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tv   Bloomberg Markets European Close  Bloomberg  October 12, 2016 11:00am-12:01pm EDT

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you're watching the european close. ♪ mark: we will cover stories out of croatia, wall street, the united kingdom, all of the next hour. here's what we are watching today. falling to catch its breath. by the u.k.'s exit from the eu may not the swift as many once thought. money: terms of gradually removing policy combinations, we look ahead to the minute that the fomc later today. a birds eye view of the economy and politics in croatia. us croatian president joins to talk about a meeting with
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therese -- mark: 30 minutes to the end of wednesday session. down,quities, the ftse you can see that in the left-hand column. mirror .5%.a -- a mere port -- a mere one half of 1%. on the brexit decision-making process, she wants to keep her negotiating very close. and wein europe are down are awaiting the fed minutes. deutsche bank, interesting news after raising $3 billion. for $1.5bank returns billion, twice what it paid to aro a year ago. mostly the same investors who bought last week operating at a slightly lower premium at 290
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basis points. pointsmium was 300 basis compared with 143 basis points. this shows that borrowing costs have risen at deutsche bank. deutsche bank dollar-denominated bonds, and the blue bar is the average yield on bank bonds generally. get to a gold and silver producer listed here in the u.k. which said that production ofwed to two availability equipment. since the stock fell to a 170year low in september, 5%. this year it is the third-best aftermer on the ftse 100 anglo american and glencore. i want to get to premier food. 18% ofdown as much as the most in april.
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september's warm u.k. whether quelled demand for products such as gravies -- i can think of vonnie thinking of her childhood now. one third less than the takeover .roposal the core that the company fended off in april. the company said its -- property has changed only after putting up a planned increase in market spending. so very british. 90 minutes into the trading day in the night of dates. let's get over to the markets desk. abigail doolittle has the latest. after yesterday's dramatic declines for u.s. stocks, today, stocks are not doing very much. the dow s&p 500 and nasdaq all trading after fluctuating gains and losses,
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treading water basically ahead of the fomc minutes later today at 2:00 p.m. eastern time. check -- aa one-day one-day chart and we see the stock trading, the s&p 500 opened higher and traded lower, higher, lower, and now slightly higher. for individual movers, humana shares are trading down after the company raised its full-year 2016 adjusted earnings. the medicare ratings for humana had declined to 2018. to climb to 37% from 78% the year before. in the process of acquiring humana so those shares are down as well. let's take a cross asset classes and look at a 10 year yield to the release of the onc minutes. trading higher once again. we have yields rising on the expectations the fed is likely
11:05 am rates later this for the industry probability function, investors think the fed is likely to raise rates. 58% of investors think the fed will raise rates in december. interesting stuff there. we have a 10 year yield at its highest level since june. vonnie: thank you. wording in on the first news, courtney has more from the newsroom. courtney: the france foreign minister will meet with john kerry as both nations try to take the lead on pushing for cease-fires in syria. france says the only way to end the fighting in yemen is by resuming the political dialogue. for areviewing support saudi led coalition after the bombing of the funeral killed about 100 40 people. in south africa, fraud charges the finance minister have moved the country one step closer to a junk rating. putting the possibility of the
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increase of borrowing costs back on the table. yesterday, to make a court appearance in november on fraud charges. the top prosecutor now says he is willing to reconsider the decision. the review of south africa's credit was released for next month. other country has ever done, withdraw from the international criminal court here lawmakers voted overwhelmingly in favor of a today, which escalates a bitter dispute over the human rights situation. things took a turn for the worst after a president made a controversial print -- decision to pursue a third term. hurricane matthew, less damage than many feared but it came at a high cost. the storm destroyed more than one million structures, forced businesses to close, and put thousands out of work temporarily. probably $10 billion in damages.
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a real estate advisor says insurance companies could be liable for about force -- $4 billion total. a navy warship ringing hundreds alongines and sailors with bulldozers to poster -- to haiti.lief efforts it comes a day after army personnel started delivering the eighth. caring more than 1100 sailors and 600 marines. global news 24 hours a day powered by more than 2600 journalists and analysts in one 120 countries. this is bloomberg. mark: let's get back to brexit and the pound, which is rallying today. teresa -- of aound is coming off brutal week that included the 6.1% flash crash on friday. joining me now, formally known
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as global economics. you say you have got to get this chart. this is the ftse 100 index chart. going back to 1990, it is a logarithmic scale. that is important. tell us why we care. >> two things. one is the scale of the increase we have seen. the second is a movement of words and equity. it shows we were first at the levels we recovered recently to new record highs as far back as 16 years, the tech crash at the turn of the millennium. who thought it would take six years and something like brexit to get us back. mark: hooper -- if you had predicted that, would you be laughed out of town? this is the second chart. the index we do not often look upon.
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local united kingdom index, which is down at a two-month low. this is the white line. the blue line, both of them have been a record. local investors, it is predominantly to matt -- investor oriented. that tells the story. >> yesterday encapsulates that. terming that soft is the on brexit, and the ftse 100 rising to 70% of his earnings overseas. rises less, underperforming the ftse 100. now the local index as well. the story is telling the markets are happy with the translation effects of a week or sterling on the ftse 100 international companies, still very concerned about low growth trajectory for the domestic u.k. economy. nothing yet to shake us out of that. vonnie: the thing is equity markets are local but also global.
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we are seeing a shift away from quantitative easing -- quantitative easing globally. how does this impact u.k. stocks if at all? for sure, what we're looking ar is anything that generates long-term higher growth trajectory. we are revising lower our forecast for next year compared to this year largely because investor spending is not coming through. a lot of companies are deferring that from domestic u.k. until they get better clarity as to what they will be investing in p are and i have got enough gray hairs to remember when japanese carmakers first came into the u.k. market, the u.k. was called aircraft carrier at the u.k. and the japanese carmaker is looking for entry into the european market. of course they will be positive for thought. >> for now, and i have one, it
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shows exports and the weaker pound really helping asked towards. let exports has skyrocketed as the pound has fallen. at one point to the chickens start coming home to roost? click through the course of the backend of the year and into 2017, we start to see the timetable clarify unfold. it is still unclear what actually brexit means. i go to a common i'm it earlier. when we have read -- rhetoric coming out from european leaders, suggesting a soft return and not the hard return, sterling starks to root -- recover in a better growth rate may respond to that. i think we're in for a time of volatility and with risk on the
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--nside >> you have got to report out tomorrow. to the unknown. i will let you debate it. not telling you they will vote on it. the court case tomorrow. what does the soft brexit look like in your eyes? >> it would have some trade-off between the freedom of movement particularly of labor, versus single market in europe. it is a standoff at the moment. controlhard and rigid over immigration and therefore you cannot have access to the single market, so there has to be some accommodation at the moment. the expectation we have is there will be some trading around it will bes but fraught and the legal challenges coming tomorrow on the technicality, very narrow, on article 50. trigger
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going back to the time of charles the first. the division between sovereignty of parliament and sovereignty of the monarch. the challenges all around the preservation on the sovereignty of parliament versus the -- derail brexit. >> unlikely to the what it might do, if the court tomorrow finds in favor of the people challenge, they would go around the loop of appeal. ironically that could end up with the government taking its case to the european court of justice but we will park that for a moment. there is a delay straightaway. theight end up that government is forced to bring the -- to trigger before parliament. at that point, -- >> there you go. there is so much to chat about. at forecast --or
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vonnie? interviewr exclusive on why russia may be planning to cut operations in london after brexit. this is bloomberg. ♪
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mark: i am mark barton county down just about 40 minutes. vonnie: it is time now for the latest business flash, a look at some of the latest business stories in the news right now. between deutsche bank in the u.s. mortgage -- mortgage-backed securities.
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angela merkel wants lenders to focus on reshaping the business model. on the government's wishlist, a shift to online banking. -- declined to voluntarily the gas and pro kit -- propane company is moving ahead with construction work. a native american tribe says the pipeline will damage types that are -- places that are culturally significant. saudi arabia is exploring the possibility of granting more licenses to foreign banks and loosening restrictions on operations according to people familiar with the matter. they say they want to boost growth in the private sector. the central bank is said to be weighing proposals to offer more products like mortgages and small business loans. that is your bloomberg business flash for the hour.
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mark: russia'second-biggest bank will continue to cut operations in london after the u.k. decided to exit the eu according to chief executive andre who spoke exclusively to bloomberg, who joins us now. tell us more. >> i interviewed andre and chairman earlier. there were reports of them having to consider moving parts of businesses away from london and europe. here's what he had to say about that. see whatl have to brexit means. is we'rean do now planning to have functions in london. -- because of the
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brexit, i do not think we will be able to do it. london and europe, these functions. that is a problem. otherwise, no plans for london mayor the plans continue and we will definitely cut down. for a business reason and not a political reason. >> there is still a lot of uncertainty and yesterday i spoke exclusively with the central bank p or when i asked her about it, she said they are less concerned about the u.k. and more about the impact on the rest of the eu. for example, if other countries decide they want to spin away from the block. the eu is one of russia''s biggest trading partners. they still see sterling as an attractive reserve currency. back, one of the sanctioned byecb
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the u.s. and eu over russia''s role the you came -- conflict, this is why it is looking to restructure aside from brexit. is abouthing privatization, if they're at it -- if there any details on that going ahead. something russia is trying to do is plug its deficit through privatization. privatization is difficult the moment because of the sanctions. they need to wait for them to be removed. >> any thoughts of what they make about the deutsche bank scandal? >> yes. it is interesting here we look at russia first and another thing i talked about with the central bank governor yesterday was about the banking supervision. the central bank has shut down she told melenders
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the central bank plans to take preventative action against what they call week lenders. i wanted to get the take on what he thought about potential weaknesses in the european banking industry, particularly as it relates to deutsche bank and this was the response. >> deutsche bank used to be a great european bank and we very much believe they will recover. more on the part of the german government. we do not quite share the opinion>> deutsche bank used toa great european bank and we very much. i like it is unfair to deutsche bank. lenders, concerns about low and even negative rates. in russia, it is about the high
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.eal rate in terms of what the central bank is doing to try and lower inflation in russia, he said it is good there taking an active stance and the key rate in tosia could drop from 10% seven or eight percent next year. mark: vonnie. vonnie: still ahead, we hear from the secretary-general on his efforts to implement a deal limiting oil production. this is bloomberg. ♪
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mark: this is the european close on bloomberg markets with under five minutes to the end of the session. vonnie: live from new york, i'm vonnie quinn. both the u.s. and europe are lower today, still holding above that 50 collar -- $15 per
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barrel. opec works toward stabilizing the market. we asked the opec secretary-general about russia's latest commitments to join the efforts to limit production. >> you hide yourself from president vladimir putin here at ae world energy congress, commitment at the highest level of government. his able minister had been with walking hand to hand, side-by-side, shoulder to shoulder. we are confident. >> we also asked if he is aiming to get oil up to a specific price level. >> we are not targeting a particular price but we are cautiously optimistic that what we have seen with the u.s., nearly five weeks now, that this
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is probably the new trend. vonnie: he told us it is still too early to assign individual output targets to economies. literally five minutes away from the end of the wednesday session. stocks are down awaiting the release of the last minutes of the last federal market committee meeting. expectations of a rate hike weighing on stocks. the earnings season is underway as well. stirling is rising. you might have forgotten that. increase in five days. theresa may is granting some power to parliament. this is bloomberg. ♪
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mark: live from london and new york. you are watching the european close. we are down to the day in six.
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gainers in basic resources and oil and gas. the tendency to continue to decline in october is continuing. the index has actually risen. will that winning trend come to an end? 100 and thee ftse ftse local united kingdom index. this is a chart for 2016. also at a record, not as much. as it comes from abroad. it is at a two-month low. investors are still focused on deterioration they think will happen from brexit negotiations.
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the biggest chemicals maker seeking to alleviate fears. the business model is finally running out of steam. focused on trimming the sprawling portfolio, cutting costs and choosing to that on the sidelines of the merger frenzy that is gripping the chemical industry. shares are little changed. minister is being investigated over fraud allegations. this is the percentage move against the dollar. look at how rare that is. a little bit of a bounce today. the he says they are politically motivated.
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titling to stave off the credit crating -- credit rating downgrade to rein in spending by the government. interesting view from goldman sachs today. a potential downgrade to junk is price yet. what a wonderful charge. showing a percentage move in the rand against the dollar in 2016. yesterday it was very rare. >> the volatility index continues to creep higher. nothing to be majorly worried about. the fearindication gauge is creeping higher. we back at 97.97 with the dollar gaining against areas currencies. outflows of capital. the palace has just confirmed the king is an unstable
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condition. investors in thailand getting spooked by that. the 10 year yield creeping higher. 1.79%. the condition. investors in idea we will see an november. stocks announcing too much movement. 10th of a percent of the s&p. relatively unchanged on the nasdaq. for more details on where we stand there, i am courtney collins in downtown manhattan. >> the nasdaq of the biggest decline in about a month since september 9. right now we are on pace for the second week we decline. the longest losing streak since back in july. what is bringing the broader down is ericsson. the stock is down 20% right now.
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billion ing about $4 market cash. this comes after third-quarter results were not as good as expected. the quarterly revenue was the lowest since 2003 blind-siding investors. erickson said they expect more cost cuts. the company announcing they would eliminate 3000 jobs. a bit ofny is in turmoil after the ceo was ousted in july. juniper networks and cisco book down around 2% on the erickson news. cyber security stock also leading the nasdaq aware. this is the biggest decline in a year. reported third-quarter revenue falling. came out today and
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removed fortinet from the conviction list. lower the price target to $36 from $43. that is what is going on at the nasdaq. back to you at headquarters. courtney donohoe has more from the newsroom. wikileaks has released almost 1200 more e-mails it has hacked from the personal campaign clinton manager. the disclosure in the final of the u.s. presidential race has outraged democrats who blame russia state-sponsored hackers and julian assange to help republican nominee donald trump. the fbi is investigating the hacks and fully cooperating. vladimir putinnt says lever is responsible is not
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is important. he says it is merely a .istraction from the main issue he said he is concerned to u.s. presidential candidates are campaigning using anti-russia rhetoric. he also expressed concerns over worsening relations between moscow and russia. they will no longer defend him. they say they have stopped representing him because he is she is chosen to remain silent in the protest against the 24-hour the o's surveillance of his prison cell. hoping to provide information about the islamic date strategy and network and identify others who may have had connections to 13 attacks that killed one of 30 people. this as the river is swollen with rainwater and caused flooding days after hurricane matthew past. to rise. continues
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the storm killed 34 people in , and half of them were north carolina. hurricane nicole heading to bermuda with maximum sustained per hour.nd 100 miles the u.s. national hurricane center says this could be near laterhurricane strength in the day. global news, 24 hours a day powered by more than 2600 journalists and analysts. this is bloomberg. >> croatia's president is on an official state visit to the united kingdom. a host of business and technology leaders. this comes as croatia is set to install a new prime minister. a deal was just struck to form a new coalition.
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us is the president of the republic of croatia. thank you for joining us. you were appointed the prime minister designate. will parliament approves? .> i believe so he has enough support that i believe the government may be approved as early as next week. i have high hopes for this government. what's i have heard from him monday is very encouraging when it comes to focusing on the economy and improving the climate and invest it and restoring faith in our institution. mark: how long do you expect the government to last? >> for the
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full four years. this is the first time they had an extraordinary election so it was a bit of a new x.'s. -- and restoring faith in our institution. experience. mark: what would happen if he does not get the backing of parliament? what with the days.s? >> it is 30 if he should not been -- be able to form a government. then we have a new election. i have seen from the political croatiaand everyone in that no one wants a new election. we want to focus on issues that are existential for people in the country. shared this is something by the potential government and opposition. theye the responsibility are showing in the process. what is top of the to do list? >> top is to take a realistic
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evaluation of the situation in russia. we need unity. we need national unity because we need structural reform to reform the labor market to make croatia a lot more business friendly. this is where i believe the new government and new prime minister will be going in order to gather everyone around this. this has commanded a set of fixed dose of economic fishing zone in the adriatic sea. and more control over the central bank. that has not in a welcomed with open arms. what do you make of some of those proposals? the coalition to agree. when it comes to the independent
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who supportof those it. i do not think the government can put it under control. i have a feeling this will not be one of the outcomes. certainly less benefits for those who do not deserve it is the right decision, which the politicians who dodge their duty and do not spend enough time working and making proposals. program has to be deregulation of the system. restoring credibility and more predictability and croatia so we attract foreign and domestic investment. new making it possible for our young , talented people to stay in croatia and not seek a better future somewhere are brought. always good if they study
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and work abroad and come back and bring the experience. croatia is still going through a recent transition from a complicated centrally planned economy to a market economy that well.eryone has adjusted we are talking not just about startup dismisses that how to keep the young people, how to invest in tech knowledge he and innovation. how to put added value to the product. mark: how worried are you that people you are talking about will not be able to move freely to the united kingdom? >> this is an issue we will be discussing and negotiating with the u.k.. surprisedl negatively by the june referendum. respect the will of the u.k.
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citizens. i hope this will not only focus on the exit strategy, but they will focus on the opportunities also. about bringing our countries closer together. this is what i will be arguing for. to use this as an opportunity to businesses closer together, people closer together, and the experience the u.k. has in promoting the investment and startup businesses and improving the overall investment. mark: the apparent desire to main control over both went of labor and borders, how compatible is that with continued access to the single market? there is no desire on the part of the government to keep people in the country against their will.
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seek their free will to jobs abroad. we hope we will create the conditions within croatia that is a beautiful country with a log of potential. dell we are struggling with the ax fix of providing opportunities to young people especially. that they will not only not be leaving the country but they will be coming back. mark: what will the u.k. relationship be with the eu >> i the process is over? can tell you you will not be shore. away to a distant you can share responsibility or
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security challenges of energy independence entity and i make issues. the u.k., croatia and the european union. i would assume the connections will remain very close. i think it will probably be somewhere in between. ultimately it has to be good for the people of the u.k. and remaining 27.
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vonnie: time now for battle of the charts where we take a look at some the most telling charts of the day and what they mean for investors. you can access them on the functions green. >> earnings season is coming up. people are curious how the banks are going to do. i can probably guess by looking at the spread between the two in 10 year treasuries. the yield curve profits from a deeper spread and higher interest margin. this has been trending up a little bit lately.
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the blue line is the financial or etf relative to the s&p 500. basically when the spread has gone higher. when it goes lower, financials underperform the s&p. >> i love it. >> two of the more interesting bond markets have been the u.k. in u.s. bond market. i want to give you something really exciting. we are looking at long treasuries. similar for the u.k. fonts market. total returns. we are looking at it in dollars. the u.s. outperforming the u.k.. what is fascinating is back in september u.k. bonds were sitting on again year to date up
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18%. look at what has happened. down by 4%. it has to do with the plunge in sterling boost next to patients -- expectations. bonds in the u.s. are declining. the u.s. will raise interest rates in december. not your everyday chart. total return in dollars, long bonds. vonnie: you forgot another ice. and who gets the no ice into a chart wins. you did not mention a wrapper. how did we ended the trading day? mark: take a look at where european markets ended. the fifth decline and six. the stocks it hundred falling.
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the fed minutes released in a couple of hours time. that is one factor. beginning of the earnings season. still debating brexit. giving parliament leeway and debate over brexit. have a look at the currencies. rebounding for the first day in five. a horrible five days for the pound against the dollar. euro falling against the pound. looking forward to the minutes in a couple of hours. this is bloomberg. ♪
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vonnie: noon in new york and 5:00 in hong kong. david: welcome to bloomberg "markets."
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>> covering stories from tokyo. u.s. stocks are seeking direction ahead of the federal reserve minute. real estate and utility among the gainers while energy is lagging. the meeting minutes are due in two hours time. bank earnings kickoff and earnings on friday with j.p. morgan chase and wells fargo. we are joined with the numbers you need to watch out for. halfway into the trading day, abigail doolittle joins us with what we have been seeing so far. >> halfway through the trading day, we have stocks doing very little, fluctuating between al


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