tv Bloomberg Markets Americas Bloomberg March 29, 2018 10:00am-11:00am EDT
london, i'm mark barton. welcome to bloomberg markets. vonnie: u.s. stocks rebounding ofthey head towards the end a tumultuous quarter. equities in europe are rising today. bloomberg positive julie hyman and making economic data -- we have some breaking economic data. julie: the confidence survey is coming in from march, the final really being revised a bit lower from the original reading on this sentiment index. as we know, the consumer confidence index has been generally strong of late, although the most recent ones have been a bit weaker. even with that revision to 101.4, it is still the highest level since 2004, even with the volatility we have seen in the stock market. the job market perhaps
offsetting concerns about what's going on with stocks. when it comes to stocks, here we are in the first, the dow in the s&p 500 trading higher on the day. the nasdaq is still struggling to gain traction as we see weakness in some of the larger cap tech stocks. perhaps not the wholesale selling that we saw in the first session, but that is where we saw the struggle. speaking of, the first quarter was one for many stocks. majore got a look at the and our witness quarter and the s&p and the dow, and unusual moves were gains -- barring unusual moves were gains today, looks like they will post their first negative return on a quarterly basis since 2015, when we saw all three fall. even given the turmoil in tech recently, the nasdaq is still set to gain on a quarterly basis. i also want to take a look at the imap today, to see what is
leading gains in rebound for oil prices. consumer discretionary is in the red. why? likely because of one stock. amazon is still struggling today on this tweet from the president, confirming that he is company,oking at the or as asked year reported, obsessed with the company, looking at its relationship with the u.s. postal service, though that is a bit confusing. facebook has been under scrutiny in recent days and is bouncing back today. i wanted to mention that when it fedexto amazon, ups and seem to be rising. interestingly enough, macy's also rising, as is the maker of calvin klein and tommy clothing.
another big client, amazon. mark: 19 minutes left in the thursday session, last trading day of the week before the easter break. we are heading for the first weekly rise in three and the second month since august of last year. of biggest drop since march 2016. that puts the last three months in perspective. as does this, the stoxx 600 enters correction territory this week, falling 10% from january. the index 12 month price ratio hit the lowest level since june of 2016. the dividend yield has surged some 330 basis points above .ermany for morgan stanley, european valuations are looking very attractive price with estimated earnings. is the blue line moving in
different directions mark cme, up agreeing to purchase michael slager's next group with a transatlantic deal valued at 3.9 million pounds, and trading foreign exchanges. cme and will over trading and treasury futures, brokering the largest market for trading treasuries. cap better known as its i think trading volume for a trillion dollar market. today chart shares making the big move yesterday in anticipation of the deal, up by 9% over the last couple of days. it has been a busy week for m&a. and they are in talks to create a new auto maker to trade is a single stock, according to people familiar with any current alliance between one corporation.
currently owns a 15% stake in its french counterpart. could be a tricky counterpart -- tricky one to push through. they may be reluctant to relinquish control over its stake or have its position water down. shares are up i 6% today. by 6% today. a bloombergrding to school, the companies are said to be in talks to merge in a deal driven by carlos ghosn. floated nearly two years after one of the fatal accidents involving one of its vehicles. only adding to tesla's list of challenges. the big auto, let's start with remote nissan. -- renault nissan. this is a real head scratcher. owned by thehat is
french government is 15%. nissan owns 34% of another company. what does this look like? pretty messy, as you say. probably why they would like to clean up these holdings. if there's one person they can pull this up -- all this off, it's carlos ghosn. the hard part about this is the french government owning 15%. a little while ago they even owned a couple of points more. this is an active investor at this particular table. the question really is -- will they want to retreat from that? will they want to see their stock water down? the french government typically takes a fairly robust approach to corporate action. they like to be involved in the viewndustries and they automotive certainly as such. that will be very difficult for the negotiations with the french
government. on the other side the japanese government may not have a stake, but they will be keen to see where the new entity will be based. japan? paris? something entirely different? the aim is to tidy up these and make sure that investors have a clean asset that they can trade, not several , smoothing out the ownership. in the end, if it did happen it would be a conglomerate the french and japanese input as well. what would that do to global competition? >> that is probably what it would look like. it would be a company that packs a punch into the global market. we are seeing more global conglomerates emerge. they are probably best in class in that regard, lots of plates spinning at the same time.
they are a force to contend with. we have seen them purchase a stake in daimler. lots of movement out there. caree these big global brands come together as they try to bulk up. one thing is clear, they will have to spend a lot going forward, spending a lot to go into the ev, the autonomous and car sharing future. in order to do that, they need a critical mass. to be just a local and regional player won't cut it anymore going forward. if and when this happens, will carlos ghosn remain number one? >> that would very much remains plan. this alliance has been around since the end of the 90's. it's a very successful, long-running alliance.
whenever nissan performed well, alt,lped to prop up for an and vice versa. he has done well at that. he just had his contract extended. he has said that he wants to solidify the alliance and oversee that. this might be his swan song. he probably has a couple of more years to go, but he wants to make sure that whatever he leaves behind he has overseen the transition and can put the pieces together in a more logical order. out of the big global automakers, what's left when it comes to mna? fiat chrysler is often talked about. theybig deals are left if combine under one stock? >> there isn't that much left on a global scale. daimler seems like an obvious target. they do not have an active anchored share. very dominant family
involvement, it's very difficult to get into that. there are niche players out there, like aston martin. for our he went public as a standalone company. we might actually see some blocks fall or small parts break off the big conglomerate, but there isn't one big company out there. the one that everyone would like is tesla and you mentioned that there are issues there, so we shall see. mark: good timing there talking about tesla. vonnie: as you said, let's get back to tesla. for that we are joined by an .nternet analyst, romit shah you are taking down your price target. why? >> we lowered estimates today based on weaker data around model three production, but we are quite bullish still. it's interesting that the market seems ready to throw in the towel on this company right at
the point where they are about to see their model three vehicles ramp into production. ofy have a tremendous amount momentum going into this major shift towards electric vehicles. vonnie: are you confident that they can get to what they promised? deliveryey have a q1 update coming next thursday and i don't think they will hit the 2500 per week announcement or guidance, but i think that exit .- expectations are too low the street is looking for them to come in a closer to 2000 per week and i think they will be better than that. the negative news surrounding autonomous driving in the last week, with tesla or uber, have you started to autonomouse whole
driving experiment? bernstein and: and group have been quite outspoken. said they are questioning autopilot leadership. are you having doubts or not? >> i'm not. autopilotpromise of is really that you can save a tremendous number of lives. each year in the u.s. you have about 40,000 fatalities and what tesla has said is that by using autopilot, you can reduce the risk of an accident by two times to three times. it won't eliminate the risk. that's something that investors and regulators need to come to terms with. using self driving technology doesn't reduce the risk of an accident to zero. but if it reduces the number of fatalities from 40,000 to 10,000 or 20,000, that's a very positive outcome. are you questioning the
tesla technology? bernstein says they see a large risk in the self driving equipment capabilities that tesla has been touting to customers and it may not meet the eventual government standard . you clearly are not worried about that. romit: no, this technology is evolving very quickly. you know, they started with autopilot and they quickly moved to autopilot two. we think that over the next three months you are going to get an update that could provide level three autonomy. you know, over the course of the next 12 to 18 months, the technology is going to improve even further. in thevery early development of self driving technology. it's a wonderful feature. if you have happened to drive a tesla and used autopilot, it's still very early, but i'm very optimistic about this technology.
it really feels like a faith-based investment here. you have title your fourth as .eeping the faith we have 10 buys and 10 cells amongst the analysts that cover it. looking at the standing, it's pretty substantial if you look at tesla equity. you can see that the principle is in blue and at a loss of repayments coming up. faith,e is a little less do they get into trouble fast? they need to figure out model three production and ramp up production to 5000 vehicles per week. they said that they could get there by the end of the june quarter and we think that even if it takes until the and of the year to get the 5000 cars per week, they won't need to raise capital. once they get to that 5000 hurdle, then i think you got a clear ramp up to 10,000. look, this is a multibillion
dollar company that is growing. we think they will grow an excess of 70% this year. that's really unprecedented and it 12 a path from call billion last year to $50 billion in revenue by 2021. it's quite tremendous growth. at the current price, we think there is still a lot of upside to the shares. involvesll of this terrestrial concern, but what about the celestial concern? does this provide a real stellar hope for his company in other areas? talk about how this informs everything else. is that think division you have solarcity, which provides panels that capture energy from the sun. and that energy is going to be used to power all the model s x and free vehicles with the trucks.
to provideare going a lot of data that is going to go back-and-forth between the vehicles and the satellites provided by spacex. that's the -- that's the world we are looking at over the next several years. it's an interesting concept. scheduled for tomorrow morning. thanks to internet analyst romit shah for coming in. romit: thank you. billione will pay $5.4 to create a trading giant. details on that, next. this is bloomberg ♪ -- bloomberg. ♪
mark: live from london, i'm mark barton. cme group reaching an agreement to purchase their next group, valued at $5.4 billion, it would create a transatlantic trading venue spanning futures, treasuries, and foreign exchange. joining us now, dinesh. i thought this wasn't meant to happen, cross-border transatlantic deals. i thought this was impossible. it happened. dinesh: it has. thanks for having me. thought that this would be the big cross-border stock to trade over. but you know, this shows the
ambition of cme on one hand and the interests of a business like nex. paying a high premium. 49.2% over the closing price. could someone else come in? >> there's a good chance of someone else coming in. this is a business interested in trading, pretty much. 80% on trading volume. you could think about a business in the market and think -- would that make sense. you would think that lse would be less interested in trying to merge, with their lack of luck. many of people have had that lack of luck. cme is offering that ability and you could argue that it is a bigger plan, taking on someone
who has a track record in that space where it's not easy to do deals. i think that potential suitors will have that in mind. otherwise i think it's a good price. about brokerss and how this will add to the cme portfolio. dinesh: as i mentioned, cme is a leader in the futures market and they are gaining the ability to kind of bring in the platform for futures and cash market together. i think that is a big incentive they must have seen in this deal . seems like a clear rationale. thanks for bringing us in on that fascinating deal. bloomberg west dinesh nair. vonnie: the u.s. 10 year yield is at 6.7%. pretty unchanged from yesterday. the dow is up, as is the s&p
is "bloomberg markets." i'm mark barton, from london. vonnie: and from new york, i'm vonnie quinn. the bloomberg business flash. a look at the biggest stories in the news right now. president trump has said that he has had concerns about amazon since his -- since before his election, saying that they pay little or no taxes to state and local governments.
he also accused the online retailer of putting thousands of other retailers out of business. the report is that the president wants to impose further regulations on the company. their market value plunged $53 billion yesterday as part of the wider tech selloff. more job cuts are coming according to people familiar with the matter. the company is cutting about 100 employees on the advertising side of its business. the final step in the restructuring process, set into motion in the fourth quarter. americans increase spending by 2/10 of a percent in february, while their incomes were boosted by increased wages. the commerce department said that income rose 4/10 of 1%. consumer spending accounts for about 70% of u.s. economic activity.
that is your latest bloomberg business flash, vonnie. barclays shares, reversing losses as the bank reaches a settlement with the u.s. department of justice. we will have details, next. markets, now. the this is specifically the nasdaq 100 index. we are still seeing some losses here. amazon and netflix are down another 2.5 to 3% today. seeingflipside we are some reversals, as facebook is up almost 3% and shyer is adding a 3% on the deal news today. thursday before the holiday weekend. this is bloomberg. ♪
in london, i am mark barton. let's check out the "first word news." ylor: armed of officers are becoming more prevalent at american schools. the national center for education statistics say armed officers were present at least once a week in 43% of all public that is compared to 31% of schools a decade before. last months mass shooting sparked debate over whether teachers and other school officials should carry guns. in venezuela, human rights leaders are calling for investigations into a riot and fire that left 68 people dead at a police station jail. the prison observatory said it has been warning for several -- for some time about deteriorating conditions in prisons including hunger and overcrowding.
the sole surviving suspect in the 2015 terror attacks in present -- in paris will learn his fate on april 23. he is charged for his part in a police shootout after the terrorist attack that killed 130 people. federal prosecutors are years for he and an accomplice. -- is excited to be back in pakistan for the first time since she was shot in 2012 by taliban militants angered by her championing of education for girls. old thatnly 14 years already known for her activism swarmediban gunmen the van she was riding in before shooting her in the head. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120
countries. mark: in banking news, barclays has agreed to pay $2 billion in civil penalties to settle a u.s. investigation. stephen morris is here, u.k. banking reporter for bloomberg. this paid off didn't it? n: most banks stood in line but barclays took a contrarian bet. takedecided they would say us to court because we don't think we should be paying more money than this and it is -- it has paid off. we reported they wanted to cap the penalty and that is exactly what happened. this goes in the good newsletter, doesn't it? stephen: it is good news for barclays. this is a victory for the bank strategy and its legal team.
we have a different president now, different people at the department of justice and there has been speculation that they are sort of less into getting eye-catching settlements from foreign banks than they were in previous administrations. vonnie: the investigation was targeting 36 deals involving $31 billion worth of loans and half of those roughly defaulted and that is why the doj was investigating in the first place. come?ere more fines to stephen: there are. royal bank of scotland still has to settle and indications are that will be much larger, $6 billion or more. this is cleaning up the last ones but certainly for barclays, this does mark a milestone in recovery from their misbehavior.
vonnie: the new activist that has been getting in the barclays, any reason to believe there was pressure to come to the settlement or that he was really telling the bank needed to move on? bank hasi think the been settling this as long as possible but there have been issues and trying to get these through. jes staley would have rather it this been settled immediately -- jeff daily would have rather it had been settled immediately when he took over. mark: disco executives were targeted, weren't they? target: they managed to to the people responsible for miss selling these toxic mortgage bonds which fueled the mortgage crisis back in 27 -- 2007 and they agreed to pay 2 million pounds between them. -- is thisis a going
going to affect business? clearn: barclays needs to its misconduct before can start returning capital to investors which in turn is what will raise .he share price no indication as to whether there will be a big penalty or any punishment for former executives yet, but they are still not out of the woods yet. vonnie: this $2 billion fine is substantial, but there -- is there any loss for the doj -- the boj? -- the doj? stephen: early indications that the doj wanted more than $5 way, it is an a victory for the department of justice but in a way it is also a victory for barclays and hopefully the money will go to
consumer relief and helped draw a line under the scandal which is one of the most costly in history. mark: any idea when that cloud is going to go away? stephen: the investigation into jeff daily's pursuit of a whistleblower, we are now reaching the year anniversary of that and have heard nothing from the u.k. regulator. him inll be affecting his day to day job and he will want to see that resolved that we have no indication of when they will be done. mark: stephen morris, u.k. banking reporter for bloomberg news. vonnie: coming up, saudi arabia celebrates. why the country just received secondary emerging market status and what it will mean for the kingdom. ♪
mark: live from london, i am mark barton. vonnie: and i am vonnie quinn. -- has announced it will add good newsia to the -- for the kingdom and the crown prince who has been touring the united states. let's bring in the founder of a washington think tank. you have been in the middle of this. we see someone who is very likable, enthusiastic and charming. at the same time, a crackdown in saudi arabia on businessmen and officials. >> a lot of people see the
enthusiasm and drive, but change is controversial. -- an example is the stock market, saudi arabia should have been part of these indices 15 years ago. it is the largest stock market in the middle east. iny have been very slow making the legal and structural changes required to get into these indices and now things have been accelerated. a lot of things are being accelerated. the changes controversial and you have winners and losers -- the change is controversial and you have winners and losers. there was a high level of energy. there is a lot of change and it is controversial.
vonnie: where is the line in the sand? everything is copacetic with the united states, a lot of positive talk. at the same time, there are underlying conflicts like nuclear aspirations, the war in yemen, israel and palestine. >> there are. the relationship with america is good, very solid. thatmuch on the same page saudi arabia is worried about foreign policy with iran. the crown prince is caring out -- carrying out a lot of initiatives at high-speed that are attracting a lot of interest. some of them work, some of them may not work. ideas and energy, rather than trudging along. mark: how soon before we see a breakthrough in whether it is crisisen war, the qatari
or the israel-palestinian issue? ali: i don't see a quick break through on any of those. saudi arabia has expressed willingness to sit and talk about a political settlement with regard to yemen. qatar, it is not something -- the cost is borne disproportionately, so they are willing to wait it out. israel-palestine, i don't think people are optimistic that much can come out of this new peace initiative that everybody is talking about. 2030, whats vision aspects of this to you not agree with? i gather you're not a big fan of the megaproject like the new tech city. ali: i worry about those. they are very large and one wants to make sure that billions
of dollars are not pumped into megaprojects that have an indeterminate return. so far, the government has not been open about the details of that, the economics of a city like that. how is it going to raise that money? i understand a large portion of that money would be from third parties. if that is the case, that is good because third parties do their due diligence and do their homework before they invest. the more you bring in third-party investors, the more you have a check and balance. has gone from doing nothing for 30 to 40 years which was frustrating to a lot of activity. it is good, but the stakes are going to be made. the one thing you see is the government has a willingness to recognize mistakes and correct them. it has done that twice already.
it has reduced benefits for government employees which is , the reversalle six months later when they saw political and economic impacts were very negative. mistakesbout to have and success. vonnie: how do international relations get managed, going forward? china whichnce tour has been very active in saudi arabia? ali: i think he will. china is important and it is probably the largest buyer of saudi oil. there are talks about building on that. the same with japan. vonnie: what is the next five years going to look like? are you going to see much more internationalization of saudi arabia's market?
theoretically, the saudi economy could open up phenomenally in the next five years. aramco i feelhe will be listed on the saudi stock exchange and that will be very positive for the saudi stock exchange. it will attract money, and analysis and journalistic interest. the whole issue of having it dual listed is being rethought because the complexity -- in this industry, if you want to take a grocery store public, it takes two years. if you're going to take the largest company on earth and make it public, it is immensely complex and that has been underestimated by engineers in aramco. it cannot be done easily.
i think the listing will be on the saudi stock exchange, but that will attract tremendous inflows and interest and encourage peripheral development. vonnie: briefly, describe to us what the saudi crown prince's is.omic vision ali: he wants to attract foreign investment. that is not mean you are leaving the oil sector. part of diversification means going upstream in oil. refining more, developing more, turning into more products rather than just exporting crude oil. also, peripheral industries that can benefit. solar energy, which was just announced. a very ambitious solar energy product -- project. a number of things make sense and a lot of ideas are being put
mark: live from london, i am mark barton. vonnie: and i am vonnie quinn. this is bloomberg markets. mark: let's talk about brexit. theresa may is on tour. her trip marks one year since the u.k. triggered article 50. in u.k.f uncertainty businesses over how they will have to change to continue trading. we are joined by and the ross thomas, bloombergs brexit editor -- bloomberg's brexit editor.
paint for us how this is going to look in a years time. emma: the divorced bits are more or less sordid, but when it comes to the future relationship, the u.k. has not even presented anything that the eu feels he can engage with, and so one of the case scenarios is not a huge amount is decided. we get to the autumn and the divorced deal which is along the line of what the eu city thisning is dropped and political statement that lays out in broad brush terms what both sides aspire to, and then it gets blocked by parliament because parliament does not dare orng in the rebellious prompt an election and also they don't dare provoke the
alternative to theresa may's deal which would be this chaotic no deal scenario. then we leave and the hard work starts and that is when they get down to the nitty-gritty of the trade negotiations and that is realization -- when the sink -- when it sinks in and you will probably have another transition period. once you've got the trade deal, then you need the phasing in period. means we are still in essence in the eu even though we are not in the eu. emma: the iod is calling for it already and it would be sort of standard wto stuff where you know where you are heading and you have this implementation. startm saying is when we trading under the new regime, it is still a long way away. the thing to watch out is there
is an amendment waiting in the wings of parliament which could change the course of theresa may's policy. mark: another referendum? that is option number three. emma: what would this achieve in terms of -- it is not a given that a second referendum would produce a different result. there is a campaign for a second referendum that is gaining in strength but it is not entirely clear that it would result in a different answer. mark: emma ross-thomas, bloomberg's brexit editor. vonnie: we seriously considered a countdown clock. it would be a long one. here in the u.s., president trump has fired veteran affairs secretary david chilton. he faced -- david shulkin. he faced criticism. president hasn't -- the
president has announced his personal physician to take the reins. we are joined now by kevin cirilli. at what point will personnel changes be done? kevin: i don't think they will ever be done. what is interesting about now former v.a. secretary shall can -- shulkin is he took out an op-ed in the new york times and said this is about his vision for the v.a. and that is a very contentious issue and policy debate about what exactly -- what actually happened to veterans health care. vonnie: we have a quote here from him. a recurringby thought, it should not be this hard to serve your country. just had -- just add him to the list of people who have left the white house. kevin: in terms of policy, you are not going to see a shift in the type of policy that president trump is advocating for, nor are you going to see a
change in the type of noise coming out of washington. bolton has a lot of conservative allies within washington, d.c. someone who is much more hawkish. in that regard, the president is still receiving the type of briefings and the types of knowledge from a diverse pool of conservative thought, but it is not likely to change the trajectory or policy implementation. looking at the regulatory front with community banks, that is still on a separate track that some of the noise coming out of the white house. noisen some of the coming out of the white house. vonnie: at the same time, you do have some policy priorities. the president is going on tour to talk about infrastructure. kevin: infrastructure again. i have lost count of how many times it has been infrastructure weak. -- infrastructure week.
i can tell you they want to get something of that done. lower of provident -- lou ure of private investment. gauge long-term strategy, i am looking at what type of democrats are likely going to get elected should something like the house of representatives get flipped in the midterms. centrist democrats, if a wave of them are part of that majority, they are not likely to back impeachment and that would mean other policy items such as unity banking, regulatory relief or even additional tax reform tweaks might be able to get done or something like gse reform right after the midterms and that is what we are looking at. senator doug jones, the democrat who won in alabama is very different than senator elizabeth warren. vonnie: the president still has
steve mnuchin and wilbur ross as well, front and center. , regardless folks of what people think of their style, on substance, they are much more in line with what the business community has likely put forth. someone like peter navarro, very different. vonnie: i understand you are news houring the -- -- balance of power. we have the european close coming right up. this is bloomberg. ♪ retail.
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from bloomberg's european headquarters, i am mark barton. vonnie: and i am vonnie quinn. this is the european close on bloomberg markets. ♪ mark: the top stories we are following from the bloomberg and around the world. the markets higher in the u.s., rebounding on the final trading day in what has been a volatile program -- a volatile quarter. barclays agrees to pay $2 billion in civil penalties to settle a u.s. investigation into its marketing of residential mortgage-backed security. a look at what is happening to european equities. the final trading day before the easter break. stocks heading for the first weekly rise in three.