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tv   Bloomberg Markets Americas  Bloomberg  April 16, 2019 10:00am-11:00am EDT

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11:00 in hong kong. from new york, i'm vonnie quinn. guy: and from london, i'm guy johnson. welcome to "bloomberg markets." vonnie: u.s. stocks are in the green and we have economic data. the national association of home builders reporting the april numbers are in line with estimates and one point better than last year. homebuilders looking at a decent state of affairs in the housing market with their index coming in -- i want to point out the utilization after industrial production was down .1%, potentially the figures the market will focus on today. let's check the markets. the s&p 500 holding onto those gains for the moment. [no audio]
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vonnie: the sector has been losing a lot of ground, while united help topic out with -- while united health topping out with better numbers. guy: the global map of story -- the global macro story is the prime story in europe. pay attention to the dax. we will get the china gdp numbers coming out. the will be something spend a lot of time talking about tomorrow. csi 300 trading up. let's talk about the euro dollar trading below 113. about theretalking
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is little enthusiasm in the governing council when it comes to the negative deposit rates in europe right now. there have been concerned that the negative rates are impacting bank probability. doing isting we are something the ecb will not likely to ignore. european banks are trading in the green. a quick reminder of what we have toing up, we will be talking they had of global macro. vonnie: looking foward to that. for more on today's market action, let's bring in jeff, back from a three-week tour of. -- three-week tour. information of
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global growth. does it feel like things are slowing? >> the thing confusing for investors is the data is coming in weak everywhere. when you look at the leading indicators, and they are all pointing south, and you look at the expectations for the first quarter earnings, they are negative, yet you have a stock market ripping cyclical companies that do best in economic environment, and investors are throwing their hands in the air. story is that global risk is coming down. the discussion is only seen
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worst case outcomes going away? line walked away with his in the sand. our bankers easing up on their hawkish sentiment? central bankers are becoming more dovish. inflation is coming down, so the threat of recession is going down. the headline growth is weak. that is what people are grappling with. vonnie: japan, australia, new zealand -- all concerned with tightening. the fed's next move might not be tightening. markets aree betweenfor two eases now and 2020. their largest thing is on hold
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for a protracted period. meaning they either sit on their hands for six months, but if you look at the yield curve, the yield curve is not inverted. it is steep because the fed said their rate almost too high, therefore, it almost looks like a big u shape. the fed has over tightened a bit. guy: jonathan, good morning. kickbanks have had a nice out of the fed raising rates. is that done now? jonathan: the kick from banks? guy: yep. jonathan: if you look at the earnings, it is a bit of a surprise that the banks are crushing it on corporate profit, and they are talking about how nims ar, but they are
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doinge a brilliant job -- strong are, but they are doing a brilliant job. you are seeing a 5% to 6% jump in u.s. banks. it doesn't mean that the environment is brilliant, but it is coming in better than people thought, and it is pretty broad across business lines. guy: i'm wondering, as rates have gone up on the consumer lending site had been benefiting. i look at jpmorgan and bank of america and they are making more money on that side of the business than on the trading side of the business. i'm wondering whether or not that is repeatable in the coming courses if the fed is on hold? jonathan: good question. i just held a dinner for guys in the banking sector. they are more negative on the profit picture that i recall them being as far back as i can
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remember. ashink if the banks do well stocks, the story is this -- dividend and buybacks -- dividends and buybacks, if you put those two together, it is 2.5% for the group. they are trading at a stock multiple at 11. they are basically spewing capital back to shareholders. they are super cheap, and there is a surprise on the basis that it may be a difficult earnings environment for all of the reasons you say, but it has become less cheap than others. if the environment is not recessionary, you get low multiples. that is a critical part of the bank and the profit mario -- in the profit model, but they look more like a utility. if you look at where the multiples are on the stable
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sectors of the market coming utilities is much tighter -- is much higher than -- are. at 3000.ou are looking what will bring us there? jonathan: when i put out my target, people thought i was --ng uber bullish credit being uber bullish. i think there is a lot of upside. the risk profile of the market is getting weaker. i think that is causing a bit of re-rating. the vix, what is it? like 12 or something. when it was well over 20, i said we will see the fiscal well below 15. they said, no, it will stay at the higher levels. what that means is hedge fund investors need to re-risk their
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portfolios. when the volume is low, they take bigger bet sizes, but december was so ugly that there is muscle memory. they are slow to reset their positions. i think you will see the hedge fund community will be a source of upside as they reset. the second thing is, what we are saying it's all of this chatter about an earnings recession, it is not going to happen. but it did not happen. catalyst foris the people who are bearish are -- continuethan, we will with this conversation. jonathan golub will stick around. vonnie: let's get to kailey leinz. companiese wealthiest
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and individuals in france are among those to pledge to donate $452 million to restore the notre-dame cathedral after that fire. family willone donate $113 million. gutted by thewas fire and the cause is not known. jong-un is's kim getting ready for a summit with vladimir putin. the two will need next week. they will likely discuss the stalled nuclear summit between north korea and the u.s. president trump is leveraging the advantage of being be incumbent. the trump campaign and joint fundraising committee ended the first quarter with $49 million in the bank, more than three times the money is any of the democratic challengers. bernie has $15.7 million on
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hand. donald tusk says everyone is exhausted by brexit, but he warned to not give up to break the deadlock. british lawmakers have proposed to break the deadlock three hass, and theresa may started talks with the opposition labor party. global news 24 hours a day on air and on 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. vonnie: coming up, we had that interview with henry mcveigh. this is bloomberg. ♪
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♪ live from london, i'm guy
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johnson. vonnie: and i'm vonnie quinn. this is "bloomberg markets." this is abigail doolittle. abigail: there is a risk on town. take a look at the dow and s&p 500, up more than .2%. we have bigger gains in europe with the german tax up seven point -- the german dax up .7%. waiting for cues around earnings, but taking a bullish stance. something is happening that is interesting on german bones -- bunds. longest moving streak of the german bund since the end of february. setting a risk-on town. bank of america is trading lower down 2.3%. theinterest income grew in
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first few quarters, but could fall, now that we have the fed in pause mode. deposit did fall and the banking sector up .4%. .e have bonds falling we will see the relationship between the 10 year yield in white, and the banking index and will going all the way back two -- going all the way back to 2015. bondsear, the downside of started to rally, weighing on financials. guy: abigail, thank you. let's get back to jonathan golub. he is joining us from credit suisse. we are getting the china's gdp
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number out. this will beink important? jonathan: it is the most incremental piece of the pie for the year. it is this emerging view and one we can debate on whether the reason the market is rallying is because there will be a second-half rally on the back of continued chinese stimulus, which not only will lift china, but will give a reprieve to europe. if that is the case, not only will the markets in the western -- markets in the west will do well, but if you have a stronger gdp number from china through the year, you are likely to see industrials, materials,
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tech, hardware, semi conductors leading. but if on the other hand, if it is softer on china and the rest of the world, then the market will take a more defensive tone in health care or consumer staples. the kind of tech company will be different. guy: it it is the former, does europe outperform the u.s. this year? jonathan: for the full year, no because of where you have been so far, but between now and the end of the year, yes. the u.s. would be laggard if you have u.s. stress. if the u.s. is the most intellectual-heavy market or index in the world, which means the u.s. grows whether or not the economy is going up or down because people are buying more services on the internet. on the other hand, emerging
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markets in europe do best when the global economy is helping lift them forward. it is a beta for the rest of the world. health had ad great stay and everyone will be watching the conference calls. care?appens with health we were talking about this after break and it is a little early to look at health with policies as they move toward the next administration. is, we will see first need to see who will be the candidate, and we are far away from that, what type of policies they will embrace? especially because of the discussion of left wing kind of
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issues, the question is, as we get clarity and see how they are pulling, it will be interesting to see how the markets embraces that. but without knowing who that probably is, trump is got a better chance of being president for a second term than most would think. but until you get the opposition candidate out there, it is impossible to know. vonnie: what will get us about the 3000 mark? what sectors? jonathan: health care has had really decent fundamentals. it is surprising the stocks have lagged despite the fundamentals and revisions in the growth rate. i think technology will do great, but if we don't see the back half of this magical rally of china, we will see a huge
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amount, tech win's. -- tech wins. it will be more software and internet-related companies that are less economically sensitive. in that environment, health care does pretty well. if i am wrong, i think tech will do pretty well, but it will be a different group of names. vonnie: all right. a lot of variables. our thanks to jonathan golub. this is bloomberg. ♪
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♪ vonnie: live from new york, i'm vonnie quinn. guy: and in london, i'm guy johnson. this is "bloomberg markets." let's turn our attention to paris. emmanuel macron has vowed to theild notre dame, after
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cathedral was devastated by that fire last night. we are joined by anne-marie. the money is pouring in to rebuild the cathedral behind you. anne-marie: that is right. we have seen this from the start of this morning, but we have learned the founder and ceo behind louis vuitton is donating $200 million, and another person is stoning $100 million, and we are hearing that apple's tim cook will be donating money to restore the cathedral that suffered a fire last night, taking out two thirds of the roof. money around the world from .lobal tycoons is flowing in in metal macron last night -- emmanuel macron last night said they want to build notre dame.
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tweet whowill read a said, i'm not french or --holic, but we are more connected than we think. emmanuel macron being very public on this issue. [indiscernible] anne-marie: the fire has not been really politicized in france. there are people just begin with others on the street and many are grieving. many french people say they consider this cathedral as like a death in the family, and they want to see it be rebuilt. last night, macron was supposed about thespeech
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protests of the yellow vest movement that started as grievances for the rising fuel prices, and ended up being a national debate on income disparity and inequality. but that has taken a backseat and they say that macron is handling this very well, holding back the tears last night, but the question is, will that andte to the re-optimism for others getting behind his economic agenda? guy: that is a tricky one to see happening. french aree that the getting behind the president, but you have to drive around french to appreciate the -- the yellow vest have been out and about. what they really come behind the president because of this?
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we are getting closer to the elections. anne-marie: i think you make a good point. that is day one. next week, two weeks in, i'm sure we will be back to the protests. they have been happening every saturday in france, and macron will eventually give that speech he mentioned give last night. vonnie: thanks, anne-marie. a quick check on the markets as we head towards about an hour into the session. we have the s&p 500 up .2%. the nasdaq is up .4%. henry mcvey of kkr is next. this is bloomberg. ♪ so with xfinity mobile
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customize each line by paying for data by the gig or get unlimited. and now get $100 back when you buy a new lg. click, call, or visit a store today. ♪ vonnie: live from new york, i money quinn. guy: and from london, i'm guy johnson. "bloomberg markets." vonnie: let's turn our focus to private equity investing. erik schatzker is here with a
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special guest. >> henry mcvey is from kkr. henry, always good to see you. have survey the macro landscape. this time, you have found troubling signs. what is of concern? henry: there is a disconnect where we have $10 billion of negative gilding rates around the world, not the same time, we have major deficit increases in developed markets and bigger debt loads with corporations. seeing from we are investors right now, certainly insurance companies, is a real investment risk, which is most people cannot expect rates to be as low as they are -- people did not expect rate to be as low as they are.
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we have stepped on the throttle in terms of accelerating our push into the income-generated markets. erik: and you have the forces of andgraphics in one hand inflation on the other. henry: we put out a piece that highlights that side. proxy,ogy, it used as a is leading to a 40 basis points of decline every year. that is major. think about the announcement we had two weeks ago with walgreens, with generics, and issues around pricing. amazon bought whole foods coming two weeks ago, they announced they were taking price cuts of 15% to 20%. of inflationadwind coming up and when you couple that with demographics and slower gdp growth in china. mean, nominalk, i
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gdp growth in china used to be 20%, and now, it is between 6% and 12%. it feels slower. and that environment, it is hard for interest rates to break on the upside. erik: you called this the uncomfortable truth. question a facetious as it may sound, but is that closer to been a do investment standpoint? henry: i think it is a little more of "you can't handle the truth." this is the time you want a yielding asset, but not one with active duration risk. but we had been trying to do is really find collateral that is linked to nominal gdp, so things around housing, locomotives, aircrafts, and infrastructure. real estate credit, where you have collateral that when be
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going to a downturn, you have something to hold onto, but something that is cash flowing that is not outsized. isthe interim, inflation effectively nonexistent. , policy ratesrisk hurt us in the 1970's. today, the demographic picture is much different. mistake see the policy in terms of the central bank. clearly, the u.s. is leading the charge on having bigger deficits , which is why we want inflation protection. -- buto having some out. also having some outside yield for investors. erik: where do you think we will see the bond -- what you think we will see the bottom of the bond yield? erik: --
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henry: the equity has 3% in the fourth quarter -- the equity has 3% of growth in the fourth quarter. think there is a better chance that they do not cut. but i think that hockey stick earnings growth of the fourth quarter is miscalculated. erik: what about europe? benchmark rate are negative. is that working? henry: i think what mario draghi did with their latest program in which they land banks means rates will stay low in europe through 2021. for global investors, you have to remember that u.s. rate but the past three decades have never -- you have to remember that u.s. rates in the past three decades have never traded above -- they may trend up somewhat, but i don't think you will have a
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cataclysmic bond market selloff like you did in 1994. erik: have you been parsing these words before? what do you make of mario draghi's implicit warning that the fed's independent may be in question? henry: i think most central bankers want to be left to do their job. their mandate is not to please the politicians. their mandate the balls about inflation and growth -- their mandate revolves around inflation and growth. let them do their job. it is a statement of confidence and what the fed can do, but two, he is pushing some of the authorities to take a step back and let them do their job. erik: do you think the perspective with the nominations of herman cain and stephen more put more incentive for the fed in question? is a: i think the fed
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great committee that they have right now. think they are incredibly intelligent. i think anybody who gets approved and that is why you have a process, will be reflected of the values of the central bank. i was in mexico city. there is a new administration down there. i think the central bank has been able to maintain their independence. i think the same thing is going on in the u.s. what draghi is saying is buyer beware. i am not sitting at my desk at work thinking the independence is being undermined currently. erik: what do you need to see to advise investors to start raising cash, you know, shorting stock and allocating more aggressively? henry: i think we are moving into the next five years, we will do better with stress. that has been one of the worst
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access -- asset classes. as money leaves the system, albeit more slowly than we thought, that will create a situation where the water comes out of the swimming pool and the we'll see who doesn't have debating suit on. every cycle has this -- we will see who does not have they are bathing suit on. a free -- every cycle has this. you have seen that in energies, retail, and it went surprisingly if you saw it in software, health care, and industrials, but it will take a lot for that to unfold. erik: you have been to china recently and came back with some thoughts on the prospects for u.s.-china trade. what are they? henry: the near is more positive than what most folks think. we try to peel it back a level. theink the u.s. will keep $50 billion they originally put
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in place. i think there is a chance they will back the $200 billion. president trump needs growth going into 2020. , but in mynice sign 20 plus years of going to china from a goes back to something we talked about before, which i think there is a divide and i think that china-u.s. relations needs to be more structural and it will effect supply chains. the way people think about expanding globally, asia becomes more regionalized and europe will be somewhere in the middle. and that is not insignificant for europe. europe gets 49% of its gross gdp from exports. as china slowed, they slowed down, too. is to findn europe industries that can go beyond the global slowdown that is being forced upon them, that led us to technology. erik: what about the impact,
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well, let me say this, if i understand you correctly, from what i have read in your latest report, which by the way, i urge everyone to read because we can barely summarizing here -- china's economy, the slowdown has bottomed. messagehere is a clear from being on the ground in china that the stimulus they did, the monetary of the supply-side is starting to -- erik: when is the impact of the stimulus felt, like in europe? henry: probably in the third quarter. i think there is a little bit of a lag. unlike in the past, where it was stimulus, this will be much more gradual. i think that is an important consideration. nominal gdp in china, when you have a fixed investment economy,
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you can grow 20% nominally. today, as a service economy, i think you grow maybe 8% to 12% nominally, and that is real gdp north of 6%. erik: henry, always great to see you. henry mcvey is the head of global macro innovation at kkr. guy: good stuff. erik, thank you very much indeed, and thank you to henry mcvey. coming up, the energy industry too"wly escaping the "me scandals. this is bloomberg. ♪
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-- ank guy:
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vonnie: live from new york, i'm vonnie quinn. guy: i'm guy johnson. this is "bloomberg markets." let's catch up with first word news with kailey leinz. kailey: it took firefighters more than of hours to extinguish the flames that gutted the notre dame cathedral in paris. spire collapsed. thorns crown of survived. officials say they are working on the assumption that the fire was an accident. come on in lawmakers have approved a bill linking american forces in the middle east to terrorists. legal makes it -- it makes it illegal to provide material support. u.s. factory production stalled in march. unchanged ins february with the decline of motor vehicle production.
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there has been an uncertainty about trade any demo outlook for global growth. it has taken more than 30 years, but -- are waiting to deploy a vaccine for malaria. the disease kills one half million people per year. developed with a nonprofit organization. global news 24 hours a day on air and on 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. even as then "me too" movement rolls through hollywood and beyond, the energy industry has largely escaped. soldnadarko which will be to chevron had a moment on its own -- a moment of its own. from thisling details
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story. great reporting. is like a lot of other "me too" stories. anadarko aten at the denver office saying for years, they experienced an appropriate behavior from executives, discrimination, and held back while the amended complaint about were promoted. what is unique if this is the first time we are hearing something like this from an oil company. is kind of shocking, with a series of elements to it, catherine. how has the company improved it behavior and its monitoring? how has the company improved its reporting. there is a takeover included in this as well. catherine: anadarko, which is being acquired by chevron right now has said they have been responsive to these complaints
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over the years and have investigated complaints ever made related to harassment. they say they have launched a fuller sexual-harassment policy chemistry strengthen the policy about sexual relationships between supervisors and their subordinates. vonnie: just give us some of these troubling details that went on inside the anadarko. women talking about 550 and how did it finally come to light only last year? catherine: justin carrigan, there are 550 employees in the denver -- just to clarify, there are 550 employees in the denver office. we have a small office in denver and this company has had some "me too" issues over the years. i started speaking with former employees and women who worked for the company and still work
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in the industry, and they were sharing details about what they experienced. supervisors asking women about their sexual activities. nicknames, derisive cutting their bonuses when they complained. some of the details i heard about were so graphic that we could not even publish them. guy: catherine, give us a sense of the timeline. just was not 10 years ago, this was more recent. give us a sense of how things have changed subsequent to some of this coming to light? i'm curious of the timeline because the "me too" movement seems like it has been going on for a while. i am fascinated this was still going on while that bigger movement was going on elsewhere in the country. catherine: sure. all of the women i spoke to describe experiences they had in 2015, 2016, 2017. most of the women i spoke to had
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left the company by 2017. it is my understanding that around 2017, anadarko started taking strong steps to correct the culture that had been exposed by some of these complaints. vonnie: we have to leave it there, catherine. i would urge every single member and subscriber to read catherine's story. it really is phenomenal and these details have been out there. it is important we all know them. thank you. ahead, we are talking oil with suppliers. futures in focus coming up. this is bloomberg. ♪ is bloomberg. ♪
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♪ guy: live from london, i'm guy johnson. vonnie: in new york, i'm vonnie quinn, and this is "bloomberg markets." time for futures in focus. i want to ask you about the agricultural commodities that you watch in a moment and get us the incremental trait headlines about china, but let's first get to oil. we are trading at $63 64 a barrel. will we stay there? >> bhp stocks are making -- >> stocks are making new highs. upc is talking about backing production. but not until we get to $85. that is maybe a little bearish in crude inventories have been rising in their expectations are for another rise. can crude hold with the two day
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moving average at the $63 level? the funds are really long. hold this moving average, we get a break, at $63.erm, i see crude i think we are going higher. is the next stop. i wouldn't be surprised to see a pullback first but i think we are going higher. vonnie: briefly, are you seeing impacts in the commodities' space with these new science that china may shift tariffs with other items? looking for ways to play the game at the negotiation table. something we did yesterday approving sales to taiwan for defense, china will not like that. china will continue to make noise, but they really need
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ethanol and need corn and eventually, soybeans. swine problems lowering their demand, but if they get a deal done, there will be a lot of agricultural commodities purchased, and it will be better than most are expecting. hopefully, if we get a deal with china, that will be great for agriculture. vonnie: ted, thank you for joining us. guy: a bit of breaking news relating to the -- relating to switzerland. redemptions starting to slow. the stock beginning to pick up right now. fundsms of the coal relating back to q4, you can see the slowing. this is basically a head of an
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expected uptake we will get from the company likely to take place on wednesday. vonnie: are stock of the hour is ist -- our stock of the hour sticky. say it is a good company that has been mispriced. they issue credit cards, managing cash machines, and the biggest a.p. in europe -- ipo in europe raised 200 billion euros at $2.7 billion. it is down 8.5 euros. it may have been missed price, and the ceo said it should not be judged on the first data and they shall look at the share price over time. ceo'ss something many
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have said. they have had plenty of big ipos over the year. levi is doing pretty well, but lyft initially rising on the first day, missed calculations due to uber. companye third payment since june of last year. done really well. in terms of what the ipos give you, they give you acquisition, and acquisitions in this space, consolidation has been talked about. does this change anything? the paymentstioned companies have done well since going public. a number of investors said they would -- saying they had
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seen megamergers in the payment space in europe over the last few months or so. investors like it. rising consumer demand for digitized payment and digitizing across europe, latin america, and the middle east. because we have seen a number of mergers of megamergers, it could have heightened the demand for more mergers. vonnie: majors are creeping back down a little bit in the u.s., but still in the green by a 10th of a percent. this is bloomberg. ♪
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guy: 30 minutes left in the
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european trading day. from london, i'm guy johnson. vonnie: i'm vonnie quinn. this is the european close on "bloomberg markets." withi'm going to start off where the dax is. the dax is outperforming now. the automobile sector is trading relatively strongly. this is part of what's coming out of the motor show in china and the macro picture starting to improve a little bit . is outperforming a little bit today, up .6%, fading off its earlier highs but not a bad move forwards. we will get some china data overnight. the gdp number is something we will follow and spend a lot of time talking about tomorrow. pay attention to that one. the csi 300, the chinese market up quite strongly.


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