tv Bloomberg Markets European Close Bloomberg December 23, 2016 11:00am-12:01pm EST
we're going to take you from new york to london to milan and washington. this is what we are watching today. thanks her dominating headlines today. banks 20promising billion euros. we will talk to the treasury in just a few moments. u.k., theresathe may is struggling to work with some of her closest allies. we will talk about the power struggle going on within the government did president-elect donald trump tweets yesterday. let's have a look at the equities in trading. london is closed. it closed. it is friday.
there is our wonderful gmm function. strikes -- stocks are rising today. both currencies in the second column arising against the dollar today. the dollar rally is running out of steam. stirling is lower today. i will come to that in a second. bond yields are falling, you can see that in the third column. about talking a lot volatility. we are down to levels we haven't seen 2014. these stocks futures are heading on swings in three months. month, it has tumbled 31%. the contract on the gauge has fallen to 5%. the difference in performance is pushed futures to a record high versus the current measure, the one-month measure.
a lack of volatility, it is quite incredible in the last month or so. we have a big m&a story. they are buying delta lloyd. there was an earlier offer for its national offer -- rival that was rejected. bid,ay before the initial they are seeking to boost its scale and intention. the insurance sectors and the economy is looking in pretty good shape. thehis is back in line over early estimates. the biggest drag from trade since 2012, consumer spending grew. that, this group grew 3% in october from retailers suggesting the economy will have
momentum into the fourth order. -- is it aproduction quiet day? : we have hardly any action for u.s. stocks today. the dow and s&p 500 and nasdaq are all down less than .1%. declines, we see the averages slipping. this is keeping with the averages in the green for the week. for the dow, this is the seventh weekly gain in a row. 2014. the longest since what happened to the bloomberg, we see not a lot of move there. we are actually -- we are taking a look at health care winners. -- this is the bloomberg we were looking at here. this is the group return
function. it appears as though there is a lot of movement, but health care is up .5%. discretionary is down. there is not a lot of movement stocks,ospital community health, what appears to be behind this is real estate transactions. community health did sell and lease back 10 medical buildings. this is a positive. we do see some strength from the hospitals. julie: thanks so much. we appreciate it. let's check in with news. courtney donohoe has more. courtney: the hijackers of the libyan plane have surrendered. the two men claimed to have hand grenades have been searched and taken into custody. they forced the plane carrying 118 people to the mediterranean
island of malta. negotiations ensued and within a few hours, the passengers and crew were allowed to leave the point. investigators are trying to determine whether the suspect in the deadly truck attack on the berlin it christmas market had a network of supporters. policeshot and killed i conducting us stop -- a stop in milan. germany and italy are trying to reconstruct the route he took from berlin. ordered akel has review of anti-terror measures. she talked at a news conference. german media reported that security officials had him under observation for months but could not deport him. nearly 100 people are missing and feared dead after a shipwreck off italy. deathaises the estimated toll among refugees to at least
5000. people seeking economic opportunity has spiked this year. vladimir putin insists russia had nothing to do with the cyber attacks on the democrats during the election. he answered questions on a wide range of topics at his annual news conference. >> time will show. i am going to look at what is happening in the country and in the world. doneting from what we have , what we can do, how should we do it, the decision will be taken. speculationere is that he might want to hold elections earlier. he accused hillary clinton of being a sore loser. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is
bloomberg. i am courtney donohoe. the thet's get to banking stories of the day. deutsche bank agreed to settlements with the justice department. barclays is being sued for fraud. italy is rescuing. columnist whoour writes about the banking center. also is the visiting professor of the london school of economics. he used to be the director general at the italian treasury. thishave put away liquidity injection and capital injection. is it enough? is 20 billion euros enough to cure the balance sheet elements of the italian taking industry? >> i think it's certainly a very large amount area i think it could be enough.
thedon't have to clean up banking sector in italy. you need to fix the process and facilitate a speed up in reduction. this is what is the aim of this package. mark: how long does this process start. at bringing down these nonperforming loans. take?ng is it going to when will we say the italian banking industry is truly on the road to fixing itself, which this economy really needs. issue was the package approved last night. it's a good chance to see this situation for the time being. then you move to other banks are in other banks have problems at the moment.
i don't think the systemic problem is very big red in terms of the pace of the reduction of nonperforming loans, i think we start seeing a steady decline over the course of the year. lorenzo, we have spoken a lot about how italy is unusual in that individuals own a decent amount of bank debt. you think that will change here? will we see a cultural change in italy where people will of lloyd that investment? lorenzo: i think it must change. it was a distortion. i think there was a tax incentive for investors to invest in rank bonds rather than deposits. clearly, there is an unusual situation where the banks send bonds to their clients. unusual and very
risky. it should end in the future. i don't think it will not them -- continued. julie: i want to bring you into this. we have lurched from crisis to crisis in europe over the past several years in terms of the banking sector. is italy now behind us? is there another on the horizon we will swerve to russian mark -- swerve to? >> i think we will be talking to italy in the next year. the politics has kind of restrain them from unleashing a really big shock and all elusive -- bazooka big year. -- figure. i don't think italy is done quite yet. mark: let's do glass half full. you had a wonderful piece today.
this is not all doom and gloom. the chief executive, there is evidence of that era in success brings its own risks. having to bail out the rest of the industry. can he maintain best in class position? lionel question i think it's correct to say it's not a systemic risk for europe. the shocking to see how contagion effect of smaller banks has spread to all of it here in unicredit should be able to raise capital. they have not seen a real hit. it's worth more than all the other listed italian banks behind. i would be surprised. this monteare saying dei paschi bailout is the first test of the eu bank failure
rule. is this going to push those rules to the break? lorenzo: i don't take so. -- i don't know. the schedule is for 2018. they are willing to change regulations before that. in my view, this will remain a one-off operation. debate an article 32 which gives the possibility to inject capital because there is systemic risk. i don't think any other bank in italy would apply or be considered, it's so risky to cause systemic problems in italy. i don't think it will be used again. julie: i want to broaden it out and look at european banking and the settlements we heard about today for deutsche bank and credit suisse.
about how talking this is a relief for their shareholders, the deutsche bank will not have to raise capital. how big of a relief is it for these banks and for deutsche bank in particular? big pick upion in on yields. i think that has helped you a lot of the relief we have seen now, i don't think deutsche bank and credit suisse are completely out of the woods. there is a need to raise capital. considering the existential fears from a few months ago, it's quite early to see 14 billion coming to less than half that area taken into account a lot of it is paid out. lorenzo, put your
political hat on. italy is going through a time of transition, it's possible we can have an italian election next year. uncertainty, how can the italian economy come out of it? there has been a. -- time of lackluster growth. renzo: i think it's a good first step. the uncertainty about the financial sector and the credit to the economy which hasn't been particularly brilliant in terms of dynamics, it's really a factor that remains the economy from growing. this big perception and remove an obstacle to prevent banks from providing more credit to the economy, that
could be good news. on the political front, there is a chance to have elections sometimes in june. i don't think this is going to be a major factor. we will see. thatnk it's very important between now and june a number of things happen. mark: those things are? lorenzo: there are some issues regarding the reform. i think it's essential to provide competitiveness to the economy, which is been challenged by the work. we will see how it goes. i think the other reforms italy needs to put on the table before the elections. mark: it's great to see you. thanks for joining us. julie: coming up, we will hear
mark: let's to the challenges facing europe now. we talked to the international rescue committee. we asked about the flood of refugees into europe. >> most refugees are not in rich countries. , 2.7 million refugees. when you hear the u.s. debate about 100,000 or 80,000, you get some perspective. the german situation stood up in a way that no leader except for
mr. trudeau in canada has done. she put herself on the forefront. she is been let down by some of her colleagues. i was in berlin the month before last and germans have addressed this at the state and city level. there aren't people living in gymnasiums. this terrible incident this week wasn't an -- a refugee entry issue. jonathan: i wonder how you mix the eye deals of the crisis and getting elected. >> you address the problem at source. if you just say all the refuse -- refugees are going to come to western europe, you won't get elected. the responses to say there needs to be more effective humanitarian aid. they need support if they are to
house large numbers of refugees. there needs to be a legal way or the most vulnerable cases to come to america or europe. we face a massive choice. is it going to be a turning inward or will there be continued fragmentation? is there going to be a recognition that in the modern age, in a connected global world of problems aren't going to be contained in the region they start and that's a massive issue facing the new administration. david: vladimir putin has a profound affect around the world. now, where he sits right is he a force for stability or instability? >> i wish i would've been at the news conference. i would ask who was involved in the bombing of eight hospitals
in syria this year. frome under bombardment syrian and russian forces without any accountability. these are hospitals marked on maps getting bombed for treating civilians. important point. david: eight hospitals have been bombed. >> i've got 1200 staff still working inside syria. david: where is the leverage? >> who is meeting this week to carve up the future of syria? turkey, iran, russia. russia is the goto place for new middle east whose formal boundaries are being redrawn and whose power structure is being redrawn. is russia force for stability?
it's clearly a force for instability. it's not the only one. the syrian a civil war started as a popular demand for more accountable government. it became a sectarian conflict and mutated with players from iran, saudi arabia. the u.s. has been forced. jonathan: you think there will be a pivot in terms of foreign policy toward the united states and russia. if you were the foreign secretary, how would you approach russia? >> there is going to be a recent because the first reset did not work. they are going to have to find a new way of dealing with vladimir putin. the weaknessorget of the russian economy. this drives everything in any long-term view. you could argue some of the intervention in ukraine had a
concern on the part of the regime about its domestic weakness. remember that russia craves respect. the eye the a that it can come back to sit in that superordinate status above the chinese and next to the u.s., you can play on that. the russians fear unity among those who are their partners and enemies. chinesewhy are they driving eurn fragmentation? thehas that -- they said russians are targeting the german election? they fear unity. mark: this was earlier today on bloomberg television. inside on the get future of the international monetary fund. this is bloomberg. ♪
julie: mark: this is the european close on bloomberg television. we are five minutes away from the end of the trading day. check it out. it looks like it's going to be touch and go. , marginallydon higher today. volume is down on the moving average. peek.cies have a these are the best and worst forming currencies. i believe you with the bond board. we are approaching the close, four minutes away. this is bloomberg. ♪
up by .02%. little change here. we are down for the year, 1.6%. it is all about the banks today. three for the price of one. the white line is deutsche and the blue line is credit suisse. 5%tsche was up as much as earlier. today.her all three related to the dealings in mortgage-backed securities. billion bank at a $7.2 settlement. credit suisse paying $5.28 billion to resolve the investigation and a barclays essentially is being sued by the ..s. doj let's not forget at least three other european banks remain under investigation for the roles of the mbs business. all about the banks today, which
brings us to monte dei paschi not -- not trading today. putgovernment said it will 20 billion euros into the banking industry providing liquidity capital injections. they will ask for a precautionary capital increase. they failed to raise 5 billion euros from the market shares. this is the italian yield versus the german 10 year. it has barely changed. it was lower earlier, barely changed on the day. we are well below the highs we saw a couple days ago and the spread was roughly 1.9%. if i were doing battle of the charts today, this what have been my chart. this is my chart of the year, my final chart of the year, my final workday of the year. sterling dollar back to 1992. these are percentage moves.
six months today was the brexit referendum. -- day after was the biggest second-biggest decline in sterling and the first was black wednesday when we were ejected from the exchange rate mechanism. we fell against all 150 major currencies. we are down 17.5% cents. how much further have we got to fall? bearish landers bank says 107 next year and hsbc was -- says 110. what an amazing day that was for the good or for the bad. julie: i love that chart. as for here in the u.s., very little movement as people gear up for the holidays and we have the drop in trading volume. let's take a look at the year instead. we only have one trading week left. we have seen this rally in u.s.
stocks. it has taken the s&p 10.5% higher and the dow 14% higher and the nasdaq about 9% higher with gains coming in the wake of the election as we have had zig's and zags. and what has powered us? not you would have predicted. if you look at the bloomberg and 10, you see energy is in the top spot with a 25% gain and financials up 21%. the two groups that have been losers, real estate and health care. 2017 brings.what let's check in on first word news. courtney donohoe has more. courtney: the prime minister of malta says the hijackers of the plane surrenders and were taken into custody. officials say the man had a handgun and hand grenade and a second gun was found on the plane. the man forced -- men forced the
plane carrying 118 people. all other planes were diverted and emergency teams were sent to the airport tarmac. vladimir putin took aim at the -- he says the democrats need to learn how to "lose with dignity." he also said donald trump's remarks about expanding the nuclear arsenal did not take him by surprise. >> president-elect, that is nothing new, in his election campaign he kept saying that there is a need to consolidate the nuclear element. there is nothing absolutely new. courtney: donald trump tweeted that the u.s. must bolster its weapon and -- until the world "comes to its senses regarding nukes."
meantime, china is also reacting putin's remarks. -- countries with the largest nuclear arsenals should take the lead in government. beijing is paying close attention to what the nuclear weapon policy the trump administration will follow. the economic community of west states dates says -- says milledge -- if the longtime president does not step down, they will send if he does not hand over power. he first accepted election defeat and then changed his mind. president obama is planning a farewell address next month in chicago. the remarks will take place on january 10 and likely include a
thank you to chicago and the state of illinois for launching his political career. global news 24 hours a day, powered by more 2600 journalists and analysts in over 120 countries. i am courtney donohoe. this is bloomberg. julie: more than eight years after the collapse of the global financial system, europe's banks are still struggling. the year -- the latest threat comes from italy where the oldest bank is running out of cash. strengthening the eurozone's banking sector is not a challenge for the fainthearted. plate ofscussing the european banks and what it will take to spur economic growth. >> this has been one of the key reasons by -- why growth has been sluggish since the recession. sheets account for 80% of credit flows in the eurozone as opposed to 20% in
the unit -- in the united states. when you have overhang of these large fines like the one we were just talking about, obviously that does not leave a banks in a position to be aggressive about lending a helping to spur growth. >> legacy issues are one thing. monetary policy makers and regulators, is this as lean as they can pull? mr. lipsky: the ecb and the central bank has been pulling every lever they can think of. not total success. what is necessary is for example what the italian banks -- recapitalization and cleaning bad assets off the balance sheets. that has to happen and that is happening much more quickly in the u.s. putt is one thing to lawsuits behind you, it is another to restructure a balance sheet so you can succeed in the future. bank,uld turn to deutsche
he has taken part of a good part of his legal liabilities, the question remains how does he move forward? will the bank be successful in the future for european growth? mr. lipsky: that is going to be very important for deutsche bank and other banks and the project of the e.u. to create a more vibrant securities market and to have the banks be a smaller part of credit raising in the future. jonathan: to make that change is not an overnight story. mario draghi can by 10% of the market, it does not mean companies will change the cultural habit of going to the banks for loans. how long will that take? mr. lipsky: it will take a while because there is a lot of infrastructure that has to be put in bay -- in place. the big bang in london, american banks moved quickly. atyou were a chief economist chase and a senior official at
imf. they have been taking down estimates of global growth consistently. are we going to see a change in that given the election of trump or have growth in europe that you talk about? mr. lipsky: let's hope. the imf forecast is actually a bit better next year on the basis of things like the banks getting worked out in other aspects. economyal, the advanced is moving along at essentially a more or less steady pace. what is notable, since the great recession, since 2008 and 2009 the growth in the advanced economies has persistently been well below the 30 year average since below that -- for that period. how to spurblem is growth. jonathan: there has been a flashing light in the background over the last decade, it is global trade stalling and now we hear increasingly a lot more protectionist rhetoric coming
out of campaign trails across the world. does that concern you? mr. lipsky: of course it does. since world war ii, growth in international trade has outstripped growth in gdp. it has been pushing to -- working to push growth. since the great recession, it has lagged. trade has turned into a drag. this is something that needs addressing and needs addressing on a positive and constructive basis. if the principal reason for sluggish growth in the advanced economies, in my view, has been weak business investment. all has been uniform across advanced economies, including the united states. >> when it comes to trade, is it possible we had too much of not the sustainable kind of growth? go back to donald trump's election and other countries as well, people thought they were not benefiting from global trade. it was fine for policymakers to talk about it, but they were not
benefiting. do we have to take a look at fair trade on terms where the populace feels they are benefiting? mr. lipsky: that is for sure. the biggest growth and trade imbalance occurred in the 1990's. it was not that people did not notice that we had a record trade deficit, but it was accompanied by strong growth. back to my point. thelarly, inequality in u.s. grew rapidly in the 1980's. it was not that no one noticed, as long as the overall economy was growing, these problems were at a second plane. -- socialists kind of wanted this. mr. lipsky: i do not know about that. overall growth is slow, then these problems seem big. lipsky.hat was john
with i am mark barton julie hyman. this is the european close on "bloomberg markets." theresa may facing a monumental task extricating the kingdom from the e.u. orchestrating new trade deals at a time of geopolitical and economic uncertainty. there are rumblings in her own a circle that the team is going about it the wrong way. is misstalk about it
o'donnell. thatthink the problem is people are not giving them the benefit of the doubt, they thought maybe this was a new form of government or more old-fashioned and less collegiate. the problem is, what has transpired since is that her two seem to be regulating access to the prime minister that such an extent that even members of their own cabinet are afraid of either expressing their views openly, putting even simple policies through and the talk has now become that theresa may herself may be increasingly unaware, also -- of the rumblings in the background and of the fact that people are dissatisfied and frustrated. is this leading to policy
mistakes that have had to be hastily corrected? svenja: there was a famous announcement where she openly criticized monetary policy, rumorsed to all sorts of that they would be considering the bank of england independent. theresa may's office had to call mark carney to apologize. this was a classic example of a line that was inserted at the and thef the aide treasury was not consulted and that is how mistakes happen. mark: let's not beat around the bush. and shean enormous task has gotten very little time to play with before she will trickle -- trigger article 50. that is an amount some a -- amount of pressure. svenja: she's got three months
and even some of her closest colleagues do not even know what her position on brexit is and what the plan will be. you have cabinet colleagues such as the chancellor and the ministers of brexit who are talking to each other a lot, but even they are being kept slightly in the dark and three months to go, the clock is ticking, they have to have a position. the other issue is this is from top-down, so the people who do the negotiations and do the fine print, they are the civil servants, they are the more junior ministers, and they are completely isolated. this is really far from an ideal state of affairs. ofk: great story, iron grip theresa may set to cut her off from key colleagues. accessed the bloomberg and check that out. saudi arabia has deliver the most detailed budget in economic
shakeup in recent history. spoke to bloomberg to outline some of the specifics of the budget and how they plan to reach a surplus by 2020. otherwill issue instruments, locally and nationally and we are likely to go to the markets. i cannot give you the details. that would depend on the window in the market. theenerally speaking, scenarios are conservative when it comes to oil prices. we use multiple sources, one is coming from the ministry of energy. we use the international energy crisis, the imf protection, the average and we calculated most of the scenarios.
it is increasing slightly over the years, but generally conservative. date,annot specify the but it will not be late 2017 as if we do it soon enough. stimulusl be a real passage. it is dedicated toward companies -- fdi companies who want to expand their current business. , battle ofg up, botc the charts. how much does a partridge in a pair tree cost? your christmas price index is next. we will sing it. well, courtney is. this is bloomberg. ♪ ♪
mark: some of the most telling charts of the day and what they mean for investors. three special guests. three for the price of one. kicking things off, dani burger. two for middle opponents, but i will do my best to be victorious. assetooking at two classes and positioning. the white line is the vix. the blue line, i have speculative positioning in the dollar. it should surprise no one that these tend to track each other. basically, when you have a risk on atmosphere, you have them both right up in tandem. let's look at august over here and both are rising. this is when china devalued their currency. risk on, both rising up. lately, the dollar has been surging to new highs, so likewise, the dollar positioning has also been rising. check out what has happened since the election.
these have diverged. although it makes sense that people are not thinking that the vix is going to rise considering how much money has come into u.s. equities, we could see increased turbulence because these tend to move together. you can check that out at g #btv 554. mark: courtney carlin's -- courtney collins is going to sing for her entry for the first time ever on battle of the charts. courtney: i almost might sing it for you. i am going all out for the holidays. you can check it out at g #btv 1199. this is because this price index created back in 1984 and it tracks the cost of all of the items in the 12 -- "12 days of christmas" carol song.
partridge in a pair tree at $209 almostdrummers drumming $3000. the big ticket item is the seven swans of swimming, $13,000. if you go back to when the chart was created in 1984, it is pretty much in line. around 1984 or 1985 there was a huge drop down in the price of swans. i have no idea why. is really key -- three key terms to take away is that birds on the skilled labor and skilled labor. , the cost of hiring skilled laborup 16% s andkilled -- skilled labor up 209%. mark: i hope my wife is not watching. i do not want to give her any ideas. take it away julie. julie: i do not know how i will
beat that. look at prices as well, but in other countries. as we talk about various trade wars under a trumpet ministration, great charts courtesy -- and dan curtis helped me to interpret. these are imports from china in white, canada in purple, we have seen declining or very little change. we have seen an improvement for canada because what has been happening with the price of oil. what we see here is there are -- if there are tariffs imposed, you could actually be importing inflation and you can see these numbers go up, the prices of these importing goods go up from areas countries. just one of the potential ripple effects we could see of the incoming administration. , # btv view this chart g
1327. mark: it is my task to separate you. i have to grade you. yesterday i showered julie with praise. my duty as her coanchor is to bring in the head size, so julie comes in third. dani burger beat me earlier in the battle of the charts until jonathan ferro interrupted. i cannot give her the victory because she almost beat me earlier. the christmas champion, courtney tolins, 5 golden rings courtney collins. wonderful battle of the charts. this is bloomberg. ♪
from bloomberg world headquarters in new york we cover stories from new york, london, and milan. deutsche bank and credit suisse agree to pay and agreed $13.5 billion. we speak to the governor of the great state of colorado, john hickenlooper. danny meyer gave us a tour of his new restaurant. abigail doolittle joins us with a look at the markets. abigail: there is not a lot of action for u.s. stocks. s&p, and nasdaq flipping between very small gains and losses today. we are looking at the smallest trading range this year for the s&p 500. trading so far in a range of less than four s&p 500 points. where we have