tv Bloomberg Markets European Close Bloomberg June 4, 2018 11:00am-12:00pm EDT
, i'm vonnie quinn. this is the european close on bloomberg markets. mark: hero the top stories we are covering from the bloomberg and around the world. a major media deal as discovery pays $2 million for the global rights to the pga. we'll talk exclusively to the discovery executive and the pga tour executive. microsoft agrees to buy github. we'll sit down with microsoft's chief executive. stocks in u.s. and europe advancing today. investors put concerns over trade on the back burner for now. look at what is happening to european equities. stocks are rising today, strutting off concerns about global trade.
1.3%ain the gain is up by out on friday.ster was booted the socialist leader is the new prime minister. portugal live -- portugal rising . the gain did have its biggest weekly decline. this is the worst run for two months. euro rising against the dollar as are the other currencies. look at some of these bond yields. the italian 10 year continuing to fall, down by 11 basis points. it was much higher last tuesday. greece, spain, portugal, yields declining. much to chat about. a move would combine two of europe's biggest financial institutions.
discussions are in an early stage. france'sid francis -- second-biggest bank has considered combining with the italian lender. biggest bank considered a potential merger with a german bank. consolidation is rife among european lenders. a theme today -- air france shares earlier rose as much as 7.8%the biggest increase since february. it would say europe's biggest hotel operators build ties with the airlines. grappling with a costly labor dispute and a change in top management. the analystnity is not united in the applause for this deal.
a consumer business lender is slightly sweetening its 1.6 billion pound proposal for virgin money by offering its target shareholders the largest share of the company. the takeover of the richard branson backed version would create the challenger bank with around 6 billion customers. g up by 2%.es in cyb julie: we are still seeing the rally in the u.s., although it is wavering a bit. the dow is faring better, coming on the heels of a better than estimated jobs report on friday. we are also watching retailers today, both in the consumer staples side, with walmart as well as the more discretionary retailers. walmart has not had a strong year-to-date performance. it is seeing a 2% boost today. it looks relatively modest compared to the year-to-date chart.
the company is going to record a non-cash net loss of about $4.5 billion in its second quarter, selling stake in its brazilian unit. it has been paring some of its international holdings that have not been performing as strongly. we are watching some of the discretionary companies as well. consumer staples, the best-performing groups in the s&p because of walmart and other retailers performing well. according to analysts, the retailpocalypse is over. retaoving evidence that they're holding up well in an amazon dominated environment. oil, which initially had been little changed on the session
cannot manage to rise and is falling sharply, down 4% over the past five sessions. need to makeg the sure supplies to meet growing demand. that adds to eculatn the group is going to phase out its production cuts. that is what has been putting pressure on the oil prices. vonnie: julie hyman, thank you. another major sports deal for discovery. discovery has signed a deal to air pga golf globally. and thedavid zaslav commissioner of the pga tour. an exclusive joint interview jay let me start with you. what will you do with the $2 billion? jay: we are combining our resources with discovery. acrossed 40 tournaments
vonnie: will you be charging the more, or you have more leverage? we will address every single market as those deals come up. when you create this video streaming service, when you bring discoveries and knowledge. in marketn sport but relationships, we will look for the partners that give us the biggest opportunity to diversify and grow our fan base and accelerate growth of the game on a global basis. you have brought in someone from the nba to do this. >> when we look at this together, we can do traditional things, we could launch a ball channel in every country in the world outside the u.s., we could
-- we when we want to could aggregate all of the content and offer it on every device. it is not just the tour, it is the idea of creating all this content around golf. vonnie: you will have to differentiate yourselves. how do you do that? is it with the videos you provide and who will you hire? do you need tiger to retire and become a commentator? >> the biggest thing we have is the pga tour brand. we saw this with the olympics. there are the big stars, but the local players. in norway we had a 90% share of. one of the things we can do with our 10 to 12 channels is promote all of the great talent that jay has on the pga tour. vonnie: there is a phenomenal
amount of it. what about the bottom line for discovery? this about gaining subscribers and eyeballs and .ngagement , we did hdh globally tv travel. we own those brands globally. we are in sports in europe, it has 750 people. there are 4 billion people. china alone has a billion and a half people and their two people on the pga tour in chi we think china is a massive opportunity for us. vonnie: what will you do with the 2 million? our primary responsibility
is to maximize playing financial opportunities. the focus on this partnership is to build our fan base and bill the startup of our players in their home country and ultimately that will materialize from the standpo increased private money down the road as we continue to grow this partnership. vonnie: i know you're trying to double your cash flow over the next couple of years. will you buy more ip's, institute dividends, will you do more of that? david: we think we can double our cash flow and we are ahead of plan on that. things are going very well. this is a unique opportunity with compelling global ip, a great partner, there is no reason, if you think about netflix's ability to go global, you look at facebook and amazon and google, we look at the pga tour, the local nature of it and
the ability to get millions of people around the world, every golf fan over the next 12 years that loves golf should have our product on every device and they should wake up every morning and be able to read about it, talk to their friends, and view all of the great content. vonnie: how are you going to fund this? one of the things about discovery is we generate an enormous amount of cash. next year we are looking at -- if we doble are free cash flow we will be generating $3 billion of cash a year. one of the things we need to do is decide how to deploy that capital. for us, we think we want to own high-quality ip that we can take around the world so we can be one of the leaders in the way people consume content in mobile and on every device. jay and the brand that he built and this business we think are going to be a big part of it. vonnie: you rad lawmaker, you
are one of the best deal makers out there. -- you are a dealmaker. will the at&t go through? david: i think randall stephenson is an extra ordinary leader, a great executive. ping for the industry it does because i think it should and i hope it does because i think it is important for the industry and we will see what happens in june. vonnie: who wins, comcast or disney? think with that transactions says is international assets are critical. , wee is a battle over sky are bigger than sky on the content side in italy. when you look at all of europe, we have a bigger business and when you see someone paying -- and saying i will pay 17 times for european assets and a clever and smart executive, we take a look at what we have, we are the
leader in europe in sport, we have huge assets in latin america and asia and we think we've become a much better company. in some ways ws you that the traditional platforms are still outdoing the newer tech. -- 55 markeround the world with oernational media team. if you look at international composition, you look at the stars we have today, more and more international stars and you think of plugging into discoveries network, the technology and director consumer expertise. this is the greatest game and your viewers are avid followers
and we think this is an opportunity to bring the stars forward, to bring the live content forward and to build a significant business often ecosystem that doesn't exist. bonus, you get an extra in your next for some -- your next foursome. our thanks to the ceo of discovery and jay monahan, commissioner of the pga tour. microsoft has agreed to acquire github, a repository popular with many software companies and developers. microsoft is returning to its roots, serving the tech community, a sharp turnaround from where it was. i am joined by microsoft ceo satya nadella who is here from the github headquarters in san francisco. thank you so much for joining
us. i want to start with what github and's to microsoft. extent yours developer ambition and fit into longer-term strategy? satya: thank you very emily, for having me. when you think about what is happening in the world around us, commute -- computing is being embedded in everything, from agriculture to medicine to personalized education to personalized banking. it is being driven by software and every company is becoming digital and that world is being built by developers. there is a linkedin stat that shows the development in non-tech companies like retail or energy is growing by , 25 percent higher growth rate than in the tech companies. that shows we are in the very early innings of what is going to be a set of tools and services that are required to
empower every developer out there. that is the rear strategic rationale. about microsoft, we have always been a developer first company, that is how we got started, and now we are all in on open source. with that, the coming together of github and microsoft, it makes a lot of sense for us. we can contribute a lot and stay true to the original teeth those of github -- to the original ethos of github and that is how we will operate github -- developer first. billionithub raised $2 just a few years ago. dot is microsoft going to differently to justify the $7.5 billion price tag? satya: we had -- we feel bailey good about the growth rates that github has. whether you're a hobbyist or a
student or a small startup or a person working in a large company, to be able to use github as a free service. they have done a good job of going a freemium model from that service to paid versions. we think we can scale that by first staying true to building that service up and making sure it is an open platform for all tools, all clouds, all platform targets. we think we can bring a lot in terms of scale and reach to additional customers and additional channels, but we feel very bullish about what we can do for developers on organically growing github. there's been some consternation in the developer community about this acquisition. this is the saying end to github's independence, the rest of reasons why is endless, how do you reassure them? satya: it is a critical element.
we are bailey committed to keeping that developer first eat those -- that developer first ethos of github. mtween the ceo of github we decided to run this company independently. operate it as an open platform. to us froman came another company and has a lot of open-source credentials. he will be the new maintainer of github and he will stay true to what the github community demands oanybody who is maintaining that community. we will have to earn the trust, there is no question of that. our actions from the recent past should help assure every open source developer of what microsoft intends and they should measure up by what we do going forward and hold us accountable. speaking of trust, there
are new revelations about data facebook shared with its device partners. these controversies could have an impact on microsoft. how concerned are you about increasi tech regulations? satya: overall each company is different in terms of what their core products are and core business models are. and our case, our entire business model is about being custodians of data and providing services to both consumers and organizational customers and trust is everything. in other words, we have to secure the data and used the data to benefit our customers. that is our business model. without it there is no microsoft or microsoft products. up to making sure we live the high standards and expectations of our customers as well as regulations already in place.
we are taking some of the core tenets of gdp are in making that and making that true for all consumers across the world. that is the approach we will take going forward. emily: you've made some big buys including linkedin. i recently spoke with your chairman who said he is should we be looking at you to make more acquisitions like this? there is perennial expectations of microsoft and netflix. satya: for us, the real focus is on his -- is on our organic growth and organic investments. we are always going to look for secular growth markets, whether it is minecraft or linkedin or github. we look for things were we can grow going forward.
we need to be able to contribute something unique and that is something important to me. i do not want to get into businesses were microsoft cannot contribute and execute super well, and we need to be able to operate them with linkedin and minecraft we did a fantastic job of staying true to what the ethos of those communities was and that is the same sensibility we want to bring to github. that is what will define what we do going forward. microsoft ceo from github headquarters in san francisco. satya, thank you so much for joining us. mark, i will send it back to you. mark: let's take a look at what is happening to sterling. theresa may's keep use of legislation was amended 15 times recently by the house of lords. we have a date. sterling lower. this is bloomberg. ♪
vonnie: take at where european markets are trending as we head toward the close. stocks are rising strongly .ff geopolitical concerns china's words hardened over the weekend. i want to finish up with the currency boards. the eu withdraw bill will return to the house of commons after being in the house of lords for a number of amendments on june the 12th. this is the crucial bill when it comes to the brexit process. this is bloomberg. ♪
a few markets rising today. the gauge had its biggest up in two months and the second weekly drop which was the worst run for two months. investors choosing to ignore the escalating tensions -- we will call it -- between the u.s. and china after china hardened its rhetoric over the weekend. you want to show you this wonderful chart following the euro stock 50's worst week in two months. last week, plenty of cash plenty to like for bottom fishers in spain and italy. the two countries getting new governments. euro stocks dividends yields trading at the highest level to the 10-year german bund yield since 2016. fell lessutures also than the benchmark signaling the
volatility against expectations for corporate payouts amid a broader earnings recovery in the region. italy and germany 10 year yields continuing to narrow, down to 15 basis point -- down 215 basis points after that tumultuous week last week. 350 basisy level of points. over the weekend widened by 23 basis points. the populist government is preparing for its next hurdle, which is a vote of confidence in the two houses of parliament which they should get because the populists have a majority in both houses. analysts say it should go smoothly but they say it should be difficult ahead for the the twos because parties, they say, are likely to spar over which of their expensive electoral promises to ep first. that is thtle. the final chart i want to talk
about is turkish inflation which might have big implications later this week. the lira is rising in the dollar is finst lira. biggest decline for the dollar since may the 30th. turkey's consumer inflation accelerated to the highest level ahead of that to you later this month. fueled by that slump in the lira that schedule the emergency hike in interest rates. the annual inflation rate, 12.2% in may. the governor of turkey's central bank is said to have told investors last week that further timing was possible that the inflation output worsened. to the emergency rate increase, the bank did been criticized by not taking action to support the currency whose depreciation feeds into prices for the cost of imported goods. 2.5%ira has rebounded by since closing on that record low on may 25. it is down 18% against the
dollar this year. thursday the central -- the turkish central bank next meets. vonnie: is the dollar cresting? that is a question analysts are trying to work out. it looks like we are back above 94 for the dollar index and definitely softer than we were last week. the yen is trading at 109.67. crude oil is back down to 64.83. that spread is still $10 plus. the 10 year yields, we're back to 2.92%. we will talk 3% again this week? we will have to wait and see. g20 movers, i thought we would take a look. stocks on this monday are doing well in most of the g20 countries. you talked about the lira, so i will leave that one well enough alone, but the australian dollar -- that is weaker, that is trading at 6.42 at this point.
commodities having a down day. primarily on the trade talks and the uncertainty surrounding them. stocksund the world continue to on hopes the biggest economy is powering ahead despite uncertainties. here in europe, new leaders were sworn in last week including weeks of political turmoil. tarrant investment management joins us. investors shrug off global trade. sometimes they do, sometimes they do not. why are they ignoring it today? thehey are saying unpredictable donald trump is becoming predictable. he is throwing everything at it to make a deal and i think markets are just not believing this is going to happen. i'm not so sure. mark: you think there might be
collateral damage? lothar: i do not think they can find tune it to the point where it does not create for the same negative consequences we hexit - i.e. trade conditions going forward are a lot less certain for a lot of industrial companies. mark: what does that mean for asset allocation? lothar: at the moment it does not mean much but it might well. mark: can you position ahead of it? lothar: it is a little bit early at the moment but we are certainly concerned how he is playing it. mark: let's talk about italy and spain -- what a week. we have two newernments. who would've guessed last tuesday when it was going crazy. should it have gone so crazy? one of your notes is the italian job. 4% of global government there, 2% of global gdp. italy caused bond markets to take flight.
true or false? lothar: it was a wake-up call for europe. the eurozone sll has that inherentess of being a monetary union but not being a there is no solidarity between the countries. there is not a true european government bond. all of that puts countries in peril who are not playing the same game. that is the fright. whenever there is a political tendency that says this might be put under stress and everybody goes there was something, wasn't there, and that is what we saw last week. it was not really about the eurozone, it was about the bond markets repositioning after global growth came up its strong growth that we had. the equity market had already reacted but we are not seen the bond markets adjust to it. that was the catalyst for the adjustment around the world with the 10 year and the u.s. coming off so markedly. mark: look at the yield spread.
it went up to 320 basis points, we have come down. does the populist government have scope to cause further jitters given that this is just the beginning of the adventure. we have not even started the confidence vote. then we have part of their proposals that they will try to implement. lothar: i think they had the shock right at the start of what policy can actually cause. if you know italy you were not quite so surprised about last week and you are not surprised they did get a government at the end of the week. i think it has been a good warning shot for the populists and the europeans that brussels. they still have some work to do. mark: what about brexit -- we just had the announcement that a massive piece of legislation that was amended a number of times in the house of lords comes back.
this is the big one. you cannot run away any further. theresa may has delayed making all the big decision but this month she has the big summit. this seems to be a very important month. lothar: it is. that is also why sterling is under pressure. the italian job last week was not good news for brexit. now the europeans in brussels will be even more inclined to be playing top and showing that remain -- to be playing tough. mark: we are just getting breaking news. the u.k. government is about to dispose of 7.7% of rbs group. resolved itsrbs toxic loan issue with the u.s. government a week or so ago. that removed a big overhang for the stock and led many to say the government can now reduce and begin thebs
process of for storing dividends. that was the talk after that -- of restoring dividends. it has been confirmed that the government will dispose of about 7.7%. it is the beginning of the process. it comes after talk of replacing the ceo and the cfo. we know the cfo is leaving, the ceo was said to be leaving after he cleared the toxic loan issue. the issue is resolved, the government will begin selling its stake. what big investment decisions have you made recently and why? lothar: the big investment decisions we have made is to actually fill some of our underweight u.s. equities that we have had. we are going a bit more underweight in asia, south east asia with china not growing quite as fast as may have been anticipated. ger whene you a doom mon
it comes to china? lothar: no, but at the same time we are saying to not expect incremental growth in spurts from china this year. china is going to grow nicely but if you're looking for growth boosts, it is not going to come from china this year. mark: come back. good to see you again. of tattontel ceo investment. vonnie: time heck in with first word news. courtney: president trump twee that the appointment of robert mueller was totally unconstitutional but he says he will play the game because he has done nothing wrong. trump says it would be perfectly legal for him to pardon himself but he says he has no need to. u.s. defense secretary james mattis has a warning for north korea. regime kim jong-un's
will get relief from sanctions only when it shows euro versatile toward giving up nuclear weapons. kim and president trump are said to meet next week. a british lawmaker warns that russia is using tactics inherited from the old soviet kgb to wage a covert war against the west. memberrvative already said the kremlin considers nonmilitary methods of attack to be more powerful then conventifare, among those using social media and tv news. the trump administration is said to announce a compromise policy on biofuel. bloomberg has learned that will broaden the market for ethanol possible refiners used to make the fuel from corn. it is a big issue from farm state lawmakers who want to guarantee -- global news 24 hours a day on air and tick tock on twitter, powered by more than 2700 journalists and analysts in over 120 countries.
vonnie: it is time for our global battle of the charts. you can always see the charts on the bloomberg. lines --hings off is k >> i am looking at oil, but the prices people will see at the pump. oil has had a steep decline from its peak on the 22nd. it has fallen almost 9%, down 5% on the month. gasoline is not following suit. there is concern coming into the
oil market about supply from opec. they say they may roll back some of the pullbacks that of been in place. gasoline prices that usually follow and trap the price of oil are not doing the same. they are up four point 7% for the month and a lot of that is the actual gasoline retailers like valero capturing this gap and taking more profit for themselves and that will weigh on consumers wallets as they start the summer driving season. this is an important chart to watch. vonnie: thank you for that illustration of what is happening at the pumps. mark, what have you got? ago the big fear was if there was an italian election it will be a de facto referendum on eurozone membership. that did not play out. we have a populist led government but it let me to believe that that question is still present and some analysts posit the question, at what
point will the true colors of the populists come to the fore, their true anti-euro colors. that is something to look ahead to. in the meantime, it is worth posing the question what is the probability of a breakup of the eurozone in the next 12 months? .e have a chart for that this is what i love about life. you have a chart for everything. this is the euro breakup index which essentially surveys individual and institutional clients and right now we are in 13%. 13% of these investors say the eurozone is going to break up in the next 12 months. that is the highest level since april of last year. it is the highest for over one year. you know me and you love history, we love to go back in time. on an absolute level it is high, but is it high on a relative basis?
before the french election last year we got to 25% of investors thought the eurozone would break up in the next 12 months. greek height of the crisis in 2015, when there were real concerneurozone would break up, this index got to 50%. 2012, the index got to 75%. we are atlute basis, the highest level since april of last year. relative to france, to greece, to the eurozone sovereign debt crisis, what are we worrying about? vonnie: it is fascinating to be able to go back in time like that and revisit some of those good old days, i guess you would call them. i think your chart was wonderful and it is a very important question will be having. i'm going to aboard -- award today's prize though to kaylee.
mark: live from london, i'm barn in new york, and vonnie quinn. this is the european close on bloomberg markets. let's get to our bloomberg businesssh. qualcomm has asked the european union's general court to ask down an antitrust fine. the penalty was imposed overpayments made apple to make sure only qualcomm chips were used in iphones and ipads. the companies are doing that it's deal with apple did not -- will propose a 63 million dollar with monsanto. it is helping to fund its trnsferred -- its transformation into the biggest
maker of agricultural chemicals. that is your latest bloomberg business flash. it is time now for the stock of the hour. company shares absolutelymeting, shares down the worst ever since the company went public in 1994. abigail, why abigail: it is a larger biopharmaceutical company. they are developing a pipeline of drug candidates for other companies goo explain this if we hop into the bloomberg and use the financial analysis. this is about 65% of the company's overall revenue in orange. of that, a big chunk of it goes to other companies. down here, it looks insignificant but it is a growing chunk. we have bayer and astrazeneca
developing drugs. drug, a have a cancer -- their response rates in patients were not on the mark. vonnie: that is extraordinarily disappointing. the investigator from the yield cancer center on the study believes that the results are going enough to move to the final stage. the chief scientific officer seems to think this is a snapshot, there are some analysts that are positive. let's take a look at a long-term chart. this stands out to me as somebody who loves chart. you can do this chart using the function at home. decades,st couple of it had traded in the range between four dollars and $20 but last year getting this huge jump up from 20 to 100, this
optimization with a piece of it. fight -- a pipe ,op to drop back into the range something it did around the time of 2000. it could be choppy trading ahead . it will be interesting to see esults vonnie: as we were saying earlier -- it is amazing. surprising investors. mark: it has been a busy day for m&a today. italy's credit said to be mulling a merger with a french bank. this would combined does go of europe's biggest lenders. i thought we were post crisis in this regulatory environment. is big necessarily best even if this deal did happen? >> it seems like the banks are going back to that thinking.
it is not just unicredit. there was a report about barclays looking at something last week. you had top management tell government and the regulators ht they were headed for a takeover. you had germany talking about deutsche bank and commerzbank. the question is how many times is the circle going to happen. even if we do not see unicredit, it does seem like there is much more consolidation talk the mitts the european banks as they are faced with lower profits and interest rates. the moral the story from rbs selling at 7.7% or a government selling at 7.7%? ruth: remember 2007. rbs tried to do this, it could
not, the government bailed it out in 2008 and now it seems like we have come full circle. the government is trying to sell its stake in look for new ceos. the question is what is next and who is bold enough to take on this with the memories of the crisis so close behind us. mark: and who would want to be cfo or ceo? you are a shareholder in your sitting at losses on 7%, at air france you are sitting on gains of 7%. the point everybody is making in terms of an idea of them combining -- air france is looking at some of its low cost or even high end options and combining them with fidelity. why do they need to take a stake in this company that itself is dealing with management issues and labor unions and shareholders have made the stock of this company go down 25% this year. you are wondering why do they
need this monetary investment, why can't they just do a partnership, apart from the fact that it is a good solution. mark: we have so much more to talk about. time ran out. good to see you. ruth david. tomorrow we have an exclusive interview with the ubs chief executive at 9:00 a.m. london time. do not miss that interview on bloomberg television. a quick look at the markets, today's gains, investors not ectlly reacting at the of a worsening of tensions between the u.s. and china on trade. ♪
midnight in hong kong. from bloomberg's headquarters in new york i'm david westin. , shery: and i'm shery ahn. welcome to "bloomberg markets: with a focuswer," on u.s. politics and power in the economy? david: strong criticism from europe, china, mexico and canada as the u.s. heads for a contentious meeting in quebec for the g-7 summit. presidential immunity. his lawyer said he cannot obstruct justice. issays the investigation unconstitutional. we speak to james clapper officer of a director -- former director of national intelligence. and, as presidenprs for his summit with kim jong-un eight news from now, what will success look like? ♪