tv Bloomberg Markets European Open Bloomberg March 21, 2019 12:00pm-1:00pm EDT
european trading day. from young and -- from london, i'm guy johnson. vonnie: and i'm vonnie quinn. this is european close on bloomberg markets. to be thet seems story dominating the agenda on this side of the atlantic. european stocks are lower. they're basically flat on the session. we are seeing weakness in the banking sector represented across europe from the u.k. into france and germany. stocks like deutsche bank trading down. one of the banks behind that is what we are seeing in the bond market. we continue to see strength in the european bond market. take a look at where we are in germany. just .04 asen-year we potentially approach zero. the brexit story affecting the cable rate, the pound versus the dollar. we are down .9%.
is the market repricing the possibility of a hard brexit for the u.k.? , thee: over in the u.s. s&p 500 making fresh gains, up point 75% -- up .75%. after the fomc, yields lower by eight basis points. in thewould need to be 2.40 22.60 range to reflect what went on yesterday with 11 of 16 members not seeing any increase this year. jan -- biogen alzheimer's drug do not work. analysts saying it should look for another company to buy or look at being bought up itself. can ankara is the best performer in the s&p 500. let's turn back to
the brexit story. theresa may pushing for three-month delay. joining us from brussels is bloomberg's maria tadeo. maria, the summit is underway and they are talking about the brexit extension period the moon music seems to be the europeans -- the mood music seems to be european saying a hard brexit seems to be more of a reality. maria: i would agree with that. there is also a sense of real frustration from the european this equation. they do not see a way forward. i spoke to the french president, who has been a top riddick of the process for many months. -- a top critic of the process for many months. playingwe need to stop and to terms with the deal gets approved or it is a no deal brexit. let's take a quick listen. >> we do respect the votes of rich people.
we do respect what the prime minister in the parliament are making. but we have to be clear. extension, if a technical extension in the place of a yes vote -- in case of no , it will guide everybody to a no deal. that was the french president, very explicitly saying it is clear by now the u.k. needs to accept a deal or we are all walking into a no deal scenario. what he did say is speculation that the french were already prepared to veto this short extension that prime minister may will be asking for tonight is just speculation. what the french want to see is a real strategy from the prime minister. no decision has been made on
whether they want it granted or not granted or the terms they would attach. vonnie: are there any secret meetings taking place behind the , conversations that might change any minds in europe? right now the next step is up to united kingdom. maria: there are many bilateral macron possibly emmanuel may meet with prime minister may. we also have more clarity when it comes to the european parliament. they will have to ratify this deal and i just spoke to the head of the european parliament who said it is clear by april 11, the u.k. will have to let us know whether or not it wants to participate in the european elections. the eu is clear they must. the european parliament sees april 18 as the final date to ratify the u.k. deal if there was to be a deal. our thanks to maria
tadeo in brussels. guy: let's carry on the conversation. the bank of england out today as well. we are trying to figure out where it is going. i do not think the bank of england goes. let's bring in carol ward to get a take on where we are going, joining us from jpmorgan asset management where she is the chief market strategist for the mba. the market spent the last months pricing out a no deal brexit. the pound is rallying as a result. changeink what does not is the fact there are roughly parliamenta 650 mp who are comfortable with no deal. we know the great majority are comfortable with something that is at least a customs union. has the last 24 hours, three weeks truly changed the risk of no deal? marginally, perhaps because you
can never rule out a political accident, but what i continually is howe with logistically 100 mps can deliver no deal when you have 550 trying to prevent it. guy: the french president is saying that unless the other mps vote for theresa may's deal, there is the possibility or the likelihood of a no deal brexit materializing as a result of ,hat and thus far theresa may her withdrawal agreement has seen some of the biggest losses and parliamentary history. let's assume the vote does not go through if it comes back a third time. the french are saying c'est finis. roughly 400 do not like the deal. they do not like the deal because they would like something harder. 300 do not like the deal because they would like something softer.
suppose prime minister may loses again and parliament wants to ,ake control of moving forward whether that is forcing a vote of no-confidence in the government, there will be increasing evidence as we saw with no deal that where there is a majority in parliament. that will be toward something that is softer founded on a customs union. is the eu going to turn around and say no, we would rather take the risk and cut the discussion and forced toward no deal, or are we willing to engage in that discussion about something that is softer? my assumption is the latter. remindingtinually client is 400 do not like the deal. 100 one something harder, 301 something softer. that is the arithmetic. vonnie: there's a petition that is now past one million names. how much of an influence will something like that have on this
thing? our politicians ignoring things like petitions? karen: i don't think so. this does come back to the people. if it is that parliament cannot decide a way forward and it has to come back to the people, either in another election or a referendum, exactly what the people are asking for and what type of brexit the people want is going to become critical. 52/48, whether that arithmetic has changed, that is a question, even among those still wanting to leave. what type of brexit are they looking for. is something founded on a customs union acceptable? how we move forward and how each political party declares whether their brexit looks like is extremely important in understanding how we go forward and that is going to be founded on the increasing noises we get
from surveys like this about what people want. vonnie: how often do update your base case on brexit? karen: i don't know this is going to sound bad. not frequently. my view at the beginning of all of this has been there are two realities to brexit us. one is there is a border between north and southern ireland. that is the reality. ,he other is our supply chain regardless of what the final demand is, our supply chain is heavily integrated with the eu. those realities have always led me to believe that brexit will end up in something founded on a customs union, because that is the only solution to the irish border and the trade reliance with the eu. that is where we will emd up. -- that is where we will end up. there will be lots of drama on the way. i have not changed my view as to
that is where we are going. i've been surprised how much drama has been along the way. the end view has not changed. vonnie: karen ward of jpmorgan asset management is sticking with us. let's check in on the bloomberg first word news. mark: president trump with some of america's top corporate leaders today. the president had a closed-door session at the headquarters of the business roundtable near the capital. the association representing leading companies saying promoting the u.s. economy is holding a quarterly meeting with an estimated 100 chief officers from across the united states. saiduropean union leaders they're open to granting the u.k. a short delay in its to departure from the bloc if the u.k. government can win parliamentary support next week for its divorce deal. both britain and the eu are headed toward a disruptive no deal brexit if lawmakers reject the agreement again.
eu leaders arriving for a summit at brussels today said they wanted to help british prime minister theresa may, who was asked to postpone brexit. in brazil, the president reportedly has been arrested in connection with the operation car wash corruption investigation. according to brazilian news outlets, please were carrying out a preventative court order. brazilian markets fell on the news. the day after a fire in a texas petrochemical facility was extinguished, people are being warned to stay inside. national guard troops are being called in. officials say elevated levels of benzene have been detected. hazardous materials are on scene. monday, sending a huge plume into the air. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am mark crumpton. this is bloomberg. vonnie: thank you.
policy decision from the fed as a dovish turn. we do have banks in europe lower , down 1.3% in sympathy with yields falling and the euro is down about .5%. a little bit of a risk off considering the euro is considered to be a risk currency. taking a look at the sector composition in the u.s.. we will see most sectors not surprisingly higher. cap up 1.9%. financials -- tack up one point -- tech of 1.9%. apple on fire, up more than 3.5%. citigroup has brought their price target higher thinking the worst could be over and the dividends and buyback could be increased. bullish comments over goldman sachs helping those shares. if we hopped back into the bloomberg, take a look at what is happening with technology. this is the european technology sector over the last year.
last year bullish over the 200 day moving average, the brutal fourth-quarter below it. recently above it. take a look at this. we do have the rsi coming up over but territory. the maxi is still in abide territory but in territory where it has been prior to last year selloff. a pretty bullish day. guy: abigail, thank you very much. not much tech over here but always good to talk about it. u.s. stocks continue to climb after the fed said it did not expect a hike. still it is karen more, market strength -- karen ward, market strategist for jpmorgan and a former be a week economist. economist. boe it is the economist in you i would like to talk to now. you were talking about the relationship between the x market in the bond market.
the strongest start in the year for over two years. the bond market signaling pessimism. high yields are going down. are those things contradictory or are they telling us roughly the same thing? that is what everybody is trying to debate around the fed issue. karen: i put out to all of our portfolio managers straight after the effective it, i said what i'm struggling with is we have this new signal from the fed. i can see why it sent short-term rates lower. i can see why it sent the xp market higher. this is the federal reserve saying i have ambitions to deliver higher inflation over the medium term. i'm going for higher inflation. why 10 year treasury yields are going down, why are they going up? why are people asking for more conversation with inflation rest? -- inflation risk. us they are told
going to maintain a permanently higher balance sheet. they may be switching that balance sheet away from mbs toward treasuries. on that law supply and demand they are not sending bonds -- stop trying, karen, to attach your theory to that u.s. 10 year ,nd just accept this is sheer the mechanics of them telling us this is us holding funds at this rate for two to three years and we are going to be buying more treasuries. that is what is sending the bond price up. not reflecting economic fundamentals. vonnie: what is the appropriate level for 10 year yields? think we arell range bound between 2.5 and three. we are right at the lower end of that range. i think it depends on your judgment of whether the economic situation is deteriorating such
that we are likely to see true risks of the u.s. recession and the next move is down. i am not that camp your it i think we will sit -- i'm not in that camp. recoverye will see the bumble along through the course of the year. we should expect to see u.s. treasury yields to push higher. as i say, a lot of questions over how do you marry that low u.s. treasury rate with the central bank who is telling you they have a mission for higher inflation? we will be experiencing volatility, not only around the central bank speeches and press conferences, but also around the inflation data. guy: we will leave it there. thank you much. karen ward joining us from jpmorgan. governorcentral bank spoke to was earlier on about today's decision to hike rates and that signal more rates to
come. >> growth in the norwegian economy is stronger than we foresaw. employment is growing, the wage growth is coming up, and so forth. then there is no need for the low rates that we still have. norway federalhe bank governor speaking to us. norway is an idiosyncratic market in a way that has a lot of oil and that cushions it or what is going on in the rest of the world. wells fargo down 1.1%. it's ceo is not going anywhere. this is bloomberg. guy: -- this is bloomberg. ♪
it needed to do so because it follows a report in the new york post directors have reached out to a former goldman sachs executive about the ceo post. i am joined by financial order hannah levitz. is this a day where you plant a story and it becomes smoky, not sure if there is a fire there and the company is forced to respond. hannah: thanks for having me. that is a good question. the new york post is reporting harvey schwartz is being tapped to be the next leader of wells fargo. they issued a report in the fall about gary cohn. in both times the chair of wells fargo's board has said these rumors are basis, and the current seo has the full support of the board. guy: the question has to be does he have the full support of congress? how political is this? withh: as we saw last week tim sloan's hearing in front of
the house financial services heatttee, he has drawn from both sides of the aisle with the scandals that of got on with wells fargo. there is pressure there for there to be action. there's not a lot we know but is definitely up to shareholders and the board as to how long tim sloan gets to stay in his position. what are the factors that would plane to that. is there an annual meeting anytime soon? hannah: there is annual meeting next month. that will be something to watch. a big factor to watch is the regulators. they have seen action from the from the occ against wells fargo in the midst of some of these scandals. we have been seeing in the fall the oh so see -- the sec removing members of -- the occ remember -- removing members of the operating committee. there could be action there. guy: we know how the board is
structured. is there a five about what is going on within that board? hannah: the board has had a lot of refreshment over the last couple years. betsy duke is the chairwoman and she was the former regulator herself. they are running people in the last couple of years to get new faces in to take the helm at there othervonnie: details in the new york post story, such as harvey swarts is not the only person under consideration. harvey schwartz does not want to move to the west coast. there is a lot to the story. for now we are reporting wells fargo is throwing its full support the hike the current ceo tim sloan. our thanks to hannah levitz. let's get a check on bloomberg markets. -- on u.s. markets. wells fargo higher on the
nasdaq. bytech being dragged lower alzheimer chart companies, most notably biogen who lost more than a quarter of its market value today. it is down 1.4%. very mixed story on this side of the atlantic as we count you down to the end of regular trading. the ftse is higher but the pound is down. it is the big companies with big international revenue streams that are rising. on the downside, the dax is feeling the pain. -- banking sector under the deutsche bank is a big loser today. the closes next. this is bloomberg. ♪
bottom end of the market. talk about those markets in more detail and throw a few more into the mix. the ftse 100 climbing but the pound has been under pressure. this is the market at the edge. just the tail prices in the increased risk of a no deal brexit. that is a factor. the sterling crosses. the ftse 100 up. drug sectors had a good day. the dax is trading down. the banks have been weak everywhere, even on the ftse 100. the dax has been under pressure. talking about a no deal brexit, the banks would feel some of that pain. let's go over to amsterdam. i bring this up because one of the stories we are talking about on both sides of the atlantic has been the technology sector. abigail was bringing it up early are on -- earlier on.
asml makes the kit that makes the chips companies use and as a result of which we are seeing the micron reader -- the operating environment for micron we signaled as being bad but at least not as bad as the market was anticipating. chips having a better day and that is one of the reasons why the market is trading to the upside. let's show you that can give you an idea of the individual names and single stocks we are watching in europe. this is the maker of ray-ban sunglasses, probably most of the sunglasses and glasses out there are made by this company. one of the giants in this space. bought by merger not long ago. they're battling it out. -- boss of the business there is a conflict who will take over. the stock sharply down on the back of that. i mentioned deutsche bank. trading down today.
it goes down 4.2%. the banks have suffered in europe. there is another chip stock worth mentioning. we talked about asml, there is st micro. just to give her confirmation of what we have seen in europe, i'm not sure the price action gives you the confirmation. the blue line is the average over the last 30 days. the white line is where we trade today. i have to say, if you go back over the last few weeks, it is amazing to see how weak the volume has been. volume rally been -- the confirming some of that. that is a look at the european close. vonnie: interesting movements overnight after the fomc. the markets are guessing right now and all of this could change.
yield 2.52%. a separate stories the equity market. the s&p 500 is up .66%. conagra one of the better stories. gold futures, that is telling. they are above $1300 an ounce again. risk on, risk off, it is a much. let's go to global macro movers. brazilian investment down 2.2% after the former president was arrested. we'll will be -- we will be looking at that story in a moment. argentina affected. we also have major currency moves, including the british pound. the dollar index is the beneficiary from the weakness over the last sessions as well as the idiosyncratic stories and some of these countries, including the reality down 1.5%. guy: china's president is visiting italy to sign the first
mo you memorandum of understanding for the g7 country for his road initiative. >> i do think that italy leading the remaining european countries along the silk road entices other countries to join and form a european unified strategy visit be the development of app -- vis-a-vis the developed of africa and middle east and other countries along the silk road. guy: a reporter joins us from rome on the story. there has been some concern from washington and elsewhere in europe about what rome is up to. john: that is right. i was speaking to a u.s. official who is upset about the symbolism of italy signing this memorandum of understanding.
it is a vague memorandum. it does not have specific business deals, but it does commit italy to volunteer for a role in the road initiative. european allies are also worried. they see italy going out on its own a negotiating this memorandum with china as a breach of the united front that the european block is supposed to percent. vonnie: will it lead to anything beyond a bilateral agreement? john: the italians are very ambitious. we had a speech earlier this morning saying italy could read -- could lead or encourage other countries to sign memorandums. the italians are hopeful there could be big business deals in all sorts of sectors and the chinese are even more ambitious. we had xi jinping writing a massive article in an italian newspaper promising china was ready to cooperate in all sorts of fields. strategic sectors but even
governments working together, political parties working together, authorities. you name it, it was on the list. guy: to pick up on vonnie's question and take it in a different election -- a different direction, there was a possibility of rome being denominated bonds. how significant with at the? european countries have signed similar arrangements. the point about this, as it is about the big memorandum of understanding is this is the first g7 country to do so. the massive economy is a big player in the european union. that is what is worrying the u.n. and european allies. guy: we will leave it there. thank you very much indeed. vonnie: brazilian assets are taking a beating. a developing story. prosecutors in brazil confirm they have arrested the former
president. reporter joins us from sao paulo. what can you tell us about this arrest? >> we know a little bit more. he was arrested alongside brazil's former energy minister in a scheme tied to a nuclear power plant in rio. what prosecutors said is the criminal network was still active and that is why they asked for his arrest. it is about money laundering and collection, more of the same of what we have seen from the last five years. is there a politician in brazil that will not be affected by this. we have politician after politician being caught up in car wash. does paulson aro represent up -- does bolsonaro represent a clean
break? julia: that is what he based his campaign on. i have never been accused of anything or tied up into corruption scandals. this year we already had his rio,tied to some things in as you know the murder of a councilwoman. his name has been mentioned. there is no proof or ties made by prosecutors. we will still have to see. .t is a big question in brazil it seems like everybody is involved with one thing or another. does he have information on sitting elected representatives? why are assets taking this beating? it would appear this is the story of a next politician being arrested and going to trial. there must be more to it than that. julia: the big question for assets and any investors in brazil is pension reform. it comes from a big party
traditional party that has a lot of ties. not as big in the lower house but they have a lot of ties to the other party. the question is will this do anything to impede negotiation for the approval of pension reform. that is why we have seen assets lie abed. fly a bit.ssets the father of the lower house speaker is in charge of pension reform in congress. there is questions on how fast it will move forward. julio will continue to keep us updated on the story. she joins us from sao paulo. guy: shares in tencent under pressure. the chinese internet giant missing the mark on profitability. the margin story is where we are seeing problems. it is ramping up spending in a number of areas. joining us with the details, bloomberg opinions alex webb.
away fromng to pivot the gaming side of the business which has generated profits in the past. it has to come with a cost. why are investors shocked? alex: the scale of the spending was shot. steiner -- china stopped approving new gains. there was a decision at the top level to say we are dependent on gains, therefore we need to my new revenue. they've looked at alternative content. bumblebee,venom and the transformers movie. we will see top gun come out partly funded by tencent. those ventures are expensive. we have seen them investing in brazil. that is coming in a cost. revenue beat expectations. that money is going somewhere. they are reducing money on marketing but investing in new products. one hopes that will pay a
dividend down the line. vonnie: wise the stock selling off so much? investors do not have the same confidence you do. alex: let's put it in context. it is a decline but it is not falling off a cliff. it is a big company, so a few percentage points of decline to represent billions of dollars, but it is not catastrophic. it is always about the difference between the top line growth and what we are seeing at the bottom line. the size of the bottom line was 20% less than expectations. that is not insubstantial. one has to look at management's ability to telegraph what they are doing to the market and that is their biggest failing. is the gaming business did? the chinese seem to be -- is the gaming business dead? the chinese and to be producing a more benign environment. games will come back.
the question is what is the rate of change? alex: we have seen google introducing their vision for cloud-based gaming. there is going to be a pivot toward that. that is good news for the likes of tencent, the platform players. people who are not building the consuls but they are the place where people play the games in the virtual arena. they will take a while until we get to that point. they do have a huge amount of money to throw at things. there are a lot of smaller studios looking toward tencent as a possible investor. group, universal music going to be a public company. tencent is considered -- isctive investor considered a prospective investor in that. there's still a lot of optimism. vonnie: down 21% year-over-year. this can be a bit of a volatile stock.
who is in the stock, is it hedge funds, insurance companies, big pension funds, chinese retail investors? alex: the biggest one is clearly the south african investor, which pumped in $130 million 20 years ago which is now worth $130 billion. there are a lot of those early investors still with a big stake in the company. it might be down year-over-year, that has a lot to do with the regulatory environment. the chinese stopping the approval of gains, but is still one of the giants in china. there are only three or four of them. tencent, alibaba, huawei. if you are betting on the future of china and its technological future, it is one of those stocks which remains appealing. vonnie: our thanks to alex webb of bloomberg opinions. let's check in on the first word news. here is mark crumpton. mark: president trump is
expected to sign an executive order aimed at improving free speech on college campuses. the president said he would require colleges to support free speech if they want to continue to receive federal research dollars. it is not clear how the executive order will work. in the netherlands, the suspect in the deadly shooting will face terrorism charges. three people were killed in the attack in the city of utrecht. three others were wounded. prosecutors say they are still looking to whether the suspect's actions were caused by personal problems combined with radicalized ideology. a week after cyclone hit mozambique and swept across the the damagezimbabwe, of flooding continues in southern africa. more than 300 people are confirmed dead and officials say that number could rise sharply. entire villages have been submerged in heavy downpours, hampering rescue efforts. the pentagon wants to shrink its fleet of aircraft carrier.
it once wanted 12 carriers. the latest proposal would knock the fleet down to 10, but congress once at least 11. it may give the navy more money. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. crumpton. this is bloomberg. back to you in london. guy: thank you very much. let's check where european stocks have finished the day. a bounce during the auction process. the dax has had a tough day today. not much of a bounce. it has been the banks that have suffered the most. the cac 40 finishing flat, but the pound finishing up. that is mainly due to currency. some of the drug stocks of had a better day. if you're done with the trading day and want to carry on the
guy: live from london, i'm guy johnson. vonnie: and i'm vonnie quinn. this is the european close. shares of can agora are having their best day since 1989. getting more than 11% after the company ceo signals progress in the turnaround of the nepal. kailey leinz -- the turnaround of pinnacle. kailey leinz is here with the news. iley: a lot of fear in
pinnacle. the first quarter did not go well. that led to the stock having its worst drop since 2003. it has not recovered those losses. the move gave investors some assurance. he said it is on to synergies. they are making progress in the turnaround of those brands that they are investing in execution issues with businesses like birdseye and duncan hines. he did say it is going to be a while before those businesses return to growth. they have a battle plan to come up with solutions and the ceo said results from this quarter lend credibility to that plan, especially as the tie up between the two have created 12 billion --cost synergy that growth that grows a margin be. it looks like those efforts are starting to pay off. guy: 1989 was a great year.
we should point that out. i want to bring in breaking news to what is going on in the brussels story. donald tusk, the president of the european council, the council the european leaders is set to propose a congressional -- a conditional brexit extension to may 22. that is shorter than the you take it -- shorter than the u.k. had asked for. this was increasingly expected throughout the day. we will continue to monitor what is happening in brussels. we're expecting press conferences later on. , thee, -- vonnie conditional part of this is interesting. brussels is signaling, theresa may, you have to get this deal over the line. she does not have the mp's and she upset them even more. vonnie: not exactly a quinn since because europe -- not exactly a quinn siddons since
europe -- not exactly a coincidence since european elections take place around then. sterling lower on this news. if there was any hope for an extension that was going to last until june 30 for parliamentarians to come together, there is a lot less hope it is may 23. coming up, our latest battle of the charts. this is bloomberg. ♪
equities but he likes china better than the s&p 500. what we are looking at in blue is the s&p 500. in white, the percentage of members above the 200 day moving average. yesterday when we had the s&p trading around 2700, those members were above the 200 day moving average. now we had the drop off in the fourth quarter going to 10%. the point john was making is that while we do have this rising at 42%, it is not the equivalent levels in the s&p 500 or higher. these as and -- if these as and -- if these s&p 500 gains are to continue, it suggests we will have is he more than 50% of those s&p 500 members go back above the 200 day moving average. otherwise week spreads might mean choppiness ahead for the s&p 500. vonnie: love the use of the word amber since your dress is a little amber. guy, what you have for us. guy: i cannot follow on from
that but i can add to it. one of the areas we are seeing weakness within the s&p right now is within the banking sector. a weekday in europe. day in europe but the u.s. are not looking that clever, either. we have a situation where you we have gone past the trump bump we saw after the election. we got back down to the blue line. the trump bump u.s. banks enjoyed is done. as terms of the reasons behind this, the fed has basically created an incredibly flat curve . while the situation may look better when it comes to m&a or , we talking about yesterday are troubled when it comes to net use response and this is the bread and butter, lending money when it comes to the gap between deposited and what is happening in the market. that is my chart.
trump bump, done. -- we dohe winner is not have any drums? abigail doolittle. we do have breaking news. president trump saying it is time for the united states to recognize golan as part of israel. the golan heights, trump once them recognized as part of israel. this before benjamin netanyahu's visit on monday. let's recap the eu news. a conditional brexit extension to may 22, right before european parliamentary elections. sterling lower on the news. this is bloomberg. ♪