tv Bloomberg Markets Americas Bloomberg October 24, 2016 10:00am-11:01am EDT
vonnie: we are going to take you from new york to madrid and cover stories out of washington, russia, and the u.k. in the next hour. at&t has agreed to acquire time warner for $85 billion to the deal may be lucrative for the banks during the financing. regular three uncertainty could cloud this new partnership -- regulatory uncertainty could club this new partnership. mark: national chemical miss the deadline to make concessions to european merger watchdogs, another megamerger that may be in flux. vonnie: equities getting a boost from earnings to start the week and we talked to one equity strategist who says the market is becoming coiled for a big move. about 30 minutes into the monday trading session in the u.s. let's go straight to the markets
desk where julie hyman has been watching things. we have stocks rising and a lot of deals to talk about not just the big one, but other ones as well. all of that is helping to boost stocks. we are continuing to hear from companies on earnings. going to be a very busy week on that front. as rather big deal is trading, let's look at at&t and time warner. have the 2 stocks we can look at? there we have it. both of them are falling today. at&t down by 1%. time warner pulling back after the huge gains at the end last week. report started to service that the deal was going to happen. we might face regulatory scrutiny. there was also concern about at&t's debt load. let's look at bloomberg. that is what we're looking at with that particular chart. this is the bond spread for nonfinancial corporate bonds'.
at&t's bond spread in the white. this is the proxy for market perception of bond risk. nonfinancial bonds overall are going down. we are seeing a widening in the corporate bonds that for at&t. on concerns about the debt, already a heavy debt from the heaviest in terms of nonfinancial companies in the s&p 500. there is concern about the additional debt it will have to take on to get the deal done. vonnie will be talking about that with alec sherman, who covers deals and who helped breaking news about this story. moving on and looking at the other assets we are watching in today's session, james bullard, federal reserve president from st. louis, making comments and saying to the markets interest-rate are going to be low for the next several years come even if they are going up for couple times. the dollar is little changed on that. interesting we are seeing the
10-year yield pick up a little bit. also want to mention what is going on with oil prices. iraq is coming out and saying it should be exempt from the opec deal because it is in the midst of battling islamic militants on its home soil. because of the questions about how effective the deal would be in terms of cutting production, we're seeing oil fall by about 1% today after some of the gains we saw a early last week and then the decline at the end of the week. mark: julie, 90 minutes left in the money session. bouncing today, the stoxx 600 is up to earnings economic data and politics driving european shares higher. politics is related, which i will come to later. essentially, it looks like the formation of a spanish government is in the offing. of course, portugal cap's investment grade -- kept its investment grade rating on friday. shares are up, led by banks.
let's get to the earnings out of the equation. phillips, biggest rise since january. it's personal health and diagnosis and treatment business improved. it is aiming to sell the lighting components unit by the end of the year to better focus on health care. shares up by 4%. this is the germany dax index going to the beginning of the event the blue line -- you can see finally it is positive for the year. back in february shares were languishing. they felt to that state, 15-month low. since then, they have rebounded by 22%, thanks to a weaker euro and stronger deutsche bank. what is interesting is the white line. bearish options, cheapest since april relatively bullish. beautiful in its simplicity. this is the economic data set of today's equation.
euros in economic -- euro zone economic momentum accelerants of the fastest -- accelerating to the fastest pace this year. blue line line ispmi is manufacturing pmi. and the comp positive pmi. all three elements rising today. germany was the strongest area economies, supported by pickup and factor activity the pace of growth in france slowed. inflation i just markets may be picking up as well. the company is reporting higher prices as a consequence of the need to pass high rising costs from commodities and wages. the three elements boosting markets today -- earnings, geopolitics, and economic data. pmiie: the manufacturing rising as well in this morning's
data for october. let's check in on "first word" news. british prime minister theresa may is offering leaders of scotland, wales, northern ireland a role in shaping brexit strategy. her office says the leaders will have a direct line to the brexit secretary david davis. there were ones that if may didn't involve nations in the talks, there could be constitutional crisis. areraq, kurdish forces advancing in the offensive to take mosul from the islamic state. the offensive may take months. it involves more than 25,000 iraqi troops under planes and advisers from the u.s.-led coalition. a plane heading to the libyan coast to monitor migrant trafficking routes crashed just after takeoff from multiple it all five french crew members were killed. port of the main departure for thousands of
migrants trying to get smugglers to take them to europe by boat. european officials are trying to break an impasse on a trade you between the u.s. and canada. the problem, objections between the french-speaking colonial region of belgium. officials says the deal would allow multinationals to crush companies. the european commission's meeting with them today. in the u.s., republican karl rovestrategist does not believe donald trump to be elected president. rove told fox news, "i don't see it happening." he says even if trump wins the crucial battleground states of ohio and florida, it will be enough. rove played a major role in george w. bush's campaign. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. final lisa parenti. this is bloomberg. vonnie: thanks. i want to break the headline now, the one falling to the
weakest level on record. it is weaker by another quarter percent, versus the u.s. dollar. china yuan, weaker story. pboc is time to keep up with the u.s. dollar. that.l watch now to the big deal that everyone is talking about, at&t has agreed to buy time warner for 85.4 billion u.s. dollars. the ceo spoke earlier today about this megamerger on a conference call. >> we are convinced this combination of time warner and at&t is a perfect match for our 2 companies vertically integrated. we will bring a fresh approach to how the communication industry works for customers, content creators, as well as advertisers. vonnie: news of the imminent deal was reported by bloomberg news october 20.
joining us is alec sherman, who has been doing stunning work on all of this. congratulations. let's talk about the 40 feeling dollar almost one-year loan at&t will need. is this deal even possible to begin with? is definitely possible. you have to turn back the clock 18 months or so went at&t bought directv. this deal is even bigger, but the deals have something in common, which is a lot of people investing at&t or indexes with at&t because of at&t's dividends. at&t looks for companies that are free cash flow positive, that will turn money so they can keep paying the dividend, ever-increasing dividends. at&t is still ultimately seen as utility to many investors. directv and time warner both have that in common. they are these big, large moneymaking machines. even the directv potentially is
a declining business and you could argue the cable network portion of time warner is also a decline business, they serve that function for at&t and the debt should stay investment grade. vonnie: i was going to ask that question. the way the steel structure, there is a chance so any money wants to come out and did for time warner, there is no go-shop period. this was a one-on-one negotiation between at&t and time warner it from one that people i spoke to, time warner and basically told me you don't want to process when it is $100 billion. that said, i don't think time warner is expecting anybody to jump in at this point. i'm not sure anyone makes sense as much as at&t. i suppose google or apple could if they wanted to. it would be an enormous debt on an area they've largely stayed away from. scripts,x, discovery
many are saying they are likely target. does this deal spur further and activityurther m&a within the media industry? alex: good point, mark. it is not a stretch to say that these cavities are targets, particularly for john malone. alone is looking at this, owns liberty global in europe, a content distribution integration , vertical integration just like we are seeing with at&t and time warner. you have to imagine, one would think that charter, the cable company that malone invested in which bought time warner cable, may look to start buying up content. what content that is, i don't know, but he owns stakes in lions gate and starz, which are merging. those would be logical candidates. mark: alex, many, are one, at least, referred to the deal as an awkward marriage.
do the business models, do the cultures marry? alex: you know, at&t will probably run time warner as its own independent fiefdom. cultures matter in any transaction of this size. just how much independence time warner is given within at&t will go a long way towards deciding just how much of a problem that is. obviously, aol-time warner did not work that well. at&t is certainly not aol. at&t has been around for so long at this point that it knows how to integrate better than aol, which was a largely were roughly brand-new company at the time. , there is a general fear among many copies when a telecom company comes along and buys them. come ondoes it mean that note, anything for the wireless industry, whether it is t-mobile, sprint, directv?
alex: chris marangi spoke earlier about how he thinks that t-mobile is the big winner here, because he feels like comcast needs to look at t-mobile little bit closer now that at&t is going to this quad play. let's make mobile video and tv available to everyone who buys this obstruction. comcast owns nbc and mitigation into the same thing as at&t, owning the wireless, the tv pipes, the broadband, and the content. it is certainly possible that t-mobile is a winner. to latere will speak -- alex: i'm sure he will give a nonbiased approximate of whether t-mobile is a win or not. vonnie: alex sherman, thanks for that. mark: stocks moving in the early u.s. session today. $6.4 billion. this is bloomberg. ♪
mark: live from london and new york, i am mark barton. vonnie: and i am vonnie quinn. you are watching "bloomberg markets." time for the biggest stories in the news right now. shares of syngenta ag falling in europe on concerns that a $43 billion takeover is in jeopardy. the chinese company missed a deadline to make concessions. is based in switzerland and produces herbicides and pesticides. goldman sachs has cut s&p 500 earnings estimates through 2018. the chief equity strategist be upst that profits will
5% this year, 10% next year, 5% in 2018. he says low interest rates and peaking margins will hold down growth in infotech, financials, and telecoms. royal phillips posted third-quarter profits that rose 13%. the calmness as business improved and it's personal health businesses. -- the company says business has approved at its personal health businesses. we will be speaking with the ceo later on. that is your bloomberg business flash. let's go to the markets desk cam ward julie hyman is looking at deal members. you have a choice today. julie: you do. we are talking at&t and time warner but that is not the only one announced today. rockwell collins buying bea aerospace in the largest deal ever. it is the largest agreement supplier for aircraft cabins. $62 a share here. you can see the shows moving higher even as rockwell collins
does pull back. a deal financially buyingronto dominion, scott riggs financial services $4 billion. td ameritrade is going to buy the brokerage operations for td.7 billion and then ameritrade, $1.3 billion in cash. you can see it is little changed here. td ameritrade is off by 2%. we have a couple of chinese deals to talk about as well. chinese-american deals. it has agreed to purchase jen worth for $2.7 billion. there is been a big buying spree on the part of chinese companies as of late.
it will help jen worth manage its debt and strengthened the life insurance units. in the hn a group agreed to acquire 25% hilton from blackstone for about $6.5 billion. it has been an overhang for hilton. see hilton rising today. blackstone is higher. mark: the china deal still ahead. more on syngenta shares slumping. what it means for the $43 billion takeover. that is next. this is bloomberg. ♪
shares of syngenta down 9%. it is raising concerns that regulatory approval may be delayed. let's bring in the bloomberg reporter who was first to report this news. ,ow much of a big deal is this that china did not submit revenues on time? >> well, they had a deadline of friday to do it and the decision deadline now of next friday, where the commission gets to decide, does it clear that you without any conditions or does probe? a longer in-depth that can take four months. i guess what we're seeing right now with the sharecroppers the level of uncertainty about what happens next. -- the share drop is the level of uncertainty about what happens next. it raises the risk that you have to sell something to get
regulators on board. it raises the slight risk that your deal might be blocked. it is something that can happen. when you open up a whole realm of possibility, that is a little bit worrying for a deal you thought was in the bag. mark: what sort of concessions, adjustments might ultimately have to be making get this deal through? >> the european commission has talked about this area of agrochemicals -- other deals going through right now. we are looking at monsanto. it is a very concentrated area. probably very limited suppliers. hard for me to say because i'm not an expert in anger chemicals. -- agrchemicals. there are of feeds four slovakian farmers, it can come down to that level of detail that regulators might want to very wide investigation to look at lots of little things work of the something quite big. given that we've not seen this as a couple
someone, it might be something quite narrow, might not be a huge dealbreaker. but it is something that needs to be addressed. companies like looking at the global way of doing a deal but sometimes it comes down to what matters to a small part of france and the fact that they have a small number of suppliers to buy things from. it is the kind of thing regulators look for. vonnie: why didn't chemchina come up with something to satisfy regulators? is this stubbornness on the part of the chinese or something the overlooked that they decided they'd were not going to bother with? aofie: it is hard to say. it could be that regulators want to have a careful and long look at this. the commies are seeing very at all. singin -- the companies are saying very little. it is not necessarily mean that the, these are stupid just because they don't meet that deadline. it just might mean that the regulators are not ready to give the complete ok to something.
we will see more throughout the week and precisely tomorrow with the issues might be. vonnie: the eu has until october 22 approve the deal -- october 28 two approve the deal. is it more likely that it will extend the window? aofie: that is the speculation in the markets and what analysts say that they expect it to be pushed out a little. maybe the shock we saw with the share price says that is not something they expected. it is not the end of the world at some take longer than expected, but it does mean that the time unscripted forward to next year. it might mean that the deal would only get approved and completed and it might be divestment sales. though it happened later next year. that's that what happened later next year. -- that what happened later next year. mark: there are three big deals chemicalhe agro industry. how is the regulatory process surrounding the other deals? dow-dupont has been
filed and it is in a longer approval process and the deadline for that is february. when the eu open the investigation, the only one they have opened an investigation on so far, it picked a huge list of things. they wanted to look at different kinds of pesticides and patented products and how their licensed. these tend to be very long, going into the detail of what is happening in these markets and how they work. the other dealers ba -- deal is bayer-monsanto. we have seen a lot of interest -- mark: thanks, great job. we had to cut you short. vonnie: we will be speaking with matt maley at miller tabak next. this is bloomberg. ♪
mark: i'm mark barton. you're watching bloomberg markets on bloomberg television. alisa parenti has more. >> hillary clinton and donald trump are in a dead heat. they are tied at 41%. leading in some cases significantly. gary johnson 8%. jill stein 4%. hillary clinton is hitting the campaign trail with michelle obama. will make a joint appearance on thursday in north carolina at wake forest university. radical tom hayden has died.
he was an author and california legislator. he was 76 years old. north korean officials are criticizing efforts by the u.n. to strengthen sanctions following the latest missile launch and nuclear tests. they said sanctions targeting the missile tests are criminal and accused the u.s. of orchestrating the punishment. alibaba billionaire jack ma wants china's top security bureau to prevent crime. he says policing cannot happen unless china has the ability to analyze information on citizens. china has begun to build unparalleled online surveillance of its citizens. this is bloomberg. vonnie: stocks rallying today in
both the u.s. and europe. our next guest is expecting some caution regarding markets in light of potential upcoming central banks tightening. joining us is met mainly -- matt -- matt- matt mainly maley. >> we had a bit of a change in stance. is talking about raising rates for a second time in december. the other ones aren't. they didn't add much liquidity over the summer. aboutey are talking tapering back. the boj is talking about focusing more on the yield
curve. that's going to cause a headwind for the market. what about the idea that money might move elsewhere if it's not going to go into u.s. stocks? things in europe it a couple things. numbers out of europe. that's looking a little bit better. you also have a weaker euro. people are up in arms about that. it is good for some of these exporters especially in germany. basically you're saying
the stock market is way ahead of the economy. is the economy going to catch up? >> that makes it very difficult to do. central bank liquidity around the globe has really helped the markets rally further ahead of the fundamentals. things is when we debt as there is in pick upd how do you that much more? it's just rising slightly and it is so going to remain sluggish. questionsave earnings . questions . with the dollar rallying in the last couple of weeks a lot of the people hoping for a big tail went from a lower dollar are now facing a headwind.
to be tough for the economy to pick up as much. the stock market is going to come down halfway. mark: when leverage in central banks play such a big part in assets moving upwards, what happens when it underlines? -- unwinds? of the things underestimated in the marketplace is the leverage. we have new york stock exchange margin debt near an all-time high. low theerest rates so only way these investors can make money is to leverage up their portfolios. up --erage has moved interest rates have moved up the cost of carrying that leverages going to go up as well. some of that leverage had to be unwound when the fed raised
interest rates. i think the same thing will happen again. the fed is between a rock and a hard place. they kept rates so low it allowed people to add so much leverage. now rates have been so low that it's hurting not only the banks but insurance companies. pension funds are not going to be able to reach their mandates. keep interest rates low. they have to raise them a little bit. the line of least resistance over the next six to 12 months has got to be lower. vonnie: what about the arguments that we saw banks just have a .tellar quarter much further ahead than estimates. we are seeing a humongous amount of deals. as soon as earnings season is over we may begin to see buybacks begin again. you heard some of these
billionaires the last couple of we aretalk about how going to see big major corrections. i see it more in the eight to 12% range. i think supply and demand will turn to the negative side. i don't see it being a major problem. one thing we have to be careful of is higher rates should be better for banks. if hillary clinton becomes president she has been known to be very positive for the banks. we have a situation where we have the biggest time where people have been looking for a change in elections ever. and yet if hillary clinton wins we will have the biggest insider in the history of the game. she will have to do some things to help people.
ther anger towards establishment isn't going to go away. she will have to do some things. i worry about the regulatory side. to be careful of the postelection process even if hillary clinton wins. mark: you say the airlines have broken out. will that trend be confirmed and will airlines -- the travel index follow suit? >> the airline index has broken out to the upside. it has only been a slight break so far. but the transportation index has been bumping up against resistance for a couple of months now. if the airline stock can be that will be very positive for the market overall. the thing to look out for is some of the rail stocks in the trucking stocks have had poor earnings. that could be one thing that
brexit vote and the plunging pound. microsoft is raising the price of some key products in the u.k. mark: the power of vladimir putin. has been holding on to popularity among russians in spite of the country's economic challenges. vonnie: at&t has agreed to buy time warner. for more than $85 billion. the deal still faces regulatory hurdles. the ceo spoke about the megamerger on a conference call in relation to the content equation for the deal. >> time warner is the global leader in entertainment. brands we all know and love. is a vast content library and we believe it's the best on the planet.
time warner has the best creative talent and journalists in the industry. the company is raising the price of its business software and cloud services by as much as 22%. the big drop in the pound. microsoft's consumer software and cloud products won't be affected. exports from japan have fallen for the 12 month in a row. making exports more expensive. a group of pilots of at american airlines wants to give up their 53-year-old independent union. they're hoping to merge their union with the airline pilots association after pilots at other airlines want new contracts with debtor pay and benefits. time for our bloomberg quick take.
popular politician in russia is among the west's most reviled. 's experience sink economic hardship provoked by the ukraine intervention. his popularity has hardly been dented so far. here's the situation. as he prepares to stand for election again in 2018 his approval ratings have fallen slightly. remarkablyill at a high level of more than 80% and his united party won its biggest majority in parliament september 18. opposition parties complained the vote wasn't fair. putin honed his survival skills at a deprived child in postwar leningrad. died in a german siege.
his mother barely survived. in 1989 as a spy in east germany to destroyed documents when crowds tried to break into the kgb office. he says the discovery traumatized him. he switched his allegiance to the orthodox church. putin once described the collapse of the soviet union as the greatest geopolitical catastrophe of the 20th century. under assault from a decadent west. his strong approval ratings suggest his constituents take a similar view. the longest recession in more than two k has resulted in support for the ruling party. high as 60%ng as just 18 months earlier.
you can read more about russia and vladimir putin and all of our quick takes on the bloomberg. heads to bloomberg.com for more stories. plan to&t's bland -- buy time warner may get hung up. it may be a tricky time to get deals approved. on bloomberg surveillance today dan clifton painted a scenario of democrats actually taking a majority in the house of representatives. >> coming into this year nobody thought the democrats could take 30 see. -- seats. the democrats have only done that twice in the last four years. that was after watergate and at the height of the iraq war's unpopularity. they are starting to increase the number of seats that can be
taken. this morning we are between 15 and 20 seats. that abc poll that came out over the weekend, this is a double-digit presidential election gap. with two types of asymmetrical risk. either the democrats take over the house completely or the republicans have a much more narrow smaller caucus and that makes it harder to raise the debt ceiling in 2017. in yourovetail wonderful work on gridlock and the idea of this monster merger that is going on. if i am elected free beer and i will fight this transaction. what's really going to happen? >> this deal is getting caught up in politics. pfizer allergan tries to invert. warner and at&t trying to do a merger 15 days before an election. wait until the election is over.
moveve seen a massive against any type of mergers. the obama administration pushed back on mergers. we saw that increase. this was after the american airlines approval. now you are seeing pushed back on doing types of mergers. one argument is the more mergers you have the more wages are being helped. you get into 2017i believe soundtitrust will be the of politics and you can probably get a better hearing under the clinton administration then you could under the obama administration. what about infrastructure? this is being talked about in many parts of the world. where should we look to focus our attention postelection? >> if the democrats sweep hillary clinton will get most of what her infrastructure spending
is going to be. you are talking about $250 billion over five years. if you get into a republican house democratic senate clinton white house it becomes much harder to deliver on infrastructure. republicans are going to ask for some sort of corporate tax reform changes. we have about $2.4 trillion of cash sitting overseas. do you let the companies bring that cash back and use the tax revenue for infrastructure spending? a less than 50% probability. whether this election really is about monetary policy passing the baton to fiscal policy. this is going to be a global trend as many investors think central banks are out of bullets. vonnie: that was dan clifton. may is speaking.
leakinge minister was about her attendance of the eu summit last week. jeremy corbyn now responding. the u.k. is discussing future trade with countries. the canada deal seemed to fall apart last friday in brussels. the government will make time for parliament debates on brexit. the debates will take place before and after christmas. they will be about high-level principles. continue to watch this on live go on the bloomberg. this is bloomberg. ♪
standoff and allowing ruled for a second term. 10 year yields fell to the lowest in more than a week on the news. joining us now is been sales. bloomberg european government editor. why suddenly the back down? what happened was the socialist party had been divided throughout this gridlock with one faction pushing for the party to stand aside in the interest of the economy and to show statesmanship while the said the party's role was to oppose and refuse to do it. oustedks ago sanchez was by an internal coup led by the rebel faction. that point the process of
moving towards abstention became quite clear >> vonnie: we are clearly seeing a market reaction. what can he do in his second term that he couldn't do in his first term? >> good question. the main thing we are going to see is he needs to renew his government. he's going to be looking at bringing in some new faces to give the impression this is a new administration taking the country forward. he's going to stick very much to the same setting he had before for the first election in december. sticking to labor reforms and trying to protect the growth which has been quite good throughout the crisis. mark: how do you take the country forward? you have a parliament of 350. how easy is it going to be? >> it's going to be an absolute
nightmare for him and i think he's aware of that. to tie in the socialists as much as possible ahead of the confidence vote to try at the very least to get a budget approved for next year. once he gets beyond that he's going to find himself in a dog fight to win any kind of legislation and get it passed and the three main other parties have demonstrated their prepared to join together to vote against him. huge sigh of relief for portugal on friday. retaining its investment grade rating. i noticed they said portugal faces significant challenges including elevated levels of public sector debt, low potential growth and high corporate sector indebtedness. how much progress is the prime minister making right now? i don't think that he's
really rolling up his sleeves and getting stuck into the sort of agenda that portugal's creditors would be looking for. he is keeping the show on the road. that thevincing commitment to the budget target remains while also keeping his left-wing partners on site making the government more stable than people were expecting. 10.8%: unemployment is at versus 19.8% in spain. thank you for joining us from madrid. this is bloomberg. ♪
you are watching the european close on bloomberg markets. ♪ mark: we will take you from covere to london and stories out of wall street, italy and washington. here's what we're watching today. stopped jumping 31%. chief executive preparing to present a new business plan. be as pleased tomorrow after the report and its earnings? at&t will acquire time warner. hear from one media expert who says a company like apple could swoop in with a bid. t-mobile beats estimates as customer growth outpaces verizon. the ceo joins on their latest earnings