tv Bloomberg Markets Americas Bloomberg March 7, 2019 10:00am-11:00am EST
30 minutes into the trading day. from new york, i'm vonnie quinn. guy: from london, i'm guy johnson. this is "bloomberg markets." vonnie: the s&p 500 down 3/4 of 1%. the dollar index is close to its high for the year. we can thank mario draghi for that. suffice it to say that both euro and british pound are much ofer, the two big components the dollar index. kroger is down, the biggest dragger on the s&p 500. margins a little but of an issue there for kroger. estee lauder is bucking the 1.1%,for retailers, up getting a great outlook for china. jp morgan is upgrading estee lauder today. tell us more about the ecb and
mario draghi. guy: mario was much more dovish than the market anticipated. we also got a deferment of the raising of rates from the ecb. we are not going to get a rate rise in 2019. downgradednificantly their economic forecast, particularly for 2019, which is a really big deal. the fact they didn't significantly change for 2021 implies a certain degree of panic at the ecb. the market has reacted reasonably strongly to this. here is the session chart of euro-dollar. of 1% move on the euro. let me show you some other assets as well. we are getting some rotation out of cyclicals and defensive stocks in europe. banks initially jumped, and then .ropped sharply you have that initial spike higher.
i just wonder whether some people were using the tell trope in that initial spike. certainly they've moved away --m cyclical stocks certainly this move away from cyclical stocks would encompass the banks. it probably doesn't imply great things going forward in terms of the banking sector. there could be a mini credit crunch at some point in the summer. we seen a big move in the german yield curve, too. we seen the biggest move in the 10 since 2016. some massive moves coming out today. the market death knell be being -- the market definitely being caught on how dovish mario draghi was. vonnie:. as on some of the new measures are someen -- here thoughts on some of the new measures being taken. >> on the cohesiveness on the governing council and deliberations -- vonnie: talking about the
cohesiveness of the decision they are making. it is clear the ecb lowered growth and inflation outlooks and decided there was need for extension of stimulus in the form of another tltro. joining us is mike reagan, editor for bloomberg. and in london, we have paul dobson. mike, it is clear this is going to have an impact on global assets today. we are also seeing it in the dollar index. what are the ripple effects? dollar has sprung up to be the risk of the day. the dollar, regardless of which dollar index you look, was very much range bound all year. surprised some people, when the fed became a lot more dovish than they had been, that the dollar didn't really freefall. now we are seeing that a dovish fed only goes so far if mario
draghi is going to come to the table and be just as dovish, if not more. i think guy made a great point about the forecasts being cut. enough toll tropes really compensate for that forecast drop? the market doesn't seem to think so. it seems to really be taking a sour look on europe and pushing that dollar higher. it is looking like the dollar index is breaking out of this range they've been in all year. equity investors were probably pretty comfortable thinking that that range was pretty firm. to see a breakout to the upside, it certainly creates a headwind in commodities and earning expectations in the u.s. not huge earning expectations in the s&p in the u.s. guy: paul, let me bring you into
the conversation. is this panic from the ecb? paul: it is a more extreme reaction than the market was expecting, but we know draghi likes to be ahead of the market, and he certainly delivered by pushing out the time horizon for the ecb keeping rates at current levels, and also announcing the tltro now. some of the details of the loans for banks slightly disappointing. looks like the rates banks might be able to get will be higher than the existing loans they have, so that is one negative. a longer and more depressed yield curve not good for banks in terms of transformation in the loans they make. at the same time, the banks have got this whole scandal about the money laundering going on, and that is only escalating and starting to weigh on investor sentiment as well.
you've got three bad things going on for banks all at the same time. that has left investors kind of cautious on the message coming from the ecb on top of, as you've been highlighting come of the outlook for inflation and growth. vonnie: mario draghi said the ecb reaction cannot stop the effects of brexit. what will this do to impact any growth implications from those issues? paul: mario draghi says we are not looking at a recession. this is still a growth environment. the idea of pushing more money to the banks is to increase lending into the euro area to keep credit flowing through the system, to help support the economy and help that growth outlook remain in place. like you said, you can't do much about brexit. you can't do much about trade negotiations.
probably the weaker euro is a pretty good way of helping the euro area, as well. i can imagine the u.s. president might be a little nuts when he sees the market today, but it is getting into this kind of everybody wants to stimulate the economy at the same time. you can't have everybody stimulating at the same time because you can't have all currency we getting at the same time. guy: let's talk about the rotation from cyclicals and figure out what happens next. in the u.s., the data are still relatively good. certainly that services number look very strong. in europe, we've now got a downgrading of expectations. and asia you are seeing a similar thing as well, certainly from the chinese. is it the right call at this point to start to pull some of those cyclical stocks out of the portfolio ? value, and particular, looks cheap right now. michael: the market was up so
much since those december lows, almost 20% for the s&p 500. so on one hand, it is sort of natural to see this little bit of pullback right now. that said, it does look like the rollovers that we saw at the beginning of the major corrections in 2018, in january and later in september in october, if investors think the market is headed for another dip that, they will get more defensive, get out of the cyclicals, and into much more defensive stocks. ultimately people will be watching yields. treasury yields really getting caught in the downdraft of the ecb today, and coming back down. in theort of range bound u.s. treasury yield for the 10 year and the two-year, so not enough to really spark that hunt for yield, so the sort of stocksve utility type of in the real high-yield stocks.
but it is something i think, as you mentioned, is on people's minds. they are kind of waiting for that signal, and anymore declines in yields, anymore risk off mood will sort of exacerbate that rotation. vonnie: mike regan and paul dobson, are things to you. guy: let's check in on the bloomberg first word news. here's kailey leinz. kailey: former trump campaign chairman paul manafort will be sentenced today for tax and bank fraud. manafort's 69 and could look at up to 20 years in prison. the federallieve court in virginia will give him half that. is suing theawei u.s. government for blocking its equipment from certain networks. way -- no-- while
response yet from u.s. officials. meanwhile, the head of the u.s. and a pacific military command, admiral philip davidson, won't say whether there will be an increase in naval patrols in the region. he told reporters in singapore that it is a hazard to trade and financial affirmation that flows on underwater cables. and pessimism that there will be a breakthrough in brexit talks this week. negotiators suspect there won't be enough to get parliament to back prime minister theresa may's deal. 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. guy: thank you very much indeed. coming up, we are going to speak
♪ guy: we've seen a lot of action coming as a result of what's been going on with the ecb. let's get the details with abigail doolittle. abigail: you're absolutely right. we have a strong risk off tone on this thursday after ecb president mario draghi did highlight growth concerns, a bit of a shocker to investors. result. sea of red as a the s&p and nasdaq both on track for the worst day of the month.
the dax also on pace for its worst day in about a month, and the euro on pace for its worst day since the end of january. this is a complete risk off picture. as for that s&p 500 slide, let's take a look at the last 800 days. we had that treading water period where investors were trying to figure out this year's rally. now we see the big selloff, the bears really winning, the worst eight days of the year going back to summer 24th of last year, when there was that -- back to december 24 of last year, when there was that big selloff. this really paints the picture, this range between 2600 and 2800. 2600,yers stepping up at the sellers stepping up at 2800. valuation, retracement, overbought conditions. this rally trend clearly broke,
suggesting we could see the s&p 500 dropped back down toward 2600. very quickly, a few of the big movers on the day dragging on the s&p 500, kroger down 13.5% on a disciplining outlook. store whole foods really eating in. bright house financial downgraded over at sandler o'neill to a hold. this is a piece of what is dragging on the s&p 500 today, but more to your point, those ecb growth concerns. guy: abigail, thank you very much. erupt may be is looking at $1 trillion in dirty money -- is europe may be looking at $1 trillion in dirty money? i started by asking him a little
earlier how far the laundering scandal that has encompassed a number of european banks already could go. guest: our investigation continues to lead to new evidence and new information and new suspicious transactions. as long as it does, we will take that evidence and follow the evidence where it leads, and when we find money and money laundering, we will make complaints to the law enforcement agencies of the country where we find it. guy: is there another institution out there that could say something along the scale of what we seen at danske bank? guest: i think it is entirely possible. if you look at the numbers i quoted, we seen the $234 billion flow-through dansk bank's estonian branch, but that is only 1/4 of the estimated flight capital. of that $234 billion, it didn't stop at on sky bank -- at danske bank's estonian branch.
it went where people spend money on real estate and yachts and private planes and all of that. guy: what is interesting is got relatively small numbers when you started your investigation. suite number is an obvious want swedbank is an- obvious want to talk about here. guest: in 2013, we identified $200 million of illicit, suspicious transactions going through danske bank. we filed complaints with the danish regulator and law enforcement, and with the estonian law enforcement. the danes refused to open any case. estonia opened a case and then closed it. workinged up with a major newspaper in denmark with our allegations of $200 million. they did their own investigation with other data and our data, and determined the size of the problem was not $200 billion,
but $9 billion. the article that they wrote was the most read article in the history of denmark. on the back of that, danske bank was obliged to do their own internal investigation -- or actually, external investigation. they brought in outside lawyers to look at the situation. they said it is $234 billion. when you start pulling on that string, it ended up at a $234 billion problem. guy: and you see that now working with some of other institutions as well? can you scale up every institution in a similar way? guest: you don't want to start extrapolating because you just don't know. all i can say is with the swedbank complaint, there is one under $76 million of transactions -- there is $176 million of transactions we consider to be suspicious. i can't extrapolate from there, but i thing it is the duty of
swedbank to do what danske bank externalet an investigations of all parties can look at the information and .ay, how big is the problem guy: disappeared to start as a nordic problem, but is morphing into some thing that is larger. you talked about tracking the money to its ultimate destination. when you look at countries around europe, where do you see the bulk of that ultimate destination money being? guest: i see it's going to the places where people want to spend it. here in the u.k. is one of the prime examples. this is a country where that money ends up, as a destination country. most upsetting for me is that law-enforcement agencies here, even after i filed five complaints, they refused to investigate. guy: how far down the road does it go? it goes all the way to individuals? guest: it goes to individuals, companies formed by individuals,
purchase, real estate, private jets, yachts, big bank accounts, etc. guy: bill browder of hermitage capital talking to me earlier on. in response to those allegations, swedbank has said, "we have, as far as we know, not yet been able to see the notifications, content, or details, therefore we have difficulty getting a comment on this." and all of the cases when authorities start investing -- a comment on this. in all of the cases when authorities start investigating, we cooperate fully." they have started an investigation into the matter. from london, this is bloomberg. ♪
johnson. vonnie: from new york, i'm vonnie quinn. this is "bloomberg markets." the top-performing smart data etf is focused on high-quality stocks, but the same story isn't holding true for bonds. here to tell us more is tom her tom with bloomberg intelligence. reporter: quality tends to get overshadowed, but quality is the best this year in equities. companies with cleaner balance sheets, less leverage, better cash flow are doing really well. let's apply those same factors to fixed income, so let's look at companies that are better at servicing their debt. quality stocks are outperforming, but quality bonds are underperforming. typically they tend to move in tandem, so this divergence in factor performance is pretty interesting. i would think with high
yield spreads widening last quarter, investors would be flocking towards defensive bonds. reporter: we tend to see this a lot. they needed event to happen. the market goes down, and everyone flocks to low vol. when spreads widened, everyone always tends to go in after the fact. they tend to flock to these products after, spreads come back down, so there's a lot of performance chasing. vonnie: why do using these quality bond etf's haven't really caught on? guy: when using about when spreads are widening and high yield, at that point, do you even want high yield at all? we find that decision seems to be more binary. that etf, trading in and out of it. these products tend to be a little newer. i think we need to see longer
track records. at least for right now, people just like to trade in and out of high yields. guy: thank you very much. of course, you can check out factors to watch on your bloomberg. ftw is the function. i've got a set up here in terms of the u.s. and what we've seen thus far this year. the rsi is down there at the bottom. the big one is the momentum story. vonnie: shares of kroger are falling now. we look into this for our latest bloomberg business flash, looking at some of the biggest business stories in the news. they are down more than 13%, forecasting earnings that missed estimates. the chain has been lowering prices, remodeling stores, and centralizing its e-commerce operations to boost growth. we will be bringing you highlights from our interview with the cfo, coming up shortly. apollo global management
reportedly agreed to buy bloom global. the seller is an investment perm e qt. about $200 billion, including debt. provide green domestic containers to ship cars and other parts for the transpiration industry. that is your latest bloomberg business flash. still ahead, draghi's decision. ofspeak with james mccann aberdeen about the ecb growth forecast and the way forward in the global economy. this is bloomberg. ♪
the growth forecast of the euro area and the most since the start of quantitative easing. at now sees the economy growing 1.1% this year, down from an earlier forecast of 1.7%. ecb president mario draghi has expanded the institution's existing stimulus with a package of new loans for banks. turkish president aragon has broken his silence to stand by a controversial arms deal with russia, citing u.s. threats to punish turkey with sanctions if it buys russian advance missile-defense systems. air to gone sale a done deal. eoductivity games -- rdogan calls the sale a done deal. productivity gains in the u.s. were bigger than expected. and a new study says that women -- suggestsrkers
that when the labor market runs strong, and equity in the labor market could shrink. 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. let's get back now to the ecb decision and commentary this morning. we are joined by james mccann, senior global economist at aberdeen investment, was more than $130 billion in assets under management. guest: i think this is the latest in the line of central bankers trying to react to this latest slowdown in global growth. we had a number of these over the course of this economic cycle, and the familiar response from central bankers is to try and provide more support where they can. we saw that today from draghi, trying to announce a number of messages and sound very dovish, but it is a playbook we've seen
from canada and many other central banks this year. phenomenal for the growth forecast. inflation is also going to remain muted out to 2021 or something, looking at 1.6%. shouldn't the ecb to be doing more? what are they counting on? guest: i thing this is the real concern at the moment, that growth is going to go below trend this year and looks further and further way from making those inflation forecasts. euro zone economists think despite this, there are still a little to us to been stick -- they are a little bit too optimistic. the natural question comes, what do?you i think draghi is trying to push a strong message that the ecb is there to support, but the creeping doubt in markets and investors' minds is will this get inflation towards target. is the ecb really cripple here? that's really credible here --
really credible here? guy: is the objective to get the euro lower? it hasn't dropped out of its range. guest: i don't think the objective is wholly focused on the euro. i think they are going to support overall monetary conditions for the euro economy and get as much stimulus as they can from the current toolkit. obviously that provides a little additional support on both the inflation and the growth side. but really, i think the ecb wants to make sure that monetary and financial conditions are as supportive as possible while standing short of providing another boost in that direction. guy: there was a mistake raising rates at one point. did draghi make a similar mistake in ending qe? guest: i would not say it is as grave a misstep as that rate hike proved, but certainly i think this downward revision in
inflation forecasts suggest maybe there was too much focus on some of the technical challenges around that plan, maybe too much of a desire to move out of those extra neri measures, but certainly it seems the consensus on the committee is though types of -- is those types of measures should be for crisis moments. vonnie: there is a 2.6 trillion euro qe. now we are on number three. isn't there something a little more basic wrong here? can continued support from the central bank fix what is wrong with the european economies? guest: it could really do with some support. one of the consistent features throughout this expansion is so much weight has been put on the ecb, and it has found itself conflicted. it has issues with institutional arrangements. it feels some policies are controversial, and there is resistance around some policies on its balance sheet. what it needs is a strong help from some euro zone governments, particularly from germany, a
little more on the fiscal side, to cut limit what it's done on the monetary side. on the fiscal side, that leaves the weight on the ecb. vonnie: we have some incentives now for credit to banks, to lend and smooth the transition of monetary policy. we've tried this a few times. will it work this time? is there demand in europe? guest: there is -- that is going to be the crunch point. we've got some tentative signs, but we will get more in the future. around these types of issues, you need that credit demand to come in and, lamented. it remains -- and complement it. it remains relatively healthy, so i think the ecb is going to be watching that really closely because if it sees that credit demand continue to falter, i think it will feel that there is less potential for this policy to prove effective. guy: james, we saw a significant
downgrading of the stock productions for 2019, but not when it comes to 2020, 22 the one -- 2021. are the forecasts credible, do you think? where are your numbers on those years? guest: a large part of the rebound they are expecting in the future depends on what happens in the global economy. the euro zone is one of the most cyclical parts of the global economy. it is very highly connected to the global trade and production cycle. really, what they need for that is for global growth to improve. i do think that is what will happen over the next six to 12 months or so. we think the support put in place by central banks, the ecb, the fed, china stimulus, some cooling and some of the trade and other political tensions in certain regions, should help loosen monetary and financial conditions and support global growth. we do think the euro bone -- the euro zone can rebound alongside
global activity, yes. credibility ecb's damaged today? guest: i think the bigger issue is on its inflation forecast. it has just been such a long period of under shoot that their credibility around meeting that target has taken so many knocks since the crisis. we see this in the fed, where now he of monetary policy is starting to explore different ways of being more symmetrical, more forceful around meeting its target using different tools. i think it is right for a discussion like that to happen in the euro zone as well. vonnie: james, thank you for all of that. , senior global economist at aberdeen standard investments. coming up, kroger comes up short for investors. shares are tumbling today. my conversation with the cfo --ut revenue miss and g
♪ vonnie: it is time for our bloomberg quick takes, and today we are talking about the fight between the united states and the chinese tech giant while way -- giant huawei. u.s. officials have harbored suspicions that the telecom giant is a potential security there wereing that concerns about whether it was subject to pressure from beijing. there is a fear that equipment
manufacturers could leave a backdoor that allows their home country to access information, or that companies themselves would hand over sensitive data. tensions have exploded in the past 12 months, with the u.s. restricting government use of huawei products. there was also the rest of their in canada for alleged violation of sanctions in iran. huawei denies it helps beijing spy on other countries or companies, and says no one has proved anything to support such charges. way -- has -- while huawei filed a lawsuit in federal court claiming the statute that blocks u.s. fromnment agencies
using their quip and is unconstitutional. you can read more on the bloomberg. guy: quick look at these markets to see where we are. it's been a busy thursday. this is the picture in europe. 1%.x 600 down by 7/10 of names, the peripheral we've also seen a fairly big move in the german ten-year. price higher, yields lower. we haven't seen a move like this, or levels like this, since 2016. we now have just seven basis points on a german ten-year. of krogerares tumbling this morning after its holiday performance disappointed investors. i spoke with michael schlotman, the earnings about miss and growing competition from amazon. guest: we have over 2700 food stores today.
we had 11 million customers a day on average come into one of our properties, and they live within a couple miles of our stores. we've been building out the digital platform. we feel we have the infrastructure with our brick-and-mortar to be able to serve our customers conveniently with the rollout of our pickup program, as well as delivery to home. over 90% of our customers have access to either pickup or delivery to their home, and we are already conveniently located, and we continue to invest in growing our digital platform to be able to meet the customer when they want to shop that way as well. vonnie: are you or any of your suppliers experiencing any impact from tariffs? guest: i would say there's some out there. we don't have a huge general merchandise business. a lot of those products that would be tariff related don't affect us quite as much. but i do know there are some out there for supplies of some of the stuff that gets consumed in
the manufacturing process, so there certainly is some, but not as much as some other retailers that have a more robust or bigger general merchandise business. vonnie: so how are you dealing with that, and also with rising wage pressures and higher input costs? guest: when you look at wage pressures, we actually earn about $18 an hour average salary for our associates at our stores. when you look at the pay raises and things we've been giving this year, we had a phenomenal year on retention, so we are keeping our associates longer. because of the retention improvement, as well as other efficiencies we've created inside the store, our productivity actually offset all of the increases we made in wages this year. one of the side benefits of a longer-term associate is the fact that they know their job better and are more productive, so we look for that to continue to balance out over time. vonnie: you are also in a bital of a battle -- a bit of a battle
with visa credit cards. do you anticipate it will go to a division where you are not accepting those credit cards? guest: there's nothing that's off the table relative to our acceptance of visa credit cards today. the prices that they charge us for taking the cards is simply thisigh, and we are doing so we continue to offer our customers a better price for the products. there are other competing cards out there that are less expensive. ,hen you look at foods co. where we did this first, we saw a tremendous amount of increase in business that is on a debit card rather than credit card, increase in better business for us from a plastic standpoint, but we will try to get a lower interchange fee to be able to keep our prices good for our customers. vonnie: you are also
experimenting with other sources of revenue like digital advertising. you anticipate getting to $400 million by 2020. how will you do that, and what is the future for digital advertising for kroger? guest: both our media team and our kroger personal finance team had a great quarter and year. they generated about 20% more profit, which is a phenomenal increase for them, during the year. the $400 million is total operating profit growth. we would actually expect those businesses to generate more than $400 million over the next several years, but they will certainly be a big contributor to us being able to generate $400 million in anchor metal profit in 2020. vonnie: what is your read on the u.s. consumer? guest: i think they continue to be in a very good spot. we were talking about the consumer this week as we were preparing for today, and the
recession word keeps coming up. from my standpoint, i wish everybody would quit telling the consumer we are going to have a recession. otherwise it will be a self filling prophecy. i think -- self-fulfilling prophecy. i think the numbers were slightly better than expected when you look at unemployment. i think there's still a lot of signs out there at we have a very healthy consumer. --nie: kroger cfo mike slot mike schlotman there. guy: coming up, more highlights from the conversation with hermitage cofounder bill browder. why he says europe may be looking at $1 trillion in dirty money. this is bloomberg. ♪
vonnie quinn. this is "bloomberg markets." our stock of the hour is hugo boss. shares are down 6% despite earnings growth this year -- despite forecasting earnings growth this year. analysts are offering a lukewarm response. why? emma: they delivered on expectations. they delivered a confident outlook for 2019. they seem sales growth across all areas, particularly online. shares are down the most since august of last year. they have been up more than 21% this year, so there could be some profit taking. also, if you take a look at the bloomberg, i've got hugo boss alsost some of its peers, the broader specialty apparels index. they are still lower than they were a year ago. a lot of analysts sort of explaining the stock action today. morgan stanley saying growth
this year would be lower quality. ubs saying reception could be down to margin expansion below the four-year runway. citi also talking about inventory growth, and that has impacted cash flow, lower i about $400 million than last year. guy: let's talk about the goldman sachs factor. the ceo told bloomberg a little later on -- a little earlier on that this is about a shift to casual attire. emma: they said they will have a more clickable dress code, that this might be the end of the bespoke suit with regular suit as people move toward wearing chinos and turtlenecks to work. hugo boss said they are very well-positioned to do this, already shifting the kind of clothes they make, particularly turtlenecks and knitwear. the younger generation driving
this change away from or formalwear still wants good quality products. they just, perhaps, don't want it in the form of a suit. they said they are also looking at more sustainable materials as the younger generation looks for products made out of materials that are not so labor-intensive and harmful to the environment. vonnie: emma chandra with our stock of the hour. thank you for that. it is time now for futures and focus. the dollar rising as the ecb turns dovish. let's turn to bill at cme. does the high for the year stay there? tough one -- it is a tough one given the move in the aero south -- the euro south. taking that big dovish step was not quite expected yet, but if you are going to ride this dollar move, you have to know that there's some big data
coming out tomorrow. but if you are looking to fade the dollar, the better place to look would be gold. you had some technical damage last week, but a lot of support. gold is going to be the want to capitalize the best between the dollar and the euro. vonnie: so what happens to yields from here?if the dollar index is at 96.28 and the 10 year yield stays in its range, does that mean yields are diverging a little bit from the dollar story? >> you know what? i don't like fading any rally in yields, so i am buying dips in treasury prices. i think you will see these prices rally higher. i think yields will go lower before the year is said and done, and ultimately that will be the story. anytime these treasury prices go lower, you've got to buy them and see this thing to rally. the fed has already made the shift to more dovish, but i
don't see them really getting very hawkish unless there is some very sustainable longer-term view in the data, but that is not going to happen right away. a few months out if consistent data comes in better. i think right now the path is lower on yields. at the cme, baruch thank you. guy: time now for our bloomberg business flash, a look at some of the biggest business stories at the -- on the bloomberg right now. a tough start for the year for hedge fund manager alan howard. bloomberg has learned the fund howard overseas himself fell 8.5% in the first two months of 2019. last year the macro fund gained around 30%. blackstone is signaling the appetite for private equity isn't over yet. bloomberg has also learned the firm expects to reach around $20
billion when it completes the first phase of capital raising for its flagship fund. blackstone said in january they plan to take in $100 billion this year. that is your bloomberg business flash. vonnie: checking u.s. majors, we are in the middle of a down day for u.s. stocks. the s&p 500 is down 7/10 of 1%, being led lower by kroger. the cfo talking about the lack of share buybacks being one of the reasons investors are punishing this stock so much today. more reasons in there as well, which we will get to later on. the dow jones industrial average is down 9/10 of 1%, and the nasdaq down about 7/10 of 1%. ies one of theog industrials taking a bit of a pounding today. guy: we are being knocked lower by the banks here in europe. one factor that is influencing the ftse 100 today is that it is
thursday, and that means stocks dividend. stocks like rio tinto have gone ex-d. we are certainly seeing a rotation out of cyclical stocks. we are seeing rotation into the more defensive names, as well. the flat yield curve not helping out the banks at all. the long-term economic story not helping out either. europe is lower. mixed reasons, but draghi certainly a very big factor. this is bloomberg. ♪
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from london, i'm guy johnson. vonnie: in new york, i'm vonnie quinn. this is the european close on "bloomberg markets." guy: big reaction to draghi. the euro falling sharply, the dollar strengthening. ato-dollar now trading $113.32. we are seeing a rotation out of -- trading ats 1.2132. we are seeing a rotation out of cyclical stocks. banks initially moved higher on the announcement from the tltro, and quickly nosedived. the 10 year yield now trading at just seven bits. big move today. german curve flattening, not good news for