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tv   Bloomberg Markets  Bloomberg  September 16, 2016 10:00am-11:01am EDT

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vonnie: quit going to take you from new york to london in the next hour and we are covering stories out of buffalo new york and frankfurt. deutsche bank shares tumble. will the bank have to pay up? >> european stocks pointing largely lower. meanwhile the rally in government 10 year yield below zero for the first time in a week. and european union leaders are meeting in slovakia, discussing what life will be like without the u.k.. we are live with the latest. now we do have some breaking economic data area the consumer confidence reading,
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preliminary reading coming in at 89.8. that is likely below the 90.6 estimated. current conditions are what dragged it down. university of michigan surveys, how they are feeling now and what their expectations are like for the future. the expectations came in ahead of estimates at 81.1. that coming in below estimates. we did have the consumer inflation reading coming and above what analysts had been anticipating. let's take a look at how this is affecting the markets. we are seeing a pullback after big gains yesterday for all three. something that is very important, quadruple witching. it tends to cause a spike in volume, which we are already seeing today in a big way.
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all three major averages at the moment are trading lower. at a few movers, exxon mobil is on the list. reportingt journal the attorney is examining accounting practices. the intel shares are higher after the company raised its forecast. looking at some of the other asset classes in the wake of the cpi data, that 10 year yield is unchanged. coming up a little bit. also looking at the dollar and seeing what kind of reaction we saw there, a similar move and a move sideways.
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what are you seeing in europe? for a full day. on track for a second consecutive weekly drop. we felt the lowest level since august. this is the worst week since june 17. they are actually the worst performing industry group today. corporate story today, shares down as much as 8.9%. biggest decline since june 24. it received this $14 billion claim from the u.s. department of justice to settle this investigation in sales of its residential rank mortgage security. j.p. morgan analysts before the figure said a settlement of 2.4 billion would be taken very positively and agreement
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exceeding 4 billion would pose question about deutsche bank capital decision. down by 8.5% today. stock ineclining europe. euros andion additional tier one bond spirit this is the first to take a loss in a crisis. the biggest effort -- biggest ever on a closing basis. we are above the february lows. off asds can be switched a lender runs into --
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it has the least available distributable fund in europe according to credit sites. this is the weekly performance. down by 5.3%. sinces the worst weekly june 24. banks have been declined for four days. >> now i'm curious how things have done in the u.s.. also down three of the last five sessions. let's check in with bloomberg first word news. >> for years donald trump has question where president obama was born. obamae campaign believes was born in the u.s.. trump himself has and said so but he addresses the matter shortly. his birther issue has hurt his support from black voters.
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merkel and other eu leaders are meeting in slovakia to post their post-brexit course. leaders want to take on issues like defense and protecting eu borders. the cease-fire in syria appears to be holding. the united nations is blaming the syrian government for preventing aid from reaching the city of aleppo. syrian government troops have now started pulling back from their major roads that they have been holding in the city. in northwestbing pakistan has killed 24 worshipers and wounded 25 others. rescuers are transporting the dead and wounded to a nearby hospital. no one immediately claimed responsibility. an appeals court upheld the detention order for julian assange.
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julian assange is wanted by prosecutors in a rape investigation. he is concerned that if he goes to sweden he will be turned over to the u.s. for publishing secret diplomatic cables. his lawyer is now appealing to sweden's supreme court. global news 24 hours per day howard by 2600 journalists and analysts and more than 120 countries. this is bloomberg. week contains a string of fed comments and economic data released ahead of next week's meeting he at with all this talk about will they won't they in september or december, what should we be focused on? >> we should be focusing on the path of interest rate. it will be very shallow. where are we going to end up?
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where's the terminal rate? that is going to be well below historical averages. finally, our other policy instruments going to be helping? that is going to determine where equity markets, the bond markets, and currency markets end up. >> he oversees 1.7 trillion dollars total. i think the home it is not alone in his fatigue. but the markets are reactive to that kind of speculation. how do you keep nine on what is important? >> i am definitely sympathetic to the fact that markets have been keying off of policy. bond yields rising, we have seen economic data. it has generally been risk off.
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the question is where is that coming from. is that coming from the ecb and the bank of japan? i think it is probably the latter. we see a pretty drastic change in the propensity of the committee to raise rates. they said it themselves they went down to probably one hike. we think it is probably going to be in december. we see it has been very persistent. we are seeing a u.s. economy growing at a slower trend rate. they want to be accommodated for a little bit longer. we have been sort of convinced and we think that narrative gained traction on the committee, that will keep them pretty accommodative. now shifting focus to the boj
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and the ecb, i think there is a sense of the credibility and them pushing harder on the accelerator. maybe they are being more complacent these a fee inflation relative to target. markets are reacting to that. it is massive and we are speaking to a lot of our colleagues this week who have the boa atssentially the center of things and the global bonds market. whatsoever sort of actions do you expect next week and house the global bond market going to react? is not a lowk it bar for the bank of japan. i think they need to do something. think would has also thrown a wrench and how markets interpret the bank of japan is the fact , they have policy been pulling that lever.
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they deferred the tax hike into the future. , to the form.s monetary policies, i think they need to do something. how much they need to do to satisfy markets becomes more speculative. you had a speech two weeks ago feel confident in our tools and bond yields rose on that comment. there's clearly an air of skepticism. >> we have seen a shift over the past several weeks globally among bond investors into shorter duration. is that something jpmorgan is doing as well? >> i think it is fair to say we are bit more circumspect about the long end of the yield curve. we have this view that has been fairly finely balanced.
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economic growth is accelerating, inflation is picking up. going to move. all those things push bond yields up. led by aggressive policy and the rest of the world pushing it down. that balance is starting to come under a bit of pressure and maybe we start favoring the domestic hackers argument a bit more in that debate. >> you said it is going to be key to our asset allocation. you also say that i've urgent story, which fades, it has already been priced in. what does that mean for now for equities versus the about -- versus developed equities and emerging-market equities? >> we are leaning a bit more
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giving aging markets, fundamental story. it is a bit of a momentum trade. it is true neither the u.s. or equity market or a emerging markets do well. implicit view of equity markets is the idea that the dollar is not going to rise from here. think we are happy so far as the for story isn't what it used to be. the u.s. is accelerating in gdp terms. even risk on and risk off events. you have had pretty significant risk sentiment. .nd the dollar is up when you put all those together a dollar that is not
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going to react as aggressively. we think that is an experiment they are willing to run. >> thank you. ben is a jpmorgan global strategist and i said -- >> coming up, meet the guru who only talks to wall street's financial elites. the 1% of the 1%. more on this story next. this is bloomberg.
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mark: live from london i am mark barton. julie: a new financial the lead -- financial elite is emerging.
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if you are not part of it, then the next best thing is to sell to it. bloomberg joins us to share her exclusiveif you are interview we most significant shifts in finance today. this is somebody i have talked to many times. i didn't realize this was his biggest dutch this business model. >> this is about a guy who is trying to reinvent himself. he is not really an enigma. this is a guy who used to work for wall street. -- this is about a guy who used to fit into the wall street banking research model. and he decides to carve out a bit of market for himself.
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different it that is about what he is doing? a lot of wall street analysts set up their own advisory firms. he has an alternative eight of business. he is also thinking about everything else. he is thinking about how to share information, how to give information to people who don't necessarily have the money to pay for him. >> isn't competition heating up? wayhat he is doing in some is not entirely unique. companies outof there looking at information differently, who are trying to
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find an edge for investors. it is not easy. the markets background. he understands a lot of the market better than the scientists out there. >> he certainly says so. time, is the pressure on more for somebody who is acting he sensually as a consultant, versus somebody in-house. isn't he auditioning every time he is consulting with these various banks? >> a lot of us have talked to him so he has developed a network of high-value clients. the family officers, the big names. now he's going would you pay me,
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and just me. he is asking people to pay for him as opposed to getting free research in the banks. >> it is perhaps an enviable position. thank you so much. some financial -- like jpmorgan and fidelity. this is bloomberg.
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mark: live from london. julie: after a low of new etf's launches, it gives are back to their pace after -- here to discuss his senior etf analyst at bloomberg intelligence today. he is in our boston bureau.
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great to see you here. this is a theme we have talked about before. you have the big vanguards of the world but then you have the wall street banks getting into the etf game. talk about these recent launches. >> i would like to say they are two mouths.e with they have always made money as market makers. goldman has some interesting strategies. , soundslodged and etf boring, it is. it is a two-month treasury build. but they have a feature in it that is pretty clever. it is going to allow same-day settlement of creation. that may sound wonky. but it is really useful for institutions. it means they can use it as collateral.
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goldman is basically betting that these institutions would like to use it. boring, but it has $100 billion. this is big business. goldman did their homework on it. goldman, this will be part of them now. they have smart beta products, which collectively have over 2 billion. >> is this unique in that feature you talked about? the midday settlement? >> every other etf takes three days to settle. this is a unique feature. >> jpmorgan has a different one. >> jpmorgan came in and they want to diversify the alternatives fund. this essentially is a hedge fund for half the cost.
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this is an actively managed hedge fund strategy. all kinds of strategies out there. this is part of a move by a lot of issuers. they are looking to poach some of the hedge fund assets. liquid all scum a means it's an , jpmorgan looks to democratize hedge fund investing. this is a another space that is intriguing. up till now they have only had smaller players. now you have jpmorgan looking at it. goldman has some products in this space as well. it has yet to be seen if etf's can replace hedge funds. goldmanorgan and getting involved it may make it more attractive to certain investors. the wallnot as though street players are sitting on their laurels.
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fidelity has new products. news -- sixhas six new products. they try to undercut vanguards. this is another example of a buy side firm converting their secret sauce into rules-based entities. fidelity off to a pretty good start. fidelity looking to increase assets. mark: eu leaders are gathered in slovakia to discuss life without the u.k..
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julie: live from bloomberg world headquarters in new york and london. i am julie hyman. it is friday. mark: you have a friday feeling. i am mark barton in london.
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you are watching bloomberg markets. let's check in on first word news. more from our newsroom in new york. >> hillary clinton says donald trump does president barack obama and the american people an apology for his role in the so-called further movement that questioned the president's american citizenship. hillary clinton: 45 years he has led the -- four five years he has led the birther movement to delegitimize the first black president. >> clinton says donald trump is feeding into the worst impulses that lurks in the country. a judge now says a british man accused of hacking into the u.s. government computer systems should be extradited to the u.s. to face trial. officials say lori love attacked nasa, the federal
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reserve, and the epa, reportedly stealing names and security numbers and critic on information. he can appeal the judgment. attending ars summit in venezuela will be greeted by antigovernment protesters. opponents of their president are vowing to take to the streets throughout the country, demanding a timeline to hold a recall referendum. the paris climate accord closed to being formally adopted, up to 30 more nations expected to join the agreement at next week's u.n. climate am in new york according to the top u.s. climate negotiator. the deal must be joined by countries that make up at least 55% of greenhouse gas emissions. the two biggest polluters, the united states and china, have signed on. more than one million refugees ongoingd south sudan's war, creeping one of the worst humanitarian aid disasters ever. say south sudan
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adjoined syria, afghanistan, and somalia as countries that have produced over one million refugees. global news 24 hours a day powered by more than 2600 journalists and analysts and more than 120 countries. this is bloomberg. mark: thank you. leaders of the eu 27 nation minus the u.k. meet in a bratislava focusing on security come immigration, and the economy as they prepared to negotiate the terms of the brexit. angela merkel talk about the many challenges. angela merkel: now this is not about expecting one summit to solve all the problems of europe. we are in a critical situation that this is about showing through deeds that we can get better in areas like security, internal and external, fighting defense,, cooperation, better on questions of growth and jobs. for the latest on the summit let's go to caroline hyde.
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i am looking on my bloomberg, we have had a comment from francois hollande, he says europe seems to be in a permanent crisis. it is not the ideal backdrop to this meeting. >> you heard it from angela merkel herself, this is critical . yesterday, she talked about this being a question of war and peas. we heard from the belgian leader saying that this is the moment of truth. do not expect any significant breakthroughs today. this is a movement toward an end goal in march, the treaty of rome, the 60 the anniversary, this is about a roadmap to say the grievances that remain within the eu that have been shown a light on since the u.k. decided to exit the eu.
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you have immigration, a key concern for poland, the checks, in slovakia, worried about how you reset the one million people that came to the eu last year. you havethe likes of the terrorm threat affecting those in belgium and france. then there is the opportunity for the spanish, italians, to convince the youth that remaining in the eu is a way to promote growth and jobs. so many critical issues at the heart of the eu even before the united kingdom decided to leave, they want to show unity, the question is whether they can propose anything of unity today when it seems as though there were three very significant i did to five all camps. -- identify camps. mark: how do you revive confidence in the eu -- we have lost her.
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hopefully we will get back to her momentarily, caroline hyde. you are there, i will try again. how do we get this significant for confidence in the eu when you have significant elections taking place next year in holland and france and germany? caroline: this is why many people feel we are not getting any concrete decisions, particularly on changes in the eu makeup in terms of the rules that it was founded upon. you will not get that when you mentioned political players with such political risks next year and the key question is how do you get such stability in the eu and go forward when you cannot negotiate with the united kingdom, still waiting on article 50. it seems as though behind the scenes, not on the original agenda to discuss negotiations with the united kingdom it is clear that they understand it
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will start the article 50 will be triggered in the first quarter of 2017. that is apparently what was said to the italians. all of this brewing, still key questions ahead but still they need to first negotiate with the u.k. at camp or the political risks. in those elections, the french, the dutch, and the germans are fighting a rise in a wave of populism. how do you fight that back, you have to tackle the question of immigration. julie: it sounds like there is not much progress on anything, is there any area where you have seen fruitful discussions or there is a little more optimism on having fruitful discussions? eu, when can you expect anything to be made in terms of a quick decision.
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it seems as though defense and security are becoming very much the forefront of the political debate. the united kingdom stop that, with germany and france that wanted to push through a joined up eu approach to defense policy, foreign policy, now with the u.k. out of the way that can be made progress on. it is convincing the rest of the 27 countries but a much easier task. they are making some clear moves forward in the agenda, its growth, immigration, security but now they need to outline that and decide how they move forward, particularly when it comes to the brexit debate. mark: great is eu. further comments from francois hollande, he says he will insist on a european defense plan and says the eu needs to focus on growth, security, and youth. julie: coming up, blackstone chairman and ceo stephen schwarzman was a big donor to george w. bush and mitt romney
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but is uncommitted on the presidential race this year. we will hear from him next. ♪
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♪ julie: you are watching bloomberg. i am julie hyman. mark: this is your global business report. here is what we are watching, deutsche bank hit with a giant $14 billion fine in the u.s. but the lender is saying it has no intention of paying that amount. julie: do not expect to run to your nearest apple store to pick up the iphone seven, apple says there are none left at retail locations unless you pre-ordered. mark: in today's quick take, fires take over monsanto, it is reigniting debate over gm owes
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in the food chain. -- gmos interchange. -- in the food chain. mohamed el-erian says the government and the private sector's should be doing more to take advantage of the current level of interest rates. >> it is absurd not to be improving our infrastructure when long-term interest rates are so low. directly to engaging the private sector and unleashing what, until now, has been an economy operating well below potential. mark: deutsche bank is not backing down in the u.s. investigation over the sale of mortgage-backed securities, the german lender says it will not pay the $14 billion that prosecutors want to settle the claim. deutsche bank says the negotiations are just beginning. the bank expects it will lead to what it calls a materially lower amount.
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the new iphone seven on sale and many folks who show up at apple stores may walk away empty-handed. that is because apple has not made enough phones to meet demand. customers who have not pre-ordered them will not be able to buy them unless they pre-order to and apple has decided to break with tradition and not announce the first weekend sales figures. have madey regulators it official, samsung will now recall the galaxy note seven smartphone. that comes two weeks after samsung halted sales following reports that dozens of the bones caught fire or exploded. the company is calling about one million phones in the united states. is time for our bloomberg quick take where we provide context and background on issues of interest. genetically modified organisms are as common as corn and as routine as rice. the global battle over their
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future is being revived by the latest deal by monsanto, they are ingredients in 70% to 80% in america's process foods. two decades after engineered crops were first sold to americans, barack obama in late july signed into law a national requirement that engineered be disclosed on food packages. countries have labeling requirements including japan, brazil, china, and the entire european union. the biggest developer's of gm owes so most of the world's commercial seeds led by monsanto's which is 27% market share and agreed to be acquired by their. -- bayer. humans have been manipulating crops for thousands of years, crossing and selecting plants that exhibit desirable traits. in the last century, breeders exposed crops to radiation and chemicals that induced random mutations. gave and other lab methods fruits and vegetables new colors, made crops for disease
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resistant and made grains easier to harvest. and barley are, descendents of mutant varieties as are many vegetables and fruits. supporters point to a scientific consensus from the national academies of sciences, engineering and medicine, the american medical association, even the european commission that they pose no more risk than other crops. consumers remain leery, not only of gmos but other central place in industrial agriculture. read more about that at all of our quick takes at -- on the bloomberg. go to for more stories. mark: back -- blackstone group chairman stephen schwarzman says he is undecided on who he will vote for in the u.s. presidential race. donald trump yesterday laid out his economic plan which included intention is to create 25 million jobs in 10 years and grow the economy by 3.5%. in interview on what did you
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miss, betty liu asked him if he thought the plan was achievable. stephen: all of that sounds wonderful if you could do that. the economy is a complicated thing. there are other parts of his plan. i do not know how immigration really fits with that. if you were removing large numbers of people, that has to adversely affect the economy. i believe that reducing the number of brackets to as few as possible and getting rid of virtually all tax preferences in favor of very low rates is the right way to go. betty: you are in flavor of a flat tax? stephen: it is hard to just have one bracket, that is not fair to
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everybody at the more you go to huge numbers of brackets, then you have done nothing but state where you are. simplicity is a good thing. people. sense to it makes fairness. it makes it transparent. that is a good thing and countries that have adopted that type of policy have done quite well over time. i think that is fundamentally a good idea. forget how one person's plan speaks to that. betty: that framework is the right plan? stephen: it is important to do something about the regulatory burden on the u.s. economy. i think that feeds into productivity. because the regulatory structure
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tax onlike a major economic growth. without economic growth and the regular people in america, the numbers will suffer. that: regardless of all of , or taking all of that into consideration, who are you going to vote for? stephen: i am watching this pretty closely. we have gone from just throwing actuallych other to venturing into policy. undecided?you stephen: i am an undecided. betty: if you had to vote today? stephen: fortunately i do not have to. i think there will be changes that occur over the next seven weeks as the candidates realize
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that just throwing mud at each other is sort of boring. that was an interesting show. it was an interesting show to do that. saying,ink people are either i am turned off to vote or maybe i will not vote, or i will vote for one i do not want to. make pretend you were those two candidates. you would not be doing these accent thing. betty -- exact same thing. betty: would you abstain from voting? stephen: i have not figured it out, i have a sick sense that things will clarify. usually i do not make decisions in business or any other time until i see the pattern form. we have not gotten there yet and there will be i think change coming up.
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julie: that was part of betty liu's interview with blackstone group's stephen schwarzman. we are awaiting comments from the presidential candidates, donald trump will be speaking at washington in one of his namesake hotels, expected to address this pass remarks over president obama's birthplace. you can watch this event on the bloomberg on a live go. people are awaiting his appearance and his comments. twitterill ahead, broadcast an nfl game for the first time in its history, will this do anything to boost its user numbers? ♪
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♪ this is bloomberg markets, i'm julie hyman. mark: live from london i am mark
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barton. big night for twitter, it jumped into the live streaming game, kicking off with the new york jets battling the buffalo bills, part of their $10 million deal with the nfl. its first major foray into the potential lucrative sports broadcasting world, some might call it a hail mary way that twitter hopes will -- get more users and improve the stock price. a hold rating on twitter with an $18 price target, thank you for joining us. excuse the pun, is this a game changer for twitter? >> the jury is still out on this. yesterday's game was a success for twitter. we did not know what to think of it going in. we did not have president other
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than what yahoo! did in london several months back and that was not a success. from a technological standpoint, it was a flawless execution. the stream was excellent, hd, not much buffering, a lot of ads. for us to change our mind and go to a buy, we would need to see a lot more of these and the impact of these on user growth, user how advertisers are spending their money on this medium. julie: that is always the question with twitter. the user growth and engagement as well and good but you have to turn it into dollars and cents to advertising use. if you look at the best case and worst-case a narrow, best case scenario for these kinds of partnerships, what kind of contribution could it make to twitter's bottom line? >> it depends on how many they make, today the nfl deal is only
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10 games. it is one shot, hopefully if successful the nfl will come back and will do a multitier deal. later in the year, and next year, the national hockey league, baseball, etc., we understand they're trying to get right for soccer or european football. as they do more, they can start moving the needle. if you look at it on an individual basis, yesterday's game, even if they are successful, super-successful and they have a complete sellthrough of advertising inventory, we think it will generate between $2 million and $4 million last night. on a base of 500 main dollars, 600 day dollars of quarterly revenues come it does not movie needle -- $500 million, $600 billion of quarterly revenues, it does not move the needle. you have to have both overtime to drive the stock, more users coming to the platform and more
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advertiser spending more on the platform. pitchwhat else would you for twitter to maximize value now? if this is not the answer? >> i think this is part of the answer. the other part is to dumb down the user experience. we still think that even with 300 million users, there are still potentially scratching the surface when you look at facebook at 1.7 billion. the big difference is twitter is too difficult to use for the average user. they need to give the average american and international user a reason to use the platform if ory are not used -- junkies sports fans. facebook has found a dumbed down version to start out, with a very easy to understand offering.
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i think twitter needs to work on that. that is the $64,000 question they need to answer and we are not expecting an answer anytime soon. it is a long-term project. julie: thank you so much. the managing director and global head of internet and media equity research at cantor fitzgerald. twitter shares up 4% today, up 17% year to date. look atming up, have a stocks, 30 minutes away from the friday session, it looks like they will fall for the war the day in five. -- for the fourth day in five. the european closes next. ♪
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mark: it is 11:00 a.m. in new york, 4:00 p.m. in london. 30 minutes left in the trading day in europe. i am mark barton. julie: i am julie hyman in for a vonnie quinn.
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you are watching the european close on bloomberg markets. ♪ mark: we will take you from new york to london to moscow in the next hour and covering stories out of frankfurt and tokyo. here is what we are watching today. deutsche bank shares fell off, the u.s. just apartment is going after the german lender, seeking at least $14 billion to settle a probe of open mortgages. julie: after the boe left changes, the fed and the bank of japan will make their decisions, will either one-shot the markets. apple's new iphones gone on sale today, high demand, they are turning away customers who did not preorder online. mark: have a look at my european


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