tv Bloomberg Markets European Close Bloomberg April 1, 2019 11:00am-12:00pm EDT
30 minutes left in the european trading day. i'm westminster in london, guy johnson. vonnie: from new york, i'm vonnie quinn. this is the european close on "bloomberg markets." guy: we are seeing bond markets selling off. yields are picking up. we seem strong data out of china, and a really strong trend on the u.s. ism numbers. the stoxx rising 1.22%. it really did start in china, the csi 300 up by 2.60%. in europe, the car sector doing really well, driving outperformance in germany. in london, we are seeing the minors performing as well. in terms of what we are seeing out of your outcome of the picture not quite so positive.
pmiaw german many factoring coming below the flash number and indicating the german economy remains in a deep freeze right now. that probably is the china story, so it is interesting to see what kind of lag the positive pickup in china is to the german story. a positive come a risk on sentiment here in europe. vonnie: the 10:00 a.m. data giving more of a boost to u.s. equities, but we were already higher. the s&p 500 up three quarters of 1%. wynn resorts is contributing after gaining revenue. nalysts were looking for a much bigger dip than forecasted. kellogg down 1.4%.
jp morgan saying to short costi to put more pressure on the stock. fromwe are joined by derek fumg bank european head of global market research. the data are improving around the world, or most of the world. we saw this out of china over the weekend, now seeing decent data out of the united states. is it time to face this bond -- it is time -- is it time to fade this bond market rally? guest: certainly over the last couple of months, there's a strong case to be made. the rights market in particular in the u.s. moved excessively the other way to be pricing in the extent of rate cuts for the end of this year. it just didn't really tally with the incoming economic data even
though it had weakened. i would extend that globally. i think pessimism has been very significant. of it will take is a series data that improves, in particular from china. certainly from a european storyctive, it was a big about what happens in europe. positive news from china, i'm not surprised to see the reaction we are getting today. guy: we were talking to a guest in the last hour who was saying that while the china data are improving, or at least stabilizing, there is going to be a long cap -- a long gap before europe sees the benefit. how long do you think that is chinese be between manufacturing pmi picking up in the german manufacturing pmi picking up? guest: it is difficult to say.
obviously the focus today is very much in the pmi's, which disappointed in the advanced readings and then again. on the positives, we did see the ifo come in a little better than expected. i do think there's emerging evidence that germany is beginning to stabilize. from my experience of visiting germany and seeing our clients my don't get the sense of any kind of economic downturn or crisis unfolding in germany. a temporary element to what happened in the second half of last year. i would expect us to start to see relatively quick evidence that the sentiment will improve and the german economy in particular with stabilize. vonnie: if you were to look at u.s. markets right now, you , bondsee the s&p 500 up selling off, but the 10 year yield at 2.47%, the two-year yield at 2.31%. what would that tell you about
the u.s. economy? guest: again, it would tell you from the way in which equities have performed relative to rates in particular that the power of fed communication, to the extent of moves in the rate market. it was very much dictated by the monumental, rapid change of communication we got from the fed. when you see the incoming economic data, certainly it is more mixed and it is weakened. the economy is still reasonably well positioned. i guess the longer the data gradually approves, the more upward pressure we are going to see on rates, and then the debate about the fed coming in and changing communication could quickly come back into the markets. vonnie: what are currency markets telling us right now? it seems like it is the rate market really telling the whole picture, but it used to be currencies. where do you look when it comes
to currencies right now to tell you what is going on incrementally in the global economy? guest: we had to cut our euro forecasts to the extent of the prolonged weakness we've had in europe, more than what we had expected. fx, becausee it to the theme has been broadly consistent across all of the developed economies, the appetite for fx simply isn't th. until we get some apparent divergence in the macro flow of economic data coming through, i think ethics remains relatively subdued. you talk about having to cut your euro forecast. is it possible to have a sterling forecast at the moment given the chaos going on in the building behind me? guest: well, the only way you
can base your sterling forecast is not going through the nitty-gritty scenarios where there are so many different ones, but to just step back and broader macro picture in terms of your assumptions. the direction of travel is clear. it is down to either a long extension, or parliament getting its way and us moving more towards a softer brexit. i think that is the most likely scenario. what complicates your sterling forecast is when you go into a long extension, does a pandora's box of risks open up in terms of a general election, second referendum, leadership election? all of that creates a huge amount of uncertainty. but stepping back from all of that, it does look more likely that we could get a customs union and direction from parliament, or even a single market, which appears to be gaining some traction this afternoon as we speak.
to real moneytalk accounts, people who actually have to move money across borders, what are they saying about their proclivity for risk at the moment. how are they hedging out there risks? guest: i think the appetite for risk is volatile. what toyou look at place in march, for example come on the one hand there is an escalation of fears about a recession in the united states . we had certain elements of the u.s. yield curve inverting. but then when you look at equity performance, the s&p 500 gains in the month of march. so it has been sporadic. i would not say we are in risk off mode. came to thefed
rescue and helped us manage risk appetite, but it is fragile. guy: we are going to leave it there. thank you very much indeed. derek is going to stay with us, mufg bank.nny of vonnie: with the first word news, here's courtney donohoe. southwest, delta, united, and jetblue were among the carriers affected by a flight planning weight and balance program glitch from arrow data. data.om aerdo aerodata. in turkey, president erdogan suffered a rare setback at the ballot box. the country's biggest city turned against erdogan for the
first time since 1994 in the municipal election. the election board says the opposition candidate has taken the lead in turkey's biggest city, istanbul. in the ukraine, a tv comedian with no political experience took a big step towards defeating the country's incumbent leader in a runoff later this month. he won 30% of the vote in the and is tapped into movement years a ago. 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 courtney donohoe. this is bloomberg. vonnie: thank you. major indices are green today. the s&p 500 up 8/10 of 1%. off their highs now, but each of
this is the european close on "bloomberg markets." here is taylor riggs. taylor: a global risk on day, particularly led by the tech index in the nasdaq. the stoxx up 2%. numbers from china helping all of the risk on assets, and transportation index as well. global growth concerns are being squashed for now. as you take a look at risk on assets, what that means for yields, the financial situation we are looking at is that the 10 year yield is up 10 basis points. some of the financials really benefit from a steeper yield curve and higher rates on the long end. i want to come into my terminal --e at gdb go -- at gt vigo
gtv . here we are looking at the dividend price index relative to the s&p 500. dividend stocks really and outperform her in the recent weeks. the global bond yield had look to less attractive than everyone had seen m. some of the sheer pressure being exacerbated by a lack of good news on the business side given the lack of a new strategic plan that has yet to be released. 1.6%,g falling off announcing they are selling their fruit snacks business to ferrero. you are getting a little bit more defensive here. some of these staples start to selloff, translating into the overall risk on factors. guy: thank indeed.
y,ill with us, derek halpenn mufg bank european head of market research. for what is happening in turkey, president erdogan looks like he has lost control of ankara and is probably going to lose control of istanbul as well. how big a blow is this given the recent volatility? how do you think he's going to react? guest: i think in one sense, we shouldn't be hugely surprised. we've had a recession. we've had a crisis. we had inflation shooting over 20% on an annual basis. i think the risks were always in would saytion, so i privately, he's not hugely surprised. from here it is really about how does he respond, and in particular, the markets will be watching very closely for what appears to be on the horizon in terms of some speech laying out
some further details on economic policy going forward. really it is about whether or not president erdogan can go beyond these local elections, address the problems, and help stabilize financial markets. the last thing turkey needs right now is the lira plunging once again just when we are beginning to see some evidence of the worst being over in terms of the economic contraction we had in the second half of last year. there's a danger he sees this as a threat to his leadership and tries to take more control. we are already worried in terms of the interest rate story and squeezing of offshore liquidity in the market. if he decides to step up and take a hard line on this, how do you think international investors will react? they've already been burned over the last few weeks. they are really struggling to make this market investable. guest: for sure.
this latest bout of turmoil is another damaging impact to long-term investor sentiment. of course, you can protect your currency, but there is long-term damage to have a nice shot up by hundreds of percent. the more episodes like this that we have, for sure that is going to undermine the kind of long-term viability of investing in turkey. ultimately it is about balancing his desire for control with doing the sensible thing in terms of economic policy, and that is laying out a neck on my that helps to restore a degree of civility and stabilize the currency, and ensure that inflation continues to drift lower from current levels. vonnie: what is your call on yuan trade talks, and the
offshore? 6.71 what do you say to your clients about what to do about this? guest: what we make of the whole u.s./china trade negotiations is one that has undermined activity. there was a clear fundamental this at play about going to deleverage. we had positive economic data over the weekend and today, and it is real evidence potentially that the stimulus that has been put in place is going to have traction over the next couple of months. i think from an ethics perspective, that is -- from an ethics perspective, that is certainly positive.
underpinng to capitalists in china. dell looks look pretty good for china, but long-term there is still the risk of a gradual slow down and undermined growth. that could result in a reemergence of weakness at a later date. but certainly the outlook is good for cny? vonnie: will they be resolved at all in the short to immediate term? so talking brexit, trade, many unresolved issues in the world right now. europe andg back to the fact that we had to cut our forecast for the end of the year from 120 to 116, we still see europe moving higher based on assumptions we are making in regard to just that. we certainly don't expect an
escalation of the conflict. the tariffs may remain in place, but we see gradual progress going forward. i think the china stimulus is an important story, and i think we will start to see evident of that in real economic data over the next couple of months. , stepping back different scenarios we have, if you assume a new deal brexit is avoided, which we do, we are headed for a softer brexit. i think ultimately that is supportive for u.k. and european growth as well. u.k. stayinge the in the single market, staying in some sort of a customs union, how big a boost with that give the whole of europe? guest: i, for one, and it is difficult to gauge, think that the brexit uncertainty is perhaps having a greater
influence on the european data, the disappointing data. of course, a lot of that is centered on germany. if there is one country that is most concerned about brexit, it is germany. i think there would definitely in sentimentlift if we were to see a removal of the brexit insert the, of course coupled with china, if that were to recede as a risk as well and stimulus in china picks up comedy backdrop is there for a up,ble improvement -- picks there is a backdrop of their a notable improvement. vonnie: thank you for your time mufg, derek halpenny of bank. this is bloomberg. ♪
♪ live from london, i'm guy johnson. vonnie: in new york, i'm vonnie quinn. this is the european close on "bloomberg markets." it is time for our latest bloomberg business flash. bitcoin has risen to the highest level of the year. the digital currency rose more than 1.5% to more than $4100. it hit a low of just over $3100 december. still, the price nowhere near where it was in the cryptocurrency mania of 2017, where it was trading nearly $20,000 a coin. the fight between jeff bezos and "the national enquirer" took another turn over the weekend, accusing saudi arabia of axa ' dat-- of accessing bezos a before "the inquirer."
that is your bloomberg business flash. checking u.s. markets now, we are up about 1% for the equity indices. the nasdaq biotech index up about 0.5%, not as strong as the rest. guy. on: european markets risk coming out of asia. that strong pmi data over the weekend the and augmented by the strong ism numbers out of the united states. , reallyoutperforming gaining on the china news. this is bloomberg. ♪
putcent performance being forward by the miners today. data we saw out of the chinese economy over the weekend, both official and passion of pmi data showing signs of strength. let's initially with the equity markets look like and give you an idea of what is going on. we have seen outperform is coming through on the dax today. the auto stocks have been the leader. theas actually been some of supply chain stocks that have done well. the dax up 1.5%. lagon, a little bit of a edit exit story and what has been happening with the airlines.
easyjet to the downside. as we have already talked about on the program little earlier. it does seem as if consumers are waiting to see what happens with the brexit story before booking. that has rippled out across the airline sector across europe. ad giant is also trading lower. apparently it is studying the acquisition of the alliance data. the market a little bit concerned about prices paid. it is trading up nicely. i mention the cost. daimler trading up by 4.19%. to chinese data and u.s. data really helping out some of the big european car stocks today. that is a look at the european close. 1, first day of
the quarter and indices are up. to 10 year yield back up to 2.48%. several wall street banks cutting their forecast for treasury real -- yield this year. morgan stanley actually sees the tenure ending the year at two point 25% -- 2.25%. crude oil is up 1.7%. opec's production slid for a fourth month. i just thought i would point out lyft as well down 11%. price by a bit of a margin right now. let's look at the macro movers and see where the currencies and commodities are trading.
mexican peso up 1% but still at 19.21. the turkish lira up 2% after elections. let's stick with market rather now and bring in bloomberg's dave wilson, known to all for his charts. he has his own code on the bloomberg. we are looking at the second quarter at this point and earnings and it is not looking too rosy for the earnings season. dave: absolutely not. when you consider that if you go back to the beginning of the quarter, analysts were anticipating the s&p 500 would be up by more than 4%. now, you are looking at a decline of about 3.5%. clearly, there has been quite a swing. the question is front and center as to whether, this is going to prove to be the bottom in terms of what happens with earnings, whether companies will be able to rebuild as the
year goes on and he will get some renewed earnings growth rather than the possibility of let's say two quarters of declines in earnings recession, which is something that has been much talk about. vonnie: what with the hope for is not being the bottom? consumer spending? spending? fiscal stimulus? dave: you could probably throw all of those things in the next. there is a tendency for analyst projections to swing too far in both directions, too much optimism followed by too much pessimism. the question is whether we have seen too much on the pessimism side. we know that historically companies have a tendency to be earnings estimates. by the time we get through in a couple of months, the -3.5% turns out to be perhaps even a positive number. vonnie: talk about a few individual stocks moving. we start with lyft.
will it give some investors pause when we see cooper interest or one of the others? dave: absolutely. multi-sharese lining up. our people going to want to spend the money? you think about uber, in particular and a money-losing company like lyft. investors on how much are going to be willing to pay for the promise of future. as far as lyft, they have said this year is going to be more like last year and you're not going to see much of a reversal. sort of thing people are going to take into account when you look at other companies. what is the outlook here? vonnie: what happens because the f1 without. we were talking about revenue andmodels and margins yet the stock was absolutely
going manic. we have seen this on ipo's before. is this something different? dave: is different only because it is sort of the first of a potential of a number of ipos. you go back to 2012 and look at facebook, right out of the gate, it didn't do that well. only after a few years and facebook building its business and being able to get mobile ads going in a big way that they were able to turn around and the losses turning into gains for shareholders. that is the sort of question that hangs over not just lyft but other companies going public. at what point are you going to start making money because ultimately you have to do that to set us investors. vonnie: bright house financial up. steve from metlife was on earlier.
tell me why i mentioning these stocks? dave: i'm happy to do that. you have this split of down dupont's chemical business coming up as doubting that dow inc. it is going to replace dow dupont. bright house is going to be coming out of the us the 500, moving to the mid-cap 400 because dow ince is going to take its place. asr in mind, you do have to, an index investor own a lot of these kinds of stock. i was looking at bright house in particular. it accounts for .02% of the s&p 500. it is what you have 10 times the weighing in the midcap 400, which may offset the fact that there is less money focused on that midcap index. vonnie: fascinating. always great to speak with you. we should mention that wynn
resorts is the best performer on the s&p 500 gaining revenue. dave wilson, thank you. facebook ceo mark zuckerberg's nicole is being met with a little skepticism. where joined now by bloomberg's ben rody. this op-ed that came out of the weekend being met with absolute skepticism. suddenly, mark zuckerberg is the voice for regulation? ben: exactly. there is a lot of skepticism that mark zuckerberg gets to choose how mark zuckerberg is regulated. he is looking at four issues, content moderation, things like terrorist videos that came out after the horrible new zealand massacre, privacy, things like gdpr, data portability, moving your data between services and then election security, how we talk about issues and campaign
spending. they have started to move their policies on that from here in the u.s. to around the world. vonnie: that is great and all in all of those goals are very worthwhile goals, but if mark zuckerberg feel so strongly about this, why hasn't he done enough about it yet? ben: i think that is what we are hearing from a lot of policymakers are in the united states, especially on things elections.rldwide that is something that internet companies lobbied against years ago and facebook kind of changed its tune a little bit. internal we will do company standards and industry standards, now, they're calling for worldwide industry standards. i think at the end of today, there are a lot of lawmakers who look at each other when this thing comes out and they, where are you? are you really going to put your name behind this and go out and try and tell the public why this is really right and we need to pass it, not just issuing a statement here and there that says, we reluctantly support,
like they did with the california privacy bill, that really go out and put their name on the line. vonnie: is the following the is he tryingmodel, to get in front of something here? why be so reluctant when it comes to europe, but then you have to comply because it is international standards at this point and then be so slow when it comes to the united states? what they're are looking for is worldwide harmony year. facebook has learned to live with europe's privacy rules. they may not have wanted them in the beginning, but they are finding that they can live with them. they are finding that a lot of their smaller competitors and that starts can't necessarily. they are saying, if we can bring that to the united states, we don't need to have not only an expensive compliance regime in europe, but one that is different in the united states. we could just have one expensive compliance regime. they are always projected to some level of compliance.
i think that is essentially what they are looking for here. at the is it the day, i think we hear are looking to see what the privacy debate is quick to look like. it may be possible that facebook will come out and say we do support or we want something else. vonnie: thank you. let's check in on the first word news. courtney: let me get you caught up. british lawmakers will try again to reach an orderly and to the u.k. divorce from the european union. a proposal already has been rejected three times, but lawmakers trying to come up with one thing can support. floodwaters are inundating parts of western and self western -- southwestern iran. several rivers in the area have overflowed their banks trickled by heavy rainfall. more than 56,000 people in iran
have been affected by the heavy rainfall and flash floods since last month. at least 40 people have died. to house judiciary committee will vote this week on whether to issue subpoenas. the justice department appears likely to miss tomorrow's deadline. attorney general william barr says a redacted version of the full report will be released by mid-april. new york lawmakers have approved a budget that will for the first time allow for tolls on cars. the congestion pricing will begin next year and raise money that can be used to date debt service for the city's bus and subway system. day, onews, 24 hours a air and that tictoc on twitter. this is bloomberg. vonnie: let's check where european stocks have settled as
vonnie: it is time now for your latest bloomberg business flash. jet our falling today. the carrier is being cautious in its outlook for the second half of the year. it is seeing easing in ticket prices across the u.k. and europe. amateur uncertainty and best unanswered questions. see as chrysler are exploring a partnership to build a super platform. it would reduce their investment costs. psa is the french company that makes best cards. that is related bloomberg business flash. . -- our stock of the hour is headed to its best day of the year.
wynn resorts benefiting. why do trade talks have anything to do with it? >> because it ties into the economy. stock thats is a pretty much rises and falls depending on what you are getting. this is a company, despite being based in las vegas, 75% of its revenue last year came from macau. a lot of that is dependent on whether or not people have money to gamble. is not only the high rollers, but also average people like you and me. getting them out there to the casinos and really just to the region in general to spend money. we are seeing that all of those concerns we had about the chinese economy slowing down, the week -- weak yuan. vonnie: if we are average, you must be a high roller. i'm definitely a low roller in
this idea. we know that revenues were down .4%. some analysts were looking for down as much as 6%. remember, we had that really awful january the revenue dropped about 4.5%. we rebounded in february much to the surprise of a lot of folks. a lot of estimates we are getting for the rest of the year are starting to ratchet up a little bit. people are saying the economy is healthy, consumer spending remains healthy. they just opened this huge region,n the mackay which is going to make it easier for people to get their. this was a trip that normally would take several hours and i you can do in a fraction of that time. that is expected to boost some of the more leisure travel and family type of travelers that would go there. vonnie: of course, there's a halo effect. we also have auto parts and equipment up. is that something to do with trade talks? >> everything right now is about
the trade talks. there are some positive developments in what china and the u.s. are agreeing to. this is to be some sense that this is going to be resolved in short order. you are seeing that reflected not only in a lot of traditional practices, but even more proxies here and in china. yesterday.ae rally lot of this is locked into this idea that the global economic growth story is going to be a little bit better. vonnie: thank you. rightn catch his show after u.s. markets close at 4:00 p.m. wall street time. this is bloomberg.
vonnie: joining us from westminster green is alex stock, conservative in key. that mp. we understand that theresa may been meeting with conservative lawmakers today. had he met with the prime minister? alex: yep. i met with the prime minister about 15 minutes ago. we discussed a number of things. i want to reiterate that i support her deal and would vote for every day of the week and twice on sunday, but if it doesn't get through, i think we need to have an alternative which avoids no deal. no deal would be an act of self-inflicted harm for this country, so i'm going to be voting for a customs union as an makenative, but i want to crystal clear that her deal is the best deal and i hope that parliamentarians, even at this 11th hour will get behind it. vonnie: is customs union
newspeak of, would you want this to be a permanent fix for brexit? how will with that and tingly from european union rules? the customs union would be a compromise. it wouldn't solve every single problem, but what it would do was go and awfully long way to resolving the northern irish situation. it would deal with a lot of manufacturers in my constituency where i have a ba reply on just in time supply chains. that problem goes away. it allows us to say to the european union, we might be leaving, the we are staying in the same neighborhood. it sends a message to them that we do not want to pull up the drawbridge but remain involved. when i'm not in favor of his going even further and remaining members of a single market. think that would be to betray the referendum result. is a middle way. vonnie: are you quite confident
that europe would agree to that, the you can pick and mix? it would be picking and mixing.what we would be saying is there are aspects of being a member of the european union which are off-the-shelf and customs union is one of them. they have already been very positive indications that came in the last few months or so that this is something they would be amenable to. it would be in their interest just as it would be in our interest because we manufacture a bunch of things your which they need to ensure get into their supply chains quickly. the other point i would make is that 80% of the british economy is services. it doesn't stop you making trade does around the rest of the world. i think this is something that will be good for manufacturing in the u.k., good for the eu, good for honoring the referendum result and ultimately would bringing ourss of
nation together and restoring some sanity to our economy and finance is an democracy. vonnie: theresa may doesn't think the single market respect the referendum. does she think a customs union does an issue performing -- supporting? alex: you have got right to the note of the issue. what did she think about all of this? in the event that this goes through tonight and the added wrinkle is, it might go through with it a lot of opposition votes, but not on her own site, which way is she going to go? issued going to say this crosses my redline? but my point is, we are not in parliament because we didn't win the election, but will she respond to that saying, i'm going for a no deal or will she pick up the box and fulfill parliament mandate? i hope she will, but ultimately, it is going to be a judgment for her. vonnie: who would you support to be next prime minister assuming something happens and there is a way through brexit?
who would you like to lead the conservative party? alex: it sounds like i'm dodging the question, but the next leader of the conservative party will be a policy as much as they are a person. i'm going to want to know not necessarily their backstory, i'm going to want to know what will they be doing in respect of the situation? is parliament does mandate the customs union, are they going to follow it or not? those are going to be the important things before i make a decision on who to back. vonnie: thank you for joining us. , kentucky governor matt bevin. this is bloomberg. ♪
from bloomberg world headquarters in new york, welcome to balance of power. your new yorkfrom on the 2020 presidential race for cash. therese raphael on another brexit vote. president turkish election setback. sudden, petera buetel judge. kevin: have upended this field. cash, he has the energy, and he is putting the beto o'rourke campaign on the back burner. the former texas congressman -- ng launched is david: nobody is talking about elizabeth warren.