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tv   Bloomberg Markets European Close  Bloomberg  November 24, 2016 11:00am-12:01pm EST

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barton. this is the european close on bloomberg markets. u.s. markets closed for the holiday and we are going to take you from athens to johannesburg to san francisco in the next hour. here's what we are watching central banksean warning a correction is back on and rising political uncertainty has intensified, posing a serious threat to banks, stability, and economic growth. worldwide are being forced to take action. howell things fair in the face of incoming president donald trump the growing populist mood in europe question mark is content in greece as banks struggle to clean up their balance sheets of bad loans. we will hear from the chairman of greece's largest bank this hour. europeane a look at equities.
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no trading in the u.s. because of the thanksgiving day holiday. most european equities trading higher today. these are the currencies writing against the dollar index. you have yields declining in europe. ime really interesting charts want to bring in today. the gains sending the dax to a second quarterly advance our failing to spread to midsize companies. its againstck for underperformance relative to the large cap dax since 2012, sending its valuation to a half year low relative to the bond proxies. they have lost ground as tenured
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rising,unk, yields are a wonderful divergence between the dax and am dax. .et's stay with germany german business confidence holding at its highest level in more than two years in november, signaling the recovery in europe's biggest economy does remain on track. the business climate index staying at 110.4, the strongest since april 2014. adding to signs that europe's biggest economy pays after the slowdown. supported by domestic demand, we had a slump in exports slowing the expansion. let's get to the broader landscape. i wanted to focus on asian currencies that are trading at
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their weakest levels last seen in the wake of the financial crisis. this is the bloomberg jpmorgan asia dollar index. we are at levels we have not seen since trump was elected president. 2.6%,uge has fallen by led by malaysia, south korea down by 3.8%. are prompting central banks in the region like india, malaysia and indonesia to intervene. many economists think it's likely to determine looser monetary policies and capital in the indian currency fell to a record low. fascinating chart. let's check in on bloomberg first word news. erik johnson has the details.
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isc: the european parliament looking at a crackdown on political opponents. tomakers called for a halt eu membership for turkey since an attempted to in july. thanalso dismissed more japan gets one more chance to salvage his campaign for president in a national televised debate. there will be a runoff election to decide who will be the republican party candidate. until last sunday, he was favorite to win the presidency but finished a distant second in the primary. mayeuropean parliament head be preparing to challenge angela
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merkel in next year selection. to resign as president and run as a lower house seat. u.s. president-elect donald trump is expected to name billionaire investor wilbur ross to be commerce secretary according to a person familiar with the planning. ross made his fortune acquiring and restructuring troubled properly's -- troubled properties. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i'm erik johnson and this is bloomberg. mark: since the election of hasld trump, the dollar gained and some hedges on the expectation trump will release a trillion in new spending. joining us now is a global macro strategist at ecb capital.
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it orion -- do you buy not? reaction we have seen in the market that the thing investors do believe, a lot of that depends on how congress ,eals with any fiscal package any members in congress worried about that, debt is rising, and the budget deficit is going up. away fromks might shy a bumper reflationary package. although investors are downplaying protectionist risks from mr. trump's trade policy, clearly that is a concern. it may well be that free traders will push back against that as well and we may end up with a scenario where the actual outcome is on protectionist
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measures are somewhat tempered. mark: it is going to take a wild to play out. how much further of this bond selloff have we got to see? i think that's a good question. equity markets are making new highs and valuations are extreme, there are indications that the u.s. property session is turning around. there's always the issue of a stiff correction as there's bound to be during 2017. --hink the bond market is there are a lot of commentators that may be this 35 year old run in fixed income has come to an end and we have seen the secular lows in the government bond markets. , if10 year treasury yields you are a technical analyst, you will note 2.3%, which is roughly
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where we are at the moment is the post crisis downtrend. we break that and go into a longer-term downtrend. technically, you are talking the bull market is over. self-correcting mechanism? there a feeling or a process to take care of itself? guest: that's a good question and u.s. financial conditions are tightening. the dollar is super strong the moment and the charts you show previously say it all. strong and the fat are downplaying that. the strength of the dollar has been an input into thinking and they have shied away and the dollar has been strong because according to the fed, it has an adverse effect on exports and
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gdp. there's also spillover effect on .o emerging-market currencies we've seen the indian rupee at a record low today and is pressures can create instability for emerging-market policies. the fed cannot ignore this. it's not just through the trade channel that a stronger dollar works but as the bank of international settlement pointed out and i have pointed out for my own research, it went through the financial channels to the dollar is the global funding currency of choice and we see that in the cross currency basis. out and thereing are funding and liquidity pressures in the system and we german banks, to year bond yields going down because they are used as collateral. there are things going on here
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that dollar strength is creating and it's going to become a big problem. mark: what does it mean for fed policy? december is 100%. 2017, given what you have said, what does it mean for fed policy? it is interesting because there are echoes of this time last year when the markets are saying this divergent policy theme, we know at the moment u.s. german spreads are wider since the late 80's. this time last year, we were talking about a strong dollar and the virgin monetary policy, talking about the fed and. doing rate increases through 2016. high-yield credit crashed and the rest of it. behold, the low and
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fed changed their tune. be the strength of the dollar is going to be a problem and we shouldn't take it for granted that the fed is going to ignore it. it is creating problems for the u.s. and emerging markets. is ay well be that 2017 different story. mark: stay with us. up next, we're going to talk brexit, which neil supported, of course. this is bloomberg. ♪
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is joining me to
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on brexit. we have to say you are brilliant for coming on it being so open. pre-brexit lawmakers have attacked the kobe are path gloomy, what they say, fiscal outlook, basically saying leaving the eu is going to cost the u.k. annexed or $60 billion in extra borrowing. slow.onomy is going to do we listen to the kobe are? my personal view is in the same way the free referendum analyses taken from the treasury was talking doom and gloom, let's remember that on a brexit eu,, not an exit from the
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guess what it hasn't gone up 500,000 in all the economic data, the fact, not the forecast and the brexitw group got there forecast right. inevitably, it begs the question, why should we believe the forecast that would say a slowdown in 2014 or that productivity would suffer? instead of looking at brexit as a negative uncertainty and a big negative in the financial media, that is the case for brexit equals uncertainty. incident thinking of it as an opportunity. the gloom sayers will have 2 -- mark: 1.4% is too low? guest: it is too low.
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i would not mind betting the economy is a lot stronger. the campaign of fear was wrong then and no reason to believe they are going to be right anytime. mark: before the referendum, he was pilloried for saying there is going to be a $40 billion pound. to borrow in 2020 versus a surplus. i recall when mr. osborne was chancellor, it was already off course. why should we believe what it would be? the economy will be stronger, borrowing will be lower and the worst thing that affects all of this, and certainly it is a fact, kristin forbes made a very
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good speech saying the effects are being completely overstated and i think she's right. we believe project fear, we talk ourselves into doom and gloom because of the incessant barrage of negativity. economy will be on a better footing. the euro zone economy is recovering. the strongest growth this year according to pmi data. the global economy is looking better and that helps the u.k. with the sixth biggest economy in the world. we are not a little. on the edge of europe. to a chart. to get draghi's measure, the deflation from five years hence.
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i think mr. draghi has a potential problem. i think a couple of things were interesting. growth being strongest and other indicators that,ting elements of average input prices were at a five-year high. this is in tandem with what we are seeing elsewhere. it is picking up and inflation is turning around and this is why bond yields are going up. that will take time as the unemployment rate in the eurozone is 10%. there's a lot of work to be done improving the eurozone labor market. time might not be on his side and he's faced criticism from mayany and the ecb program
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create financial instability. the collateral squeeze and the ecb having to lend bonds rather than buy them, i think the consensus view that december will see a six-month extension could prove wrong. i think there will be pressure with inflation picking up. euro-dollar parity? guest: i've got that down as a forecast. away.ot that far getting to parity is within the margin of error, but it's all about the dollar. that could be much more of a problem the fed is bargaining for. mark: great to see you.
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coming up, the ecb is getting more concerned about a global market correction. we will hear why from this man. this is bloomberg. ♪
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mark: market have been flying high and the ecb is warning the risk of an abrupt warning. matt miller spoke to veto constantia. tost: it's difficult interpret how people consider their votes in a referendum. many answer in a concrete question and others vote for , including thens general judgment on the government in place. hard to predict what will happen and what will be.
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for theequences political situation in italy. we just have to wait to see what could happen in case of a know in the referendum. the polls have been wrong in so it's not useful to speculate too much at this stage. we will have to see what will be the repercussions. you mentioned the chance of a market correction of its this volatility. think that do you chance is an do you think the participants in the markets are prepared for a market correction? let me elaborate a bit.
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i think we are certainly seeing a correction come from the u.s. because the market perception is that there will be more growth and higher inflation in the u.s. the spillovers of that development to other parts of the world and in particular for europe are not totally clear accompanied may be by protectionist measures which would then reduce the impact on other parts of the world. has increasednt the exchange rate and that has been disturbing mostly emerging countries. continue toecb will exert its role, and i don't there will be significant contention to europe.
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it could only really continue the same way as in the u.s. of growth and inflation could increase also in europe. that case, it would be a normal thing to happen. matt: one of the results of the u.s. election has been a strong dollar. the euro last week had 10 consecutive days of declined and jean-claude trichet a mentioned he did not to bed -- did not like to see these violent moves. and does therned strength of the dollar handle your ability to be accommodated? central bankers in general don't like and that is still true today, abrupt movements. the exchange rate is not a target of our policies, so it is the market. it has consequences, of course,
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but it is not our target. i would be more concerned of the development in emerging countries and deceleration of growth they're which will affect world trade. mark: that was the ecb vice president. we are headed to the close, four minutes from the end of this thursday equity session. stocks are up today. have a look at the currency orders. it is a quiet day. the thanksgiving holiday, sterling is up against the dollar and the euro is up against the pound. this is bloomberg. ♪
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live from london, this is the european closed. stocks finishing the trading day in europe -- docs at almost the highest close in a month.
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with stocks continuing and ant performing interesting chart -- the euro is the top chart against the dollar. the dollar-yen is the bottom. both the euro and yen look poised for declines against the dollar regardless of who was going to win the election. both currencies were in downward trends. the dollar was in an upward trend on a technical charge and the prospect of a rate hike from those post brexit nadir's. risen to a record high. treasury yields gaining on speculation of thomas of infrastructure spending will boost inflation.
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looks like that trend was in place regardless. the economy growing in line with expectations in the third quarter. led by public expenditure from a year ago. comes as the prime to a budget next year. it's a highly fragmented and hostile parliament calling for an increase in the minimum wage. from the european commission, there is pressure to narrow the and let's finish it off with the u.s. stock market which is closed today because of the thanksgiving day holiday. this is a wonderful chart.
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line is the credit suisse fear barometer, which as you can see is falling, tumbling 23% since the day before the presidential election. you've got the s&p reaching record highs and that gauge compares bearish option prices with bullish ones. it has dropped to the lowest level since february. let's get to bloomberg first word news with erik johnson and the latest from our newsroom. eric: iraqi troops have made more gains in their attempt to oust islamic state forces from l.e city of mosu according to one commander, his troops drove them out of three neighborhoods. the battle is now in its sixth week. at least 67 workers in china
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were killed when scaffolding collapsed. two other workers were injured and one other is missing. more than 100 paramilitary police are involved in rescue attempt. voters in columbia will not get a second chance to ratify a piece bill ending the civil war. colombian lawmakers will instead be asked to put -- to approve a proposal that gives their rebels guaranteed seat in congress and imposes restrictions on those who confessed to serious crimes. colombian voters narrowly rejected a similar deal last month. president-elect donald trump is calling for unity after a bitter election campaign. trump recorded a message or the thanksgiving holiday. mr. trump: it is my prayer that on this thanksgiving, we begin to heal our divisions and move forward as one country, strengthened by shared purpose and very, very common resolve.
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eric: trump acknowledged emotions are still raw from the election intentions do not heal overnight. suggestingall trump nigel farage would make a great ambassador to the u.s., but chancellor of but chancellor of the exchequer says he should not hold his breath waiting for an appointment. he said if he ever needed advice from nigel farage, he would give him a call. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i'm erik johnson and this is bloomberg. rallied on markets hope that greek bonds are finally going to ease the debt burden. bank stocks have gone up 30% in the last 20 days and the chairman says investors may be discounting risks. the bank has seen almost 40% of its euro loans turned sour.
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chairman sees a brighter future thanks to among other things, trump's election victory. he spoke exclusively to bloomberg and athens less than an hour ago. guest: trying to predict stock prices is a fool's game. trying to give predictions about where shares are going, i don't think it would make me look very good. i would point to a couple of things. usually the markets are a printer for the future. for the are aggregators future, honestly the market seems to be discounting something which seems to be of poisoned nature. extent a lot of new steps
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are being announced, a good performance in terms of the bottom line by the investment community and the participants to be an there seems indication in the future there may be more good use coming out in the form of less uncertainty. any form of where the greek economy is going, people seem to newsscounting more good and most important, a reduction in the range of the uncertainty. >> what keeps you awake at night in this job? globally with the u.s. election,
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the rise of populism? main thing keeping you awake at night? in general, wey have to start focusing on what you can do best and i want to make sure we execute well and have clear objectives. we can to perfection with ambition. we have goals that we have set for ourselves and some have been set by regulators and we like to execute them to perfection. , firsthave other things and foremost, the state of the greek economy.
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whether we like it or not, we , but if theest greek economy does not perform, that will not allow us to go very far. therefore, justifiably, our biggest concern is where the greek economy is going. as i mentioned before, there is good reason to because as we optimistic. as we go further out, we look at what is going on in europe and obviously, although risks that with brexit and the forthcoming elections in italy. with the further out elections in france, netherlands and germany. potential sources of
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uncertainty but a little further out, with regards to what is happening in america, it is even further out but that is important because what happens in america affects the rest of the world because it is a major player in the economic scene. the bullish sentiment with the election of a new president is a reflection of the reality that we see higher economic growth, i think the rest of the global the effects ofel that and even greece will benefit from that. goyou want factors that further out, we can hope for the rest. speaking exclusively there to bloomberg and athens today. being up, amazon is set to
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endorsed by one of the largest --ommerce countries -- and largest companies in the middle east. that is next. this is bloomberg.
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mark: live from london, i'm mark arden in this is the european close. abhisit said to be in talks to buy -- amazon said to be in talks to buy soup.com. dealsg us now is our reporter for bloomberg. why would amazon be interested in soup.com? they are the largest
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online retailer in the middle east. so to raise their bid list -- there business model, it's a fragmented market which is growing. for someone like amazon looking at getting into the emerging market where consumers are turning to online, it's a perfect fit. weren't they interested in selling a minor stake in the company? what caused this? they were looking at a minority stake at around 30%. ouron comes in and understanding is it's a big player to buy a sizable business owned by financial investors. people like tiger capital have
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been with them for a long time. investor across the world. this kind of buyer would give them a perfect opportunity to exit and if the price is good, they probably would see this as the best. mark: is the price good? soup last did their fund raise, we were told the price was around a billion. we probably are in the final stages. butations could change people have traditionally gone to the central market to buy this stuff. what would amazon do with
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soup? amazon do in these sorts of instances? guest: i'm not very familiar with their international strategy but you would assume they could likely use this country as a consolidator and it could be their entry into the reason where they could look at more interesting businesses. there are a lot of small, upcoming is this is which are quite popular but they don't have the same kind of reach and scale that soup does. probably don't have a lot to do with changing the model. it similar to what amazon does already. more are we going to see consumer-based businesses in that region? ofst: you have seen a lot this is getting interest,
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especially consumer facing is mrs. getting interest. is aported a company which very similar ride hailing service to uber is close to raising $300 million. you see instances where businesses need capital and international investors know there's not a lot of place to get decent returns, so they are increasingly looking at the region. mark: thank you so much. our deals reporter for bloomberg. turning to pepsi go. the chairwoman and chief executive recently spoke with david rubenstein in the sixth episode of the david rubenstein show. the two discussed changes around the world that have made it more challenging to run a global battle to hit on the defend and activist investor to break up the country -- break up
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the company. >> most ceos are ceo for five years or so. the stock is up 67% since you have been the ceo. is it harder to be a ceo now than 10 years ago? look at the world in last decade, the financial crisis changed the world in norma slate. , theave had since then world has not recovered from financial crisis. you had geopolitical of peoples all over the world and on top of that, technology disruption is rewriting the rules of most companies. what kind of jobs are you going to keep in the company? how is e-commerce going to impact your business? there is some technology impacting every part of the company. this last seven years in particular has been a real challenge to run a large company to be ayou have
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foreign-policy expert, a technology person, you have to talk to the front line in two world leaders and ceos have had theira lot just to manage companies and keep them going. it has been a challenge. >> not long ago, and activist showed up and said maybe you frito-layn off your business. what was your response and how did you keep the activist happy? keep the is not to activist happy. my job is to make sure this company is managed for the next generation and is performing very well. if the activist is happy in the process, so be it. i'm an activist. i own 33 times my salary in pepsico stock. my entire net worth is in this company. if there was a great idea on how to improve shareholder value, i listen to them. i listen to the activists. business own personal
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and i'm very transparent about the company. i told them where we are headed and where the activists want us to go. it was very clear to the lord that it was more of a short-term strategy. the board back to me, the current -- the courage of our conviction prevailed and we are exactly where we were before the activists came in, performing very well. that airs tonight right after this program and is also available online at bloomberg.com. ♪
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mark: this is the european close on bloomberg markets. in u.s. politics, we continue to look at what could change for the country under a donald trump
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presidency. one of the biggest is a balance of power under the supreme court which could shift if there is a second vacancy. reporter hasourt been covering high court for over a decade and spoke with me about it. he's going to get one appointment and that won't shift the balance of the court but we have three other justices in the center or the left of the court who are at least 78. there's a reasonably good chance donald trump will get another appointment and that one really could shift the court on a variety of issues. mark: what are those issues? been: the one everyone has talking about is abortion because donald trump has been talking about it so much. we could be talking about voter id requirements. we could be talking about affirmative action, in the business context, we could be talking about stopping class-action lawsuits, forcing
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consumer arbitration agreements, there are a host of areas where we could see a more conservative court. mark: do justices selected by republican presidents always follow the parties scram once they joined the supreme court? guest: they definitely don't and that's a big part of the dynamic going on here. if you look at the last 30 or 40 years, you see justices like sandra day o'connor, anthony suter and kennedy who have backed abortion rights and even justices who are generally conservative people like john roberts to hadley disappointed conservatives by voting twice to uphold the core of obamacare. you can expect as donald trump decides who to nominate, he's going to be hearing from conservative legal thinkers who want to make absolutely sure
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this is a rock solid conservative donald trump nominates to the court. of 21trump has a list perspective supreme court justices. take us through some of the names. guest: we know more about some of them than others. one to watch for is a guy named william pryor. he's a very outspoken judge, very conservative and has called roe versus wade one of the worst abominations in the history of the country. he's someone who you could expect a very vocal fight from, kratz over. there are others who are much less well known. when people have been talking about is a michigan supreme court justice. she's much younger and has only been on the court for about a year. but you talk to conservatives and they say she's got a lot of firepower. if she doesn't get this nomination, her name will almost certainly the out there again
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for future nominations. mark: i suppose a trump victory puts to an end to reams of a liberal supreme court. court we have not had a since the 1960's were you had a majority of democratic appointees. after antonin scalia a died, that's where many folks thought we were headed because it looked like barack obama or hillary clinton would name the next appointee and we would get a fifth democratic appointee and a much more liberal court on some of the issues we talked about with wings like abortion and class-action lawsuits, potentially overturning the death penalty. instead, we are going to go back to where we have been with a conservative leaning court. justice can eddie in the middle and we will watch to see who might be leaving the court next. take a look at where european markets ended the
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thursday session. no trading in the u.s. because of the thanksgiving holiday. ftse, the dax, 14% below the daily average. look at the currency board today. ascendancy continues. the gauge of the dollar against 10 of its major peers. let's finish with the markets in europe today -- stocks rising and bond yields falling. the german 10 year unchanged, the yield down in spain and up in italy. you are watching bloomberg. enjoy the thanksgiving day holiday. ♪
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david: did you think you would grow up to be the ceo of a large company like pepsi? ms. nooyi: it is a dream come true. i pinch myself every day. david: to get advice from people all the time and do ever listen to it? ms. nooyi: you never know if a nugget of an idea can translate into a success. my job is not to keep an activist happy. my job is to keep an company performing well. david: suppose someone has a company based in atlanta and you see it in the refrigerator, what do you do?

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