tv Bloomberg Markets European Close Bloomberg May 28, 2019 11:00am-12:01pm EDT
trading day in europe. "european close" on bloomberg markets. we are starting in the united up, it is s&p 500 erasing -- look at the 10 year yield, down 2.2 8% coming out of equities straight into treasuries. we will be speaking with the payment ceo in a moment. it is really the generic drug makers that are lower today. the worst performer in the s&p 500, a downgrade here and there on some of those generics. idea of the drug companies are fighting for market share. 8%ond meets is seeing up
now. more than triple its price since the ipo. this is following the european elections and the stoxx 600 is down 2/10 of 1%. it had been higher earlier but some indices are dragging at lower. one of the worst performances in the block. two year yield is right now at 65 basis points, it is up four beis points, italy looks to facing off against europe on some of those metrics. , coming up this hour, -- payments ceo will join us at 11:30 eastern to discuss the deal. new leaders gathering right now
, a winner of the election german closely aligned to angela merkel has been losing momentum today. we heard from the french president that he does think other names and another french man or even a socialist could do a better job. by the end of today we will have a clear idea which way european leaders are headed to an the european commission really does matter because there has to be a balance of power between the european commission and central bank. if we get a liberal voice at the commission that means may be a german at the ecb. country movinger markets today is italy. what happened to put italy in such a position -- such opposition to the european union? we are back to the same story. the conversation between
brussels which has died out until the election. feelse had those, savini he strengthened his hand and said clearly he thinks the results treated him very well. they have given a mandate to cut taxes which is problematic when you look at the italian economy. a country and economy not growing. at the same time we are hearing the european union may have no option but to perhaps fine the country for not meeting those targets when it comes to measures. it does seem like another political confrontation will heat up. i pretty -- particularly now that savini feels he has been strengthened by the election. deske: patrick in verlin in berlin, are things to maria in brussels. patrick, the dynamics at the top of the akk party are
interesting. is --signated successor he said will lead the party after her seems to have other notions about that. patrick: the new party leader, merkel -- she has been at the top of the party since december. you would like to boost in the polls but that has not happened. showinghad its worst since the war. things aren't going since they were supposed to go. , she hason to that committed quite a few gaffes. she picked a fight with some web activists who cut into the cdu before the election and so a lot of people are wondering whether she is up to the job and from what we are hearing is that angela merkel feels the same way. vonnie: angela merkel even
though she cannot stay on -- can stay on until 2121 -- 2021, questions about how much she could have on her party. patrick: she doesn't have the influence. the party does not have an appetite for another change of the top. herwas substantially designated successor and was supposed to bring in fresh pair of hands to politics in germany to center-right politics and that has not happened. says she is prepared to fill out the rest of the term and if there was any notion she kk as thee way for a new chancellor, she has given the signal she is staying put for now. vonnie: we will be back on this subject soon. he is in berlin, thank you for joining us.
for more on the context we are joined by the head of political --. at open cdu and the to the german electorate as we progress throughout the year into next year? it is particularly complicated in germany with a coalition government suffered a few political crises over the past months and is facing a lot of critique about where they really have the legitimacy to continue running the country. these elections continue to confirm they might not have the majority or the mandate anymore to run the german country. more globally what has happened, we've seen it for many centrist parties across the eu, in france for example the center-right came in with less than 10% of
the vote, the tories did the same. it's a broader european trend. it's the first time really the european electorate as a whole has had a voice or has given its verdict on europe to the leaders that be. will there be a transference of power at all to the european commission, european parliament from the nationstates more so then there has been? suggest that is very unlikely because essentially what has been very ish debated across the eu this idea it has too much power and not enough direct influence from the citizens of europe and there is the principal of subsidiarity which is the eu
does what it is best at and the rest is cap that the member state level and obviously in the context of the rise of nationalists and populists across the eu, there is little appetite to transport more to the eu stage. vonnie: i want to point out to our viewers we are seeing the spectacle of theresa may arriving for the meetings after nigel's party-- made headway. aboutu have made talking something that shouldn't be interesting to britain because it will be pulling out. this is kind of a ludicrous seen here. -- scene here. famke: it is definitely and as far as i know it's the first time theresa may talked to the press after announcing she would
step back. the u.k. had to participate in the eu elections because it is still a member of the eu as it hasn't managed to implement brexit in the eu. it elected members to the european parliament which might never sit. what it did do is put the brexit process to the electoral test and what has happened is the brexit party got 30% of the vote and it sent a clear message about what the u.k. electorate is hoping for and it will definitely influence the leadership contest which is about to happen. vonnie: italian banks are down today. there is worry about italy and whether it can meet the metrics and rules outlined for it at the
european level. how concerned are you about italy? the most pullas on the fabric of the european union? famke: definitely as i guess everybody has been saying for years, italy is too big to fail and it is worrying because the fundamentals are in a bad state and the country is run by the haveight national and they really made significant gains in these eu elections and savini takes it as a message he has more power and the ability to confront brussels. that will -- we will see a standoff essentially between italy and the eu. we think at the debt and deficit level targets and see who has the power whether the eu or whetherits fines
it gives into a certain extent to the government. vonnie: big movement today. our thanks to famke. she comes to us from paris. let's check in on first word news. -- slow down for the month in a row. the property values rose 2.7% in march. that is the slowest pace since august of 2012. we had of the s&p index committee says given the broader picture, the economy -- housing should be doing better. visitent trump wraps up a to japan focusing more on pleasantries. said he was aiming to reach a trade deal by august, japanese officials said note such talk.
he brushed off recent north korean missile tests, the prime minister calls them a violation of the u.n. resolution. sebastian,ecord for the first -- to be thrown out of office since the country was rebuilt after world war ii. he has begun a campaign to get back into power. mckenzie bezos promised to give away at least half of the $7 billion she is getting from her divorce from jeff bezos. she is one of the 19 news signatories in a giving pledge. was started by bill and melinda gates and warren buffett. more than 200 people have committed to donate more than 50% of their wealth to philanthropy or charitable causes. 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.
♪ york, i'mom new vonnie quinn. let's get a check of the global markets. abigail: it has turned choppy. we did open higher than where we were at. the s&p and nasdaq up. briefly low for the s&p 500 now. nasdaq.gain for the all of this continuing uncertainty around trade plus the federal reserve and europe, the eu elections. take a look at this, the 10 year yield down for basis points -- down four basis points. investors are continuing to seek safety. let's look at the s&p since the start of may, a solid decline. 3.9%, the first down month of the year. we had a monster rally into this
month, now giving some of that back. the question whether the s&p might follow the stocks -- stoxx . which is more sensitive to china and the trade war. we take a look at what's happening between the s&p 500 and tax -- dax. we have the s&p 500, both are correlated. the dax lead the downside last year, this year the s&p is leading the upside. the other indexes are low suggest there could be some weakness. the worst sector in the u.s. on the day, the consumer stable space getting dragged down the cigarette tobacco stocks. a little bit of a mixed tone on this tuesday. vonnie: thank you for that update. markets,n bloomberg the chinese government's first
♪ vonnie: this is the european close on bloomberg markets. seized itsernment first bank in more than two decades triggering a wave of concern. the move is driving up costs for smaller lenders and adding pressure to shares. let's bring in tom to explain. why did china sees this bank? it didn't have to make that kind of gesture. tom: i think there is a big question and it is how much does this represent some particular problems of this particular bank potentially related to its participation in a larger financial conglomerate, about
which we had a lot of questions. to what extent does this represent a bigger systemic problem in china banking sector. if it's an isolated incident i think the markets will move on testing af it is now larger approach to deal with the bigger systemic problem among china financial banks, this will be a story for some time. vonnie: how do we figure out which it is and what our markets telling us? tom: i think the markets are pricing and concerns about chinese smaller banks. the biggest story is in the last with the so, starting response to the great financial crisis, china's banks have expanded too fast. that is particularly true of china's smaller level banks and in many cases they expanded by
taking on risky liability, they borrowed expensively in strong terms and by stocking up on shadowy assets. in particular there investment in debt receivables. when we look at the bank, it looks like a pretty typical example of banks which fall into that risky category, but by no means the worst example. concernme raises the that there is potentially -- that this will not be an isolated incident and there will be more banks falling into this category. vonnie: at what point are they affected? is one seizure will affect some, but presumably for the moment, that measure will be small. is: i think the issue here banks in china have basically always operated on a kind of no
default guarantee basis. so investors provided capital to banks, big banks that lent money to school -- to banks to fund their operations work on the assumption they would never go bust and that their money would always be safe. now we don't know how things will be worked out, but if we see some of the investors that gave them their capital or some of the banks that lend them liquidity taking a haircut and losing some of their money, we will see a pullback across funding for the entire universe of small banks in china. if theyhappens, the face higher funding costs and that will be passed on to the small businesses that rely on them for their funding. asnie: tom, thank you always. fantastic explanation there. time for the latest bloomberg business flash. a look at the business stories
in the news. global payments has agreed to at $21.5 a value billion. it will be the third megamerger of the year. it will create a powerhouse that provides software and payment technology to merchants and more than 1300 financial institutions and we will speak with the ceo in just a few minutes. members of the board at renault are studying a proposal to create the third largest automaker. fiat chrysler has proposed a 50-50 ownership. renault shareholders would get a premium of about $.10. the carmaker is moving ahead without the other members of renault's alliance. that is your latest bloomberg business flash. a quick look at u.s. markets. we are paring gains. a 10th of a cent higher -- a 10th of a percent higher. thevix is up 16 -- the vix is
up. the 10 year yield is the new vix -- it is two point 2815 2.2815%. markets, weeuropean are seeing them also pare gains. the ftse 100 very clinging on to a three point gain -- barely clinging on to a three point gain. the ftse in italy for now the worst performer in europe down more than a half percent. this is bloomberg. ♪
that is a pairing of a good gain for the u.k. day. is having a off set for a square off with brussels. yields are going up and putting pressure on the economy. in paris the cac 40 is down .4% as we finish up the session. daystoxx 600 finishing the down .2%. the italian 10 year yield at 2.69%. after all the brexit trauma, the british pound pretty unchanged relative to the u.s. dollar at 93k. 10 year yield basis points. thanks to blame for the losses in europe -- banks to blame for the losses in europe. italian banks are some of the worst losers in europe's markets. seneca bank and unicredit down 2%.
deutsche bank. there are the banks that are performing better. many of those based in paris or ireland or elsewhere. it is the italian and other banks seeing the worst of the losses. let's move the united states and see where we are two hours into the u.s. open. this is our s&p 500 and many of the groups are lower. up .3%. the chip stocks are doing well today. we also have a deal in the works. we be talking about that in the moment. let's move to our next board and show you more movers. 2.8% right yield at now. the s&p 500 has turned into the decline,t is on the having spent the first couple of hours in the green. 5.6%.and services up
this will be the third megamerger in this space this year. quite difficult to believe but a lot of consolidation going on. global payments ceo jeff sloan will join us to talk about that $21.5 billion merger with total systems. amazon suppliers are on notice. the retail giant funding a purge of its smaller vendors as it looks to focus on wholesale pricing with major brands. our reporter joins us with the latest. amazon went off the top stories to have a marketplace and now wants to shutter them? >> the marketplace is growing so what is changing is that amazon buys a lot to sell themselves, just like walmart might buy from suppliers and the goodwill walmart and you buy thinking walmart is the one selling to you. for some of the smaller vendors, where and amazon employee will
had a relationship and bought on bulk and found ways to sell directly to consumers, they are pushing their smaller vendors to the marketplace saying you can still use our warehouse and are shipping, but you need to hold your own inventory risk and maintain your own presence on the amazon website and sell directly. expecteds this move have a big impact on amazon's bottom line? >> we are not sure how deep the timeline -- what the bigger story is is that amazon is trying to have a more hands-off approach where in the past there would've been an employee or team employees focused on umbrellas and they are dealing with vendors around the world finding the cheapest umbrellas, buying in bulk and trying to sell them again. now they are saying to the umbrella suppliers you do it yourself and what they will be focusing on is the bulk purchases from the biggest consumer companies. procter & gamble, they could
benefit from this as well. what happens to all of these smaller suppliers? do they just go away? is this the death of 10,000 businesses? >> that might be extreme. for many people this will be disruptive. many businesses have been built on selling directly to amazon. a lot of businesses have also been built on selling -- the marketplace has been a bigger effect on amazon's revenue. further vendors that can find a way to survive on their own, they will still be on amazon, just not selling only to amazon. selling to amazon consumers like you and i. with the china trade war, there must be a lot of people extremely worried about this move. wise amazon doing it now? >> amazon has been happy about that growth in the marketplace
so that means people can sign up and sell on amazon without amazon buying them and selling themselves. it is a model they want to press into the future. at the end of the day is less risk for them. even the small vendors are using amazon warehouses, if the stuff does not sell amazon does not have to take a loss. it is the vendor itself it does. vonnie: thank you for the great reporting and our whole team on the amazon story. let's check in with bloomberg first word news. here's ritika gupta. ika: in germany, angela merkel has been seated her succession plans have fallen apart. outheir apparent may not be -- up to the job. she has seen her popularity slide since taking a breath leader of the christian democratic union in december. on sunday, she oversaw the cbu's
worst ever results in a national election. european union may reward brexit negotiator michel barnier with the top job of leading the european commission. france is pushing its candidate. it has spain and ireland in its quarter. eu leaders have gary in brussels -- havess who should gathered in brussels to discuss who should lead the block. iran says america has not grown in power in recent years. the u.s. recently sent an aircraft carrier and bomber to the region over an unexplained threat. troops of0 american been employed. a rocky summer may be in store for american troops traveling by air. 257 million people will fly from june the first to the end of august. hundreds of airport security
personnel may be reassigned. the continued grounding of the boeing 737 max is still a problem. 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'm ritika gupta. this is bloomberg. you.e: thank let's check where european stocks have settled as we head into the break. the cac 40 is the worst performer for the moment in europe, down more than .4%. the ftse has edged it out. the benchmark down more than .5% at the close. the dax down at the close. the ftse 100 finishing the day lower. down 3.3% -- british tobacco down 3.3%. this is bloomberg. ♪
vonnie: from new york, i'm vonnie quinn. this is the european close on bloomberg markets. it is the payments industries third make a merger of the year. global payments has agreed to buy total system services. joining us is global payments ceo jeffrey sloan. congratulations. a nice deal. you have been eyeing each other for a decade. why now? effrey: the pace of innovation in payments has accelerated. , cars coming to the , theys, in asia-pacific necessity has more scale in our business to further compete and
fund innovation. vonnie: there some pressure from competition. what about the likes of visa and mastercard. does this allow you to be better aligned to face them? jeffrey: those are our partners. the businesses that were the beneficiaries in the ecosystems -- we are good partners with mastercard and apple pay and all of those things. when we have competitors with other deals, it is to our favor. i know you guys of talked about growth going forward. your leverage levels will be better than some of your rivals. what are you looking at in terms of further m&a? jeffrey: this transaction makes is the biggest provider of payments in the world -- we will not stop there. it is important for us to keep investing those businesses and by way of example i would see more software and integrated markets. more geography in which we can sell e-commerce and omni and
more exposure to emerging markets. this takes us from 32 countries to 38 and 60 virtual. 100 is not all of the world. neither is 38. >> this is the third megadeal in this industry. how do you see yourself positioned against your other big rivals? jeffrey: those are good companies but the point of for us as weon are focused on smaller businesses. we are not in big box in any part of the world. the second thing is the breath of our distribution. we have the biggest payment centric sales force in the world. 3500 sales. i would say there is geography. goodther companies are businesses but they are not in the geographic markets we are in. further, we are up your plate and the rest remaining pure play payments playess -- we're a pure and the last remaining pure play
payments business. vonnie: how big you see the market getting? you are always a big player. you made another acquisition three years ago. how big can revenue get? jeffrey: i thought estimate this morning from mckinsey that the payment market globally is $1.9 trillion. i do not know that is right, but we will be about $8.6 billion of revenue. gore is a lot of room to between $9 billion and $1 trillion. my role is to double the company again. i do not think there is any reason we cannot continue to double the company over the next few years. since the merger europe or two we have double the company. there is no reason we cannot double again. vonnie: which have to make another acquisition for that to happen? jeffrey: i think it is a mix of organic and inorganic growth. there are other markets would like to be in still in.
we would like to be bigger in europe. neither one of us has any presence today. we are not in south korea. there are parts of europe we are not in. geographic extensions to where we are make sense. >> where do you see further consolidation? i know the big players are now tied up but there are others. we talk about software businesses. where should be looking next for deals? jeffrey: additional markets that involve software. we're looking at other large segments, real estate being example. if you pay your fees online using your cards, we do a lot of that in university in k-12 environment, but not a lot in real estate. we would love to be in a market like that. municipalities, we announced a partnership with tyler technologies, taxes, fees or good place to be.
>> and the regulatory parts of this deal, you are confident it sells through easily? was competitive yesterday, competitive today, more competitive tomorrow. it is a matter of the amount of time it takes to get through the regulatory process. not something we are overly concerned about. vonnie: congratulations to you. 45% year to date. total systems up as well and now there is the combination. congratulations to global payments ceo jeffrey sloan. it is time for your latest bloomberg business flash. some of the biggest business stories in the news. reveals getting ready to how much it will charge for its made in china model 3. the carmaker is inviting people to guess. there is speculation the car will cost between $43,000 and
$51,000. tesla is counting on it shanghai factory to boost the company's competitiveness in china. the magazine sports illustrated is being sold to authentic brands for $110 million. authentic brands lands to make money licensing out the magazine's name. the current owner will continue publishing the print version of sports illustrated and running the website for at least two years. that is your latest bloomberg business flash. time for our stock of the hour. it is beyond meat. shares of 8% today after a slew of analyst initiated coverage and the company cited massive growth potential. that was jpmorgan's blurb. kailey leinz is here to tell us more. jpmorgan saying growth potential for this company is extraordinary. they already have seen significant revenue growth, from
$16 billion to almost $90 million in 2018. analysts see more room for growth. that is because of the market this company functions and. this meat substitute market is expected to grow by 2025 and has goldman sachs noted, beyond meat was an early mover and they have been able to capture a lot of market share. that said, analysts are not overly bullish. 7% have a hold rating on the stock. beyond meat as in this incredible post ipo run since it went public earlier this year. saying it will take bold k's developments to support the stock at these levels, whereas credit suisse is saying this is priced perfection. this is not necessarily going to play out. valuation is a concern. also competition.
this is a rapidly growing space, the meat substitute space, and there are entrants in the market that will compete with beyond meat. growth is the mantra. vonnie: yes. there could be a fast food deal in the future. who could be a candidate? kailey: mcdonald's is what jeffries is writing for a multitude of reason. the former mcdonald's ceo is on the board of beyond meat and impossible foods is having some issues meeting demand. beyond meat can make up for the supply. burger king rolled out the impossible whopper, and mcdonald's is going to want to have a rival offer. jeffries is saying if beyond meat can capture 6% of u.s. beef offerings, that could bring in $285 million, adding about $25 a share should that mcdonald's type happen -- tie up happen.
a fast fooding chain is likely to become a customer beyond meat. vonnie: they would have to have separate cookers? kailey: i would imagine so. vonnie: a lot more thinking about it before that deal is done. kailey leinz, thank you. coming up, our global battle of the charts. you do not want to miss it. this is bloomberg. ♪
vonnie: from new york, i'm vonnie quinn. this is the european close on bloomberg markets. it is time for our global battle the charts. you can see these charts on the bloomberg. just run the function gtv . our battlers are michael mckee in new york and christine aquino in london. christine, take it away.
chart is all about italy which is back in a big way. it has been a year since populist selective power in italy. the italy bond your spread is back to square one. the spread shot up to nearly 300 basis points when the populists first took power at the end of may. we saw gyrations in the past year and a little bit of a pullback in the spread over concerns -- as concern over italy receded. that stock up nearly 300 basis points after a bloomberg scoop showed italy may be subject to a hefty fine in budget procedures because of its inability to rein in its debt. this is according to sources familiar with the matter who have told bloomberg news in an exclusive yesterday. if that is not the greatest anniversary present for the current italian government, surely something for them to be watching and moving on as well as investors who want to keep track of italy.
this is the chart to watch. check it out at gtv . vonnie: a great chart. we have seen this play out over and over again but it has been a long time since we have seen those spreads in any european countries blowout like that. istine: absolutely, and certainly something investors will be aware of again since it has been a year since populists have taken over. sure investors judge that there has been enough progress in terms of italy raining in its debt. developments over negotiations with the eu regarding its budget for 2019 and moving forward. vonnie: thank you for that wonderful chart. i do want to point out that jean-claude juncker has been speaking in brussels. he says they will not make any decisions on the top jobs until tomorrow. those negotiations continue. let's continue our bell. on at -- our battle. under new york set we have
michael mckee. is a big weekweek for into not -- for economic indicators. we have some this week that will interest investors. we have consumer sentiment today from the conference board and the numbers are amazing. a six-month high. the white line for consumer confidence. the present situation index is at the highest the year 2000. the question is does it mean we will see more consumer spending? that is the real question that does not seem to have a good answer. the blue line is consumer spending as reported in the gdp numbers, which we will get later this week. as you can see there is little correlation. people can be happy and not spend, people cannot -- people can spend and not be happy. it does not tell us we will see an increase in gdp. we will check out those revised numbers on thursday and then on friday we get the income and spending numbers for the month of april, which would give us
some idea of whether this increased consumer confidence is going to lead to more spending and a higher gdp number. vonnie: never mind the spending. businesses have to worry about that and we will eventually. just the idea that consumers are getting happier is phenomenal given the trade war. as you say we saw present conditions and expectations rise. vonnie: is interested -- michael: it is interesting because the consumer sentiment numbers that came out today, the top of the survey is may 16. they would have known about donald trump ramping up the trade war with china did not seem to have an effect. you get the conference board numbers very correlated with the unemployment figures. people think jobs are easy to get, they think their incomes will get up. that makes them happy. vonnie: i guess so. now i have to make a decision. this is the hard part. they are both day of stories, they both phenomenal and they
are both well worth our viewers time and attention. i think i have to give it a tie. it is a tie. you can come back at the end of the week and we will do a tiebreaker, perhaps. congratulations. coming up on balance of power with david westin, arkansas governor is a hitchens and joins talksk -- is a hutchinson about trade tensions affecting walmart and other businesses in arkansas. we have the dow and s&p a racing most of their gains. the nasdaq still up .3%. this is bloomberg -- still off .3%. this is bloomberg. ♪
david westin. welcome to "balance of power," where the world of politics meets the world of business. on the brief today, sarah mcgregor on president trump's latest signals on china trade talks. from berlin, patrick donahue over angela merkel's shakeup of her party and from brussels, maria tadeo on the eu's meetings to pick a new leadership team. president trump went to japan but started talking about chinese trade and said we are in no big rush. is that a single of where things are headed? sarah: the interesting thing about his comments is it was easy as trump said to win a trade war but proving much more difficult than he thought. by putting the ball in china's court and saying maybe they are not so interested in a deal and we are not interested in one with them, he is expanding the time he is taking to close the deal which is going to be the hard part of the job. david: part of the hard part is huawei.