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tv   Bloomberg Markets European Close  Bloomberg  February 28, 2018 11:00am-12:00pm EST

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♪ mark: your the top stories we are following around -- here are the top stories we're following around the world. powell opened the door to the possibility of four rate hikes this year. stocks in europe still lower, today. brexit talks in peril. from minister never to the eu's latest draw. -- prime minister theresa may says never to the eu's latest draw. largest sporting goods retailer in the united states. have a look at what is happening to european equities. stocks are declining.
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down for a second of -- a second consecutive day. the stoxx 600 falling by 3.5% over the month. all of these currencies falling against the dollar. sovereign bond yields are declining. let's get to the corporate news. spain's biggest oil company reporting the highest earning since 2015, beating estimates. the chemicals and refining side of the business bucking the industry trend. waiting for clues about growth.
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big data out of china. toufacturing pmi falling 50.3, the white line in february. the biggest slump in five years. services pmi flipping to 54.4, the blue line. the weaker reading signaling that china's economic growth and global trade might be starting to cool off. this comes as china top -- china's top official heads to washington and communist party officials gather to set economic goals. and. -- economic goals. the rapid change in fortunes for chinese stocks in hong kong has turned them into the world's wildest. chinese shares listed in hong
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kong after rallying 50% in january. the biggest decline amongst global benchmarks, driving the 30 day volatility gauge to an almost two-year high. withuations may continue mainland investors turning bearish over u.s. monetary policy and upcoming legislative meetings. session ininto the the u.s. how is it looking? julie: a little less bullish that a little while ago. -- that a little while ago. -- than a little while ago. we were seeing stocks at highs to to the while ago. a drop in energy stocks, but that is now pairing the gains overall.
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tech stocks continue to lead what gains we are seeing. we have seen leadership from the tech sector. monthly performance for the letter -- for the major averages. this is all three major averages and the nasdaq is in white. even though all three major averages were down on the mound -- on the month, the nasdaq is down the least. continue to see those gains in technology. speaking of things that are holding back gains, we've got the homebuilders as well. we saw the homebuilders lower in the wake. it was an unexpected decline. a shortage of inventories and rising mortgage rates are also starting to take a toll. the dollar has been bouncing a little bit.
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this is the third straight daily gain. gain and ay small 10th of 1%. still a three day winning streak. there is a citigroup index that shows the fx positioning alert indicators index, what it calls its pain index. the yellow line here indicates short, wherend the the various accounts are positioned. will be could see with this large short position among fx funds is if the dollar does continue to strengthen, we could see a squeeze of those dollar shorts. mark: ireland the main point of argument in brexit negotiations. the commission submitting this draft withdrawal agreement.
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nothe eu and u.k. could agree on a bill that would -- prime minister theresa may quickly rejecting the proposal. >> the draft would if implemented undermine the u.k. common market and threaten constitutional integrity by creating a customs and regulatory order and i were see -- in the irish sea. no u.k. prime minister could agree to it. mark: if today was a game of tennis, one game, eu versus theresa may, who won? >> an apt analogy. where we all -- where we are is this has the talks into stalemate. sense, the irish sentiment never went away. now the eu is sort of forcing the issue into black and white and forcing the u.k. to stare
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what a dealss of outside of the single market and customs union looks like an theresa may said no u.k. prime minister would agree -- and theresa may said no u.k. prime minister would agree to that. it is interesting because on the one hand, theresa may's room to maneuver is limited because you sidehartline rebels on one and soft brexit rebels on the rebels on oneine side and soft brexit rebels on the other. you've also got -- saying today, hinting that the customs union would be the solution. mark: he also warned that
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brexit's -- that the brexit transition period was not guaranteed. emma: the u.k. basically does not want any new laws that it does not have a say in making. period, everybody thought that was going to be the easy thing. both sides wanted it. certainly the town is very bitter at the moment. mark: we don't know when it is coming to parliament, but 10 is a big number. emma: it is. is, itng to bear in mind probably is enough to defeat her, depending on which labor lawmakers would vote. mark: i know that is a big call,
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but some are saying it could lead to that. emma: it is a key plank of her policy. she was defeated in december over issues of vote. the other thing is, i am not sure whether you can legislate for a negotiating position. it could be sending a message and trying to steer policy rather than necessarily defeat her. mark: we are all waiting her big speech on friday. is this going to put some issues to bed? is the northern ireland question going to be clearer? there is not much she could say that would solve the irish border issue, sort of staying in the customs union and
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what she has been clear of so far is that she is not staying. the stuff today does increase the need for a slightly punchier tone. -- what happened after that was -- mark: the ireland issue has come back to haunt us. emma: whatever she says on friday -- how do she solve ireland -- how does she solve ireland? emma: stay in the customs union, -- and whato call
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boris johnson would say is, the border is between northern ireland and the republic of ireland. it can be a high-tech border but no one really notices. apart, there are sensible suggestions about how you could move checks away from the border. it would take time to implement. fair in mind that the last thing the irish government wants is a messy no deal brexit. mark: you've got a big -- a busy week. and a ross thomas -- and a ross s,omas -- emma ross-thoma thank you. vonnie: paul manafort pled not guilty. the new charges in the mother probe -- in the mueller probe. his trial date is scheduled for
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september 17. we are joined by kevin cirilli. what happened -- happens between now and september? kevin: a lot of back-and-forth with mueller's investigation continues. former campaign chairman paul manafort is pleading not guilty, a clear departure from what his deputy has decided to do. rick gates pleading guilty last week to the charges that he faced in connection with paul manafort. metaphor through an attorney released a public statement following that guilty plea, saying that he himself is disappointed that rick gates has decided to plead guilty, that he does not believe and is maintaining his is a dense -- his innocence. and ears for deleting that rick gates might provide new information to the authorities it are about paul manafort or something else -- to the authorities, either about paul manafort or something else. vonnie: the more time there is,
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the more time there is for mueller to collect more. forward, you play this what you notice is that the level of indictments that have started to come out like rapidfire. week, thether indictments against 13 russian individuals as well as three russian companies, saying that there was a well orchestrated russian cyber meddling attack utilizing u.s. institutions in silicon valley and social media platforms to metal in the election. and you have -- to meddle any election. than you have -- in the election. gatesou have rick pleading guilty. many people anticipate that this is going to drag on through court hearings and proceedings beyond them in terms. vonnie: how is the conversation proceeding on gun control versus
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the second amendment as we head into another full week past the shooting in florida? from dixmpany news that it was changing its guns and ammunition policy -- from dick's that it was changing its guns and ammunition policy. kevin: you have the outcry from folks calling for some type of new changes to gun policy in the indebted states, but you also have -- have the private sector acting. sayingsporting goods that the shooter in the public attack purchased the gun at dick's sporting goods. it was not the weapon that was used in the attack, but they are deciding to now not have any assault rifle weapons sold at their locations. rent-a-car --ing it comes following rent-a-car services and airline services distancing themselves from the nra. vonnie: a domino effect from
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corporate america. thank you, kevin cirilli. yesterday, bloomberg television covered a story about the saudi aramco ipo. video provided by the company included an incorrect map of the gulf. we do apologize for that mistake. this is bloomberg. ♪
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mark: live from london, i am mark barton. the european close, over 10 minutes away. vonnie: dick's sporting goods of 1% now in the market. it says it will in you -- the sale ofand assault that weapons which had
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been available in some stores. it will require gun buyers to be at least 21 years old, so making big changes to its policy. joining us on the phone -- straight, exactly what the changes to this policy are. we have a full screen, but maybe you can explain to us what exactly dick's is making changes to. >> thank you for having me. first point is that they will no longer be selling assault style rifles. that is something that they have removed out of their dick's stores back in 2012, but the theirued to sell them in 35 field & stream stores. as he referenced, they will no longer sell firearms to anyone under 21 years of age and no longer sell high-capacity magazines.
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those of the general statements today coming out of dick's sporting goods. the point i would make is only think about the hunted segment for to exporting goods, or they don't break out the specific size, it is roughly 10% of decline -- ande that category has been declining since 2017. we are talking about 35 field & theam stores and individuals who are buying or have been purchasing guns under 21 years of age, what impact that will have. it is probably not that material , but certainly something we will be watching. ethically and markley -- and morally, there will probably be an impact. read a quote from the ceo and chairman. he says the whole hunting business is an important part of our business and we know there
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was going to be backlash on this, but we are willing to accept that. backlash from home, do you imagine? , do you imagine? chris: individuals who have purchased hunting, guns and ammunition from them in the past and would go to them for their purchasing needs. it might look at this in a negative way and decide to go to the competition. that is certainly possible and something we will have to watch. i'm sure that is the reference he is trying to make. vonnie: given that there hasn't been a negative reaction in the , perhaps this would impress upon retailers that they need to do the same, that the administration and congress are and that maybeon it is incumbent upon leaders in corporate america to do that instead. chris: that is always hard to determine in that regard.
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looking at the stock and when we think about this category and its impact, probably going to say it is not that material. it has been a declining category. also maybe one of the silver linings in all of this is some might walk away feeling like applauding dick's for taking a step to do what they are doing, and the results, maybe they will decide to go there and buy sporting goods products because they are stepping out and making a bold move. that is possible and something that is undetermined but also might be reflected in the stock, today. mark: the stock is at $32.10. you have a neutral rating. what is behind that call? chris: part of the observation
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is dick's sporting goods is in a very competitive segment of the industry. they have seen a lot of challenges within their business and across certain categories. until we start to get some sense that there is more rationality with regards to the pricing environment, stronger underlying product trends and the rate of reinvestment into their business which is negatively impacting margins, we might take a fresher view, but that is part of the reason we are neutral at this point. vonnie: can i ask who exactly dick's competitors are? much pressure on them to check these kinds of steps -- to take these kinds of steps? some of their larger
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competitors are going to be academy sports and outdoor, based in texas. the other ones will probably be bass pro and cabela's. you have had a lot of consolidation recently in the industry. sports authority exited the sports good market. gander mountain have their challenges as well. the larger players are going to be academy, astro and cabela's -- bass pro and cabela's. good their recapture some of that business? -- could they recapture some of that business? it is possible. vonnie: thank you so much. this is bloomberg. ♪
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vonnie: live from new york, i am vonnie quinn. mark: and live from london, i am mark barton. the european close in a matter of minutes. lower, down for a second day, on track for the biggest monthly fall since june 2016. that was the month of the u.k. brexit referendum. took out the currency board. we will be talking about eurozone cpi in just a few moments. euros trading lower against the dollar. i will leave you with the bond board. the close is three minutes away. this is bloomberg. ♪
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mark: from bloomberg's european headquarters in london, i am mark barton. check out what happened at the end of the wednesday session. on track for the biggest monthly decline since june 2016.
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the dax for germany, the biggest february slump since 2009. the worst performer among the biggest european benchmarks. wonderful w m go function. cpi slowing to 1.2%, that is the white line. the figures follow a series of releases that have checked the economy's thundering momentum. will we see a change in the policy language to pave the way? today in the u.k., we had some data, we had consumer and business confidence both muted in february.
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jfk says it's measure of household spending sentiments slipped to -10. a separate report on wednesday by the recruitment and showsment confederation confidence in hiring in investment decisions has fallen to the lowest level since june 2016, the brexit referendum. warning on volatility, that is why shares are down by 5%. momentum strategies, this is the world's biggest publicly traded hedge fund manager. year, rose by 87% last income from fees increasing, customers returning to hedge funds as performances improve.
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up from an all-time high of $80.9 billion at the end of 2016. shares falling by 5%. it used to be the case that we saw this quite frequently, where the u.s. dollar and the japanese yen would strengthen at the same time. we did not see it for a while, but seeing it again. the dollar index up. back below 107. the bank of japan cutting its bond purchases. we also see crude oil under a bit of pressure after inventory data showed a bigger build then anticipated -- bigger build than anticipated.
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what some are seeing as a little more hawkish. -- gnn.ok at gn and downan see with japan, 1.4% as the yen strengthens and the bank of japan is cutting bond purchases. nasa negotiations in the works and that interest rate decision in mexico as well. the south african rand under pressure, once again. in his capitol hill debut as fed chairman, jerome powell calling for for rate increases this year. each member of the fomc is going to be writing down a new set of projections and a new estimate of approved monetary
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policy as we go into the march meeting which begins three weeks from today. prejudgeot want to that new set of projections, but we will be taking into account everything that has happened since december. how refreshing was it that the fed chairman gave his personal view on a few matters? >> i was scared because i actually understood what he meant. very strange. he said it how it is. the reason why -- he was going to be a steady hand and clear and that is what he started off as an will no doubt continue. mark: howl versus greenspan in
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technique -- powell versus greenspan in technique. he did not give the markets what they wanted, or did the markets misread him? four rate hikes was the takeaway for some. >> he gave them what they needed. mark: that is a good thing. seems tond markets have lifted reasonably well. it managed to calm itself down and this is always going to be a data dependent fed. if there is economic strength coming through from tax reforms or a number of different things, it is likely there will certainly be three and that is where he set out, definitely three, could well be cointreau. -- could well be four.
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i think the bond markets have priced out supply and are doing ok. on a bitseem to be firmer footing. the 2-year note is doing very well. that is the one that keeps on pushing higher in yield. it means that the market is getting ahead or driving a -- driving up expectations. vonnie: is the bank of japan throwing a spanner? >> i have written on this a few times. people are getting excited about minor reductions in what the bank of japan is doing. they are trimming by much more than that. it is just tweaking. real thing is the yield curve control. wobble, then all of a sudden, there would be a
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major reason to sell japanese bonds in that context, but i don't think anything is new. mark: was the biggest relief yesterday in that power in frankfurt? that big ecb power? was draghi sitting back with his feet on the desk? was there a sigh of relief? >> exactly. strip kept to a domestic -- script. i think he has done a service to the ecb in the sense that they have been increasingly paranoid about so the comments coming out of the u.s. administration. focusing new fed chair on the u.s. economy, rather than trying to manipulate or nudge the dollar lower, it makes their task a lot easier because they
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put a lot of stimulus into the european economy and the impact has been reduced. thursday,meeting next inflation data, does it change the script, next thursday to get any tweaks or changes to the communique? >> i think it is all about the euro. if the euro does fall, you get the hawks pushing back on any qe. at the moment, everyone is playing to the script. . next week's meeting will be fairly benign. mark: market/worth, -- marcus ashworth, bloomberg gadfly reporter. let's check in on the "first word news." courtney: the european union has come out with its own draft of a brexit agreement and theresa may
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says no british prime minister could accept it. says it would threaten the constitutional integrity of the u.k. she is referring to the portions dealing with the irish border. former trump campaign manager paul manafort has pleaded not guilty to new charges against him in the impression -- in the russian investigation. special counsel robert mueller has ramped up the pressure on metaphor by getting his deputy rick gates to plead guilty and agreed to cooperate -- and agree to cooperate. president trump is attacking his own attorney general again. the president tweeted that it is disgraceful that sessions isn't using justice department lawyers instead. in florida, students have
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returned to class two weeks after the deadly shooting. there were plenty of police at the high school. students began the same classes they were in, when the gunfire broke out. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe, this is bloomberg. vonnie: coming up, we are talking tech. we head to the international conference and will -- in berlin. we will speak with the chairman of octopus ventures.
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vonnie: live from new york, i am vonnie quinn. mark: and i am mark barton. this is the european close on bloomberg markets.
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return conference in berlin. that miller spoke to the chief executive of ares capital about what worries him in the economic picture. >> final worry so much about the economy -- i don't worry so much about the economy. valuation because rates are very low. they encourage risk-taking behavior. matt miller joins us now from the conference with another special guest. matt: i am here with alex macpherson, chairman of octopus ventures capital fund and all the private equity guys that we have said that prices are high. they've got so much money to put to work. is that good for a person like you? alex: it is really interesting
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because in the european venture community, almost an arbitrage between the u.s. and asia with the european assets being really cheap. there are opportunities. matt: what do you think about -- there has been this sense of everyone in this conference wants to convince me, our viewers that the economy is still doing well and powering on, full steam ahead. is that a red flag? alex: i think there is always going to be bumps in the road as we look forward, but from my perspective, investing in technology, every business is transforming to become a technology business in some format and that is exciting as you get core technologies being embedded into the way we live our life. matt: how important is the economy to someone in your business?
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you invest in businesses that are going to do well, regardless of the underlying economy. alex: that is a good point. the businesses we are investing in, we are looking to be disruptive or bring completely new products to market. their disruption is often taking away from traditional businesses, so the overall economy does not really affect them and there is a great opportunity for high growth businesses. matt: where are you finding the best opportunity? we love think of ourselves as a held of new businesses, but they are all over europe. alex: the areas we are interested in our that sort of crossover of hardware and hearing a lot about artificial intelligence, but also robotics, a really interesting area.
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another area is that crossover of digital and health. how can we use new digital get offto empower and our health-care system to avoid people going in a hospital in the first place? matt: what do you think the next big thing is? what is going to be your home run? alex: let's stick with regards to the health side. we have a business that is focusing in europe and also in the valley, looking to use cognitive behavior therapy in the way in which you can treat patients with insomnia and other mental aspects, so that business is how do you scale and they have been able to prove that their system is much better than drugs. matt: i'm starting to get the feeling that everybody over 40 has insomnia.
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let me ask you about the fundraising, because the private equity side of this conference says that fundraising is the best it has been in history. vc?is it for alex: the vc and goal has been different for some time. european venture capital to not necessarily go together. europe, a lacking in number of funds that are able to invest in those great businesses that are still lossmaking or just approaching breakeven. that is being filled by some u.s. houses that are coming in, but we expect to see that gap get filled over time and that is because we can see great entrepreneurs. matt: you mentioned europe a couple of times but you are not from europe or you won't be,
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soon. is brexit going to have any effect? anx: brexit is going to have effect, but if you are an entrepreneur, whether you are in europe or the u.k., brexit is just another challenge to overcome. lending those first sales, building your market, looking at international expansion and when you think about it from a european perspective, we grow up knowing we need to internationalize where is the u.s. or the chinese can address one market and that gives us a longer-term competitive advantage. matt: we appreciate it, alex macpherson of octopus ventures capital. mark: matt miller in berlin, thank you. vonnie: great stuff. time for our stock of the hour. lowe's. current fiscale
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year also fell short of analyst expectations. joining us now is the reason -- with the reason is taylor riggs. that sort of gives you an idea of how the investors are thinking. this brings up the idea that we thought the rising home prices would lift them. you mentioned home depot. we are looking at the same store sales and since 2008 with rising home values, people are comfortable reinvesting in their home. same-store sales for lowe's is about 4% while home depot is about 7.5%. look at what this is doing to the share price. you have going back since 2007, a pretty similar share price and
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then the diversions between the two. a $95 spread between the stock prices. home depot is number one. lowe's does not have as many , has always been a number two, but an increasingly distant number two. the earnings call to place a few hours ago. management came out and said we are going to open 10 new locations in 2018. they are going to boost spending. rbc mentioned that idea of investors digging down into this team that not all rising tides will lift all boats when it comes to the home improvement chain. vonnie: great stock of the hour, thank you. coming up, battle of the charts. what will it take to turn higher again next month? we will tell you. ♪
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vonnie: it is botc time. the most telling charts of the day and what they mean for investors and you can access these charts on the bloomberg by running the function at the bottom of your screen. kicking things off is kevin kelly. kevin: looking at stocks, how will they did in february and a streak of 15 months in a row with the s&p 500 total return index which you can see in the red and green bars. a lot of people questioning, can the show go on for u.s. stocks. one indicator to look at that we spotted in the white line is the cyclicals versus defensive sectors and their performance. in prior selloffs, you typically see this rotation in defensive sectors.
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what is interesting is despite that selloff at the end of january and february, a lot of signal stocks like technology companies have held up really well. this is an important indicator going forward to see if this market still has some life to it on you can see this chart your bloomberg terminal. vonnie: it is not a question of whether cyclicals are saying the show goes on, it is that the show must go on. mark, what have you got for us? mark: back in the day, i love to do a monthly battle of the assets. i thought i would bring an old favorite back and the winner of the february battle of the assets was fourth place within the bond space, with our function.
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this was an area that was hammered right across the spectrum, so i thought we would look at the worst-performing to the subgroup within wb ajax -- within wbix. the worst-performing gauge was the bloomberg berkeley -- the blue line, we track 150 currencies on bloomberg. wcrs is the function and the winner against the dollar was the ukrainian. top performer. just to get away from your crane. if you only do g10 currencies. we tracked the gme compass it -- composite. that the biggest of gauges when it comes to valuation.
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top of the charts with a gain of 11%. , cocoa rose to the highest level in 12 months. vonnie: i do love your monthly visit with the best-performing asset, the matter where in the world it may be. thein this case, i think crowd is going to go to kevin kelly because we are looking forward and wondering what is going to happen next month. up next, powell pass. we focus on the new fed chairman with grant thornton economist diane swonk.
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mark: i am mark crumpton with "first word news." getting a glimpse and what happened during hope hicks' nine-hour testimony on capitol hill yesterday.
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she knowledge to the house intelligence committee that she has occasionally told which he termed white lies for president trump, but is not lying about anything relevant to the russia investigation. the panel is looking into russian in -- interference in the 2016 election. since democrats want -- senate democrats want president trump to push for more extensive background checks for prospective gun buyers. they are asking him to endorse legislation that would extend the prepurchase checks to online and gun show sales. the president will host a meeting of bipartisan lawmakers later today to discuss school safety and possible gun legislation. the city of charlottesville, virginia says it has complied with the judge jakey order to remove the blacks shrouds installed over two confederate monuments after a white nationalists rally last summer. charlottesville tweeted that city staff removed the shrouds this morning. the circuit court judge


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