tv Bloomberg Markets European Close Bloomberg August 15, 2016 11:00am-12:01pm EDT
vonnie: it is 11:00 in new york, 4:00 in london, and 11:00 in hong kong. i'm vonnie quinn. mark: i'm mark barton. you are watching the european close on bloomberg markets. we will take you from new york to london, cover stories out of washington and brazil. here is what we are watching today. we are about to get the clearest picture of a post brexit british economy as we ready for key economic reports starting tomorrow. london properties are taking longer to sell despite summer price cuts. shares of entertainment one jumping after a private equity firm kkr emerged as a potential sitter for the company
pig.owns peppa ahead to home depot earnings, as they stand out among american retailers. with consumer spending on homes and cars, we will tell you what to expect from their second-quarter report. wherehave a look at european equities are trading, 30 minutes away from the close. global macro movers is your function. bonds,s, currencies, credit default swaps, commodities. it is the function that gives everything. about .8%. up stocks in europe are barely changed, earlier rising to the highest levels since may 30. 30 minutes left in the session. william hill in focus, shares down by 4%.
they rejected a 3.1 billion pound offer from 888 holdings. the deadline to make a formal bid is august 21. the sides could not agree on a the second bid. william hill says it is worth 3.52 pence. basically, shares are falling because analysts remain skeptical in deal will materialize. let's have a look at h&m. european sales rising 10%, beating estimates. it has a celebrating at a price target of 242 swedish krona. the report should be viewed positively, although the stock has gained 9% in recent weeks. performance is probably in line with current consensus.
shares are up by 2.3%. take a look at what is happening with london house prices. properties are taking longer to sell this month, despite a summer price cut. that as brexit uncertainty compels the deepening effect of the holiday season. homes in the u.k. capital stay ,n the market five days more compared to before the brexit referendum. owners ofge buyers, homes are cutting asking prices by 3.6% per year. right now, overall prices are up 2.1% among the slowest regions since u.k., slowest pace may 2015. across the country, prices falling 1.2%, in line with the average summer dip over the last six years. fascinating to see the brexit impact on the london property market.
90 minutes into the trading day in the u.s., let's go over to the markets desk. julie has the latest. time: sounds like it is for you to go shopping for some real estate. here in the u.s., things are getting pricier when it comes to stocks. valuations and prices climb with all three major averages at records. not only that, extending the gains into this early session. the nasdaq is up on 6%. as we have been talking, the rally we have seen, taking stocks to new highs, also characterized by lower than average volume. in terms of what is on the move today, oil prices are a big part of the equation. oil moving above $57 a barrel, up nearly 2% in trading. a week and a half ago, we were talking about a bear market for fallen 20% from
its most recent high. now the bounce in prices is more like 10% from that recent low. we are getting more commentary from saudi arabia and now russia about potentially taking action to stabilize prices. we have already seen signs of stabilization even on that conversation. speaking of real estate, we have a real estate deal in the u.s. in the apartment business. post properties selling itself to mid-america apartment companies for $3.9 billion. this will form a company with a combined 105,000 multifamily units, apartments, as there is rising demand for rental apartments. on the flip side, there is some oversupply in markets like manhattan. post properties rising by more than 8% on this deal. maa pulling back by 6%. "theer shares rising 7% as
new york times" reports that twitter is in talks with apple to bring the twitter app to tv, possibly to stream nfl games. majorn discussion with league soccer and the pga, streaming golf over twitter as well. a quick survey of some of the u.s. steelted today, one of the favored companies at j.p. morgan. micron estimates raised at mkm partners. vonnie: thank you. let's check in on the first word news with alisa parenti. lay outonald trump will a series of foreign policy and immigration initiatives today. he is expected to call an end to nationbuilding.
will focus on destroying islamic state and other terrorist groups. he will also propose a new ideological test for admission into the u.s. an individual's stance on issues including gay rights. hillary clinton and joe biden are on the campaign trail today in scranton, pennsylvania, the vice president's hometown. he will argue that donald trump is less prepared on issues of national security than any other candidate in history. a dramatic scene in southern louisiana, where rescuers broke the window of a sinking car to pull out the driver. the flooding there has killed at least five people and forced 20,000 from their homes. most of the states flooded rivers have crested but some are still rising. germany is urging russia and others in the ukraine to cool tensions over crimea. vladimir putin has accused ukraine of killing two russian
soldiers in crimea. it.ia has denied germany's foreign minister met with his russian counterpart today to try to resolve the crisis. russia annexed crimea two years ago. the japanese prime minister shinzo abe mark the 75th anniversary of the end of world war ii by sidestepping a visit to a controversial shrine. two of his cabinet ministers went to the shrine and abe sent a ritual donation. that is likely to irritate japan and south korea, who consider the shrine a sign of its past militarism. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm alisa parenti. this is bloomberg. demand, faster inflation, that is the u.k. economy that the bank of england seer tes aft nation voted for brexit.
the first hard numbers are on the way. data on inflation, retail sales, jobs. emma ross thomas is here, our london bureau chief. this is the big week, the week we have all been waiting for. hard evidence of the impact of brexit. emma: the first of several. we have inflation data which will be interesting. we will probably start to see in some of these subcomponents, evidence of the weaker pound, .aybe food prices retail sales will be interesting because so far, survey data has shown some resilience on the part of consumers since the referendum, which people have put down to the good weather. then jobless claims. we expect an increase in jobless claims. the unemployment rate cover the three months leading up to brexit, so we wouldn't get much from there.
those are the key numbers to watch. emma: we also have july jobless claims. vonnie: our most economists saying we will see a dramatic deterioration? week,does not happen this then by next month we will see a dramatic drop? most economists are saying, we will see a pretty dramatic deterioration in the data and pretty quickly. does that mean, if it does not week, that we will start seeing it in coming weeks? emma: that is fair to say. the boe downgraded their economic forecast by the most on record 10 days ago. so that will probably start to come through in the hard data. the chief economist has said it is a structural shift. how would we know what that shift is until britain starts to
renegotiate, which we are now hearing it will not be until 2019 that britain leaves? there is certainly a period of uncertainty now. of the year, we are not going to have a clear idea on what the government's real priorities are. they continue to say their priority is brexit, but we still do not really know on what terms they will seek. until we get a bit more clarity on that, all sorts of investment decisions will be on hold. mark: is there some wisdom to wait to trigger article 50 until those two big sets of elections next year in france and germany -- because of course you could be doing with different people. emma: that is true, but you cannot wait until all of your docs are lined up. -- ducks are lined up. when we put it to theresa may's
spokesperson, whether there would be a delay because the government is not ready, he did not exactly deny it. to the line that there would be no triggering before the end of 2016. one about 20 17, waiting until after the german elections? he just said not before the end of 2016. again, will not denying there would be some delay, he said the full weight of the machinery of government -- the full weight of government needs to be filled, these ministries for brexit, the official name, the new trade ministry, they need to fill their positions, and that will take time. emma: it is fair to say the treasury is not even fully staffed yet. reporting out at westminster is reporting -- is trickier than it was.
not everyone carry out the negotiations will be in place. this will behile, impacting consumer confidence and general trade for britain right now. how will that manifest itself in the coming weeks? emma: you have some analysts expecting parity with the euro within 18 months, which might cause regret among some parts of the population. certainly that would undermine consumer confidence, although it may help exports. vonnie: london house prices,
sellers are producing [no audio] emma: prices, sellers are producing [no audio] emma: london is slowing more quickly. you could argue that london is more affected by brexit because of the banks, the companies that may or may not lead in the case of a harder brexit. in that respect, you could say there is a big component in that. mark: thank you so much. what is a massive week for hard data here in the u.k.. prices, sellers are producing [no audio] home depot shares up around 4%. could the retailer deliver a blowout quarter as consumer spending shifts to the home? this is bloomberg. ♪
vonnie: live from london and new york, i'm vonnie quinn. mark: i'm mark barton. european close on bloomberg television. time for the bloomberg business flash, a look at the biggest stories in the news right now. private equity firm tpg has agreed to buy broadband services .rovider rcn tpg will pay $2.3 billion.
rcn offers cable, phone, and internet services on the east coast and chicago. grande is in texas. technologies has agreed to buy sensus. provides smart meters and network technologies for the water, electric, and gas technologies. british millennials are already suffering from economic weakness , mistakes of the past. now they may have to pay more for the country's future. pension fund the liabilities in the u.k. hit a record 1.3 chilean dollars after the bank of england cut rates this month. it could get worse as economies expect economies to cut rates again this year. one solution, millennials have to save more or work longer. that is the latest bloomberg business flash. outie: home depot stands
among retailers as americans continue to spend on their homes rather than clothing. store salesteam have posted 20 straight quarters of growth. you can see the has not been a negative quarter since early 2012. this shows a correlation with the remodeling market index, which surveys remodelers on a quarterly basis, asking how much work they are getting. any value above 50 represents an increase. the impressive run in same-store sales has boosted overall revenue growth. it has climbed 20% from a post protection bottom in 2010 and may reach $101 billion in 2018. e-commerce not mix of 6% of their sales, up from less than 2% in 2011. online sales grew by more than 21% in the last quarter, country --g to the
companies sales gain. home depot has also effectively merged its physical and internet businesses. 40% of orders country are picken stores, and while much of america is seen as over-retai led, home depot has kept its store count flat. you can see the trends of the stock prices. amazon, home depot, and lowe's. you can see that consumers are favoring home-improvement retailers. mark: breaking news. going to be holding adviser talks on a possible ipo in 2017. they are said to be exploratory, no final decision has been made. says it isagement keen to get a sense of a public
valuation for the company. holding talks with advisors on a possible ipo in 2017. in the have more european close in about 30 minutes to get up to speed on the big news crossing. has ahead, a cartoon pig turned into a huge revenue driver. a billion dollars in related sales in 2015. and a potential bidding war could be in the works as kkr is weighing in. this is bloomberg. ♪
live from london and new york, i'm vonnie quinn. mark: i'm mark barton. this is the european close. just under eight minutes to go until the end of the monday session. live from london and new york, i'm vonnie quinn. let's get back to dealmaking on this merger monday. kkr may be eyeing a bid for owner entertainment
one. it rejected an offer from itv. thingset a look at where stand for the potential media merger. eric pfanner. thanks for joining us today. itv was spurned last week. is kkr waiting in the wings? eric: they certainly signaled over the weekend that they could be interested. , pondering a too possible higher bid. the bid was rejected. is there a figure that analysts are saying could be a knockout blow? around 2.90e heard pence a share. that was before kkr came in and signaled their entrance. maybe he could go higher than that. it is a different prospect should kkr by entertainment one.
typically, a private equity firm comes in and makes cuts, and then exits. what would be the outlook for entertainment one, were kkr to be successful? eric: this is a company with some interesting assets with "peppa pig" and some other things, mark gordon outfit. clearly, there is something there that people want. some people say the film distribution business it has got does not necessarily fit that well with the tv production business+++
making some clearer decisions on that. vonnie: what are some of the other assets that entertainment one has? eric: they have mark gordon company, a u.s. production outfit. they did things like the steve jobs biopic. this is a fairly broad outfit that can do a variety of things. vonnie mark: it has been snapping up production companies. does it need to offset advertising revenue? toc: the big push has been offset falling revenue, a traditional broadcaster in the u.k. that operates channels, which has been beefing up its production arm, including a big u.s. production arm. this is a company that has been pretty aggressively pushing in that direction. entertainment one would help. " generates more than a billion dollars in worldwide revenue last year. why is it so popular? i am just intrigued by it, having young children. it is absolutely incredible. eric: you might be better asking my nine and five-year-old.
it is a hugely entertaining property, obviously. children's television is huge. gets it is massive, and it you to pay for subscription-based channels. it used to be sports, then moved on to box sets, and now children's tv is so important. eric: that's right. my nine-year-old watched a full box set during a flight to tokyo recently. mark: thanks for joining us, eric pfanner. we are four minutes away from the close here on bloomberg television. " so popular? pig this is bloomberg. ♪
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session. let's take you through all the action. we will close up and literally 20 at the box. 0 since may 30. we have come down from the highs . health care, oil and gas tracking oil higher today. let's get to the big gainer in europe, shares rising as much as 5%. a mere 7% higher, biggest gain earlier since 2000. this is the belgian drugmaker. they are confirming the validity and the generic version of their epilepsy pattern. it has a buy rating on the stock with a 92 euro price target. shares have fallen 10% this year. price is at 75 euros. entertainment what we were talking about is this private equity company kkr about to show
interest in the canadian film entertainment distributor that owns peppa pig? $.32 a share? the proposal was rejected. will we see a bidding war for the company that owns peppa pig, which made more than $1 billion in revenue last year. shares are up almost 7%. and what a week it has been since brexit for sterling. stirling is the white line agnst the dollar. we are down to 1.875. that is days after the brexit vote, the blue line is in the speculative position. hedge funds has never been this bearish. hard data could show early impacts of the brexit vote. net bearish wages rising to over
90,000 toward august 9. that is according to cftc data. this is going back to 1992. we have never seen hedge funds speculated so bearish. sterling was the worst performing out of the 30 week track. the lowest since june 25. speculated has never been this bearish. we are in truly historic times. what are you looking at? vonnie: i am looking at commodities. they are gaining again. $45 $65 barrel. this could be a potential freeze in the work, but we won't know just yet. the commodity index is up 1.4%. this is a very interesting one. if you look at the model more broadly and take oil out of the
observation,rms of in columbia they are doing well, up 7%. year-over-year, still looking down 7%, but don't forget things like iron or that had an extraordinary run. down 0.2%. elon -- let's take a look at the majors we saw in the records. 18,657 for the dow. -- 0.4%also with a 4.10 gain. and the nasdaq is up 0.6%. we have abigail doolittle. abigail: we do in fact have the nasdaq. it is a new all-time intraday high.
though, this woman thinks the major u.s. equity major will be giving a bit of a breather. if that happens, she would see it as a ying opportunity in all of this longer-term strength and momentum. as for what is helping the nasdaq, there are two things playing out, strength in china related, china-based stocks, which are at a record high. and others.du they are rising more than 2% in today's session, best day since may 31. m&a speculation around the property developers really helped chinese stock. tech,cond big thing, big as is often the case. apple, cisco, intel, also micron. the chinese related stock, micron is one of the best
related performers. this raised the firm's estimates to a break even in profits for the fiscal 2016 versus the forecasted loss of eight cents by consensus. thehinks this will go into first half of fiscal 2017. behind that is dram stock pricing. moderate upside potential for the shares of micron, one of last year's worst in the nasdaq, but it is on a turnaround pass. vonnie: thank you. we will keep an eye on those. let's check in on first word news. reporter: a car bomb exploded at a police station in southeast turkey today. at least six people were killed and more than 20 others were wounded. authorities blame kurdish rebels. last week a wave of attacks killed 12 people. fighting in aleppo has killed
dozens of civilians. that is according to a monitoring group. they help -- hit rebel held areas. and shelling and government held areas killed nine. americans finds most favor limited military use in syria. affairs, to the global 72% approved of airstrikes 57% approvedrists, of special forces. only 42% wavered sending u.s. ground troops into the region. three students who were protest leaders in hong kong have avoided prison sentences. they were sentenced to community service three years ago. they occupied key thorough pairs for 11 weeks -- thoroughfares for 11 weeks, restricting elections. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.
i am alisa parenti, this is bloomberg. mark: let's go back to markets. a little changed today. euro stock 50 had its 200 day moving average in the u.s. stock setting records after a time when more than half of s&p 500's more than 20% -- fell or than month andn the last now. we are joined by george marist. thank you for joining us today. where is the love for european stocks? .he euro stocks 50 has touched some may say that is a trigger for further gains. we are actually 40% below the in 2001.tting why is there such divergence in performance between the u.s. and europe? george: it is a great question.
one of the issues we have is there is tremendous uncertainty with stress in the markets. you are feeling that particularly in europe where you have had several factors culminate to create this high degree of anxiety. it is interesting because what has happened historically is not currently, and there is no certainty on the future. mark: when there is no certainty, you say to use your words, we are divorced from the historical reality as stock tickers. ckers. how does that change the way we invest? george: we need to step back and understand where we are, divorced historical reality. the most primary focus is on a heightened degree of populism that is out there and extreme political polarization. you have already seen the brexit
vote a curb a few months back -- occur a few months back. extreme parties on the far right and far left throughout much of the continent is creating tremendous anxiety. place, not been in this so it is divorced from historical president. -- precedent. , with a european context, much of developed europe is now trading in negative interest rates. we have not been there historically. and the implications are completely unknown. a lot of them are clearly negative. what does that mean to the psyche of retirees and how do they save? what about the transmission policies of central banks? things that are negatively impacted, creating uncertainty and stress. vonnie: as in central banks, absolute implosion if you like.
we had this halting scenario where they are cutting rates, and the federal reserve is holding. does that give you reason to read your hands in glee? george: frankly it gives us growth opportunities. we think the fundamentals aren't currently being priced. the reason for that is because of all of the stress and uncertainty in the markets, there is this tremendous herd mentality to go for stability, .or low volatility precisely because we are so diverse to form historical -- divorced from historical precedent. it has resulted in a tremendous rise in consumer staples. telecommunication stocks and build -- regulated stability. we see this vacuum for fundamental stockpicking.
so roughly the same as u.s. regulated utilities that have relatively low growth going forward. so there is tremendous opportunity even with all of this anxiety. vonnie: you are binding and china. i want viewers to dip into my bloomberg. looking at chart 2754 in the chart library, it shows how currencies and stocks have been rising. where else besides china in the emerging markets are you seeing growth opportunities? george: we are seeing opportunities in stocks that are being discarded and left for dead, even though the for mendel's -- the fundamentals are radically better. if you look at european continentals, the big banks and u.s. big banks, historically they have been week of balance
sheet and capital strength. that is no longer the case. as a consequence of the great financial crisis, they have tremendously improved. they can weather low rates for a long time. and many of them beer price as though they are going out of business -- many of them are being priced as though the are going out of business. you see tremendous opportunities in both growth stocks like the chinese internet places as lower value stocks. user growth nor value is being priced right now. -- neither growth nor value is being priced right now. mark: i looking at the ftse smallcap index, which is capitalized companies, very u.k. centric. it is at a record high. people were telling us posted brexit, these were the types of companies that would be hit the hardest. look at the chart.
you can't see it, but it shows the ftse 100. it is international, but right now the rsi tells us it is overboard, trading at 75. why is you is a stock doing so well -- why is u.k. stock doing so well? and the ftse small-cap index since brexit? george: it is a complete paradox. i also thought the u.k. especially domestically focused u.k. equities would suffer coast of brexit. we may very well have a relief brexit because the world not fall apart. there was a lot of gloom and but it has stabilized. we had two years upon the invocation of article 50 before anything happens. there is still a lot of time and i think just consequently, may be a relief rally. if you look at the collective
indicators of the u.k., the economy is clearly mixed. depressedkely to see investment going forward. i don't know i would be extraordinarily bullish on the u.k. entities at this point, not is say there aren't a very attractive ones. en masse, they will have to whether some difficult headwinds . mark: we have the release of consumer sales unemployment this week. thank you for joining us. it is 4:44 in london. be otc, this is bloomberg. ♪
♪ vonnie: it is time for the global battle of the charts, where we look at the most compelling charts and what it means for investors. you can run the function featured at the bottom of your screen. kicking things off, it is matt miller. matt: i was hoping to go first, because i see mark barton at the european themed charge. i don't, i have a u.k. themed chart. this is london house prices. they are not rising as quickly as they have, or falling -- wait, they are not rising as 1.2%.- wait, they are up that number has not been that low since june 2015. the are still rising year after year. you see the problem i have
making that point. they have not quite fallen yet. they did fall in the last month, and the number of days it has taken to sell your house in london has drawn out. i think it is interesting house prices continue to rise year-over-year after the brexit vote. the number is 2746. vonnie: you are basically saying cooling would be the word. matt: cooling down. still rising, but cooling down. mark: how about london house price versus slowing? vonnie, you can have your record and theow, the snp nasdaq, because today, the euro stocks 50 has surpassed the yellow line, the 200 day moving average. you were thinking, 200 day moving average -- it is significant, vonnie, because
history tells us momentum is a fine thing. when you cross a moving average, it should mean shares are going to continue rising. they have wiped away their post brexit losses. history is wonderful. back in november we crossed the euro stocks 50 with a 200 day moving average. seven days. 20%then we had a 1/5 fall, to client because of the concern about economic growth. analysis, heical basically said expect stocks to ,all to the green line, vonnie the 50 day moving average. which means we could see another 4% decline. the reason why is because of the trend from last year, seven-year high. it is basically a downward one. there you go. forget the fact that house price growth is slowing. and i can say it.
barton, i could not let you not win. i will say matt in your defense, that was a simple chart, and i appreciate that. mark, you are the winner. 2742, but hisid chart says 2761. vonnie: that is his personal chart. he takes them home. matt: i will show you how to use it next time i am in london. vonnie: you go first. global news, dropbox is expanding. more on those details next. ♪
mark barton. vonnie: i am vonnie quinn. let's go to the scoop on per dropbox. they have met with advisers to discuss the possibility of a public offering as soon as 2017. that is according to people familiar with the matter. we have the reporter now here with more. we have been anticipating some kind of move out of dropbox, but not necessarily this. what kind of valuation should it get? reporter: that is the big question, and that is why they brought advisors in. this is a posturing shifts. they had no immediate plans to go public. now they are reaching out, talked to us about what this would look like. back in 2014 ina private funding round, they were valued at $10 billion. that has been called into question over the years as the company struggled to grow and
find new business lines. you see a lot of the mutual funds who invest in dropbox right to down there bookmarking's as the valuation. down -- if we go out, are we going to take a big cut, because that is not good for morale or customers. vonnie: isn't the case that it does not make a profit, but it does have close to $2 billion in revenue? alex: they are not profitable, but they are cash flow positive. that is a step in the right direction. when you look at the slow year of tech ipos, investors have been calling for more fundamentally sound businesses. positiveo cash flow and showing a path will be he for ceos of houston and dropbox
before the call the venture to public market. is the expansion into cloud-based operations going? alex: they have some pickup, but that is where they are really competing. dropbox is known as the filesharing personal use. now they are having to add security tools and justify why businesses should use them. momentum --deed is adidas as a customer. there is momentum. they will push on the $10 billion valuation. vonnie: good job on this. check out where european equities are before we get to them. look at russia's index. they hit a record high. russia's micex hitting a record
high, coming out of russia by one half of 1%, and a quick peek of the european markets, this was a day of gains across most equities. day for the ftse 100, the best since october 2015. the highest close to the ftse since june. and a big day for germany because the dax went positive of the year. it was negative for the entirety of 2016 before today, but it wiped away all of those losses. marginally 60 down on the day. that is it for the european close. ♪
vonnie: from bloomberg world headquarters, good morning the afternoon. -- monday afternoon. what we ares watching. u.s. stocks approaching records, and the dollar falling today as traders put back bets on higher interest rates. alix: a stagnant economy. ken corona replace that economy -- governor kuroda replace that? matt: we sit down with larry grassed i ubs and ask why global growth can be competitive for more m&a. scarlet: we are halfway through the u.s. trading day. moves to another record high, even volumes closing quite a bit. we are in