tv Bloomberg Markets European Close Bloomberg October 10, 2017 11:00am-12:00pm EDT
vonnie quinn. this is the european close on bloomberg markets. ♪ the top stories we're covering from the bloomberg and around the world, one hour until they possibly moment of truth for catalonia and spain, will be catalonia president declare independence or back down? we are live. questions swirled around prime minister may's future and the outlook for sterling, our guest says it is between a rock and a hard place. silicon valley and washington maybe 3000 miles apart, but tech companies are feeling the government pressure and we will tell you how google and facebook and other companies are in crisis planning mode ahead of congressional testimony next month. now, an equities trading
mixed day with the pivotal meeting of catalonia's regional parliament coming up. the euro is rising, up two thirds of 1%. bond yields are gaining. we have had some retail sales data today in the u.k., retail is the clearly losing the battle against high prices, potentially strengthening the case for the bank of england to raise rates next month. likeort today showing product sales increasing 1.9% from a year earlier, the fourth straight month of gains. the fastest growth since april mainly driven by consumers paying more for essential items as retailers pass on the impact of sterling drop since the brexit vote. elsewhere, a mixed day of data for the u.k., a picture of an economy struggling to gain
momentum. and after production rising 5.2% in august, boosted by better than expected manufacturing performance. construction bringing back some of the losses sustained in july with a trade deficit unexpectedly widening. and ports jumping. -- m ports jumping. jumping.s ahead of the big speech by the catalonia president, a great turk showing you the divergence of the psi 20, the portugal benchmark stock index. 9% blue light -- the ibex up on the psi at 60%. sixth biggest gainer among developed european dangers. has been cutting
back on spain, putting money in portugal and betting the economic recovery in portugal powered by exports and a surge in tourism will continue to bolster shares. 90 minutes into the trading day in the u.s., what is it looking like? .> still in the green entered a record for the major averages but backing off a little bit with -- acting off a little bit the highs of the session as we get individual stocks movement pushing things around. on the plus side, walmart after the company came out and said that u.s. e-commerce sales will rise by 40% in the next fiscal year. target is higher. a number of the different product producers are also higher. the stuff that gets sold in walmart, mont elise a food maker -- mondelez rising. in the wake of the vote by
procter & gamble shareholders to not allow nelson feltz on the board. he was lobbying for a board seat at the company's annual meeting. it looks like he was voted to not -- he was not approved to get a seat on the board, although nelson felt says the vote is still close to call -- nelson feltz says the vote is too close to call access the should be appointed to the board because his suggestions for the company are valid. he has a more than $3 billion stake in png and has put for organizational changes that the company says are all largely enacted before he came along, shares down 1.6%. you see the drop when the vote results came out and now they have been bouncing around. we will monitor that situation. outside of stocks, the bond market, not just today but over the past month with a big run-up in yields, down in price at 19
basis points climb in the u.s. treasury yield. a backing off today with the yield coming down today. that is benefiting some of the interest rates stocks. back to the stock market, look at the bloomberg, utilities higher, they benefit when bond yields go down. asl estate and telecoms well, maybe a relief rally. on the flipside, financials with little change as yields go down and health care is the worst performing group as we get a little bit of a slipping of the earlier stock market gains we have seen. mark: and less than an hour, the toalonia president is going address lawmakers and if he proclaims independence for catalonia, sources say spanish forces make arrest him. -- may arrest him. if i can start with you, maria, give us the flavor of the atmosphere, what is it like where you are?
until heunder an hour will address the catalonia parliament, this is what it looks like, shut off from traffic. a show of force from me catalonia police. as you mentioned, it will be about this word unilateral, what would the president do, make the big announcement of a unilateral declaration of independence? mark: charles, if we get the world unilateral -- word unilateral, what happens next? >> that is the question. prime minister rajoy has made it clear that he will not tolerate or permit the catalonia regional government to declare independence. what follows remains to be seen. he said he believed all opt in solving table.
-- all options on the table. some police action must be a possibility. vonnie: it is fascinating, charles, because i am curious to know what spanish people in general think about this. do they care if catalonia secedes? what a protest, would there be a peaceful civil war? how do spaniards view the separatist movement? >> they care passionately about it, it has polarized catalonia society and spanish society in general. we saw huge demonstrations in barcelona on sunday in favor of unity of spain. something we had not seen before. everybody had been talking about the silent majority as the government -- the spanish government would claim, in favor of unity with spain. we saw those crowds on sunday. that was an impressive
demonstration of that side of the argument. number police estimated taking part at 350000 and organizers say it was double that. maria, any kind of unifying figure emerging? happens today, there will be a large group of people disenfranchised and unhappy. >> absolutely, that is a big risk for the president. he knows his base wants him to deliver this unilateral declaration of independence. it has been going on for a week, he said we think the vote is valid and we will follow-up on it. tells you thetion vote is valid and we heard the french president say this is not acceptable, it goes against the constitution and cannot happen. from barcelona, it is very tense . under an hour and people already starting to come and they want tell the president we will
back you up if always do this. if he fails to deliver, he will be under a lot of pressure. he already is, especially from his the database, those who voted in favor of independence. mark: charles, we add bloomberg look at the market side of things. the euro is up and the ibex is down roughly 2.4% since the vote. bond yields, the spread with germany has stabilized. on wednesday weird given the various scenarios, will it remain a spain centric market reaction or could we see contagion outside of this -- outside of spain? is a good question and we will find out the answer soon. the moment, the issue is, to put extent does this challenge to spanish authority from me
catalonia government -- the catalonia government, are they prepared to take it to the brink? if they are, that becomes a serious issue. not just for spain but for the european union. it may encourage other separatist movements around europe which exist. it is a challenge, not just to spain but to the european order. mark: we have seen a two biggest banks in catalonia move their legal base. regardless of what happens tonight, does that process continue? do we continue to see companies move their base, their legal base out of catalonia? yesterday, some company said they will have to leave. the companies based in catalonia are scared, what if we get to a situation where we have to operate under legal limbo where
we do not know if we are part of the european union, what will happen? a lot of uncertainty. more than 15 company -- companies have left and the catalonia government says it is temporary but the business community in catalonia is preoccupied about this and they --ed him to remove the world word unilateral. mark: great job today. thank you both for joining us. 49 minutes to go. theresa may winning major public backing from brexit supporters in her cabinet, for more on why and how long it will last is emma ross thomas. use a sporting term, did she hit it out of the park? her speech to parliament got the
backing of all sides, is that fair? >> on the one hand, she offered the brexit backers recognition and said we are preparing for no deal, which they love to hear because it shows she is appeared to walk away -- prepared to walk away. theresa may said they were making contingency plans which the brexit backers love to hear. at the same time, she clarified her position on the ecj. in the florence speech, we thought we understood she was saying that the ecj would continue to have jurisdiction during the transaction because they are the boogie man for the brexit backers and it is crucial to the eu. it is important. that florence speech, david davis said not so fast, ecj would not have jurisdiction. in parliament, she stood up in response to a question by a leading brexit cap in and said that the ecj what have
jurisdiction during transaction. after that, boris johnson came out and said, on facebook, some vitriol, on facebook come he's that great speech by the prime minister -- facebook, he said great speech by the prime minister, -- mark: the negotiations continue. not a day three, why? >> we have not been told, normally they go from monday evening to the day but taking wednesday off this time and we do not know why. the eu said it was because of open- the eu says they are is not clear, on thursday we have a closing session and a press conference. not looking at what they say but also body language.
last time there seem to be some progress with smiles, they had made some kind of advances. we will be looking at the bill, have a made progress on the bill, without that, they cannot move on. mark: thank you. vonnie: it continues. let's check in on the first word news with courtney donohoe. >> it sounds us that when executive order on health care is in the works. president trump said that since congress did not pass a replacement for obamacare, he will be using "the power of the tent to give great health care to many people fast." rand paul says he has been working on it and it will be a big deal for millions of america . no details so far. deadly wildfires ravaging northern california's wine country, at least 11 people killed and 100 are missing. taking hundred buildings have been destroyed or damaged. when a thousand people have been forced to leave their homes and
winemakers say it is too early to estimate losses but from whiners and vineyards have been damaged. most of puerto rico castillo in the dark after the island was hit by a hurricane, 85% of customers in the u.s. commonwealth do not have electricity. puerto rico should -- said it could take months to restore power. president trump may visit the the militarized zone separating north korea and south korea according to a south korean new york -- news, they say the president is suspected to send a significant message to north korea and the white house announced a trip to asia but gave few details. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. mark: shareholder pressure mounting on deutsche bank chief executive to deliver on growth plans, what some large stakeholders want to see and when. this is bloomberg.
april. there are rumblings that if he does not deliver on key parts of the turnaround plan, his job may be a stake. with more, lisa. is he on borrowed time? >> he has been for a while. as soon as he announced his strategic shift in march, investors say he does not have that much time to show it will work. the numbers in the second quarter were disappointing. the news has not gotten better. investors are impatient with the speed at which the revenue line may or may not grow. ,ark: there are positives legacy misconduct, he settled that, reducing risk in investment banks and raising fresh capital. not enough it seems for some investors. >> he has been described as a fireman, he put out the fires and he is into rebuilding the bank.
this is where investors are getting nervous that the rebuilt is taking longer than they would have liked. he is operating with a smaller footprint. they are shedding businesses and investing in outdated technologies. all of this is not conducive to growing the top line or bottom line. innie: as the 10-year -- 2020, are major shareholders willing to let him stay until then and see what happens? >> we are hearing that among the top 10 shareholders, some are looking at a few quarters and deadline closer to make. -- confirming a deadline closer to next may. how the strategic plan progresses, cost-cutting will show through clearly, and therefore investors may take a slightly different view into next year. vonnie: wtwo stark reactions to
how deutsche bank can proceed, one and not viable at all, research hinting at that or saying it. the other, saying, this is a good idea. is that based on his strategy or the viability of the bank in general? >> it is down to the pieces he has to play with. he has a resale consumer bank and a competitive market that is germany. he has an investment bank he has the strength. he has nasa management business he is trying to build. trying to ipo that and potentially add scale. with the pieces he has, we are seeing a reflection of the difficulties that they face. mark: you do not need tension with your chairman. a story about hna, what is that about? >> a big new investor with a
capital raise and it appears he has not sat down with him yet. some investors have commented on as not being ideal. they are -- they have come in with a 10% stake, a significant investment and backing up him and his strategy. they do not like that, even though the dollars did not cross , may not have been a deliberate attempt not to sit down. mark: great job. a programming note on bloomberg television, more insight on the banks and we will bring you an exclusive conversation with the ubs chief executive 2:00 p.m. in new york and 7:00 p.m. in london. vonnie: exciting stuff to come as the pound is stuck in no man's land, steven barrow will answer, head of ethic strategy at standard bank. this is bloomberg. ♪
world headquarters in new york, i am vonnie quinn. mark: live from london, i am mark barton with the european close six minutes away. time for the bloomberg business flash. parker and gamble declaring victory in its battle to keep billionaire investor nelson peltz off of its board. they say that based on preliminary results, all 11 of its directors were elected in the shareholders meeting. says thelson peltz fight is not over and is waiting for an independent inspector who will certify the results. prices -- reviewing options for its consumer health care business which could be worth $17 billion, the possibility is a spinoff, sale, or other transaction and the consumer health unit sells products like advil and the dietary supplement centrum. they said the unit brought in
$3.4 billion. walmart forecasting online sales up 40% in the next fiscal year, they are expecting its investment in e-commerce to help it play catch-up with amazon. walmart plans to add 1000 online grocery locations, twice the current number of sites. ♪ take a look at where european markets are trading, heading to the close, four minutes away from the end of the tuesday session with stocks marginally higher for the stoxx 600, gains in london and declines in germany and in france. the closest 3.5 minutes away. this is bloomberg. ♪ retail.
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
with the european benchmark up .02%. the big meeting and roughly 31 minutes, the pivotal meeting of catalonia's regional parliament. the spread between the spanish and german ten-year, 1.25, little changed today. last week, it widened by 11 basis points, the most since february. the president speaking to parliament and roughly 30 minutes. on the outcome of the referendum , the word is it will be crucial , will it be a unilateral declaration of independence? people familiar with the matter say spanish police are ready to arrest. check out the yield difference tomorrow. near a record, kicking up a third-quarter reporting seasons with sales growth, up 12% and boosting confidence, the luxury rebound is set to continue. they have been boosted by rebounding demand for luxury
items, particularly in asia and its appeal to younger consumers and selling more products. we spoke a lot about the lira yesterday. the big move happen yesterday. an intraday move, dollar lira, dollar up six point 6%, the biggest intraday move since 2008. by the end of the day, the dollar rose a mere 2.4%, the most in 15 months. the lira coming back a little bit today and the today chart is a gain of 1.7%. a spat between turkey and the u.s. investors not as rattled as they were during thin asian trading. vonnie: let's start with the won,n one -- the korean henry kissinger visiting the white house around now and later run, the president has lunch .ith rex tillerson
we shall see if the state of affairs continues throughout the day. chinese yuan following golden week, a major strengthening with continues today, 6.57 and crude oil rebounding. almost at $51 per barrel, it started at a 49 handle any 10 year yield down a couple of basis points. global macro movers, the top markets, we are waiting for the andlonia president speech there will be a speech in argentina. latin american stock indexes, currencies to see if there is reaction because she can roil markets and it is good to look at the russian ruble, strengthening of little bit. the bloomberg dollar index down 4/10 of 1%. mark: let's move on and talk about sterling rising today, again supporting the bank of england rate hike in november. steven barrow joins us, the
standard bank head of fx strategy, he projects sterling dollar will go below 130. mixed data with production deficits and construction. the labor costs figure yesterday, which was a change because of a problem that has put the cat among the pigeons. >> it has, but i think the markets do the wrong thing. i would much rather look at the trade date. so look at it, it was horrendous with record deficits, 14 billion pounds. hot on the heels last week of visions to current account deficit dates in the second quarter. 4.6%. that is quite large. not a healthy position to be in, going into a situation of the brexit negotiations and
questions about the u.k. trade position with such a hefty deficit. mark: wasn't this meant to help our trade position? >> economists had a j curve, which basically means that if you see a significant decline in the currency, very often trade deficit gets a bit worse. exports go down and imports go up in value terms. if you gain more competitiveness from the weakness in the exchange rate, eventually that will turn around. the shape of a j, trying to find the bottom of the j, rather than moving up and it is worrisome. mark: a worry for sterling, are you saying the boe will not move in november or will they still move? all that are they move higher? the -- iot sure i see
can understand the banks logic and i see a rates hike, a negative rate hike for a currency, we cannot assume every rate hike is good for currencies . in emerging market countries, if there currencies are under massive pressure, sometimes they can raise interest rates many percentages and it does not make the currency stronger. hikeannot take every rate as good for a currency and i do not think it is good for sterling. up, if they dogo go up in november? because inflation is potentially picking up and therefore a problem. there are two ways inflation can go up in several times, one, the man get stronger than the economy, that is not happening. the other is the supplier could track and that is what the bank is worried about. a contraction in supply, the economy's ability to supply goods and services. as a result of the us uncertainty associated with brexit.
with a supply shock, you have stronger inflation and weaker growth. a tough one for a central bank. even if the bank response to that with higher interest rates, for me, it is not a positive for sterling. i am not worried about that. in terms of a ferris call for sterling. where do we go, if there is a rate hike, is it going to be a series or one in done and i think it is one and done. vonnie: trade deficit figures interesting to watch, how will be rebuilt -- read those in coming months and years, given the dynamics of trade will change phenomenally around the developed world? changing.ey are very significantly. if you look at -- we talk about the u.k. trade with the eu. about 44% of u.k. goods are exported to the eu. that is why the brexit negotiation is quite important.
mark carney made an important part about trade dates between the u.k. anti-e.u. when he said we are not as much trade with the eu, we trade through the eu because a lot of the goods the u.k. since to the eu are then exported to components and used to make other goods which are exported on to other countries. it is difficult to look at isolation of the u.k. trade with the eu or any other country. there is a story in the telegraph newspaper today that the u.k. may want to join nafta. that may be a reasonable idea but not sure if we will draghi u.k. economy to north america. changes the north american free trade agreement title. >> from the u.k. perspective, they want to go into a trade deal with a country like the u.s., which is seemingly hell-bent on extracting the most
value as it can over the trade agreement. as it will be shaped in the future. trying to look for trade deals in the u.k. is not positive to me. one of the reasons i am bearish sterling. mark: the euro ahead of the catalonia's president speech? not big declines. candidate whether the worst-case scenario -- can it whether the worst-case scenario? >> i do not know if they can do that if independence is declared it -- is declared immediately .think back to the eurozone 12012 thes in 2010, euro -- 2012 the euro was weak but not massively week, the major hit in the bond market and we see the similar thing with the spanish bond market relative to the euro. i think it will be contained
more in the bond market that does not mean the euro is not potentially affected. in my view, we are in a correction period for euro-dollar and the longer term going up 130, 140, my short-term view, between now and the end of the year is 110, 115. not -- also what is going on in the u.s., not just the euro side and the weaker euro fits my story but not really necessary. the catalyst is really the key. mark: thank you for joining us, steven barrow standard back head of fx strategy. just talking about, in spain, waiting to hear from the president of catalonia speak to the regional parliament in the next hour. the question is will carles puigdemont declare independence, spanish police are ready to
arrest him immediately if he does so and an elite unit would take part in a raid if the catalonia police try to shield him from arrest. in northern california, fast-moving wildfires burning through the wine country. 10 people are dead and 100 people missing, 20,000 people have been forced to evacuate. 1500 homes and businesses have been destroyed. those numbers likely to grow. wineries and vineyards have been affected but industry groups say it is still too early to assess the damage. president trump has escalated his feud with republican senator bob corker. on twitter, the presidents of the feeling new york times set little bob corker up by reporting his conversation. he was made to sound a fool and that is what i deal with you bob corker said president trump good set the nation on the path to world war iii. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. this is bloomberg.
>> united and continental up, despite the fact>> their revenue measure for the industry was down. american airlines reported that their revenue outlook is strong, price fares, they have power and investors are happy about this. a volatile year. chart. a year to date on the bottom, united and jetblue and up top, recently turning positive is american airlines and delta air lines. a bumpy ride. starting in july, a move down as we had a we'll recover but we had the hurricanes -- oil recover but we had the hurricanes. even no united and continental numbers are the lowest of the -- we are seeing a relief rally but still down on the year. vonnie: warren buffett a major shareholder, he had never like the airlines. >> a great trade, he acquired a
lot of shares and the middle and the end of last year, up 50%. but there is reason to believe that berkshire hathaway is lightening up on some of these positions. this is the ownership function on the bloomberg, on delta berkshireown, hathaway, the top holder. filings.last 13 taking some profits and our bloomberg intelligence analysts were chatting about this and he says more about that is known for liking industries that have a moat around them and he thinks this is more of a tactical trade on the part of warren buffett's lieutenant with seems to be successful with a 50% profit. vonnie: thank you with our stock of the hour. silicon valley versus washington , google summit about 200 politicians from around the world to discuss whether google is an attractive target for government regulators. new information could make
google's job tougher and it admitted taking political advertisement from russia looking to influence the u.s. presidential election. they join facebook and twitter already under investigation by congress. joining us is our bloomberg technology reporter. what do we know? what is different between the companies on this matter? >> all three companies are being in this position where they have to figure out how far to cooperate and how much responsibility to take. and how much change to promise for this issue that is -- that russia tried to use the platform to spread a little discourse -- discord, advertisement that may have affected the u.s. presidential election. these companies have grown to scale because of the automatic nature of their advertising platforms. uggla, facebook, and twitter will be testifying before congress on november 1 to try to explain how this could have happened.
it is quite a political issue for them. , to bey volunteering more responsible, are opening themselves up to more publicity and more blame? >> absolutely, especially the case with facebook. what i heard from insiders, executives are pretty concerned with how the public is viewing their role in the election situation. they feel like facebook is being unfairly called partisan when they just have this platform that anyone can use. they have been working directly with the donald trump campaign, of course they would because they work with everyone who uses the platform. they are on a communication offensive. some of the frustrations have come to light from executives on social media. t fromt this week -- twee the chief security office of facebook, handling the inquiry
into russia's meddling and says a lot of people are not thinking hard about the world they are asking silicon valley to build. when the gods punish us, they answer our prayers. he is warning that the more you ask facebook to fix this automatically, the applications could be very great for the amount of free speech in the world. they are trying to be very open about the problem and very careful about how they fix it. mark: we are just -- just coming across the bloomberg, theresa may's spokesperson says the u.k. is looking at the role google and facebook play in the news environment, the work on an existing plan to make a digital charter about how people should behave online did it seems like facebook and google are facing it in the u.s. and outside. >> one very important aspect
about what they take, they do not want to set a precedent that they cannot -- europe is especially hard on these companies right now. calling for them to help on issues from terrorism to fake news, to election meddling. facebook said it was working hard to prevent any sort of -- anything similar to what happened in the u.s. in the recent german elections. this is an issue that will follow them around the world, despite what happens in the u.s. mark: thank you. sarah frier speaking to us in san francisco. the catalonia president moment away from perhaps the clearing catalonia's independence from spain and we will bring you the latest. this is bloomberg. ♪
moments away from what maybe the most what moment in europe. catalonia's president set to speak, will they declare independence from spain and what will the reaction be? it is catalonia's moment of truth. >> it is, it has been a dramatic few days. in spain. today, it will reach a head for now. we do not know what will happen. the feeling is that there will be a formal word in the president's speech that refers to catalonian independence, how will it be framed, how it will be head, how direct with the declaration be? hanging over this is the potential that we could get more drama with some people saying he could be arrested soon after his speech.
high drama awaits us. mark: if he does not use the words unilateral, what does that do to his core supporters? does he alienate his core supporters who want to go the whole way? >> absolutely. that is a big risk for carles puigdemont, his coalition is incredible fragile. we know he is being pulled from all sides and moderates who do not want the unilateral work, the 40 hour deadline. the radical site is saying we have to do it. his face, the people -- his base, people who voted, the legal referendum, some of them got beaten for it and they feel this is something you oh us. -- owe us. thatexpect his coalition his coalition could implode and he could be under pressure from voters who feel this is the time. administration has
promised the public three times and has failed to deliver and many people i talk to in barcelona deal it is the right time and will be the real one. if he fails to deliver his pledge, we could see major tension. a group for him and against them, telling him just to do it. vonnie: how is this difference as a separatist movement, it seems more peaceful than past separatist movements, or one in europe. isto a certain extent, that what they say, speaking to members of the spanish establishment, some people referring to this as a coup led by anarchists. how you define this and frame what independence movement this is, this is the question dividing spain down the middle. the detractors would say that because scottish independence
referendum, they say that was legally mandated and sanctioned by the parliament. the detractors from the catalonia side say there is nothing like this year. vonnie: they have seats in parliament. what is their prime beef with spain? >> they feel they contribute so much to the spanish sector and do not get much in return. this is an issue that goes back decades and centuries in spanish history. they say that the government in madrid does not respect their is are and the franco era high example of that. it manifests that in spanish life, the soccer rivalry between barcelona and real madrid. it cuts to the core of what many people feel is their identity. vonnie: we will come back to
you. we are awaiting that speech. headlines from president donald trump's meeting with henry kissinger that took place a half hour ago. he said he respects kissinger and has a lot of work to do. he does not think they the bob corker spat will hurt tax reform and he will adjust the tax reform plan to make a stronger. he spoke about the secretary of state, rex tillerson, who he will have one foot in a few minutes. he says he has confidence in rex tillerson. we will bring you all of those headlines as they come through. thank you to our senior executive in new york. more markets next. ♪ who knew that phones would start doing everything?
no one else lets you do that. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. vonnie: noon in your at 5:00 p.m. in london and midnight in hong kong. i am vonnie quinn. >> welcome to bloomberg markets. ♪
>> here are the top stories on the bloomberg and around the world. now, the moment of truth or -- for catalonia and spain, will be catalonia president declare independence or back down? is tax reform already in danger of dying, why some of president trump's poses allies are getting more worried about the president's ability to deliver. as puerto rico struggle to ,ecover after hurricane maria how the u.s. territory's massive debt burden lay the groundwork for the current crisis. vonnie: a crucial moment in the crisis in catalonia, their president carles puigdemont