions on the bank of japan next week.
voices are going -- growing stronger for the fed to get out of the way. saying the market is not pricing in the possibility of a hike enough. why not go in september? i have a lot of sympathy for them to just get it out of the way. in the grand scheme of things, this is not a big deal really and i think it would clear the air and risky assets are doing well really. the fed lowered, saying we're done for the year. i think risky assets are doing fine on that. >> some currencies have been suffering. >> i think emerging-market currencies will do fine on that. pretty much wherever you look in assets, i think
those would do well. >> the story is basically the fed hikes place next year, the end of the dollar -- the end of the dollar rally is not night. what sort of games could we see the dollar achieving against some of its major pairs? >> when you look at the past year and do some analysis, it gainsst you do 10% against the euro. moderate gains. solid gains nonetheless. >> it means we get further downside in the pound against the dollar. big lakeide, we had a lower for sterling against all the major currencies by 10% against many. the next instigate
level of weakness? many are forecasting lower. >> a couple of things. we still have the policy differential story and we still and spake the bank of england to cuts probably in november. then you obviously have the fed story we just chatted about and probably most important is the current deficit will not come down all that sharply. in part because the economy is slowing moderately so far. you will see the financing side will become more problematic. fund related financing will be tougher. >> what are you targeting? now, 1.25 for year-end. to kick in. dollar
116 for the end of 2017. that for sure will need a stronger dollar. a large part of the story as much as the weaker pound. vonnie: we have to talk about the other big central-bank. the bank of japan. i want the viewers to have a look at the japan yield curve. see very dramatically here, this is the 10 you -- 10 year yield. although we are still very low when it comes to returns. is the policy they're beginning to finally work? ifyield curve i don't know it is necessarily indicative a stronger growth going forward. there is a sense it is negative for the economy, that is not
something the bank of japan should pursue it also in the marketplace that it is symptomatic as well. have isthe problem you the economy will respond more to what is generated at the front of the curve for short-term rates come down and as far as the currency is concerned, typically, being led by the back of the curve, good for the yen, not what the bank of japan actually wants. mark:an: looking at -- looking at your forecast, it is not fact risks. china, onthe risks on europe, materialize. how does that shape of your forecast? >> the dollar will be much stronger against the risk currency. i think market currencies will suffer substantially but the
dollar will not gain much vis-a-vis the euro in particular. the yen story i think will hold up and outperform all. biggest shakeup will come from the euro-dollar. it will hang in and the liquid currencies will do well. for the yen we are looking at 94 for the year-end and into the low 90's really for 2017. hanging at what is seen as fair value. >> if it happens as you say, we're in for a bumpy next couple of months. thank you. >> coming up, monsanto finally agreeing to buy a proposal which will create the world's biggest seeds. both companies will join us at the bottom of the hour. do not miss that. this is bloomberg. ♪
vonnie: you are watching bloomberg markets. time now for a look at some of the biggest is the stories in the news right now. the same regulator that gave apple a bill of now looking at ikea. officials are examining claims the world's largest furniture maker uses unfair loopholes to avoid taxes. partyame from green politicians. >> it is early days. we have received documentation and we are going through it but we have nothing to count on as the case stands right now. >> ikea has not commented so
far. the company is owned by the private equity, helping them ,ncover the popularity attracted hordes of new fans. numberndation says the of u.s. players declined by 27 million in 2011 to 24.1 million last year. let's head to the markets desk where julie hyman has been looking at some health care stocks. more wellness and nutrition. herbalife is the company i am talking about. carl icahn is asked the federal trade commission if you can have stake.ion to raise his it does not mean he will do so but nonetheless he is asking for
that kind of permission. he acquired a most 3 million shares of the company, 21% currently has permission to raise. it does not mean he will the sts 35% and he said delivering a conference yesterday that the company might the better off is a privately held firm. he has been bullish on the company for a long time. up 4% this morning. getting more into health care proper, the japanese drugmaker told reuters that the company is looking to potentially make acquisitions although the ceo would not confirm in a report that he would set aside $10 million to make those acquisitions but we are seeing some potential target that and talked about by analysts rising in u.s. trading. all trading higher this morning. we also want to look at a big move today. up 27%. they make an experimental medication to treat muscular dystrophy.
the drug to treat it has not been approved by the fda. controversial. those who have this are pushing for approval in the person who has been resistant to proving it has now left the agency. that is why we see such a dramatic move in the shares. mark: thanks. still ahead on bloomberg markets, donald trump took the lead in ohio. one of the biggest swing state prizes in u.s. presidential politics. more on that ahead to do not miss the q&a session with donald trump and investor john -- we will be carrying that live. this is bloomberg. ♪
five point lead over hillary clinton in the critical battleground state of ohio. for interesting barometer of the presidential race. the mexican peso has showed an inverse relationship to trump's performance in the polls today. the currency is weakening against the dollar immediately after the ohio poll results -- pull results came out today. to help us that this all into context is our editor in chief on thet released presidential race. thank you for joining us. is it time to start taking it seriously the potential of a trump presidency? i know clinton remains the overwhelming favorite but there seems to be somehow a little bit of complacency in the market. >> you should always take it
seriously and you should never not tickets seriously. if you look over the past several months, there have been times where the race has been closed at least in polls that you cite. for example, you go back to july . the two candidates were close together. trump was leading in some of them. inre is a lot of volatility the race and it is likely to persist. fascinatingiece is and looks at the amount of manufacturing jobs created by presidents going back many years almost in response to trump's's criticism of hillary clinton, suggesting her support for nafta has lost jobs. you uncovered something very interesting. >> facts are stubborn things.
they are often's -- submerged by what people want to believe. the fact is, looking at 13 assidents all the way back far as the data is available to us from the u.s. bureau of labor statistics, the seven democratic presidents all experienced manufacturing job growth. the six republican presidents all experienced manufacturing job declines. argument, you can spin it the way you want. especially politician. we will illustrate exactly what you're talking about. payrolls manufacturing when republicans are in power. republicans will say it is all too to policies the democrats put in place.
nott is always prudent to for better or worse. having said that, there is no the policies have had some impact. you have the roosevelt truman presidency. clearly committed to fighting the second world war. people may forget the look is initially were not in favor of the second world war. that dragged the u.s. economy not -- not only out of a depression but put it on a chair for becoming a global manufacturing drug or not. if you go back to kennedy johnson, those administrations maybe the best prosperity we have seen in a decade.
we are committed to massive government stimulus, which had an impact on many watching. more -- war vietnam , and enormous stimulant for manufacturing as well. there was a policy to rescue the automobile industry and in the very state of ohio that you talk the obama policy of rescuing the automobile industry had a massive impact on creating jobs. vonnie: have a look at his bloomberg view piece. this is bloomberg. ♪
mark: a global surplus will persist into a year. let's get over to julie's markets desk. julie: going into the report, as the numbers cross, it looks like we have an unexpected drawdown in inventories. a gain of about 2.8 million barrels estimated. last week we had a huge drop of inventories because of the her anticipatednd the disruption to cost within the gulf. now seeing another drawdown here. expected there would be a bounce back happening. up quite a bit.
it looks like on balance, it is a mixed report with a drawdown on the crude side. gains.ticipated a little bit of a bump up from that. still down by .1%. here's what it looks like. 173. people try to figure out what to .ake of the disparity here >> it seems like it has been a surprise a couple of weeks in a row. clinched, to take over st. louis-based monsanto. 66 billion dollars, making it the biggest merger and also the
largest foreign takeover by a german company. if the transaction is approved, it will be the largest supplier of needs and pesticides. jeff mccracken joins us now, the ceo from both companies. jeff. jeff: thank you. i would like to welcome our listeners. the ceo and chairman of monsanto, congratulations. is going on in the farming space, the agricultural space, that is forcing these kinds of deals? your deals are huge. in the space on that is making these deals necessary? >> one thing that is most important to see is what is needed in addressing and never increasing demand for more
outputs and more yields. only way that can be done is with better in innovative solutions that can be developed. we share an intuition we talked about that you happen working on that theyears, culmination of both companies what we bring to the table with chemistry and what monsanto brings to the table, yunnan x, greatlytics, would be a -- to help address this. ? trying to do more with less. basically. >> they have to do this in a more environmentally sustainable way and you can only address it with that are solutions that are not available today below we're working on tomorrow. >> i have had these conversations. in some ways, a year before
you're talking about trying to do a deal with syngenta. do you feel that you ended up being bought as opposed to buying another anthony? >> not at all. i look at it as the strategy has .een the same the industry has gone through consolidation. as we are going to unlock additional yields for growth around the world. the combination of the two companies unlock that potential going forward. i think it is a great deal. >> do you feel like the regulators will make life difficult? it is skeptical. $20 below the $128 offer. they worry the eu regulators will block the deal. are you confident you will do whatever is needed to get through?
>> regulatory challenges have been discussed very intensively as part of our negotiations but also beyond. large teams ofd our own people, and looking at it jointly, we assess how big of the regulatory challenges might the and we are really blessed in a way because of this combination. it is highly complementary. we are looking forward to engaging with regulatory agencies in all countries. we will have to file. i request -- requests so we can push up to what is needed in order to get the transaction and the accommodation of our business to the finish line.
>> have you laid out what kind of sales you are willing to do to get past any regulator concerns? >> testimony to a high level of confidence. ultimately will not succeed in getting all the regulatory approvals in key jurisdictions. >> compared to some of the he is thens, preeminent pipeline around the world. the attraction is there is very little overlap between the two. i think that will be a piece of the dialogue with regulators but the overlap is minimal.
>> vegetable seeds and herbicides, those are areas you will have to address, those are where you will need to investors. any thoughts? >> there is a lot of coverage out there with what will be needed. we don't want to comment on these assessments at this point in time. we would like to engage with to have a agencies discussion with them rather than preempting it here. >> there is not much discussion and not a lot written in the press release. who will run the company? is it you? thing fort important us was to find a way to combine the two organizations and enjoy we realize our vision. today is the first step we are taking. we are by no means done with uttering all of the questions. people, the on
senior management teams of both companies sit together and jointly assess whose career is developed in the new organization. they help our people to drive their careers and also a combined organization. >> number one, there are a couple of springs and one harvest in there. we need to focus on customers. to that dialogue with the regulation agencies. that is the key for us.
>> i know the monsanto name in europe, people get concerned about genetic modification of seeds and crops. is there any chance the monsanto name goes away? you might have a view on that or review? away?e see the name go >> previous conversations, i have an very -- the key is less about the name and more about products developed. we have not talked about that. there are bigger things to solve than this. >> we have really looked at what it is in order to realize our joint vision. that was the first and only priority driving our joint activities up until now.
>> i think it started way earlier in terms of developing a , first independently coming to the same perspective and then discussing on and off at different levels with different ways of cooperation and so on that we never brought it over the finish line. to came to visit on april 18 facilitate the hanover. that was the second time we met. >> we have been in dialogue for 10 years. the companies have known each other for a long time. got it. thank you for your time. back to you. vonnie: brazil is enduring
mark: this is your global business report. banke: denmark'central says the britain economy is most at risk from the brexit. major targets next could be ikea. settling allegations. brazil is in the biggest economic slump in a century with the new president now in charge. can brazil get back following the recent corruption scandals?
we begin in copenhagen where the head of the denmark central-bank -- theyy should we should be worrying about brexit with the rest of the european union. the british economy is most at risk. accountould take into that although britain is a very important country, the impact is limited. will come tompact the british economy. mark: the british labor market is showing resilience. 4.9%.ployment rate is the bank of england is forecasting unemployment to rise actually, hitting 5.6% in two years. european regulators gave apple is $4.6 billion tax bill.
eu competition commissioner tells bloomberg that officials are examining claims the world passes largest firm in jamaica uses unfair pulls to avoid tax. it came from green party politicians. no comments so far from ikea. vonnie: time now for the quick take. economyon scandals, the in the biggest slump in a century and politically gridlocked, just naming a few. the president was removed from office and will serve out her term. he is off to a rocky start. what went wrong in brazil and the challenges. ♪ in recent years, brazil has gone through a roller coaster of turmoil. economic woes and
corruption scandals and presidential impeachment, brazil is in a deep crisis. a new president has stepped into the spotlight and promised austerity measures. will the slow unraveling of the world passes fifth most unpopular company stop? ofaugust 31, by a vote 61-20, the president was found guilty of high passing congress to finance government spending. paving the way for the vice president to serve out her term until the general election in 2018. ordertake a step that in to understand the situation now, we need to understand how it got here and that cannot be done , ahout talking about lula rags to riches story. wildly popular and became a symbol for brazil's economic ascent as one of the top exporters of commodities as oil, soybean, corn, and iron oil -- iron or.
presidency, global prices for raw materials began dropping and a corruption scandal paralyzed many infrastructure projects, putting severe strain on brazil's economy. economy shrink 3.8% in 2016, the most in a quarter-century. ouster, the president is promising austerity to right the ship. not been smooth sailing. the presidency is strained by a massive corruption scandal. an investigation revealed a deeply corrupt organization and political system. kickbacks.nd big picture, there are not many good guys here. 352 of his ill 592 members of
congress are currently under investigation for serious crimes. brazil's future is uncertain right now. a tough path to stitch a country back together again. vonnie: you can read more on the bloomberg. head to bloomberg.com for more stories. mark: volatility back in the markets. it may only get worse. one of the most bearish price targets for the s&p 500. wait until you hear where he inks we will end of the year. this is bloomberg. ♪
correction could be on the price in 1960. welcome. we've talked a little about how this could be a bumpy couple of months ahead. it is going to be pump you. >> yes. we have meaningful downside. we have been set up with an growthstic high, valuations which are pretty high, and sentiments which has gone to bullish. i think you -- it makes you very vulnerable here. a backup in bond yields but it frankly could have been anything. and number of risks out there are still to come. vonnie: i know the view on most things is a little gloomy. catalyst that drives us there between now and the end of the year?
>> my flippant answer is it could be anything. we are vulnerable. you have had eight meaningful corrections. causedk back at what has them in everson one is different. on the spot, two things concern me. right now. people have been to bullish on the growth scenario. 40% earnings growth. you have never seen even close to that with the gdp outlook we have to is the other would just be the political calendar. yard he have uncertainty above globally, that has real consequences. growth earnings, etc. are you look at the calendar, the french election, the list goes on. : you talk about the political calendar. the brexit prompted a shift from defensive. you think that will stay. >> i think so. double-digit next year, it is incompatible. leading indicators are not
strengthening. the markets have a big rotation from growth to value. we would actually be looking at the bonn proxies here. we think the bond yields have come back down again. we think there are opportunities here. mark: you are underweight in europe as well. you are not alone on that. some continue to withdraw funds out of europe. to have done so for the best part of 32 weeks. are you seeing any relative value within europe? >> the strongest case for europe is the one you just made. dependable case. for europe to work, you did a positive earnings price. it is difficult for us to see how that will happen with this level of political uncertainty. the u.s. on the one side is a relatively defensive market. emerging markets, if you do want
to take a risk in portfolio. fascinating.is one more question on the strap. quite central banks are satisfied as they can be with her actions and not changing anything, why shouldn't this regime continue? >> i do not think in the big picture probably does. we are in range bound markets. we got a little ahead of ourselves. 14%.have averaged we should not necessarily think this is anything abnormal. i think we are a little vulnerable. fundamentally, very low bond yields and subdued earnings. vonnie: which emerging markets? they are very different these days. class of think you need to get
as cyclical as you can. been bullish on brazil. we like turkey and south africa and russia. these are the most cyclical and depressed markets. structural, medium-term call. we think this is right at the beginning of the cycle. how should we position toward japan ahead of next week? meetingbank of japan and the assessment of monetary policy. >> it has all -- been all about the weaker yen. markets at all-time highs. view, the earnings story is completely undermined. on top of that, i think you have concerns about the amount of public policy here. we are underweight in japan. vonnie: thank you.
coming up, what have we got? mark: handbags have not been enough. you must be doing your part. we will cover a slump in luxury retailers next. have a look at stocks, 30 minutes away from the close today. we are seeing gains. we were down five consecutive gain -- five consecutive days. up just by 0.01%. germany andes in improv. expect nothing as unemployment here stays at its lowest level in 11 years. bloomberg markets continues. this is bloomberg. ♪
vonnie quinn and you are watching the european close on bloomberg markets. mark: we are going to take you from washington to paris and cover stories out of switzerland, new york, and japan in the next hour. here is what we are watching. monsanto clenched with a fourth bid to create the world's biggest supplier of seeds and pesticides. the ceos of both companies are speaking to bloomberg. isnie: jean claude juncker his state of the union speech, warning about the dangers of antiestablishment forces saying it is as strong as it was in the 1950's. we hear from the formula i.e. profile, pluswing what he makes of liberty's