tv Bloomberg Markets European Close Bloomberg April 18, 2018 11:00am-12:00pm EDT
european close on bloomberg markets. ♪ mark: here are the stories we are covering from the bloomberg and around the world, geopolitics softening today as president trump reveals the cia director mark -- mike pompeo travel to north korea to meet kim jong-un. russian president vladimir putin is seeking to dial down tensions with the west, ordering officials to curb their anti-u.s. rhetoric. u.k. prime minister theresa may faces a new brexit challenge. ready to defeat her flagship brexit bill. have a look at european equities, rising by the smallest of amounts with the highest day since february 27. sterling is down by -- is down.
sterling, the reaction we saw from the inflation data out of the u.k. today, inflation with the weakest level in a year in march, the boe preparing to raise rates, some suggest but what does it mean beyond may you -- beyond may. lineill see that the blue is average wages, yesterday rose 2.8%. that is fascinating. core inflation also an interesting statistic. the lowest rate in a year and could weaken the case for the boe to raise rates twice this year. sending sterling lower. bond yields are lower as well. let's talk about a story we saw
in the u.k. today, hammerson, shares of 4%, an offer to buy a property, it would have greeted the u.k.'s biggest shopping mall owner. try tog mall owners focus on premium properties. the decision announced days after a company abandon its pursuit of hammerson, a deal that would have created one of the biggest retail proper death property owners in europe. -- property owners in europe and heineken shares down. dampeningan winter demand for heineken beer 31st quarter with shipments up 4.2%, below analyst estimates. the cold spell in europe reducing demand in markets like france, spain, austria, mass-market loggers using --
losing ground to more fruity beers. the weakness in europe upsetting a strong performance in asia were heineken's brand has been driving growth in markets such as vietnam and cambodia. announced,he heineken, 90 minutes left in the session in the u.s. >> cheers to you as we had the heineken discussion. stocks in the u.s. extending gains, when we spoke one hour ago the dow was down three point in the red and barely in the green but holding onto gains. closely watching commodities. you heard the inventory numbers, 30 minutes ago, let's look at oil, which took a little bit of a leg higher but has zigzag since with a gain of 2% and trading at its highest since 2014. to break down the numbers, we
saw crude drawdown of over one million barrels and gasoline and distal it drawdowns. the total of oil and refined products inventory decline every week except one since late february and total petroleum stock piles in the u.s. the lowest since march of 2015. and the fact we have opec meeting this week in saudi arabia, and there appears to be a decent amount of optimism they will come to an agreement on new production targets that will be positive for oil prices. that has led to the rally we see. and the dripping to a rally in oil -- contributing to a rally in oil stocks. oil large caps, exxon, chevron, eog, participating in the game. we are watching industrial metals. here is the commodity index, precious metals and gold, industrial metals, and the big rise we have seen.
it has to do with russia sanctions. ahead of the sanctions, it looks like global companies are scrambling to get aluminum and hand. seeing the prices spike. and many companies that produce aluminum, the raw material and aluminum spike, and other industrial metals. rio tinto and others all rallying. vonnie: thank you, julie. president trump has confirmed mike pompeo made a secret trip to north korea to meet kim jong-un. they met to discuss a possible summit between the leaders. the focus will be on north korea's nuclear weapons. the president said denuclearization will be a great thing for the world and north korea. joined by our national security team leader live in washington. how much of a surprise did the
as visit to north korea come a surprise to national security complex? >> it is a huge surprise. this is the highest level talks between the u.s. and north korea in almost 20 years, since then secretary of state madeleine albright went to north korea at the area end of the clinton administration. a sign the meeting is likely on. there has been doubts, the way the president almost casually announced that he would be willing to have a meeting with kim. doubts whether it would take place or too many roadblocks. the fact he felt confident enough to send the cia director to pyongyang to meet with kim jong-un is a sign they are laying the groundwork, trying to figure out what some of the details would be, what the deliverables they say may be from this kind of meeting. to plan a formal agenda. vonnie: will we find out
anything that went on? the atmosphere in the room, how many people came with mike pompeo and kim jong-un? are workingde, we very hard to get those details, how the trip came about, what took place, what the atmosphere was? -- it gave theo u.s. the closest look at the new -- relatively new north korean leader, in power for seven years. the contact with the u.s. has been limited so he is the new personality for the u.s. to get a sense of how the personal dynamics will work between kim jong-un and president donald trump. president trump is someone who puts a lot of stock in his ability to make a personal connection and to charm people. that will be one of the top goals going into the meeting, whether they can make the
relationship work. mark: i had of a donald trump and kim jong-un meeting, a meeting between the south korean and the north korean leaders next week. we are hearing rumblings about plans to announce the official finish of the war. what is realistic when it comes to the meeting between those two leaders? >> there have been talks in the past between north korea and south korea about reaching some kind of a peace treaty. those talks, after the announcement, never get far. countries that are technically still at war. it would be a big deal if they could reach a formal peace agreement. focuss. and north korea's is the denuclearization of the korean peninsula and kim jong-un knows that the main reason he is able to have these meetings and get the attention he has is because of this nuclear weapons. and his ballistic missile
success over the last 1.5 years. those are very competing vision, the u.s. and south korea would like to see these nuclear weapons removed from the peninsula while north korea knows that is why they are here in the first place. vonnie: who may have an interest in moderating or being a broker if a summit were to happen? the nine countries able to handle it? >> a lot of interest, hearing of a number of european countries, including switzerland, geneva, we know can jump in went to a boarding school -- kim jong-un went to a boarding school in switzerland and may have a personal connection to going back. in the past, you expected these meetings to take place close to either north korea or south korea, because kim jong-un's family does not historically like to go into airplanes and have taken trains when they go somewhere else. kim jong-un, when he went to
beijing, late last month or the middle of last month, he took a heavily fortified train. .e has flown before, we believe that opens up the possibility of europe, singapore, southeast asia. it can be dangerous to fly if you are from north korea. thank you. russia,t's get to getting reports that vladimir putin is coming down hard on u.s. criticism from russia, the move aimed that giving president trump a second chance to improve relations after u.s. sanctions. joining us is greg. is this wishful thinking? the relationship has deteriorated to a huge extent in recent weeks, hasn't it? >> yes, it is quite a deep freeze, a level we have not seen
in decades. the signals we are getting from the kremlin are at the very least they do not want to have to raise the conflict further. parliament brought forward a bill to retaliate against the u.s. sanctions with a sweeping restriction on trade with the u.s. and the orders from the kremlin came third to put the stop on that. that is on the shelf for the moment. the rhetoric has been toned down. the russians have been encouraged by messages out of washington, despite conflicting signs publicly over the threat of new sanctions, it emerged today that the u.s. would be assured the foreign ministry back to the russian embassy in washington after nikki haley's comments about possible new sanctions. it was confirmed today
that no new sanctions. mark: ready to make concessions? and how does he do so without losing face, domestically? >> that is really the billion-dollar question. we do not have a clear sense of that. some desire on the part of the kremlin, there is a sense, to prevent further escalation of the crisis and a hope that donald trump may be able to deliver on his promise of better relations. after the sanctions which royal the oligarchs and aluminum industry, an important sector in the russian economy, going further down that road will be much harder on russia. they do not have a lot of weapons in its arsenal to fight back. it will be tough at this stage, the relationship is already so spoiled by the last couple of
years. signals from moscow are more conciliatory. vonnie: on oblique angle, but how are the turkish elections going to play out in russia, do people care? a major deal for the russians? the think anything that turkish president does to consolidate his power, the russians would be happy to see, vladimir putin has built up his relationship with him since the downing of a russian plane by turkish air force over syria over a year ago. lately, the two leaders have strengthened their relationships and incorporated in syria. the turkish president, from submit his, steps to rule in turkey would be welcomed. vonnie: how is vladimir putin's
popularity at home, has it changed in the last couple of months? >> that is tough to read because it is not quite an open system. since the elections in march gave him the best ever result, all indications he has a strong approval rating. the response here to the pressure from the west is to rally around the leader. the longer the economic case continues, the erosion, but so far, not deep enough to cause a real problem for vladimir putin. mark: are the russians still holding out for a meeting between vladimir putin and donald trump in the white house in the future? >> i think there is hope. near future, probably not realistic, given the reaction and the level of tension on both sides. some sort of personal contact.
they clearly hold out hope that some kind of personal relationship between donald trump and vladimir putin may be developed and donald trump may overcome the opposition to improve relations in washington. they will only be in the same city currently in the fall. mark: great to see you and thank you for joining us. our russia and -- economics and government team leader. vonnie: let's get the first word news with courtney donohoe. >> investigators found evidence of mental 50 -- metal fatigue in the internet exploded on the southwest airlines jet causing one person to be killed, the first in-flight fatality in southwest history. it was flying from new york to dallas and made an emergency landing in philadelphia. givenaxpayers have been one more day to electronically file their tax returns after a computer malfunction disrupted the website of the internal revenue service. the irs says it's prop --
processing systems are back in line and the new deadline is today. the imf warns that the rest of the global financial system are rising, they say the site of risky assets surging reminiscing to the years before the global financial crisis. they say stock prices are especially high in the u.s. and so our corporate bond valuations. the turkish president has called for early elections, he wants to move them from november of 2019 to june 24. he is likely to go for early early -- early elections because of deteriorating economic conditions. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. mark: thank you very much. eu is up next, the standing before the house of
♪ york, i ame from new vonnie quinn. mark: live from london, i am mark barton counting you down to the european close. prime minister may, another wrecks it brews. -- brexit bruise. they will try to keep the u.k. in a customs union. it they do both for this amendment, it goes back to the commons, what happens?
>> one of the lords said it is put something in rather than take it out. once it is in the bill, it has to pass the commons, but once it is in the mix, these conditions that are not friendly to the prime minister, it is another piece of the anti-brexit campaign. mark: to backtrack and say, union,o a or b, customs she will have progress of years shouting at her -- brexit people shouting at her, creating new problems. >> they customs union does not solve the big economic issues for the u.k. a custom union relates to trading goods, great if you are a carmaker or have an airbus plan in bristol.
but may notof noise be worth the price to fight. vonnie: is it a foregone conclusion she would say the leadership challenge, if this were to happen? >> nothing is a foregone conclusion in british politics these days. [chapter] a leadershipof challenge for the conservative party is a tricky one because the party is so divided, who knows what will happen if there is a leadership challenge, it may open the door to jeremy corbyn, he has been surprisingly popular in the polls, did surprisingly well in the spring elections. who knows? vonnie: the eu wants a solution on the irish border by june. do they come up with one? >> that has been among all of the brexit issues, that has been the toughest one to square.
so many of the conflicting interests come into play at the irish border. you will need a person much smarter than me to predict an outcome. may: the reason why theresa may face defeat in the lords is because there are not many conservative members of the lords, one third of the 600. it leads to the question -- if she is defeated, the abolition of the lords is a topic that sometimes brings its ugly head. >> let me come back to vonnie, the reason the irish border is so important is that, if there is no border, virtually no border as it is now, between northern ireland and the republic of ireland, that effectively means there is no mortar between the eu and the united kingdom -- no border between the eu and the united kingdom. trouble,with years of
no one in ireland wants a border. that's making it a tricky issue to find a solution on. managing editor, thank you. vonnie: here is a check of the stoxx 600 in europe, struggling to find direction early on, still struggling for the dow, s&p up one third of 1%, gains are held back by ibm, the worst performer in that index. europe about in 3/10 of 1%. morgan stanley after earnings is up to present. -- 2%. this is bloomberg. ♪ oomberg. ♪
gains,, another day of stoxx 600, ftse, that has been jumping around, up 1.2%. gerling's ball is the ftse's ain. cac 40 is up. , sterling falling in the wake of inflation data, which we will talk about in a few seconds. the biggest drop in two months versus the dollar. weak inflation data out of the eurozone. this is bloomberg. ♪
surgeon basic resources components, up for .3% with oil and gas, construction, among the other test performing industry groups today. look at some of the big moving assets catching my eye, the swiss franc against the euro, a fascinating chart with the swiss franc close to the previous currency ceiling. that does not mean investors should expect a rate hike soon, a monthly survey of economists it will keepipate us deposit rate at -7.5% for the first nine months of next year before raising it by 25 basis points in the fourth quarter, loosep has wanted a monetary policy for years to keep inflationary risk at bay. an amazing day, january 2015, revenue aheading
of projections after winning orders for nine more of its newest machines. first quarter revenue beat estimates. , to adopttel, samsung its newest machine called systems,ltraviolet that connect smaller circus with increasing capacity and speed. eu machines cost 100 million euros each. secured orders for more than nine of these machines in the first quarter. cointreau, shares rose. chinese new year's elevations with demand for sales in the ewmac business, including --remy cointreau.
demand for the cognac strengthening in asia. opening a retail store in beijing, focused on louis the 13th, the most that didn't cognac which sells -- decadent cognac which sells for $3000 a bottle. shares down by a fifth of 1%. that is a look at european markets. vonnie: that is all you drink, mark. classes interesting to look at, the canadian dollar after the bank of canada that did not move on rate hikes, 126.3 5 -- 1.2635. it has come back a little bit but that was anticipated, perhaps a rate increase on may 30 but we will have to see what happens on trade before the bank of canada makes a decision. the lira is interesting to watch because the announcement there will be early elections in
turkey. it caused the lira to weaken. possibly better for the markets that there is uncertainty now we know there will be an election. strengthening 1.6%. chinese renminbi, firmly below 6.27. interesting to hear talk about devaluation when we see a strengthening. crude oil futures strengthening to 16.07 per barrel after -- 68.07 per barrel. look at the green on the screen. it happened overnight over some geopolitical fears subsided and we have good market action. some momentum out of u.s. earnings with banks and more. the idea that mike pompeo will visit north korea, providing some -- we will have to see how
that issue progresses. mark: the surprise call in the u.k., euro area with inflation 2.5% in march, less than expected. an inflation missed in the euro area. march revised down to 2.2%. joining us is jamie murray. may still looks like it will happen for the u.k. hawks they put to bed the who thought the boe may act twice in 2018? >> i do not think so. today, the data, we have seen a bounce. if you look get it at the category level, funny stuff going on with clothing, clothing, a weird, affected by the weather. the weather was bad in march. people may have had to discount more.
up nextl push back month and we've -- will forget about this episode. mark: real pay is positive. it is a positive. are the consumers going to get back to spending? a tricky start to the year for the weather and other reasons. >> yes, inflation, the interesting thing, year-over-year rate tells you a lot about what is happening now and just as much about what happened one year ago. this inflation shock is dissipating but not news to anyone now. what happened, we look at a shock three quarters ago or four quarters ago, dropping out of the headline rate. it is telling us that the comparison with last year's changing. we are not feeling a change in the price level now, normal, we will not start seeing a benefit to our spending power, just because the headline inflation
is starting to fall. everyone misses that. mark: good you explain that. the ecb has a different issue, bank of england has inflation above forecast, does today's we can line inflation revision -- week line inflation revision change the narrative of the next week ecb meeting? >> not much because of the same reason. clothing, footwear, and europe. if you look deep within the index of the goods have suffered sensitively to the cycle, deeper core inflation, you see it is picking up the underlying rice pressure in the eurozone is picking up, even though the headline number and the core numbers are looking feasible. around,all in the looking at inflation favorably. mark: should it be, are you inflation pick up -- will pick
up? >> i think it will, you see a tightening of talk is in the eurozone, difficult to find inff, wage growth picking up the next quarter, we think, that is set to continue. mark: good to see you, jamie murray, chief european economist for bloomberg a number of. -- economics. >> more misery for puerto rico as the u.s. territory has been hit by an island blackout. they have suffered from frequent power outages since hurricane maria severely damaged the electrical system last year. president trump says a secret meeting between cia director mike pompeo and north korea's kim jong-un went smoothly. mike pompeo went to north korea before a possible summit between president trump and kim jong-un and the focus would be on the north koreans nuclear weapons program and details of the meeting are being worked out. vladimir putin is trying to dial
down tension with the u.s., according to people familiar with the matter, he wants to give president trump enough just to give good on pledges to improve ties and avoid escalations. president trump reportedly act away from imposing more sanctions on russia. openedan legislature has a session to choose the successor to president raul castro, the new president will be the first person outside of the castro family to leave the island in nearly six decades. castro succeeded his brother who headed cuba from 1959 to 2006. andal news 24 hours a day on take tack on twitter powered by more than 2700 journalist and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: coming up, battle of the charts, can out with the old and in with the new keep turn on track. and, further along in the
♪ i am live from london, mark barton. vonnie: in new york, i am vonnie quinn and this is bloomberg markets. hope to investors in south africa about reforming the country with the president speaking with guy johnson earlier today about how he is marketing his nation. >> the pitch will be we are open for business. we are having reforms that will lead to south africa becoming even more attractive that it has been.
we will have incentives for various sectors of the economy. depending on which sector. we will have well-crafted incentives that will attract people. some of them may be tax incentives, some the general industry incentives given to a sector. the pitch will be, we are serious, we have a good climate for investment to come into our country, we will give you good incentives and security. we will make sure you may well have -- any concerns you have may be addressed. our infrastructure is in place and we remain an infrastructure company -- country. we have a good regulatory framework. all of those things, a combination of them, will give
people a good package and offer to come in and invest in south africa. rand,he level of the looking now, training at 11.95, up 20% since november. it is coinciding with your arrival. let's talk about whether you are comfortable with where it is, appreciation a reflection of international sentiment toward south africa being positive, or would you be more comfortable with a cheaper brand that may make investment you are talking about easier to make? >> it is a double-edged sword. rand, where it is now, reflects the level of world has inat the south africa, because they can see that south africa is going somewhere. for exporters from our own
country, the stronger rand is not so positive for them because they bring in fewer. guy: is there balance? >> it is near the balance. not quite there. but it is near. it is a double-edged sword. mark: that was the south african president see repose of with -- with guy johnson. vonnie: we need to blame somebody for the semifinal battle of the charts. it is time to see who will take the spot facing her. charts on our bloomberg. semifinals. mike regan and ed ludlow. >> a nasty correction in the u.s. stock market and the question from everyone, how long
will it take to get back to the record highs in the stock market? history is no god but some of the reporters here crushing the data to show that the short answer is, you need a little patience. the average recovery from a correction in a bull market has been 200 days. my colleague on marcus live produced this chart which compares the direction recovery to the shortest correction recovery of the bull market, 2012. even that one, at that pace, would take -- history is no guarantee of what would happen, but we can say, if we recover before july, the quickest recovery we have seen in the bull market. outie: i love it, holding little carrots. telling us that by july we will make more money. mike regan -- we go to ed ludlow.
>> this chart shows the tug-of-war in the chinese economy but we the old traditional heavy industry we talked about before and knew industry like e-commerce and health care. it raises investors in question for policymakers, when they want to deleverage, but also trade wars with the united states. that is impacting heavy industries. policymakers, can these new industries offer and keep strength that when policy and external factors are trying to drag growth down? 6.8% growth, white light, first quarter, traditional industries, they missed estimates in march. retail sales, the blue line, the blue line come again 35% on the year in march, very impressive on the new economies. economists are talking about in asia, will we see the kind of growth? bloomberg forecasts say we will not, slowing 6.5%. hsbc economists say these new
industry can act as a buffer for growth and the policy comes in play. an interesting chart because it shows how the chinese economy is changing, and that change may be for the better when they have to make painful policy decisions and so much talk about trade and tariffs. you -- i love the way ed, i concur with you, a very excellent chart. is also very good and everyone should check it out on gene keady. mark -- gtv. the winner is ed ludlow. mark: i think ed has grown, not only since the tournament started two years ago, but grown in stature. grown in confidence. he is a worthy winner. they are so good in the semifinals. by a whisker, edward ludlow
♪ mark: live from london, i am mark barton. vonnie: this is the thing close on bloomberg markets. mark: time for the bloomberg business flash. warns that threats to the global financial system are rising, saying risky assets are surging reminiscent of the year before the global financial crisis and says stock prices are high, especially in the u.s. so our corporate bond valuations.
an italian oil coming believes opec and its allies will try to keep production cuts in place. we spoke to their chief executive and an exclusive interview. >> they will continue in 2018. whatllow the price and see happens this year. about 75, 80, $85 and maximum is the right price for these countries. nobody wants to go back $100, $110 per barrel. mark: opec and its allies are meeting in saudi arabia. can go tooday, you the movies in saudi arabia for the first time in more than 35 years. a fiat -- theater opening and riyadh, "black panther."
ban on theaters five months ago to open up the country. big blue in the red with ibm down more than 7% two years following disappointing earnings but beat estimates. full-year guidance came up short come a warning site that cloud growth is class -- casting a shadow over its turnaround. these reports are phenomenal. start?up to the wrong it is supposed to be one of the leaders in the cloud. it is far behind. >> one of the growth rates i was surprised about, currency about 14% and last year averaged 24%.
? does microsoft is growing faster. -- microsoft is growing faster. center andyour data you can use the public cloud. the numbers showing the hybrid cloud strategy is not as strong as we would of thought. vonnie: you have to be all in. you cannot suddenly do a u-turn after doing hybrid cloud and change strategy with the cloud. did they picked the wrong strategy? >> the strategy is right because they already have a love contracts in full data centers. -- a lot of contracts in full data centers and if their client want to move to a cloudlike infrastructure, they can help them. the growth is pretty good, last year, 30's, now, 14% is a bit surprising. vonnie: hassett offered explanation or has ibm suggested
it is worried about this growth rate? quarterll take another or two do find out if it is a one-time phenomenon or a secular trend. there could be hardware elements. i do not have a good read on it. we asked them but have not heard back. vonnie: some of the units, the margins the street is not happy with, they believe they can be expanded. markets desk margins may not expand -- the markets -- margins may not expand. >> 2017 the margin declined rapidly compared to 2016 and now investments in new technology, cloud, second, there are certain contracts, variety services
industry, putting pressure on pricing. third, as they go into a subscription service, those are not as profitable as some of the legacy products. these things are having an impact on gross margin. --nie: generic money doing not happy with the stock price. >> they have to explain the strategy. whether it is the cloud or blockchain. how will they monetize that? beeniggest frustration has there is a lot of marketing and talk about these technologies but we have yet to see hard numbers come out of that. vonnie: thank you. a fascinating report on ibm. u.s. take a look at stocks, where european stocks ended the day, s&p 500, a choppy
day, up a third of 1% as investors digest the latest earnings. we had inflation data out of the u.k. and germany, the eurozone, the euro zone inflation not as strong as earlier estimates. and -- a meeting taking place next thursday. cac 40 up a half of 1%. i will leave you with the currency board in the wake up today slightly weaker than expected inflation data out of the u.k. does it change the dynamic when it comes to how many rate hikes we see in the u.k.? ♪ ♪
david: cia director mike pompeo secretly visited north korea to meet with kim jong-un and president trump said details are being worked out. immigration,ty on a law struck down saying the language was too vague on which crimes were included which the president calls a public health crisis and to congress to fix the problem. a challenge to the time warner-at&t merger moves to the next phase and try was speculation the government's case may have holes and we talk with the ceo of discovery of bipartisanship in the cable channels he helped create. ♪ shery: mike pompeo travel to north korea to meet with kim