tv Bloomberg Markets European Close Bloomberg March 5, 2019 11:00am-12:00pm EST
european trading day. vonnie: this is the european close on "bloomberg markets." guy: let's talk about the markets right now. we do see some pound weakness. i don't think it's associated with what is happening down in westminster right now. the governor of the bank of england is delivering testimony to the lords. i'm not sure he's saying anything that's going to move the markets. what did move the pound a little earlier on in the session was a story that the attorney general is likely to come back from his meetings in brussels with very little in terms of new movement on the irish backstop. that certainly has spooked the markets a little bit. the cable rate trading down by half a 1%. that has lifted the ftse 100, trading on above average volume today, and is the outliar near europe. it's trading higher, but it's to do with the pound. the stoxx 600 is up by .1%. take a look at the five-day charted on the stoxx 600. it is barely budging.
there's not much direction in equities right now. the dax, for instance, trading on well below average volume today. the banking sector still front and center. it's named like i.n.g., rbs, what else the connection between these two? it is this growing money laundering scandal that it's pulling in, more and more institutions over here, and those are the latest names that we're talking about. raiffeisen out of austria really getting dropped. the banking sector certainly under pressure today. vonnie: we are seeing a drop in stocks. futures had pointed to a higher open, but we're not getting that momentum now. there's too much negative news around the marketplace. not not so for target. it is up 3.4%. the crew very going to be on a little bit later on, brian cornell talking with emma chandra at 1:00. don't miss that. an investor take taking place.
hertz global holdings is one of the companies that is dropping like a stone down. carl icahn getting out of the stock. he does still own a massive chunk, more than a quarter of the company. salesforce.com is another one to watch. it's down 1.3%. the outlook perhaps not as rosy as people were expecting, guy. guy: let's talk about what is happening down in westminster right now. we were just addressing it a few minutes ago. the governor of the bank of england is currently giving testimony to the lords. in terms of what he's been saying, he's saying there is some progress in terms of no deal preparation, but the economic effect would be substantial. we're joined now by the head of g-10 strategy at standard take. earlier on, we did see the pound coming under pressure. this on we did to the pound comg under pressure. the attorney general is not making much progress over in brussels. the pound has been on a tear of
late. little tong back with share for his efforts. >> don't forget this is a herculean task for the government overturning 230 votes. i think the pricing is appropriate for that sort of outcome. if the deal went afoul next week, if we got signs that it was likely from when he comes back, we would see some weakness in sterling but it will not move a great deal until we know the way out of this ministry. the bank of england -- the u.k.ure institutions have access to euros. how big of a squeeze in terms of access could there be if there were a no deal brexit? >> i don't think that is something to take seriously.
preparations have to be made. i doubt the liquidity squeeze will be that substantial. this is obviously a precautionary and welcome measure. it helps stop liquidity issues. i don't think it is something that we should become too flustered about. >> saying that there is little weight being put on a low deal -- no deal scenario. perhaps the financial markets are under waiting this to their own detriment. i don't think there is less risk of that to be honest with you. -- mps showed in the vote the government obviously allow them to have this book next week on delaying brexit.
has noent has shown it interest in a new deal brexit and that will be avoided. i think it is right for the moment -- the markets to think a no deal brexit is down low on the probability list. we heard a 25% fall in sterling on the no deal. that probability for me is probably 5%. europeansing with the in case of 5% scenario does , is that just a precautionary measure? are you saying that is far down the list? >> i think so. if we look around when we have had financial strains before
primarily during the global financial crisis and we saw the fed open up swap lines. i think it was an effective way of getting liquidity into banks quickly. since then, those lines have been extended and more central banks have come into that old. it is a popular measure for central banks to take in cases be someere will adversity. a no deal brexit falls into that category. i just don't think it is something that will end up being used. could he be dovish enough to get it out of the range on thursday? can he get the euro out of its range? >> i think we are sufficiently-esque angst within that range.
we are sitting at the lower end of the moment. i don't think he actually will be that dovish. the forecast may be adjusted down again another 10th for gdp and inflation forecast but i don't think the basic message that the ecb has about how it is stopped as it purchases or thinking of a restart -- restart or anything that. i think the market is square behind that idea. it is a question of the technical details of if the ecb is ready to announce what it wants to do.
that is clearly the direction of travel and if that remains the case than the euro should move. >> what is your outlook for pound sterling? >> i am bullish for sterling. i believe that the u.k. will achieve a deal with the eu. it could be on the boat after next. think we will go to a second referendum or go to a new election. i don't think there will be a no deal exit. i think a lot of investors have hedged sterling and case there is a no deal exit. once it becomes confirmed that the u.k. has avoided the no deal, those hedges will be unwound and sterling will go up. for it tonext year is be of in the 140 range. what has changed in europe and the last weeks cut my comes to investing?
it feels like most people are saying europe has become more investable recently. lot is going to depend on how the economic data goes. in economicweakness data in the u.k. and the rest of the eurozone. if the economic data continues to deteriorate, i think there are big question marks about that. there are question marks obvious they avoid a no deal outcome, if brexit is not as good as being in the eu. i think international investors might still question the wisdom
of going to overboard on getting back into u.k. assets what's the brexit saga is over. >> stephen is going to stay with us. the president of the united states wants a weaker dollar. he certainly has not got that. the euro trading at 113 even. let's check in on first word news. >> in tokyo a judge has upheld the decision to grant -- grant bail for the former nissan chairman. the appeal that he remain in jail over financial misconduct. than 100 days behind bars. he could still be arrested again on new charges. president trump is making another move aimed at what he calls unfair trade practices. he has notified congress that he will -- key trade practices for
india and turkey. india says withdrawal of the benefits won't have much impact. says a rateresident hike could be in place for some time. in a speech earlier today he several monthly meetings before they determine where the economy is headed. you expects gdp to extent -- expand by more than 2% this year. have passedppear to another milestone in the aids epidemic. a patient with the virus that causes aids reportedly has been -- following a stem cell transplant. the scientists will publish the report today in the journal nature. global news 24 hours a day on air and at tictoc on twitter powered a more than 2700 journalists and analysts in more than 120 countries.
from new york, i'm a vonnie quinn. johnson.y this is the european close on bloomberg markets. >> let's check the global markets. >> they are a bit mixed right now. a slight decline for the dow and the s&p 500. they are both on pace for a fifth down day. possibletion to a trend ship. look at the shanghai composite up. china recently put out a growth forecast of 6%. the lowest in decades. look at a bloomberg chart. this is the city economic surprise index.
when it is up and tells you the data is beating expectations. now at the lowest level since 2012 on a number of mrs.. the european pmi's coming out better than expected. this could lead into that. upside,vers for the look at these retailers. the target is up. kohl's-ish up on higher. target is issuing a great outlook.
revlon is a laggard for today. plunging down 22%. its worst day since 2017. the nielsen data shows worsening trends of for revlon especially over the last four weeks. >> iq. let's look at china. economist and strategists are weighing in earlier on bloomberg. pushere is a big fiscal with very little said about monetary policy. monetary policies are set on a non-resolution to the trade war. >> now with the trade war going, china has decided that it needs
to reverse its policies and come all out in support of both. chance china gets a new to trigger this reform. pillarsof these little , thesedifying the base are been left behind in this great big monetary stimulus. >> the government might ease this deleveraging process. we might to see -- see real average and going forward. our guest is joining us from standard bank. at the chinese are downgrading their growth expectations yet the recent data is showing signs of stabilization.
stimulus is working. if we continues to see data like this, does the yuan go up? i am not sure about the data. we saw some straight -- strong credit data by january can sometimes be freakish in terms of credit data. i still think the economies momentum is going to continue to slow down. respect --ssue with is the trade pressure. in the short-term, the biggest issue will not necessarily be the economy that what u.s. pressure comes to bear. toknow the u.s. wants include the remember the end the trade rate. be interesting to know what that is and how the market response to that. the u.s. is aggressive and china
is seen to acquiesce, maybe that is where the strength comes from. i don't like it comes from a stronger economy. >> if there is a trade deal, is the knee-jerk reaction to buy the dollar? >> yes that is the knee-jerk response of the markets. i am not sure that that implies strength going forward. that is probably the knee-jerk reaction. probably a trade deal is better for everyone else than it is for the u.s.. it eases a lot of the uncertainty that we have had globally. you can make a case for it being better for everyone else than the u.s.. the short-term reaction might be
to buy the dollar. right now year to date the argentine peso is the worst performer versus the dollar. the ruble is the best performer. emerging-market currencies in general, when you look at levels of volatility, they implied .olatility last year, we have specific problems in certain countries like the turkish lira. volatility may be a positive factor in terms of the pause from the federal reserve. there are lots of currencies
that you can use as funding currencies for emerging markets. it is a question of aching and choosing carefully and making sure that the currencies you arese on the buying side those that have the best prospects. >> what are your favorite at the moment? emerging --of emerging-market currencies, it is probably more an issue of the ones to avoid. on the trade issue side, as we the u.s. reduced its preferred trade status for turkey and india.
that shows the bias of the u.s. administration which is not just for developed countries. maybe those two currencies -- i would have on my list of currencies that could weaken for trade reasons and other reasons as well. thank you for coming to see us. we are six minutes away from regular trading in europe. we will talk about the next. this is bloomberg. ♪
fractionally higher on the session. we have a lot of stocks moving and a lot of volume. is muted.e the vix what is happening in europe? >> we see the pound underperforming. volume in london is very good. it is very weak on the dax. in point terms, the biggest drag on europe today is ing. out of the netherlands. it has been sucked into the money laundering scandal that is now capturing other banks including rbs in london. this is bloomberg. ♪
the u.k. has -- is the brighter green story today. why is it up? because the pound is down. this is a strange relationship, but it does hold at this point with the pound getting knocked down by rumors that the attorney general is unlikely to come back from brussels with anything significant. and the ftse 100 is up by 7/10 of 1%, trading on good volume as well. dax only up by 2/10 of 1%. that volume story has been light, down around 20%. and volume across europe a little bit on the negative side. the cac-40 is also up 2/10 of 1%. the market is looking for direction, may be looking for some trade headlines to help out. let's talk about individual names, single stocks, to give you an idea of what is going on. we have the banking story front
and center. terms, take a look at the stoxx 600, it was ing that did the most damage today, less in points terms. that is having a gravitational effect. vodafone putting out a convertible bond into the market, part of the liberty acquisition, and the market is taking it well as the stock is trading up 2.3%. campari out with numbers. it has been selling very well. the comps are getting so difficult now, that they are pointing in the fourth quarter to a slight slowdown in sales. but the numbers have been so stellar, and the market is knocking it down by 6.62%. london outperforming on the volume side today. the continental market a little less so. light volume across europe
today, although we did see it tick higher when the volume story turned more positive. we can show this to you. we saw the pound go down. volumes point here, ticking up as greater volume was going to the london market. and we are still trading a little bit lighter compared to the 30 day average. vonnie: here in the u.s., the top markets moving include brazil giving back some gains. pension reform is a little iffy in brazil. but there are plenty of positives on the country as well. ubs buying reads. and we mentioned the stronger dollar earlier. some currency is affected by that, the british pound, the canada dollar obviously, and swiss franc, all lower. risk on and risk off today. take a look at the commodities complex. you can see copper is
rebounding. coffee, as well. natural gas down about two thirds of 1% in the united kingdom. and in terms of other forex moves, the australian dollar is another want to watch. that is all on your top market movers. guy: let's talk about what is happening with the brexit story. top ministers coming back to brussels today in the hope of negotiating changes. geoffrey cox, the attorney general, the main person in focus. we are joined now by emma ross thomas, our brexit editor. the pound took a knock earlier on a story that geoffrey cox is going to be unable to deliver anything significant over the next couple days. maybe we have to wait until the and of the week. we are getting some theories about this story. he will be meeting over the next few minutes with officials. how much do we know? emma: he is going into a meeting now, they will have dinner with
the team this evening. i think that the story today was the u.k. government was playing down expectations, don't expect a breakthrough. we are also being steered toward expecting news toward the end of the week, possibly may could go to brussels over the weekend. and the deadline for the vote is on tuesday, march 12, so i would not rule out the piece of paper does not emerge until monday. the pre-brexit lawmakers say they want have time to take a look at this agreement, this text, this legal text, to figure out what it means, but i would not rule out a coming pretty much a day before this thing goes to a vote. vonnie: we have the ceo of -- foods on saying they are stockpiling things like fish, so they can have fish fingers when the time comes in case of a no deal brexit. mark carney telling the house of lords financial markets are underprepared for a new deal brexit.
and a market participant saying, there will not be a noto brexit, is everybody ignoring a freight train that could be coming? emma: it does look like the immediate risk of a no deal brexit on the 29th of march has almost certainly been avoided because, theresa may give parliament the opportunity to vote on new deal brexit. and it has been clear that there is no majority of parliament for a no deal. of course, theresa may would say she is only taking it off the table for a few months. in her words, this is the cliff's edge, because she says she only wants an extension for a couple months, so you could be looking at a no deal cliff edge in june. bear in mind, as parliament has taken it off of the table now, one would think they would do it again. the other thing to think about, the european union does not want a new deal brexit.
there is going to be some wrangling about the length of this. if may's deal is voted down, parliament votes against no deal" for an extension, you will see some wrangling in brussels at the home on the extension should be allowed to last, and what it is for. guy: this is increasingly feeling binary. and geoffrey cox, if he comes back and says, i do not feel like i made progress, the u.k. will be locked into a permit customs union under the way that i see it, the way the legal story is developing. or he goes, we have made progress and as a result of which there is wiggle room for the u.k. not to be stuck in a permanent customs union. that seems to be the fork in the road, which will determine pretty much everything. emma: or perhaps there is a ford -- a third part, where he says, i have done a good job, and i am convinced, but the hardliners say, we are not convinced.
the is the risk for theresa may. guy: ok, thank you very much indeed. emma on brexit. vonnie: let's move to the continent of europe and huawei in europe opening a cybersecurity lab in brussels trying to fight back u.s. allegations that its equipment poses a national security risk. we are joined by maria live in brussels. . it is seem like they should be experts at proving this, what is the company doing to prove it is not the criminal here? >> they are clearly on a very european cahrm the event -- charm event. companye open this new in brussels. digital services will be here coming out of the european union. they said, we are a company that does the same business as any other american company. and i spoke to the global
security officer and he told me, if you look at the allegations, none have been proven in court. this is what the eu should focus on. take a listen. which would be that america would take a similar approach to europe and other countries to collaborate and be more open, because security is a global challenge. if america wants to adopt the best technology today, the only --pany doing 5g is while way is while way -- is this company. >> the europeans are aware of the allegations. tehy are very aware -- they are very aware of the practices in europe. they have said we may have to restrict the use of chinese technology and the head of the european commission carefully about key sectors in europe.
guy: but the europeans are still taking a less drastic approach them in the u.s. at the moment, maria. huawei are the hopes of in europe, what chances do they have to be a significant part of the 5g rollout? maria: a lot of this has to do with 5g. you are right come in the u.s. they have been banned from government agencies, anything to do with the military. in europe, they are only looking at it, but has not been banned. they think they can continue to grow for the supple a reason that there is also a business case now. if you stop using chinese technology in europe, that inevitably means the cost will have to go out. -- up. that is something ceos have told the authorities, we do not want to use chinese technology, that is great, but be prepared for the costs to go up. the rollout will also be delayed
and that will have repercussions for clients. in the eu, it is tricky because they are aware of political tension, but there is the reality of business, and that is costs will go up. vonnie: are there any countries that are more incentivized than others, some that would be more friendly toward huawei. ? maria: when it comes to negotiations, the company is aware that most things will come out of brussels and they look at the eu as the eu 27, but they know the french government and german government are the most strict. and we heard of this story play out in a recent merger that they do think there is a risk from chinese companies and that they should protect european companies in the face of a chinese threat. another country they want to focus on is the u.k., they want to look at this after brexit and they really think new legislation will probably be put into place in the u.k., a market
that they are still fond of and interested in. guy: that is interesting, because the pushback from the intelligence community has been very strong out of the u.k. and there has been a good deal of pressure coming from authorities that we should not see huawei playing a significant role in the u.k. how do they think they could play a part in the 5g rollout story? maria: they think the pressure from the u.s. has been pretty strong on the u.k. side to drop chinese technology altogether and that has not been the case. they also think, this is why we uawei, ins from h which they have a case that the allegations were actually not correct, and that could help their case. and they think with brexit, that will trigger a new negotiation
and perhaps the standard will be different in those to the european commission, which have said at this point, we need to keep an eye on strategic sectors. perhaps they think the standards may be different in the u.k. the fact the u.s. has pushed the u.k., but until now they have not banned them and they have kept the door open for huawei. vonnie: thank you, maria in brussels. let's check in on first word news. courtney: new home sales in the u.s. rose in december to their highest level in seven months. purchases up 3.7% to an annual rate of 621,000. mortgage rates have fallen since peaking in early november and that appears to be supporting a sales rebound. we are getting new details about how dangerous the tornado in alabama was. officials say at least 23 people were killed, 90 others injured, this in the small community of borough guard. the twister's path was nearly a
mile wide and a strong enough to bend a car around a tree. the storm had winds over 170 miles per hour. more than 30 states want to replace aging voting machines before the 2020 elections, but do not have enough time or money to do so, according to a report from nyu law school. the states received $380 million in election secured grants last year, but experts say that is only a fraction of what is needed. and more european banks are being drawn into money laundering allegations involving dirty russian money. the latest had its shares drop more than 15% after bell batters fund said they ignored signs that would've stopped the laundering of money from criminal activities. at least two dozen banks were banks were mentioned in
the allegations. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is bloomberg. guy: thank you very much indeed. courtney mentioned the banking scandal story, rbs in london acting as a drag on the ftse 100. not much move in the auction process today. the ftse 100 finishing up by 7/10 of 1%. dax is barely budging. 1/100 is finishing up by of 1%. if you are getting into the car, tune into "the cable" show with a jon ferro in new york. i will be joining him in london. find us on all of your bloomberg devices. this is bloomberg. ♪
the european automakers in switzerland are facing uncertainty, including brexit and tariffs. matt miller discusses these issues with the ceo of vw at the motor show. >> we have been talking to the trump administration, also to the european administration, to berlin, because it is really a threat for us. americancost us -- the market is very important for a premium brands lieke audi, mainly, so we will be trying to avoid this conflict. i think it is possible to avoid it. you have to understand that between the tariff negotiations, which is not only covering the automotive market, but an area here, so we can only facilitate
and show goodwill. matt: there are different tariffs, but donald trump seems focused on the 10% tariff that the eu has leveraged an american cars, would you be happy to get rid of that? herbert: i do not think we need to protect the companies with that 10% import tax, i think it is not necessary. we are competitive. but you have to understand that in the tariff scheme between different products, and this is not in our hands, but we would be open to that discussion. matt: there are only 24 days until the official brexit is scheduled, can you quantify the cost of a hard brexit to vw? herbert: it is hard to quantify because we do not know exactly what will happen. it might need a transition period in the u.k., but the biggest exposure is the big
which has about 85% of its production going into asia, europe and the americas. so for them it would be a major problem for operations. audi,u have our line for so it is a big market. but i hope that after a decision some way ort it is another that of market would recover and we would keep selling cars there. vonnie: that was the ceo of vw speaking to us from the geneva motor show. our stock of the hour is one of the retail winners of today, kohl's giving positive guidance for the coming year. here is kailey leinz. even better than target. >> they are the best performer in the s&p 500 today, the fourth quarter looking good, beating on earnings, coming in above
estimates, but it is the guidance driving them higher. they see margin expansion of 10 basis points this year. the earnings personnel number $6.15, that iso higher than the average estimate. that shows a lot of their initiatives, specifically their partnerships, are really paying off, especially their partnership with amazon. they have a partnership that allows customers to return goods bought on amazon to their stores. and they are selling amazon products like the echo dot. they also have a partnership with ww. they have in-house in-store studios in some locations. the partnerships are paying off. guy: now a partnership with planet fitness. >> this was just announced. planet fitness is announcing a development partnership with kohl's. they will open 10 locations adjacent to kohl's stores. that could drive a lot of traffic.
emma spoke with the ceo planet fitness, who said that they are a good neighbor to have. a lot of customers come during the week, and traditionally most see the traffic on the weekends. we have seen the rally of shares accelerate for kohl's since the news was announced. so there could be some benefit from that partnership. vonnie: ok, kailey leinz. stock of the hour is kohl's. coming up, battle of the charts. this is bloomberg. ♪
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take a look at the purple line, that is the s&p as a benchmark, but the blue is the meggitt etfs tracking those who 's political affiliations lean that way. general electric and boeing here. down over the past 12 months. moving upward, if you are a pet lover, there is an etf for you, invests in pet care companies, so you profit from people who are spending on their furry friends. and also the final frontiers etf. but clear what that is, basically it focuses on deep space and the deep-sea, making investments in companies that do things like shuttle parts or astronaut food, or satellite technologies. this is up about 2% over the
past 12 months. so doing a bit better. and the millennial etf, the best 13%, itr so far, up makes money off of millennials and how they spend their dollars. thevocado companies, closest i could find was the sprouts farmers market. millennials love them. vonnie: how fun. etf'sit ps -- quirky indeed. get more details on that at the gtv function. guy: millennials in the u.k. could have a problem, because avocado imports could become an issue after a no deal brexit. avocado needs on both sides of the atlantic. this chart shows you the proportion of stocks in the shanghai comp, around 1500 better trading above their 50 day moving average, which is an important indicator. the number is incredibly elevated, up near 100% and it is
a broad rally taking place in china with a lot of it be interim by the margin story. they have opened up the margins a great deal. if you are looking to evidence as to why this could get going in china, take a look at this chart, you will find it on your bloomberg gtv 4487. vonnie: that is a wonderful chart, but i think today was a little fun, so i will award the winning avocado, that will be the prize today, to hannah. coming up in the u.s., asia and everywhere online, "balance of power" with david westin. he will be talking china and lots more. this is bloomberg. ♪
on the brief today, peter coy on the new china economics. and josh wingrove on prime minister trudeau's struggle with his cabinet. and maria from brussels on the campaign to reassure europe on national security from huawei. we have a new plan out of europe. >> they are looking for growth about 6.5% versus the target last year of 6.5% and they came in around 6.6%, and this does not include the possibility of a cyclical recession. they are try to find ways to combat the slow down and there will be tax cuts. there will be value added tax cuts. cuts in social security premiums. and they are trying not to do it through more debt. but there will be in increase in the projected