tv Bloomberg Markets European Close Bloomberg March 6, 2019 11:00am-12:00pm EST
european trading day. from london, i'm guy johnson. vonnie: and from new york, i'm vonnie quinn. guy: let's look at the markets in europe. the stoxx 600 down 1/10 of 1%. suggesting the ecb will downgrade the forecast tomorrow. justify theough to governing council delivering long-term financing for the your pain -- for the european banking sector. we saw a big spike in the banking sector that has now unwound. we saw a big story with the euro versus the dollar, which has unwound as well. the market has gotten to the parts -- has gotten to the point that they believe brexit is coming and is creating a knee-jerk reaction, telling you where positioning is. volume today is ok, but that is
a factor into that story. vonnie: in the u.s., let's look at currencies. dollar, keeping interest rates steady after the canadian economy slowed at the end of last year. losses down one third of 1%. keep your eye on aeon that decided it would not go ahead with any takeover, and the stock is taking back some of the losses. 4.4% to be exact. , sales missed estimates. ratchet that to back because of tariffs. guy: the british pound trading
down for the last five sessions. this has brexit talks go down -- this as brexit talks go down to the wire. not go smoothly. prime minister theresa may is back in brussels to discuss her deal next week. ourt now we have tina, chief political analyst. what is the sense of the distribution of outcomes when it comes to brexit at the moment? what are you expecting? the very short-term, things have not changed so much. think article 50 will transpire, whether or not the prime minister's brexit withdrawal is approved next week. you can see markets have priced
in the worst option, which is a crashing outcome on march 29, and that seems quite unlikely. kicking the can down the road, it has become business as usual when it comes to brexit. it is hard to see positive breakthroughs coming about. guy: will the delay salt anything and how much of a delay will the e.u. allow? tina: the prime minister has gone from avoiding any type of extension and one to deliver -- and want to deliver brexit on time. even if her deal goes through, which is a long shot. remember, it was voted down in december, but she conceded that they will need more time to pass this of legislation needed to deliver brexit, but she said they will keep that time horizon
for an extension bury -- extension very short, but the longer, aboute it 21 months. the longer it takes for something to transpire, the less likely it is to happen. a long extension of article 50 could really change the political calculus. vonnie: tina, what kind of a billion are we seeing right now? it is as strong as some conservatives would like it to be? tina: well, remember, some conservatives of mps have dissected as well, reviving a term from the cold war in an interesting way. remember, we have seen this in the united states with republican senators regarding the border wall. not a lot of space for small parties to come about.
thingion has become the for members of congress. it has become difficult to abandon. but it shows you how high the stakes are with brexit. this will last indefinitely, having satisfaction with the labor leader, jeremy corbyn. vonnie: tina, how much our clients of citi asking about brexit? takenheir concerns precedents. well, for a long time, u.s. and china trade have been major issues. investors are
understandably, not being able to differentiate signal from noise. we will see an 11th hour intervention at the last second. [no audio] guy: tina, your expectation is there is a delay and a crash out. if that what you are saying? rangeit is a delay with a of plausible outcomes after the delay. move the delay, we could forward with the prime minister paschi deal. we could have a crashing out
get a, but you have to .onsensus around this and if there is a longer delay, we could see a general election or a slow probability, another referendum, but in other words, all of the possibilities remain on the table. albeit, in a different order with a deal less likely than in might have been, and it reasonable prospect that the premise to does get her vote, also she has offered a third meaningful vote, or suggested it, why would anyone vote to pass it on the second round? it is a groundhog element here. guy: it feels like it. the ecb will significantly downgrade its inflation forecast and growth forecast for the eurozone. stagnates, how does
that change the calculus between countries? slower growth presumably means low tension. what does that mean for investors? investors, i mean, look at data as it appears kind of on our screens minute by minute, whereas voters are much slower to internalize and feel the effects of inflation and slower growth. you could make the case at many of people -- you can make the case that particularly of people in the u.k. and the u.s. don't feel they have benefited from the global, economic recovery. there isn't a huge global impact, but a debt crisis, a financial crisis, or indeed, a recession, would probably boost support for these non-mainstream parties. italy where weis
have seen a far right party in coalition with a far left party rather unusually. elsewhere, france and macron, for example, the centrist party has become about -- has come about. but performing less well than the green party, so it is a real mixed bag. the fact the u.s. and the u.k. numbers a fairly small of voters, 35% in both cases, were able to see their candidates win, where as in europe, the parliamentary system means that little parties can of as the skate valve anti-establishment sentiment. vonnie: we are getting a takei spokesman telling us there are still changes to the brexit backstop -- we are getting a u.k. spokesman telling us there are still changes to the brexit backstop.
the u.k. spokesman coming out and talking about the brexit process. what left -- what work is left to be done on the brexit backstop? it sounds like it they don't come up with something in the next few days, it sounds like armageddon, and i hope that isn't literally. tina: the irish are concerned about the backstop. i have had conversations about irish -- conversations with irish statesman who say how significant this issue is for economic stability in ireland. i don't see but you getting -- i don't see the e.u. getting in very much -- giving in very much. the brexiteers have been those concerned about the backstop. this,er, the u.k. wanted
but the brexiteers wanted a binding description of the backstop being temporary. on theirt is resting shoulders. tina, stay with us. fromfordham joining us sydney. vonnie: here is courtney donohoe. courtney: the u.s. trade deficit is resisting president trump's promises to shrink. it is 12.5% higher than the previous year. he cites the deficit as evidence of the failure of his predecessor's trade policies. -- the former nissan chairman posted a $.9 million in bail, one of the highest amounts ever in japan. ghosn a chance to
work with them. his may try to extend detention. north korea reportedly is restoring facilities at its long-range missile site. hasjong-un's regime dismantled it. lastly, the summit on nuclear weapons between kim and president trump broke up without any agreement. as we had been talking about eventa may risked another over the revised brexit deal. the chairman says he is not confident she has those numbers. he says next week's vote will be tight. global news 24 hours a day, powered by more than 2700 journalists. i'm courtney donohoe. this is bloomberg. guy: thank you very much indeed. let's look at the european
has been a risk off tone. atking at the s&p -- looking the s&p 500 at the dax, both are down, on pace for the worst seven sessions of 2018. investors searching for clues as to what is next. we are seeing a bid for bonds. it is suggesting we could see more of a pullback for the s&p 500. he trades off the global flow dynamic. and we have u.s. bonds rally as well. oil is not rallying, down by 1%. this chart suggests we could see weakness ahead of -- we could see weakness ahead for the s&p 500 if the bond does not strengthen. this is before the huge period of volatility. warned is looking at oil -- orange is looking at oil. both the s&p 500 and oil is
down. still and a bear market. if the lower round would correlate to $55 a barrel, should break if the bears take that, and could be a negative signal for the s&p 500. oil being less liquid than stocks. on the s&p 500, take a look at exxon mobil, down 1.8%. their plan to boost spending has not worked. investors wanting this sooner. pfizer and ge are down. they said the turnaround plan will take longer than expected for the power unit. negative free cash flow and investors are expecting positive. investors not liking this at all. vonnie: yes, another planning for the day for ge. is with us.
2020 is a long way out, and investors may not be trading on 2020, but seems like they are perking up their years, thinking about how the landscape will change in the next presidential election. is that what you are expensive at citi? tina: yes, as of this week, the request about the democratic primaries, that's her extra early this year in july, whether democrats will put forward a so-called hard left candidate, those are all rising to the top of the list of questions from investors and clients. vonnie: what sectors of the market would you caution people to be most weary of when it comes to how it may change in 2020? is the health care trade the correct trade? liked thistors never
answer, but this is why i am a political scientist working in financial markets. the leading contenders at this stage of the game never, ever turn out to be the actual winners. we all start this game, some of us tried to map out the policies in which way it is going to go. 2016, we wereion, off within the margin of area -- the margin of error. in this case, we have so many variables from a very crowded field, from democrats to the state of the u.s. economy. if it does soften, will it have an impact on voter sentiment? that is far from clear in my view. and what happens this year with a rubber mueller investigation and under -- with the robert mueller investigation and other pressures on the president?
so, so many variables to consider. but if you try to make me come out with what i thought democrats would do, i think they will go for a candidate who is less than hillary clinton, and criticism of the democratic party shows that centrist third , the compared to the u.k. policy platform failed. ok, so just to be clear, tina, you are expecting a more centrist candidate to emerge in the primaries? so, they are going to go to the left? you think that candidate is not going to win over donald trump? tina: that is correct.
kind of a centerleft has diminished as a franchise. sadlyestors, that is -- for investors, that is what we are used to. i do think you will see more hard left candidates and rhetoric from democrats. lots of coverage in the u.s. about this sort of -- strange to my cold war mind revival of the term socialism -- is what we would call a social safety met -- a social safetynet. but yes, i think younger voters, the economically anxious, are going to push for a candidate that helps deal with that type of uncertainty and address it in a more forceful manner. vonnie: unfortunately, we have to leave it there don't. our thanks to tina fordham, city's chief global -- citi's
♪ i'm guye from london, johnson. vonnie: and from new york, i'm vonnie quinn. this is the european close" on bloomberg markets." officials arels, discussing consolidation in europe. >> consolidation is inevitable. there are four airlines controlling 80% of the traffic. i think the industry will manage consolidation, but if you look at what is happening in the u.s. with a lot of consolidation, i don't think it has been well-received by the consumer and regulators. in europe, consolidation has been more measured.
it is definitely in the consumer's interest. >> will you be one of the strong will you find it hard to compete going forward? >> some airlines are disappearing, and as such, i think fair consolidation is likely to happen. bankrupt, and i think there will be further consolidation. guy: airline executives from around europe, talking about consolidation in the united states and what could happen here in europe. marketslet's check u.s. a couple of hours into the open. indices are lower. the s&p 500 is down by .4%.
of --wer by the likes walgreens dropped 3% on the dow. the dow also seeing for performances by exxon mobil and the energy companies. guy: the mining sector is up in europe. parts sector is down and that is why the dax is underperforming. the ftse 100 has lost some. this is bloomberg. ♪ so with xfinity mobile
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customize each line by paying for data by the gig or get unlimited. get $250 back when you pre-order a new samsung galaxy. click, call, or visit a store today. we are wrapping up the european trading day. 30 seconds until the end of regular trading in europe. the mining sector with a fairly solid day, that is why london is
outperforming. the auto sector with less of a good day. although fiat chrysler has had a good session. partnerships could be on the agenda. let's take a look at the numbers. you can see the difference. the ftse 100 is up, dax and down. -- dax is down. and not a big difference on the cac 40. in these days of mild swings, we have seen little action over the last few days, so this is worth paying attention to -- cac 40 absolutely flat. one story moving the markets is one that bloomberg generated earlier on, a suggestion to the ecb -- that the ecb will downgrade projections tomorrow. we look at the press conference from mario draghi. today, you have seen can see the point at which of
the story came out, because this will be good news for the italian banks, spanish banks, you could argue it is good news, but not for all. and then you have a fading off of the story. i would suggest indicating that the market is already largely pricing in that story. in terms of stocks moving around europe today, fiat chrysler, that is one of the standout stories today with news coming out of the geneva motor show suggesting that maybe there is the possibility of a deal getting done, up by 3.96%. ing, the banking story, the ongoing dirty money scandal that we will talk about in a moment, that is rippling through the banking sector, down by 2.5%. and you have the scandal on one hand, another story on the other hand. and the head of the fda in the united states, the commissioner has decided to depart.
and there is a great deal of exposure from the u.k. and u.s. -- there have been comments regarding the market. a little bit of a bounce back, the that stock has been pummeled, british american tobacco. and we are pretty much on the average line here with the volume. but from aolume day, price point to view the markets are really going nowhere in a hurry. vonnie: continuing to see deterioration in the canadian dollar after the bank of canada left interest rates unchanged following the slowing of the economy last year and it is at 1.3431. and the s&p 500 is down one third of a percentage point. back losses from yesterday with a 24 hour news cycle, it could have been making an acquisition or offer, that
beingby watson was considered, potentially, buyers regulations suggested that they had to come clean with it. the upshot is aon is not going ahead with it, so getting back those dollars a lost yesterday. and one of the earnings stories today that disappointed us, it was looking like they would have a great year, but tariffs would say just that sales are being impacted. and a look at the global macro movers. let's see what else is going on in the g10. we are looking at the nikkei, lower on potentially a weaker yen. you can see the oil currencies are weaker as well. the canadian dollar, obviously that is weakening. and the australian dollar. and you mentioned to the british pound? guy: five days down. coming uppotentially, over the next 24 or 48 hours.
in europe, the ecb policy decision in focus. bloomberg news learning the central bank will cut its forecast by enough to justify a new round of cheaper funding for europe's banks. the new projections are expected that are expected to deliver a sharp downgrade to inflation and growth. joining us now is marcus, you have been predicting this for quite some time. the that it is pointing toward at, the ecb is planning -- th was the point i was about to get to. ,arcus: something that -- today this shows us that the ecb is listening and i think clearly we will get something tomorrow which is the logical when -- ill ical when you get these numbers. the trend is barely positive. the interesting thing is maybe
growth will return to trend by the end of the year. that is a big hope. vonnie: how are equity industries so positive? year to date, we are seeing double-digit gains for the major industries across europe. marcus: they are borrowing money, that is the only thing they can do. if they do not do these by june, effectively a massive tightening for financial conditions. it was well known and the fact that they are admitting it, that the growth forecast is down, ticking the boxes of the hawks, as we say for the governing council. it is going to be a lot of cheaper money again for the banks. and in theory, that will go into the system and buying government bonds, for the italians i would imagine. but that shows the central bank realizes there is more to do. guy: is the bounce back
predicated on more financial stimulus being delivered? are they capable of delivering a turnaround without more stimulus? marcus: that is a moot point. i think that the ecb thinks it will come back, but they also want to help it, so it is a bit of both. they think the economy is starting to flatten. and there are some signs. italian growth fell 1.2, surely that alone must be reason to cheer. but it looks to me like there are signs that the worst is over, but clearly the banks need more money into more access to this type of funding and therefore, it makes sense to do it. and it backs of the generals moving out of the decline. guy: marcus ashworth, thank you. clearly, we will be covering the press conference tomorrow. always entertaining. and tomorrow should be more so than most. turning our attention to a different angle on the story
today, more allegations in money laundering and european banks. ing was aware a client in its moscow branch was "potentially involved" in laundering dirty money, this according to a dutch newspaper this morning. the royal bank of scotland also looking at reports of money laundering, according to another dutch report. money from russia was moved through accounts at other banks that became part of rbs. >> some of the russian money went through an entity which we acquired in 2008, and a business that has been closed down subsequently. that makes it difficult to know whether this was before we bought it or after it bought it. and who is responsible for it, i am afraid we will have to work on that. royal bank ofthe
scotland chairman speaking with a bloomberg. joining us now, our senior finance editor. he was making the point is hard to find this stuff, you have to go back through all the records. ing is doing it, dots bank is doing it, have we gotten to the point -- dots bank is doing it, have we gone to the point where every bank has to go back to see whether it will be implicated in this? how wide could this go? >> it could go wide, but it is being driven entirely by press reports. the banks are not doing it on their own, it is only when the media organizations, these investigative reporters go after it and find it, that is what is forcing the banks to come clean, at least, because there has been virtually no pressure on the regulatory side, on the money laundering issues. vonnie: what other ceos are shaking and running scared today, james?
this is broadening out, how much will it broaden out? james: again, it entirely depends. you know, we have -- it depends, i guess if it spreads to correspondent banks, you know, you have certain banks, especially those that did business in eastern europe, whether the baltic states or russia, those are probably the ones most directly implicated. but then you get into correspondent banking, that begins to attach you to bigger money center banks, potentially even exposure in the u.s. jim, bloomberg wrote a story that this highlights how weak the cops were. the policing has been incredibly weak. we talk about the risks in financials themselves, but the regulators need to think about how they have been acting and think about how they are going
to act going forward. how to give a shift do you think we will see? james: i am a skeptic. if you look back before the financial crisis, it was really, all for one and one for all. and the crisis gave impetus to a european effort to form a banking union, and they moved ahead well on the regulatory side. you know, the signal supervisory mechanism. but they ran out of energy before they got to the of portsmouth side. and the money of -- to the enforcement side. and the money laundering has to do with enforcement and there really is no enforcement mechanism for this. no law on the european books. ad it comes down to donnybrook scrum among european capitals. everybody has their diverse interests. and short of a major cataclysm the crisis -- or crisis,
political pressure may not be strong enough to forge a consensus. thank you very much indeed. vonnie: it is time for the bloomberg first word news. here is courtney donohoe. courtney: a gloomy report from the oecd, the organization cutting its outlook for global economic growth from 3.5% to 3.3%. and it could get worse as the risks pile up. among them, trade disputes, a disorderly brexit or debt. president trump pressure in trade negotiators to cut a deal with china soon in hopes it will help with a market rally. bloomberg has learned the president is concerned that the lack of an agreement could bring down stocks. the president is looking for a win after the summit with kim jong-un collapsed. and president trump's former lawyer is back on capitol hill for a fourth day. he will testify before the house
intelligence committee. his appearance will be behind closed doors. he could be asked about russian meddling in the election and the possible obstruction of justice. and wall street pay limits getting a fresh look from regulators appointed by the president. bloomberg has learned u.s. agencies may dust off post crisis rules that were on the back burner, rules meant to curb bonuses that could encourage investors to take dangerous risks. 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. guy? guy: thank you very much. european markets have settled. london ticking a little bit higher, dax a little bit lower. bat is the biggest gainer in terms of points, in terms of the stoxx 600. and do not forget to tune into bloomberg radio, "the cable"
guy: live from london, i'm guy johnson. vonnie: in new york, i'm vonnie quinn. this is the "european close" on bloomberg markets. regulators considering restrictions on bonuses through wall street. bloomberg reporting that even the anti-regulation trump administration might be keen on supporting the legislation. with more details, here is jesse westbrook. who revived this?
where is the reasoning behind this right now? >> this is a requirement under dodd-frank, never done in eight years of the obama administration, although it did try. trump won the election and we never heard anything about it for a few years, but recently we fed anders that the other agencies are talking about trying to revive the rules, which i meant to curb the kind of incentive pay arrangements that prompted bankers to take dangerous risks. short-term clawback, longer clawback periods, making sure that deferred comp is over longer periods so that the bankers can do deals, walk away and make a lot of money, then those deals blow up and hurt the financial system. guy: at what stage is this at?
how early in this process are we? jesse: i think that we are very early. there were sort of very thought-out, ironclad proposals that were released as early as -- as recently as 2016, but i think that those are all but dead and we are starting -- t tho the degree we are starting at all, it is a clean slate. i do not think these regulators want to be as aggressive as those who came up with these in 2016. that proposal was really aggressively criticized by banks. i do not think that is what the trump regulators are looking for. you could argue they are looking for something that satisfies dodd-frank, but does not punish wall street in the way that this administration has no interest in punishing it. vonnie: is there something that wall street is getting in return for allowing this to happen, if you like? jesse: i do not know about in
return, but i would rather have jay powell oversee or dictate what my bonus policies are than somebody appointed by elizabeth warren. you look where the democratic party is going, we have talk of transaction taxes, taxing wall street trades, nothing is feeling more -- fueling more policy outrage and then these pay packages and elizabeth warren has tuned into that populism outrage, so i could see her appointing someone who would be much worse for wall street if the rules are not done now. vonnie: that is a great story. wall street facing restrictions on bonus payments if they consider dusting off these post crisis rules. tim for the stock of thee hour. exxon mobil has been one of the worst performers today, shares are down as investors look at
the company's plans to boost spending. why exxon, everybody else is doing it. >> everybody else is not doing it, that is the thing. $38 see capital outlines of billion through the rest of the that $34 billion in 2020, is an increase from 2018, and it is really bringing spending to the highest it has been since the oil market collapse. an analystsd are not liking it. the ceo says society is demanding them, society needs them to make investments, but there appears are not doing this -- their peers are not doing this. other companies are cutting spending or holding the line, so exxon is bucking the trend. where they are putting the money, they have some big projects going on in brazil into mozambique. they are investing in the permian. they say it will pay off eventually, but this is several years down the road.
exxon said they think the permian will break even by 2021, then have revenue in $5 billion by 2023. they also increased their profit target to 140% growth from 2017 levels, but that is by 2025. so several years down the line. guy: when they say they are investing in the permian, what do they mean? one thing we have with the permian is that there is a problem getting stuff out. the restrictions with the pipelines are massive, so what is their long-term plan? is it assuming that gets fixed? >> i think that is the assumption. the permian accounts for about 40% of exxon's production growth and they are targeting about one million barrels a day in permian production by 2024, that follows chevron saying they are targeting 9 billion -- 9 million barrels a day.
we saw the data out this morning. we have a chart showing how inventories did build, so there assupply concerns, because you say there is so much production coming out of the permian, and will that translate and keep up with demand, and can they get it all out -- that is the concern. exxon is betting on it and really targeting their growth there. vonnie: thank you. and coming up, it will be the global battle of the charts. this is bloomberg. ♪
i have three of them here, because they are very different in which when you pick, you could have different return streams. whiche up 30% is a-share, is mainland china stocks. this one is fxi, hong kong listed stocks. it is up double. you have hopes of a trade deal, you have some domestic policies that are good, so a-shares are the place to be and the flows have followed. i put cn in the middle holding h and a. some investors do not want to pick. they just go with cn. youou beginning -- pick any of them, you are doing fine this year. guy: the story between hong kong and the mainland is fascinating and the margin story is behind that, the releasing of the margin rules, you have seen the pictures of people carrying around the blocks to get those margin accounts going.
vonnie: i am going to europe and the move index, the europe move index, the rates market plunging to the lowest on record. take a look, we are at basically zero basis points in terms of volatility come even negative. -- of volatility, even negative. we have been hearing the fear of -- and it is real. it is priced into the markets right now, the idea of low rates for a long, long time. the growth outlook with inflation, i guess it will not change until we see that move up, or vice versa, that moves up and then it starts to change. you can see this on the bloomberg at gtv . guy: i like the china charts, did not get me wrong, but ahead of the ecb story tomorrow the talk of the european bond market, talk of the possibility
of a tell joe coming through, the incredible low volatility we have been watching, i have to give it to vonnie. it is the big story on the day. do not get me wrong, i like a china chart, and that was a nice one that eric delivered. q" on bloomberg television with eric at 1:00 p.m. in new york, 6:00 p.m. in london, 2:00 a.m. in hong kong. coming up, "balance of power" with susan collins, joining david westin, as well as other great guests. that is coming up. this is bloomberg. ♪
where the world of politics meets the world of business. on the brief today, we begin on trade. with the u.s. deficit numbers at a few hours ago, $60 billion for the month of december and on pace for the rest results in 10 years. welcome now shawn from our washington bureau. welcome. these were unexpectedly high. they were even higher than expected. shawn: i think we had a prediction that the trade deficit would top $600 billion a that,we are on track for but at $621 billion for the year, that is higher than expected. of it also reinforces one the quandaries facing president trump, who has promised to reduce the trade deficit and so far in his first two years it has grown by $120 billion. david: it was both sides, exports down and imports up, do we have a