tv Bloomberg Markets European Close Bloomberg January 10, 2017 11:00am-12:01pm EST
mark: we will take you from new york to amsterdam, covering stories, london, washington, in the next hour. here is what we are watching. sterling set for its worst three-day drop since october on brexit concerns. outliningos of today dire threats if officials fail to implement an orderly transition out of the eu. vonnie: console business before nameext flight, the klm one of the best advice when it comes to online -- on time travel. jeff sessions seems -- seeks to become the attorney general come he is testifying now saying he was short -- make sure the
department of justice is responsible to congress. mark: european equities, just under 30 minutes until the finish of the session. you know the function. macro movers come equities on the left. look at the ftse up by one half of 1%. nine straight days of records, that is a record run. those are the currencies that are falling. the euro and pound against the dollar, today, sterling earlier falling below 1.21, 123 is the key level which we will explain. bonds, commodities, your final three columns. corporate news, valiant pharmaceuticals international agreeing to sell three skincare brands to the world's biggest cosmetic company, $1.3 billion. it wants to pay down the $30 billion in debt, that is valeant, embroiled in scandals
about his drug's high process and regulatory investigations. l'oreal paid a high price for the brand to challenge nestlé in medicated skincare, the largest category in the cosmetics industry, accounting for more than one third of the global market, l'oreal shares down 4/10 of 1%. german retailer metro lower earlier now up 4/10 of 1% come it owns media mark and stores in europe. holiday sales missed analysts estimates raising doubts about its growth prospects ahead of this split into two independent companies later this year. a cold shower after the excitement of capital markets. they hope for a better future and dreams of a better metro, a mediocre slightly disappointing set of numbers which reminds investors of all the metros,
steve bernstein says. daimler rallying to a one-year high. the cost of options wagering on more gains as rallies have not seen in more than two years after call trading surged to a high since 2008 and technical as high asy climb 77.58 euros. let's get to julie. julie: things looking up over here, averages higher and building early gains, the nasdaq is the outperform up a quarter of 1%. does not seem there was a specific catalyst to drive stocks higher but telecoms and financials and industrials leading some gains. lower, interesting divergence, sometimes they move in tandem but that not happening at the moment and crude oil falling off below a $52.
bloomberg news has reported that even though iraq is saying it has reduced oil production, some of its loading data might suggest otherwise, suggesting the exports are actually set to increase next month. this rages -- raises questions about the credibility of these cuts by some opec nations, iraq and particular. that is what is behind the line and oil prices. -- decline in oil prices. outperformance among transportation stocks. we have airlines helping to lead outgains, southwest coming and reporting december traffic up 4.2% and says its fourth-quarter operating unit revenue, revenue her available seat mile will fall less than it anticipated. alaska air is benefiting from an upgrade over bank of america merrill lynch analysts who are
22 opportunities from its acquisition of virgin air. shares up 5%. vonnie: thank you, we will be watching those and talking to minutes butin a few first the first word news. choice to bemp's attorney general being questioned now by the senate judiciary committee, jeff sessions says he will not be rubberstamped for donald trump and told lawmakers he would stand up to the president if needed. you can watch this confirmation hearing on our live event channel at bloomberg.com/live. president obama makes his farewell speech tonight, will not speak from the white house, instead from his adopted hometown of chicago. he is likely to deliver warnings about policies being proposed by president-elect donald trump. watch the speech tonight on bloomberg tv, coverage beginning at 9:00 p.m. eastern time. afghanistan come authority say to bombings have killed 38
people and wounded dozens more. the taliban is claiming responsibility for the attack. a suicide bomber targeted and. -- area near government offices and a car by that car bomb went off moments later. the chinese president will become the first one to address the world economic forum in switzerland, addressing the opening session of the annual conference of billionaires and political elites, company by top chinese business executives including alibaba founder jack ma. global news 24 hours a day powered by more than twice its journalist and analyst in more than 120 countries. this is bloomberg. mark: let's turn to the pharmaceuticals. they faced criticism in the u.s. or high drug prices. what will be the victory of donald trump? what will it mean for the sector? schachterhter -- eric
has a special guest? merck. with the ceo of i am specific to make a distinction between american company and what some people called the german mark, just to confuse you. good morning. >> good morning. >> you medical person yesterday and i would like to pick up on a point you made. i should remind everyone that yours is a diversified company. >> it is true. >> you are in health care, life sciences and an electronics business what you call performance materials. you said yesterday that the financial world, call it wall street if you will does not understand your business well enough. why not do something about that? >> that is why we are here talking about that. going from here to silicon
valley and will be talking about a lot of technology company venture capitalists, what i meant to say was that, given the structure of the analysts world, people either cover pharma or something else. workings ofternal the financial industry that sometimes creates this issue but we do not worry much about that. >> a problem with confusion is that it can penalize your evaluation. and/or performance materials -- and yourrates performance euros business operates on a higher-margin than your other businesses, why not spin it off? >> we are a family owned company, listed on the german dax, publicly listed, at the same time, the majority family-owned, that defines the specific type of strategy of diversification. our businesses have a lot in common, they are science-based, a science and technology
company, all about innovation. at we are experts in physics and physical chemistry and biology and medicine. we believe that makes a lot of sense and the technology trends are converging. >> even for the sake of your publicly traded public shareholders, you could do a partial spin off, and set your full valuation for your higher margins businesses while still keeping it within the family so to speak. >> in comparison, we are probably one of the most active portfolio managers, we have been moving over the past 10 years, moving almost 40 billion euros in assets in acquisitions and the vestiges. -- the best teachers. nobody will say we are complacent in this area. >> how will the lack of complacency manifests itself? you are no stranger to large deals, $17 billion for sigma, an
appetite for large transactions. >> we have tried -- acquired sigma-aldrich $417 billion in 2015 and we still have almost 12 billion euros debt on the balance sheet, currently -- currently the name of the game is deleveraging. we are doing fine. we have a strong cash generating machine so to say. aboute excluded any deal 500 million euro for the next couple of years, given that we have such -- we put so much priority on deleveraging. >> does that put you at a strategic disadvantage compared to your competitors? >> not necessarily, very busy with the integration of a lotaldrich, it requires of attention, the health care business has an interesting pipeline, we think we can grow organically.
we look at our performance materials business, the world leader, have market shares of 60% in some of the most important areas in which we work. we do not see any necessity to move and organically at this stage. >> let's talk about your health care, with donald trump set to take office, you know policy change is coming, something will replace obamacare, what will that have in terms of impact on your business? >> our current business is mostly in the specialty pharma, the u.s. is a very important market for us. we generally believe that the u.s. health care system will continue to reward true innovation. there is so much that still needs to be done in medical research, especially in every such as oncology and neurology. we have an optimistic view. >> an optimistic view because
you think what will happen? >> there has been discussion about the pricing environment in the united states, the pricing environment in other countries and this discussion is natural. people are talking about how to best use resources in health care. medicinee that noble are usually a very good way of investment in health. >> the price setter for so many drugs in the american market are the farmer managers -- pharma managers. >> a competitive system. >> they are not about to reward you for innovation, their business is to crush you on pricing. exists for a couple of decades. this is what business is about, you are negotiating price in the marketplace. at the end of the day, it is about what value is being
generated for the patients. is u.s. health-care system one of the systems that rewards that better than others. >> do you think is more value based then say some of the more monolithic -- atthe u.s. system is better recognizing value for patients. >> you will see more of that in 2017 under donald trump? >> that is very difficult to predict. we have not heard anything --cific about policy specific policy statements, i was referring to the fact that the patient in the u.s. health care system has more of the sake been in many other more monolithic centralized countries. >> thank you for spending time with us on bloomberg television of the jpmorgan health care conference. , theis the ceo of merck german merck to make it easy.
vonnie: live from london and new york, i am vonnie quinn. mark: i am mark barton and this is the european close on bloomberg markets, 15 minutes until the finish of the tuesday session. stats out with its annual list of international airlines with the best and worst on time or performance and the worst and air, iceland air
india with the highest percentages of flight arriving more than 15 minutes late. el al more than half the flights were late and the best work klm and jal. klm is top of the pile according to flight stats. joining us from amsterdam is the ceo of klm. thank you for joining us today. flights --keep your the number of your flights delayed so low? pieter: we work hard to make that happen and we do things with tools and processes and people who are all committed to make sure we deliver the best performance to customers. mark: does this data matter to you, being number one in the on-time statistics? pieter: of course it matters. it matters for our customers.
they are very excited about this . our people work every day of the year very hard to make sure we ifa on-time performance and an independent company like flight stats is recognizing you as the best in the world, we are very excited and proud of that. mark: does it translate to more traffic or not? pieter: for our customers and passengers it is very important, especially those flying on a tight schedule. for us, coming from a small countries with connecting travel it is important we run such a reliable operation. ,ark: when it comes to traffic last year your passenger tally rose by 6.4% to 30.4 million, will you be that in 2017 -- beat that in 2017? hard, the will work 30 million we hit in 2016 was a record for our company.
years, we built it from a small company to where we are today and committed to continuing that by adding new destinations next year and welcoming more customers aboard our aircraft. mark: at the same time, air france passenger tally fell by roughly 691,000. but you have to continue to upset the declining performance that your merger partner -- of your merger partner? pieter: there was restructuring in air france, if you look at the long haul numbers, the trends are comparable, especially some of the restructuring of the medium network. if we look to the combined performance of air france and klm, the figures are much more aligned. mark: other data on passenger traffic, bloomberg has written about, the number of customers multiplied by customers flown.
lufthansa is hanging onto your coattails, they are closing the gap, can you stay ahead? pieter: it is definitely what we are going to try and work very hard for. a punctual operation is extremely important for us and we have put all her resources and we are aligned to make sure we continue on the same track this year. mark: when it comes to issues at air france-klm, seem to be on the air france side, a management shakeup and a nine point business plan released by the new ceo. going to be able to squeeze more efficiency out of the company, you are facing competition from the discount carriers, facing more threats from the gulf. . -- the gulf carriers. world ishe airline changing rapidly in the last couple of years and as a consolidated entity of air france-klm, we are ready to be
part of that consolidated world. if we look to the world around us and dealing with big partners in the u.s. where we have a great operation with delta, it is important to be a part of a larger entity and within that larger entity of air france-klm, we are doing -- they are doing their part of the restructuring which is necessary to end up with the changes. mark: how are higher oil prices going to hit your margins this year, crude oil closed at an 18 month high, how are you hedged going forward? pieter: i am not in a position today to give any guidance on the financial side, we will publish our annual results in february. i would not like to commend -- comment on the financials. mark: what you may be able to comment on is the fact that as a company, especially your merger partner air france, strike threats an issue overhanging that side of the company.
is there a sense of frustration when it comes to the klm side, that may air france is holding you back when it comes to an issue like this? currentobviously, both -- companies are doing their part of the restructuring and the philosophy within the group -- if you are able to make that philosophy, if you are able to make the restructuring effective , there is room for investment and growth and that is what we are doing so no such frustration. mark: thank you for joining us. the ceo of klm joining us from our amsterdam bureau. we will continue counting down to the european close, eight minutes away from the tuesday session. this is bloomberg. ♪
away from the thinnest of the tuesday session. vonnie: from new york, i'm vonnie quinn. time for the bloomberg business flash, the biggest business stories in the news now. optimism among american small businesses rose by the most since 1980 come expectations about the economy improve dramatically following the presidential election. the latest survey from the -- says that more companies tend to invest and hire more. has run the european union approval for a $4.8 billion bailout from the french government, it will be paid out after it sells its reactor business and passes safety tests. the european commission says france could grant them a bridge loan to cover their liquidity until a larger capital injection can be made. that is your bloomberg business flash for this hour. mark: take a look at what equities are trading as we head to the finish of the tuesday section, the ftse up with the
ninth day, will they close higher, if it does, that will be a record. nine days of records and the run will be a record. gains for the stoxx 600, the dax, today. the currency board, the dollar is falling and the euro up against the dollar as is the pound. earlier sterling fell below -- earlier sterling fell. i will leave you with the bond board. an appetite for risk today, yields rising in the u.k., germany, and italy. the close is four minutes away. ♪
leisure also up with utilities -- down today. a week ago the stoxx 600 entered the bull market territory, it has not been plain sailing since then. this is these that of the day which i'm excited about because i love stats, 11 days in a row, the game that the ftse -- gain that the ftse has enjoyed and nine days of records which is a record in itself. i will not say anything else because we will talk about it later. , thethat time, the 11 days ftse is up by 3.4%, helped in no small part by the weaker -- let's talk about william morrison, one of the biggest supermarkets, shares of 3.8% profitraising its forecast after posting its growth -- best christmas sales in seven years with shares nearing a three-year high today, fighting back against the growth of discounters.
same-store sales excluding gasoline rising 2.9% in the nine weeks finishing january. the best performance by one of the big four cents 201 -- since 2014. better than expected christmas sales. one would hope for the industry. let us look at european banks, a fantastic chart, banks should be at a turning part -- turning point, a lot to do when it comes to catching up. the s&p banksis index and the white line is the stoxx 600 banks index. the outperformance by the u.s. banks, down by roughly 30%, european banks down by roughly 70%. in sevenean gauge down of the last 10 years with the s&p 500 banks index down in the last five. five of the last 10 years and citigroup which has an banks has on european
a recovery in global economic growth and improving commodity prices may signal the trade in investment half past their low point and that both well for european banks, the worst performance over the last decade , european banks, among 285 sectors and regions, citigroup tracks around the world, what a wonderful stats, what are you looking at? vonnie: oil, we are seeing weaker prices today for brent and nymex, 51.58. russia complies with what it said it would comply with and we are seeing a little bit of prices coming down on extra supply from the united states and less supply from the opec and non-opec countries that made the agreement. currency wise, we keep an eye on the lira which gets weaker, 1.5% more week today at 3.7677 and we its to watch the yuan, tendency is to weaken him a not
so much the offshore as the onshore, no matter how much china is spending on trying to have it not weaken so much. country market movers, for a look at other assets including stocks, higher today, was the from the small business optimism index showed expectation rising dramatically as things like hiring plans and the expectations component of the real outlier, that is probably what is pushing the small-cap index higher. the s&p is also higher and even though we saw a record a couple of days ago by a quarter of a percent, illumina one of the country as companies leading that. strength for the young today. -- yen today and the dollar is consolidating, down a little bit. yields, not seeing a lot of change. the 10 year in the u.s. is just up two basis points. below was 2.328.
let's go to bloomberg first word news. >> u.k. foreign secretary says donald trump's incoming administration wants to complete a trade deal fast. as britain prepares to leave the european union. he told lawmakers at the house of commons that there was enthusiasm for an agreement when he met earlier this week with the president-elect's advisors. the same jury that convicted white supremacist dylan roof of killing nine black churchgoers will decide his fate. the jury begins deliberations today on whether he should get the death penalty, he represented himself during the penalty phase of his trial and called no witnesses and did not ask for mercy. police have responded to reports of a hostage standoff near the university of alabama campus in tuscaloosa. the city received a report of a robbery and hostage situation at a credit union branch, officers and closed the area video shows police and military style vehicles and tactical gear.
the soccer world cup is getting bigger, the global sanctioning body for soccer has agreed to increase the field to the world cup from 32 teams to 48 teams beginning in 2026. fee for estimates with 80 matches instead of 64 it can bring in another $1 billion for broadcasting and sponsor deals. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. mark: thank you. uk corporate executives voicing concerns over brexit negotiations, especially when it comes to the risk to jobs in markets. in testimony before the treasury select committee we heard from top executives at alianza global, hsbc, and the london stock exchange. >> we believe that a stable framework of grandfathering for a limiting time to be determined
in advance of course, is likely to strongly support positive outcome for the negotiations because it is clear that massive migration or changes in customer behavior would be no good to anyone and a very complex negotiation and it would reverberate globally. >> detail in the regulations which we would not know about and our lawyers can only get to on day 100. in practice, there will be some sort of agreement that you have to grandfather the status quo until we have completion because these are legal contracts. >> in my view, it would need to be accompanied by a clear indication, a direction of travel and what the best definition is, we are we were aiming for the definite -- destination to be here -- destination to be. mark: sterling dropping to as low a level -- lowest level
versus the dollar and a wild. u.k. ftse 100 adding to its record 3 -- record gains. christina.is excitingery excited -- , nine in a row, a record high, who would have guessed it? >> it is an incredible start to the year for the ftse, not many people predicted it, last year they were saying this is the time to sell the indexes, it has been overbought since christmas, and yet it has showed no signs of stopping, miners are leaving the game, the pound is helping. i cannot tell you when it is time to sell even though the index is showing all the wrong signs that it should. mark: we will get to that in a second, propelled higher by one important factor. sterling. >> absolutely.
the stock market might love it but fx markets are a whole different story. it does not look like it will turn anytime soon, especially not before march when article 50 is supposedly triggered by prime minister theresa may. between now and then, it looks like it will be a bumpy ride. vonnie: what are forecasters saying in terms of comparing it with the u.s. dollar versus comparing it with the euro, where would we see more weakness? >> i think the dollar -- the pound against the dollar has more room to fall because we also have the dollar in the fed on the other side of that equation. we know that there is a bit of a diversions between fat and bank of england policy where we have the fed looking like it is very much ready to raise rates even more this year, meanwhile the bank of england is still very much in neutral mode. vonnie: what does that mean for companies planning forward, if the pound will continue to weaken, at some point, it may
not be a boost. >> exactly, i think the truth will all come out in the earnings season that we are about to have. it really takes off in february and that is when big exporting companies listed on the ftse will tell us if the pound has really helped their bottom line and if it will help carry forward. there is only so much they can hedge and hopefully they can have -- be able to drop the , the lower pounds be through to higher revenues. mark: what are the signals telling us, traders do not seem to be loading up on options to project against the downside, what are the ruin showing? >> it is quite surprising that we had this tough market, a record, rsi over 70 which means that it should really turn lower but no one is really rushing to buy protections, no one thinks
at least in the options market, that this is something that will correct itself soon. >> we have strategist saying cell, a difference of market, it may last the rest of europe because you have the likes of the dax who are lagging behind and have a lot to catch up. maybe rotation but the ftse correcting, no one is telling me that. pound a currency that is trading on politics? data was macroeconomic all good, pmi data on construction, manufacturing, and services, the pound barely budged. is it politically driven currency now? >> it certainly seems that way, mark, we had better than expected data as of late, inflation expectations turning higher, when you look at my the middle's of the u.k. it does look like it should be supportive of the pound.
uncertaintyrce of and negativity among analysts and market participants is the fact that we still do not know what brexit will look like and what the u.k. relationship with the eu will look like. we will not get any answers anytime soon. vonnie: if you were a hedge fund and you took a position on the pound, if you listen to my bloomberg, you will see the function, spot returns, the canadian dollar at this time last year was the one you saw the most strength versus the pound, the new zealand dollar and a time you trillion dollars next and then other currencies. what are hedge funds saying about this year? parity,ere looking at how do you see a very different picture? spot returns, what are hitch -- hedge playing out? willing like they are to keep writing this dollar strength train which makes sense when you point out that it is the canadian dollar and the australian dollar that are
gaining the most out of this which makes sense because they are kind of more higher yield in currencies compared with the pound. for sure it seems like the dollar rally, we may get some pullback here and there, it seems like trade is here to stay. vonnie: if i can ask you about rotation, we had bill gross today saying that 2.6% on the 10 year treasury was a lot ticker news than just hitting 20,000 on the dow. when it comes to the ftse 100, where is the rotation from? from guilt, u.s. assets? >> the u.k. stock market is historically one of the most under weighted markets in the world. unlovedr, it was so that almost everyone in the merrill lynch survey was underweight which basically means they owned less u.k. shares. maybe just the rotation of stock
investors finally seeing that there is another way to play this ftse, it is through the pound and commodities. not just about the u.k. economy and when it comes to the ftse, not about the economy at all. this is the ftse without commodities, the blue line is the ftse 100. the ftse without commodities is the white line. months, it 12 or so actually is down, if you do not miners, thebig bankers the best performers. to drivetely helping gains come at fantastic rebound for the stocks which means as they get those gains, they are also a bigger partner of the index and weighted terms, driving the index more than they were when they were the climbing. -- declining. it was a two way thing, the more they rise, the more they help.
mark: thank you for joining us. vonnie? vonnie: attorney general jeff sessions continuing his testimony on capitol hill at his confirmation hearing. to upholdssions about the law including immigration he will also says recuse himself from any investigation involving hillary clinton. he supports keeping the terrorist prison at guantanamo bay open. he opposes losing it. you can watch this testimony live on the bloomberg at live go. this is bloomberg. ♪
york, i am mark barton with vonnie and this is the european close on bloomberg markets. france prejudicial hopeful -- a france presidential candidate is making a speech. before meeting tomorrow with economist, labor activists, and politicians including the vice chancellor. will it help bolster his place as third favorite in the french polls? joining us is bloomberg's alan crawford. why is he heading to germany? to be one in germany in the french election. >> that is very true but he is trading something of a well-worn path, remember the president kennedy delivered his famous 69 berliner speech at the height of the cold war. more recently, a young barack
obama chose berlin as the backdrop for his major foreign-policy speech when he was in the presidential campaign in 2008. it is following well-worn footsteps and a signal of real politics, this is effectively the capital of europe, not brussels or london, it is berlin. mainly because of angela merkel. mark: what are the themes he will tackle and get across while in berlin? needs to establish his foreign-policy credentials. he was a former economy minister and francois hollande's government and he needs to show his -- he needs to preview his ideas on europe in the german capital because france and germany traditionally act as a
dynamo working together to try and push forward a european agenda. it makes complete political sense to be here. mark: is angela merkel listening? attend but i am sure she will have representatives in the audience has beenafter all, she something -- he has been something of a surprise candidate during this campaign for the french presidency. there was a poll last week that showed him in third place which was a surprise. he is making good games. i think it is too early to write him off. mark: knows he just and that he will be able to -- knows he gestured he will be able to the favorite or is a slowly becoming a three-way race? alan: the last poll showed it as
a clear three-way race. polls have proven to be wrong, the french polling system is somewhat different than holes for brexit or the u.s., but -- , its for brexit or the u.s. is all we have to go on but angela merkel will be taking him seriously. mark: thank you for joining us. companiestex recovering -- tech companies recovering, we had a chart to prove it. -- we have the charts to prove it. ♪
the bloomberg by running the function featured at the bottom of your screen. kicking things off, dani burger is back. neck techre the stocks. these did well in 2015 -- and white we have -- in blue the s&p 500. s&p is beating it out, a bit of a surge in the middle of the year. it did not so much work over here. this is a cyclical rally. the defensive company doing better than mega-cap stocks and an energy rally taking. over here, a ratio, and 8% decline, the zero four tech stocks, not doing so well. arrow,ek, this yellow this is a 6% rally over a week, the best one week rally since
october. there was some bearishness in this group, difficulty with earnings but the bearishness which allowed the rally at the bottom because think about it, every other sector has rallied from -- since the donald trump election and tech was the last shoe to drop and now it is occurring and you can check this btv 4884.t g# vonnie: i am scared but going with something you talked about earlier, minus more colorful and illustrative of what you're talking about. mark: hang on. vonnie: industrial outputs and how the move in tandem with industrial profits. as we had the recession in producer prices, profits decline and these are industrial profits, very volatile. they were just down, the one
thing you could say about them and i have this resurgence over the last four months to produce a price indexed which locally -- likely for chinese consumers is not feeding out to the component of things. this buildup of prices on the producer side, and that may bode well for industrial. mining profits up by about 10% in the last quarter. other industrials such as -- i have it written down -- minor profits up 21% and raw materials were up about 10%. that is your look forward. mark: where can we find that chart? vonnie: 1882. vonnie: -- mark: you are usually so good at playing to the judge but she shed her chart was more literal -- colorful and illustrative.
birthdayt is someone's , she produces this show, happy birthday, chelsea. chelsea will decide. she did not know this. she will decide who wins today's botc. vonnie gets it. i would have given it to dani after vonni and salted me. me.onnie insulted where -- the ftse a record straight nine consecutive days, a record in itself. this is bloomberg. ♪
♪ david: from the european headquarters in london, we are covering stories from new york to washington and ankara. are watching, a big day in washington, confirmation hearings with senator jeff sessions for attorney general. we looked at what he would mean for wall street. 11 brexit aftermath, stockpicking ceo outlines the most dire threat officials should fail to implement a failure transition out of the havehe says brexit could -- philip kicking off january with his biggest private sales exposition ever. displaying 11 abstract forces with a combined forces of $95 million. halfway into the trading day in the u.s., julie hyman with the latest.