tv Bloomberg Markets European Close Bloomberg September 26, 2016 11:00am-12:01pm EDT
european close on "bloomberg markets." i'm vonnie quinn. mark: we are going to take you from new york to munich. algeria and brussels in the next hour. here is what we are watching. we are going to talk about karen sees -- currencies. how it could hinder growth in countries like japan and the uk. vonnie: the latest on the oil market. no agreement is expected to be reached. saudi arabia could cut production. poll,bloomberg politics donald trump and hillary clinton are locked in a tight two-way
race for the presidency. we look ahead to one of the most highly anticipated debates in modern politics. mark: let's have a look at european equities. gmm go global macro movers. biggest selloff since the beginning of july. we saw the biggest weekly increase since the middle of july. the first weekly gain in three. these of the currencies rising against the dollar. the yields are falling against the sovereign bond space in europe. that is the commodities column in the far right-hand corner. the big story is out of turkey. .t is assets the story broke on friday. all but one are rising.
that is south korea. they cut the sovereign credit rating to junk, citing risks linked to the financing needs. economic growth has slowed. this takes me to the 10-year yield. difficulties turkey faces to cover the current account deficit likely to be compounded. we have seen the biggest move up in the 10-year yield since july. we are up to 9.8%. german business confidence. business confidence surging to the highest level in more than two years in september in a sign that corporate concerns are easing over the economic outlook and the consequences of brexit. toned down its outlook for the german economy.
the pmi index published on loway dropped to a 16-month with the services sector almost stagnating. to business sector rallying the highest level in almost two years in september. 90 minutes into the trading day in the u.s., let's get over to julie hyman at the markets desk. julie: we are slightly up off the lows of the session. health care shares leading the declines today as we look at all three major averages, down at least 0.5%. let's look at the various groups in the s&p 500. , asgy holding up well today well as oil prices and real estate. those are the exceptions. health care is the biggest drag. down nearly 1%. by 0.75%. off i want to hone in on two of
these groups, financial and real estate. ever since the real estate index formally split off as its own independent group from the financials, we have seen it outperform handily as the financials have waned, even though the financials have been doing a little bit better. this is closely tied to what we withbeen seeing happening rates. you see a drop of 12 basis points in the 10-year. 1.60%. that tends to benefit the real estate stock and it has tended to hurt the financial shares. getting back to today, when i talk about health care, one of the bidrs is pfizer. it is not going to be sptting itself up, something it had been talking about doing. it could have been one of the biggest breakups in drug company history. twitter is being downgraded at oppenheimer. analysts saying the company
could get $17 per share in a takeover. hyatt hotels initiated with a neutral at goldman sachs. vonnie: julie, thanks. let's check in on the "first word news." >> some people are talking about super bowl-type viewership numbers for the first presidential debate. a new poll as donald trump pulling into a tie with hillary clinton. when third-party candidates are included, trump leads clinton 43% to 41%. you can watch the debate tonight at hofstra university. our coverage will include pre-and post debate shows. twitter with livestream the bloomberg broadcast. columbia is taking a big step longd emerging from its nightmare of bloody violence. the government and the country's largest rebel movements will
sign a peace accord after years of hard negotiation. the conflict killed more than 220,000 people and drove 8 million from their homes. at the united nations security arecil, france and the uk taking a look at russia over the bombing, excuse me for a second, of the syrian city of aleppo. group said more than 200 civilians have been killed in the last week. russia has denied responsibility. aleppo is the center of opposition to syria's russian-backed government. jack nicholas said that arnold palmer was the king of golf and always will be. fans,pired countless arnie's army. he was still earning millions
from endorsements. global news 24 hours a day powered by 4600 journalists and analysts. mark. mark: let's get back to the markets. financials leading a global selloff and stocks. investors seeking out safer assets. our next guest thinks stocks will outperform bonds. john bilton joins us. what is going on today? euphoria.oj, fed, john: i do think it was really -- i don'ter se think it was really euphoria, per se. we are getting the european banks doing what sadly we are getting used to them doing, highlighting the earnings issues they face. i don't think it takes away from
the fact that the underlying economy is generally ok. the u.s. is doing very well in terms of unemployment levels. we are seeing slightly brighter signs and emerging markets. we are seeing a world with more evenly balanced risks. we have some issues in the equity market. broadly speaking, i'm very comforted. how are spain and italy doing in the 10-year bond yields? yields are down in both places. it suggests that we have a more segmented outlook across markets , where particular issues affecting one part of the market are not naturally infecting other parts. mark: investors are getting quite defensive in their comments, outspoken in the bond markets, whether it is bill dlach. jeffrey gun
is there another leg lower for yields? we have this stay of execution from the fed. the boj fiddle that the edges. the bank of england has cut rates. because of the stay of execution, could we see yields falling further in the bond market? we don't seely, them racing to the top side. the idea that we have bond vigilantes around the corner i just don't buy. we have a huge globalization of bond markets. if you look across g7 10-year bonds, the yields have gradually risen. they are 90% correlated. when you have a giant sucking sound in the back end of the curve with the bank of japan taking supply out of the market, it will anchor yields around the globe and will serve as a gravitational pull. we still have a negative correlation between stocks and bonds. as a portfolio allocator, that means you can find diversification there. there will be demand for bonds.
vonnie: even with the correlation, how anchored can u.s. yields be really when you think that we are more likely than not to have a rate increase in december? john: i think you've got to bear in mind that in real yield terms, the u.s. still looks fairly good. more importantly, the u.s. 10-year yields are better than normal. about 80% of the remaining high-quality sovereign bonds you have available to investors. even though we have extraordinarily low levels of yields relative to where the u.s. economy is actually moving along from an economic standpoint, the fact is you have this huge global force holding u.s. yields down. vonnie: what does it mean for currencies? what are we going to see in terms of volatility for currencies? john: broadly speaking, in terms of the majors, one would have to
argue that since the beginning of this year, we kind of got something of cease-fire ing on in what could have been a currency war. we think the dollar is reasonably stable at this kind of level. we are not seeing the same kind of policy divergence as we were seeing at the beginning of the year. even though we do expect to see some further action from the ecb and a rate hike from the fed, the rates have changed and slow down significantly. growth globally as broadened out somewhat. it is not just the u.s. leading the pack. you are seeing emerging markets with more balanced risks. the dollar looks a little bit more stable. mark: the sterling weakness is boosting equities in the uk the moment, we are overweight uk equities because, fundamentally, the uk equity market is not the uk. the pound sterling has really done the heavy lifting in buying the economy the breathing room. mark: more upside in the ftse
100? john: i think you have a relatively well-balanced index in the ftse 100. it is a big, global index. as long as oil prices continue to gradually grind better, we see the bank of england avoiding some lurching into negative right territory. big blocks can generally hold up, but yes, of course, you get further weakening and sterling and that is going to give you the shot in the arm for the footsie -- ftse 100. mark: john bilton, thank you for joining us. vonnie: coming up, jeremy corbyn maintains control of the labour party. we are live at the annual conference in liberal party -- liverpool with a look at what his win means for international investors. this is bloomberg. ♪
vonnie: live from london and new york, i'm vonnie quinn. mark: i mark barton. this is the european close on "bloomberg markets." jeremy corbyn retained leadership of the uk opposition labor party. that was the big news over the weekend here in the u k. 62% of theyn won vote as he strives to unite the party. the boats were announced on saturday at the start of the labour party annual conference in liverpool. anna edwards is in liverpool and joins us now. a very good afternoon to you. tell us why international investors care about who actually runs the labour party. thanks very much.
good to see you. this matters to international investors in the sense that who runs the labour party and how left of center it becomes good have implications for how electable it is. jeremy corbyn would dispute that. if you believe the most recent , the conservative government is 10 percentage points ahead of the opposition labour party. there are questions as to how electable the party is right now. this is to underline some of the party politics being talked about. this is what john mcdonald had to say during the first day of the conference here in liverpool. >> it is a society that is radically transformed, radically fairer, more democratic. yes, based upon a prosperous economy, as economically and environmentally sustainable, but where that prosperity is shared by all.
that is our vision to rebuild and transform britain. in this party, you no longer have to whisper its name. it is called socialism. this is john mcdon nell, the uk shadow minister. they are giving messages of ying to come together, can they paper over the cracks, though? they really come together to beatles lyrics to work it out? that is the message they want you to take from here, but we will see how long it lasts. vonnie: what do we know about the labour party involvement in the brexit negotiation process? they don't have any involvement -- anna: they don't
have any involvement, but they are lobbying for parliament to have a large role. they will not have a role, but although brexit meant brexit, there are lots of different ways that could be done and a lot of uncertainty. we caught up with angela eagle, a prominent mp on the labour party and she was once in the running to lead the party, and asked her about how she thought parliament should be involved. >> the government is telling us that parliament does not have any role, but we have had a referendum, at which the deal to leave was not actually on the table and parliament has a duty to have a close look at that. the people that argued that we should leave said that we were returning sovereignty to our own
country, well that sovereignty is expressed in our parliament and i expect parliament to work with it. got a fewe announcements about what policy might look like from a future labour government. they would ban fracking. they would increase the minimum wage. they talked a lot about interventionist politics and an industrialist strategy. we heard a lot about that from the ruling conservative policy. no doubt, those policies would look very different from both sides of the political aisle. both of them lack detail at the moment. mark: great, great job. great to hear from you. anna edwards in liverpool. coming up as opec members gather in algiers -- vonnie: we will hear from ihs. could the discussions lead to a freeze in production? this is bloomberg. ♪
counting youbarton down to the european close. vonnie: i'm vonnie quinn from new york. it is time for the bloomberg business/. flash.ness u.s. home sales fell last month. sales were down almost 8%. still, builder backlogs increased. the number of homes sold, but not yet started is that the highest since 2007. business sentiment in germany surged to the highest level in two years, signs that the corporate concerns are easing over brexit. last week, the bundesbank said it expected german growth to slow in the third quarter. that is your bloomberg business flash for this hour. after two years of pumping without limits, opec may be
doing something to shrink the global glut. saudi arabia is offering to cut production to january levels to entice other members to stabilize the market. juergen reacted to the offer. : opec is producing a lot of rumors and speculation right now in addition to producing a lot of oil. it is seasonal that the saudi production would go down at this point. the sticking point seems to be between iran and saudi arabia. are they willing to compromise? the differences are very deep. election presidential coming up and can't be seen to be giving away anything. >> i love that you implied a saudi cut is really a hold as they are lowering production anyway, but the financiassl stre of the saudis is really backing up. they will inject billions of dollars into banks.
stressorsinancial really move saudi's hands right now? dan: i think that all the oil producers are feeling stressed to one degree or another. venezuela has destroyed its own economy. there is pressure in saudi arabia, but they have over $500 billion of foreign reserves. they are not in the same position as the other countries. the other thing to keep in mind, saudi arabia was one of the countries that set up this whole international energy forum, which they headquartered. they are also irked to have been taken over by an opec meeting, given the commitment they have made to the ief, which brings consumers and producers together. >> they are doing it to themselves. the third prong of this when it comes to saudi policy is that a potential ipo, the saudi's having the debt market this year or the next, what part of those two potential moving events for saudi arabia have them dealing
with trying to job the price is higher today? dan: i think they are looking at a number of different things. for one, the recognition of prices going up means more u.s. production coming back into the market. your point is true that they are occupied with their domestic reform program. the ipo is part of it. what happens to prices now, as opposed to do they do something in november when they meet or next year, it is early in terms of the ipo, but that is really were so much of the central focus is because that is where their future is as a reform program. >> the crown prince is going to care about that at the end of the day, which leads me to doha in april. a call from the deputy ground prince -- crown prince to shut down a deal in hours. what is the risk of that happening this time? dan: i think it is quite high. the tension with iran is quite central.
saudi arabia does not want to cut production to give more barrels to iran. iran is saying, we want 4 billion -- 4 million barrels per day. the death of animosity is so great that it makes it very difficult for them to come together and compromise. if there was not this animosity, it would certainly be more likely that something could happen. mark: dan yergin there. take a look at where european markets are faring as we had to the close on this monday session. literally, or minister the end of the session. stocks are lower after the biggest increase. the biggest fall since july6. this is bloomberg. ♪
quinn. every single industry group falling. biggest decline for the since july 6. the biggest weekly game last middle of july. a new record on concerns theg to capital buffers will be undermined by rising legal charges, including the settlement tied to the u.s. securities, which could cost as billion, more than twice it has set aside for litigation. chancellor angela merkel ruling out any state assistance heading into next september election. this year alone deutsche bank shares down by 50%. what has happened since the highs of 2007? this was a 102 euros stock. today is the 10 euros stock.
that is 90%. more in just a second. enter continental -- intercontinental hotel has been cut to underweight. crown plaza looks full eval your it has outperformed in dollar terms. morgan stanley sees multiple signals the u.s. hotel cycle is peaking and cutting the red car estimates, that is part of the upset by the expected $500 million buyback. cells -- sells. the price target, 3000 pounds. that indicates 2.1% downside. .he big gainer today look at the shares up by 7.8
percent. rose as much as 11%, the most since 2009. the capital -- chemicals company agreed to buy chemtura corp. to , andd into lubricants flame retardant business. not every day i get to say that sentence. vonnie: looking at currencies. the tale of two currencies, the len and the year a. strong yen. stronger by two thirds of a percent. after friday's downgrade, perilously close to that mark. the dollar still above 95. yield keeps on coming down. it is a tale of risk off today. down .8%.nes
s&p down .7%. the nasdaq down. for more from the nasdaq, going live to abigail doolittle. certainly extending to the nasdaq. row for the second day in a . looking at the various asset classes, one potential trigger is the yen strength. the yen dollar higher today. a lack of news that may suggest some investors are seeking take the. the risk offoff ceiling. interesting, up about 20% for the best year since 2008. that tells you the safe haven story there. these are the biggest drags on the nasdaq today. one small bright spot, apple. a bigger boost for the nasdaq as
we have positive analyst commentary, which includes piper firm conducting a survey of 134 apple stores. that showed constrained supplies. the own report that the iphone seven plus is basically sold out. raising the iphone seven estimates for the first quarter, .ell above consensus more bullish reports on the iphone seven. >> what are the charts telling us? charts seem to confirm the bullish reports on the iphone seven. what we have going on our lots of golden crosses. one was put in weeks ago. one little quirk, there is a
broken of trend. the last two golden crosses have been hugely bullish. 2009 apple rose by 450%. 2013, the stock is up more than 100%. this may suggest the positive reports could come true. abigail doolittle, thank you. checking in on first word news. >> republican presidential nominee donald trump looks to apply his new campaign discipline at the first debate tonight. trump and hillary clinton face-off tonight at hofstra new york -- foxtrot university. a new bloomberg politics survey shows they are and a dead heat with 46 percent each. trump leads when third-party candidates are included. watch the debate on bloomberg
television. our coverage will include 30 minute pre-and post debate shows led by mark halperin and the bloomberg politics tv plus. we will livestream the broadcast . tension over the skies of the east china sees. china sent 40 aircraft on what it calls a routine drill. japan responded by scrambling its own warplane. it is the first time it has seen chinese fighters in the region. japan and china claim the islands are their own territory. france's president said brexit does not end the uk responsibility to deal with a grants trying to reach its shores. he's booked today. thousands of migrants are camped out near the city. he wants the camp to be dismantled. the british labour party says if they get some power, it will raise the minimum wage to more -- 10 pounds, more than
$13 per hour. this would be part of the new deal for the economy. he also wants single market access and free movement of european workers. he spoke at the annual conference in liverpool. global news 24 hours a day powered by more than 2600 journalists and analysts. mark: deutsche bank shares dropping to a record low in germany today, raising concerns about financial stability. just telling bloomberg it is unimaginable the government would support the above -- would support with public money. the chief executive sees it very differently. >> i do not buy at all what is coming out of germany in terms
of wanting to step in. it is too important to the german economy. therefore, these are rumors not based on facts. ultimately, it is a political issue that will get resolved at a lower price. the government will have to step in. joining us now, the self-help writer.g into self harm how long can the government distance itself from deutsche bank? >> it is a very complicated position. we have an election next year and ongoing talks with the u.s. over this fine, which if it gets to $14 billion, everyone thinks that deutsche bank would be pushed into a very harmful capital hike. him in theys
election year, the potential game of chicken with the u.s., we do not want to put the taxpayer at risk for something that would surely lose both and encourage a sharp fine but the veryseven months could be interesting indeed. mark: many in germany believe deutsche bank is similar to buendesbank -- meaning that it has to bail it out. >> germany and deutsche bank are perceived by the market as the same sort of risk. not in terms of the risk in its is af, but deutsche bank huge bank, huge balance sheet. . trillion in assets no simple or logical backstop other than germany if it ever
found itself in trouble. there is some of the affection starting to creep in. yes, germany is not perceived as risky as torture bank, but seen as somehow swimming in the same pool. there is the elections next year. if you dive into the luber, i want to show viewers where the share price is. it has been on the decline, the green line. theyis cbs, how long can survive if they do not get a bailout? >> that is a great question, and the question we were asking ourselves in february. we are asking again today. ultimately we live in a strange and different world. what we may have seen in 2008, we have not seen.
partly this idea of politics and central banks. this idea was central banks. what is certain is that this is a stock that can get cheaper. ? the priceow can ago target is $13. would not want to call a flaw at the deutsche bank share price today. mark: thank you. vonnie: more on deutsche bank. you are facing off with joe weisenthal. this is bloomberg. ♪
time now for our global battle of the charts where we take a look of the most telling charts of the day and what they mean for investors. kicking things off now is joe weisenthal. >> everyone talking all day and theutsche bank troubles there. earlier there was talk about theingent capital, securities that would get hit first if deutsche bank were to fall below certain capital levels. was the first line of
defense capital-wise for the bank. keep an i on these -- an eye on these if you want to see the sensitivity. vonnie: i love it. something a little different. mark: fundamentals matter in this world of easy money? in south africa as dispute between the president, the finance minister. are we going to see a ratings downgrade as well? the rand has returned 10%. this is more than twice the return of the next best. . hbc says politics is important that has a big but temporary impact. the second most important thing is global factors that are supported.
potential ratings downgrade. lois investment grade. iniewing assessments december. the fed rate hike could turn things as well. $19 billion. 19 billion rand this quarter. trade asd-best carry the south korean won. the worst? you guessed it, the mexican peso. showing us fundamentals clearly do not matter in this world of easy money. wonderful presentation. i don't like this one judge decision. there are no checks and balances.
even though i love this, i will give you the win. congratulations. >> well done. we do have breaking news. the fed governor commenting on the stress tests, thing this would demand more bank capital. more on this and the comments in just a moment. airbnb cofounder and chief technology officer is our guest. more on the big expansion plans. this is bloomberg. ♪
right now. the largest stock exchange in , buying back global markets. this is the first attempt to go whenc in 2012 was spoiled the firm software had problems. asking the eu to approve the 40 $3 billion takeover. this would turn it into the largest supplier of pesticides and chemicals. to big takeovers pending, dupont and dow chemicals. calls theitrust chief industry quite concentrated. the chief vote has executive thinking about moving to headquarters outside the uk. said 76% areg firm
considering some form of relocation. the ability to do business will be disrupted once the country leaves the eu. that is the latest bloomberg business flash. vonnie: the bank governor has been speaking. we know the federal reserve has been planning to ramp up stress tests. we have been awaiting the results of this. now saying the central bank will capital the old conservation buffer for a new capital buffer. derived from their own results. the lowest point in the nine quarters of the high blood -- hypothetical stress period.
if it started at 13% and drop to eight, the buffer would be 5% and not allowed to go below 2.5%. now taking a look at the markets. the dow jones down about .8%. 18,111. 15 points lower. the nasdaq is down. we heard abigail doolittle -- giving us more from the nasdaq. mark: airbnb gets another blockbuster funding rounds, $555 million from investors. joining us is caroline hyde.
ceo and cofounder of airbnb joins us. wonderful to have you here. great outfits. you are living the dream in terms of founders getting more money. necessary? that is >> i think the amazing thing is thefurther we are gotten, more opportunity we've seen. we raise capital with that in mind. the business is doing fantastically well, as you are probably well aware. what do you actually need? >> a few different things. expanded geographic coverage.
last year it was china. women doing a lot of marketing and china. we have also looked at india. increasingly we are working at emerging markets. airbnb took in europe and the u.s., but we think the future is innovation. theow are you managing better playing field? >> we are building a long-term playing field. that means we need good relationships with all the cities in which we operate. the general attitude is to be as as possible and being able to compromise. we need to make sure the regulation that is past is .upporting ordinary will and that we did not create rules
that are more pillared toward businesses. ordinary people are not businessmen and do not have that level of sophistication. what do you think about perhaps they are putting -- you are putting too much pressure on this? >> that is a great example. the policies do not speaks physically to the airbnb activity. it is very broad in terms of what they say is not allowed. we do not think that matches not for the people that do contribute. >> when you are looking at innovation in new york, your home domestic base, how is that progressing with the governor of new york? >> we are seeing a lot of cities embrace home sharing that do support activity. there are 50 examples of cities that have passed favorable
policies. where thereamples is conflict. new york has been one of those places. in 34,000nge is different cities, and the rules very city by city. political processes are not always through the terms of innovation. >> what i say to them is strained they and persevere. a lot of these people are just following this. almost gave year we up. a lot of things were not going well. >> thank you very much.
from bloomberg world headquarters in new york, we are covering stories from san francisco to brussels, berlin and hunting. financials clothing down global equities. speculation it will need to raise capital. in the u.s., the presidential candidates are locked in a two-way race heading into the highly anticipated debate tonight at hofstra university. live coverage of the debate this hour. tech leaders no longer keeping quiet about the election. that interview is first with bloomberg this hour. through thewith u.s. trading day. checking in with julie hyman for