tv Bloomberg Markets Americas Bloomberg March 27, 2018 10:00am-11:00am EDT
vonnie: u.s. stocks open higher than losing gains after yesterday's big rally. breaking economic data. here is julie hyman. >> consumer confidence coming in at 127.7, lower than the prior month and the 131 reading estimated by economists. the present situation index ticking down and the expectations index ticking down as well. a little bit of flagging in consumer confidence from its recent elevated strong levels. perhaps one thing affecting it is we have seen volatility in the stock market as of late. that could be something weighing on individual confidence here. amidst that volatility, we are still seeing a little bit of a
gain following the big gains yesterday that were the largest since august of 2015. momentum continuing, but we are seeing -- around in the session. if you look beneath the surface at the confidence of institutional and professional money managers, we are seeing some chinks in the armor. this is the dow jones industrial average and blue, the smart money flows index in white. what this does is tracks moves in the dow in the first and final 30 minutes of trading. the thinking being professional managers are more active during those periods of time. index hovering around a two-year low. if you go back further, you would see that. also if you saw the gains monday, we saw it only get 1.2%
versus the 2.8% advanced for the dow. that balance we see after it came way down. showing there is not necessarily universal confidence on the part of professional money managers or at least that is the inference. sectors,look at the real estate is weak. that has to do with the fact p has agreed to be a acquired by brookfield property partners which are 34% of the company. , many saying it is too low. a sample that the offer is wholly inadequate and negative for the sector, neither exciting for ggp shareholders. some analysts say it will go through anyway. you are seeing declines throughout the sector. a quick check on social media as well today.
facebook for the moment is in the green. it did bounce around between gains and losses. twitter following and -- twitter falling and snap moving higher. majority of analysts out there have a buy rating. mark: rising for the first day in five-year. we felt to a 13 month low yesterday. the sock -- stoxx 600 seven weeks. it has dropped before today's open from the january 23 29-month high. not quite that 10% correction. the stocks making up for the losses over the last four days. know near the gains yesterday by the s&p 500. deutsche bank has held talks with a number of potential successors to chief executive john cryan as part of plans to replace the manager should a
better candidate emerge. that's according to people familiar with the matter. this comes after a time the deutsche is considering candidates to replace cryan amid tensions between him and the supervisory board chairman. disagreements have flared up over strategy with the chief executive and cfo pushing for a more radical restructuring, including the investment bank. shares have been higher, still up by 6/10 of 1% today. a topic we will be talking about in great nature later on. a big m&a day. -- acquiring the specialty chemical unit. it's a deal worth 12.5 billion euro. firm partnering with the sovereign wealth funds.
shares up by 2.8% today. sticking with the m&a theme, glaxosmithklein agreeing to buy stake in their consumer joint health venture. this is days after abandoning pursuit of a similar unit put up for sale. full control of makes pains that relievers while arming novartis for a pharmaceutical operation. shares in glaxosmithklein up by 5%. vonnie: another big day for deals. we look at the global rally with cameron. up another quarter of a percent. we can definitely say that we have morphed into a higher volatility regime. can we say any more than this? wheren: u.s. stocks are they were late in the session on thursday. thattold you one week ago
10:05 on tuesday would be the previous thursday, you would say there's nothing to say about that. i don't think you can say it is a game changer. yesterday's rally was not a game changer. the selloff can say late last week was a game changer either given the desk given we do not break the low-key technical threshold. we are oscillating up and down. youoes not necessarily tell a whole lot where you will be in a week's time. end.e: it is quarter does that suggest anything? cameron: it is interesting because the signals if you look at a monthly rebound would suggest you would be a buyer of equity and a seller of bonds. if you look on a quarterly signal, it is some of the reverse.
let's not forget the bond market sold off quite a bit as well. you are thinking about the relative shift in the price of equity and the performance of equity as a performance of fixed income. fixed income has had a terrible quarter. i don't think there will be massive flows one way or the other on that basis. mark: the lack of volume yesterday, is that highlighting the surge of enthusiasm and if it does, does that mean investors may see an issue lurking over the horizon? cameron: i think it speaks to -- we arehat it is approaching months and and quarter end, it is a short week in the u.s. and europe. earnings season starts beginning of next month in earnest. you have to ask the question if you are pulling the trigger on a big equity position, where is your edge? you are likely to see lower
liquidity positions in a short week. signal you are presumably opting for is you are to position for is we don't know what the earnings are yet. thatld argue or suggest most investors don't have much of a need -- of anbang edge -- of an edge. in these hours, euro-dollar is trading now at 12397. it is perilously close to very significant a little. cameron: the 200 month moving average has been superb -- a superb pit -- superb pipit -- pivot over the last 15 years.
it has been quite a bit of a boom. it is a 1.2470. the art human being if we close below that and below the hundred month moving average, that would a pretty powerful technical signal that we are now morphing into a more secular, broad-based longer-term rally for the euro. vonnie: thank you. wonderful comments and columns. global macro strategist for bloomberg. let's get the first word news coming here is taylor riggs. taylor: a top russian officials as moscow is valid to retaliate from the announcement by the united states that it is expelling 60 russian diplomats in response to the nerve attack on a former spy in the u.k.. the minister told the russian state news agency that his country was disappointed by what
he calls the united dates's irresponsible behavior -- united states's irresponsible behavior. torussia, thousands rallied demand a full investigation into a shopping mall fire that killed at least 64 people. the blaze engulfed the winter cherry mall on sunday. witnesses reported the fire alarms did not sound and many doors were locked. a memorial for the victims, president putin blamed the death on criminal negligence and sloppiness and promised relatives a thorough investigation. new reports says british firefighters were not allowed to go to the scene of that manchester arena bombing for two hours because of questions whether the attacker was still on the loose. the investigations as firefighters were kept away because a senior officer on duty mistakenly believe there was
an active shooter situation. the commerce department says the 2020 u.s. census will include a question about citizenship status. california's attorney general says the state will sue the trump administration over the move. the commerce department says this will help the justice department in force the voting rights act which protect minority voting rights. opponents say the question will discourage immigrants from responding. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs, this is bloomberg. mark: thanks a lot. getting some breaking news on bmw. it's become the latest in a list of carmakers under investigation over suspected illegal devices to influence emissions setups in its vehicles. drivers of tens of thousands of built between 2009
dan 2011 suing bmw and its technology supplier saying they designed outlook rhythms -- they designed out rhythms to manipulate tests similar to those used by vw. they claimed the vehicles are polluting up to 27 times the legal limit according to the complaints filed today in a new jersey federal court. more on bmw coming up on bloomberg markets. this is bloomberg. ♪
for him. the upcoming ipo of saudi aramco , the ipo may be delayed to 2019 depending on market conditions. the ceo of saudi aramco spoke to reference to in the timing. as a company for listing in the second half of 2018. we are doing a lot of work to prepare the company for listing. the same time our company and the government are looking at what we are doing to make sure the company is listing. vonnie: we are joined by john sfakianakis, bloomberg's new columnists and director of economic research. thanks for joining. price either later this
year or next year, how much our hopes riding on it in saudi arabia? think is the whole strategic economic foreign policy outfitted saudi arabia encapsulated in the saudi aramco ipo. the idea is to have the largest orthern wealth fund by 2020 2022, it has to be done. fund is2 trillion basically based on that ipo. has to be considered in terms of market conditions, which means the pricing and demand and supply has to be there. so when the right time is appropriate, the ipo will happen. vonnie: as part of the vision of 2030, does this seat into every part of 2030 and how is that
progressing? john: if you look at vision 2030, a lot of things have taken place since 2015, 2016 when it was announced in terms of the fiscal planning. there is a plan and a target deficit and surplus by 2022. i think growth prospects in stimuli are coming in, the human aspect and labor force, targets and employment goals are very much in tune with the vision and i think as i say, the saudi arabia of today, there is a vision and plan. the saudi arabia of five years ago is that it was no plan or vision. there is a huge difference in the way saudi arabia sees itself and projects itself to the world , a much more friendly and open saudi arabia than the one we
knew a few years back. mark: how much did the recent corruption crackdown affect the way outsiders view saudi arabia right now? john: the biggest i would say encapsulating definition of what happened after and during the rift is that there is a level playing field. before, international businessmen had to find people to break into the system. today, there is a level playing field for international businessmen. theyey want to come in, don't have to find the pockets of patronage and crony capitalism. they can tap into the level playing field and the furnace the system is put in place. i know there was a lot of post rift andthe what this means for business, but i believe there is transparency put in place and that's positive if you are
anbang international and -- are an international investor. -- will decide whether to include saudi arabia in its emerging markets category. msbi will provide a second ruling in june. do you expect them both to go saudi arabia's way? what sort of boost to that provide for saudi arabia stock? is an excellent question. if you ask anybody in the market in saudi arabia, everybody is expecting a positive response from friday. everybody is expecting they will say a yes. that's a 90% possibility and the theet as a result of that, inclusion i think we will see another yes. most likely we will see another 10% increase in the local stock market with anbang -- with an
inflow of money. a lot of bottom-up investors are taking advantage of what's happening and the locals are taking an opportunity to invest now. vonnie: negative gdp growth right now for this year arabia andn saudi last year as well was not to hot gdp wise. there is pressure because of the rising rates, how is the economy faring? i would agree in part that last year we had a recession. the economy grew negatively. 0.7% contraction. i think this year we will see growth at around 2%, if not more. there is no longer a recession. i think a lot of the plans of the government are being put in place and moreover there is confidence by businessman in the private sector. now there is the cycle that has
to allow for the economy to grow. i'm very optimistic about 2018. vonnie: those rising u.s. rates put on -- put pressure on the saudi's. the saudi's are looking for u.s. investment in and out of the u.s.. john: absolutely. cost of capital will rise, interest rate will go up. what's happening now is interestingly the central bank of saudi arabia is taking the lead and instead of waiting for the fed to increase rates, they are closing the gap and increasing rates on their own. very good sign a they are on top of things and liquidity is being managed well. the u.s. is a big market and that's where we will see the conference in new york, there will be a lot of highlights and opportunity shown and demonstrated. the u.s. is a preferred choice for saudi's and the government does like the openness and transparency and very much so
the saudi arabia wants to see that money coming into saudi arabia from the u.s. mark: great to see you. andmberg view columnist gulf research center director of economics research. , deutsche bank reportedly considering dropping chief executive john cryan. what it means for germany's biggest lender. this is bloomberg. ♪
news. -- pasts on the discounts it negotiates on prescription drugs to about 3 million of its members. the discounts, which can amount to more than half the drug price will be passed on at the pharmacy counter. for many people next year, it promises a decision earlier this month by united health. the housing boom may be coming to an end, a new report finds prices across the city will begin falling by midyear, this comes two weeks after another report found values are already dropping at the fastest pace since the depths of the recession. brexit and tax changes have forced sellers to cut asking prices. facebook is on a hiring spree as the social network brings up its ranks of lobbyists in the midst of their scandal. facebook is looking to hire at least 11 people for policy related positions in washington. hiringpany started
lobbyists last fall after revelations of russian linked agents exploited its platform to help elect president trump. that is a latest bloomberg business flash. vonnie: coming up, we will keep the focus on facebook. we will continue with wells fargo analyst ken sena about why there is a buying opportunity for the stock. it is up one half percent. facebook shares in general are trading higher although they are giving up most of those gains. the s&p 500 is actually negative now. the vix still about 20, but not yet 21. this is bloomberg. ♪ retail.
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deutsche bank may be preparing to replace john cryan. the bank's chairman has been holding talks with potential chief executive candidates. according to people with knowledge of the matter. let's get the latest from stephen, bloomberg's german banks reporter. cryan's days numbered? >> they could be coming to an end. that is not a good sign for him. people are calling him a lame duck. investors are unhappy with his performance. -- sayifficult to stay if it is over yet. it depends on first-quarter performance. if that turns out badly for him just ahead of the agm in may, i think things will come to a head. mark: how much of the blame should rest with the chairman given that he is in charge of
hiring these chief executives? steven: i think that is a fair point to make. he was in charge of cryan at the beginning. in the beginning he was well-liked. that has now soured and the investors have put -- have been putting pressure since basically the middle of last year to find a replacement for cryan. that turned out to be extremely difficult to find someone to take that job. it seems like investors are growing impatient. we have a few analysts who say he is the problem and not the solution. it is looking difficult. vonnie: the times reports suggests the head of goldman sachs international operation has been asked. would any of these or anybody of their ilk have a better chance at deutsche bank?
difficult to say. what we hear is the deutsche bank would like someone able to speak german and i don't think any of the three you may that you named take that box. they want someone with a good relationship to financial regulators in germany as well. criteria, but -- is experiencing a big bank turnaround. it could be something deutsche bank would look at if he was willing. it does not seem he is. to find someone to fill those shoes now for a replacement is very difficult. thanks a lot, our thanks arons filling us in on that deutsche bank story. the meeting of german shareholder advisory firm dsw.
analyticae cambridge data breach has been a crisis for facebook. company stock fell 10% yesterday before climbing to end the day slightly higher. higher again today. our next guest says facebook's weakness creates a buying opportunity. analyst at wells fargo security. i'm not sure if you would take credit for the whole 10%, but you made a point that this is a buying opportunity because facebook tends to bounce back. is that going to be forever true? ken: we have to get used to these headlines being the new normal. a narrative is being created and i think as you see more investigations, it will be in the headlines persistently. as we look at the selloff that happened given the increased selloff from the ftc notice of
investigation, i think investors should be stepping back and saying we understand the news out there has been set, but there will be investigations, it will be uncomfortable. as we look at that in the context of where stock is sold off, can we get close in terms of affecting users and advertisers and we don't think we can. we see a company still traded at discounts. with still better growth prospects. i think there are some things facebook is going well. i think instagram is a big part of the story. a lot of their usage will ship to instagram. from the contact us context of should -- it really should be expected at this point. there is an opportunity to be buying here. vonnie: investors did get a shock. now the national association is not just some individual ladies,
the ftc which is normally confirming came out and also we have legislatures around the world, the u.k. parliament is calling on mark zuckerberg. it feels like at some point this will impact the amount of people and advertisers that want to be there. it doesn't. and there are a lot of people that want to use facebook as a tool for their connection. to say the data is not somehow being used for the benefit of the platform is a bit naive. it does make sense to review data policies more broadly and think about what should we be comfortable with with these platforms collecting and reinterpreting and using. i think when this data harvest happened, clearly we are at a time where facebook was collecting more data than expected. it was trying to find tools that could help advertisers. certain uses of the data and we saw that occur. policies have since changed and i think for facebook to explain
how policies have changed and how they can continue to change to make users feel protected, facebook is able to take care of the platform more broadly in terms of others trying to benefit from the scale as well. i think it makes sense. are lookingyists for another 11 in washington, d.c. including privacy in public policy managers. clearly that is cheering investors. is there anything that would have investors turned away at this point? ken: from an investor standpoint, they are -- they should think about what other shoe could still fall. it still comes back to the core issue of how the data is being collected and used. there have been policy changes that have already aimed to deal with the types of use we have seen from cambridge analytica. so what other abuses could come from that? it is worth having that discussion.
facebook should be held accountable in terms of the inquiries happening now, but at the same time, you are looking at a company treating a discount to the entire space has arguably better growth prospects than anything out there. if you are an investor, you are thinking about where you want to invest in should you buy this. you have to ask yourself, what will impact this business based on the news now? will people truly stop using facebook and instagram? that is something that last themselves. will advertisers stop in addition? mark: what does it take for advertisers to stop using facebook? ken: i would say still when you look at advertisers, there are several who are quite vocal about this. 6 millionas advertisers and if you think about facebook's ability to target messages person to person and serve them something in local markets they can't currently get.
facebook is still a very important partner for advertisers and i think until there is real concern about the contents of the ads being placed next to which i think will be more measured around as well. i think they continue to use facebook. mark: what lessons can mark this?berg take away from sheryl sandberg said maybe she was late in reaching out in communicating, appearing in front of the public. mark zuckerberg some say was slow to. are there lessons from this that the two top people can learn? ken: i think maybe they were a bit late. many of this test us were late in understanding the severity of this. -- most of us were late in understanding the severity of this. wasink to see how it misused is a good lesson for all
of us. how much of that was recognized at the time and appropriate steps taken, we are still finding out. at the surface at least, it seems like the policies were changed and at this point, that needs to be made clear. from the standpoint of mark and cheryl, it is important to express their apologies for the current. i think it's important to reimpose size they are trying to create a platform for the users, for the individuals, businesses. mark zuckerberg is still acting like he is not the one who should be in front of congress. he is acting like it is a favor being called before. the legislative branch of the united states of america for potential breaches of their citizens privacy. ken: i don't think that sounds like a very fun experience for anyone so i don't blame him for being reluctant.
certainly he is going to have to go at some point. he will have to answer these charges. when you look at the sheer number of inquiries and investigations and interviews that will come out of this, i think facebook is trying to say we have to somehow say we are not saying facebook is not going to participate, but we are saying mark in all cases is not going to be able to. they will need leadership through this. mark will have to answer for it and inter public flogging. i think facebook is trying to make itself available as well and make sure people who knew the information the legislators are looking for have the answers. vonnie: i hope they get them out there soon because i have not seen too many. sena, wells fargo securities managing director and global internet analyst. mark: coming right up, president trump's russia move. the decisionut to
kevin: the results ever perpetrated throughout the world as well is on capitol hill where lawmakers are in recess, but the president turning bipartisan praise for his decision to expel the 60 russian diplomat's piece in the united states and many considered to be spies. he is closing the seattle consulate to russia because of its close proximity to a u.s. naval base as well as to a boeing plant. the concern being they were tapping into some things out there on the west coast with regards to silicon valley. all of this has earned praise from lawmakers in the republican and democratic parties as well as part of a concerted effort on the european and nato allies administration. he consulted with nato allies before ultimately reaching the decision to do this. continue,ade talks what will be the next salvo in the trade talks? kevin: i want to pull up a tweet
he blasted out earlier. he says trade talks are never going better and for the first time the united states has a negotiation strategy that will get a better deal for american workers. that said, this has drawn some criticism not just from republicans on capitol hill, but within the administration. there has been a divide with regards to the trade policy between the likes of people like peter navarro and other folks like wilbur ross. led the-of-war has counterparts around the world to really ask themselves whether or not this is rhetoric from the administration or if it is a negotiation strategy because you look at something like more than 70% of that market has now been qualified for exemption. when you look at what was put forth on china, the question comes whether or not there will
i wanted to see what sort of things were in sale and it's a real mix. there were some puffer jackets, a lot of it were things like ripped jeans, floaty dresses, jumpsuits, just the things you don't want. -- refused to wear some ripped jeans. an h&m thing? it is a weather thing? what is to blame? andrea: all clothing retailers are having a terrible time in europe particularly. has had a particular fashion fail over the last year. it is a bit of both really. mark: how does it set itself right? andrea: the key thing is it is under the pressure. h&m used to be chief -- cheap chic.
it does not look that cheap anymore. it has to make itself either more special so it can differentiate itself or it has to bring the price down. piece,ou said in your , don't price-earnings try to the index. zara has had this issue as well. you've got companies online getting the hot look to the customers pretty quickly. erodesu roads -- that these companies. vonnie: the thing about primark is that it doesn't really have the aura of being cool where these other shops have that aura. it sounds like they were always on top of what was next fashion
wise. are they losing that edge? andrea: they are indeed. i think that's really changing. i went to a primark on staten island and it looked pretty good. considering it has cheap pricing, quite impressive shop fittings, it all at pretty good. door and an h&m next that looked pretty shabby in comparison. mark: do they need to hire -- vonnie: do they need to roll some heads and higher fresher faces? andrea: that would help. i think it's about getting back to the basics. retail is not rocket science. if you have the product at the right prices, you will sell. look at the likes of primark who won't be immune to the weather either, but they had a pretty good time of it lately. mark: target, sales growth 25% from e-commerce and you -- new business this year. 20%, how was it
doing when it comes to online e-commerce new business? andrea: that is improving. credit because so many retailers just cut costs. what h&m has said is you can't get any bigger, you can't grow just by slashing costs so it is adding new business is doing well. they are not doing enough to move the dial and the core is so challenged. mark: andrea, thank you. a new rift is opening between germany and france. over just had to deal with president trump's threatening tariffs. where is the issue when it comes to how germany and france are treating these tariffs from the united states? >> at the moment, the issue is fundamental.
france is taking the view that europe should not make a concession at the moment and should be united, try to unite itself with china against the u.s.. whereas germany says we are in a situation where we need to try to find some agreement with the u.s. and need to see whether there is some concessions can be made to avoid a trade war. is sounding out the car industry in germany which is a key industry for the nation. is she having any luck? it is surely about the car industry. the fear is that tariffs on aluminum and steel will's deal -- will spill over and there will be a spiral of measures and countermeasures and in the end trump will against the car industry. in order to prevent this or any
kind of european trade war with the u.s., they are thinking -- one thinking is maybe we can find an agreement on car tariffs. but here, it is a -- it is complicated because it is a wto agreement. it has to include other sectors as well. this is far from a done deal. nobody yet knows how this will end. vonnie: at what levels are the talks taking place? the governmental level or are ceos talking to each other? -- went to the u.s. to talk to wilbur ross. they do not say whether they concretely talked about the car tariffs, but after the meeting, he was much more optimistic that
a deal can be struck so they must have had some kind of venue in mind. we are hearing germany is pushing on the european agenda to get some kind of concessions on tariffs in some way or the other. any are trying to get agreement on a european level with the eu parliament over the next month. surelyrley they have -- they have talked to german car manufacturers on whether they would agree with car tariffs. vonnie: there is a lot of lobbying going on on the part of the companies because as much as they are in competition, they are also against tariffs in general altogether. what happens next? is it wait and see if an exemption is given out? an intensere is now
phase of finding some common ground in the european union and months from the eu commission on trade is responsible for this. it is not just finding a common ground, it is finding the legal base to change this. it is also about china. mark: thanks a lot. speaking to us from berlin. coming up, it is the european close. we are less than 35 minutes away from the end of the session. stocks rallying for the first day and five. this is bloomberg. ♪
quinn. this is the european close on "bloomberg markets." mark: here are the top stories we are covering around the world. stocks higher in europe. investors file back their fears about hostility of an all-out global trade war. billion acquisition of the specialty chemicals division adds to the string of deals making 2018 the year of the big buyouts. the chief executive of deutsche bank has been talking with several chief executive officer candidates. have a look at what's happening to european equities. stocks gaining for the first day in five after falling to a