tv Bloomberg Markets Americas Bloomberg January 13, 2017 10:00am-11:01am EST
vonnie: we will take you from washington to tokyo, and covers stories out of london, paris, .nd wall street first, u.s. economic data. consumer sentiment coming in estimates. still a strong reading, but it was supposed to come in at 98.5. we have stronger confidence readings in the wake of the election and the rise of the dow here at risk assets doing well to consumer confidence and talk of jobs. how markets are reacting, as well as other economic data. abigail doolittle has more. abigail: we have the dow, s&p trading higher. the nasdaq carving out a high on
intraday basis and a record closing high. the s&p 500 was on pace for a record closing high. there is contrast to the declines we saw yesterday. we are seeing an uptick of intraday volatility. g the bloomberg looking at , it has been more than a month since we have seen a move up of more than 1%. 64 days since a move down of 1% or more. that is the second longest streak of not seeing a 1% move down. seriously strength for the s&p 500. behind the strength are banks trading higher. bank of america, jp morgan, wells fargo trading higher. jpmorgan at a record high after beating revenue and earnings
estimates. .ank of america missed julie hyman was on the earnings call, and it sounds they are focused on consumer business and cost-cutting. perhaps that is helping. we look at the typical assets, and the vix, the 10 year yield is up six basis points. bonds trade off a bit. that theyso a tell are not seeking safety. the vix trading lower or the fear gauge. we have gold trading down and the dollar against the yen gaining ground after the yen was up four days in a row. a risk on claire. for the day. touch and go whether. it will be the third week of gains. best run since november 25. we need to rise, .8%.
banks, insurers, construction, the best performing industry groups. chart, the ftse 100 is rising for the 14th consecutive day. an ongoing record. record high for 12 of those days, also a record. the white line is ftse, the blue line is price targets. 12lysts say in the next months there is a 5% upside chance for the ftse. pound. line is the a lot of the ftse's gains has been on the back of the pound. it is dominated by exporters. ftse is theine, the most overbought since 2013. 83.55. an amazing run up by 14
consecutive days. monitoringer, we are the stock after it fell 20%, finishing 16% lower. it is down 12%, rebounding after the u.s. accused it of violating pollution laws. dismissed the allegations as hogwash. they're looking at $450 million under a new epa chief under the new trump administration. shares have risen 40% since the trump election on his pledge to deregulate, including fuel economy rules. he is focusing on suv's and lucrative pickups. auto story. paris prosecutors opening a preliminary probe into fordions weeks after
watchdogs found enough material to require further investigation. renner says they are not using software. they say they do not have fraudulent equipment that the vehicles meet effective norms. shares are following regardless. they are down by 2.7%. a big couple of days for the auto industry. days but big couple of the banking industry, too. bank of america, jp morgan, wells fargo kicking off the earnings season. earlier the bank of america ceo shared this outlook about the trump administration. >> the optimism for positive .hange is palpable it has driven stocks higher. we will see how these topics play out, but we are optimistic. in the interim, we will operate
companies by controlling and driving what we can. vonnie: for more, julie hymen has been monitoring earnings calls. also, the senior rank analyst for bloomberg intelligence. have bank of america and jp morgan been saying about the incoming trump administration? was tooleman he said it early to comment on regulatory changes. he was asked if the compliance under auld change different regime. he said the company has invested in talent and capabilities in compliance and risk in 2010, 2011, 2012. smallerany has become and it has become a larger proportion of the workforce. that is where the compliance of operation stands with regard to regulations.
jamie dimon had interesting things to say on the media call. jp morgan call has just begun. jamie dimon on the media call saying, putting aside one-liners and election rhetoric, he was putorted that trump has real professionals in the playing field. steven mnuchin is talented. tillerson is talented. i have some comfort they will do the right thing for america given time. that is what we heard politically and regarding regulations from the heads of the 2 banks. wante: allison williams, i to ask, we were expecting what we saw in the earnings reports. what were the surprises that you saw? : bank of america, overall, giving investors the most they could in terms of optimism. we have had a run in bank of america and the industry.
the positive stock reaction is impressive. where things were mixed, but on bank of america we heard reasons for optimism. they gave numbers to net interest income benefits in the first quarter from the rate increases so far. we have the share repurchase program accelerated. that increased overall even after the share. the buyback, their capital ratio. one negative impact of the huge move in long-term interest rates is negative capital. they have talked about requiring coming down. this is what we have seen at other peers, a key positive that we heard bus about today. mark: what can we gauge about trading revenue? issed.f america m what is the take away? isson: the jp morgan number
the most important because they are the biggest. bank of america, there were some areas that were hurt. minutes of pools were a big area, that relates to trump and tax reform. theexpectations ahead of bigger companies, goldman, morgan stanley, and to citigroup , the jp morgan offsets the bank of america loss on a net. mark: looking at the shares which you commented on since the trump victory, bank of america up 35%. thebiggest gainer among lenders. why did it outperform? alison: for all of the big hass, one thing is there been a lot of buying of the financial etf. when that happens the biggest companies in the etf will see
the biggest benefits. when we look across the stock is the best,t who that helps valuation. jp morgan at the higher end of that range. r.o.e..rgo also higher there have been concerns around the scandal, but i expect it to generate higher return. hyman, talking to jpmorgan and asking questions. were any questions posed at the bank of america? julie: a lot of the questions were the nitty-gritty of what happened during the quarter. ,n trading, since mark asked bank of america said trading slowed at the end of the quarter. you know, the increase in rates
that we saw was something of a double-edged sword. on the one hand it is better for net interest income. bank of america says that number will go up by $600 million in the first quarter as it sees the effects of higher rates. on the flipside it can depress, as we saw in the bond rout, fixed income trading revenue. jpmorgan on the media call, about hown was asked things looked for the first quarter. did they see a similar slow down to bank of america? he wouldn't comment. he said he is not fixated on the short-term time period. vonnie: we haven't asked about wells fargo. was there anything of note? the banks ares enunciated in? keyon: for wells fargo, the is what is happening following the in proper sales practices.
they announced a new compensation program, making progress. also making progress with retail metrics. that is one thing they are focusing on. see what we would have expected from the banks in that quarter. going forward, in terms of looking at the companies and the stocks, the stocks have had a huge move and are building in optimism. we will have to see reasons to support the optimism. a lot of that will take shape in regulatory and tax policy. mark: how are they doing in courting new retail customers following the scandal? alison: it is not according to a customers, it is stopping closing. looking at the last few months there has been a slowdown in looking at account openings on a year-over-year basis.
you are seeing improvements from when the scandal first hit. vonnie: julie hyman in the newsroom on the jp morgan call. thanks.on williams, next week we will have the jp morgan ceo, jamie dimon. ourof the interviews from economic forum in davos. more from our new york newsroom. >> lawmakers who want to appeal the affordable care act face their next hurdle. the house is expected to take up a measure allowing for this would repeal of president obama's health care legislation. several republicans plan to oppose. a are concerned about coming up with a replacement. donald trump says he will have a full report on hacking in 90 days.
in tweets he said a report that russians had compromising information on him was put political opponents and a failed spy. he called the allegations phony. james mattis is the latest to president-elect on seeking relations with vladimir putin. he said russia is a strategic competitor with the u.s., and will find little common ground. china's exports were lukewarm. overseas shipments fell 6%. global demand hurt sales. china is bracing for trade friction with the u.s. under a trump administration. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. mark: thank you. may's old,theresa new trade agreement. that is next this is bloomberg.
mark: i am mark barton. vonnie: i am vonnie quinn. this is "bloomberg markets." business the biggest stories. pandora posted fourth-quarter results that beat estimates thinks to strong ad sales and paid subscribers. the world's largest online radio service cutting 7% of its 2200 employees. another automaker be investigated over vehicle emissions. it is rueaunald. say they have not been told
of any investigation. they are not using software to cheat on a missions. the britishash of pound. for two minutes on october 6 sterling fell 6% in 31 years to -- to the lowest level and 31 years. factors ranging from the time of day to the lack of expertise of staff as reasons for the drop. that is your bloomberg business flash. were trade and security top of the agenda as to resubmit a held talks with her new zealand counterpart in downing street. here were the takeaways. theresa may sees scope for a bold new trade agreement with new zealand. she says the trade secretary will visit new zealand. the trade deal with new zealand is possible in a reasonable amount of time.
her new zealand colleague says he will seek a comprehensive high-quality trade accord with britain. he says talks of a trade agreement could start soon after .rexit markets and politicians will pay close attention to may's speech on tuesday when she will set out brexit.on for sitting down with the luxembourg finance minister, and he was asked about the mood among fellow finance ministers. >> we should not want to punish the united kingdom. we should try to treat them in a way that you do with someone who has been a long-standing member and will stay an important partner. mark: as for the rise of populism and donald trump trump 's incoming administration, he hopes free thinks his policies. is consistent in saying
that he is doubting the benefits of open trade and globalization and wants to go the route of protection. this is a big worry for europe, as we are -- it is a worry for japan. we have to see how this will really happen in reality. an united states is also export champion. staging ae etf comeback as donald trump appears to take office. we are talking revival next. this is bloomberg. ♪
applico? abigail: the often overlooked dow jones etf staging a comeback. joining us is the senior etf analyst with bloomberg. the dow may not have achieved doubt 20 thousand. some experts say it won't. since the election it is outperforming sp y. we have a report showing this. 5574.s g #btv -- i have blown off the diamond for a while. really, it is beating the s&p. the space you see, almost all over the s&p is from goldman sachs. this brings into account how the dow is weighted. with about the weight indexing. it is price weighted. if the stock is trading at a
high price it gets a high weighti 8.4%ng. , a monster weighting. is goldman is the 15th biggest company with a .4% weighting. take apple, the biggest in the s&p 500. in the dow jones it is the ninth biggest because it is only 140 dollars a share. that is nonsensical. this goes back to when the dow was invented in 1896. when you look at how it was done, they wanted something to measure the market. it wasn't meant to be investable. if you go back to when dia was insepted in the 1990's, s&p since thethe 1970's. it is doing quite good over
multiple time periods. of the dow.ew fan applico: is the flow increasing into the diamond? flow grow by 3 billion, 28% increase in assets. on a percentage basis, the rate of flows is bigger in the doubt etf. : the question you are being asked, do you think there ?ill be a trump-related etf will it involve tweets? >> i think there will be. there is an etf for whiskey and drones. i don't think they will call it trump. the question is, how would you design it? this is where active has an opening.
you need to be click on the draw to go short or long in stocks pretty couldn't wait for the quarterly or monthly rebalance. trump is random and erratic. would do well. hedge funds is working on out rhythms, but i have not seen it in etf yet. vonnie: abigail doolittle, thank you for that, along with our etf expert. i wanted to let you know president-elect donald trump is meeting with lockheed. he continues to meet with ceo's at trump tower. the lockheed ceo at trump tower today. this is bloomberg. ♪
on bloomberg's first word news spirit here is a lisa parenti -- alisa parenti. trump says democrats should not complain about the fbi's handling of hillary clinton because she is "guilty as hell." he seems to be responding into a doj inquiry into the fbi's investigation of hillary clinton. obama has taken one last step in trying to reverse the cold war isolation with cuba. he has ended a policy granting residency to cubans if they reached land but not if they were caught at sea. -- turkish herds them president is wrong to keep troops in cyprus as talks into
to reunify the mediterranean island. negotiations will pick up again next week after top officials from cyprus, greece, and turkey hit a wall. securities, guarantees, and property rights are the main sticking points. cyprus has been divided since 1970 four. a new study says declining are contributed to inequality in the u.k. about 20% of working men work part time in the u.k. just 5% did so a few decades ago. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am alisa parenti. this is bloomberg. mark: thanks. u.s. banks.ck to shares of jpmorgan hitting new highs. he reported a profit climb that topped profits estimates.
julie hyman has been listening in on the jp morning earnings call. what have you heard so far? julie: just now listening to jamie dimon responding to a question to give more detail on his comment earlier that the u.s. economy is gaining momentum. indicators hehat was looking at, and he said he is looking at actual retail spending, auto sales, confirmation numbers, not based on what the market is doing that economic indicators he is seeing. he also says we are seeing better data out of japan and europe, for example. he said that said, the bank currently does not plan to change its hiring or spending plan much. he said that could change if the regulatory environment changes. talked front, his cfo about potential regulatory changes. she says the company's spending on regulation cost controls,
regulatory costs, peaked and is now trending down a little. at the same time, the bank is picking up cyber security spending. another comment came around the sapphire card, which has been popular, especially among millennials. the original thought about cutting back promotions, which is something they typically do with a new product. the charge off for the car last year -- that is some of the commentary that continues to come out. vonnie: thanks. we will check back in with you several times today and later on. for more on jpmorgan and reports from wells fargo and jpmorgan, let's bring in fred cannon from kbw.
coverage on the financial firms and some of the trans-banks are noticing. banks are the trends noticing. fred: there has been a lot coming outs. we have to listen in to the call to get the full flavor, but the rally of seen in stocks will be verified by earnings that we are getting headline beats, and the positive outlooks for big banks. the narrative is intact is this is a group that can have reasonably good earnings and a positive trajectory of earnings in the future. vonnie: what about the fact that net interest market -- margins can be good but still that you mental? fred: higher rates has -- but still detrimental? we are very cautious on the big mortgage names, which is
why wells fargo is our least favorite of the big inks. the mortgage business will be under pressure as refinances disappear and competition for mortgage banks intensify. mark: you touched on wells fargo. how are they doing in quarreling -- quelling this cross-selling scandal? is a moving on and regaining trust? fred: you cannot rebuild trust that well. i have a two-year rule, where it takes two years before you can get trust back. even jpmorgan took almost that long after the whale incident. they handled the situation better than wells fargo has been handling it. mark: i want to show you a chart that shows the correlation in the top chart between the s&p 500, the blue line, and the u.s. 10 year 2009. the bottom chart is the stoxx 600 bank index, the red line, and the german 10 year.
jpmorgan said rising rates will high to erode the correlation we have seen between lender shares and bond yield. when will this breakdown? says the correlation will soon behave like a has done historically as borrowing costs normalize. we have some idea of when this cordless -- correlation may break down? fred: we really do not have a great idea. this is a new interest rate environment. they are right. at higher levels of rates new the end of a tightening cycle -- near the end of a tightening cycle, that relationship will break down. awever, we are still quite ways away from that. i would not expect that until maybe the end of this year, early next year. i do not want to say a rising tide is causing boats to
go up, but is that partially behind this? is it based on fundamentals? fred: it is based on fundamentals but also there are two issues related to that. right now, we at kbw are hearing from folks we have not heard from in years. why? particularctor in benefits from higher rates and lesser galatian and lower tax rates, better than any sector. -- from higher rates, less regulation, and lower tax rates, better than any sector. mark: the higher rates are playing out, lower taxes we do not know, and the likes of regulation we do not know. fill in the gaps when it comes to taxes and regulation. what is the best and worst we can expect? fred: we tried to break it down for the big banks. basically, we had 8% to 10% lift
from our expectations of higher rates. the tax could raise 14% to earnings. lower regulation could add of earnings.o 15% but that did come at a cost. if you look at republican proposals, one to get banks a 10% capital to get rid of this regulation, we think the banks ought to raise about $500 billion in deferred stock. it is expensive. vonnie: is that the main question coming from clients? fred: blue sky estimates is the main question. you, fred cannon. next week, we hear from the big finance chiefs at the world economic forum in dallas -- in davos. we will bring exclusive interviews along with interviews with jpmorgan, morgan stanley, and goldman stack -- goldman sachs. up, october 6 saw a
♪ you watching bloomberg. i am vonnie quinn. mark: i am mark barton. here's what we are following today. flashaused october's crash that saw sterling plunge? investigators have a new report out. vonnie: and is nintendo's new switch gaming device a winner? take, a today's quick look at the student debt issue in the united states and whether it could hamper the economy in years to calm -- come.
bank of america, jpmorgan, and wells fargo kicked off the earnings season. butits fell for wells, jpmorgan and bank of america posted gains. brian moynihan discussed how the incoming administration could change the game. positivetimism for change at bank of america and among our customers is probable -- palpable. we are optimistic. in the interim, we will continue to operate the company by controlling and driving what we can. mark: an investigation found there was no single trigger to last fall's flash crash in the british pound. on october 6, sterling fell more than 6% against the dollar. the bank of international settlements says the time of day of staff experience
as possible reasons. and the nintendo's new switch gaming console will go on sale march 3 at a price at $300. that is higher than rival consoles. investors are not convinced the switch will be a big hit for nintendo after a presentation in tokyo. company shares fell almost 6%. -- boeing's order for spicejet is worth $22 billion in list prices, though discounts are usually given for large purchases. it is the largest order placed by an indian airline for boeing jets. vonnie: time for our bloomberg could take, where you find context and background on issues of interest. in terms of american exceptionalism, student loan debt stands out. no other country imposes the kind of costs on universities
and colleges that the u.s. does. and nowhere else to the loans cover so much of those costs. in new york, governor andrew cuomo to post a plan to cover full tuition for any student whose family earns less and $25,000 per year in a state school. his proposal goes beyond hillary clinton's, who called for a series of incremental debt to reduce dude in debt and rain -- the cost of college. on the campaign trail, donald trump mentioned the government's current role. he also spoke of how two of the youngt problems facing people are the cost of college and the challenges of repaying student loans. here is the background. when a student federal loan program began, the goal was to
give students reliable access to funds that would get them through college by deferring some of its costs until they had an income. most were paid within a few years, while the benefits lasted a lifetime. raisedcost of college ahead of inflation, the federal loan program morphed into something quite different. here's the argument. loans witht of the the college? president obama proposed a system for rating schools on afford ability that could be tied to eligibility for federal aid. colleges hated the idea and it was dropped. was thebernie sanders only presidential candidate to propose anything like the past other developed nations have chosen of higher taxes to make public universities free or cheap. k oncan read more at niquic
the bloomberg. mark: breaking news from takata. visitors have been indicted in the u.s. over their faulty airbags. it comes as takata as the justice department and state reached a settlement. that was over airbags blamed for deadly deployment in cars. fine could emerge to the tune of $1 billion and possible criminal charges. but it has been confirmed three takata executives are indicted over faulty airbags. we will continue to monitor that closely. france's renault is the latest of the put under investigation for diesel omissions, a day after fiat chrysler was accused of cheating omissions tests. this is bloomberg.
♪ mark: live in from london and new york, i am mark barton. vonnie: i am vonnie quinn. this is "bloomberg markets." mark: fiat chrysler shares rebounding a little a day after it was accused of cheating on diesel emissions tests. the chief executive strongly denied the accusations. is our us from milan bloomberg news reported. how different is this from vw? what fiat chrysler is trying to point out. sergio marchionne pointed out a couple of times. conference calls to explain that this is completely fiatrent from vw, because
was not trying to cheat. he said his software they the software as shown on the real road. this is why he was upset about the investigation, which came out a few days after vw agreed to settle the fine with the epa. fiat is saying this is very different. they may be technically wrong, but they are not immoral. mark: how do you account for the massive, record decline in the share price yesterday? 20%.e stage, down it has recovered a little bit today. is that pure fear? we have lost him. vonnie: let me update you then. i was going to say that shares
today.n 2.8% they had the terrible day yesterday. we go to another automaker now that is under a cloud of suspicion. this is renault in france. is covering that for us now. what is being accused in terms of renault? caroline: this time, the paris prosecutors have decided one renault inrating january of last year to take it , thetle further allegations about the quality of the tests that renault has been carrying out on some of its models. at the share price of renault today, shares are not -- dropped as much as 6%
late this morning. the lowest in one month. about 1.5 billion euros in market value. but later in the day, shares slightly recovered. if you remember, the initial part oft january was a big french crackdown on the emissions scandal following the emissions cheating on tests. basically, friendship officials looked at 100 vehicles in france, not just renault also peugeot and others. it may not go well with the --ons, because the rates was were actually initially announced by unions.
a meeting is happening now with the unions from renault. that meeting was already plant. renault announced they would hire more than 3000 people in the next few years. theirvest at least 8% of revenue into r&d. the chiefalked to executive of renault back in september. here's what he had to say about diesel emissions. >> we have a lot of technologies. the fact that we are sharing between renault and certain airlines, we can share technology. play,t has its role to for the consumer and for emissions. but in reality, there will be a lot of costs, additional costs, on diesel. there is concern that
renault will be dragged into a similar part as vw, or at least mentioned in the same breath? caroline: of course. renault has been trying to reassure. we spoke with their spokesman, who said this is a very different case than volkswagen. just like sergio marchionne said. notaid that renault is creating any fraudulent equipment in order to cheat in emissions tests. the share see with price reaction that investors of any extension of the volkswagen diesel to other carmakers. the difference between fiat and renault is that renault does not sell cars in the u.s. nissan sellsmpany cars in the u.s.
,emember the french government the environment minister, is especially sensitive to the pollution question in general. the cap-21, and france faced the worst pollution last month. have a look at european stocks now. recorde continues its setting advance. 40 consecutive days of gains. 12 of those has seen record highs, which is itself a record. stocks rebounding. the stoxx 600 up 7/10 of 1%. we want to show the currency board. brimming with great stats. the euro is rising for the
fourth consecutive week against the dollar. best run since 2014. the power of the bloomberg. let's finish up with what is happening in the bond market. stocks rising. currencies rising. bond yields rising. there is less of a flight to safety today. in the u.k.,ield germany, spain, and italy. "close" is next. this is bloomberg. ♪
♪ "eruopean close" on "bloomberg markets." mark: we cover stories out of china, japan, and russia. thanks talk syriza and today. jp, bank of america reporting gains. we break down the key numbers. vonnie: pound-sterling traders brace for theresa may's speech next week. mohamed el-erian gives bloomberg k's news on the trump trade. without encouraging signals from the new administration, strauch's -- stocks will struggle to go higher. mark: looking at european equities and trading.