tv Bloomberg Markets Americas Bloomberg March 2, 2017 10:00am-11:01am EST
vonnie: we are going to take you from new york to london in the next hour cover stories at a san francisco, madrid, and paris. here are the top stories we are following. in markets, the u.s. dollar is extending gains as investors eye the fed. two weeks from now, we may get a rate hike. equities are trying to extend the records after yesterday's huge rally. risingnflation picks up in the fastest pace in four years. how will that impact the ecb strategy. snape: snapchat's parent is pricing its ipo at $70 per share. how much demand whether being?
30 minutes into the trading day in the u.s., and it seems like market can do no wrong. julie hyman is here to explain. we are seeing a pullback which is not surprising after the big gains yesterday. the dow turned positive a moment ago, but have come back down. 15it does arrive, it will be of the last 14 sessions that we see the dow industrial average. 44 years ofowest in ess claims. the rally yesterday is the largest we have seen this year. what is holding stock back at the moment is the cyclical groups benefiting. the economically sensitive
groups. moreed is starting to get attention of its march 15 meeting after lael brainard hinted that a rate increase would happen earlier rather than later. notable, feds on future pricing and 80% chance we would get an increase on those rates. want to bring it back to individual stocks were we are seeing earnings-related winners. monster beverage shares up 16%. beating estimates by 17%. it's energy drinks doing well. some of the brands from coca-cola are not doing well, but energy drinks are doing well. .bercrombie & fitch are not doing well polished or
could reach $9 billion by 2021. 7%.es up by almost the world's biggest cement maker says demand is expected to grow, including from you infrastructure projects. shares up by 2% and expects double-digit growth. between 2% to 4%. falling short of expectation in the fourth quarter. this is quarterly going back a number of years. investment declined in exports recorded the week is quarterly results in nearly two years. matching theh growth of the third quarter. .4% was forecast. exports -- this
export-oriented category. but will they be thinking today? better growth in the euro area could help the swiss economy. breaking news on snap. vonnie: we have an indication on what it will open at. ,e are awaiting the first trade but it is indicated to open up $22. it was priced at $17 per share. we shall see. let'sw on the market, bring in mark regan. us inchard jones joins london. mark, we are looking at snap. it is the first tech ipo of the year. leisure -- mark: this rally keeps going and going.
one of the more interesting charts i have seen was from cameron christ. he took the citigroup surprise index. there are ways to quantify how much global economic data is beating estimates as well as how much inflation is beating estimates. you combine the two, and it is just through the roof. in other words, economists and maybe investors were little ahead of the economists. the strength we have seen, the higher-than-expected inflation data we were just talking about is really catching people by surprise. and it explains as the agenda in washington is a moving target and we are not sure of what the tester form will look like, and what the stimulus infrastructure regulation changes will look like, this global, economic scene is really supportive of the equity markets right now. as far as being much better than expected both on inflation and regular economic data site. vonnie: i wanted to mention that
looks like that will start trading at $22. we will bring you the first trade only have it. we turn to you richard jones and ask you, why bonds are not telling us the same story? richard: i think the short end of the market is coming into terms with the past two days as we are selling going to get a fed rate rise in march. you don't have to go too far back a few weeks ago never was a one in three chance. of that high, i do not think the fed will miss this chance to raise rates, so it does look i come the 15th of march, the fed will be raising rates. mark: we talked about cameron your -- he i love said yesterday, the fed has never not raised rates going
back to the mid-90's --going back to the mid-1990's. a big shock if the fed to not raise rates, that leads us to yellen tomorrow. gucci pullback on market expectations? richard: it would be a big surprise. this that is not in the business of surprising markets. the fed is looking to raise rates. if the market gives him the go-ahead in the market is expected, the fed will take that opportunity, so i don't think we will get much pushback from janet yellen. it will not be much different from the messaging. knowledget all my from marti live. this is the s&p 500, longest since 1996. got the highest rating in 20 years. paid?hat get all get
mark: the markets are due to posit little bit. maybe a little weakness, but this rally has been so relentless and historic that a lot of people are turning off that signal the previously would've caused caution and they are willing to look past it is this is an unusual situation. it is so incredibly rare, as you said, for that reading to be that far above 70 percent long. obviously, it is not sending the same signal, or at least reaction to the same signal is different. for that to go bust 72 or three days in a row. vonnie: showing in the bloomberg about what you said about inflation surprise index. what point do investors look to europe? both of those indexes are
global. it is cap check all of the data around the world. gives you a sense that it is not just limited to one region. all the cylinders are firing better than people expected together. you can see from the graph how elevated that is. how much of a surprise all the data has been. that said, yesterday, the gdp forecast got cut by several banks. it is not a totally clear picture. we are looking at sub 2% growth for the first quarter. it is two steps up, one step back. vonnie: what kind of lingering effect with a snap ipo have on the markets? what about tomorrow and the next day and next week? wonder -- iseople starts feeling like 1999 again when you have a giant tech ipo like this.
i remember people saying similar adoo.s with bu it encourages a lot of these your cones -- encourages a lot of these unicorns to say it is time to pull the plug on this ipo. you equity ipos and issuance has been one of the underpinnings of the rally. if there is less ipos to buy -- vonnie: it appears there will be fewer buybacks. >> right, right. mark: it is interesting to talk about 1999. richard and i were talking about 2000 and ipos heralding at peak. it is interesting people are drawing parallels to snap and last-minute dot com.
we went in one direction, didn't we, richard? are you getting jittery? richard: it does feel like things are getting frothy here. feelel will have a better of the equity market, but looking at it from a mac pro perspective, it looks like we have come a long way. jones and mike regan. commentary. it is excellent. chair'srget, catch fed janet yellen speaking tomorrow at 1:00 p.m. in new york and 6:00 p.m. london time. she is speaking in chicago. kent on the bloomberg first word news with taylor riggs. taylor: in the u.s., president trump is wrapping up his campaign to boost defense spending. he will tour in virginia and will talk to sailors and
shipbuilders. the president will also make a speech on board the uss sterling. theier this week him at white house proposed increases in the pentagon's budget by 10%. you can watch the president's speech beginning at 2:00 p.m. new york time on bloomberg tv. the white house is standing by attorney general jeff sessions in the latest controversy over contacts with russia. the justice department says sessions had conversations twice with the russian ambassador while he was a surrogate for the senateampaign, but in a confirmation hearing, sessions denied any contact had occurred. the number two house republican mccarthy said it would be easier to sessions recused himself of any russian investigation. in asia, a malaysian -- malaysian will release the suspect in the killing of kim jong un. they say they do have evidence to charge him. two women have been charged with
the poisoning death of kim jong-nam. sweden is bringing that the military draft to counter russia's both of and the baltic sea. minimum women will have to serve. the plan calls for sweden to draft 4018-year-old a year. the country ended the draft seven years ago. global news 24 hours a day part by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. mark? mark: we are awaiting the first trade, snap's first trade pricing its ipo $17 per share indications that it will open at $21 to $23. we have it for you on bloomberg television. this is bloomberg. ♪
♪ live from london and new york, i'm mark barton. vonnie: and i'm funny quinn. this is "bloomberg markets." the parent of snapchat is about to make its trading debut under snap. up andndicated to open that $22 to $24 range, higher than $17 per share. joining us is caroline hyde. tell us about the process. are there more people on the floor at the new york stock exchange? ago was: 45 minutes when the bell opened. have a look behind me. pop on snap's opening trade.
they wanted enough left on the table to ensure there was a healthy open, but not too much money left off the table. they wanted to make sure they -- the 24 billion valuation $24 billion valuation to escalate the business. there is excitement abound in the new york stock exchange. me think theyind are guiding it higher and want to walk it slowly upward. in a moment, we could see a healthy top. twice as extensive as facebook and four times twitter. caroline: when you look at the current valuations. they took a $5 million loss, but
it is still driving up bit valuation 20 times where future revenue is expected to be. there is hope that it could be driven that much higher. facebook is 10 times that. revenue was already up sevenfold. the first tech ipo to list this year. the one of most significant since 2014. caroline: i have been trekking all the kool-aid in silicon valley and so much help is on this particular stock because there is so much demand for companies to go public.
the next on the block could be dropbox by that $10 million. that may come in the next quarter or so. there is a lot of hope that if this particular shares goes well, we will see plenty more of those unicorns. there i mention uber or airbnb. vonnie: thank you. we will back -- we will be back with you in a few moments. speaking towill be -- aligned can follow live coverage of this lead ipo on the bloomberg. mark: it is happening today.
♪ vonnie: this is "bloomberg markets." from new york, i'm funny quinn. mark: and i mark barton in london. analysts had expected to hit the 2% mark, but doing so could provide ammunition for those theing for next it for european monetary stimulus program. let's bring in maria. i got a chart that i will take about, the headline rate, 2%, across the ecb's target. the blue line is the headline rate. the white line, maria, is the core rate at 9%. what do these two lines tell us
about the ecb going forward? maria: the two lines taylor at the market reaction -- why the market reaction was so subdued. if you look at the core rate which is stripped a volatile elements, energy is stable and it is been at the 0.9% area for a while now. draghi was to see data to show that inflation is here to stay. now, we have a number that appear striking and exceeds the ecb's target for price stability, but does not tell economists much. there would be any changes to policy and that inflation is sustainable. -- does the ecb have
more room to raise its inflation forecast? maria: that will be interesting weekse the ecb meets next and we are not expecting policy changes, but we are expecting they will have to revise or forecast for growth and inflation. that is interesting because it shows what the debate is at the ecb right now. drug he is on the more dovish side -- draghi is on the more dovish side. data, itok at the points that the eurozone is in a better position than it seems. the data may give them more ammunition, but in many force -- but it may force draghi in a more domestic tone. vonnie: doesn't mean investors are looking past political risk and banking risk? in spain, because gdp
taylor riggs has more. taylor: on capitol hill, chuck schumer is speaking about the controversy regarding jeff sessions. he is calling for sessions to resign after revelations he year to anwice last ambassador to russia. the department of justice must appoint a special prosecutor. confirm benoth to carson as hud secretary. the vote is ongoing, but carson will be confirmed. the british investment manager who brought the lawsuit that forced prime minister theresa may to get parliament's approval for her brexit trigger plan could go back to court. miller said she may file an new case if parliament is not given a full vote for the final deal to leave the european union. theresa may drop brexit law is going to the house of lords. france's independent candidate
emmanuel highlighted his plan today and won't change the retirement age or cut pensions. he does want to cut cost and bureaucracy so it is easier to hire workers. he promises a massive effort on apprenticeship. the number of earthquake in oklahoma has fallen since regulators began cracking down on the injection of wastewater from oil and gas wells, but still, there is no other state that has another risk of man-made quakes. a new map shows oklahoma and southern chances are likely to be hit by a high magnitude quake this year. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. vonnie: taylor, thanks. with snap began to trade any moment, let's take a look how make ipo's have fared in the past and what can be ahead for snap. abigail doolittle is here. abigail: it is certainly
exciting as we wait for snap to open. shares opened yesterday at $17 per share. shares are indicated to open between $22 and $24 per share, initialo 40% above that public offering price, so pretty lofty, and investors are excited. it puts the company's market cap well above $20 billion. this is a mega cap ipl. what is ahead? 64 20 four is what we have for facebook. we see that facebook has had a stunning performance since its ipo up 260%. twitter, not so much, down 40%. in between, we have alibaba along with square. point of the fundamentals, facebook revenues last year grew 54%.
twitter, just 14%. investors are looking for sales to drop for twitter by 6%. we see that in the share performance. we take snap fundamentals, a commercially come down to mobile advertising revenue. paul sweeney told us that the company still in the early stages. expectations are pretty big that they need to execute. this is the overall mobile advertising spent. $57 billion roughly. and snap, all the way down here, just a sliver. the pressure is on snap to boost those revenues, especially around user growth. that is one of the biggest things. user growth is a big pressure issue. vonnie: abigail, thank you. let's take a deeper look at snap's prospects and challenges that may lie ahead. joining us is bloomberg editor at-large cory johnson.
.oday is all about demand about trying to grab a tiger by the tail. the revenue growth of snap has been interesting and strong. the user engagement is very impressive. you know, these crazy kids. consumer facing businesses, tech businesses, do ipo's, generate all of this -- the notion of having all of these people were there spending tons of time sharing lots of snap's is cool. is it cool, i don't know, yet. vonnie: spending tons of time and not spending tons of money. popularity of something so fleeting as a 10 second photograph would seem to suggest their appetites are very short-lived? richard: there is an old joke in
the oil and gas industry of a guy drilling a well saying it will never get any better than this. snap is not generating its revenues from users. it is not growing users like it used to. they can start to read accelerate growth. snap is a camera company, but snap is a chat company, not about cameras. .he possibilities are endless the proof of what they have done -- is allt is not about what they could do for the future. the business is slowing on many metrics, including the user growth numbers, which are most disconcerting, but the hope is that that can change.
the audience is quiet a desirable. who are spending time on media are very susceptible to advertising in terms of deciding what brand they will choose for the rest of their lives. that is the reason advertisers target young users because they can get them started early. mark: the big elephant is the room is instagram stories. how is a coping with the threat of facebook? richard: you tell me. you saw the user numbers. cory: the growth rate of users often medically -- falls dramatically. let's call it what it is, esther graham story is a ripoff of snapchat -- this call it what it story is aam's
ripoff of snapchat's business. mark: you have looked into the rapidly rising cost to produce snapchat. what are you uncovered question mark -- what are you uncovered? cory: it is getting more extensive to serve the users. to the armsing suppliers, in this case, google. therewith a sentence a member of the gated not to just spend elegance of dollars with google will add $1d, but billion in the guaranteed spent web services. the certain winners will be google and amazon. vonnie: this idea that other platforms or copying what 10 toat does -- i
thing crimea river. think cry me a river. tell be a little bit about how snapchat could monetize? advertising? cory: it could be that. advertising has been a focus. let's not downplay the snapchat filters. the filters are really wonderful. that is a part of the appeal. it is the recording of moments, but the filters are fantastic. when you think of the ad sales, they have other sources of revenue here, but the filters is a big part of it. advertising is the biggest promise because there is an exit market. snapchat isopes for the belief that advertisers will
give up on twitter and yahoo!, andmove those ad dollars snapchat will be waiting for them. they will go straight to snap. -- is nyse thee venue for tech? what is the next tech ipo going to be? cory: there is a lot of talk about a dropbox ipo. box has struggled in the public market. maybe airbnb or pinterest. the ability to raise money in the private market has been so great for these companies that one wonders if they need to do that at all, or stay private? by uber getting out of their massive losses, they may start
to look at the public markets, to could do. too.blic markets, a lot of these late rounds of , with a ratchet -- come with a -- vonnie: bloomberg's cory johnson in san francisco as we await snap's first-rate. stay tuned for an interview with tom farley. if can follow all of the latest on thements with snap bloomberg. the senate has confirmed ben carson, the retired neurosurgeon to head donald trump's housing and urban development department. next advances is
♪ is bloomberg you are watching, and i'm vonnie quinn. mark: i'm mark barton. here is what we are following. inflation rose to the highest level since generate when he 13 -- since january 2013 thanks to oil prices. maker, topweiser executive will miss out on his bonus as a missed out on their estimates. mark: modern space race, the
company sending private citizens to the moon. is this the next frontier of travel, and is it worth it? vonnie: inflation in the euro area has speeded up the fastest in four years. consumer prices rose 2% last month. that gives ammunition for those calling for the central bank to end its monetary spending program. mark: theresa may will seek to overturn the house of lords vote that secures the status of europeans working in the u.k. after the u.k. leaves the e.u. even as may remains committed to brexit, secretary to the treasury says the idea remains risky. >> we have taken on risky things from an economic -- the reality is the reason why the u.k. is doing this is because of politics and the labor policy must not strong
enough to oppose it. nobody really thought that it would result in a decision to leave. mark: there will be no bonuses for the top management after the beer makers missed estimates for a seventh straight quarter. the company raised its target for cost savings related to the takeover. exxon mobil is shifting to shale oil. they are trading and long-term projects. crude prices changed. crude is diverting its budget to shale fields. takee: time for our quick where we provide context and background.
space race was the spread between the u.s. and the soviet union. resulted -- enough landing on the moon. the new space race is more like a fun run with nations and companies working together to reach asteroids, mars, and the great beyond. but are the benefits worth the cost? president donald trump is probing nasa to considern that ned missions and beckoning elon musk spacex planning to send to private citizens on a trip around the mill next year. musk sees colonizing mars for the day that humans render their home planet uninhabitable. while nasa has found liquid water on mars, the planet remains a fixer upper. the space age began in 1957 with the soviets sputnik. tosident kennedy and higher
land a man on the moon. once nasa met that goal, interest faded in the apollo lunar missions. it is shifted focus to sending astronauts miles into orbit into space crafts, the shuttle. the obama administration adopted similar ideas after staffing a plan return to the moon in 2010. here is the argument -- is it worth it? space is costly and complicated. changedg to the space everything from baby formula to mobile camera sensors. deeper space exploration could be far greater. you can read more about the new space race and all of our quick takes on the bloomberg. head to bloomberg.com for more stories. still ahead, snap sets
♪ live from london and from new york, i'm vonnie quinn. mark: and i mark barton. ons is "bloomberg markets" bloomberg television. uncertainty rising as elections in europe. despite all this, investors do to bee -- do not appear worried. etfing us is head of investment strategy, blackrock exchangee -- blackrock is the largest globally. morningstar have this report said european etf's will reach $1 trillion asset fund to
management by 2020. do you agree with that forecast? >> the etf market has gone through phenomenal growth centered in the u.s. initially, but now to europe. if we were to extrapolate this in thetrajectory we saw u.s., and more recently in europe, the number is not too ambitious. mark: some of the more interesting developments is the race to the bottom between blackrock and vanguard. the cutting of fees under core goducts -- how low do fees when you look at the average, which is nine basis points or less? are we going lower or lower here? fees,n people look at they go beyond the headline management fee. fee from more at the the cost of ownership, we are
talking about the journey, holding and etf throughout the and activating it in the secondary market. the cost of holding this instrument is more and more becoming the measuring cost of the etf going behind the headline. vonnie: what are the trends becoming popular for 2017? per calendaro year, but we are seeing in hedge funds, a shift and a rotation of search strategies and to others. are we see never etf's as well? is continuingy the momentum in the search of the smart beta investing value nowtegy earlier on, and looking at momentum strategies. investors using smart beta to
try to understand the drivers of their portfolios and using smart beta etf's to compose their portfolio is a key trend we are seeing in the etf space. sawshares last year, we smart beta and half of that went into -- vonnie: fascinating. put that into context for us. what is the overall number and what is the most popular strategy right now? wei: if you look at the macro environment, the inflation seen as back. after the u.s.ad elections, but it had its roots before the u.s. election. that trend took a bit of consolidation because the price moved to quickly.
some of the positions looked too crowded. now it is back with a vengeance. a lot of investors are looking ishares.g etf's with including that in europe has been popular as well ly investors are asking about momentum. mark: what new products are in the works and what are investors crying out for? wei: from the perspective of launching a new product, one looking atok at is what we are missing from a country composition perspective. we are looking at certain parts bethe market that could interesting from a segmented perspective.
another theme in terms of driving our ideas for new products has been around the mattox. -- around thematics. what are the trends i would have many years to go that go beyond --he ebb andow t flow -- they go beyond the ebb and flow of innovation? capturing theof next story that will propel markets beyond the economic cycles is what we pay a lot of attention to as well. mark: thank you for joining us. in -- we havee not spoken about snap for a few minutes. we have to get on with it. [laughter] vonnie: i will give you an update. betweenised to open up
$23.50 a share and $24.50 a share. it initially priced around $17 per share, mark. mark: "european close" is next. a look at what is happening to the stoxx 600, not really changed, up for a third day of the highest since december of 2015. check out the currency board. i will leave you with this. four minutes away. this is bloomberg. ♪
this is the european close on bloomberg markets. mark: we are going to take you from new york to london in the next hour, plus covering stories of washington, frankfurt and paris. here are the stories we are following on the bloomberg and from around the world. could trade at any moment now on the new york stock exchange. -- snap could trade at any moment. the range has narrowed from share a share to $24.50 a after pricing at $17. mark: european stocks are waffling today after big gains yesterday. the u.s. market that records, will investors start flocking to europe in the hunt for value? vonnie: