tv Bloomberg Markets European Close Bloomberg January 26, 2017 11:00am-12:01pm EST
"bloomberg markets." mark: we will take you from philadelphia to london, covering stories out of paris, hong kong and wall street in the next hour. u.k. lawmakers have two weeks to debate the short brexit bill introduced today. to limitnment looking the possibility of amendments by the opposition. mayie: in the u.s., theresa begins a two-day visit to meet with president trump on trade. two british officials say the u.k. does not have enough expert negotiators to tackle out any agreements. verizon is reportedly exploring a combination with charter communications.
as a deal between those to make sense? those twodeal between make sense? mark: it looks red on the gmm function today. stocks as measured by the stoxx 600 higher. you can see a lot of individual markets are lower. currencies are falling against the dollar today. bond yields are rising today. flights toquality or riskier assets earlier. brent crude up. a busy couple of days for earnings. rbs in the news today. it will take a chance and salesing this probe into
of mortgage securities in u.s. before the financial crisis. the lender is continuing to cooperate with u.s. department of justice. the timing of the settlement remains uncertain. rbs has taken $6.7 million of provisions related to mortgage investigations, further charges may be needed. it is among the final group of global lenders yet to settle in this probe at has earned them penalties -- the final settlement is $3.8 billion. it will be well within the market expectations of between two billion dollars and $8 billion. on provided good news today come up by 2.8%. shares of 7%. or higherup 7% fourth-quarter revenue than analysts expected they come offering some relief as the new chief tries to stabilize the switch company.
-- the swedish company. unilever 5% lower. the biggest decline since 2010. this is the owner of dove soap. estimates in its personal care unit, its biggest division. that engine posted its worst results in two years. the unit includes that didn't take him at ben & jerry's ice cream come also falling below estimates. includes lipton iced tea at ben & jerry's ice cream, also falling below estimates. abigail: at this point, we are looking at a mixed trading action for the major averages in the u.s. the dow trading slightly higher come on pace for another record close. carving out another all-time high.
but the s&p 500 and the nasdaq have slipped out. small fluctuations between gains and losses on the trading action this morning. this follows a powerful two-day rally. one that has left the dow above 20,000. one question is, what is next? does this mean strength will continue or are we going to see a bit of a pullback? btv 86. the fear gaugee for the s&p 500. in white come a gauge of currency volatility. in purple, we have a bond volatility gauge. but the volatility for bonds and currencies are much higher. in the recent gains, the bond volatility is continuing to pick up a little bit. those are the foundational asset classes. it may suggest stock investors
are slow to catch up and we could see some volatility ahead for stocks to the downside. doubt 20,000, one of the reasons behind the strength and lots of deal activity. today, lots of deal activity. actelion and johnson & johnson, johnson & johnson is buying the european biotech company for $30 billion. they are trying to move into the rare disease space. they will take actelion's drug to the next level. actelion rising 20%. as for one deal that could happen, verizon and charter communications. some sort considering of combination with charter communications. we see charter communications up in a big way, having its best day since february of 2013. bryson down a little bit. -- verizon down a little bit. this would create a large telecom and cable company. 300 billione a
enterprise value deal. verizon would have to raised significant debt. sprint and t-mobile trading up on this. the nasdaq did put out a notice that they have seen trades and charter before the open. vonnie: a fascinating development. we will be speaking with craig moffett in just a little bit. let's check in on the first word news with courtney donohoe. courtney: president trump is inspected to impose a temporary ban on virtually all refugees into the u.s. as early as today. preparing to act on his campaign trai pledge of "extreme refugees." britain's government has set up
a timetable for the legislation that will lead to the exit from the european union. secretary,eckled the "disgraceful." the final death toll from italy's devastating avalanche stands at 29 after more victims were pulled out of the rubble of a hotel crushed by tons of snow. delays and malfunctioning in the initial rescue effort. abenese by minister shinzo open to bilateral trade deals with the new u.s. he told lawmakers in tokyo that he is finalizing the negotiation's for a summit with donald trump. the leaders are said to have a phone conversation in the coming days before meeting in washington next month.
trump formally withdrew from the 12 nation asia-pacific accord earlier this week. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. mark: let's get back to the latest on brexit. the government of theresa may taking a key step today towards moving the process forward, publishing the short brexit vote . just 137 words long. power -- it'sirm all about process. tell me about the process for next week. >> it is very tight. they want to get most of it done in two weeks. next week, they have the second meeting. in debate followed by a first boat. -- first vote.
then come it goes to committee stage. tight amount of time as well. the final time for comments, they very eight. -- february 8. after that, it goes to the lords. mark: is it wrong of the government to plan a hasty process? an could slow it down. is there anything wrong in the idea of saying hey, we want to get this done in a couple of weeks? mp who doesn'tn , yes, you feelt a bit shortchanged. it is not an awful lot of time to debate the biggest thing to happen in britain since the second world war. there's been some tempers over that.
we also have a white paper that will be published in the coming weeks. mp's a thirdive opportunity to debate. vonnie: who has influence on these amendments? only opposition lawmakers? does the public get any chance to lobby their local congressman or congresswoman for the equivalent of in britain? >> of course. you can always go to your mp. this debate has been raging for some time. havesume those mps listened to their constituents and will respect their wishes. one ofstion here is parliamentary process. things can get rushed through without a substantial discussion in parliament first. mark: let's talk theresa may and her trip to the u.s.. let's listen in to the french finance minister who had
something to say. madame may can go see whoever she wants. understand she goes to see the new u.s. president. she is not going there to negotiate. neither she nor mr. trump are in a position to negotiate. it is a courtesy visit. mark: back to process again. theory agree on a deal, cap they? that's can't they? >> it looks very good for theresa may to be the british by minister that's prime minister to be one of the first leaders to meet with mr. trump. what is she going to have to give up in order to negotiate this trade deal? mark: a bad deal is worse than no deal, some say. idea this is a win-win
situation is unrealistic. there has been criticism of her being willing to give up some principle, some kind of strong positions the u.k. has taken them off for example on farming and the use of torture, in order to get a deal that is attractive for both countries. hasie: bloomberg news reporting on the verizon-charter rumors. -- charter is said not represent a perceived a direct approach from verizon. verizon advisers telling bloomberg that they have studied charter among 10 options. sourcesadvisers telling to bloomberg that they have charter among 10 options. greg massey was also approached.
mark: live from london to my mark barton come accounting you down to the european close. live from london, i'm mark barton accounting you down to the european close. rbs moves closer to resolving the u.s. probe into sales of mortgage securities. shares of rbs rising on the news as the bank says it is
continuing to cooperate with the u.s. department of justice. joining us now is michael moore. we don't have a deal yet. that itthe suggestion is around $3.8 billion. that is within the parameters of analyst estimates. everyone is happy with that result. michael: that would be good news. bit,have set aside quite a $8 billion for mortgage investigations written large, they have a number going on with doj being the biggest. they are not in active negotiations with the doj at. -- yet. they have not gotten into negotiating numbers yet. there is still a level of uncertainty. otherthere could be charges elsewhere with regards to litigation, but it would remove a massive hurdle for the chief executive, who labeled these issues legacy issues from
before the financial crisis. he will be pleased to be rid of this case. rbs has more legacy issues that most of the banks these days. this would be one of the biggest in knockout. o knock out. sell down and get the u.k. government to sell down some of its takes. vonnie: we got word today that barclays will be moving some of its london operations to dublin. only 150 jobs for dublin. what does it signify? our banks looking up for headquarters -- are the banks looking out for headquarters? michael: you are starting to see banks kind of formalize some of their planning when it comes to brexit. there's been a lot of talk of
narrowing down of potential options. we are finally starting to see the banks make some decisions on those fronts. havebarclays, while they chosen dublin, there is some flexibility in that plan in terms of how many people to move over. all that banks will be watching how the negotiations develop. you are seeing the plan start to take form. vonnie: where is next? we heard recently from jeff bailey that they were not thinking of pulling out of london. michael: that is the tough part for the banks. it could be any time in that to your negotiation period when they start to get clarity on what the picture will look like on passporting come on equipment come on their access to the eu. -- to your negotiation --
two-year negotiation peiord. we are banks look at frankfurt and paris. seeing banks look at frankfurt and paris. all the banks are having to play wait and see with the ups now the of moving jobs. option now of moving jobs. news.: breaking president donald trump about to leave joint base andrews to take a short flight to philadelphia. he will be speaking to congressional republicans at their retreat in philadelphia. that is the president there at joint base andrews. this is bloomberg. ♪
base andrews, taking a short flight to philadelphia where he will address the gop retreat. verizon is very interested in buying charter communications. libertys ceo went to about a deal. has been vocal about deals in recent weeks. joining us on the phone, craig moffett. if your to three dollar price target and they buy on charter -- $853 price target and a buy uncharted. obviously, something is going on. what makes the most sense here? ofig: this is the beginning what everybody has been anticipating as the biggest mating dance and communications
that -- in communications that any of us have seen. all the stars aligning in a trump administration that people assume will be a bit more permissive with respect to consolidation. the end of the so-called thatcast incentive option has kept people from talking to each other for any collusion reasons, that is about to end. the gates have flung open. you will see every conceivable combination put on to the drawing board over the next couple of months. vonnie: if it were to be verizon and charter, that would add verizon. and video for obviously, that's a good thing for verizon. can they afford it? will come back to whether it can afford it in a second. the short answer is i doubt it. charter is not a content
company. in the same way that when at&t bought directv, they did not buy a content company. directv was just a distributor. charter is just a distributor. the difference between charter is airectv is that charter physical infrastructure. if verizon decides to make the , what they would be signaling is not a strategy anything like at&t is about content, it would be about trying to get a wired infrastructure to support a much denser wireless network for the future. their argument would be that the future of wireless network needs a lot more wires than they can provide on their own. the place to get them is the cable industry. the strategic vision make some sense to me. mark: both strategies make sense to you. at&t time warner and this potential combination?
craig: they cannot both be right. one is likely to be profoundly wrong. i don't know whether this deal will happen. i'm a skeptic that you will see charter verizon. that the assetg we need is a dense wired infrastructure is a completely different strategy than what at&t has signaled which is we are diversifying away from the wireless business and want to own content instead. of them is making a strategic mistake. mark: which one is it? craig: my intuition is verizon's strategy is a more sensible strategy. right now, the market sentiment around at&t is quite positive. at&t has a story to tell. it is trying to combine the
vertical market, the vertical value chain in a telling way. that story could quickly change has become a very levered company with a shrinking wireless business come a shrinking wireline business and a shrinking satellite-tv business as well. and they have dug themselves into a deeper hole. strategy, what it as wireless operators, they are looking at the future and saying they don't know that they can get to the kind of infrastructure underpinnings for their network that they are going to need for the next generation. that should be alarming to investors in both verizon and at&t. vonnie: was this deal help 5g?zon move up to size craig: it would be faster than
that. this would be all about 5g. the theory would be 5g networks are smaller and smaller cells and therefore closer and closer together. what do you need to support a network with smaller radio cells? you need a lot of wires. who owns the wires? the cable operators do. turn out toerators be the companies that are best positioned for the next and ration -- next generation of wireless. they are looking at the cable operators saying the grass is greener on the other side of the fence. john malone has been very vocal about consolidation and this demonstration being more amenable to that kind of thing. that administration being more amenable to that kind of thing. with a be interested in some kind of deal here -- would they
be interested in some kind of deal here? craig: sure. mercenaries. they are in this to make money. if the price is right, they are sellers at what price and buyers at another. -- at one price and buyers at another. strategically, it makes some sense. --nt me as a skeptic that here's the problem for verizon. both companies are much more heavily levered than they appear. the debt you have to think about is not just what appears on the undere sheet but also accounting rules and another year or so, we have to start counting all of those tower come operating leases,
will start count as debt. add those to the pension obligations and the health care obligations and these are very heavily indebted companies. given that both verizon and at&t are negative revenue growth companies carrying very heavily burdened balance sheets, they don't have much capacity to borrow more. because they pay such high dividends, they also have a part-time -- hard time issuing stock to buy something. there just aren't that many scenarios that you can see verizon being able to afford something as expensive as charter. vonnie: we are getting reporting that it is just one of 10 options. can you think of any other options we might be seeing? craig: sure. the speculation has been swirling that verizon can go out and buy spectrum instead.
if they buy spectrum, perhaps they buy it from dish network or legato, a company that just came through bankruptcy. there are other people that say that verizon needs to buy content and follow at&t's strategy. any scenario that you can combine will be talked about and will be given credence as a serious strategy. every single combination is going to get its day in court, i suppose. we will be talking about all of them. vonnie: craig moffett, thank you for joining us. mark: stocks finishing up the day in new york. up if it of 1% today.
1% today. of of 2015.ires since may health-care stocks leading the advance because of this company, actelion up by 19% today, the biggest gainer on the stoxx 600 today. shares did rise 22%. for $30eing to buy billion. the biggest deal for j&j ever. it will become a leader in medicine treating a rare type of high blood pressure. -- 23% aboveme wednesday's close. the deal caps weeks of discussions interrupted by several days after j&j walk away from this in december come only to return to negotiating,
leaving the french drugmaker jilted at the altar. big did out of the u.k. the economy grew once again in the fourth quarter. .6%. .6% in the last record is, continuing to defy expectations following the brexit vote. 15 straight quarter of growth, driven entirely by services, helped by consumer spending. arc going forward, is the support from consumers going to weaken as sterling's decline pushes up inflation, squeezing real incomes? as theresa may heads to negotiate with donald trump, a
deal in kind, discussed in merit come a trade deal between the two countries. i thought we would look at the trade balance between the u.k. and the u.s. the u.k. has a trade surplus. a trade deficit between the eu and china. which is why it is so important for the eu to get a good trader with the u.k. when those negotiations truly intensify. vonnie: i'm starting with the dollar. we are weaker in general, but stronger again today, back to one of 6.8 -- 106.8. they think this is a bit of a positive. yields are still rising. -- 100.68. , we are seeing 1.6%
re after thee central bank in russia said it was going to make some purchases . strategists are not buying that this will weaken the ruble in way in the medium-term. weakening and stronger overall heading into the lunar near. gmm, we will see what we can see. higher among the g-20 movers. japan's nikkei as well. mexico having a difficult time, down 1% for the stock exchange. the bloomberg dollar index stronger today. in general, a weaker u.s.
dollar. let's check on the first word news. courtney: president donald trump threatening to cancel his meeting at the white house next week if the mexican president continues to refuse to reimburse the unite states for that border wall. mr. trump blasting the mexican president saying trade has been a one-sided deal for mexico's benefit. hismexican president said country would not follow the law. theresa may meet with donald trump at the white house , there is concern the u.k. prime minister could end up with a bad trade deal. the u.k. doesn't have enough expert trade negotiators for talk on new sweeping agreement with the u.s. the u.k. will need to relaunch to handle the workload.
says.k. brexit secretary there will be no delay in producing the so-called white paper on may's negotiating plan. it will be as expeditious as it can be. it takes time. have a procedure, it takes time to do, but we will not waste time. >> davis made those comments in parliament. the final death toll from italy's devastating avalanche stands at 29. after more victims were pulled out of the rubble of a hotel crushed by tons of snow. nine people were pulled out alive. there were delays and malfunctioning in the initial rescue effort. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is bloomberg. dollar, as goes
january, as does the rest of the. bets on a strong dollar. -- as does the rest of the year. more, neil jones. as it by magic, i have this showing theart correlated index, the dollar against its nine major developed markets. that is the white line. the blue line is the u.s. 10 year yield. was .90 intion november. it has broken down. neil: there's an and flow of money into the u.s. that is dollar hedged. equity investors don't play the currencies. you have money going from overseas into the u.s. into stocks and those dollars are
sold because they are being hedged. meanwhile, there is money circulating out of the bond market into the stock market as well. not that unusual. this does happen from time to time. it happened with the dax. the stocks are currency hedged for the euro. the most famous among the selloff in the japanese yen. people would be exposed to japanese stocks, they don't want the currency hedge. is the rally over? neil: a strong dollar policy, no. but a strong dollar is in play.
the majority of the dollar selloff is largely over. there are specifics as to why we've had a dollars 11 january. in january.lloff ed, etc.tion threaten those deep embedded positions have been on for months and months. a lot of money in those. now that money has been taken up a table, we have swings in the brexit situation with a white paper, the supreme court, that has caused people to take short sterling off. the same as the mexican peso. no time sooner it would be a large money flow from mexico to the states. i think it is largely running its course. my sense is you will see it in
the reports coming out commission on a substantial dollar long reduction position. vonnie: what is leading what? as the dollar leading rates or our rates leading the dollar? neil: the dollar is largely following rates. rates are going first. the stock markets are going first. especiallyrallying in terms of money flowing into infrastructure in the u.s.. t to is causing the marke sell off that yields have come off. equities investors outside the states offering money into the u.s. don't have a currency hedge. going first.ket is a bond market is going second. the dollar is going third. vonnie: is the expectation that
trump's policy is underlying all this? my sense is that markets are very focused in on trump protectionism as opposed to expansionism. there was disappointment last week when the market sensed the more protectionist type stance. that is flipping over to expansionism. this almost like three arrows like we had in japan. tight monetary had come a loser fiscal ahead and regulatory ahead. monetary ahead, looser fiscal ahead and regulatory ahead. mark: explain sterling.
.6%, better than expected. is it proving that we are not trading on economic data, we are trading on whether investors still think they will have a even though brexit a hard brexit seems most likely? neil: there's a short rally after the gdp data. politics is at play or so that economics at the moment. arereason, markets discounting current economic data. we have not started brexit yet. gdp will be a different figure coming out in a brexit world. was ansumer spending strong component of that gdp. things currently stand, consumers aren't spending within brexit well.
that will take gdp lower. right here, right now, politi cs is everything for the pound. the hard, soft, as the pendulum poundes, that so goes the . anything that leads away from a harder to a softer is good for is black and white. mark: neil jones. coming up, white house press spicer saying president trump will be doing it is conference tomorrow with prime minister theresa may. deseret news conference tomorrow with prime minister theresa may. president trump will be doing a news conference tomorrow with prime minister theresa may. this is bloomberg. ♪
mark: this is the european close on "bloomberg markets." the french presidential campaign has had its first major scandal. prosecutors opening a probe into front runner -- the front runner. accusing her of earning a six-figure salary over multiple years without actually doing any work. hurt histhis going to presidential ambitions? mark: it is definitely going to hurt them. it has already hurt them. how much damage will it really do?
this is serious damage but not fatal. we are essentially at the beginning of the big public campaign now. have been interested in this campaign since donald trump got elected in november. the public is just waking up to it now. for francois,m who has pitched himself on the basis of his upstanding record. this gives him a hint of scandal. it is early in the campaign, he has time to fight back. mark: who is set to benefit in the short term? who is running in third place? who could benefit most out of this? mark: it is a very good question.
it is essentially a pretty tight three-way race now. he is still in third position, closing, but in third position. i think she stands to benefit in they are all the same, they are all rotten, we need a new sort of person. that could benefit her. she has her own allegations in the parliament. about the public use of funds. acron is only 39. he hasn't spent his entire life living off this system. macron has proven he is not beholden, not intrinsically
wrapped up in the political system that everyone else has lived in for years and years. -- it will well that be interesting to see who benefits more. potentially, they both stand to pick up support from this. mark: isn't it true that lawmakers for both the left and right do happen to employ family members? there's nothing particularly unusual in that. typicalis is fairly over the years. even the government has said this is not illegal. the investigation will hinge around whether penelope fillon actually did any work or whether this was an extra salary for nothing for a fictitious job in the fillon household. there is a legal investigation going on and there will be a thisof drift of news about
to remind the public that these allegations exist. for now, we will have to wait and see what the next poll says. this is probably the end of this specific news cycle. news mark dean, bloomberg paris deputy bureau chief. 11:50 in new york. coming up, the battle of the charts. charts to show it. this is bloomberg. ♪
mark: mexico's president says he will not be attending his meeting with the president donald trump next week. there was meant to be a meeting. he says he will not be attending the meeting. today, tensions between both sides have been escalating. donald trump yesterday ordering to build a border wall.
that in tents if i with the president. that's -- that intensified the potential showdown with the president. that trump earlier today nieto for saying mexico would refuse to pay for the border wall. if mexico is not willing to pay for the badly needed well, it would be better to cancel the upcoming meeting. it seems as though mexico's president will not attend the meeting with trump next week. the dollar is sending against the mexican currency -- i ding againstscen the mexican currency. kevin: what i'm looking at today is high-yield debt issuance in
the oil industry in the u.s. that's what the blue bars represent. the issuance by month in 2016 and the yellow line shows oil prices. what we saw in the beginning of the year was record low issuance levels. andlowest month since 2005 2006 respectively. here in december, we saw this massive spike up in issuance. one was the opec meeting and the second was the fed raising rates. at 2017, this continues on that path, morewing costs become expensive for these companies come it will be interesting to see it they can continue these issuance levels. >.l the data on lead
securities. the bloomberg dollar index. the trendline before election strengthening of the dollar index and the weakening of a lot of other currencies. we are back to the trendline. many strategists saying if you think this the end of the reflation trade, think again. others in saying this was an overcrowded trade. the strong dollar will continue because yields will continue higher. particularly when the market begins to concentrate on the actual policies. -- can see that chart mark: if ever there was a time to do that chart, that was it. pete of the time. that's beautifully timed. you know tradition, kevin.
first-timers get the victory. , i will be tough -- next time, i will be tough. i love your chart and i love lead . big news just breaking. mexico's president saying he will not attend next week's meeting with donald trump. donald trump yesterday saying he will build a border wall. the dollar rising against the mexican peso today. we will continue to focus on this story on bloomberg.com." -- on "bloomberg markets." this is bloomberg. ♪
david: from bloomberg world headquarters, i am david gura. we will take you from philadelphia, to london and beijing. speak thisrump will afternoon before the congressional republicans at a joint retreat in philadelphia. we will bring you his comments live and british prime minister theresa may will take the stage in the city of brotherly love. -- withis exploring a charter communications. that deal would make it the largest internet provider in the united states. ford's profit drops after the report earnings as they make changes in the new political environment. ceo mark fields joint bloomberg to weigh in on the apple sales and profitability. abigail doolittle joins us with a look at the markets. abigail: we are looking at next trading a