tv Bloomberg Markets European Close Bloomberg August 20, 2018 11:00am-12:00pm EDT
vonnie: here are the top stories we are covering. turkey got that downgrade. the economic crisis showing little signs of abating as turkish markets break for a holiday. the lira is trading, investors showing little confidence of the government has a plan. after almost nine years of greece exitssis, its international bailout program. is the environment ripe for investment? putin and merkel find common ground, pushing the nation's closer. we are live in berlin. it is 19 minutes into the trading session -- 90 minutes
into the trading session in the u.s. >> small moves for the major averages. most, one point 25%. the s&p up fractionally. take a look at the tech heavy nasdaq. down and being dragged down by the chip sector. down 1%. tech underperforming on the day. as for some of those chip laggards, take a look at the apple supplier. nvidia down 1.9%. this could be of concern because the sector is seen as a leading thatfor broader markets those components are using everything we need. if those are lagging, it may suggest something is off. let's hop into the bloomberg and check out this chart. view this using the gtb
function. where looking at the evaluation metrics for the s&p 500 back to stocknd in blue, the tends to trade richer than the s&p 500. that is considered to be rich. a more in-line valuation for the broader markets. what i would like to point out is we have these stocks at 18 times forward earnings. the s&p 500 at 21 times. the index is trading richer. that may be a signal there could be a slowdown for the economy or the tech sector. not confirmed by other signals. we've not seen it over the last several years. some bright spots, nike up 3%, upgraded. trend for that
athletic market of more than 30% on the year. estee lauder up 3.6%. they reported and the initial guidance is considered positive. kohl's is up in the department store reports tomorrow. but thereenney tank was the bright spot of nordstrom, that stock was higher. vonnie: thanks to abigail doolittle. greece's economic minister is expected to announce his country is exiting its parallel. in a speaker. what will he announced today -- he announce today? >> it is the formal end to the bailout program. a lot of reforms have taken place.
there has been a gradual progress. it has taken longer than many expected. here we are. the formal end of the troubles of greece. is entering into an interesting phase where can look , toard to progress rebuilding its banking platform and so on. this is an exciting time for investors. a new start. the announcement may be a symbolic gesture saying we are out of it now. understand how this could be exciting from a political perspective. from a market and financial perspective, is greece in a better place than it was three or four years ago? the value,ook at this crisis of the past eight over 60% ofestroyed
the value. earnings have come down. the value distraction has been concentrated in the banking for good reasons. -- banking sector for good reasons. there can only be one way, up. all eyes are on the ecb policy and if the ecb were to signal an end to quantitative easing or a tightening of the situation and it remains committed to reining in stimulus and raising interest rates in 2019, it could help greek stocks make a comeback in , the euro strength is a signal the dollar is going to be weaker. it is good for emerging markets, including greece.
the idea is that investors will wait for earnings estimates to pick up to see a sign that on the way to rebuilding. as of now, it is fragile, it is early days. only the bravest of investors will take the plunge. on the way to rebuilding. some investors will wait for earnings estimates to start going up before taking the plunge. romaine: let's talk about the bond market. has there been any talk about going back to the bond market with a public sale rather than these deals? that they would do a public sale we would get a better read on how the market values greece as a whole? >> definitely, things have improved. the investor perception of greece has improved. we do not know if it is too early to talk about that.
we are not at a stage where we can stop thinking about fiscal prudence, fiscal discipline. greece has to demonstrate fiscal discipline to a greater extent. we can talk about returning to the market. let's go into turkey, where that nation has been thrown a lifeline by qatar. is it enough? >> we have to see how much of that money comes in and when. the problems of turkey are not lack of dollars. it is a lack of commitment to reining in inflation. it is his self-made problem. if the president gives the go-ahead for his son-in-law's plan for fiscal discipline, the problem will get resolved.
no amount of dollar inflow can solve the problem for turkey. turkey is on a downward spiral. probably, something for the time being, but the optimism will ade away soon if there is not concrete and committed framework of policies to rein in the , to giveo slow it down a fiscal response that matches the monetary policy. we will see the problem winding down. vonnie: what happens if they end zap extendingd this lifeline and turkey ends up using it? >>
economic. probably, it has as much to do with geopolitical interests as it has to do with economic interest. how mr. erdogan will play the cards and what happens to the future, turkey is an important ally of the u.s. will there be a real alignment of regional interest? those are the things that will be bothering investors. the money is temporary. dollars will support the market for a few weeks. beyond that, how the geopolitics , whether it will remain strong as before or whether it will be weaken, those are the questions for investors. romaine: we're talking about
qatar, iran, china. close enough to russia to bolster its economy. can he get back to where was without some sort of economic relationship with the united states? >> we are talking lots of unpredictable things. turkey has a president with the u.s. -- with the unpredictable. we do not know where this relationship is going to go. hopefully, things will come back and it is probably posturing. it is not going to be easy for erdogan to shake cans with -- or theands with putin chinese authorities and say, you helped me take on the u.s. the economy is dependent on imports and its treasury is
dependent on the dollar market. those are not going to change. i think it is more posturing than real, strategic interest. the longer mr. erdogan keeps it fluid, the greater the effect on the market. vonnie: the u.s. dollar strengthening by 2.9%. the turkish markets are closed. let's check in on first word news. here's courtney donohoe. of jury day three deliberation from the fraud trial of paul manafort. he hid tens of millions of dollars in foreign income. the defense did not call witnesses and said the prosecution did not meet its burden of proof. president trump has ramped up
its attack on a little-known justice department official. the president tweeted -- will thee ohr ever be fired from justice department? a joke, where his wife was a contractor for a research firm they compiled information about the president during the campaign. in southern india, flooding caused by monsoons has caused more than 900,000 people to flee to relief camps. officials are worried about the outbreak of disease. the floods are blamed for damage in kerala. authorities say 341 people have died. in venezuela, president nicolas maduro is testing the capacity of a population to face more pain. he carried out one of the largest currency devaluations in history. he devalued the currency by 95%. inflation was forecast to reach 1,000,000% this year and this may make it worse.
global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is "bloomberg." vonnie: thank you. we are going to have more on venezuela coming up. you can catch our interviews with the function tv . you can find breaking news and related functionality we discussed. this is "bloomberg." ♪
already forecast to reach 1,000,000% this year. the plunge will test the limits of a suffering population that is likely to experience worsening inflation. joining us is dan. tell us about the special bank holiday that has been called today and why? thisen before he announced devaluation, today's bids were going to cut off five zero's. to allowoliday was banks to stock up on new bills and fix the online platforms for banking. vonnie: how bad is it? what he has done is recognized that the black market exchange rate was setting the
prices in the country. they had this overvalued rate and he has let that go and everything is going to be in line with the black market. minimum wages will rise from about one dollar a month to about $30 a month. as more money is printed and the measures play out, that minimum wage will be eaten into by hyperinflation. romaine: this is not just about inflation. you're talking about an economy that dropped over the last four or five years. what is the path forward? it is not clear what they intend to do with these measures. you are not lifting price controls on basic goods, lifting capital controls. it looks like he is ripping the
band-aid off and letting it go. they are keeping the same restrictions in place. it is hard to see how people would see this as an opportunity to invest or build businesses. romaine: have we heard from andysts about the new petro about whether it will be different? he said it is backed by the state and their oil reserves. also backedolivar by those two things? >> it is a new concept. it is their creation. it seems they set their rate for what the sovereign crypto asset is. this will fluctuate with the price of oil. we have to see how that works before we can say whether this will be an anchor for the currency. novel idea but analysts
are skeptical this will work. vonnie: you say the streets are quiet. at what point have people flown the country and who left? over the weekend, things were quiet. not see people rushing out to buy televisions and food. like we've seen in previous devaluations. along the borders, we are seeing an uptick in people leaving. in ecuador and peru are putting increased restrictions on people coming in. the ones that want to leave are finding it harder and the ones that have, all they can do is send remittances home. vonnie: thank you. let's get a check on the markets. still in positive
terrain, up more than .1%. macy's is the top performer, of 4% along with retailers -- retailers like nordstrom. the dax had a great session. 10 minutes left, up 1.2%. the euro is treading water versus the u.s. dollar. the british pound a little bit stronger versus the u.s. dollar even after the telegraph said they were strengthening plans for a no deal brexit. this is bloomberg. ♪
according to a kremlin spokesperson, they covered topics including syria, ukraine and they agreed to take steps to protect the pipeline from threats by president trump. joining us now is tony in berlin. how was this viewed in germany? in germany, it is viewed as a -- in many corners, it is viewed pursue.ural alliance to that is not due to donald trump. that has always been a sentiment in parts of the german political establishment. merkel has said we need to keep talking to russia. that is the rhetoric. right now, over the past year or putine connection between
and merkel has gotten closer and the main reason is the disruption by donald trump. came to men putin trump, he was late and it was strange. how did he treat angela merkel? , the little we saw as reporters, remember, they only came out for some matter of fact statements before talking. there was not a big readout or a news conference for them to show they had made up. it was all matter of fact. neutral isnguage was the best way to put it.
the only point where merkel cracked a smile was when a ,ussian reporter asked putin you attended this wedding on your way over to berlin, how was that? he said it was nice but it was private. you get the idea that on the top cell --s a tough sell to say that he has broken the ice with merkel. there are things they agree on and things they disagree on and that merkel will not forget. romaine: was this meeting borne putin's mind's or or was this about the changing political landscape that has pushed them closer together than they would have been? that theyre things
agree on anyway. the gas pipeline which runs from russia or supposed to bring russian gas directly to germany, being a big one. we heard again today from merkel 's economy minister that there is no reason why we should be worried about this. that flies in the face of trump parading germany and merkel over this. trump is a big factor. -- in berlin.our the european close coming up. ♪ xfinity mobile is a new wireless network
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exporters leading the way which is why we're seeing the dax ending the day up higher than 1%. up, the ftse alternated between gains and losses, ending higher by .3%. i want to go to the individual stock bloomberg and that is because atlantia has been one of the big story. it has been one of the biggest decliners, down by more than 1%. italy in process of removing its confession after eight told disaster. two other decliners out of the u.k.. is sufferingerry with the issues at the house of fraser word sells good. . 4s, sharesve g$s declining by more than 2%.
i want to start us off with the euro treading water, alternating gains and losses. a large short position weighing on it. we have the cable moving higher despite some of the losses it had earlier. we are also getting hints we may be approaching a no deal brexit. is not a not -- that enough to shake investor confidence. the lira declining, the u.s. dollar gaining against the currency. continuing to see turmoil. this is the second day of declines. that is a look a european markets. the u.s., where keeping an eye on currencies. our index now at $96.12. the trend is toward continuing strength. $66.02,l futures awaiting inventories and the
results of chinese talks later this week. the jackson hole meeting has the yield curve watchers with their breath held. 23.25 is the yield curve spread. is that close to a record? we hit the intraday record low last week. vonnie: the remnimbi up. we hear that china is propping up the currency now. western europe loaded but i'm going to go to top markets. russia up .7% as the first bilateral since -- with germany. we are seeing interesting movements at the long end of the u.s. curve, the yield down almost four basis points. improving yield in china as well. copper up 1.1% ahead of those
talks. .2% today. wrap up the trading day in from sueet us hear noffke at schroders. had been suffering because of the increased chances of a no deal brexit. there are preparations for that. banking on schroders a no deal brexit? >> we are in the negotiation part of the brexit situation. to beld expect this noisy. the noise getting stronger through october, the autumn conference season. no one wants to reveal their hand at the moment.
vehicleency is the main to express that political risk in the u.k. and what sort of deal the u.k. is going to get, if any. we are going to bump around it in the currency at the whim of what the europeans want to put forward and what theresa may and her party can agree to take to the europeans. vonnie: you are responsible for schroders core u.k. equity fund and the outlook for u.k. equities in general. what has demand been like since this drama started and appears to be stagnating a little? have there been outflows? appetite for putting flows to work in the u.k. is not there. they remain nervous as a whole.
the interesting thing is the difference that corporate's take and private equity investors. they have stepped in where they have seen corporate valuations look attractive. we have seen a pick up in m&a activity throughout 2018. i would expect those deals not to happen. we have seen quite a few not happen. thoseuld be one of recently. the impetus is there to close that gap. romaine: when i look at u.k. valuation, you're talking about a market that is cheaper than the u.s., cheaper than china, you name it. tell me something good about u.k. equities now, particularly with the brexit deal? >> the important thing to remember about the u.k. equity
market is it is not representative of the u.k. company. only 25% of have their sales revenues emanating from domestic u.k. companies. that means 75% is plugged into what is going on globally. globally, the economies are strong, particularly the united states. valuation forount an international exposure by buying u.k. equities and that is attractive. romaine: at what point to get the market to see that same view and embrace u.k.'s stocks in a way they have not done for two years? >> i think we are going to have to wait until we see the deal for people to get excited. as an investor, you have put
money to work today to reap the benefits of that. if we do get signs we get a deal worst case is the being priced into domestic stocks, you've got that upside reevaluation to take place. you have got sterling strengthening. if it is a no deal, the u.k. market muddles through and do a rice didn the downside -- and you have priced in the downside. do have dividend yield you not get in other international equity markets or fixed income markets at the moment. you are quite well underpins. there are u.k. companies you are sweet on including some media companies. tell us why. >> a lot is going on in media.
we are seeing consolidation globally and that is the attraction. its content, we have seen that in the battle for sky. also, through fox and disney and comcast also being interested. i tv plays well into that in terms of how they might be able to monetize their viewership and their offerings for advertisers getting large numbers of viewers. that through a subscription video-on-demand service platform. togetherhey can get with other broadcasters and broaden out their content provisions. they provide large advertises with quality at -- audiences where they know those customers are. other media companies could be the likes of in education.
it is around making the offering more digital and for education providers to show the quality of the materials and what that does for the student in terms of outcomes. they have invested a lot. they are beginning to get traction. i am excited. romaine: are there any sectors you are worried about now? >> it is around valuations. , the steady growers in the consumer staples area, have free rated a lot around quantitative easing, particularly when the markets become more defensive and cautious about the outlook. lotations are discounting a and i am concerned about air
pockets that are not quite delivering the best expectations g potentiala deratin for the likes of major drinks companies, it could be food companies or those staples look expensive to me. vonnie: thanks to sue noffke, schroders u.k. equities fund manager. let's check in on first word news. here is courtney donahue. >> negotiators from the u.s. and mexico resume talks on nafta. sides are resolving their differences over agricultural products. car are making progress on manufacturing. president trump wants a deal that would increase jobs in the u.s.. secretary of state, mike pompeo, says it is time to end american's longest war. pompeo urged the taliban to take part in a cease-fire. the 17 year conflict has ground to a stalemate. u.s. and afghan troops have been
unable to bring about a conclusive victory. economists say that president trump's tariffs are bad for u.s. growth. a survey showed 91% of those surveyed say tariffs are having an unfavorable impact on the economy. two thirds see negative affects of the u.s. withdraws from nafta. in london, the driver whose car hit several people before crashing outside parliament has appeared in court. the suspect is accused of attempting to kill police officers and members of the public. he is a british citizen who came from sudan. he did not apply for bail and the court ordered him to remain in custody. global news 24 hours a day and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is "bloomberg." vonnie: thank you. of theup, we have battle charts, retail there be. big wins for big retailers.
vonnie: it is time for our global battle of the charts. the first of the week, you can see these charts on the bloomberg. it is an all u.s. battle. -- >> ithings off is wanted to bring us to the retail sector. and tj maxx's reporting tomorrow. they have a nice jump over the s&p consumer discretionary index but also above the s&p itself. talked about the
consumer discretionary being overvalued. we will see tomorrow morning whether they are able to beat enough to keep this going. vonnie: it is topical. romaine bostick has all of the tricks down. co-anchor,g to my romaine bostick. romaine: let's talk about dividend yields. we have been talking about the divergence between u.s. markets in global markets. one advantage european markets have is that they offer higher dividend yield. when you think about the s&p 500, you're talking about a 1.9% dividend yield. that is 100 basis points below are the 10 year treasuries are at. when you think about europe, you're talking about 3.5 percent dividend yield, 300 basis points above what you get on the benchmark 10 year treasuries. a lot of strategist talk about
the importance of paying attention to dividend yields as we head into more volatility. it is not to say it europe is better but if you're chasing yields, europe is one place you want to look at. the prize byon getting to coanchor with me. romaine: that is prize in a. vonnie: the chart was good enough to win the battle of the charts. this is bloomberg.
producer. mainly gas but also condensate lpg. .e have three rigs >> where do you see the price of oil headed and what is your optimum price? >> on the short-term, being an upstream investor, we look longer-term. things like-term, you mentioned, whether it is turkey, trade war, can have an impact as well as countries like becausea more than iran of geopolitical concerns. looking forward, the demand growth is solid, even if it is only one million additional barrels, we lose 3 million barrels a day which means we need to add a new north sea every year. >> you said that before but we
are in the middle of trade tensions. how much will that hurt consumption? >> even with more pessimistic views and with more optimistic views of u.s. production, we will need growing demand for oil. that is not driven by passenger vehicles. it is driven by petrochemicals. most of the items in the studio are products of our business, trucking and shipping. these are seeing robust growth, particularly from asia. >> how do you see these chinese -- the chinese economy developing. you have all of these producers in the u.s. >> there are different views on where the industry is going in the u.s. even if you take the extremes, you're going to need oil.
the countries that have added capacity are the united states and we are placing our footprints. we have been awarded three new blocks of oil and gas fields. we are waiting for the new government to be formed and those will be signed. we will have eight fields down to the kuwait border. despite the challenges there, the potential is high and the contribution to global supply is going to be important from the middle east, going forward. vonnie: the ceo of crescent petroleum speaking to us earlier. now for our stock of the hour. shares are up -- it is sodastream. shares are up almost 10% today. they are.
for pepsi, that makes sense. they're looking to a healthier market as well. soda consumption has been declining. it makes sense from the analyst perspective. for pepsi, this is a growth opportunity. if we take a look at revenue, revenue is up 28%. net income is up 54%. starter kits are 11%. this chart shows the geographic diversity that pepsi is getting. pepsi has been focused in north america. they get 60% of their sales in north america. the next highest country is in mexico. sodastream is focused in europe. a lot of their revenue from western europe and asia pacific is their second highest region. this is the geographic diversity for pepsi. vonnie: a lot of people are
talking about how this is a push into something healthier for pepsi. you mentioned something about bubbles. romaine: i am wondering about how far they can take this. i was under the impression sodastream was not as popular in terms of growth as it was a couple of years ago. >> if you bought them a few years ago, their shares were lower and now you're getting them at $144 a share. you have seen a comeback for them and talking to some of the analysts about what does this , it for pepsi and they said will change fundamentals. pepsi has been struggling in the north america business. sales are down. down about 1% in the latest quarter. what does this mean? it does not change the fundamentals because sodastream has been so focused abroad.
vonnie: thanks to taylor riggs. we have breaking news. president trump at a fundraiser. he said he expected jerome powell to be a cheap money fed chairman. he mentioned these wealthy republican donors that his nominee raised interest rates. romaine, i'm going to bring you in. you expect some grumbling from the president. romaine: he does that. it does not mean the fed is going to be listening. romaine: let's hope not. there is a difference between him grumbling and taking some action to influence what powell does. toell has done a good job maintain that the near of independence. of independence.
as long as he does that, the markets remain confident. if there is any indication powell is getting into his demands, that could raise concerns. we know how important central bank independence is to markets. it is a bedrock of our economy and that is intact. let's not worry about central bank independence. the fed has raised twice under powell, a raised three times under the former fed chair. they were keeping the trajectory of ben bernanke's idea. that was taken through by three fed chairs, all of them were appointed by republicans. romaine: there is continuity and that is why people reacted so well when powell was appointed. he was not going to change the script too much.
the market is confident in that. there are questions as to how much more tightening the fed needs. you see that reflected in the market. and you look at the options bonds market, they are starting to call powell's bluff. for now, people are happy with what he is doing. the inflationary pressure balanced out by some of the dis -inflationary pressure. vonnie: the president talking about the federal reserve and his pick. more on breaking news, next. this is "bloomberg." ♪
presidentews, the said to complain that jerome powell has been a chief money fed chair. more on that in moments. decoding the chama rod -- decoding the drama around paul manafort and michael cohen, the latest legal hurdles facing the president. and one of the top democratic targets in the fight for the senate. we will speak with republican kelli ward on how she plans to keep the senate under republican control. ♪ shery: back to the breaking news, president trump complaining about the fed chairman raising rates. the president making the comments at a fundraiser for gop donors in the hamptons. joining us now from washington with the latest,