tv Bloomberg Markets European Close Bloomberg January 13, 2017 11:00am-12:01pm EST
"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. what another week it has been.
already two weeks into 2017. greek stocks low. touch and go whether the stoxx 600 will finish the week higher. if it does, it is the third consecutive weeks of gains. these other currencies rising against the dollar. since 2014.ning run technicolor, bigness the kleiner on the stoxx 600 today. take fall for the paris-based mediatech allergy company. its stock market outlook ahead of results on lost 1/523 to shares of their value. a massive decline, sending shares to the lowest level since 2014. this is a company that offices services like content management, animation, and game
developer. and it worked on all of the films in the "harry potter" series. we love this chart. foried volatility sterling-dollar, rising the highest since november 2, 2016. this is an outlook for volatility. nowhere near the levels after brexit. what investors are worried about big speech,ay's laying out her vision for brexit, a vision for creating a global britain on tuesday. when she had her big policy speeches in october, the tory party called for hurt to speak on monday. she spoke sunday. still a far cry from what happened in june pre-brexit.
keep an eye on volatility and this index. this is a gauge of well being made up of four elements. economic growth, implement, and inflation. growth, economy -- this index is the lowest level since june, 2014. consumers may hit the brakes, which could cause growth to slow. below average uncertainty. moreis the index also about, the bliss index. how was looking there, abigail? bliss indexove the you have. as for stock investors in the
u.s., a small amount of bliss. 500, andthe dow, s&p the nasdaq. the nasdaq card out another all-time high, on pace for a record close. earlier, the s&p 500 had been on pace for a record close. not quite there. the dow getting dragged down by walmart and united health and mcdonald's. we do not have dow 20,000, but we have the bloomberg, g #btv 2026. that the dow will not make 20,000. last week, and analysts said he did not think it would have been. says shest at btig just -- would see it next week. this is a reversal out of the up trend from the election, which is typically bearish.
there is the all-time record high. with the up trend reversal, is adjusts that it will break to .he downside it will be interesting to see. one market today pretty molto -- volatile is the 10 year yield. after some of the bank earnings reports, we solved on selloff with the tenured degree -- with the 10 year yield off. as for the banks, bank of america, jpmorgan, and wells fargo all trading higher. jpmorganth noting that and bank of america have already engaged in their conference calls. wells fargo's upcoming, and i know our julie hyman has been on those calls with great insight. today'st's get more on big bank earnings and what it means. joining us in london, michael
moore. julie has been listening in on the jpmorgan conference call. what was the take away? itie: the bank emphasized was a strong quarter and a strong year. little, the cfo and ceo, and talks about the coming change politically and what it could mean for their business, though they were very cautious in making any firm statements. give examples of what he thought could be improved through regulation. he said it would help if there was a simple flying of securitization -- a simplifying rules, thatation would be good, not just for j.p. morgan chase but good for the ui in states -- for the united
states of america and the housing market, and good for the citizenry. a better taxsaid policy would be good, not necessarily only for companies, because companies eventually compete that benefit away, but rather it would be good for growth and the company in general. he emphasized, one and analyst about baking in a syntax cut to his models, jokingly said there is no point in doing that, you will not know what a new tax rate would be until nine months to a year down the road. he said the most efficient companies should benefit the most if there is, indeed, a change in the tax code and if there are tax cuts for corporations. mark: thanks a lot. we still have about half an hour before the wells fargo conference call begins.
michael is still here. we spoke to fred cannon from kbw earlier. he suggested there is nothing there to suggest that the wind and the sales behind banks is going away anytime soon. nothing from today we have heard seems to take away from that suggestion. michael: there are still issues and optimism. loangan talking about 10% growth. bank of america talking about customers be more active. i think there are certainly a lot of optimism. there was a lot of talk and the jpmorgan call about politics and policy. it was not just with the bank was doing, but how the economy was doing. jamie dimon talked about the broader economy. vonnie: is everything transparent now? several years ago, part of the problem was there was a lot of opaqueness to
balance sheets. the widow everything going on now? michael: i would not say everything. some of the most opaque products are just not as utilized anymore. those products he really could --thosee that well into products you cannot really dig that well into. they are not completely transparent. to be, toere seem about the federal reserve and interest rates next year. from last far cry year. it is all to do with incoming admin surgeon, is it not? yes, and those go hand in hand. the new administration and the outlook for higher rates. a lot of the questions were if those rate hikes come through,
how does that benefit your bank and how are you positioning yourself for that? jpmorgan talked about adding duration to the bonds they hold, but all of the banks took a little bit of a hit on the bonds they have been invested in, because rates are higher for some of the prices. there is a little bit of give and take their, but -- take t here. mark: michael moore of bloomberg, it has -- thanks for being here. if you include the european in untiley will go february. next week, we hear from the big finance chiefs from the world economic forum in davos. we will bring you exclusive interviews with the chief exec it is a jpmorgan, bank of america, and goldman sachs. what a week. just a lot of fun,
especially on this side. let's check in on the first word news. courtney: lawmakers who want to repeal obamacare face the next hurdle. thousands are expected to take of -- of the house is excited to take up the repeal of the four double care act. some are concerned about a replacement. the president-elect says he will have a full report on hacking in 90 days. he also says a report that the russians had come from rising information on him was put together by political opponents and a failed spy and called the allegations phony. talks into reunifying cyprus after four decades have hit a wall. top officials held to reach an agreement in geneva. security arrangements and property rights are the biggest obstacle. the turkish president about his
troops would not leave the turkish side of the island. in the space of two minutes october 6, sterling saw -- fell more than 6% against the dollar. the bank of international settlements suggests doctors ranging from the time of day to the lack of expertise of staff as reasons for that. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney donohoe. vonnie: thank you. house minority leader nancy pelosi is speaking on capitol hill now. the democratic leader says more than 2 million jobs could be lost if the affordable care act is repealed. calls there -- she is no positive upside to the republican replacement plan. the house is expected to vote on the obamacare repeal today. watch the news conference on the bloomberg.
♪ vonnie: live from london and new york, i am vonnie quinn. i am mark barton. roughly 15 minutes until the end of the friday session. just look at the banks index. it will become clear in a second. bank of america, jpmorgan, wells fargo reporting a collective 50.7 billion dollars in net income this quarter. shares rallying on the news. kumar, us now is ben investment manager at seven investment management, showing $10 billion in assets. how much further will this rally in banks run?
ben: it has a fair way to go. we thought the same before donald trump was elected. nots looked undervalued and only do they benefit in net interest margin in a low interest rate world, but they benefit because people trade out of bonds. banks love you trading. last twones the quarters say look at fixed income trading. people are doing things. mark: and a lot of it is on lower taxes and lighter regulation. on that a risk that side we may be disappointed, and, if so, about? ben: the pullback we could see it could stop a strong rally if we do not get an announcement of a tax cut for banks. but the fundamentals are good. in the u.s., it is reasonably clear that rates are going up and a republican government is usually good for banks.
in europe, they are more undervalued. we are not in the same panic spiral we were in last year. everything seems to be going well in the eurozone financial system. frome: let me quote a note allen robinson of deutsche bank securities. he made a list of the things that need to happen under the incoming presidency. there are five defining stages. the promise, the dealmaking, the economic impact, and the payback. let's not worry about payback, but how long will it take for the first four to get into the working of the economy? impact isconomic already taking place. you have seen the u.s. economy, the small business sector is showing great optimism. it is showing in surveys and consumer spending. consumer credit demand is picking up. as house prices
increases and consumer confidence increases, the write-offs are reducing every quarter. vonnie: confidence and optimism are wonderful. they can definitely change consumer a beer. data.ey are soft we need to see that real translation into hard data be sustained. do you see that happening? ben: i think actual loan demand is increasing. they are seeing hard data thing. europe as well but the u.s. in particular. soft data applies to tax cuts as well. if a tax cutn said comes through, it will takes months to be implemented in years before you see the benefits. optimism is a wonderful thing, but it is driving the market. time you are on, which was november 22, the day the dow went past 19,000, we put you on the spot.
fedsaid by the next meeting, it will go past 20,000. to be fair, december 20th, it peaked at 19,007 hundred something. you were very close. is it only a matter of time now? ben: i think it is. a lot of technical analyst are saying they are not sure. i think the dow is going about 20,000. every time it breaks that level, everyone gets a excited and they say they will not break through again for this reason, that reason. inple will be buying shares u.s. companies the next few months. i expect to see it go through 20,000. mark: you said cut eurasia exposure, cut it to underweight. why have you made those decisions? the asia risk is donald
trump cannot do much when it comes to enacting policy, but he can talk a good gain. if he can do that as president, other political figures respond. mr. putin is a volatile character. mr. xi is less so, but he may feel the need to step up and defend china against the u.s. equitiesd be good for except for in india, because mr. modi gets along well with trump. mark: ben kumar, investment manager at seven investment management. vonnie: thank you. nintendo announces details of its new game console called "switch." we look at how it works and why it could be off to a wobbly start. this is bloomberg. ♪
mark barton just about eight minutes from the european close. vonnie: and i am vonnie quinn from bloomberg's new york headquarters. time for the latest bloomberg business flash. earnings are out from three of the largest banks in the u.s. the biggest take by assets, jpmorgan, posted profits that the estimates. on trading revenue was more than expected. bank of america is earnings missed estimates. a 12% increase in bond trading fell short of predictions. wells fargo's profits fell more than 5% because of a decline in its mortgage business. the bank lost its status as the most valuable lender after a scandal in its retail unit. the main hedge fund for bremen had some -- withding to a person knowledge of the matter. investors pulled money after almost three years of losses.
it now has less than $12 billion in assets. nintendo unveiled for details of its new game console switch, a hybrid device that lets both gamers play at home and on the go. the success of this device is crucial for nintendo, whose previous console, the wii u, flopped. yuji nakamura has more. yuji: hey, guys. we finally get our hands on experience with the switch. you can see i am playing zelda, the biggest launch title. this is probably the most important title. this is for when you play at home with the game on your tv. it does not feel that much different from a playstation. i think the controller is a
little smaller. here is where the switch is unique. let's say you want to go outside. if you want to keep playing, all you do is take these controllers out, take them off like this -- you can even keep playing in this state. you can see i am still controlling the guy, link. and if you want to go outside, pad, slide themy in like this, then pick it up. immediately, it is the same game, same scene. there is no delay. ofs is the real innovation the nintendo switch. this is what nintendo is hoping to do, where people will play the same game on tv and on the go when you're commuting. switch.the nintendo it goes on sale march 3 for about $300, mostly worldwide. mark: bloomberg's yuji nakamura
there. i'll stick with pong. coming up, i'll will have an interview with nintendo america's president. were you a pong fan? vonnie: absolutely. pong, pacman. what was the one with the bars? tetris. the tennis one as well. i am a simple guy. vonnie: mark, you can like them all -- mark: back to the 1980's. the ftse higher for the 14th day. "close" is next. this is bloomberg. ♪
weekly advance. driven up by banks. in july.risen by 50% estate today. lots to tell you about. ftse gaining for a 14th consecutive day. high. risen to a record that itself is a record. what line is the ftse. blue line is the price target from analysts, the gap between the two is 5%, suggesting there is further upside. the red line is stirring. day,urple line is the 14 which is the highest since 2013. overbought itost has been. what a winning run. yesterday fell 16%. the drop is 12%.
the u.s. accusing it of violating pollution laws. dismissing it as unadulterated hogwash. a new trump administration. has risen by 42% since trump was elected. china, big week, big day. overseas shipments dropping. the trade surplus. and against the bosket last year. -- the basket last year. out of china, what are you looking at? >> a massive move in the 10 year yield.
data, the ppi coming in better than stronger forecasts. a lot of treasury selling with the yields going higher. look at what levels they are at. sticking at 6.85. that will do it for our market check in a moment. let's get to the first word to news. why don't we have a look at some of the stocks moving higher. continuing. >> markets pulling back on the trade. mohamed el-erian says without credible figures on policy
here he is joining us from california. our investors getting impatient? is it justified? is getting impatient, yes it is justified. we have had a significant move on announcements, on progrowth policy announcements. are waiting for detailed design and policy implementation. >> how much of a app between the policy announcements and the implementation on capitol hill? >> a lot will depend on what we see over the next few weeks. remember why this is needed.
out the chinese export numbers that's adjusted the global economy is weak. second are long-standing structural headwinds. is why you need continuous fuel into the stock market in order for stocks to go higher. rotations and relative value is where the money is going to be made. >> markets don't like uncertainty, yet they are liking this environment. what are they so uncertain of? >> they like the fact they have turned -- they have heard about tax reform and money coming back into the u.s.. the uncertain element comes from the trade side. so for the rhetoric on the trade
side hasn't been as sharp as it has been on the campaign. >> it is a different kind of rally. definitely other elements are playing into a good feeling right now. when the federal reserve was reassuring everybody that would take care of what it could, the markets didn't rally to this extent. markets so convinced this will end up being good for the economy? >> convinced is a strong word, but they are hoping. the federal reserve, the measures that have been announced, not detailed but aggress thetually long-standing weaknesses.
these are not new announcements. a lot of them are featured in the obama administration. congress was in no mood to enact economic reforms. is seeing is a congress where both houses have republican majority. they see greater probability of passage. >> we mentioned the chinese trade ada. it has been a year dominated by the chinese once again. rising.interbank's similar to last year. how do you expect the change rate to pan out. are the chinese going to allow the yuan to decline further this year?
learned two things from watching the exchange rate in china. of the first is chinese officials learned very quickly. the offshores market that was leading the onshore market. this time around the onshore market has acted as more of an anchor. the chinese realized you could have excessive depreciation. the more you depreciate the more you encourage capital outflows. seeing is a tweaking in the policy. the key thing is can they get the overall economic balance correct? it is amazing to me in which the chinese tend to learn how to conduct their policies as opposed to repeating mistakes.
>> for those currency gigs, 12123 of course. we haven't managed to close through it. week with teresa outlining her brexit vision. what is your forecast for sterling? this is trading as a purely curl route -- purely political currency. is trading on fear of hard brexit. how is the pound going to react? >> it should be trading on politics because the decision on soft or hard brexit is a political one. you're talking about the trading relation of either kingdom with its main trading partner.
the foreign exchange market got comfortable with slow brexit. then suddenly over the last few and suddenly we may go back to giving a lot more evidence between hard and soft brexit. volatilitysterling is higher. my hope is we are going to get indications of a soft brexit. i really don't know what theresa may is going to say. >> let's move back to china. what if there is a cooling between the relationship between the u.s. and china.
does that impact financial markets and trade between the two? >> it is one of the major risks for 2017. tradet destruction to relations, not just with china, but also with mexico. so far the rhetoric has softened. that is why the markets have set aside the trade protectionism. we get more tensions on the trade side. >> speaking of currency markets let's take a look at the 80 x lie index. you can see how much it has weakened over the last two years. you didn't see this drop as much. inthere a potential for an
currency crisis or at least turmoil? >> what we have seen in turkey and mexico is at a certain point they depreciation goes between -- goes from being a good thing to being disruptive. thean be disruptive on deflation side. they can be disruptive on the capital outflow side. what i look at is this notion that there is always an inclination to borrow in dollars , even though you are generating most of your revenue in local currency. next thing you know you have a problem.
it doesn't surprise me the central bank in turkey, that china, all of them have stepped .n an idea of a trade you are thinking area or we should make. what is top of the pile? >> if you have an appetite for lots of volatility and you are able to maintain your position. foreign exchange in emerging markets is attractive. it good vfl volatile issue. we can tolerate significant volatility. click's to see you as always. bloomberg view columnist and chief economic advisor. very much in today focus. julie is in the newsroom.
>> we haven't had the executive taking questions that tim sloan has made some interesting comments about the company's scandal in which we had employees opening unauthorized accounts for clients. the ceo talked about the occ, the regulator. talking about some of the steps it is taking with a national mediation program. potentially unauthorized accounts. he also talked about a five point plan that the company is in acting. are more product sales calls that had ended in october.
to increases and primary customers and the number of new accounts. there will be a focus on team performance, not individual goals. there will be stronger controls in place to monitor behavior at the corporate and regional level. these are some of the measures. the result of all of this will be monitored to see if there the be any of this is -- company is increasing its wages as well. the minimum wage going up by 12%. the company is seeing some of the aftereffects of that scandal and depressed customer growth. >> thank you indeed, filling us in with the latest.
>> president-elect donald trump has been gearing up for friday's inauguration and a week before the world is watching. u.s. is positioning itself moving forward. former director of national intelligence in the bush administration and he joins us now from d.c.. elucidate for us what you think as his appointees get appointed, as nominees get appointed. differences major of opinion on things like sanctions on iran, russia, torture. will these come together? >> i think that is an extremely good question. right now mr. trump and his team are in the waiting room. but in january 20 it will be in the situation room.
once they do come to the white house they are to have to come up with a coordinated and integrated braided -- and integrated approach. a face-to-face briefing is necessary. how much of a relationship is necessary? >> there were presidents who didn't take the daily brief from intelligence officers. in the course of their business they would meet the director of the cia, have different meetings such as national security council meetings and so forth. this day and age it is useful and important that a president have a good healthy relationship
with his intelligence community. there may have been things said that are disturbing to the thousands of men and women who work in our intelligence community. i am sure those difficulties will be weathered and mr. trump all come to appreciate what tremendous asset he has in our intelligence community. >> what does it do for morale across those agencies when an isernal watchdog investigating the fbi and its director? guest: i wouldn't know what to say about that. agency in our government has an inspector general and a look into these kinds questions. i look at it as almost a matter of course, these things happen.
up way to ensure morale and -- up lifted is to ensure that the community as a whole is respected, that their work is appreciated and played attention to, andd paid attention these people feel like their work is valuable to security and defense of the nation. vonnie: we had a number of hearings this week. just to take one of the potential sticking points, rex tillerson saying russia will help us defeat isis. ins that mean a change foreign policy? does that mean rex tillerson would support bashar al-assad along with a russian ally? we do have a pretty long goingy of cooperation back to the soviet union when they were an adversary.
obviously cooperation on some issues without necessarily cooperating on all of them. one of the areas that has been one of cooperation between our two countries is counterterrorism. so has the issue of nonproliferation. i can see being on our guard against russia. they take many positions adversarial to us. but at the same time looking for opportunities for cooperation. it is important countries find ways to work together. it comes to actual decisions about who we support support, cane we we work with russia if we disagree on something like whether bashar al-assad should be in syria? >> the international terrorism occurs in many different places
besides syria, the entire middle east and elsewhere. russia has a serious terrorism problem of their own. working together in various regions in the world. >> we do hope you will enjoy sick that she will join us again very soon. former director of national intelligence. >> battle of the charts. we have a chart to prove it, this is bloomberg.
by running the function featured at the bottom of your screen. kicking things off for us in london. >> here i have a chart about inflation. the ecb speaking in europe and inflation data. at this white line, it is profit margin for the european equity index. it goes all the way back to 2008. over here is a 14 year low. the most profitable european companies were. we can see how important inflation and the rising prices is for european companies to become profitable. mario draghi predicted that inflation would pick up this year. for thateally good white line to go higher.
it is forward-looking, it is optimistic, it is everything you want. joe: i am looking at a chart that was put together by my colleague, who scans inflows and outflows. there is an extraordinary outflow happening from the world's biggest commodity etf. trump wasople thought going to be great for gold. the last time they saw on inflow was november 9. it has been 43 straight sessions of outflows. gold has been rallying a little bit. this doesn't necessarily correlate perfectly. outflows that the asset hasn't worked out very
well. the longest in the history of that fund. chart on the that bloomberg chart. >> we have breaking news. chrysler under investigation by departmentstice to -- u.s. justice department. this is according to people familiar with the matter. another legal hurdle for a company already under legal scrutiny. the possibility of a criminal action comes after the epa yesterday. 104,000 jeep grand cherokees. the criminal to -- alleged efforts to mission testing.
we're covering story from washington dc to san francisco. after leading higher reporting results. jpmorgan is hitting an all-time high. president elect on trump's national security nominees are not afraid of disagreeing with their boss if confirmation hearings are anything to go by. we will examine the point of contention and the implication for foreign policy. and we will hear from the president of nintendo america. halfway into the trading day. abigail doolittle joins us with the latest.