tv Bloomberg Markets European Close Bloomberg June 28, 2018 11:00am-12:00pm EDT
this is bloomberg markets. mark: here of the top stories. another miserable day for emerging markets. investors grappling with follow-up from trade tensions. european leaders deep in brussels deeply divided. what they decide to be crucial for the eu future. we will have an interview with allstate. how the insurance giant is leveraging the new tax laws to expand market share. toook at what is happening european markets 30 minutes away from thursday session. stocks weighed down by trade concerns. greece 2% lower. the danish has a similar decline.
these are the currencies and how they are faring against the dollar. the euro rising, danish krone loader --ish krona lower. what to tell you about european banking stocks. banking stocks are trading at the lowest price to estimated earnings ratio since 2016 when the region shares were hit then. again two years later, here we are. we are worried about deutsche bank shares hitting record low. they are struggling to maintain confidence amidst a management reshuffle. the stoxx 600 plunging 18.5%. since600 banks index january 26 27 month high.
showing earnings expectation of the stoxx 600 banks index. i want to talk about china. it has a massive implication for the rest of the globe. let's compare it to 2015 as then as now stop thinking. now a government bank think tank is warning against a potential financial panic. there is a comparison between the two. as you can see on this chart. is lost $2 trillion in the last five months. if archive -- far cry from the last dust tradingon for each during the first three weeks of that trash today the gauge shanghai composite falling since march 2016. h&m struggling to deliver new items to its stores in the latest quarter forcing it to cut prices even more to clear out
unsold clothing. the company reported earnings that fell for a fourth straight quarter. record $4 billion. that is equivalent to a fifth of total sales of 2% from a year earlier. they were aiming to reduce that proportion. about a quarter of its freely traded stock is been sold short. session ininto the the u.s., abigail what is looking like? >> it is looking a tad wishy-washy. we flipping between small gains and losses. you can see the small gains but you can see the dow flipping between unchanged. lots of uncertainty. we are looking at significant declines for the three major averages all down about 120% or more. up for itshe dow is
third weekly decline in the row. that will be the third longest streak since 2016. theso long ago we did have shares of bj's wholesale club .pike higher the ipo price of $17, investors wanting in on this deal. gordon haskett has already rated them and by. let's look at of the movers here . the shares of madison square garden are up 10.3% as the company is exploring its been out of it sports franchises including the next and rangers. they would keep their well-known venues, madison square garden and radio city among others. mccormick put up a big earning of feet.
marbella buying caveat. here are some nice winners on the day. where we are not seeing strength , what we are taking a look at this chart again is we have just flipped positive. looking at a 14th down day in the row. this is the etf tracking. right now on this small movement .arding -- higher time will tell at 4:00. are you starting to look at the earnings estimates warning about tariffs, daimler on the side of the pond? it is beginning to trickle isn't it? doesn't trickle turned to a flight when it comes to quote
companies warning about the trade? clearly theen second quarter earnings season will be kept watch is to. for aright issue or just few companies? as long as it is contained it should be fine. our view is it is probably for 2018 we should not see too much negative revision. see what it means for 2019 depending on how long the trade war last. >> did the earnings season take hold of the equity market or is it still going to be pushed around by pronouncements from the white house? war and allhe trade the headline around that will have an impact. it is going to be a good time for investors to focus. right now we can do is shield for what could be the impact. this will be our first chance to see what is the impact over the small window that we have.
it will be easier for investors to realize the actual strength that the trade workers represent to earnings. >> where are the fundamental strong? >> i think they are very supportive if we look at how the growth is supposed to come from this earnings season but also from the full year. we still looking at a very healthy picture. there have not been any red flags in terms of economic data that would indicate a sharp slowdown. maybe just moderation from the very elevated level we have seen for the end of last year. we are still in a good place when it comes to macroeconomic data and activity in terms of earnings in terms of buyback, those things are supportive of the overall picture as well as the overall equity market. vonnie: where are the strong
points? is it m&a? is it something else that provides leadership? what industry are you looking at? focus is thethe banking sector. is 17% of the market that we need, we need that sector to mark to -- sector to work. the industry is probably the you have better opportunity medium-term issue focus on companies that have secular broad stripper behind them. sector is something that i think has pulled back too much. banking stocks, lowest expectations for earnings in two years.
it is a deep and down industry enough to law review and? >> i think we can spend some weeks probably at those levels but sometimes -- at some point we should see a recovery. will we feel comfortable about maybe it has been delayed for a while but they should remain on track to normalize their policy. volatility overall and for this --mark: particular currencies bonds equities. we're now the lowest level for a year. we know sort of quarter it has been. --suade me if i am tentative tempted, why should i buy
emerging-market equities right now? the point about the emerging markets story is the long-term story. the emergence of this middle-class. the consumption there. that's what you want to own and you want to own that for the long-term. toit today the right time buy? probably not. but i think emerging markets should be seen as a long-term location you have a new portfolio. this is were the growth is going to come from for the next decade. vonnie: what should the ecb do next? a pretty clear road map as to what is going to happen in the end of this year and until the summer of next year. in europeane months equity markets is a very long time so we will need to reassess how is going to move forward until then. clearly there is a strong case to be made that normalization
should come sooner rather than later. as we were discussing earlier the economical picture does not justify negative interest rates or at least moving back towards zero. whether it is going to happen in september next year, that feels too optimistic but by the end of next year we should be closer to this the rebound definitely. casee: what is your best from france and germany? does europe become more integrated or less? want to have a future, i think it has to become more integrated. that is necessary for this region to work over the medium-term. there is a desire to move toward the past. i think the crisis made a strong case for that.
it will happen but it will happen over a long. of time. that is not something that we will see overnight. clearly not. there is a lot of disagreement about what form of disintegration we should see. israel 20 when the world cup? >> we hope so. vonnie: you have to pick a side. let's check in now on the first world news. >> entitled prime minister threatened to reject the eu stamp on curbing migration. ahead of its meeting with german chancellor. members share the burden of refugees landing and italy. german chancellor has been advised to make a deal allowing migrants to return to italy. the two leaders are meeting one-on-one before joining the 26 other leaders at a summit in brussels.
consumers in the euro area are getting rid of the economy. a european index unhelpful sentiments held to an eight-month low in june. confidenceeasure of also fell for the sixth straight month. today, hundreds of people gathered in front of you and headquarters to protest against this -- saudi led coalition. it is a main entry point for food, humanitarian aid, and fuel supplies to the country. grew moreconomy slowly than expected in the first quarter but gdp rose to 2%. spending andr business inventories, but economists expect a significant rebound ahead forecasting 4% or higher of the current quarter. global news today. powered by more than 2700
journalists and analysts in more than 120 countries. this is bloomberg. more ahead on bloomberg we will take you to the european summit in brussels. they are grappling with a wide range of issues from migration to brexit to monetary policy. also an interview with allstate ceo. eastern, we 2 p.m. hear from the cochairman and co-ceo of edgewater associates. this is bloomberg. ♪ vonnie: live from new york i am
leaders meeting in brussels dealing with the full agenda of contentious issues ranging from refugees to transatlantic tension. maria, is there any sense of unity when it comes to the issue of migration? >> high. there is not and that will be a problem. migration numbers in europe are down at the problem has escalated for two reasons. angela merkel is under pressure to crack down on migration numbers in germany. earlier the italian prime minister appeared to suggest that if we don't get on migration deal that goes far enough, italy could veto the document. let's take a look. >> italy doesn't need any more words but we need concrete action. this is the right opportunity as far as we are concerned the
summit will be a watershed. as far as i am concerned i am willing to accept all the consequences. really that is a problem for angela merkel. she used to balance a demand to be tougher on immigration in germany. for to come up with a deal interior states like italy which as you know are an entry point for migrants. unity.s no sign of mark: is there unity among eu members when it comes to trade and tackling measures that have been announced in the future by the trump administration? that is an area where
european leaders agreed that the situation could get worse and the eu has to get ready for all sorts of scenarios. that includes more sanctions and potentially more measures from the eu retaliating against the u.s. leaders here agree that the situation could get worse and they don't understand what donald trump is trying to do when it comes to their trade policy. we have seen a draft document and we understand the rules are going to have to be updated in the wake of protectionism and that eu has to prep for the worst-case scenario. that is more restriction from the trump administration. vonnie: how much unity is there in the block on those kinds of issues? the block has its own problems as well. >> exactly. is thecking point here
migration issue. we understand the european leaders agreed as i just pointed out. trade is an issue where the eu has to get together to face up to donald trump. when it comes to brexit they also and understand they need to come up with some kind of breakthrough or new ideas. there has been no progress on brexit. it is migration that is really going to be a problem. thehave to keep in mind underpinning and this whole tension is the fundamental that is a free movement of people. any the fact that repercussions on the future of angela merkel goes beyond germany. this is a woman who has really let european policy for over a decade. within germany there is a little bit of discord as well. exactly. withins a lot of tension
merkel's own coalition. remember all of this goes back to a decision she made to take an one million refugees at the height of the crisis. parliament dennis the end of the day these are european values and principles the problem is that it is not paying off and she has to come up with something they can appease her most conservative allies. i do have to turn out -- point beyond thees far future of the eu. this is a region that is putting up a front. i also want to point out that the lawmakers said this morning they have no interest in making the angela merkel administration fall. they want to major she gets tough on protecting the border. mark: thank you for joining us. vonnie: the gtv go shows all of
alibaba is scaling back its afterce in silicon valley the president's crackdown on chinese investments. the company has taken sizable stakes and fanatics list and snap. securities next -- bloomberg has learned the plan outlines formal eaths to -- the chairman makes passing an etf priority a role. that is your bloomberg business flash for this hour. mark: let's look at what is happening to european markets. trade concern that is weighing on equities.
dax is want to have percent lower. the cac 40 is down 1.08%. have a look at the currency board today. as you can see sterling is down against the dollar theresa may meets her fellow eu leaders. couple of months ago this is a big event for sterling hoping that some sort of deal was going to be struck today. that is being pushed back to the eu leader summit in october. the euro is up against sterling by one half of 1%. the close as minutes away. this is bloomberg. ♪
european equities down for the first in three days. the cac 40 is down by 1%. germany's dax 1.5%. of theto talk about some big stories today. this is related to trade. biggest drop into a half years, it becomes the latest domino to fall in the wake of donald trump's trade war warning that -- austrian cutting its cost for sales and profit. the company has warned about flattening car sales in china, courtesy -- currency headwinds. daimler last week also becoming the first major company to cut its outlook because of escalating tension on the trade front. also ran down by 22%.
biggest decliner in the european space. this is a german company as well. cup went out of the world as you know. for the first time in the first round stage for the first time in since 1938. sales of team jerseys would set a record around the world and the world cup in russia. despite big contenders like italy not qualifying. it was expected that the sales of shirts would outpace previous years. adidas shares down by 2.8%. just want to talk about sterling.
theresa may is ambushed by eu leaders due to their lack of progress on brexit. is number four on the list of priorities for eu leaders. the summit was flagged as the key signposts for brexit nottiations but of course much is expected out of today and tomorrow's negotiation by leaders due to the lack of progress on the border and other matters. trading sterling is essentially a binary bet on the outcome of brexit negotiations. it is said long-term value models point to the one dollar 40 area but a negative outcome on brexit could lead to last year's lows. today we are down to 13096. that is the european market. this is a quick look at
u.s. indices. for amazon pill pack distributors. the s&p 500 is up one third of a percent. the nasdaq is up half of a percent. we are seeing oil rising $.91. that is wti. massive difference in the last few sessions. we will keep an eye on all of that and have a quick look at gmm . many of the european markets are lower and obviously we are seeing some gains in the u.s.. little positive news for brazil as well. index is taking a breather just for today. you can see the sovereign bonds are painting quite an interesting picture today as well. speaking of sovereigns mark:
england has because for the world cup tonight. bank of england survey shows businesses accounting most on the tournament to boost sales volume. hi, charles. it is been a rough year for the retail space in the u k. is a lot riding on england going far in this world cup? .> it always helps a bit there has been quite a lot of anticipation already. i was looking through the sales reports and electrical sales have been up more than 5% in the last five weeks. large screen tv's have been driving that. a lot of that happened even before the first match. it is likely to continue further. mark: we have the bank of england summary of conditions. businesses are hoping that their future fortunes are tied to
england progressing in the tournament. there are other factors are there? beene fact that it has --oss britain for the next last few weeks has been big two. evil are having barbecues and beer drinking and so on. people would probably have done that anyway because the weather is good. is englandt happened is knocked out? >> it depends on when. england has at least one more match after tonight because they are already into the first knockout round. obviously the further he goes, the more excitement there is in the more likely people will have a bit of a get together in some sort of party. those of us who can remember , there is90
definitely more excitement when you get into the quarterfinal than the semifinal. spending would be up a little bit on that. mostly in the consumables. facetious buting also making a point. it depends on who gets into the final eight in the semifinals. as to how much people will go out or is world cup fever just taking over? >> at think it does a little bit. get to thewere to semifinals, then you would probably have a few more people going out and buying a large screen tv. which they may not do if it is not england. yes you do get a few extra sales on that. i think for the beer drinking in the barbecues and everything like that, it probably matters less. people are going to enjoy it less -- regardless.
because of brexit -- >> there are two separate aspect to that. pricing position is probably a bit out of place. john lewis itself, furnishing .ales are an important part they have been week for most of the first half. john lewis is managing this transition which all retailers are having to face which is even though they are still selling stuff, nearly 40% of their sales are now online. there is an advantage of having shops and they are integrated and everything like that. the actual costs of the shops are being borne by 70% of the or sevent you had six years ago. that makes the operating model
more difficult. mark: thank you. good to see you. vonnie: 7:00 p.m. england time? mark: yes 7 p.m. london time. vonnie: here's the first world news. >> president trump and vladimir putin will hold the first bilateral summit on july 16 in helsinki. mike pence said he it expects the talks to include russian interference in the u.s. elections. this will be the third meeting between the two leaders. melania trump is heading back towards the southern border of the u.s.. the third reich -- the first lady -- this comes a week after she traveled to the border town of mcallen texas. she also met with children.
children of migrant have been ordered to be reunited with their parents within 30 days. israelis jewish man has been convicted for targeting centers in the united states. the man has been identified as a hacker who holds dual israeli and american citizenship. police say he masked the origin of his calls and communication to synagogues. day.l news 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg mark:. the utes you pressure, president trump asks allies to stop importing iranian oil. what does it mean for prices? we have a chart on that next. this is bloomberg. ♪
mark: you can always see them on the terminal by running gtv . kicking things off today. >> donald trump has a big accident oil market this week. he wants to stop purchases of a rating crude by november. on this chart here you can see iran's daily oil output compared to opec. one thing you might notice is it is taking up a pretty decent share here. dailyn see that iran output is 3.8 million ball -- barrels. that is about 10% of opec output.
that couldn't come at a worse time for trump. we'll have a hole in the market and other producers will have to fill that. butries position to do more even if it is pumping at maximum capacity there could still be a shortage. this can be bullish for oil prices. trump has also said he wants oil prices to go down. with his latest directive he might not get both of his wishes at the same time. you can check out this chart for yourself on gtv . vonnie: i am looking at the yuan. it is difficult to look at the charts now and the time when the yuan got devalued. here what a big move that is. obviously triggered concerns that china is doing this on
purpose but also because china doesn't follow the fed. aw you are starting to see series of contagion. areas in southeast asia are suffering declines. what might the u.n. -- yuan do next. mark: i'll be doing a lot of you on charts in the next couple of days. i am loving this scene. loving opec as well. just this wasn't done the next time kelly came on scene. gallery destroyed that whole, they threw the book out the window. i am going to put justice right. kelly is the victor. she deserves the victory today. well done, kelly for two fantastic charts. festival, we are joined by a key player in the insurance industry. >> thank you, mark. in ae here in aspen
spectacular colorado rockies. i am here with the ceo of allstate. idea ofbig on this corporis possibility. music business must take on a bigger role in society. what do you mean by that? >> if you think about society is you have government and business and other institutions. you look at where we are today with trust levels. to step upeds because trust is going down. we need to do four things. we need to make money. we need to create jobs. we need to make sure the free markets work. we need to make our communities better. >> you have published a prosperity report. i read it. thates without saying business needs to make money. being a modern company means gone beyond the bottom line. why begin a prosperity report
with the company financials? >> i think profit is a bad thing -- people profit is a bad thing. i think profit is a measure of how well we have done for society. profit is aould say measure of how well you have not been for society. >> what do we do? we take things from society and we get things back. if we give back more than we took that is profit. so youe to make a profit are doing the right thing for society. that is not just about serving shareholders are having money to do other things. it is a measure of how good you are. >> two days ago here in aspen, i talked to the ceo of patagonia. patagonia is about as activist company as you are going to find anywhere. she moaned the lack of advocacy and activism by public company
the and she blamed it on fear of shareholder reprisal. issue right? to doarly a lot of people things because they are worried what shareholders will do. we don't. i have been doing this for a long time, 12 years. our results have been good. we hadto do that. maybe i had a slightly different risk profile than other people. my belief is that we exist as businesses for more than to make money. if he asked normal people what is your business to do, most say create jobs. board ask businesses and net jobs youmany have created, that number is a lot smaller. that is where we have to change the dialog. >> so it needs to be about creating jobs. what else? >> we need to make the free markets work.
today,look at trade there are a lot of cities who got left behind. one would say that as someone else's problem. the reason we need to focus on the cities that have been left behind, is because if we don't we are going to lose the right to free trade. operate on stories and they see the stories. we know trade is good for everybody. >> the president seems to disagree with you. >> he disagrees on the fact that he doesn't think the trade agreements we have work. we do need to take a different approach on how we deal with our trade but not maybe how he would deal with it. >> societal importance. go back to roast material. why aren't you a company who has to absorb the
why areclimate change, you standing up for the environment? she would ask you that question. she would ask you why you are chatting -- standing up for immigration? >> what i would say on the the chamber is all in favor of daca, dps. we know that is a values-based approach to america. it is not just economics. in terms of the environment, you have to have the right platform. if you look at the environment from our standpoint, we don't use a lot of resources. we do know that on things related to money and use the -- we are very involved in it. money is often a weapon of choice. we know something about money. to pick your spots where you have a legitimate basis to add value. in our case, we have chosen
youth and domestic violence and improving communities. >> is there anything you would do for the sake of your stakeholders even if it were to cost or offend your shareholders? >> of course. you do that all the time. you are always making trade-offs. an example is tax reform. halfax bill goes down by $1 billion a year because we were a full corporate u.s. taxpayer. saved $500 million. we took $45 million of that and gave it to our employees for help reducing medical costs. we took $40 million and put it into increased training. we were worried about the growth of artificial intelligence. it is going to rip through this economy like a synonymy. would rather have the 40 million dollars.
we said no, that is for our where do area >> artificial intelligence and machine leaning -- learning factor into allstate? >> insurance is for data junkies anyway. in our space. we have been using artificial intelligence for a long time. insuranceen pricing with artificial intelligence for 20 years. the pace is picking up. it is going to rip through the service industry. example, your car gets wrecked and you go to one of our drive ends we meet you at a body shop. today, you take 22 pictures and we settle the claim in eight hours instead of seven days. we don't need those drive-through's and we don't need auto adjusters --. employees to our have the skills to do what they need to do?
involvedny people are in what you just described versus 10 years ago? >> i don't know the number from 10 years ago but in just auto adjusters, we went down from .000 we went down 800. we let 550 people go. the good news is they got jobs with other companies. this technology is going to take over. >> when you say it's going to rip through the economy. it described that. what will it look like i've years from now? tell five or 10 years out. thatzie has done some work said in the world 375 million jobs will go away. in the u.s. it is something like 50 million jobs. we have to figure out how to we
train them to do the new job, not a job of the computer can do. >> before we run out of time, this question has to do with insurance. allstate has investments in private equity. i presume you have talked to blackstone about this major new insurance initiative that they are undertaking. >> no i have not. >> doesn't make sense to you? that they should be able to package privately originated credit into products specifically designed for the insurance industry? have been working on alternative capital for a long time. sorry, i thought there was something else. ofhought the disaggregation having to link your capital to the work you do to underwrite
with data and analytics is completely possible. we are using alternative capital. of having to link yourwe use our so take risks, we won't have to have $22 billion 10 years from now. we will get it from other people. we will securitize into bonds. we will need less so we can make more money on our shareholders money by spreading that goodwill and intangible for a few dollars. >> thank you. wilson, the ceo of allstate. we will be back soon with more. vonnie: can't wait to tune in again. that is live from the aspen ideas central. breaking with convention now we were bringing you to stocks that are now becoming one. session,eat start the china approved a $6 billion merger. >> they approved that merger.
it is interesting because both companies are american and based in the u.s. its -- a specific position of its sales from america. the merger also had to have approval from the u.s. that was given at the end of last month. notice went to close the deal by july. a lot of consolidation in the semiconductor space. why does this particular merger make sense? >> marble itself makes chips for hard drives which is a non-growth area. the other makes nonnetwork hardware. it is an ambitious move because intel which is the world largest chipmaker dominates the sector. with a 98% share.
if we take a look at bloomberg here, i am pulling up the stocks index. arvell is theat m best performer. is the thing to look at trade tensions that we have seen. it has caused a number of short-sellers. the stocks are going higher today. vonnie: thank you. mark: that's a quick look at what is happening to markets. that is in european markets. the dax is down by 1.4%. this is bloomberg. ♪ what's a gig of data?
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david: upside down with china. is cuttingdson production in wisconsin even as china is moving in. the business of justice. what does the replacement of justice kennedy mean for american business? crossroads. european leaders meet in brussels to tackle issues that could pull them apart. german chancellor merkel may have the most to lose. ♪