tv Bloomberg Markets Americas Bloomberg December 15, 2017 10:00am-11:00am EST
welcome to "bloomberg markets." vonnie: here are the top stories. it is nearing crunch time for tax reform and president trump is facing more backlash from within his party. senator marco rubio among several high-profile holdouts. acids may even be in question. then, in european politics, brexit talks advance to phase two. e.u. leaders say the u.k. has offered enough in its divorce settlement. at the european union is warning that the harder part is to come. we look at ramifications. plunges theews, h&m most in 16 years as the fast fashion retailer loses more ground to competitor zara. we explain why sales are declining at h&m.
we got to look at the markets, 30 minutes into the friday session, one of the last of the year. julie hyman is here and we are higher. records again, at least on a closing basis, for the dow and the s&p. a nasdaq not quite getting there. a list across the board for the three major averages. if we break it down and look at individual components, we will see strength as well. in retail, for example, both on the supermarket side as well as on the specialty retail side, we are seeing strength today. costcosupermarket side, leading gains after the company came out with earnings that beat estimates. the company reported another quarter of increasing comparable-store sales, or i should say another month, 14 months in a row that costco has seen games in that area. in addition, membership rates are holding steady, which is better than cosco had anticipated.
it is higher. walmart and target are also getting something of a lift. outside of supermarkets, looking at specialty retail, we're looking at under armour and crocs the upgraded. sports and lifestyle brands are going to do well, particularly those who have exposure to , with potential for shifts in sentiment. the analyst thinks those fall into that category. the finish line and foot locker -- foot locker buying on the end of inventory clearance, getting inventory back in line with demand. up five point 5%. finally, i want to look at the bloomberg. this is something that is sort of related to retail, one could argue, and is something that caught our eye today. homeowners equity is back to the level where it was before the financial crisis and the housing crisis in the united states.
you can see the big dip we saw in homeowners equity as a percentage of market value. so many homeowners were underwater. we are seeing that back up again. here is the average since 1980. averages have come back into line. that should mean at least in theory that customers, consumers, are feeling like they might have more cash in their pockets or the value of their assets, and might be more willing to spend. about 19 minutes to the close of trading in europe. let's see how things are shaping up. outlook -- looking at the stoxx 600, you see the stoxx 600 down around 0.4% overall. a bit of a mixed picture if you look across indexes geographically. little bit lower. the ftse 100 has not been doing badly. a little softness coming through in italyx and the ftse
and spain. overall, that translates into a third day of losses for the stoxx 600. i have also been keeping a close .ye on the south african rand basically, as we look ahead to a decision for a new anc leader over the weekend, we have been seeing some gains in the rand in today's session, but also volatility spiking significantly. you can see that on this chart. bestand one of the performing currencies, if you look at expanded majors. theing at the g10, one of worst performing against the dollar in the session has been sterling. showing the intraday cable rates, we are down about 0.8%. you might be asking yourself, why is this happening, even that the e.u. leaders gave the green light in brussels to move the talks on to trade? it is because it looks like from now things are going to get a lot more difficult. that is what the e.u. has signaled. it looks like the talks on trade
are not going to start until march. really, in terms of a marathon, we are only on the first mile. that was one of the comments that came through. looking at the gilt markets, the tenure gilt yield intraday, that is down to basis points. its lowestis hitting in a couple of weeks. you can see money going into the gilt markets. another sign that investors are a little concerned about where brexit negotiations go from here. to washington, d.c., congressional republicans scheduled to reveal final details of their tax-cut bills today. they have the votes at the end of the day? joining us is bloomberg's chief content officer, marty shanker. 10 rubio, corker, mike lee, jeff flake, and the potential for --ain and susan collins there are many potential holdouts. is there enough in the pocketbook to pay off all of these holdouts?
probably going to find a pretty quickly the details of the bill and the compromises, and the subtle changes to get these people on board will come out as the day goes on. we won't have the final legislative text until well into the afternoon or this evening. my gut is that they will finally get those people on board. bute may be one or two, mike pence is sitting in the wings, waiting to be that tie-breaking vote. they are obviously scrambling behind closed doors to make the compromises they need to make to get this bill passed the finish line. vonnie: mike pence putting off a trip to israel because the likely voting scenarios are numerous, including that mccain and thad cochran may not be able to attend. marty: that cochran's office said he would be available to come in and cast his vote next week. the probably is taken off table.
but john mccain's situation is a little less clear. he is being treated for his cancer. there are reports that he is not doing particularly well, but that everybody expects that he should be able to make it next week. if he does not, it makes it much more difficult for the republicans. vonnie: the question is, underneath it all, does he really want to? marty: unlike the health care vote, he has expressed support for this bill. vonnie: publicly. marty: publicly, but he has not seen all the details. this child care tax credit that marco rubio has put forward is something that john mccain has expressed support for. we will see whether or not they are able to deliver on that. vonnie: marty, what exactly are we looking ahead to today? in terms of today, it is not too suspenseful, is it? conference committee is meeting as we speak. we will convene a public session. sham,really just a
because all the deals have already been made behind closed doors. they are not going to be able to -- they will be able to leak out, i think, in the next hour or two, some broader compromises that they have made. there are calls being scheduled withater this afternoon the entire republican conference. more details will emerge from that. we expect that some point an outline of maybe a couple of the pages of what the compromises are. but the key thing is the legislative text. our staff and every lobbyist and tax expert are going to be pouring through the text -- poring through the text. vonnie: in terms of which chamber is going to vote first, i understand we are not sure yet which one is. will it make much difference to the final outcome? they might choose to have the house vote first, where they think they have the votes lined
up. that would put pressure on the senate. it really does not matter that much as long as they get it to the president's desk before wednesday. they're going to move to their christmas recess and there is nothing that is going to stop congress from doing that, so they need to get it done before they leave. vonnie: the figure is costing $200 billion extra. there are different scenarios about how they might offset that, including taking the top rate down. what else can be done? what taxes could sense that? they could make provisions on individual tax cuts expire earlier. it saves money. the old pitch is that this is a middle-class tax cut. if you start scaling back the permanent nature of those cuts, you lose your moral authority to even say that. and then there are a lot of people who feel that -- our
owner, mike bloomberg, came out with an editorial today, said the entire tax plan is misguided, and republicans should vote no. appeal,a last-minute but i do not think it is going to resonate with republicans who think they need a political victory. vonnie: reform the tax code, but this argument that corp. rations needed is bogus, because they don't. sittingecord profit under -- overseas, record low interest rates. if corporations needed to spend money, they have it. i would this tax bill make them do it? vonnie: who could be left off the rota? dismissible? there are so many people putting their hands up. did the gop need marco rubio? marty: i think ultimately they are going to get marco. they did not take him that seriously yesterday, but now i think they are. is that he's history
will vote with the majority when it really comes to it. i think they cannot absolutely count on that, but it is a good bet they will get rubio on board. they can lose -- they have already -- they could lose flake . they could lose one other besides that. they cannot lose anybody else. vonnie: the mind boggles, the permutations. it is going to be an interesting conversation, to say the least. our conversation with bloomberg content officer marty shanker. let's check in on the first word news. emma: president trump was due to speak at the graduation ceremony" the koke, virginia at any moment. he says people are angry about what is happening at the fbi, but he plans to reinvigorate the agency. we are looking at live pictures. the white house says newly revealed records show extreme bias against president trump among senior leadership at the fbi. european union leaders are warning the hard part of brexit is yet to come.
in brussels, they formally agreed that british prime minister theresa may has offered enough on the divorce settlement to move on to trade talks. angelamany's chancellor, merkel, says the next phase will be tougher than the one before. in russia, the central bank has cut interest rates by more than expected. the one-week auction rate was lowered to 7.75%. russia's economy has been stumbling. it is the lowest since the end of the soviet union more than a quarter century ago. and mark your calendar. the royal wedding is set for may 19. that is when britain's prince harry and american actress meghan markle will exchange vows. the ceremony will be held at st. george's chapel at windsor castle. global news, powered by 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. much, emma.s so bitcoin surging again today. we will explore the futures outlook for the cryptocurrency.
theie: president trump at fbi academy. he is there for the graduation at quantico, virginia. mentioned earlier leaving the white house -- he said people are very angry about the conduct of the fbi and he would rebuild the bureau. that was as he left the white house this morning. the president speaking to new fbi members, the graduating class at quantico, virginia. time now for futures in focus. oil gyrating today to end a voluntary -- a volatile week. i enjoyed by the chief market strategist by -- at agoura
financial. let's start with oil. a volatile week. $625 abrent go above barrel. it is back below that now. you have got the iea and opec disagreeing on the outlook for 28. who is right? always, i try to make it simple. i am a price guide. if you look at price, we have been trading between 55 and 59 for a month. we are at the middle, this midpoint at 57. we tried to get up to 59 earlier this week. we got up to 58.50. you saw the brent market kick higher because of construction in the north sea. that did not push the wti to new highs. you saw a pullback. essentially, we are unchanged on the week. if we take up the double pop from the end of november and the beginning of december at 59 dollars, that targets a two dollar move, up to 61. we will be looking at 65, which is a long-term target.
we have been traded for most of the year. where does the brent slashed of uti spread go from here? alan: that spread has that very wide. they are both in uptrend. look for the wti to have more of a rubber band snap that. i am looking for this technically to make a push to new highs again. the trend is still strong and the dollar continues to decline, so that could be a positive as well. nejra: bitcoin gaining again today as volatility has come down a bit since the future started trading on the cboe. when we get the futures start on the cme, will we see that premium narrow a bit between the futures and the stock price? alan: that is one of the functions of the futures market, is that you can offset what is happening in cash, and hedge and speculate. that is an advantage. the number one advantage is the price discovery process. we want to know where the market is trading at any time. that is what the futures markets allow you to see, as opposed to bitcoin, which is on multiple
exchanges at totally different prices. not only the price discovery, the transparency, but what i am looking for is the ability to use these markets any time, day or night. but you are shifting. you are taking that counterparty risk away. an, you are not dealing with exchange in some place that i do not know where it is. you are dealing with the cme or cboe, which have clearing corporations. they are going to guarantee the other side of the trade. nejra: allen, would you short bitcoin? alan: no, i would not. it is in a trend. this is the biggest bubble in history. it surpassed two lip mania. that was 64 times over three years, the increase. we surpassed that. looking at the bubbles we passed -- we passed the oil market from 2009 -- 2005 through 2008. japanese stock market from 1982 through 1992. this is the biggest bubble in history. it could get a lot eager.
it has grown 17 times in 2017. a survey says that 75% of people that they ask think it could outperform what it did in 2017. if that happens, bitcoin goes to $260,000. i look at it as another trading vehicle. i think the technology, the blockchain technology, is a bigger deal than bitcoin itself. bitcoin is going to move. is goinghe technology to have more of an impact in the financial sector than the bitcoin itself. i guess if a bubble is going to keep growing, it is still an opportunity. n, thanksan -- knutma so much. vonnie: time for some of the biggest business stories in the news right now. a management overhaul at airbus. the ceo will step down when the term and's, april of 2013. -- airbus in february
is installing ahead of the helicopters union as part of the commercial plane building unit. that puts them in line to become ceo when anders retires. h-shares a fashion retailer h&m falling the most in 16 years. the swedish company reported quarterly sales that missed estimates. the shift to e-commerce lead h&m brick and mortar stores to attract fewer customers. the chain now plans more store closings, fewer openings. that is your latest bloomberg business flash. is at the fbip national academy in quantico, virginia. he is going to be speaking to a graduating class today, having left the white house earlier, complaining about the fbi, saying that people were very angry. he also deflected questions on national security advisor, formerly michael claim, and particularly questions about potential for a pardon. president trump waiting to make comments to a graduating class at quantico. this is bloomberg.
nejra: this is bloomberg markets. i am nejra cehic from the city of london. i'mie: from new york, vonnie quinn. corporate buybacks have cooled off, with stocks at all-time highs, but tax reform could reignite lagging vivax and the etf's that follow them. here to discuss the possibility, julie hyman eric. julie: this has been one of the theses of seeing the tax reform trickle through the corporate system, eric, is that we are going to see it -- see perhaps an increase in buybacks. have we seen that happen before? eric: yes, and i have to give credit to gina martin adams and
tom, whose name i am mispronouncing. in 2004, there was a similar situation. terminal.have a eric: it shows the buybacks jumping up and one -- in 2004 after this bill, that they were way lower back then. buybacks have been a big deal for the past seven or eight years. it definitely worked back then, but look how high they have been since the financial crisis. you can be your own judge on this, but corporations get more cash. what are they going to do with it? they could do buybacks. there are a couple of etf's to play the buyback trade. julie: look for companies that are going to increase buyback authorization? eric: yes. the big one is the powershares buyback etf. what it does is, it looks for companies that have lowered their shares outstanding by 5% over the past year. it does that. it has 300 stocks in it. it is diversified, market cap weighted. it is a little pricey at 63 basis points.
it is the biggest and most liquid. i will say when you look at this, it is kind of a trumpian portfolio. there are a lot of industrials, a lot of financials. consumer discretionary makes up almost the entire portfolio. there is very little tech. it is like the trump trade. it is cheap. it only has a pe of 18 because of that lack of tech. julie: but more expensive on the basis points you are paying for it. what about other buyback etf's? eric: spider has one that is interesting. they say, let's go narrow and fun. they do 100 stocks that have increased buybacks, and they equal rate them. it is like inserting a little hot sauce into the play. this is more volatile, but a bigger cake if it works. this has more tech, a little more diversified. i have to give credit to cambria. he has this etf called shareholder yield, buybacks plus dividends. he talked about this for years. this is actively managed, independently issued. his is narrow with 100 stocks.
that adds dividends and buybacks. julie: got to leave it there. thank you so much. vonnie: a development. the s&p is spiking higher. yields as well. the 10 year is at 2.37% after fox is reporting that marco rubio is a yes, which means we are getting closer to passing tax reform, sending treasuries lower on the prospect of more supply next year. there could be support added for a marco rubio vote. ♪
at 0.7 percent. you had yields moving around. the 10 year at two point 37%. the two-year at 1.83%. you had some treasuries selling off. the reason behind all of this is because fox news is said to be familiar with -- a person familiar with telling fox news that marco rubio is a yes on the tax vote. marco rubio is a yes. this is according to somebody speaking to fox news. definitely had a market reaction. treasuries were lower, possibly because this would mean more deficit spending, more added to the deficit. elsewhere, we are winning for president trump he is due to speak to the fbi national academy graduates in quantico, virginia in a few minutes. he has been waiting there after fbing given out about the as he left the white house. we will keep you posted on any relevant headlines from that speech. nejra: the bloomberg dollar
index still heading for its first weekly loss in a month, even though it has moved higher on the news you just broke. let's check in with emma chandra, who has more from new york. emma: house speaker paul ryan is dismissing a report that he is to retire. politico had reported that dozens of ryan confidants said they do not expect him to stay in congress passed next year. called that pure speculation. in germany, leaders of the social democratic party have agreed to start talks about a coalition with chancellor angela merkel. that moves merkel one step closer to finding -- forming a new government. there have been three months of political stalemate since the election in september. and it may be the merriest christmas for the u.s. retailers since the recession. firm customer growth partners just posted its forecast. they say holiday sales should raise 5.6% from a year ago. online spending growth is expected to outpace brick and mortar shopping. global news 24 hours a day, powered by more than 700
journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. nejra: thanks so much, emma. the pound is low against the dollar after e.u. concluded a meeting in brussels. the e.u. 27 agreed sufficient progress had been made for brexit talks to move to phase two. but european council president donald tusk warned that while an agreement by march 2019 is realistic, it will be difficult. task: it is realistic, and dramatically difficult. it is for sure the second phase will be i think more demanding, more challenging, down with the first phase. joining us now from brussels with the latest is bloomberg's anna edwards. we got the news that broke a few hours ago that the e.u. was green lighting moving on to trade, but they are not going to officially start discussing it until march, and they want to
wrap it up i october. is that realistic? realistic, but difficult. that were the words -- that was the words used. we have had a lot of these words over the last few hours. a host of e.u. leaders giving press briefings and talking about challenges ahead on the brexit front. angela merkel and someone from italy talking about how it will be difficult or a tough stage two. the timing will be difficult. the immediate order of business is to move to a transitional implementation phase. once that is done, they have exploratory talks around trade before march. the hard work on trade does not start until march of next year. they want to get it done by the on him or the fall so the u.k. parliament can vote on it, and all the individual parliaments can vote on it. this leaves only six months, nine months, to have that trade conversation. this timetable does look pretty tough. what has the e.u. said
they want to happen during the transition phase? during the transition phase, the e.u. wants to -- the e.u. wants to make sure the u.k. is not in the room, not driving the bus, if you like. the e.u. is going to be paying him, but they are not going to have decision-making powers. that perhaps was obvious, but was part of the conversation that has been confirmed today as part of the release we saw from the e.u. 27. we know a little bit about the transition. the minister said the transition will not be renewable. if you have one transition, you cannot extend it into perpetuity. there are plenty of other issues they have been falling out about. one of them is migration. we heard angela merkel, the german chancellor. she is not happy with what she is hearing, the disagreements on this subject. nejra: anna, when it comes to trade -- >> we are not quite in agreement on solidarity, or not to the
same degree as with immigration. here, we must continue our work, because it cannot be that we have solitary in europe on certain matters and not on others. so basically there is a divided e.u. on the subject of how you deal with migrants. with the syrian crisis continuing, that problem has not entirely gone away. even the leadership of the european union does not agree. you have donald tusk and jean-claude juncker on opposite sides of how you deal with them. that youuota system use? they will try to find a solution by june. another six months. nejra: thank you so much to bloomberg's anna edwards in brussels. let's bring in our guest, and joining us with more. bank of america merrill lynch u.k. chief economist. he also served as head of the u.k. team at the boe. he said that although progress
in brexit is necessary, it is not enough for a bounce. great to see you. the bank of england at a meeting showed a little bit more optimism around brexit. you are not as optimistic? robert: i am in a similar place. they said it should support consumer confidence, and i think that is probably the right way of putting it. had we not had sufficient progress this month, and the u.k. had been looking into heading into next year, without transition talks starting, maybe waiting another three months until they start, and then trade talks, which look like they might start in april, or july and august -- i think that would have been a serious downside risk for the u.k. economy. you had lots of companies saying they are close to contingency plans in that case. absolutely, progress this month was vital. it helps support confidence. it stops it falling. what i don't think will happen is we see progress this month, rollaround to the new year, and suddenly consumers have forgotten everything, and
businesses are suddenly, let's raise investment. all of the challenges they faced before now remain. they don't know where u.k.-e.u. trade talks are headed. they do not know exactly how long a transition will last. they do not know it is legally watertight. they do not know when they will know it is legally watertight. we are in the same stasis we have been in for 12 months. we have just avoided falling off a cliff. nejra: the reaction in sterling heading lower, the 10 year in gilt yields heading lower, says something about markets being pessimistic about where we go. as we keep saying, the hardest work is ahead. robert: what markets are hanging on is the word "transition." before today there was a hope there might be more in the statement about transition talks starting immediately, and maybe there might be an agreement very soon. these things could give a bounce to u.k. growth. but we did not see any of that, and it was not likely that was
going to happen after the mess of last week, which delayed the start of the e.u. leaders discussing these things. the biggestwill be concern? something like tariffs or something like regulations, or just the performance of the economy while we wait for a deal to be hashed out? robert: a concern for who? for the bank of england? the bank of england, i think everything. if you are the bank of england, you are looking out two or three years, beyond march 2019. you are going to be concerned what happens to the trade agreements with the 67 countries the e.u. has traded agreements with, which the u.k. might not, or has to roll those over after 2019. what happens to business investment? what are the terms of the transition? what happens to employment over the next 12 months? all of these things will be of interest to the bank of england. from my point of view, i was surprised that in september they went so aggressively towards hiking rates in november. i could not see how the uncertainty for them was
resolved, and the inflation they are facing is temporary. as i have said, for the next two or three years and beyond, they face considerable uncertainty about the outlook. for thee have shorthand different types of agreement that could be hashed out. canada plus plus, the e.u. minus minus, various other different shorthands. with any of those result in a very different economic outlook for great britain? how do you model something like that? robert: they all mean something different because they all have different implications for the u.k. trade access to the e.u., which accounts for a bit under 50% of u.k. exports. it is a huge deal. how do you model them? it is very difficult. we do not have president of other countries doing what the u.k. is doing. we don't know exactly what the deal would look like or when it is implanted it. it is very hard. you could make estimates. the important thing for my point of view for the scenarios you just listed is that they are all negative in my view for the u.k. in the long run.
there is no upside scenario. there is just different ways of mitigating the damage to different degrees. that, for me, is the important part. nejra: no upside scenario sounds like different degrees of bad. does that mean the guilt curve continues flattening? talk about the u.s. yield curve flattening. we have seen that in guilt, at its latest in nine years. robert: remember, you started with what is priced in. markets are pricing in a degree of pessimism. you could see the market not pricing in a bank of england rate hike until the end of next year. i think that is about right, from my point of view. clearly, the bank of england is signaling they might hike twice in the next three years. if growth is a bit stronger, maybe more. for my preference, i don't think they will in the next two years, and i think that is the right outlook. once you go beyond the next couple of years, i think you have to factor in the risks the u.k. might face. remember, the u.k. is running a large current account deficit and going through a big change in trade terms.
that makes the outlook quite risky. it is also running a large -- the fiscal deficit is much lower, but it has gotten quite a large fiscal debt to gdp ratio. those things together, along with very low household saving, i suspect leaves the u.k. open to some considerable risk if it does not manage this process well. so much tonk you robert wood of bank of america, merrill lynch. vonnie: president trump at the fbi national academy in quantico, or genia. speaking right there, right now to new members. he says it is an honor to be with law enforcement graduates. earlier, as he was leaving the white house, he vowed to rebuild the fbi and said that "people are very, very angry" about the conduct of the fbi. president trump speaking right now to new fbi members. pres. trump: totally underappreciated. except by me. [applause]
nejra: live from bloomberg european headquarters in the city of london, i am nejra cehic. i am vonnieew york, quinn. time for our stock of the hour. h&m, theshares of worst performer in the stoxx 600. the shares are on pace for their worst day since 2001. abigail doolittle joins us now. i know this has to do with ugly sales. abigail: the worst quarterly sales drop in a decade, down 2% versus consensus expectations of 2% up or 4%. the company below their own
expectations. raymond james is saying it is one of the ugliest quarters the company has put up, ever. the stock down a most since 2001, as you had mentioned. this, they are losing the e-commerce battle. less foot traffic. they have had some fashion misses. i have seen this myself, downstairs one of the flagship stores, they look a little bit off. this goes to inventory. if you look at the inventory situation for h&m, we are going to see they are just rising. for a retailer, that is not great. let's hop into the bloomberg and look at these inventories. we see that they are solidly moving higher. until they can even away at those inventories, they need to bring inventories down. at that point, they can do a fashion reset and hopefully drive stronger fundamentals. h&m said today they will give more details about a transformation plan in february. is that enough to turn the ship around?
abigail: that is what they need, and a big piece will be online. they are talking about targeting being and 43 online markets by the end of the year. they're also talking about the idea that they had this collaborative platform with alibaba. perhaps that will help the online presence. it comes down to inventory. competitors are really losing. that company talking about this very solid inventory program. centralized inventory program. that is something that h&m needs to try to do. relative to the stock, one issue here -- shorts. there is a high short interest at 15%. perhaps today some of those shorts are moving out. look at the bloomberg chart and we see this shorted. we have the stock plunging today. look at the short interest. here, it is 15%. it had been even higher. there are bearish trends for h&m. is this an inflection point? can they turn the ship around?
time will tell. they truly have work cut out for them. nejra: thanks so much, abigail. it is time now for the bloomberg business flash, a look at some of the biggest business stories in the news right now. unilever is on the verge of selling its margarine spreads business. it could fetch a $.3 billion. kkr beat out apollo global management and cvc capital partners. the deal would be the biggest leveraged eye out in europe this year. ever,e first time europe's biggest discount airline is willing to let pilots organize into unions. ryanair is trying to head off strikes that could disrupt holiday travel. fought unionry has efforts to organize ryanair employees. that is your business flash. russia surprises the markets today. the central bank made a bigger rate cut than economists
expected, but it said that is not part of a bigger trend. before the decision, the head of russia's biggest company joined mark orton. -- mark barton. whyfairbanks ceo explained he is waiting for the dividend payouts and the impact of factions on russia. discussion very long and ourvidend payments report two days ago. this processat capitalconnected to the efficacy ratio. if it will be fair -- higher than a certain percent, we will pay. 50 plus percent of our net profits. our understanding -- it will happen in 2020.
but we can have a chance to achieve growth. it will be done. about 50% of our net profits. that will be dividend payments, and maybe earlier also. but now our prediction is that it is impossible after 2019. mark: talk about europe. it is not the place where it was when it comes to making money. you have talked about a possible exit from several countries. is that the plan? which countries might you exit from? what are your thoughts right now in europe? >> i can speak generally. now is a very difficult time for with sanctions on the european market. generally, we reduce our activities in europe.
will implement more digital activities in european countries, but reduce our business -- our physical network in eastern europe. we have to discuss. nejra: the ceo of sberbank speaking with mark barton. vonnie: according to a senator rubio aide, he is still a no on the tax bill. according to unnamed, senator marco rubio is still a no on the tax bill. he has not seen the text yet. the reason i bring it up is because the markets really reacted earlier after a false report that rubio was -- a fox report that rubio was a yes.
nejra: lime from bloomberg's new european headquarters in london, i am nejra cehic. vonnie: in new york, i am vonnie quinn. this is "bloomberg markets." nejra: let's talk hedge funds. brevan howard is said to race for $1 million of client withdrawals at the end of this month as its fund heads for a record annual loss. the firm has seen assets plunged its $40 billion peak. that is not stopping billionaire allen howard. he has a plan to turn it around.
here with more is our hedge fund correspondent. this is the worst year of his career for allen howard. why doesn't he just stop? >> it is easy to give up, but why should he? they have declined from $40 billion to $10 billion. that is making a lot of investors wonder at is going to happen next. but even with $10 billion in assets under management, allen howard still runs one of the largest hedge funds in the world. just about 3% of all the hedge funds in the world have more than a billion dollars in assets. still $10 billion is a lot of money. if you just do some basic adulation, at 2%, management of $10 billion is still $200 million in management fees. that is a lot of money to run a business. then, they have stakes in a few hedge funds that bring in additional revenue. allen howard is trying to start a fund services business that
would potentially bring more revenues. he has enough money to steady the ship. there is no reason for him to give up. vonnie: that is still a phenomenally huge amount of money he is managing. many, many people's money. i am wondering. what is, according to sources, the loss for this year? do you know? untilhas lost 5.4% november. that makes it the worst annual performance for him since starting in 2003. 5.4 percent loss is not a disaster. it does not seem to be a disaster. many hedge funds have lost significantly more money than that. but as compared to their own history and regard, this is their worst. is 2018 going to be any different for macro traders? >> only time will tell. -- maybe if interest interest rates have started to go up. that creates an opportunity.
if volatility returns, that creates some opportunity. allen howard started his own hedge fund. caxton, he started his own hedge fund. going to take more risks. these veteran macro traders are getting ready, preparing for that one-time opportunity to really make money. maybe 2018 could be different. nejra: it is being creative as well, not just long and short anymore. thank you. coming up, it is the european closed. we are following stocks, less than 35 minutes until the end of trading. ♪
for mark barton. vonnie: in new york, i am vonnie quinn. this is the european close on "bloomberg markets." ♪ nejra: here are the top stories we are covering around the world. e.u. negotiators move brexit. we will look at how it could impact currencies and bonds with luke hickmore of aberdeen. aide says senator rubio is still a no on the tax bill. did disney make a mistake? we look at whether disney's purchase is sparking reminders of the