tv Bloomberg Markets European Close Bloomberg December 28, 2016 11:00am-12:01pm EST
we are going to take you from new york to london to washington in the next hour, and also covering stories out of germany and israel. secretary of state john kerry set to give a speech any moment, offering what he calls a comprehensive vision for how peace in the middle east can be achieved. and israeli minister has called the speech "pathetic." stocks trying to add to their records around the globe, u.k. joining in record territory. we will have the latest trades. shares in japan's toshiba have plunged the most on record thanks to the westinghouse writedown. is the nuclear business in deep trouble? have a look at where european equities are trading right now, just under 30 minutes to the closed.
the stoxx 600 is up 2/10 of 1%. 1%,ftse 100 is up 4/10 of the dax in germany down about 1/10 of 1%. banksalian and german dragging things lower a little bit in the continental european countries. 1.2228,pound is at weaker by one third of 1%. we will ignore the euro-pound for a moment, but we will have a look at euro-japan, 143, and ever weaker japanese yen when it comes to the u.s. dollar but not the british pound. at u.k. 10 year yield is 130, germany's 10 year yield at 21 basis points and unchanged.
the spread between the german bunds and the u.s. yield is widening. the italian 10 year yield added on about another 50 basis points . 90 minutes into the u.s. trading day so let's get the latest from abigail doolittle. abigail: after gains and records yesterday from u.s. stocks, we have the major u.s. averages all trading lower. seems like a firm directional cue to the downside. the dow is down the least but doubt 20,000 has the much happened. the s&p and 5000 -- the s&p and nasdaq down. pace for its on worst day since december 12, so a little bit of a bearish streak for u.s. stocks. take a look at sectors, my team and i saw something we have not seen for quite a while. on the bloomberg imap function, equity index, we see all read.
we cannot remember the last time we saw this since the trumpet trade and the big rally. we have tech, the second worst of the sectors trading lower. the worst percentage performer for the s&p 500, nvidia shares are down although at one point they were pledging the most since 2015. all of this a short seller. andrew list put out a cautious tweet saying shares could be closer to $90 in 2017, and has concerns around market shares. this stock is up in an absolutely huge way, more than 230%. another andrew list short, this book in june on june 13, he said he was shorting facebook. over that time, shares are about flat, even up slightly, climbing
into the third-quarter reports. 7% to 8%,s down about on pace for its worst performance since 2012 shortly after the ipo. they are plagued with fake news along with a bar being considered disappointed for some investors. mark: erik johnson has more -- vonnie: erik johnson has more. ik: secretary of state john kerry is said to outline a plan for the israeli palestine conflict. atcomes after the u.s. anger the yuan government last week. we will have more on this in just a moment. senator john mccain is not yet sold on donald trump's choice for secretary of state, rex tillerson.
mccain spoke today. >> i am pleased with the president's nominated for the secretary of defense. i have questions and concerns for his nominee for secretary of state. that is my obligation under the constitution of the united states, to represent the people of arizona that elected me, and do the right thing for them and america. if i agree with the president of the united states, i will work as hard as i can. representing my responsibilities i will exercise those as well. erik: republicans and democrats on capitol hill have raised questions about his ties to russia and vladimir putin. presidentaccused obama of hobbling the transition, writing doing my nore the inflammatory statements and roadblocks.
obama said he would have beaten trump had he been allowed to run, and warned against the urge to demonize those who are different. as donald trump has health care on the agenda today, he is meeting with a ceo of several health care institutions, among them the heads of the mayo clinic, cleveland clinic, and johns hopkins medicine. owed to repeal obamacare and replace it. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am erik johnson and this is bloomberg. vonnie: thank you for that you'd u.s. secretary of state john kerry is set to deliver a speech outlining what he is calling a comprehensive vision for how middle east peace in the achieved. we are awaiting the speech at to state department, due
begin in a few moments. joining us is marty schenker. kerry'sccounts john efforts have not worked and are not likely to produce any real effect at this point, with three weeks left to the administration . why give this speech? will it just be an inflammatory speech? marty: i am sure in his view it will not be inflammatory, although in this charged atmosphere on most everything he says will be taken negatively by israel and positively by those .n the administration with 23 days left in this administration the question is just how relevant this speech is. a step backwards taken, given the u.n. vote which the u.s. abstained from, allowing the rigid -- legislation to pass. some are saying netanyahu may
respond by causing a -- marty: there was a step back from that narrative when netanyahu close off any discussion of four -- further housing being built in jerusalem, a seeming attempt to defuse the tensions between the u.s. and israel, but it could wind up backfiring. there are a number of people who are concerned that is exactly what the u.s. extension is going to do. vonnie: what will the relationship be like under the president-elect when he comes into power? he has just tweeted out, we cannot continue to let israel be treated with such disdain and disrespect. they used to have a good friend in the united states but not anymore. the beginning was the horrible a .un deal, followed by this what is benjamin netanyahu supposed to do with this? netanyahu tweeted
after that how wonderful it was to have the president-elect's support, but it really remains to be seen with the new administration's policy on israel is. it is fine to attack the u.s. stand but it is unclear where the trunk administration's policy on israel and the middle east is. you have a defense secretary that has one view, and ambassador to israel has another, and rex tillerson as secretary of state and we do not know what his view is. vonnie: the iran sanctions obviously come into play here, because whatever approach is taken to those is going to really dictate what the israeli policy is. correct, and the obama administration has time and again said the iran nuclear deal was meant to protect israel from any kind of aggression, and the israelis feel that it was complete capitulation to iran. any change in that is going to be viewed very carefully by
people in the middle east and elsewhere. vonnie: what will history view the obama legacy in the middle east as being, at least as it purports to israel and any kind of settlement? marty: you cannot divorce the middle east from everything else that is going on around the world. i think obama himself has conceded that his major disappointment was mideast policy. syria is a great example of a failed u.s. position that allowed the russians to assert themselves. history is a strange thing. 20 years from now we could all say he did the best he could, but i do not think by any objective measure you could say his middle east policy has been a success. vonnie: netanyahu is due to stay in power since -- until 2019. what is the outlook, will he
stay in power and is the two state solution rhetoric going away? marty: it remains to be seen what the top administration stands on a two state administration. netanyahu said he was opposed and then said he endorsed it. some people in the obama administration thought it was rather duplicitous. , his current stance is a two state solution is the way to be, but it has to be negotiated between the parties in the mideast and israel, and not in the u.n. will the u.n. prepare some kind of sanctions or anything like that in case there is more building? marty: i do not know that you and sanctions can stick effectively, and again, the question really is can israel and its mideast neighbors sit
down and negotiate a peace outside of any institution like the u.n.? that is something that has been very difficult to achieve. vonnie: our thanks to bloomberg executive editor marty schenker. you can catch the full john kerry speech when it starts on your bloomberg using the function lies go, or watch it on live go orvention -- watch it on our live television. the nuclear renaissance turns into a potential financial nightmare for toshiba. this is bloomberg. ♪
vonnie quinn counting you down to the european close. it is time for the latest bloomberg business flash, a look at some of the biggest business stories in the news. fewer americans have contracts to buy homes that in november. the home index fell two and a half percent, the decrease likely reflecting larger mortgage rates and a smaller supply of homes. delta airlines has canceled an order for 18 boeing 787's. it inherited the order from northwest airlines when it took it over in 2008. delta has plans to buy 120 oh knowing's latest models. models.eing's latest -- terms were not disclosed. by phone has processed more
than $50 million in transactions this year. and that is your bloomberg business flash for this hour. russia has been great its energy policy after a black gold massive slump to $26 a barrel this year. john mickelthwait sat down with president vladimir putin in an exclusive interview. he challenged the statement that if crude were to fall below $80 a barrel there would be a in prices. pres. putin: if i said that oil output would end, i was mistaken. i do not remember. new deposits would
not be commissioned at a certain oil price. strictly speaking, that is what has happened. but maybe even surprisingly, our oil and gas companies are continuing to invest. in the past years, the oil companies have earned 1.5 trillion rubles and if you take the states investment, it is better than the overall , 3.5tment in energy trillion rubles in the past year. this is quite significant. our oil output electricity is increasing. production has declined little, by about 1%. we are the world's leader in terms of natural gas with a
global share of about 20%. of liquidort hydrocarbons, we also hold the leading position. we are first in the export of liquids and we are in first place in gas exports. [indiscernible] from powergas stations has dropped somewhat. the is the result of restructuring of the situation in our domestic energy market. , --he whole the saudispoke with crown prince.
would you still be in favor of a production freeze if the saudi's one that? -- want that? pres. putin: as far as i'm aware, mr. selman is the deputy crown prince. energetic person and we have struck up a good friendship. this is a man who knows what he wants and knows how to achieve his goals. time, i think he is a very reliable partner with whom you can reach agreements and you can be certain those agreements will be honored. still, it was not who rejected the idea of freezing output levels. it was our saudi partners that changed everything and decided to make the decision.
i want to repeat, our position has not changed, and if king salmon and i speak about this i shall put forward our opposition again. this is thehat right decision for world energy, that is the first thing. is thatnd thing everyone knows what the dispute was all about. the dispute was that production was to be frozen and everyone should do it, including iran, but we understand iran is starting from a very low level due to the sanctions on the country. i have seen that some viewpoints of economics and logic, it would be good to find a compromise. i am sure everyone understands that. the issues are not economic but political. i was -- would very much like to
help that every market is interested in maintaining stable and fair market prices. john: so you would be in favor of a production freeze but giving iran a little bit of leeway to do what they need to do? pres. putin: yes. vonnie: bloomberg editor in chief john mickelthwait in an exclusive interview with russian president vladimir putin. secretary of state john kerry has begun to speak, and you can watch that on your bloomberg at live go or bloomberg.com/live. he said he wants to share some candid thoughts on the middle east. this is bloomberg. ♪
write down billions of dollars related to a nuclear power project. economies is a senior analyst for bloomberg. toshiba is talking about taking billions of dollars in write-downs. how did they come to the figure? >> it looks like they are related to the acquisition of a company called chicago british and iron about a year ago. they were the big contractor for the two major utilities in the u.s. that are building a nuclear plants, and it looks like it might have taken a full year for toshiba to work through all of the numbers. when i got to the end of it, they apparently realized i have a lot more cost in their construction project than they may be able to recover from the main owners of the plant. vonnie: which are a southern company. will they have problems as a result? kit: it looks to me, initially,
that due to a contract rewrite a year ago which was around the same time that cbn i was bought by toshiba, the utilities went out of their way to guard themselves against cost overruns and missing the deadlines and so on that might have really run up the bills. from the point of view of the utilities, it might be a good sign to see that toshiba has taken this big charge because maybe that billions of dollars in cost do not get put back to utilities. vonnie: what does this say about nuclear construction in general in the u.s. and elsewhere in the world? kit: in the u.s., it is like another nail in the coffin because already with low gas prices, new nuclear plants are increasingly-- uncompetitive. nuclear plant costs overruns have been killers for shareholders. in the u.s., i do not see a new nuclear plant anytime soon.
other regions, much more so. vonnie: are these under construction and will workers lose their jobs? kit: they will finish the construction because they have probably put half of the total of $30 billion of the projected cost of the two big projects underway. vonnie: senior utilities analyst for bloomberg intelligence, thank you. secretary of state john kerry is speaking at the state department right now, talking about a two state solution for the middle east. we will bring you those headlines and you can watch on your terminal at live go or bloomberg.com/live. this is bloomberg. ♪
indices, the ftse 100 having come up one half of 1%. not so much the case in germany and france. real estate companies and financials are dragging the indices lower, but the dax has crawled its way back up and is flat. broader lookat the at equity indices and other asset classes globally, at least when it comes to the g 10 countries so we are not looking at emerging markets. ,ustralia, canada, and the u.k. coming back after the holiday we had a better outlook. the it comes to currencies, euro is at 1.0395, a weaker euro, a weaker krone, and the british pound is down to 1.22. the bloomberg u.s. dollar index which has been rebalanced is up about a quarter of 1% continuing u.s. dollar strength.
let's take a look at some bond markets, the japan 30 year yield up three basis points. let's look at the united kingdom , we are seeing some buying in the 10 year but a little bit of selling at the short end of the curve with the yield up 1.5 basis points in the united kingdom. we will take a look at some of the other movers a little bit later on. $.56.ude is up another let's check on u.s. markets. may be lower,s but do not count out doubt 20,000. the dow flipped positive and is less than 60 points away, so perhaps an important psychological. the nasdaq and s&p are off of the lows so we will see if this
bearish directional cue we have the nasdaqg, climbing higher, if they can return into the green. as for the bloomberg dollar index and the u.s. 10 year yield we are seeing an interesting dynamic. the bloomberg dollar index is about one quarter of 1% up and we have the 10 year yield trading lower, represented in green. it tells us the bonds are rallying. typically these two trade in tandem, and we are seeing not just this divergence on the day but in the near term. ,hen we look on the bloomberg this is a chart since the beginning of the month of december. in orange we have the 10 year yield, and white we have the bloomberg dollar index. the last time there was a divergence it appears the 10 year yield led. there.s very well over it will be interesting to see how it resolves. there are some reasons within this chart that suggest the 10
year yield will continue to lead and the bloomberg dollar index may come off of record highs. trading poorly israel state, the worst sector. homebuilders -- trading poorly is real estate, the worst sector. of stocksnumber trading lower that are rate sensitive. they might trade higher on a day that yields are going lower, but today we have declines of more than 1%, perhaps hurt by the idea that if you have pending home sales down, that some of these commercial reits will suffer even more as rates are rising. .onnie: that is one theory let's check in on the bloomberg first word news with erik johnson. u.s. secretary of state
john kerry is speaking right now at the state department, giving what he calls a comprehensive plan on middle east peace. he says a two state solution is the only way to achieve peace between israelis and palestinians. watch the speech on bloomberg at live go or streaming on bloomberg.com. the head of the labor union representing senior u.k. civil servants criticize the prime minister for not acknowledging the complexity of brexit, according to the guardian newspaper. the latest critique has concerns that the u.k. has not put in place resources to deal with such a large task. may has said she will trigger article 50 by the end of march. this may be more fallout from the brexit vote. itons are holding onto their cash. personal deposits grew at an annual rate of 4.8% in november.
approvals for home loans fell 9% from a year earlier. search teams have now recovered the second flight recorder from that military jet that crashed into the black sea. investigators will use two devices to find out why it plunged into the water moments after takeoff from sochi. all 92 people on board were killed. that seemsade a move to challenge president-elect donald trump. they have deployed their only aircraft carrier to control the disputed south china sea. it is accompanied by five other warships. trump antagonized chinese government's comments on trade and taiwan. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am erik johnson and this is bloomberg. vonnie: thanks for that.
the brexit to italy to upcoming french elections, uncertainty seems to be the only thing on the cards. on bloomberg daybreak america's earlier this month, david rubenstein gave his outlook for italy and the european union. europethere is no doubt is in turmoil because you have the french elections coming up, you have the new government in the u.k. trying to figure out how to get out of the e.u., germany will have elections in haveears, and the italians a new government. it is in the united -- it is in the interest of the united states to have a strong europe, so we are not just saying, too bad. we want to have a strong europe and probably should exercise whatever influence we can to have some impact. i suspect in the end ecb and
e.u. will give some credibility to what the italian government wants to do, and let them be more flexible in working out this bailout because otherwise if the italian government were to be in such terrible shape and europe going south because of it , it would not be good for all of europe. jonathan: europe has been through two crises but arguably we have witnessed more political fragmentation now than four or five years ago, but we do not talk about economic risk in the same way. when will we have talks about re-denomination risks? david: i think it is possible that the interesting to talk about is whether european leaders can come together with something that makes sense. the theory of the e.u. and ecb and euro, europe does better off when things are coordinated. despite all of these devices, europe seems to not be working together as cooperatively as it
should so we need the leaders in europe to get together and recognize the have a potential besis, and they have got to more cooperative and realize that italy cannot do everything that the ecb and e.u. rules require. if germany and others do not relent you will have bigger problems. w.: there was a lot of complaints about the bureaucrats in brussels. the candidate in france is about reforming brussels. is there a move toward a reformation? david: i was at the e.u. parliament the other day and there is clearly a recognition that there has to be some adjustment because the rules are too strict, and you have a bureaucracy in brussels and everyone else feels disconnected. jonathan: we have this growth and stability pact we will try to abide by. when will it take it off the next of the banks, when will we
get help? you spoke to lord blankfein of goldman sachs recently. it is clear the u.s. did not just do a good job cleaning up a betterey have done job of letting banks finance the u.s. economy. when will we see a pivot there? the great recession the european banks did not clear up their balance sheets as well as the u.s. banks did. i think they do need to look at that and the ecb needs to be more aggressive in telling the providingend more and more support. i think mario draghi has done a spectacular job and unfortunately he has to leave at some point, but he is the most important financial figure in europe. when he goes it will be a big problem. vonnie: that was david rubenstein on bloomberg's daybreak america's. esther rubenstein was actually r-a-lago meeting with
president-elect donald trump. this came out earlier according to the spokesman sean spicer. there is mr. rubenstein leaving the presence of the president-elect. the uk's ftse 100 has risen more than one half a percent at close. this is thanks to mining, metal, energy companies, sending the ftse up 30 points to close at 7106, gaining .55%. as a reminder, u.s. secretary of state john kerry is speaking at the state department now on middle east peace. some of the headlines he is talking about, how it is a personal issue to him. both sides are moving toward a one state reality that most do not want. he said if the choice is one state that israel cannot be democratic and jewish. if the choice is a one state
solution, israel cannot be democratic and dilution -- jewish. he says the status quo is leading toward one state and a perpetual occupationmr.. kerry: that is the outcome some are purposefully accelerating. let's be clear, settlement expansion has nothing to do with israel's security. many settlements actually increase the security burden on the israeli defense forces. leaders of the settlement movement are motivated by ideological imperatives that entirely ignore legitimate palestinian aspirations. among the most troubling illustrations of this point has been the proliferation of settler outposts that are illegal under israel's own laws. they are often located -- vonnie: that is john kerry giving his final speech on israeli relations in middle east
. he is talking about the status quo winning toward one state with a perpetual occupation, and has criticized palestinian violence. he said terrorism is not justified. rry giving a speech at the department of state, saying that coalition is leading the state away from a two state plan. i want to bring you a tweet from the current prime minister, benjamin yacht -- benjamin netanyahu, speaking to president-elect trump, thank you for your care for israel. this is in response to trump tweeting out that the yuan deal was a horrible deal. -- you and deal was a horrible deal. twitter communication between the israeli prime minister and incoming president in the united , and therlier on
vonnie: i am vonnie quinn, this is the european close on bloomberg markets. time for your latest bloomberg business flash, a look at some of the biggest business stories. the region and will cut rate fares between the u.k. and u.s.. starting next summer a one-way forht to edinburgh will go $50. it will be the cheapest transatlantic ticket available. more followed from brexit. a report that lloyds banking group will establish a subsidiary in europe if the u.k.
leaves the e.u. without access to the single market. the financial times says the most likely option is for lloyds to convert one of its branches into a subsidiary. london's stock exchange remains an agreement to sell france's -- according to people familiar with the deal. that is our latest bloomberg business flash. after the election of donald trump, expectation for inflation and growth picks up, but economists agree for real growth to pick up any productivity to resume its rise, and underlying structural factors may make that difficult. what does america need for growth? tony crescenzi weighed in. tony: it is important to talk about the productivity story. the numbers of people that enter
the labor force, we know that is growing at a slower pace because of the agent of the population. people and million it will turn to 70 million by -- there is people and productivity. over time historically the u.s. would see an increase of 1% in the amount of people and 2% in the things that people produce, but the productivity number has been growing at only half a percent over the past five years . looking at the data from the bureau of labor statistics it shows three sources of ,roductivity -- people, skills and stuff, infrastructures, oil ranks, what have you, and how it all gets used. in the data it shows it is the stuff part that has been week. we have not been investing. the amount of capital in place
her unit of labor has declined last year for the first time in over 50 years. for a company five years ago that had 100 people and 50 computers, today they may have 100 people and 48 computers. fewer people in place so they cannot produce as much. the future for the united states is to see investments rise in stuff, plants, equipment, infrastructure. for those to be productive assets, and for people to use their skills to make those things produce. david: capital investment is critical. where does that money come from? have been leveraging up if you take private and public debt. where do you get the money to invest in capital? there is optimism that the u.s. government will spend money directly on u.s. infrastructure, but hopefully it is good standing. the recovery and reinvestment act of 2009 went toward structures and infrastructure
that states would have other wise spent, and low value projects taking roads prettier. direct spending will be better this time and there will be policies put in technology? oil companies are much more efficient. how does that factor in? hole happening right now on your bloomberg live go or bloomberg.com/live. this is bloomberg. ♪
global battle of the charts, where we take a look at some of the most telling charts of the day and what they might mean for investors. you can access these on the bloomberg by running the function on a bottom of your screen. kicking things off his courtney collins. courtney: i am looking how the world's biggest fortunes whipsawed in 2016. shows the behind me bloomberg billionaires index that tracks the world's richest 500 people. i had broken it down into a .eginning, middle, and end at the beginning we had court economic data out of china so the world's richest networks limited, hitting a low on february 11. then they recover and keep going on and we get to the middle of the year with the brexit vote. leave theotes to european union and markets were
surprised, really selling off. that wealth drops off sharply, but we sort of continue on, keep going up and hitting a peak on september 6. u.s.nd of the year in the we voted donald trump into office, and that night futures, the markets really selling off. we have been on a trump rally since then. the world's richest ending the year up $237 billion. the interesting take away his was -- that it was such a strong year for the populist vote in the u.s. and europe, and the richest still making more money. i have to point out that warren buffett, the biggest winner last year, up $12 billion. vonnie: that was a wonderful presentation and a great chart. we will check out that risk of 500 rich people. abigail: my chart has to do with the bloomberg dollar index,
trading at a record high. can king dollar remain in 2017? there is some evidence they are it could be consolidation. in white we have the bloomberg dollar index. to believe this area of congestion could be bearish meaning we could see a drop in the dollar. the 10 year yield is a bit extended. on the bottom we have the relative strength index. right now it is above 60. we had a quantitative strategist telling us when it has been above 60 for the last time since 1995 it suggests the yield will pull back. if this happens again, rising rates help the dollar trade higher. the inverse is also true. we may have the bloomberg dollar index fall back from these record highs in the beginning of 2017. mark: abigail, -- vonnie:
abigail, i think you just tipped the scales. the question of whether the dollar will go higher or lower is what we are focused on. but courtney, your chart is amazing. let's have a check on european markets in general, where they ended the day including a record for the ftse 100 thanks to the likes of metals and mining companies. not so for the dax. ♪
u.s. stocks retreat from record highs as the dollar trades at its highest level in decades. at itsr confidence is highest level since 2001. what does that mean for the retail sector and the u.s. economy as a whole? we ask that question to jack kleiman. the world's most famous pop up .otel, a behind-the-scenes look halfway into the trading day, avalanche -- abigail doolittle joins us. abigail: yesterday's rally has evaporated. stocks opened slightlhi