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tv   Bloomberg Markets European Close  Bloomberg  August 21, 2017 11:00am-12:00pm EDT

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i am vonnie quinn. this is the european close on bloomberg markets. ♪ mark: here are the top stories we are covering from the bloomberg and around the world. u.s. treasury secretary steve mnuchin is said to deliver a policy speech on his vision for the u.s. economy. amid thened this turmoil surrounding his boss, donald trump. goldman sachs is seeking big names. we will take a look at who may come on board. warren buffett loses his bid to purchase texas utility, encore. how big a blow is it to his strategy? we will look at other energy deals. --opean equities are trading 30 minutes away from the end of the monday session. most stock markets falling
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today. dropping for the third consecutive day. uncertainty, across the globe, all these currencies are rising against the dollar. bond deals of falling, -- a big day today in the u.k. on house prices. london asking prizes up. over the last year according to the latest data. that 2014ll below peak which you can see there. london is the blue line and the u.k. asking line is in white. that is when prices were up. this is the second time this year the annual rate is topped by 1%. it is a traditional summer lull. the property market nationwide has softened in the last year -- tax changes, brexit, political uncertainty has put a squeeze on consumers.
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nationwide, the market has held up better. , asking prices, down .9% in august from july. the annual gain accelerated slightly to 3.1%. money managers pushing their bullish bets on gold to the highest level since october. wages have surged more than sixfold over five straight weeks of gains. those five bars to the right of your chart. climbing 12% this year, reaching $1306. on friday. highest since november the ninth. traders and analysts are optimistic. expressing bullish sentiment. put it down to u.s. political uncertainty, north korea tensions, and the terror attack in barcelona last week. jackson hole, big event later this week. mario draghi, if he wants will
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have every reason in the world to try to talk down the euro. ago, the euro-dollar, up by 10% a year today. look at the hedge funds right now. they look to be getting nervous. leverage, data on shows net bets on the euro -- that is the yellow line. the white is the euro itself. dropping by a have to just over 10,000 contracts in a shift to a net short. casting doubt on the sustainability of this year path rally. 90 minutes into the trading day in the u.s. >> happy monday to you, mark. on this monday we are looking at another day of declines. we have the dow, s&p, and the nasdaq slightly to modestly lower. ,oth the dow and the s&p 500 less, tech heavy. big tech names including apple,
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we will look at that in a moment. this is notable. the small declines are notable because it is fitting a bearish pattern we have seen recently. third down week in a row for the dow and s&p 500. the week is young but the nasdaq now on pace for its fifth down week in a row. the first time that will happen since 2012. a little bit of a bearish streak for the major averages. seasonally this is a weaker time. span for stocks in the u.s. this is g #9415. this comes to us from frank. does go weeks, not including last week we saw the biggest a drawdown of the year, right here. he is making the point that there could be bearish action which is the biggest drawdown again weekly since last october of more than 2%.
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interesting. whether or not this is an inflection point for the uptrend , a pullback ahead. a five-day chart of apple. the big drag today. down for days in a row, the worst since april. the street is pretty bullish. perhaps an consolidation of the 8% post quarter pop. a bit of a drag, apple down 3% over the last four days. oil, has been a skittish market recently. this is an intraday chart we will take a look at. here of oil. it is down more than 1%. on the day, reversing last week's spike higher. mike malone says he thinks it is a reversal. this drop of oil down 1.4%. very interesting reaction to the news that stephen bannon was out of the white house.
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, he thinks that is a reversal. great stuff. stocks struggling for traction. hovering around record qe. income investors benefiting big-time from the bull market with worldwide stock payments forecasts arrived to a record of $1.2 trillion, a 4% increase since a year ago. alex, head of global equity income, joining us. quite a quarter. a record quarter. is this evidence of a synchronized global growth we are witnessing? >> 100%. when you look at the numbers you see every sector in the u.s. increasing. nine out of 10 german companies, three quarters of japanese companies. q2 into this year is a strong. period.
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mark: the u.k. bucking the trend. it stands out. >> currency for starters. we base our index in dollars and that is looking at different growers. in the u.k. we have seen specifics. deal, berkeley a year ago. underlying 6% growth. not a disaster. mark: europe dominates the index in the second quarter -- is that seasonal? >> a lot of big swiss or german name's pay big so it is a key year for investors to get it right. vonnie: in the u.s., the global index, the dividend indexes at a three-year high which is impressive. and profits at this point -- is there a correction coming, particularly when you consider that dividends are being paid out at an increasing rate, that is not
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money being plowed back into the company? >> a good question there. the way we look at this is the different payout. -- ofoportion up about profitability to shareholders. globally it is about 50%. that is the long-term average for the last 50 years. at this point in the cycle, not too bad. some sectors, like oil, particularly energy, concerns us. oil prices, you mentioned earlier, sagging again. costs to gettting profitability up. that is still into the future. i still hope there is potential for that event to carry on. vonnie: so it wouldn't concern you that much that we might hopefully at some point be entering into a. increasing capital expenditure versus paying a dividends?
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>> we are seeing that pick up. on the back of that coordinated economic growth. where you will see the slack is in share buybacks and special dividends. those of the two elements when you talk to companies, where's the cast coming from? they say yes, we will borrow some but we will ease back on specials. vonnie: what are funds that your lead manager -- i notice you have a percentage located to equities, what are you liking equity wise and where in the world? >> there is nooks sovereign debt in there, it is all equity. -- we are over 90% non-us. valuation, and particularly, utilities. financials, the bank sector. the study shows that the bank sector is the strongest growth in dividends.
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normalizing profitability and income as well. that is a key area. mark: telecom in the second quarter? >> you have to be very selective. china-unicom. of thek in europe, some bigger players, deutsche, telecom, we like both those names. mark: basic resources. it has been a lean couple of years. we're witnessing a pickup. what they are saying about dividends but the implementation and a stock price as well. >> particularly metals. mining metals, the fixed payout ratios. we don't know where the price is going but we are also fixed to shareholders a percentage of the profitability coming back. you have a bit of certainty for investors. we see much higher metal prices coming through. sharp increases. that could ebb and flow over the next three years. mark: what about asia?
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>> there was a good year last year so normalizing a bit. malaysia was quite good, smaller asian countries were good. china, a little bit of a slowdown but coming into financials, utilities. it wasn't too bad. mark: you're looking good for the rest of the year because you raised your 2017 forecasts as well? why? >> it surprised us. we thought this year would be better than last year. u.s. companies held back payments depending on election results. that is coming through. tohave increased forecasts nearly 4% from 3%. we think it could hit 6%. mark: what impact does the dollar have? does it haveown. an impact on the second part of the year? >> it might. the dollar is beginning to
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flatline. the big rise against sterling-euro has at the way. it should be fairly neutral. mark: can we say categorically, alex, the two prior years have been subdued in growth. is that behind us? >> i think it is. the u.s., when you talk to american companies last year, the first half, well before the election, a lot of uncertainty. about political situation, trump, tax policies. if we can clear some of those in the second half. jump get some policies through, you will see more certainty on income coming through. -- if trump can get some policies through. it is beginning to go back to a normal level. mark: alex, thanks for joining us. indeed.
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why not, mark? it is your first day back. let's check in on first quarter views. -- news. >> the president and his advisers have been working on it revised u.s. policy in afghanistan where americans have been fighting for 16 years. is he prepared to commit more u.s. troops? on can watch that the speech bloomberg tv, 9:00 p.m., new york time. the u.s. navy has ordered an investigation of the pacific fleet after the second fatal collision in two months. the uss john mccain collided with a merchant ship. it is now docked in singapore with significant damage to the hall. a warning from south korea's president as his country begins the latest round of wargames
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with the u.s. he says the u.s. should not use the drills as an excuse for any further provocation. during last year's exercise, north korea launched a missile. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. mark: courtney, thank you. coming up, goldman sachs is not giving up on commodities. salesforts to increase people to revive of the trade in metals, crude, and more. details next. this is bloomberg. ♪
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news, a person
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suspected to be carrying an explosive belt has been shot and alan police.t that is 45 kilometers from central barcelona. the suspect from that van attack is ill at large. the suspection -- is still at large. plenty to talk about in the commodities sector. you have the opec technical meeting today. in oil business of $5 billion. to revivechs looking its commodities business. they are seeking traders in an effort to rebuild its unit. all that according to people familiar with the bank strategy. javier. us now, hobb
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will this prove difficult for goldman? >> they are in every asset class. sector,s going to a new -- oil companies, saying, we can help you with other strategies. here's the problem. they are not a big lender to the industry. fighting withl be jpmorgan. citigroup. these banks have big lenders to these companies. they are also in the commodity business. for goldman it is new territory. mark: is it a solution, in the last few years they failed to replace senior talent and now they will try to get fresh
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talent? is that the answer? >> that probably will help. goldman -- there more -- there are more junior people coming in. they realize they need a few big names to help them, to move the scales. if you are going after new clients, you will need a different kind of people, different salespeople that are more attuned to deal with these new clients. that is one of the things they are trying to do. this is a unit of goldman sachs that employed 230 people. it employs 180 today. there has been a lot of cost-cutting. thise: let's move on to massive shipping container company. grow, nots total to
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organically but by competition. we see growth in the next months? >> they are beginning to realize that cost-cutting has been deep. we need to see growth in those companies. one of the things investors tell me they fail to see when they are talking to the big oil total,es like exxon, or is where growth was coming. bg was bought for $50 billion in 2015. we are starting to see responses. exxon mobil doing a plus i billion dollars deal. -- a $5 billion deal. we are seeing similar deals. to me, who are the next candidates? companies.wo big oil
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chevron and bp. total is putting pressure on chairman, here is our growth strategy and this is where we see them playing a role. mark: great stuff. thank you for joining us. vonnie: always a pleasure. in just days, the world's central bankers will gather in jackson hole. what exactly does that mean? we explore, next. this is bloomberg. ♪
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mark: live from london, i am mark barton. vonnie: i'm vonnie quinn. holeapital annual jackson
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meeting starts later this week. the scene this year is fostering dynamic global economy. we talked about janet yellen and mario draghi and whether they of a global economy and if their definition is the same. >> there is a fair amount of agreement across central banks that a dynamic global economy is one that is on the one hand, registering strong and sustained economic growth. flown by a stable, capital and global trade. on the other hand, one where inflation is a subdued but near target. to me right now that in both of these cases in europe and the united states we are falling short on the inflation objective or should. >> what you going to be
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listening for this week? there is a quality to the areourse at jackson, we being teased that the speech that janet yellen will give is on financial stability. a broad brush. what we be listening for in terms of her and others? >> one broadpoint about jackson hole is, what really goes on their of substances outside the official meeting room. the interviews that people are giving and the tone, how worried are they about this inflation undershoot? it is surprising giving where global economy is. we are seeing inflation as soft as it is. how worried are they? i think that would be the major question. secondly, some of these issues that janet yellen will be focused on, that in this world have rates are low and
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been low for a while, it will likely remain so. they worried about pending financial imbalances as a result? nathan there. the monday session, stocks are lower, they are down on both sides of the atlantic. report.t the currency , later in the week, culminating with u.k. gdp later in the week. sterling is up against the dollar. we will talk more about that later. the close is next. this is bloomberg. ♪
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mark: live from london and new york, this is the european close. stocks on the monday session.
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let's take you through the action. industry groups rising, food and beverage, down for a third day. even adjusting for the recent rally in stocks in recent weeks, groups at the sector trading at 837 percent discount relative to the market based on one year. the historical discount is 25%. what a wonderful step to kick off the week. total agreeing to buy the oil and gas units of bp. for billions of dollars. it is another sign of the pace of deals in the energy industry accelerating. maersk well receive totals as well. the full price above what many analysts were expecting. energy deals are picking up right now, more broadly in recent months.
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as the industry puts the worst of the oil price slump behind it. shares cut by almost 3%. sticking with oil companies, opec's attempts to reassure producers such as iraq and has asked on -- kazakhstan. this is the stoxx 600 oil and gas index. oil stocks are at their lowest level since november. ahead of today's monthly meeting of the opec technical meeting indiana. which will -- in vienna. which will encourage companies to pump less crude oil -- struggling to hold $50 a barrel. stepped up by u.s. producers, negating cartel efforts with the global surplus. this is a great chart. the german ten-year with the white line and the euro-dollar
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exchange rate. falling below 50 basis points -- rally this year, threatening exports. , sustainednks exchange rates extending more support to your area. bond money markets are taking a dovish turn in recent weeks indicating no increase in benchmark interest rates through 2018 after pricing in two 10 asis point hikes as recently july. german 10 year yield versus euro-dollar exchange rate. onnnie? theie: here you see explosion last week. it has calmed down but we are still around 13.5. i weaker dollar benefiting the yen. nothing to get too excited about
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it -- gold inching more. dmn where we can see more movers. you see global movers, some of the eastern european is benefiting today. trading at 6.67. pretty fascinating. there you have it, mark. mark: great stuff. steve emerging over the weekend -- steve mnuchin emerging over the weekend as a defender of donald trump. responding to calls from his former yell classmates -- yale classmates to resign. he defended the president saying that there is no equivalent to
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groups that imagery peacefully. primary and the general and the, and beyond american people from these most important policies. jobs, economic growth, and national security. planning to address an event in louisville, kentucky today where -- last week's advance threatening to overshadow -- steve mnuchin's key role in relaunching the economic agenda. >> that is what we saw. steve mnuchin is a staunch defender. stability to the economic policy agenda is not something to be taken lightly. september is a very busy month. we have to have congress raise
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the debt ceiling limit to avoid a historic u.s. default on government debt. the trump administration is looking for a legislative when and they are hoping tax reform is that win. they have a lot of work to do to stick to their timeline. both houses of congress this year. steve mnuchin saying, yes, i am staying. ff of is no whi resignation. gary cohn is staying. there were rumors around candidates. fascinating. this event is taking place with mitch mcconnell, who trump blasted not more than a week ago on twitter. is this some kind of coming together of everyone but trump? that is what it appears to be but steve mnuchin is flying out to kentucky. senator mitch mcconnell's home state. it is a sign of friendship.
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to show they can work together to get that ceiling increase done in congress and tax reform and other legislative agenda items. it pushes trump to the side. steve mnuchin is taking the more forefront role to say, look, we need to stand together and show the people that we can get something done. isis a nice sign that there an alliance somewhere between the administration and republicans in congress. vonnie: thank you. that speech coming up in less than an hour. administration, carl icahn announced he would be leaving his white house role as a special regulatory advisor to donald trump. this came after calls from democrats about interests. carl icahn denied profiting from
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his position and announced he was ending his arrangement with the president because he did not want bickering to cloud the administration. carl icahn tweeted this statement. saying that if someone else had been appointed in the regulatory role, he had no place. carl icahn wanted something specific. he thought to push that through in the first days of the trump administration which was a small change in epa regulations that were costing his refineries a lot of money. he was hoping this special advisor role which was unpaid and informal would help push that through. it didn't happen. he did not get what he wanted. eventually they decided to go separate ways. doese: the separate --
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donald trump listen to carl icahn? >> they go back for decades. carl icahn was an investor in they weresinos when teetering on the edge of bankruptcy in the early 90's. they done casino deals more recently. i would be surprised if they never spoke again. his role was always a little amorphous. he did not have a portfolio and it essentially meant to signal could world, carl icahn call it the president and maybe get something done. mark: talk me through the potential conflicts of interests. with b aig. refinery, two oil refineries. there is an epa regulation they blamed for $200 million of annual losses. they wanted to change the regulation so it would not
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affect the refineries in the same way. -- carln interviewed icon interviewed for epa administrator and tried to push through the white house and executive order that would order the epa to change this regulation in a way that would directly benefit him. mark: given that we saw a number of ceo departures from the presidential advisory panel, is this just another blow to the credibility of trump's dealings with business leaders? >> absolutely. what we are seeing is the trump who ran as a successful business leader who could bring a pro business perspective to government is finding it is a lot more complicated than maybe he thought. icahnss leaders like carl want things that are different from other business leaders. others like the ones who resigned, are concerned that the political costs of aligning in
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any way with the president outweigh the potential benefits. vonnie: is there anyone else that carl icahn is close to in the administration? onhe is very focused specific investments at any one time. next year might be different. he is been past time obsessively focused on changing this one change at the epa. vonnie: we will continue this. that is not the end of the story. let's check in now for news. >> breaking news from spain. a spanish newspaper reports that police have arrested the driver of the van used in the barcelona terror attack. police have not confirmed. they say they shot and killed a man in the same area that was wearing an explosive belt. america's top admiral has called for an investigation into the pacific-based seventh fleet.
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the uss john mccain collided with a tanker in singapore. missing and five are injured. this is the second fatal collision involving a u.s. warship in the region in the past two months. a combative stance when brexit talks resume. prime minister theresa may's government says it is stepping up pressure on the eu to ship negotiations away from terms of separation. the u.k. wants talks to pivot toward discussion on a post rex it trade deal. -- a post-brexit trade deal. the u.s. embassy in moscow will suspend issuing visas for eight days of starting wednesday in response to the kremlin's decision to cut 750 positions from american consuls across russia. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is
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bloomberg. vonnie: courtney, thank you. the first total eclipse of its kind in 99 years. we look at how everyone from nasa to google is getting in on the action. how elliott management helped win a deal to buy encore. much more on how the stocks are reacting next. this is bloomberg. ♪
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mark: live from london and new york, i am mark barton. vonnie: this is the european close on bloomberg markets. u.s. utility owner, agreed to
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electric.l of oncor energy say that the buying of future holdings has been terminated. to hire rates. joining us now, taylor riggs. >> like you said in the intro, there have been a series of bids that have come along for the energycompany of oncor future that has been bankrupt elliott management came in saying he was not happy with the bircher deal. this deal for $9.5 billion. a few things struck my eye as i looked at the rest release. the paragraph on the rest
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release talking about fully cap overg a $7 billion the next five years. you can see this year, a $4 billion cap. stay with me. i want to look at other fundamentals. paragraph six on that press release. they talk about debt. take a look here. they will fund this with a mix of debt and equity. for theon of borrowing reorganizing company which they expect to be investment grade. let me dismiss that alarm. you can see that. a lot of fundamental still at play. vonnie: is this all about growth -- tack on growth versus organic growth? >> a big part of this is a search for growth. you had seen utilities merging
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or diversifying into other businesses. like regulated, natural gas, or unregulated activities such as renewables, power. they mention on their last earnings call when they were looking at this, saying that the share of earnings coming from the u.s. business utilities is going to drop from three quarters to less than half. this is a search for growth. vonnie: taylor, thank you. today people all across america are watching a once-in-a-lifetime event. a total solar eclipse. you have to be in the continental united states to enjoy. here is a map. on the west coast the clips is just starting this hour and is said to be peaking around 1:15 p.m. eastern time. in the central u.s. it will happen at 1:30 p.m. eastern. the east coast will see the biggest effect after 2:30 p.m.. how is business getting in on the action? emily took a look at how the
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tech industry is faring in the shadow of the sun. ♪ >> thousands of people will be lining up to watch the first total solar eclipse in nearly a century. visible only in america. tech companies from google to airbnb are offering ways to watch the spectacle like never before. where i am, san francisco, isn't the ideal place to see the total effect of the clips. -- of the eclipse. you need to be along the path of totality, a 70 mile wide swath that cuts across the country. the best view? that is reserved for four nasa pilots. their mission is to chase the path in jet planes. this will have the clearest images of the corona, the son's outer at this year -- atmosphere.
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not lucky enough to go supersonic there are other ways to watch. google is partnering with mystery science to make it safe for kids and teachers to watch. as nasa will remind you it is dangerous to look at the eclipse through homemade lenses. for those not in the path of the eclipse, they can get a taste of what they are missing through google earth the are -- vr. amazon is waging a war on sellers trying to pass off fake glasses that could damage the eyes of unsuspecting shoppers. the company has gone as far as issuing imo warnings and refunding customers -- issuing email warnings and refunding customers. homes along the path of totality have registered on airbnb with 50,000 incoming guests. that is four times the number of of last year.
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handle the load. after facing backlash of canceling reservations. nest is letting customers use their stats to help save energy by precooling homes. all in all, the eclipse could disrupt productivity across the country totaling $7 million. it will also test the nation's power grid. a bloomberg report estimates that the eclipse could knocked down 9000 megawatts of power. that is equivalent to nine nuclear reactors, powering 7 million homes. more grids across the country will have to pick up the slack doing this event. mark: that was emily chang reporting.
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for more on the eclipse we will bring you pictures across the day today. 2:30 p.m. eastern time today. aboutmiss lynn, talking how this will test the power grid for the first time since the rise of renewable energy. treasury face-off against vulnerability in sterling. this is bloomberg. ♪
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vonnie: it is time now for our global chart. we take a look at telling charts of the day and what they mean for investors. you can ask -- access these charts on the bloomberg. kicking things off in new york is alex. >> what i have today is the treasury bill in october specifically the october 5
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securities against the october 19 securities. what you can see is three months ago after health care failed to be revealed, you started to see treasury bill rates creep up. that was a reflection of investors getting worried that the debt ceiling was going to be an issue. what you saw is the spike up to the highest rate since 2008. since treasury secretary steve mnuchin has come out and said that the critical date is september 29, that critical point has been moved back. so the spike up in october 5 and right now those are underperforming. we are continuing to watch to see if that in version stays or widens as the debt ceiling deadline gets closer. vonnie: first time and it was a beautiful presentation. i think you would agree mark even though you are going up against her. all too well. the first time you presented me
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with a battle of the charts i was blown away. mark: this is mine today. done i have been away for a week. stock of we would take the pound, the economy, and brexit. sterling hits and 11 month high. back on august the 12th, we've come down about 2.7%. last week was the worst performing g10 currency. only the new zealand dollar has fared worse in august. five position papers this week clarifying stances on a number of issues. loads of potholes for negotiations. pieces of data we have had in recent weeks have rarely budged the needle when it comes to sterling. as in supporting sterling. the white line is the city u.k. surprise index, minus 4.2, a
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five-year low. any bigger it means that the gauge is missing estimates. selling sterling at current levels with a target of one dollar. mark, we are so happy that you are here and back and doing the battle of the charts but i think i will use alex' words here. and stick with tradition. she eclipse do you -- she ecl ipsed you. alex, you are the winner. in oregon right now, the first sighting of the eclipse. get out there folks. ♪ got you outnumbered.
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the dinosaurs' extinction... don't listen to them. not appropriate. now i'm mashing these potatoes with my stick of butter...
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why don't you sit over here. find your awesome with the xfinity stream app. included with xfinity tv. more to stream to every screen. i'm vonnie quinn, welcome to bloomberg markets.
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here are the top stories, president donald trump is back in the oval office after his working vacation which was full of twists and turns with chief strategist steve now out of the white house, who is next? u.s. treasury secretary steve mnuchin is set to deliver a policy speech on his vision for the u.s. economy. this hour, we will bring you the remarks live when they happen. markets are turning their attention to the gathering of central bankers at jackson hole. there is growing unease about the persistent low inflation and i will speak for that the chief global strategist at jpmorgan. abigail doolittle is with us now and we are halfway into the trading day. it looks a little lackluster. abigail: investors seem to be a little jittery


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