tv Bloomberg Markets European Close Bloomberg February 4, 2019 11:00am-12:00pm EST
guy: from london.,on guy johnson . vonnie: this is the european close. littleuity markets are a on offer, we a few seen the london market turnaround little bit as well. this as the pound shoots higher. by stoxx 600 is still down .2% just .02%. wirecard making it clear the allegations could have been leveled at the firm. this comes after ftc reporting. the company believes it will be proved it to be in the right and will have been proved to have done nothing wrong. wirecard bouncing back quite strongly. earlier on, the dollar caught a
bit, the pound caught a bid. through the minute, the pound pretty much back flat. here -- vonnie: here in the u.s., there are plenty of individual stories, including the story interrelated with more companies as well and start board. apple up 2.2% as well with jpmorgan coming out and saying perhaps apple will now finally make an acquisition. we will latency. just wait and see. -- we will wait and see. guy: the one-time king of bonds is retiring more than four years . he has been a star in the fixed income universe for four decades, mainly at pimco. bill gross spoke about his decision to retire exclusively
on bloomberg. bill: it has been almost half a century of waking up in the middle of the night to check asia and europe. in tom brady equivalent years, that is a long time. i have a few super bowl rings along the way to look at and it is time to enjoy myself and my family. tom: was it harder to manage given the repeated outflows you have seen over the last number of quarters and years? bill: not really. half of the fund is mine, and i haven't taken any money out of the fund, others have. i look back on it in the performance on constraint fund in the past four years with janus has been unsatisfactory, but still positive in nominal terms.
i've managed some total return accounts. ,hat i'm famous for, for janus and they have outperformed like the old days. pimco.tperformed maybe i should have stuck to total return and a little more constrained. bill goes as a cautionary tale for bond king. >> i think the last point he mentioned in the clip says it all. he said maybe i should have been more constrained and stuck with total return.i think that is a big issue is that he downsized from pimco, which was almost $300 billion in assets to fund.a $2 billion he thought he could go anywhere and do anything and deliver superior returns, and that really backfired on him. you some month after month of bad bet.
he even said there is this gamblers ruin idea that if i invest more than 2% in my capital in a certain trade, i'm destined to fail, and that is sort of what happened. he took big states and they didn't pan out. guy: where did it go right and where did it go wrong? there was a concentration of risk in the fund. walk us through what worked and what didn't. brian: that mexican bond is the latest example of this idea where he is is concentrating all of his risk. to one he talks about and is famous for is this idea of the german and treasury yield spreads converging. that hasn't happened because the fed has been raising rates in the ecb has been holding still. he bet on the fed converging. said she started that trade, he also had negative duration in his fund, which i'm not exactly sure why because yields were
going to skyrocket. he has done a bunch of other stuff. this has really been his own idea of where he thinks he can deliver superior return. he said investors were expecting a return like his product. what are some of the positions that really paid off for bill over the years, and with a something he was unique and espousing? brian: his pimco years, he was great. i think what really helped him out was he had scale and also it helps that it was a bond bull market during that period. yields were falling by and large. if you made some correct bets on andit, combined with taking appropriate amount of interest rate, it was going to pay off for you. i'm not sure i recall anyone t that was wildly
successful, but i think just having the bull market of his that really helped out. with great stocking up in the u.s. lately, it has been a bit more tough going. guy: what does it mean for janus henderson? brian: for one thing, they are turning over the management of the fund to the team he was working with, but they are also renaming it. they are getting rid of the unconstrained moniker and just calling it absolute return income strategies, or something like that, which is kind of an interesting idea that maybe unconstrained has gotten such a bad name of their trying to rebrand it entirely. vonnie: we will continue this conversation. let's check in now on the first word news. courtney: and venezuela, juan guaido is picking up more support from europe.
they joined an international push. out today from bloomberg businessweek sheds new light on allegations huawei has been trying to steal u.s. traits great. liberty tv followed an fbi investigation into their dealings with a chicago-area startup. they accused huawei of trying to steal the smartphone glass he invented. >> they want to work with us on product negotiation. they would have been in contention. we wanted to let them know we are willing to work with any company within the limits of the law, and if you try to still the technology there is going to be recourse. in southern california, investigators are trying to figure out why is all plane fell apart and asked into a house. four people inside the home were
killed. it was the lowest scoring super bowl ever. the television ratings weren't so hot either. last night's championship game between the new england patriots and los angeles rams drew an overnight rating of four point -- 44.9 on cps. -- cbs. global news, 24 hour a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. up,ie: thank you, coming quickly to be speaking with the president of nasdaq nordic. this is bloomberg. ♪
guy: from london, i'm guy johnson to rate -- johnson. vonnie: in new york, and vonnie. >> we do have the balls trying to take charge. trying to take charge. you can to the s&p 500 up. young,ow, the week is but at the end of the week, that will be the longest streak since 2016. the bulls are in charge and tech is a good reason. microsoft last leg reported a little bit of disappointment because expectations have been high. today, investors buying the dip. down 3.8%.r
would have this battle between the bulls and bears. that is true over the last year, too. i like to call this chart jobs. -- jaws. this is the only have been talking about. last to the s&p 500 above the 50 day moving average. then, we had that painful fourth quarter last year below the 50 day moving average. suggeststhis chart that the volatility we had seen will likely persistent with more what thoughts -- whipsaws up and down. since 2014.arly 7% this put up a solid quarter. supplier --luids food supplier up 4%. the food supplier up
4%. much.hank you very let's turn our attention to the fight for the oslo bors. it intensified today. euro next underscored its determination to acquire norway's in exchange. we are joined on the phone by the president of nasdaq nordic. thank you very much for spending some time with us. the first question is a fairly straightforward one. excluding the value of the offer, are you taking the money out of the equation, why would you be a better owner of the oslo bors then euronext? >> it's kind of obvious because we are already in norway. licensean exchange already. furthermore, we do run the three other nordic countries for the exchanges in sweden, denmark and
finland. , thethat point of view nordic to me is one investment region. it would be obvious that the fourth country would be part of the same exchange operator. guy: if it were to go to euronext, what difference would that make? you make it sound a very compelling roll up option, but if you can't roll them all up, how would that impact the plans? lauri: i can say that norway and the oslo bors has always been on our radar. we have always wanted to engage with them in front of the session. they are presenting the opportunity to do so. therefore, i think the most important thing here is when you compare the rivals is that we have the support from both the board of directors management and the most important long-term
that are oslo bors also the most important institutions in norway. we have the full support of stakeholders in the market. that just adds to the fact that nordicthree or four capital already. we could run the fourth as well. record a very good track since the first merger between the nordic countries, finland and sweden, 16 years ago. we have been running these markets for 10 years under the new leadership. to track record is there in terms of how we take care of these capital market equities, both on a country by country level and then on the aggregate, how can we leverage both brand of technology and value at its services that cover the full region. is verythat our office
obvious and i think that we would be the best owner for a very key asset in the norwegian capital market ecosystem. sweden should euronext its offer, would you consider a higher bit? lauri: in this kind of situation, our offer is on the table. to publish the offer document today and i will not start to speculate in terms of what might happen. i will leave it at that. vonnie: is there any way to break loose to shareholders that are already supporting the euronext bid? lauri: yes, of course. soth sides have conditional that vary. one could always fault that would free up the parties that
have the undertakings. and of course, the undertakings in this kind of commitment also expire. there are plenty of opportunities for this to unfold in one direction or the other. we definitely believe that we have the best offer for both the market, the capital market in the country and also from a strategic industrial point of view. currently, we also have financially the best offer. guy: why did you wait to the beginning of this process? what was the strategic thinking behind that if it is such obvious industrial set? --fit? lauri: there was a very exceptional process back in soldber where shares were under the assumption that it was an option. whether it was or not, i can't tell, but the exception of part
of it was that there was around one third of the shares available, but you are not allowed to contact the company management or board of directors or any other owners. decision that we would not get involved in that kind of a process. if we approach such an important part of the capital market ecosystem, we need to have the opportunity to discuss with stakeholders in the country that phone a friend basis that if we come to own this asset, how can we work together to make it even better ecosystem? women not allowed to do so and that is why we decline to be part of the process in december. vonnie: we should mention it is the biggest platform for trading in the region. norway's finance ministry will have the final say. how do you make yourself
attractive to norway's finance ministry? lauri: as they already put forward it kind of strategic regional aspects, and the fact that we have. or from the management board and the most important strategical nurse in norway, i think that kind of puts forward our argument. naturally, we also believe that at the end of the day, this very important asset of both csd and the exchange needs to come into long-term stable hands at some point. of course, the ministry, with the help of the financial supervisory authority will then hopefully come to a good conclusion of that process. vonnie: the very best of luck. the presidenti, of nasdaq nordic, one of the bidders for the also bors.
guy: live from london, i'm guy in. vonnie: on vonnie quinn and this is the european close on bloomberg markets. guy: european stocks down a little bit. bond prices under a little bit of pressure. i don't take much away from in --ms of market direction, let's start off with europe. there is a lot going on both sides of the atlantic right now i'm but i'm fascinated with the picture looks like on this site. is the german tenure going to euro?
>> good question. really down to the economic data. if we think about some of the pmi's that came out in january, they were coming in at a level that was on par with a growth rate of about 0.1%. we are certainly seeing a very weak macro picture that suggests there is no way the ecb can raise rates anytime, especially if we have a fed on hold. therefore, unlikely that china and -- german bund goes higher from your. guy: what you think of the bcp market right now? the central bank governor over the weekend talking about his sense and it pick up and borrowing costs. it borrowing costs do rise from here, is that spark another bout of fear from btp's? marika: it would certainly be a risk. right now, we do think that is a fairly domestic issue.
we don't see that spilling over into the broader eurozone. we think that creates broader opportunities in the peripheries. areas like spain we think are looking very attractive even if we have those issues continue to go on in italy. vonnie: what are you buying their? given the strength that we have seen in risk assets and the stabilization we have seen, we're looking to add a bit of risk.one of the main areas we are doing that is in the emerging markets debt space, which may seem a bit strange given the fact that they sold off significantly last year. really, the issues that cause concern in the emerging markets were driven by exogenous factors, whether that was higher u.s. rate, stronger u.s. dollar or the increased trade tensions we saw throughout the course of last year. focusing on where we stand today i'm looking durant, many of those factors -- forward, many of those factors seem to be
resolved or not much of a headwind. when it comes to places like the emerging markets, that scenario where we see significant opportunity in the bond market. vonnie: are you looking at some kind of an dekes or something in particular, china, or some other market that is producing its own bonds and is offering them? iska: some of the more link to the eurozone looking much more stable from a fundamental perspective, but not offering much in the way of yields. if you stretch and reach for that yield, you're coming in to one of the problem areas. we're looking to be very selective. some your focus on those countries the last year has central banks preempting with rate hikes. for instance, indonesia where the central bank raised hikes in
order to defend against current weakness. that looks attractive to us now given a have a fairly high rate. guy: marika is going to stay with us. plenty more that we need to address. the probably need to delve a little bit more into the fed and ecb. here are european markets right now. we're coming to the end of regular trading. ftse 100 up a little bit. cap down a little bit. i will tell you why when we come back. the european close up next. this is bloomberg. ♪
are seeking pressure today. big names in both countries in the banking sector trading down. 100, i don't think it is going to raise much interest today. there was a little bit of a wobble early on that seem to because by the pound. today. is mixed the dax is taking a hit when it comes to the auto sector, daimler and volkswagen are trading lower. , the socgen's and bmps are dropping that number down. wirecard bouncing back. investor calld an earlier making it clear it doesn't believe in the ft reporting regarding accounting. data from you believed an investigation will prove that to
be correct. the asset management industry continues to be under -- the outlook seems to be the reason the shares are down today. the company has warmed already. i think it was the outlook that not ryanair shares down by around 1.9%. not much movement there. volume traces. -- bases. that is a look at the european close. vonnie: we have seen some of that antibusiness sentiment coming out of the markets. if you look right now at gold, we are just at 13.14 announce. above then right up
13.30 mark last week. the yen is weaker. crude oil down 2%. we're still just about the $54 a barrel mark. still a little bit higher than it had been. the 10 year yield at 2.73%. have the following wti going lower. it isms of currencies, the oil currencies that are majorly affected from yesterday in dollar to the canadian dollar. guy: let's turn back to what is happening in the fixed income space. marika joining us. you were mentioning the fed a moment ago. let's talk a little bit more
about the fed and the is th -- ecb. the market has started to price in the potential cuts from the fed which is the deposit rate and basically the markets five years out where it is pricing the deposit rate. i think we are at 55 basis points, which is not much higher than the -40 where the ecb is right now. is the market correct on both sides of the atlantic in its pricing? really inis ship is reaction to the meaningful news we had out of the fed last week. we had a significant payment. -- pivot. fed causes that the in both march and june of this year, no rate hike for the first half of this year. from there on out, we think they will be data dependent. should we see data and the united states continue to hold up where it has been fairly strong up until now, should we
see some sort of resolution on the trade front, because that is what is weighing on global markets and brought the global growth dynamic downward. if that occurs, within it is likely we could see one or maybe two hikes in the second half of this year. it is important to take a step back and think about where we came from. the federal reserve has been raising rates for three years now. we think it is very justified that the federal reserve is taking this more flexible or more patient approach to its future rate hikes. we don't have a very strong view on the u.s. curve. we think if anything, we are likely to see some steepening. given the fact that the front end of the curve is likely to be relatively anchored by this more dovish fed. is that you are looking to add a little bit of risk. do you look at corporate settle for that or where in the spectrum would you look at that?
rika: one of the areas we're looking to add risk is in the high-yield corporate bond market, particularly in the united states. to continue to have these strong company fundamentals, whether it is strong cash flows, leverage stable. the earnings picture has been better than many had feared in terms of fourth-quarter earnings. all of the fundamentals remain robust for the high-yield space. on top of that, you can get yields around 7%. we have seen significant sales impressions with risk on move. all in yields remain attractive. with think that is a nice area and a good opportunity for clipping carry throughout the rest of this year. vonnie: where in high-yield are you looking? energy or what kind of industries are attractive? general, we are looking to remain in some of the more defensive sectors. places like health care, just in a recognition that we are knee -- nearing the end of
the economic cycle. nevertheless, we're looking to be prudent. not taking on too much risk, but staying in some of those more defensive sectors. guy: brexit is a bit of a risk coming up. talk to me about -- if you don't have to be positioned in the u.k., do you just avoid the gilt market and if you have to take a position in the u.k., how the position? marika: i think that is exactly right. we know that this will go right down to the line. will likely see a lot of volatility between now and march 29 deadline. that headline may even be pushed out further if we see an extension. we're looking to stay neutral. this is a two-sided negotiation. how does this affect the european bond market? we spend a lot of time looking at gilts.
if there was a no deal brexit, what with the story look like in europe? a: it is definitely negative for both sides of the channel. we're at a point where the european economy is in fairly fragile standing. the eurozone doesn't necessarily have the ability to be extremely hard in terms of their negotiation. that leads us to an expectation that we will see a soft brexit, probably some sort of an extension of the deadline. that was reiterated at the house of commons the last week where it is clear there is no majority for a no deal brexit. vonnie: what about currency risk? how do you hedge for that if we see a stronger dollar or much weaker sterling. is a change anything about your outlook for fixed income? rika: we the much of the u.s. dollar will be predicated on the fed's forward stance.
if we have a dovish fed, we can make the argument that the u.s. dollar has are probably doesn't have much further to run. thinking about sterling, if we were to see that soft brexit, you could very well see sterling rally on the back of that. interesting to think about the applications that might have for the bank of england given that a --rling rallying in terms of the dollar, we think fairly neutral given that balance of relatively higher rates compared to the rest of the world and yet balance out with a dovish fed. from a currency perspective, if we are looking to take risk, it is primarily in the emerging market space. all of that backdrop actually goes very well from a emerging markets perspectiven. guy: thank you very much for coming to see us. it is not merger monday,
but it is active monday. storyboard is said to be taking rboard has invested in papa john's. it is sending the stock up more than 30%. >> is able to interesting investment. they come in not really as an activist, but as an investor. they have come in with a fairly big position. it is $200 million initially --h an option to go up $250 $250 million. vonnie: talk to us about the other investment.
ed: that is in some ways a much more interesting position. we reported over the weekend that they had taken a position in bristol-myers, unclear what they wanted this point. they can say we like this situation, we just a bristol-myers is undervalued because it's traders down about 4% since announcing the deal, about 20% since late last year. they could say that, they could say we don't like this lg deal, that would be harder to achieve. they're going to get support behind them -- they're going to need to get support behind them. the third, which i think is a long option would be for them to a, we don't want you to do the other deal, we want you to sell yourself. that is not selling a realistic chance because of someone were to buy bristol-myers, they would have done it or at least shown
their hands. waiting for an activist as an accelerate is enough of every. guy: presumably, there aren't many companies out there that could buy them. that's right,-- and a lot of companies that the they could have come up and they won't. pfizer came out and said they were interested in big and many --the moment -- and a day mna at the moment. if it is the middle option, how realistic is that? i think it is unlikely that you get the value. that will be a very sort of everything to undertake. also, even need a fairly substantial position in bristol to do that. we don't know the size of their investment, but you have any sort of leverage over a company like some buyers, you would need
to be extraordinarily large. the stock is busy at the moment. they have also announced for five other position this year. it is just a question of whether they would actually have the capital leverage over a bristol. vonnie: we're talking about ebay and lots of other companies. what will he do as chairman of papa john's? you enact changes the and get out of the top? ed: he is not going to get out of the stock quickly. this is a company that has through a major trauma. you look at what has been going on with the founder led, and that awful things. they try to sell them all and that didn't work out. that love relatively recently. i think dismissal try and run the business of the, but i think he will try and draw business away from a genetic.
they are just gone for. the interesting and here is, their investment is a song a weighted average trading price of the hill about february 10. 15., february it has gone up a lot today. the cost of their investment is the ipo higher than it would be when they were looking at the weekend. vonnie: be a question that pops to mind where are all of the sweetest and he does that should be in line for all of these jobs that clearly are not there are we wouldn't have these activist investors i do the job? ed: a lot of them have been picked up by other activists to run other companies. the activists come in occasionally and lizzie situations like this where they will come in and take the three-way and almost be invited onto the board. some like to this is very well known. he has good experiences.
they did the olive garden transaction where they knocked over the entire board, famously. they were incredibly successful turning on the garden into a well performing business. i assume, there is also an element of luck, they have the physical former chairman. this adjustment being there john schnatter -- vonnie: our thanks to ed hammond. let's check in now on the bloomberg first word news. courtney: in virginia, governor ralph northam is meeting again today with members of the administration on controversy over a race his photo in his article years school of. he is rejecting calls from fellow democrats cling for him to resign saying that is not him in the picture. the trump administration is sending 700 more troops to the u.s. border with mexico. troops will provide support to protection.border
soldiers will also lay about what hundred 50 miles of razor wire on the border. in france, president and an omicron's advises are trying to persuade him not to hold a referendum this year. he has floated the idea of using european elections in may to ask french voters to endorse reform he wants to put an end to the so-called yellow vests result -- herbal. cabinet met -- revolt. global news, 24 hour a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. much.hank you very we are through the auction process in europe. while we've actually seen is a fairly decent spike during that auction process. this is when you see the positive volume coming through. the ftse 100 finishing up by .2% -- .02%. really sort of a chunky auction
price coming for. that has driven some of these european equity markets a little higher. we are going to carry on a conversation at the top of the hour. jon and i will be on radio in the londonderry a -- london area. we will span the atlantic and try to get some of the big stories there been focusing on today. the cable at the top of the hour on bab his radio and all of your bloomberg devices. ♪
-- cell phone maker -- demand for iphones is slowing, it'is almost entirely responsible for apples first holiday sales quarterly sales declined since 2001. because of that, apple is having to shift to other side of the business. services and other products are becoming more and more important revenue.f apple's taking note of that and the fact that apple has a massive war chest of cash, about $130 billion in the cast of investors are probably looking for the company to put to use with strategic acquisitions. apple is a little bit behind the curve in smart home department. sonos is a differentiation because it is a premium home speaker.
netflix, content video moving more toward mobile, they see that as a pretty strong strategic outlook. space also an industry going more and more towards mobile. how apple'sting on lead to spend its money is a fantastic parlor game. in any way, that an accusation -- acquisition look likely? kay -- kailey: the company would it will for a modest premium and a possible takeover. that you have the likes of so nos with enterprise of over $1 billion.
guy: it is time for our global battle of the charts. you can see all of these on the bloomberg g tv . joining us first is ben. ben: what i have is the bloomberg dollar index for the past five years. admittedly, is a former trader i was not a big fan of seasonality. if i was, i probably would still be trading. four out of five years, what has happened in january has stayed through to at least the first quarter. the only exception was the year 2016. we started the year with the dollar sell signal.
keep an eye out if the trends hold true, we could see this continue at least until the end of march. guy: my start. -- nice chart. vonnie: my chart is called late to the party. analysts have aligned equity rallies by about a year. if you look at what is happening, analyst downgrades are exceeding analyst upgrades right now by a lot. as you can see, stocks keep going up. we have to wait and see. in 2016, it was about 10 months before stocks went higher. will that happen again this time? you can see my chart and the bloomberg id tv . guy: these are difficult decisions to make. i'm interested in the seasonality and also figured out it that we why analyst once again are behind the curve. and late to the party. i think i'm going to go with vonnie quinn for two reasons. first of all, i like the chart. second of all, because i feel
after this weekend in dublin that the irish need a little bit of a pickup. vonnie: you can take the win back, its fine. i don't need anybody party or pity price. guy: it was still a very nice chart. i think we should point that out. vonnie: i think we are still in possession of a caucus. we haven't given it back yet? guy: we have until the end of the season. vince'soint to seasonality theme. if you don't know, england were the underdogs and the be the irish at home it's hasn't happened for quite some time. vonnie quinn wins. this is the picture we found ourselves with the european market. with saw the auction process being reasonably processed
today. daimler was down hard today. . in traded softer as well. the german makers are certainly under pressure. the cactus to staying on the 5000 mark. having forgiven me? vonnie: well, i could never say angry at you. let's just say we are both excellent at rugby. the dow is unchanged, at about seven points. the nasdaq running. balance of power is next. this is bloomberg. ♪
david: from bloomberg world headquarters in new york, welcome to "balance of power." from capitol hill to preview the state of the union address tomorrow. kevin, welcome. tell us what to expect. kevin: senior administration officials are discussing what they say will be the president's date of the union address tomorrow night. aboutl also talk incredibly divisive politics, most notably the u.s. mexico border wall. the president expected to continue to double down on his assertions that he would like to see some type of funding for that blotter -- border wall. even in recent days. he and administration officials have continued to describe it in other terms. we should also expect trade policy as well as foreign policy. yesterday, president trump criticizing speaker nancy pelosi on the issue of the border wall. hearing from my sources that democrats would like to