tv Bloomberg Markets European Close Bloomberg March 14, 2018 12:00pm-1:00pm EDT
bloomberg's european headquarters. >> this is the european close on "bloomberg markets." ♪ mark: here are the top stories we are covering around the world. ofresa may orders expulsion 23 russian diplomats from the u.k., saying russia responded with complete disdain to questions about a poison gas attack on a former russian spy. moscow says it will respond. shares soaring today as the company announces plans to spin off its british operations. issident mario draghi promising no surprises as the bank tiptoes toward the end of qe.
a look at where european equities are trading now, 30 minutes from the end of the wednesday session. risingare falling after for six consecutive days. mixedxt fair on the -- fair on the currencies. this is a wonderful chart. narrativeieve in the that we are in the early stages of a prolonged spare market in sovereign debt, then the currencies of current account suggest liraries is a likely victim, and the u.k. may be even more troubled. the u.k. 2018 deficit is at 4.4% gdpdp, standing at 3.5%
several months ago. strengthened, if that continues, how soon before the u.k. current account deficit is even larger than turkey's relative to gdp? strengthened, ifyou can see itn there. italy in the news in the wake of the inconclusive italian election. since the election, the yield premium investors demand on notes, that may not be sustained as integration efforts led by germany and france and higher yield should support italian debt despite political risks. so says a rate strategist at,
spank -- at commerzbank. 7.2% and 7.9% in the first two months of the year from a year earlier as chinese exports surged. retail sales remained robust. the numbers came to the economy reaping the rewards of the revival in the global economy. purging debttors risks and tightening the fiscal screws by targeting the budget deficit. the data today, white line industrial production, blue line fixed asset investments beating estimates. ratherit is looking bearish in the u.s. the dow near session lows. the s&p down 0.5%.
the nasdaq down about 0.3%. investors looking for cues. we did start higher earlier. that has been the pattern on the week. the dow is down more than 2% on the week. let's take a look at the s&p 500 on the week. 5%.index is more than monday, we started higher and finished lower. today, we started higher, and 500 down more than 0.5%, down 1% on the week. volatility ando uncertainty on the part of investors. on this, we have the s&p 500 flirting with its 50 day moving average. in yellow, without the 200 day moving average. in orange, the 50 day moving average. volatility took it down to that 50 day moving average.
it goes back down to the 50, you could see the s&p 500 moving lower even to that 200 day moving average. the momentum indicator starting to round down. the bears could be getting ready to strike. where we have some bearish activity, if we take a look at boeing along with two of their isoviders, boeing on pace for its worst day since february. this after the spirit aerosys supplier indicated it is a tough quarter. struggling to meet increased production demands. >> boeing is one of the main reasons the dow is doing worse. mark crumpton has more. >> across the u.s., thousands of students put down their books and walked out of class to protest violence. organizers hoped it would be the
biggest demonstration of student activism yet in response to last months massacre in florida. at marjoryere killed stoneman douglas high school in parkland, florida one month ago today. purging donald trump not to undermine long-standing trends by seeking economic gains through punishing trade tariffs. they said the aim should be greater cooperation. >> the president seems unhappy about too many barriers and tariffs between us and the u.s., i can understand him. we are not happy either. that is the reason why we started trade negotiations with the u.s. a few years ago. we should go back to these talks now. make trade, not war, mr. president. latesk said it was not too
to turn this around. he asked president trump to come through on his promise to make real friends. angela merkel has been sworn in as her fourth term as chancellor. she will have to hold together for most fragile coalition yet. she will have to contend with a potential trade war between the u.s. and europe and the future of the european union. british physicist stephen hawking is dead at the age of 76. the cambridge university professor was known for his groundbreaking work on the origins of the universe and the behavior of black holes. science to the masses through his book a brief history of time. he was diagnosed with lou gehrig's disease at the age of 21. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg.
back to you in london. mark: thank you very much. the uk's biggest insurer spinning off its british business from american and asian operations. we have been speaking with fragile chief executive mike wells about the changes. mike: we announced outstanding results across the board, our asian business, our u.s. business, and most important late the u.k. business -- importantly for this discussion, the u.k. business. earnings are up 10%. we are having this conversation from a position of strength. i think that is the right way to do this for shareholders. mark: are you surprised that shareholders are already looking beyond this spinoff and looking to the next one, perhaps the u.s. is the next one. mike: there are no plans at the current time to look at
spinning further. we have always said we are an active manager in the group, but if you look at where asia is need for solving complex retirement issues, and the u.s. is the leader in that, there are a lot of synergies. we will display more of those in the upcoming months. we think it is an appropriate combination of market position, capability, earnings, diversification, lots of good things. mark: you said that it is nothing to do with brexit. are you surprised that it has some thinking it has something to do with brexit. mike: i lived here three years. i have watched the entire brexit experience play out for the city. i have friends in london that brexit is pretty much the lens through which they even order breakfast.
i'm not surprised that we get dragged into that. we have been clear all along, this is a business with very little footprint in europe. managementet business has been successful in raising funds in europe. we have addressed that. with the shape of brexit, we view it as manageable, and i hope it is for what happens with the country and city. we think this is a natural home for financial services in europe. we want to be part of that. we are keeping these companies domiciled and headquartered here. if anything, we are an endorsement for the strength of the city. mark: do you think there will be any change in the shareholder registry after the split? the type of investor could change in both entities. mike: you could get a bit of that. if you are an existing investor,
you will get one share in each. there is no reason for those shareholders to leave us. see athe plc investor mixture of earnings? yes? it has very high cash centric earnings. i think it is about who the new investors are. that will be the interesting dynamic. it is still early days. mark: the other news is you completed the sale of $12 billion of u.k. annuities. disappointment that you did not announce a special dividend. why not? mike: we are using those proceeds to move hong kong out of the u.k. and into the asian business. about $1t is with
billion freed up in capital, and we raised the dividend about 8%. we have a good track record of increasing distributions when we have access capital, but we want to make sure these entities are well capitalized, well structured, and that we will look at how much surplus capital we have from there. mark: does it free up some acquisitions may be in the medium-term? mike: there is nothing i will comment on this morning or this afternoon, excuse me. we are always looking at ypeategic and on t acquisitions. our definition of bolt on would billions dolalrs in the u.s.. mark: are you going to risk any more of your 45 billion pound annuity back book? and when?
ise: the remaining piece about 20 billion pounds. there is another 13 billion. we will look at that when we look at the structure of the new entity. improved the quality of capital behind that business and reduced its credit exposure by one third today. we think it is well capitalized. we don't need to do anything. obviously, the terms were attractive, and given the quality of our books, it was a lot of interest. there is nothing that we plan to pursue from that. mark: what is your number one worried today? you had a good day looking at the share price. are there any worries at the back of your mind? mike: always. you want to make sure all of the stakeholders understand how they are affected accurately. you want to make sure they
understand this. we have five employee meetings after this. we will be talking to our consumers and partners after this, making sure everyone understands our commitments. that is the most important to get right. i am pleased the markets see the logic in this, but it was done for the long-term. we will take the share price when we get it, but it was not the objective mark: for the day. mark:-- for the day. mike wells there, prudential chief executive officer. julie: we are seeing losses accelerating in u.s. stocks, the down to its biggest loss on the day, down about 1.25%. boeing accounting for a lot of doingcline in the dow,
♪ julie: live from new york, i am julie hyman. mark: as our director said, a little london beauty. counting down to the european close. julie: it is time for the bloomberg business flash, a look at some of the biggest business stories in the news. a former equifax consultant is facing charges of insider trading. a grand jury has indicted him for selling off nearly $1 billion in equifax stock just
before the massive data breach was publicly announced. he received an alert in late august of the breach, but the company did not disclose it until later. more penalties could be on the way for ubs after the enforcement chief today said other sponsors have been extraordinarily reckless. a penalty onpped ubs in february. other investigators are looking at possible responses. internetbetting on the to pulled out of a sales slump. they are watching a three-year comeback plan after another quarter of disappointing earnings. slashinghe plan is distribution spending with an online push.
signet often competes with itself with locations in the same malls. mark: in other company news, adidas ending 2017 on the right foot. revenue for the german company fourth 12% in the quarter after a slowdown in the third quarter, which sparked concerns and wait on the -- w weighed on--w the shares. almost 30%, and our online business grew almost 57%. those will really grow the company forward for a record year. we are very positive on china. it is helping our profitability. margin contracts on the large superstars are signed in europe and the u.s. that makes the chinese market look even better. top: adidas is the
today.er in the eu the u.k. announced it will eject 23 russian diplomats attack of the poison gas on a former russian spy. >> they have provided no credible explanations that could suggest they lost control of their nerve agent. the nation as to how this agent u.k., noe used in the explanation as to why russia has an undeclared chemical weapons program in contravention of international law. julie: russia has responded, promising retaliation coming soon. let's bring in emma ross thompson here in new york. thank you for talking to us about this. these measures that theresa may
announced, are they unprecedented? how often do we see these kinds of tensions ratcheted up to this level or you get the spelling of various diplomats or spies? emma: theresa may said this is the biggest expulsion in 20 years. that takes us to the height of the cold war. time, from analysts and russia, these measures look a little soft. we have to see what the russian retaliation is. stuff like ministers and the royal family not going to the cup doesn't amount to a whole lot. for russiancenter knows and the u.k. russia is unwilling to let echo.
the response a few years ago was seen as toothless then. are we seeing history repeat itself? emma: that is a good question, and one that is on everyone's lips. theresa may is trying to be very firm. she has her party behind her. she also have parts of the labour party behind her. one of the side issues on the domestic front is the labour party leader has been criticized for his response to this. he is sort of trying to make politics, sort of taking the kremlin's line that session in parliament. it will be interesting to see how this plays out with domestic politics. mark: as we go it alone post-brexit, what does this tell us about the response of our neighbors, the eu, nato, the u.s. as we enter this new period
of trying to forge our own path in the world? are they still standing behind us? is a very interesting question. months ago, theresa may was in the munich security conference, outlining her vision of how the u.k. would be a very close partner of the eu. u.k. waslike the offering its services, pledging unconditional support for europe security. now it is the condition where it is the u.k. that once that support. the eu has issued quite strong language from president donald tusk. he has said we need to stand together. the u.k. will probably be quite glad of that. that the make the case u.k. is looking rather lonely leaving the eu, and the u.s. not necessarily being as close ally
disappointed and the implications of the changeover at the state department and united states. was the finishing number on this wednesday session, a busy day in earnings. it will reward shareholders with special dividend benefiting from holiday shoppers splashing out on food. annual sales above estimates and confident about continued growth. the downturn in the u.k. consumer space -- consumers buying more online from amazon and facing the squeeze -- pat morrison and rivals like a ldi, shares fell because of the underlying operating profit margin. this is prudential, we spoke to
the chief executive mike wells earlier, and the biggest increase since november of 2016. britain's biggest insurer divesting and unity from its portfolio and spinning off u.k. management arm as it focuses growth on asia shares finishing 5.8%. and finishing off with the date equity mover over the day, shares rose as much as 13%, the biggest increase for a decade, fourth-quarter revenue rose 19%, led by china and north america. and a variety of retro sneakers helped take market share from nike and other competitors. the chief executive who spoke to said in january the expects exceptional growth in china this year and a strong economy in united states as the new tax law
provides at least a short-term boost to consumer spending. shares up by almost 12%. that is a look at european markets. julie: and in the u.s. we are seeing the selloff bounce off the lows of little bit. the dow is taking a bulk of the s&ping, down by 8%, and the off by half a percent and nasdaq by a quarter percent. a big selloff in doubt is mostly because of its heaviest weighted stock, boeing. the doubt is priced average -- and you you have a stock that is dragging the dow. comments from one of its suppliers, spirit, about the progress of boeing's production and another supplier is also falling. if you look at the components in the s&p 500, it is not down as
much of a group and individual basis. there,ials the worst boeing is part of the story there and materials rounding out some of the worst performers. mark. mark: let's talk markets and economy. the goldilocks data sentiment to change as banks worldwide tighten monetary policy. the fixed income portfolio manager -- joining us now. fourve retail sales data, rate hikes does it change your assessment? fore are certainly still on rate hikes this year, and a height this month and another three later this year. retail was a little weak but we tend to see weakness in the first quarter data and that
doesn't change our view. growth continues to be strong. mark: is it going to be next week, the big meeting? you say the yield will be at three or 3.5%. that is one of the key things around watching for in the fed meeting, shifts in their guidance for future plans for rate hikes. is certainly 3.5% higher from here but it is not out of control on the 10 year treasury. we think there are a number of things that are in line are moving yields higher in the u.s. importantly we have an interesting dynamic foreign buyers, particularly out of japan, which i think will put a cap on yields from running out of control at the height and. mark: who speak to paul gordon at the ecb -- and i will throw a question that you.
of exchange rate volatility has been front and foremost in the last 24 hours following comments philip lane yesterday. it seems volatility matters and not the level of the euro. are we approaching in the next six months or your a level of motel. bothers and worries the ecb? marika: from a currency perspective we think it is increasingly volatile but with a tight range. we see it as a tug-of-war factors for an argue of a higher u.s. dollar. but interest rate is higher there are a number of things calling for a higher euro and think structural forces the deficit in the u.s. will win out and we are going for a higher euro over the course of the year. julie: you mentioned the japanese buyers, and we have a story on bloomberg sank not a
single japanese on traded yesterday, in part because japan is buying all of the supply. folks who might be buying in japan, where is the demand going if it can't be channeled into japan itself? marika: it is not unusual to see demand to left is year in japan given their fiscal year, but we continue to see that trend of demands for u.s. treasuries and u.s. investment grade corporate bonds. that is a trend we see over the last couple of years and the key factor underpinning the u.s. corporate bond market. julie: when we look at corporate ons in the u.s., we continue to see robust demand your them, even as we see the fed continue to raise rates this year? the demand for u.s. corporate bonds has tailed off a little bit in the near term. it will be interesting to
monitor because certainly demands can shift quickly. that is something we have been watching in terms of u.s. corporate. there is a weakening in the technical picture, not just on demand but also meaningful increase in corporate bond supplies out of the u.s., and that his weight on spreads for your's corporate -- four u.s. corporate. japan, how does kuroda term to get us from kuroda term one? marika: they are committed to their current policy that they have so they are focused on yield curve central. on the background they are doing this self paper that gives them a lot of optionality. they have been five monthly purchases below the target, and they are focusing on yield curve control and maintaining the 10 year at or around 0%. as that fluctuates they can
adjust accordingly in order to keep that yield relatively safer. mark: is made looking more likely -- is may looking more likely? marika: we anticipate a rate hike in may and the additional will be contingent on brexit progress. mark: what does it mean for fixed income worldwide? marika: we have a gradual shift of tightening policy at of central banks globally but the keyword is it is very gradual. the main supporter for bonds, we have a preference for higher spread sectors where we can get more attractive yields and we are cautious on government bonsai as we think we will see those yields move up. mark: thank you for joining us marika dysenchuk. julie. julie: let's check on first world news with mark crumpton. paul kentucky senator rand
says he will oppose the nomination of mike pompeo for secretary of state and gina haspel for cia director. senator paul voted against pompeo when he was up for cia opposed he sees where prisoners were tortured. an election may be a bellwether over who will control the u.s. congress. right now it is too close to call. in pennsylvania democrat conor lamb has a lead of 600 votes over republican rick saccone in a special election. some absentee ballots still have to be counted. it is a backside for republicans that the race is this close. president trump one that district in 2016 by 20 points, and glenn declared victory but sick on is not conceding.
the country's war on terrorism will continue as long as there is a single terrorist on syrian territories. also promised today to stand up to western scenarios that aim to undermine the country's unity and sovereignty. syrian conflict enters its eight-year this week. the united nations says $540 million is needed for humanitarian relief in the palestinian territories this year. the top monetary coordinator said today that 75% of that amount is for gaza, which has been under israeli and egyptian blockade islamic state took over the territory in 2007. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. back to you in london. mark: coming up, the ecb president reiterating that
julie: and new york i am julie hyman. mark: and i am mark barton and this is the european close. make sudden says changes to the stimulus plan -- the conference back for, the ecb president says he expects inflation to average 1.7% in 2020 and investors should expect aussie surprises. -- policy surprises. >> they will proceed at a
measured pace that is most appropriate for inflation convergence to consolidate. take an account continued uncertainty about the size of the gap and the responsiveness to slack. us ahead ofg bloomberg's european team, any indication from mario draghi on the message he delivered? deviation,'t call it more of hammering the point of patients, persistence, and prudence. he pointed out that concerns over the euro and further strength. that the euro gains almost 70% against the dollar is not entirely due to the economic
expansion. that is one concern. trade policy emanating from the u.s. -- and the process has to be slow and steady for now but no surprises. draghi's predictability pledge raises need for clarity. given that easing -- what is next when it comes to tweaking the guidance? >> the dropping of the easing buyers and a pledge to increase -- that tells you that qe is nearly over and most think it will be done by the end of this year, by that i mean increasing the size of holdings and ill be reinvested as they mature. that shifts the focus onto interest rates and they will rise. vague language and
not enough for investors. and the ecb chief economist said today as he said before that it will have to change at some point in the future. you will have to be more specific on your calibration of white interest rates will rise. that is the focus at the moment. until that i would just sort it out there is the risk that the ecb does in fact surprise investors. allegingu have draghi predictability and on the other hand you have them saying that folks are complaining is not being clear enough. expect to perhaps get more clarity and transparency and more details? have theirnomists eyes on the june meeting. we have one in mid april and another in june and that could be where the ecb says this is what we want to do with asset purchases and this is the language where going to use for
interest rates. of course it might not. supposed toses is run at least until september and the ecb could leave it to the last minute whether it intends to extend those are not. if you extent asset purchases you there by push out interest rates and there is a lot up in the air. it comes down to how the data comes in, that is critical to policymakers. julie: as economists and traders are waiting for more information, what our predictions terms of where the euro is going and where rates are going in the meantime? most forecasts are looking to the upper end of the 122 130 range for the euro over the next several months or a year. whether that is too much for the ecb pens on the outlook for the economy. --it is seen as warranted and in particular a pickup of
inflation, then the ecb is fine with that but there's going to be concerned that it gets ahead of itself and puts downward pressure on inflation and on the minds of competitiveness of exporters. it combines of the threat from the u.s. trade at the moment, so there are concerned risks out there. mark: another wonderful story from our team, germany ready to sacrifice -- a pond of the eu chess game. i know it is early -- a year-and-a-half from an draghi's archer to talk about. favorite,rged as the it being germany's turn. andt it be a maneuvering backroom dealings that he might not end up with the position? paul: it is possible. there are no terms, but we know germany is the biggest economy
in the euro area and it has a case to put on that level at least. you could argue central banking credentials are there and there are concerns that he has been an measuresof advanced that mario draghi has pushed through. he seems to be on the wrong side of the bait and that is a concern for countries. at a government level there is a lot ahead in the near future, and we understand this is the debate within the german government at the moment. it is considering pushing one of those posts, thereby giving up its push. there are so many different ways to scud workout, but at the moment it doesn't look like there is a look at all. julie, we have breaking
news. julie: president trump is set the name larry cargill up as early as tomorrow coming from various sources, the washington post among them confirming what has been speculated with the president himself commented as well. we will have more details on that as we get them. up next will discuss new charges from the sec. from new york, this is bloomberg. ♪
reports if it does happen and the president comments himself kudlow was the front runner for the position. as well as former president of the company -- authorities are accusing her of racing or than $700 million from investors an elaborate fraud. she agreed to pay $500,000 fine drew on strong covers theranos and joins us now. this story is such an epic story, from this being a hot company to an explosion. >> if you read the complaint what you see is essentially a company that make big promises and try to fake it before they made it. while that might work in some places in the startup world, it doesn't in an industry you are
related by the federal government. the claims they made began to unravel. they were still raising hundreds of millions of dollars from investors after they had gone out and said we can test offer a thousand conditions with a single drop of your blood. they couldn't do it and what we see right now is elizabeth holmes, the ceo of this company became and a contract -- became an iconic figure. paying a fine -- this feels like the end of the story for a company that a lot of people once thought was going to change medicine. julie: this theranos still exist? drew: he does exist, but they said we should down our consumer labs and then from running a company for two years. that exists as a r&d company that is trying -- that says it is working on technology. the technology has been exposed by a lot of people as what
appears to be a fraud. it is unclear what they are doing. they have office space and some money, but i do know if we will hear it anything from them again. on theand recover medical side as opposed to regulatory side, but do we know if this sec fine at accusations and how it compares to other situations like this? drew: 10 years is a long time. admittedly she wasn't running a public company before and i do think anybody would look at elizabeth holmes and say on our company. in that respect it may not be meaningful but there are serious symbolic penalties here. in addition to a substantial monetary penalty. $500,000 is nothing to sneeze at. julie: are other companies working on this at home blood testing? drew: it is kind of a pain for
patients, but it turns out it is really complicated to solve. this is not an easy thing to crack, so there is a lot of people trying to get parts of this to say that we can test a few of these things pleasing last or we can do a little bit of this or little bit of that. nobody is making the promise of change in the world overnight. payingthe person $500,000 as part of the settlement. thank you so much, true armstrong. mark: a reminder of how equities are faring in europe -- it is a down day today as investors digest the week retail sales numbers and changes within the white house. this is bloomberg. ♪ mom you called?
david westin. shery: here are the top stories we are watching at this hour. linda mcmahon joins us and what she says about the impact of tax cuts and tariffs on small business. democrats on the verge of snagging a house seat in pennsylvania. a surprise performance but republicans on edge of keeping their house majority? and the u.k. takes aim at russia, threatening to freeze assets following it attack on a former russian spy. vladimir putin says he will retaliate. we'll have the latest. ♪ david: president trump has made economic growth is top priority from the beginning and his or billy said that small businesses across the country a