tv Bloomberg Markets European Close Bloomberg April 13, 2017 11:00am-12:01pm EDT
close on bloomberg markets. ♪ mark: we will take you from new york to london in the next hour, us covering stories out of paris and china. hereunder top stories we are following around the world -- here are the top stories we are following around the world. in europe, the stoxx 600 inching lower. the french election looming, will we be in for a shock no matter who wins? vonnie: president trump decides not to designate china a currency manipulator well saying that the u.s. dollar is too strong. we will look at how china is viewing the administration. business, tank earnings season gets underway. he gets off to a fast start with
j.p. morgan and city topping estimates while wells fargo is hampered by rising costs. we will bring you the headlines. mark: have a look at european equities, 30 minutes until the end of thursday, the final trading session in europe before this long easter weekend. dayencies were down for the after two weeks of gains. trump wants a weaker dollar. he is not getting what he wants. let's look at the sovereign bonds and commodities we are seeing. yields decline. it is very much a day where investors are adverse to risk, commodities gaining. let's get to some of the corporate stories. this is france's biggest retailers, shares little changed.
first-quarter revenue growth matched analyst estimates. contracting sales in china were offset by growth in brazil. most --ollowing the down by 7% amid investor concern. london following is the title of this chart. london's housing market is in its worst slump since the deaths of the financial crisis, eight years ago. ricks.s price balance for london, the white line falling to the lowest level since february 2009. indicating ao -49, greater percentage of the state agents report in margins. the blue line there, the
expectations for both values and sales, over the next year, weakening. let's finish with china. overseas shipments jumping the most in two years. the trade balance rising. line, thehich is the top looked -- the bottom line, there, rising by 19%. exports rising 16.4%. that is in dollar terms. imports increasing, 23.4%, pulling back from a previous trade surplus. 90 minutes into the trading day in the u.s. taylor has the latest. taylor: markets are green on the screen, led by the nasdaq, up i about .3%. gain beingthe s&p
led by tech. look at the s&p 500, because yesterday we saw an interesting development. we closed below the 50 day moving average. it was the first time since the election that it has happened, so now as we go forward, the next while we are looking at is mark.. 40 mark -- 2340 let's go to banks. that has been the story of the morning. jpmorgan beating on the -- citigroup onstream was at a three-year high and of course wells fargo, still down as they continue with the fallout of that fake account scandal and a revenue miss. .et's go back into my terminal
it is the lowest here since the election. this week was a little bit higher, today. it is hard to conclude that bank earnings in the second quarter could improve at this spread really is the tightest we have seen. vonnie: thank you, so much. commentset on to the trump made about the dollar. first, let's speak to be -- speak to somebody who is just back from europe. it is the final countdown to the french election and the turkish referendum. just 10 days away from the first round of voting in france and marine le pen is leading the polls. the french german two-year bond level is near the highest level since 2012. we did get that warning from
goldman sachs earlier, this week. in general, this is a show me market. joining us is the chief strategist at -- asset management. is it the case of the boy who called -- who cried wolf? so many political situations, telling is the opposite of what happened. is the market working its way out, on its own? >> there are wolves out there. arkets do want to see political upheaval, one of the things we have learned over the past year is don't underestimate the chance of political upheaval, but don't overestimate the market impact. therance, you mentioned fears that the matter who wins, that extremism wins. people breathe a -- breathed a sigh of relief after wilbur's to not win in the dutch election.
his prominence in the race actually push a lot of politicians from the more centrist parties to take more extreme stands. even if le pen does not win, she is changing the political dialogue in france. vonnie: has that become enough now that we've got brexit and president donald trump in the white house? has that changed psychology, globally, i enough for more enough foraders -- more populist leaders? >> there was talk in brussels about a potential backlash against populism. a populist response against populism. a concern that the politics have shifted too far to the extreme. it was just talk. withe going to have to see the turkish referendum, with the french elections and the german elections coming up, how voters
actually feel. mark: i love the comment don't underestimate the likelihood of disruptive -- disruptive politics. what sort of rally do we get? are you suggesting we don't see a big market reaction, not in the euro, not in bonds? >> i don't know how the market reacts if le pen wins. betting markets are giving it a 25% chance of happening. if she does win, the people i talk to in europe said that realistically means the end of the euro and the end of the european union or the potential disruption and threat to that. i don't know how you actually try to price that in. would you would see if she does
not win is some sigh of relief. that does not solve the underlying problems that the european economy aces for the eurozone. you get a moment of relaxation, but then you go back to what is the next crisis that europe faces? mark: people are taking out some hedges. will this put that aside from the relet -- from the election? let's talk, should we be putting money into this bull market that many people keep questioning, that the wall of worry continues to be rolled out. what is the investment advice right now, when it comes to equities worldwide? mark: -- >> a lot of people ask me, is this a new bull market and my answer is it is the old bull market. it is climbing the wall of worry that it has always climbed.
some of those worries have changed. when you look past the political headlines, you see fairly consistent economic data and right now, it is relatively positive. suggesting indicators that expansion will continue her beeper seeable future. when you -- will continue for forfor siebel future -- eseeable future. -- the price of seeking a safe harbor is very high. the equity risk premium is 5.4% compared to an average of 4.1% over the past 50 years. you are still paying a very high price in terms of long returns. vonnie: therefore, what should you do? >> you should worry, but stay in. recognize that you
are being paid to take risk and that does not mean -- equity risk means volatility and that means that there could be a recession or a downturn, but that is what you are being paid to accept. do you need your money next year? are you willing to endure the volatility? then why not just go into something like china or emerging markets? china, people are optimistic about china because there has been a big credit and fiscal stimulus. i don't think any of the fundamental problems have been solved. you are dealing with a market in which the pricing is so manipulated in the risk factors are so manipulated, they have yet to fundamentally rebalance their economy anymore sustainable way. i think that for now, people's
concerns about china have sort of receded, that they will reemerge -- but they will reemerge because all of the piling on of debt continues and that is what is supporting the growth. vonnie: we get the treasury report -- treasury report at some point, this month which will not label china a currency manipulator. >> certainly not. vonnie: why certainly not? >> president trump said that he does not think they are and china is not pushing down its currency, it is propping up its currency. vonnie: when we get over that hurdle, what does china do with the rmb? china's currency, there was a lot of debate about what it should do with its currency. in my view, it should support its currency toward consumption. a lot of economists would disagree. vonnie: it has been around this level for quite some time and
perhaps the whole idea of getting trump settle in and the beginnings of a relationship and the five-year meeting which takes place this year. will any of that get done with regard to the currency and maybe lending its strength a little it more? that's little bit more? -- little bit more? >> they will do what they were always inclined to do, anyway. maybe it establishes more consents -- consensus with the g-20 instead of letting its line. g-20 instead of letting its line. vonnie: -- thank you. let's get to the "first word news." in syria, the u.s. military
says the misdirected airstrike has killed 18 allied troops finding islamic state. american authorities say the coalition aircraft were given the wrong coordinates by syria forces. in the u.s., president trump -- betweenons with the u.s. and russia may be at an all-time low. the president tweeted things will work out fine between the u.s. and russia quote, at this right time, everyone will come to their senses and there will be lasting peace. americans are more upbeat about the state of the economy. according to a survey, consumer sentiment rose to a three-month high. a measure of how americans view their personal finances is at the highest level since 2000. the turkish president's chief adviser could be a do over in the turkish vote to give the president broader power in sunday's referendum.
asking for their business to be routed through banks in europe. clients are not waiting to see what deal the u.k. strikes with the eu. multinational companies want to ensure they can continue to -- continue trading, no matter the outcome of these negotiations. stephen morris covers european banking. no one is going to stick around and wait for the final decision or news to come out of these brexit negotiations. companiesse, large say they think they will have to do it, so why not just do it now? they are asking for things like associated transactions to be re-documented through the paris office. this is in combination with a just -- hsbc moving about a thousand of its banks to paris
to cope with the demand. mark: tell me about flipping and why we should care, because this is another thing companies are evaluating. >> the u.k. is the biggest of the four divisions of the hsbc. clients are asking for advice on how they would flip their european headquarters from the u.k. into the eu. this has tax and maybe employment implications for the u.k.. if they start booking transactions elsewhere, things start being attractive and it may result in some moves of staff. mark: hsbc itself did not flip. >> it decided to keep its headquarters in london. it still says it is committed, but it is good that they are highlighting the trends they are seeing among their clients. mark: how is the bank doing?
>> pretty well. they are undergoing a succession, at the moment. they have a guy coming in from aia. they are already looking for a new ceo. there is a lot of change at the thatand the rock concerns they have not changed enough pending the coming brexit. it is interesting to see what type of tactics and strategies they will use. mark: companies maintaining high levels of cash since the brexit vote. what is the significance? >> they could not been done exactly why but it was noted that they are moral -- they are less reluctant to invest in the u.k. until they get more certainty. the last time we saw a buildup in cash and reduced overdraft
utilization was in 2008 and 2009 during the depths of the financial crisis. mark: we started the week, monday with the berkeley story -- barclays story. still a fairly high chance that they might get the chop? >> it is down to the regulators. it comes down to what the u.k. regulators find. if they still think this was a minor slipup, he was honest apart from the fact that he make to unmask this, they -- they may let him keep his job. they have introduced a regime. this is the first time it is being put to the test. they may choose to go hard on this one. only 15 months after joining the banks. mark: stephen, a busy week. have a good weekend. vonnie: still ahead, we talked to the ceo of an italian oil
vonnie: live from bloomberg world headquarters in new york, i am vonnie quinn. mark: with the european close to six minutes away, crude prices taking a dip lower. that you from italian oil giant, eni, the price is still quite high. the ceo joining us earlier today. we can continue to maintain the kinds of production cuts and we can hope that the price can grow because we have a balance
between supply and demand. we are not far from the balance. then we have to start consuming our inventories which are still white high. a key factor is that they can keep this cut. eni's ceo. vonnie: now it is time for the bloomberg business flash. conoco phillips has made its second major outlet sale in a month. the company agreed to sell its interest in mexico are as much as $3 billion. two weeks ago, they decided to sell canadian oil reserves for 3 -- $13.3 million. -- $13.3 billion. l 1/10ucer price index of 1%, the ppi was unchanged
from february. the u.k. once a post-brexit deal with the u.s. to give london-based banks free access to wall street. the international trade secretary told bloomberg he wants to open up commerce with the u.s. in every sector. he says financial services would form a key part of trade talks between the two countries. flash forur business this hour. mark: we are four minutes away from the end of the thursday session. the final trading session in europe. stocks are lower, today. the close is next. this is bloomberg. ♪
day and for the week after two weeks of gains, a shortened trading week. below the 1000% day average at this time of day because of the upcoming easter holiday. theonth high, yesterday or stoxx 600 -- for the 6 -- for the stoxx 600. across the big mover european equity markets. shares jumping the most in almost eight months. the swedish newspaper reporting the companies hygiene product business -- company's hygiene product business has attracted business from a local eye out firm. it plans to spin off as part of a plan to split the group into two separately listed companies.
shares up by 7.8% as a result of that. if marine le pen wins the election, the upcoming french election, what does it mean for sterling? we will talk more about this with paul dobson from and live -- from enlive. -- whitening about 2.7 percentage points, today. that is the biggest premium based on end of day prices since records began in 2005. sterling down 10% since exit against the euro. mark nash from old mutual global investors said if le pen wins, we could go to 75. there is a big referendum in turkey this weekend. if it is a yes vote, the president will get more power. this chart shows the inverse
relationship between the lira, the dollar rising against it and gdp. this year, the dollar has fallen 3% against the lira -- risen against the lira by 3%. the turkish economy has been sputtering since the president faced a series of challenges. a massive event taking place in turkey, this weekend. vonnie: that's for sure. now, i want to take a look at the 10 year yield in the u.s.. , arnight, we reached 2.21% recent low for the 10 year yield. we are lower than we were, but the vix is getting a little life to it. seeing elevated vix and things are calming as we head into the holiday weekend. president trump having something to do with that.
gold toward the 1300 mark. i am having a look at the g-20 movers. i know you mentioned a couple currencies, including a weaker lira. the weaker euro and a stronger russian ruble. movers, of the stock the turkish main index down more than 1% before that referendum and next we -- let's move to abigail doolittle with a deeper look at treasuries. abigail: we did see a technical break on the 10 year yield. chart we have been looking at over the last few months. yesterday as president trump indicated, he prefers a weaker dollar and lower rates. we did see the 10 year yield finally break out of this range we have been watching for months as the 10 year yield drops below
2.3%, overnight. recovery,ing a bit of but it is clear that this range has broken to the downside. the 50 day moving average is trained to slope to the downside -- is starting to slope to the downside. us heo of guggenheim told believes that the breakout -- breakdown out of this range suggests we are likely to see a move to the downside at a minimum of 2%. the ideaor referenced that the 35 year long bull market in bonds that this strong downtrend we see in the 10 year takes aices -- said it long time to reverse this sort of trend and with the technical break we saw yesterday, we could see the 10 year yield dropped back down into that range -- drop back down into that range.
up top, we have the tech sector, year to date. in yellow, the s&p 500 of about 5% -- up about 5%. this is the top sector out of the election. if we continue to see these financial rates, the reflation rally could start to reverse. very important to keep an eye on all of this. mark: sticking with the market and the dollar bouncing around on donald trump's comment that the dollar was getting too strong in europe. euro-dollar volatility hitting a high. paul dobson is here. in terms of importance, relevance, in terms of what we care most about in trump's confidence -- comments, put them
in order of importance? >> what i felt was the biggest surprise was his comment that he favors a lower interest environment and that he is friendly are welcoming toward yellen who is willing to consider giving her a second term. that was more of a surprise to the market because i got the impression that the consensus was looking to him to be appointing more hawkish members on to the fomc and to accelerate the run down of the qe and the balance sheet and push for higher interest rates. that is what caused people to think, especially when they came in, in asia and europe. becauseextra pressure the lower yields are favorable for dollar strength. also the effect we have seen across the global market with much lower yields, everywhere in europe.
italy, itance and shows that the effect that those comments have. mark: the count down to the french first round continues. so many wonderful charts, this week. them, riskt one of reversal on the euro pound. ould a le pen victory reinvigorate sterling? projecthole of the euro comes into doubt if marine le pen is winning. candidate had this big surge in the polls in the last week or two. and there anti-euro is a possibility we could have the are right against the far ,eft, both pretty extreme views neither our favorite -- favorable to the eu or the european union.
that could be damaging to the markets if we get that kind of a situation. the first round vote becomes very important in the second round vote becomes a bit of an irrelevance. vonnie: how likely is it that france will exit the euro? it is one thing to say one of the more extreme candidates will win, but they don't decide the fate of the country when it comes to the euro. they would have to have a referendum just like in britain mvps that arehat elected also want france out. >> you are right, there are a number of steps and hurdles that would be very difficult for any leader to negotiate before you were able to take france out of the euro project. even then, it might be a long process of unraveling or what have you. the damage would be done if the signal was sent from the voters
that they are willing to back a leader with such a strong -- mark: this chart moving in unison, it basically shows bets on stocks in europe moving in unison, which tends to happen in a crisis. we are up to levels that we were at during the brexit vote. deutsche bank has an interesting call, regardless of the brexit results. >> it is quite the outlier call. it thinks the european stocks
are overpriced and heading for a correction, downward. if you look at the relative performance, i had this up earlier on my screen, you see that along the way, the s&p 500 has fallen behind. european stocks are performing better than the american stocks. ishink deutsche bank's view a lot of nonsense. the re-strengthen the european economy and there is a lot of pent-up cash out there waiting to get over the risk of the french election and once we get there, people will notice european stocks are still cheap relative to the u.s., despite -- view about performance view of outperformance. can we get through friction -- french election night? one of the questions posted on markets, live, will mr. dobson be sitting at his desk all
night? we shall discover the answer to that. vonnie: its check-in on bloomberg's "first word news." >> president trump is optimistic that china will pressure north korea to back off its nuclear weapons development. the president tweeted quote, i have great confidence that china will properly deal with north korea. if they are unable to do so, the u.s. with its allies will. president trump had spoken with the chinese president and says he wants to do the right thing. japan's pro minister is warning that north korea may be able to hire a missile loaded with sarin gas towards his country. syria, president bashar al-assad said last week's chemical attack was quote, 100% made up in order to just of why
u.s. military strikes. speaking to french news agencies, he said he believes western powers in the u.s. have sided with ever risk against syrian authorities. he said he believes syria has no chemical weapons left. women accusedwo of poisoning the estranged half-brother of -- north korean leader -- malaysian police have not handed over security camera footage and documents crucial to the defense. global news 24 hours a day powered by more than 2000 journalists and analysts in more than 120 countries. vonnie: thank you. coming up, a city earnings call is underway. we will bring you all of the highlights. this is bloomberg. ♪
vonnie: live from -- mark: live from london and new york, i am mark barton. vonnie: this is the european close on bloomberg markets. citigroup got the earnings season off to a good start. cities earnings call is just getting started. julie hyman is listening in. do you have any headlines to tell us about? julie: the cfo is going to -- going through the financials, reviewing the quarter. they have not started a q&a portion, yet. mike corbett did speak weekly at the top of the call, the ceo expecting tax and infrastructure reform to pass eventually. about retail banking
revenues down 3% year over year and he says that was led by a decline in mortgage revenue because there was lower origination activity and a higher cost. he said deposits grew by 3%. you can also follow along on tliv, which is our top live blog which is covering it as well. some of the headlines coming out is at the company built in a $150 million loan loss reserves in the quarter to support volume of growth. we will be taking questions in just a bit. the wells fargo call just wrapped up a little while ago. that bank talking about the challenge in trying to improve its efficiency ratio, which the ceo said he was not satisfied with, last quarter. in terms of how the stocks are doing, citigroup the best, then jpmorgan, wells fargo is down. mark: time for the bloomberg business flash.
-- has won a crucial backing for its did in the toshiba timmy connector business. the american company has lined up financing from three different japanese banks and a private equity firm still relates broadcom is operating about $18 billion -- offering $18 billion to toshiba. there has been an unusual twist in the high-stakes battle for the dutch paint maker. an activist shareholder has been aggressively pushing them to talk to ppg industries which has made an unwanted $24 billion takeover offer. he inadvertently sent in email outlying it strategy for getting the two sides to the negotiating table. they complained to dutch regulators about information he planned to share with ptg. elliott, which was founded by billionaire paul singer is not commenting.
the eighth installment in the universal fast and the furious movie franchise opens in the u.s.. the fate of the furious will on 4200 screens and is expected to take in $118 million in the first three days. you know i love my films. -- has beenbeing crunching some serious numbers about the franchise. i've got two charts. battle ofr mini the charts. let's start with the franchise and how much it has reaped at the box office. the third film only made $159 million. that's the only one of the films that i have not seen. what is also fascinating is the first film which was made in
2001 grossed $363 million. it cost $38 million. so bank for buck. -- last one, number 7, 1 .5 $1.5 billion worldwide. this film is all about family and this is a bit time -- tongue-in-cheek. this is what is so wonderful about this bloomberg piece. they counted the number of canions of family and team demonstrations as well -- and demonstrations as well. number six was the most. not to give anything away, but in the last film, i gather that the family is coming apart. vonnie: i don't think you are giving anything away. this is the first one that they made in its entirety without paul walker, who unfortunately died.
i hoped for something a little -- i looked at something a little different. number of times something exploded on screen and it turns out that in number seven, there were one fewer total explosions combined that all the rest of the movies combined. clearly exclusions -- explosions were very popular with audiences. pretty popular with audiences, male bicep time. i guess they crunched the numbers and decided that male bicep were pretty popular. in number two, they up to that to about 23 minutes -- upped that to about 23 minutes. i love that we also have a very strict message. the bloomberg tallying chapters which male biceps were shown in the fast and
vonnie: it is time for our real global battle of the charts. we will take a look at the most telling charts of the day and what they mean for investors. you can ask these -- access these charts on the bloomberg. kicking things off is emma chandra in london. emma: you can see my chart is g #atv -- i am looking ahead to easter sunday.
chocolate should be a lot cheaper. as this chart shows since 2009 and the great recession, the price of sugar and real eggs have all all on. chocolate is down a whopping 22%. i looked into why this might be an oversupply is a factor, but so are changing tastes. chocolate consumption is falling across the major markets consumers shift to healthier foods. -- analysts described this as a important shift in consumer spending habits. there was a bright spot for producers and that is customers being willing to splurge on higher quality chocolate. organic offerings and those with higher cocoa percentages. that is my chart. mark: and easter themed chart. can you beat that, kevin? kevin: my chart is not about easter or fast and the furious.
market gdpg at versus the -- emerging market gdp versus developing -- developed market gdp. this is one of the higher conviction trades in the emerging markets. top panels, emerging market gdp overdeveloped market gdp. the bulk markets and the blue -- what this is showing is that when this blue line rises, emerging markets -- as you see the spread between emerging market gdp rise, you would assume that is a boon for emerging market equities. , we we have seen recently are seeing the estimates for gdp for emerging markets start to widen over the developed market we are starting to see a performance from emerging markets equities. i could continue with we start to see that emerging market growth.
vonnie: getting all serious. i like that chart and think it is fascinating. however, and i did provide a lot of advice this morning when it comes to easter eggs and i don't see one in your possession. my vote is with her. on any other day, kevin, you would've won, but you know i loved might -- my love -- i love my themed charts and much andre hit it out of the park -- and emma chandra hit it out of the park. this is bloomberg. ♪
jonathan: coming up, a candidate you have probably never heard of spooks investors one way -- treasuries rallied for a fifth straight week. yields dropped and the fixed income trade continues to revive earnings on wall street. the greatest concerns about the economy. we start with a big issue, white left wing candidate in france, bloomberg bond -- bloomberg bond market. >> he could actually be very dangerous because he is anti-europe, anti-euro, anti-austerity, and he could enact that with the national assembly behind him. >> the fact that most of the landscapes are there, the ideas we have for future of french politics will be different from the past. >> the market was not thinking it would be