tv Bloomberg Markets European Close Bloomberg April 30, 2019 11:00am-12:00pm EDT
guy: 30 minutes left in the european trading day. from london, i'm guy johnson during vonnie: from new york, i'm vonnie quinn and this is the european close on bloomberg markets. guy: it is last trading day of the month so we are keeping a careful eye on positioning. also have to keep careful eye on the macro story. banks continue to be a focus. watching a lot of banks come out with numbers. nordic banks suffering. bank down -- dots -- danske down sharply. the chinese pmi both official and unofficial signaling not exactly the stimulus delivering on its suspect the chinese authorities had hoped for. maybe more is coming. maybe that is why the csi 300 finished high. the same cannot be said for the european space. being seeing in oil story
represented at the top unity of the market. the bottom end of the market is basic resources. oil probably venezuela, you can see brent training -- trading up or not percent. airbus is another one we will focus on that. is it able to take advantage of the problems boeing is having with the 737 max? theie: in the u.s., we have s&p 500 lower and increasing losses as we had throughout the morning. down .4%. it is the nasdaq that is the worst performer off alphabet and the chip stocks. 1.7%ental petroleum down after warren buffett said berkshire hathaway would give $10 billion in order to get on the deal for anadarko, which would allow anadarko to raise the financing and get taken over. that is sending occidental down 2%. chevron up.
chevron in that scenario would end up walking away and taking a million-dollar breakup fee. it is off its highs. general electric is one of the major earnings winners. of more than 5% earlier on pairing some of the gains but adding substantial market overall. guy: plenty of granular bottom-up story to focus on and plenty of macular -- of macro top-down story. the gdp numbers out earlier on maybe giving the ecb a reason, not to cheer, but to relax a little bit. thatccelerated to .4%, topped estimates. the case for additional stimulus now looking less urgent. joining me is a global economist to give us a take on what we are seeing. can the ecb relax on the data strong enough to allow mario draghi to sit out his term on
his hands? >> today's gdp release is good , but i do not think the data is strong enough to stop the ecb from reframing this accommodative policy. if you look at the data, it is up .4%, which is very strong. however, we have not got any breakdown yet and according to the country breakdown is probably driven by consumer spending. we cannot be sure whether this recovery is sustained. if you look at the more current and leading indicators, the weakness is still there, especially in the manufacturing sector. i do not think the ecb can relax yet. to figure out what the german numbers look like. talking of germany, i want to connect that with china. the official data today showing
weakness. the market has taken it as a glass half full scenario because it confirms the chinese authorities will need to continue the stimulus. is that the right reaction? janet: sort of. today's data is not that bad. guy: still above 50. janet: it still shows civilization. you cannot be focused on monthly volatility. if you look at the breakdown of the components, the new expert order -- export order started to pick up. there are signs of recovery. i would not dismiss the report is totally negative. if the report turned out to be strong, i think the market will be thinking the pboc has to refrain from further stimulus. this report is kind of positive to market because then markets will think we are not seeing more evidence of recovery, we have to wait a bit and the central bank will have to wait
more to turn the policy status. vonnie: can we read anything into yuan moves. today we are trading at 6.7422? janet: we expect the yuan to remain quite stable. a lot of the good news is being reflexive in the market and also in the u.s.. we still have not got any update from the trade front. good news is being priced in. reference isant the federal reserve -- what they are going to do and we also think the fed is probably going to be on hold. that is why the monetary is going to be stable and i do not see too much yuan volatility from here. vonnie: if the fed is on hold and start its meeting today, will there be any tilt dovish in defense of putting out the possibility of a rate cut?
understand why markets are thinking that the fed will turn more dovish. that lies with the weaker information brent -- inflation print we are seeing with the coure cpi data. although the u.s. economy is solid, there are still number of global headwinds and a lot of uncertainty. i think the risk is skewed to rate cuts but markets are equally pessimistic because they are looking at rate cuts this year and next year. we expect rates to remain stable. guy: do you see a trade deal anytime soon between the u.s. and china? janet: it looks like a trade deal will be pretty soon. trade talks are being regime in beijing and so far steven mnuchin sounds upbeat about it. of course we know there are
still a lot of structural issues to be discussed and the enforcement mechanism will be key. this is being reflected in the market. there could still be upside because we do not know what the trade-in will be like and there is still a lot of uncertainty whether the existing tariffs will be removed. a lot of that has been expected and priced in. guy: what are you taking away from the earnings? you brought up inventories. we are seeing in certain sectors and inventory story we are .atching carefully in other areas, the semiconductors, we are starting to talk about that building up. if you're looking at the economy from a corporate perspective, what are you seeing out of the earnings? earnings expectations had been too pessimistic. the expectations had stabilized now. so far we think earnings growth will be modestly positive in the u.s. the weakness will probably be
more on the semiconducting and also the trade sensitive sectors. the domestic economy is strong but global trade is the weak point. we do not see any near-term pick up on that front. guy: great stuff. janet mui joining us. breaking news? memo, thecording to a trading chief role has been eliminated in its market unit. many jobs are going at the market unit, including the trading chief. we are also seeing from this memo that bloomberg has read is slashing jobs at its french private banking unit, luxor. this along with jobs at the market unit according to the internal document from socgen.
let's look at bloomberg first word news. here is kailey leinz. mark: high drama -- kailey: high drama in venezuela. opposition leader juan guaido is calling for military uprising and the trump administration says it supports the people. a video shows juan guaido surrounded by troops where he proclaims the end to nicolas maduro's regime. venezuela's socialist party responded by calling on government supporters to defend maduro. negotiators are back in beijing to try to wrap up in agreement. steve mnuchin says he is looking forward to having productive discussions. he would not comment on specific issues. next week, china's vice premier will lead a trade delegation to the u.s.. china's huawei technology has that it has helped beijing spy on phone networks in the west.
plaza been found in huawei of equipment going back to 2009 that could have been given access to the carrier's network in italy. the company says the issues will result but the revolution -- the revelation may damage the companies expectations. warren buffett's berkshire hathaway has committed to invest $10 billion in berkshire hathaway to buy anadarko. in return for the investment, brookshire would receive a stock -- along with shares of occidental. 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 kailey leinz. this is bloomberg. vonnie: thank you. let's check those markets. a down day in spite of some earnings beats. not in earning beat from alphabet and that is dragging on the nasdaq. .6% and theis down dow jones industrial is down .5% right now.
vonnie: from new york, i'm vonnie quinn. guy: in london, i'm guy johnson. close" onhe european bloomberg markets. vonnie: let's get a look at the health of those markets. here's abigail doolittle. abigial: definitely looking at a down day. the nasdaq on pace for its worst a in more than a month, down 1.3%. you're the big culprits on both of these indexes dragging alphabet down 8.5%, the worst day since 2012. this after they missed sales estimates on advertisement growth. apple shares on pace for the
worst day since early january. with the miss from apple on sales growth, investors may be spooked for apple. take a look at apple relative to sales growth. we are many quarters of growth but now we're looking at the klein. this goes back to 2018. we going to the first quarter of this year, which was the december quarter, down 5%. here the estimates. down 6% for march and also for the june quarter, down 4%. not expected to see a recovery until 2020. the question is if they can make these numbers. six months ago we were supposed to be seeing growth all the way around. the alphabet sales miss probably spooking investors. as for the global markets, let's take a look. not so risk off. the dax down moderately. the china shanghai composite finished up .5%. oil and other risk assets
trading higher and german b unds are pulling back again. from a global perspective, not entirely risk off right it seems to be centered in the u.s. around the tech earnings dragging. guy: it is amazing considering where we have come from how these markets are doing. an interesting month. a day after the boeing agm, airbus came out and smashed estimates of q1 numbers. the a320 narrowbody which max iss with the 737 back on track and the company delivered 126 in the quarter. airbus's stock has outperformed boeing year to date. joining us from paris, bloomberg's ben katz. can airbus take advantage of the problems boeing is having? ben: this is a question that came up on the analyst call
today. this is what the market wants to know. theissue is that some of has been sold out, which makes it difficult for airbus to capitalize because they do not have the space to offer new aircraft. the big question is maybe with enough pressure from customers interested in looking at the replacement for the max, if that will be enough to persuade airbus to increase their production. vonnie: how would they be able to do that? could they just hire more staff and start churning them out? tesla does not find it so easy. it is it easier for somebody who has been in the business? ben: this is exactly the point. airbus's new ceo was saying they cannot do that, they want to focus on improving the production, on spiffing it up,
on getting it -- saying their , they cannot go to the suppliers and ask more of them amidst a ramp-up in the industry that we have not seen before. the space for them to do that is not there. whether or not they go out on a limb and say let's just do this and try to make it work, even if they can squeeze out one or does go extra aircraft, that would be enough to secure a few orders. guy: the problems with these large and complicated aircraft are in the supply chain. you talk about the supply chain and how it would function. the engine manufacturers on the , one operator, that is ge partnered with the french, is there any overlap within the supply chain? is there any commonality between the max and the a320 that would of ordersibalization
going on one side and helping out the other? ben: this is a question we absolutely had. this is one of those curiosities about whether just simply taking the pressure off the max supply chain would be enough to give airbus suppliers and up space to work and catch up with their own supply for the a320. the answer to date from the ceo airbus was simply no. there's not enough overlap between the supply chain and the suppliers, not significantly enough to be able to give airbus any boon or assistance. as far as the lead between one a and one b engines which are -- which are provided by ge, not enough similarities between the engine. the airbus engine is significantly bigger and not much for airbus to gain in terms of catching up. vonnie: are there any other
competitors that could benefit from this? there are very few other competitors out there. there is a duopoly between boeing and airbus. , but that a contender has now come under airbus ownership. some interesting stuff coming out of china, but the message we're getting from the industry is they see this as a short-term disruption to production and a short-term production to the industry. ,n the medium to long term going into next year, they expect things to be back to normal in terms of the public perception of the 737 max 8. i spoke to airlines saying the world moves on and they learn that potentially this will be a safe aircraft. guy: you bring up safety.
one of the lasting legacies will be the relationship the faa has with the rest of the world and its relationship with the european regulator. what is the vision of how this works going forward? certification is now under the microscope. ben: absolutely. the relationship between the faa is the foundation of the modern aerospace industry. these are safety regulators who operate outside of the political rounds and outside of the competition between the manufacturers. essentially, very safely produce aircraft and develop new and next-generation models. the concern that was aired today is that if there is this misalignment or this does faa, thatbetween the could have ramifications that moveon. already saying there is tensions
guy: from london, i'm guy johnson. vonnie: in new york, i'm vonnie quinn. this is the european close on bloomberg markets. guy: let's turn attention to the telco sector. has deniednologies u.s. allegations that it could be helping beijing spy through the telecom network that it built in the west. we have interesting reporting from bloomberg on this front. we are joined live from our milan bureau.
you have uncovered possible backdoors that voter phone found in existing technology long way has installed -- huawei has installed. is this a smoking gun everybody has been looking for? >> yes. good afternoon. it has been a long journey. we spent months investigating into this. we got some documents by vodafon e that show huawei built cyber security vulnerabilities or backdoors in the equipment provided to vodafone. it happened about a decade ago and started in 2009 when vodafone in italy started an investigation, then again 2011.
vodafone after our investigation admitted backdoors in italy in 2012. we have sources saying these issues persisted after 2012. -- not just in italy but also countries like the u.k. , germany, sweden, and portugal. vonnie: what happens next? this kind of scoop comes in the middle of a big clash between the u.s. and china and what is going now is a kind of cold war. i think we can consider these backdoors a smoking gun. of course we have just proven that huawei built some backdoors but we do not have any evidence that the chinese giant actually spied on western countries.
according to a lot of cyber security experts, it is a big deal that huawei built some backdoors. that is the main topic. to have youeasure come on and talk about this topic. our thanks. >> thank you. guy: great scoop. let's take a look at the earnings story manifesting itself in the european market. we got the london market underperforming. the dax is flat, the cac 40 flat. on theis underperforming big mining stocks as well as the earnings stories. we have a lot to talk about in europe. the cac 40 being helped by airbus. this is bloomberg. ♪
france, nothing happening. the dax great, nothing happening. spanish markets up a little bit. the spanish market interesting. the london market is lower. you can see in the top quarter that the nordic market is under real pressure. we will talk about that in a moment. .3%.tse 100 down around china's data not that great overnight. there's an expectation of more stimulus, but the miners did not do well. dax trading flat. the madrid market is doing reasonably well. a number of reasons. oil stocks around europe are doing ok. brent stocks doing ok on the spanish market. we are continuing to digest the political narrative in spain. not much movement forward. we are seeing stocks in the retail space bouncing back on
the consumer front. the madrid market outperforming today. let's take a look at how it breaks down from a sector point of view. the grr function on your bloomberg. oil and gas doing well. oil bouncing back today. it has been on a downward trajectory for a while. up earlier onpick this week and today we had the venezuela story adding a kicker. utilities, retail doing reasonably well. generally, a more defensive bias in the middle of this market. give you an idea of where the rotation is. the bottom end of the market, i mentioned what was happening with the miners, stocks trading lower. basic resources down 1.45%. let's get onto single stocks and give you an idea of what is moving in europe. , worthhighlighted this talking about because of the apple numbers. big suppliers.
sensors for apple. the numbers today absolutely cracking. airbus we were talking about earlier on. still seeing some fade. the numbers were ok. it is turning the story on the narrow bodies right now. this is the first set of numbers. sinked all of the main issues. this is a reasonably clean set of numbers. the stock has done well of late. those bright led spots we saw in the nordics. that is one of the reasons. suffering.- danske one of the reasons is the regulatory story. that raises the cost of capital. that means the cost of capital is higher and the net interest margin is narrower. that is what we some reflected in the numbers and that is why the shares are being battered.
that is look at the european close. vonnie: here the nasdaq is the worst performing index, down more than 1.25% draghi lower by alphabet which had a disappointing quarter and analysts are not sure why or whether it is a one-off. they are not downgrading as of yet. the dollar index is weaker. the emerging-market currencies -- crude oil futures 63.86. a lot of crosscurrents in the oil market in the last few days and that is impacting the price of oil. the best-performing groups in the s&p 500, building materials, martin marietta up almost 3%. existing home sales have not been doing so well. consumer confidence is improving so it looks like the building and improvement sectors will be doing well in the next quarter. let's move to gma and -- let's
move to gmm and see some of the other assets. turkey rebounding and russia on the decline. some is oil, some is geopolitics. the british pound with a big move, up .8%. guy: bank of england later on this week reporting season underway. let's get a sense of what is going on today. from -- by jim from our finance team. danske getting-- smashed, down nearly 10%. walk me through what happened in these earnings to generate that kind of response. jim: is not just those banks. those banks have particular problems, especially don sberbank -- danskebank.
,heir funding costs are higher and for a bank that is kryptonite. more broadly, and you saw that with santander. the european economy story is written large in these bank results. santander's numbers were ok because of their business in terms of europe and the european economy, whether you are in europe or scandinavia, you do not have a lot of positive momentum to drive a bank's business. vonnie: does this mean pain is ahead for the other nordic banks and maybe even spending -- spreading beyond that? supertankers. it is very hard to turn around. they have been trying to get their house in order, especially danske bank, but even the company executives were not
optimistic that this was going to be turning around anytime soon. let's talk about the other end of the story. standard chartered is any and bank, massive exposure in asia. we've been waiting for a buyback for a very long time. jim: that is right. about a month ago when they had the settlement with the u.s., the first stories out of the box that our colleagues on the banking team wrote was this clears the way for a big buyback and here we are one month later. read it here first. vonnie: we are just getting more news that socgen is eliminating the trading chief role. it is also slashing jobs. what lies ahead for socgen?
jim: this is one of the final shoes to drop. it has been since january that they posted some sketchy fourth-quarter results. they have been hinting and saying that the investment banking would take some cuts. here they are and now the open question is how deeply revenue will be hurt. people talk about cutting the fat, are you cutting muscle? we will find out the next couple of quarters and see what happens on the revenue side. guy: in terms of the backdrop of what is happening, i will put two things over top of each other. we had a gdp number that signals mario draghi could chill out. we are waiting for details on tltro and what that will mean for the european banking sector. how closely tied are the fortunes of the european banks, european banking investors, and that story about what mario
draghi or his successor will do? jim: you talk to any european banking executive, the one thing they talk about unanimously is how much they are being hurt and how much they have been hurt, how much of a competitive disadvantage it is to deal with the negative deposit rates at the ecb. until the european interest rate story changes in a significant way, bank shareholders here will be under pressure. guy: always great to get your reporting. bloombergs jim hertling. thank you for much. vonnie: let's check in on bloomberg first word news. here is kailey leinz. mark: of venezuela -- kailey: a venezuela political fight could perform -- could -- the future of the country. juan guaido has called for military uprising. he has the support of the u.s..
the regime promised to punish anyone who joins the rebellion. no high-ranking officers have announced their backing juan guaido. the households, its first ever hearing on the medicare for all proposal. the democratic left is pushing to make an essential part of the 2020 campaign. nancy pelosi is trying to convince progressives she is taking the matter seriously and trying to assure moderates she is not going to far too fast. in sri lanka, officials warn more attacks to becoming. a cabinet official says he has received intelligence the group behind the easter sunday bombing could strike again. the coordinated bombings killed more than 250 people. dozens of people have been arrested. has endedthe emperor his reign due to health reasons. he was the first arraigned under the postwar constitution that
made the word emperor strictly symbolic. 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 kailey leinz. this is bloomberg. guy: thank you very much. we are through the auction process in europe. not much movement. we have ended where we ended regular trading. the ftse around .3%. the dax and cac 40 a little positive. little moves at a headline level. the banks certainly under pressure in the nordic region. the mining stocks under pressure. we will carry on the conversation on a number of fronts at bloomberg. one of your mutual and bloomberg radio -- one of them is on bloomberg radio. we are live on dab digital radio in the london area and all of your bloomberg devices.
guy: from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. let's get back to the milken institute local conference. we are live in beverly hills with a key voice. carol? carol: i am here with the key voice. former co-ceo of whole foods. your know it -- your new company is stonewall. great to be with you again. i have to talk to you about whole foods. a couple of years from the news that amazon bought about, is it late -- hasn't played out how you thought?
>> on balance, yet. look at the large theme of digitizing whole foods. i'm thinking of the offer -- the combination of the strengths of the companies is realized for joining with prime. any cultural combination takes time to settle in, values have to join together. on balance in the marketplace, whole foods continues to come forward through the partnership with amazon. carol: i'm thinking about when holes foods opened in to trick -- when whole foods open to detroit. people said it would not work. you embrace the citizens and culture and it is still working. lter: it celebrated its sixth anniversary in june. it was my foulest -- my proudest moment as a grocery. it points to this larger concern that is being discussed at
milken, which is the tremendous disparity. food access is one area. there are over 6000 communities the do not have access to fresh, healthy foods. what detroit was an attempt to do was to say that community deserves that same set of choices. six years on, here we are. can we bring organic to the mass-market in a cost-effective way? walter: the pricing and availability has increased tremendously. i think it will take more years to do that, but more sustainable food choices in general have accelerated in the marketplace. i think we will get there. you're investing in organic companies and your investing in a meal kit company. what you think the future is of meal kit companies? you hesitated. it is not an easy market. walter: i am not an investor in
blue apron but i am an investor in a number of small companies i think represent the next generation of food. meal kit companies are one choice in a litany of choices companies do not have five years ago. we are seeing some limits on that in terms of the number of times people repeat -- when we combine the meal kit with a physical store like albertsons, whole foods is working with amazon, there the combination is powerful. carol: i am also curious about the canada's industry. i believe you are on the board of one of the cannabis companies. do you see of time where there are cannabis products in whole foods market's? walter: there is a haze of cannabis growth, cdp everywhere. i think it is five years before this thing lines up to where the banking system can get involved.
there are people in my food business that say it is bigger the natural foods. there is a lot to recommend cannabis as a medical plant with properties yet to be discovered and communicated. i think there's real potential. we have the same questions around quality and standards. carol: is that necessary? walter: 100%. carol: people talk about government intervention. until we get that, is it hard to scale up? walter: this is global. licenses are being done in different countries. for the customer to say we will go all the way with this is necessary. carol: would you invest in a cannabis company? walter: yes i would. i thought about that a lot. i have looked into the science of cannabis, i understand all of the mores around it, but there's
something healing about parts of this. my dad is 92 years old and taking cannabis gummy's to help him sleep. when i see things like that, i say let's get the real part of it, but there's real potential. carol: i have to ask you one last question. the supermarket industry. where is it going. there are so may that seem to be struggling, where you see the supermarket industry going? walter: a massive change. the edge of it is with china. it is a completely physical and digital interaction. i think we will see the future stores smaller, a lot of the stores robot is sized or made a economist. fresh products are exploding. you will see this confluence of choices that the customer wants and all sorts of different ways. i think the stores are there. still havebusiness physical stores. the millennial connection wants to connect digitally in all of
these ways. it will look very different than today. carol: always great to spend time with you. walter robb is head of stonewall robb and former co-ceo of whole foods. vonnie: thank you for that. we look forward to many more interviews from milton throughout the week -- from milken throughout the week. time for our stock of the hour. ge is the second-best performer in the s&p 500. shares up almost 4%. the company burning through less cash than the street was expecting. kailey leinz is here with more. kailey: industrial free cash flow is the metric you want to watch with ge. it is still negative, but they burned less than expected. the street is expecting a $2.9 billion burn. the $1.76 billion they burned in the first quarter last year. the rally has tempered out. ceo larry called said this was just -- larry culp said this was
just one quarter. they still spent cash flow to be negative in the second quarter and they expected to balance out . they are standing by their previous guidance that their cash flow will be zero to -$2 billion in 2019. the jet engine business has been a bright spot but there are risks there as well, aren't there? ge good because the fallout from the 737 crisis. they do make engines. it is one of their darlings, a grew 12% in revenue. it is a bright spot in ge, which has a lot of other areas not doing well, like their power business, which solve revenues fall 22%. they do not want aviation to do poorly. it will be a key area to watch saga plays out
guy: from london, i'm guy johnson. vonnie: from new york, i'm vonnie quinn. it is another ipo. the world's biggest code working company finally going public, joining a wave of tech startups moving to the u.s. market. let's bring in jeffrey from bloomberg intelligence. this one is different. tell us why. is a real estate company, not a technology company. in the vc market, it is valued like a technology company, they are growing like a technology company, but their core business is occupying real estate and leasing it out. guy: this is a company that
makes epic losses. how will the markets take it? if they getdepends valued as a technology company or is valued like a real estate company. the public real estate market in the united states and globally is valuing these companies based on a series of predictable cash flows that can find the dividend. that is not this company. this is a revenue growth story and a disruptor story. that is not how real estate is valued. vonnie: what can we tell about this company already? it has a massive amount of debt outstanding. the funds are considered by those who know to be a little on the unsafe side. tell us more about what those were of the financials are saying about we work? things they of the are saying is they need cash.
if their story as a growth story and the need to require more space they can lease out, they need cash. ,he last round of equity raise they do not raise as much as they thought they were going to raise. i have seen supports -- reports they of years worth of cash left. they need access to incremental cash. if it is not there in the d.c. market, maybe going public is a way to access that cash if they can tap into the excitement that names like lyft and uber are trying to tap into. -- how much jeffrey: i do not know what their interest is or what their desire is. we are early in the process. the filings are not public yet. we have not seen the details. vonnie: thank you for that. we'll continue to check in with you. coming up in "balance of power" with david westin, he will be
looking at the crisis in venezuela. a lot of unrest taking place today. check in u.s. markets, we are seeing indices lower despite high economic data. the dow has climbed its way back up to down just six points. the s&p 500 is down .2%. s&p, including pfizer, the ceo ensuring investors after earnings. its shares up nearly 4%. the nasdaq down .9%, being weighted by alphabet which is down almost 8%. "balance of power" is next. this is bloomberg. ♪
power where the world of politics meets the world of business. we are waiting for the democratic leadership to come out and talk about infrastructure. let's go right to the white house. what do we know? kevin: we just heard from the senior democrat from delaware housest was on the white lawn outside of the oval office said he had a constructive meeting with president trump, with speaker pelosi, antenna minority leader chuck schumer. we are anticipating we will hear directly from the democratic leadership in congress after this meeting. they arrived here at the white house just about one hour ago for a meeting that was set to be on infrastructure. what we do not know as of now is whether or not other issues came up. most notably earlier today, senior administers and officials including secretary of state mike pompeo announcing their continued su