tv Bloomberg Markets Americas Bloomberg February 7, 2019 10:00am-11:00am EST
30 minutes into the trading day in the u.s.. guy: welcome to "bloomberg markets." vonnie: stocks are dropping from the second day -- for the second day in the u.s.. a $20 billion deal to consolidate two banks may be the first of a wave of consolidation. technology is really being underlined in a statement from bb&t and suntrust when they move to their new headquarters in charlotte, north carolina. both stocks benefiting from the merger. take a look at chipotle mexican grill. sales were up more than 6%. citedhough ryan nichols headwinds, that didn't do anything to deter those seeing much improvement, and the fact
that it is turning into more of a fast food chain. the s&p 500 is down 8/10 of a percent, and the other indices are also lower. guy: let's take a look at what is happening in europe. i'm going to kick off with the bbpt. be bp -- o.a.t. spread. france versus italy feels rather familiar. the french have right called -- have recalled their ambassador italy gotafter involved in the yellow vests protests. 2.2 today, versus 1.2, quite a significant downgrade. quite a lot of action recently at the long end of the italian bond market. let's show you what else is going on. this is the picture more broadly. european equities focus today, down by around a percent. the dax down more than most.
the cable rate is up. earlier it fell quite sharply. one reason, theresa may and her visits to brussels, and then the bank of england. the other story i want to highlight is what is happening with wirecard. the stock under pressure once ftin as we see fresh reporting. we will deal with the story later on. the wirecard ceo is once again pushing back aggressively on this story. that's turn our attention back to the pound with focus on the bank of england. governor mark carney says under growing certain -- says growing uncertainty over brexit is causing volatility. >> more fundamentally, it is creating a series of tensions in the economy. tensions for business. although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a
no deal, no transition exit. bloomberg'opinion columnists joins us now -- bloomberg's opinion columnist joins us now. out aboutor put this where the bank of englert is going. -- the bank of england is going. >> it is hard to feel sorry for a central banker, but mark carney has no real direction of what is going on here because of brexit. at the same time, the rest of the world is slowing down. the aim to high grades because aren't pressure, they going to be able to hike rates anywhere like what they expected to. this cut their growth forecasts.
ergo, interest rate expectations have been lowered. guy: let's turn our attention to rome and figure out exactly what's going on here. the italians in the french are not seeing eye to eye at the moment. is this significant? it strikes me that at the heart of this, there is something more. there is a problem in italy. the italians are building up towards an election in may. the european elections are trying to cause trouble abroad, and a result of the economic malaise. from an economic perspective, is this significant? reporter: it is significant if macron starts acting petulantly and withdrawing ambassadors, and actually starts being more aggressive in a meaningful way to italy, which is taking advantage of the fact the european commission has lowered its growth forecast so large down. there's simply no way the budget deficit forecast will ever be reached this year.
if he plays on that and the whole budget of italy was back in court, salvini will respond by saying france is just as bad. i think it is a surprising move from micron. i don't think it is very help -- from macron. i don't think it is very helpful. i ask you about the bank consolidation we are seeing in the u.s. this morning? bbd and suntrust could be the first of many. i know you follow this desk bb&t and suntrust -- bnt and suntrust -- bb&t and suntrust could be the first of many. i know you follow this very closely. reporter: certainly there's a second wave after quite a long respite from bank consolidation in the states. it is clearly something i think you are right to point out.
there may well be more behind this, and clearly banking is one of those industries which come on the face of us, like automotive cars, in 20 years time should and will be dramatically different. the only way they can do it is get ahead of the game and start making better technology for a digital offering. vonnie: do you see other contenders in the united states? and suntrustt together are promising the return on tangible equity will be higher than all of the major banks. out aer: i think it sends big warning flag to all of the major bank ceos if they don't get their act together and pick up obvious opportunities, someone else will beat them to it. .ne deal begets others i certainly think there will be some busy investment bankers making phone calls and putting up lots of different types of suggestions across all of the u.s. guy: this will certainly widen
the divide further between u.s. and u.k. banks. banks,ng to the central central banks around the world, the r.b.i. is the latest to execute something of a u-turn. we probably expected the r.b.i. to cut rates at some point, but central banks around the world, are they trying to stop the dollar falling? reporter: you mean the rba, by the way? r.b.i. of india. reporter: right, sorry. we are having global central banks across the board, almost, and indeed, european central bankers starting to think about it. this is a reaction to slower growth. vonnie: speaking of which, mark carney has very harsh words on brexit. that it is already being
priced in. it is already having a major impact. what happens when we are supposed to actually be out? reporter: i think the body language i got from carney is he saying guard was about come or no outcome, this is really .tarting to take an impact the fact that it is dragging on and no one can guess what is going to happen, any eventuality is possible. that is real uncertainty, starting to hit not just the outlying investment decisions from afar, but overall spending and business as a whole, which is it going to go away. that is a permanent downgrade to gdp as an effect, and that is why they had to cut growth forecasts. this is quite an aggressive move we are seeing. we saw the european commission cutting savagely, but the banks also cutting quite savagely.
forecasting the growth . i guess i could be wrong. marcus, thank you indeed. marcus ashworth, bloomberg opinion columnist. vonnie: let's check in now on the bloomberg first word news. here's kailey leinz. kailey: it is the biggest global bank merger in more than a decade. b has agreed to buy suntrust -- bb&t has agreed to buy suntrust bank. will own 57%ders of the company. both banks have a big presence in the southeastern u.s.. -- southeastern u.s. i capitol hill, congresswoman exam 30 because he accord tatts -- congresswoman alexandria oh cause io cortez -- alexandria -cortez has introduced
her green new deal. data science from optimist has found that starbucks ceo howard schultz gets twice as much support from democrats as republicans. the leading democratic hopefuls when worse than trump schultz is included. may isemised are theresa in brussels trying to change the brexit deal she reached with the european union last year. she wants the eu to change the most contentious part of the agreement, the irish backstop, but there are few signs the two will reach an agreement. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thank you. some breaking news now. walgreens onlling its tobacco selling in certain areas.
it is taking enforcement action against some locations, specifically retail outlets in miami and charleston, south carolina. the fda is escalating action versus some local walgreens and circle k locations, particularly in retail outlets in miami and charleston. the stock is down 9/10 of 1%. the fda calling walgreens the top violator among tobacco selling pharmacies. it is escalating enforcement action against some locations, including those in miami and charlston, south carolina. this is bloomberg.
guy: live from london, i'm guy johnson. vonnie: live from new york, i'm vonnie quinn. this is "bloomberg markets." plenty of good stock stories today, but indices are lower. abigail doolittle has the details. abigail: major averages following global pullback for some other world indexes. of 1%, down about 7/10 the second down day in a row. the dax at near session lows, down 2%, its worst day since the summer 27th. he worst day of 2019 for the german dax. the european commission downgraded economic readings. asia also down 6/10 of 1%. the 10 year yield lower. charte a look at a great of the dax and the s&p 500, it may suggest more weaknesses ahead. and aren't we have the s&p 500.
about a year ago they were highly correlated. then the dax started to turn lower. the point now is the german dax has been below its 200 day moving average since the entire selloff of last year, not above it. right now acting as resistance. let's take a look at some of those movers vonnie was talking about. we have the faang trade sharply lower, down 1.4%. investors selling the recent rally, a little bit of a pullback. twitter beat fourth-quarter estimates, but also missed on monthly active users. phillip morris a little bit of a bright spot, on 8/10 of 1%. they beat estimates despite that hadfor cigarettes been helping out british american tobacco, now up just a fraction. vonnie: in the u.s. we are
following a major bank merger dominating company stories today. bb&t has announced plans to buy suntrust in an all stock deal seemingly benefiting both companies. we are joined now by bloomberg's investment banking reporter. less, butbb&t is up this is a great deal for both. reporter: it is a great deal for both, and if you look at last year's banking mergers, not everyone performed this well. this is confidence for more companies to potentially pursue deals. we are seeing deals across the financial services industry, and there's a lot of headwinds, but this is good news that this is not necessarily coming out of weakness. it is meant to create a bank that will now compete with some of the largest. jamie dimon said a couple years ago that there are too many banks. to create another one that is upscale is a big deal in the u.s.. vonnie: it seems like all of the
-- there's going to be a new headquarters, one ceo will hang on until 2021, and then the other will take over, is going to be bigger than some of the biggest banks in the united states. reporter: something that is interesting about this is the timing. it is two days after the federal 250 is the topat bar in the asset level for companies to be part of the stress test. this is showing that if they didn't do this, they would have to comply with those regulations anyways. now they are saying let's merge. let's be bigger. let's compete in terms of average loans and whatnot, and also invest in technology, which is disrupting banking like every other industry. guy: this is confirmation that this is a tech industry now. we should view banks as tech companies. the center of this deal is technology. a review of through
the way we price and analyze banks as they become more and more tech driven? reporter: that is a great question. tech companies also take on more financial services. the profitability and the way that you value a bank is not as exciting as a tech company, but if you look across the entire industry and most financial services bankers, they are putting most of their energy on technology. usually we are seeing more technology driven deals, but o lendingefinitely tw companies coming together. they are saying investments and technology can come moving forward. competitors,were and fact. we will be speaking about this all day long. thanks touche and ali bostick -- thanks to sonali basak.
♪ vonnie: live from new york, i'm vonnie quinn. guy: in london, i'm guy johnson. this is "bloomberg markets." the german federal cartel office has given facebook 12 months to stop collecting data on user activity and paring it to specific accounts. facebook says the office is unfairly singling it out. the president of germany's federal cartel office joins us now. what are the criticism that will be laid against the ruling you have made against the company -- one of the criticisms that will be laid against the ruling you have made against the company is that you are confusing privacy and antitrust. guest: if you look into the law
and the economy, data is in fact a very important factor for market power. the whole internet industry is driven by data. because pays by data services cost something to the user. that is data. that weit is important as competition agencies look at the question what kind of role does data play in this respect, and first of all, if a dominant company like facebook is gathering data and processing it, i think we are obliged to look at the fact if this is done in line with the law or if there is an infringement of the law with regard to the collection of data. so i don't think there is any confusion. i think that belongs together. guy: but some would argue that with gdpr coming into force, this is a case that should not have proceeded, but should have been a gdpr issue.
guest: you can handle it under both offices, probably -- both oust is is -- both auspices, probably. in germany, jurisprudence says is a dominant company -- and we believe facebook is dominant, with more than 30 million monthly active users -- is setting up illegal general terms and conditions, that this is also a competition issue because the company is only able to do so because it is dominant. ourf facebook sets up, from point of view, terms and conditions with regard to gdpr,y that infringe the that can also be a competition issue. this is the way we argue, and isaac we have a good case here. vonnie: will you also go after
alphabet? 80% of all page loads, while just every fourth website visited is tracked by facebook. guest: it is very hard to announce anything. for today we are very happy that filing concluded our against facebook. what we have done today is quite a fundamental decision. if we have similar companies with similar problems, of course one could look at the facebook judgment we have taken today and look at the fact of their parallels. but again, i am not going to announce anything for today. we are very happy we have taken the fundament who decision. vonnie: are you finished with facebook at this point, or will you continue to go after facebook on other privacy concerns? guest: for today we have finished, but what we are going to do now, we will be monitoring
that facebook will really comply with the decision we have taken today because there is still a lot of work to be done. we have to take care that the user of facebook services can take a very informed decision what is going to happen with his data. facebook will still be able to combine all of the data they gather from a single user under certain circumstances. for example, for security reasons. we will take a close look at this also. monitoring of the decision we have taken today, there is still a lot of work that needs to be done. vonnie: all right. -andreas m --andreas mundt, thank you.
down 6/10 of 1%, and the nasdaq is down 7/10 of 1%. some of the stocks that are dragging on the s&p 500 include twitter. it says it is no longer going to report its monthly active users. a headline just crossing the bloomberg, chipotle trading above $600 for the first time since 2015. we mentioned their performance earlier, sales beating estimates , having risen 20% already this year. this is bloomberg.
there was that outbreak in one of the aaa outlets. the story -- the chipotle outlets. digital sales have driven to 13%. sales have improved. prices were higher, traffic was higher. stock another 15% up today. there you have the five-year chart, back to before the food scare that really took people away from the stores, and obviously very pleased with the performance so far of brian nickel, in the job about a year. we should mention that other food stocks are taking a tumble dunkin,ncluding yum, even grubhub. news.nteresting . let's get the first word news.
here's kailey leinz. kailey: president trump has resumed criticism of a democratic investigation into his finances. the house intelligence committee is launching a probe into the president's foreign business entanglements. shouldential harassment never be allowed to happen again." russia is welcoming an offer by the united states to renegotiate a landmark missile pack, but says it hasn't seen any concrete details. the president said the u.s. may be open to negotiating the 1984 agreement. russia also warning that time is running out on another nuclear weapons accord. it may take longer for the employment market to resume normal trends after the partial government shutdown.
the democratic party appears to be in a meltdown involving race and sex. first it was governor ralph north from -- ralph northam, iq diggin -- ralph northam appearing in a racist photo from the 1980's. the lieutenant governor faces an allegation that he is sexually assaulted a woman a decade ago. neither has indicated that they will resign. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. vonnie: thank you. in latin america the past couple of weeks, the fallout from a dam collapse in brazil and the crisis in venezuela. let's go all over all of this the chief investments registrable tech -- investment strategist from both tech. are they beginning to maybe
start to stabilize, or have some sort of forecast on stabilization? guest: it is pretty aptly put. venezuela is on the precipice of change. it is not clear at what point maduro is going to exit the regime, but this is a socialist autocracy, and the pressure is mounting for him to do so. the u.s. has done a very good job with this creative efficient policymaking to really asphyxiate his lifeline, which is cash. i think that is a commendation of not allowing humanitarian aid, not allowing oil cash to get to the maduro administration , combined with innumerable countries that have already officially recognize the interim president as the legitimate one. i think it is a matter of weeks, if not days. it continue on like this? at some point do you see some kind of pivot back to other
interests like the imf? guest: sure, if glide to -- if guaido effectively takes the shift, anuld expect a immediate move from the imf to shore up venezuelan debt. venezuela will have to restructure and undergo big negotiations on all of their debt, both with china, with russia, and all of their outstanding debt. certainly the picture is going to change completely once we get a change at the top. guy: good morning. the reserve bank of india surprising everybody by cutting rates a little earlier on. we get the central bank of mexico a little later on as well. it seems to be still in hiking mode right now. were you surprised by india? do you think the mexicans keep hiking despite the fact that central bank's around the world are beginning to turn tail? guest: this is a very
interesting question. you notice the magnitude of the dovishness on a global scale is pretty intense. we have australia, the fed, europe, indonesia, philippines, thailand, mexico, brazil. everyone holding rates, if not cutting them or likely to cut. isaac it is a combination of both concerns with regard to global slowdown. in the case of ndi, it certainly india,bined with -- of it certainly is, combined with tame inflation. same thing with the united states and europe and japan. i think the amount of dovishness is incredible, and i contend the benefit is to the emerging markets. that is why we have been actively and aggressively pushing long positions since last year. guy: one of the things of late is that we have seen emfx
follett -- we have seen emfx volatility falling quite sharply. guest: brazil is an under held asset. it is really rally seeing -- it is really rallying significantly in price, and fundamentally looks like it is picking up in e-cig of a good way. we have a market friendly president and a market that is less fearful. when there is less fear in the markets, investors are more apt to look for risk. more apt to look for that higher yield, which emerging markets inherently deliver because they are riskier. the combination of a more dovish fed, a stable dollar, a trade war that looks to be diminishing in its divisiveness, at least it looks like we will get some sort of trade deal between trump and china ands growth in ertain em names, i think
point to i digital inflows. toitional inflows -- point additional inflows. vonnie: is now the time to pause on this trade? guest: no, i would say it is an under held an undervalued asset class. prices have rebounded after last year's panic. that was the time to enter, but that doesn't mean that there's not further to run. you have to be selective. if there are names such as brazil or petrobras, or argentina come over you still have depressed asset prices, you can pick up real value. i think investors are doing exactly that, and will continue to do so this year. guy: thank you very much, catherine rivera -- kathryn rooney vera from bulltick. vonnie: coming up, we talk about
♪ bit of breaking news over the last couple of minutes relating to the real estate sector, coming out of norway. sovereignnorwegian wealth fund has decided it is going to disband its real estate unit, and is going to lower the targets for it. previously it had a target of investing about 7% in real estate.
that is now going to change and drop to 3% to 5%. we have seen money flowing out of a number of these funds as late. certainly those surrounding the london market have been affected. investormajor global significantly downgrading its expectations of the amount of money it is going to be putting into real estate going forward. vonnie: theresa may is in brussels today, hoping to hear changes to her brexit deal. i spoke earlier with the deputy prime minister of ireland about the latest of elements. this is after recent comments by european council president donald tusk and other european union officials. have a listen. guest: it is a perfection of frustration in the eu side with little more than 50 days to go before britain formally leaves the european union. we still don't have a clear plan from the u.k. government as to
what they are looking for and what they want. what donald tusk said this week, while a little provocative, i think reflects frustration across the eu that we want to do a deal here. collectively spent two years negotiating with the u.k.. we got a deal on a withdrawal agreement and a future relationship declaration, and now during the ratification process the british parliament seems to be undermining all of seen so i think what we've from donald tusk and jean-claude juncker are very firm statements to say the withdrawal agreement, a legal document providing the structure and mechanisms of the certainty around britain leaving the european union, the fact that the parliament and westminster doesn't seem to be able to ratify that is frustrating and creating a huge amount of uncertainty for everybody not just in the united kingdom, but many european countries as well. vonnie: they talked about giving
the u.k. an extension. some say it should be six months, some say longer. some say there should not be that opportunity. what is your reaction? guest: ireland has no problem with an extension as long as it serves a purpose. if we need more time to give the reassurances that the u.k. needs for the withdrawal agreement, if we need more time to change the future relationship if the ration, which is the document that outlines what the u.k. and eu envisage as the future relationship permanently, if that takes more time, so be it. but i think that does need to request forth a more time, there needs to be a plan as to how we get it done during that time. if people are asking for more time just to avoid a no deal brexit, which is an important issue itself, i think many people will be quite skeptical of that. if there is a request for more
time, i think the eu will be generous as long as there's a plan to go with that request for more time to finalize these negotiations. so once on for all, we can give people a clear picture of what brexit is going to look like, and give people on my island, north and south, the reassurance they need in terms of protecting the peace process and relationships that have been so positive over the last 20 years since the peace agreement in 1998. vonnie: u.s. politicians have begun to lobby for there to be no hard border. latest is the democratic chairman of the house ways and means committee and a group of democrats. is the irish government looking this? is the irish government encouraging u.s. politicians to jump in on this? guest: what we are not asking the u.s. to do is take sides. we don't want them to be pro-or anti-irish or british or anything like that. but i do think it is important to remind people in washington and right across irish america
in particular that the u.s. has been a huge catalyst to ensuring that the peace process, first of all, was struck 20 years ago, and has been hugely successful since then in terms of preventing violence, allowing people to create a normality on the island of ireland through trade, interaction, learning to live together under the structures of the good friday agreement peace process, which the u.s. was so much a part of. so i think that is why you are seeing now prominent irish-american politicians in congress and the senate saying very clearly that whatever about the decisions of britain to leave the european union, that decision cannot have an unintended consequence on the island of ireland to undermine the peace process there. that is why people are saying, look, what is on except a bull here in the u.s. is for this -- unacceptable here in the u.s. is for this to result in a physical
border between the two jurisdictions, which would have such a corrosive impact on that have been created over the last 20 years since the peace agreement, which has been hugely positive. we don't want to go backwards, --other words, and religion in other words, in relation to peace in ireland. if the u.k. once to be able to negotiate a trade deal with the u.s. in the future, this is something they certainly need to bear in mind. vonnie: if the u.k. wants to negotiate with the u.s. in the future? guest: yes, absolutely. that was certainly the message we got on the hill last night, that there is a willingness in washington to talk to the u.k. about future trade arrangements. but one of the factors in that discussion will certainly be the need to protect the peace process on the island of ireland and to protect against the reemergence, even if it is unintended, of border
infrastructure on the island of ireland. that is something the government of ireland cannot and will not accept under any circumstances. isis something irish america strong on as well. vonnie: that was my conversation foreignon coveney, the affairs minister and deputy prime minister of ireland. we talked a little more about what the response would be. in just the last couple of minutes, donald tusk saying he is meeting with theresa may right now on how to overcome the impasse on brexit. the talks will continue. that allfirst question the journalists were asking as she arrived in brussels was is this feel like hell, given the task comments we saw a couple of days back. wirecard shares are once again sliding on another financial -- another "financial times" report that financial executives have
some knowledge. wirecard again pushing back aggressively. this is an incredible story, shaping up to be quite a titanic battle. we've got "the financial times," which has a copy of a report produced by a law firm that was mandated by wirecard into accounting irregularity, and making a series of reports on this. wirecard's ceo is pushing back aggressively, saying we don't believe this report. reporter: it was a preliminary report that the "ft" was reporting on. this is quite a drama. it is basically mono mono this week -- it is basically mano a mano this week. this battle seems like it is only beginning.
vonnie: we are actually getting a headline right now that the cfo is buying some shares, as is the coo. is there anything that could stem and outflow out of this wirecard'sss executives can produce some kind of evidence pretty quickly to counter the "financial times" reporting? reporter: i think that is what the market is waiting for, any headlines out of the company that would bolster its categorical denial that this fraud took place. one of the intriguing things if you parse the reports on this so far, looking at this difference between a preliminary report that it got a hold of and reported on and what the final report might be. it appears that the company is saying the final report justifies its position. the waters are quite muddy still on what is happening here. guy: the reason why this is important is that this is a
company at the center of an incredibly fast growing industry, payments. used to be dell. now facet -- used to be dull. now fascinating. what does this tell us about what is going on in the wider space? reporter: payment infrastructure and health in tech -- how finn techs are treating this. wirecard is the biggest in europe, displacing commerzbank in the dax. it's market cap until today was bigger than deutsche bank. investors will be looking at this as a bellwether. what is going to be having with financial technology and the payment space, especially because it is so arcane? it is so difficult to understand the business models, how they do their financial accounting. it is a very complicated business proposition.
♪ guy: time now for futures and focus. we want to get off with a chart that shows the daily trading brent.f brent is basically not bouncing around very much. the price action can trade in one direction, but intraday we are not getting much move. tim, why is this? therter: first, look at brent term structure. i believe you got the venezuela iran situation, and also something growing in libya as
well, from what i understand. you've got that tightness there in the spread. i think it is either weaker , or somedata resolution in venezuela, which could be likely. on the other hand, to get the upside i think you need global economic growth. guy: how much is the global economic growth story playing into this? central banks around the world are backing down for the fast. reporter: but when you look at the global debt situation, and also the fact that it just keeps getting worst, may be so bad it is good. i think the global economic situation is not like the u.s. situation. you have some sort of divergence going. it is hard to picture that. guy: tim, thank you very much indeed. tim mulholland from tjm investments joining us from
cme. vonnie: emma chandra is here with more. emma: today's stock drop the sincefor fiat chrysler the ceo took over last year. take a look at the bloomberg. fiat dragging down all its european counterparts today. every member of the stoxx 600 index in the red. problememand in china a to some 300 million euros. we know that is an issue for all automakers, but some seem to be handling that better than others. vonnie: it is not just china, though. reporter: yes, earnings in there's america also missed -- in north america also missed estimates. core came out with
a note on why margins in america won't improve this year, so not happy with that news from fiat chrysler, either. vonnie: emma chandra with our stock of the hour, fiat chrysler. guy: back to the banking sector. banister confirming over the last couple of minutes it has been placed under formal ,nvestigation by a french judge and connection to the suspicion of money laundering relating to the estonian business. this is what is happening with nowdanske share price right , down 6/10 of 1%. this is bloomberg.
european trading day. vonnie: this is the european close on "bloomberg markets." guy: plenty of moving parts on this side of the pond this afternoon. this,ing to start with what is showing on the fx market. cable rates bouncing back during governor carney's press conference. edove as thes bank cut its forecasts. stocks generally down today by about 1%. the dax is underperforming. one of the reasons is one of its more recent additions, wirecard trading down by more than 15%. we were talking to ed robinson a moment ago about what is happening here. the company is pushing back against ft reporting. this is the btp o.a.t. spread, i.e. italy versus france.