tv Bloomberg Markets European Close Bloomberg February 12, 2016 11:00am-12:01pm EST
close, mark barton joining me live from london as we wrapped up trade in the next hour. we have this rally going. mark: it is the second daily gain and european stocks. the european close starts right now. betty: we are going to take you live from new york to london in the next hour and mark kicks things off. mark: we are off by 2%, we have 30 minutes to go in the friday session. every industry group is rising. basic resource stocks, bank stocks are leading the rally. let's get serious, it has been another week of declines with stocks falling as much as 5% this week. banks have slumped by 7% this
week. they are falling for a seventh consecutive week. they have not fallen for seven weeks since the financial crisis of 2008. what a week it has been for deutsche bank, announcing it is going to buy back $4.5 billion of bonds in euros and dollars. tuesday, down 4% as investors were fretting about its ability to pay bonds on its riskiest debt. speculation started emerging it might buy back its bonds. up 10%, and we are still down by 1% over the week, quite an astonishing week. commerzbank is up by 17%, the most in six years.
its consumer banking business doubling and it is planning to pay a dividend of $.20 a share, its first since 2007. excitement in the european banking sector. betty: indeed, and a lot of concerns. today has not just been about corporate earnings, we have euro area gdp numbers out. mark: gdp and the fourth quarter rose by .3%. it was the divergences arjun says within the regions that we need to talk about. germany rose the increase. rose just 1%,omy and greece slid back into recession. -- the european commission has already cut its growth as inflation forecast for year, citing emerging markets, citing the refugee crisis.
the euro is rising for the third week against the dollar. best winning streak since june last year. of morethe promise stimulus, it is falling on deaf ears. the euro remains a haven currency. betty: complicating things for the central bankers. we are 90 minutes into the trading session in the u.s.. hyman.to head to julie on,ulie gets her microphone let's get to -- you are good. julie: just like that. let's take a look at what is going on in stock. we are seeing a rally, or a rebound across the board for the major averages, and it is led by what is going on in europe. commerzbank and deutsche bank rising.
the banks are the strongest sector here in the united states as well but they had been the weakest sector in the weeks leading up to this. we are seeing some strength. not only do you we have what is going on europe, but we have what is going on with jpmorgan when jamie dimon spent essentially a years and counting to buy back bonds. take a look at the bloomberg index. this is the insider buying versus the price of the s&p 500. we have seen the surge thanks in dimon, and we have been hearing from investor saying they think banks could be a good value at these levels. leaving a rebound in the insurance companies.
they fell yesterday on disappointing earnings from prudential, but prudential and lincoln national are snapping back today along with aig. announced a dividend increase and a stock buyback authorization of $5.5 billion. what about the breaking of some streaks today? julie: losing and winning streaks. oil had been on a losing streak, so we are seeing a switch. crude oil, this losing streak began six straight sessions losing before this bounce we are seeing. oil up significantly today. we are seeing a reversal in the direction for the 10-year note. buying in the 10 year for six straight sessions until this little balance in the yield. and the japanese yen as well had
a four-day gain. the dollar falling against it before it's all a little bit of a reversal in today's session. as we know, some of these things have not been lasting. betty: julie hyman at the markets desk. courtney donohoe has more from our news desk. courtney: the u.s. national institute for health and an beenn company have developing vaccines for the zika virus. still, no one is close to conducting criminal trials. of the encouraging landscape, vaccines are at least eight months away from large-scale trials. andrea: the threat by mosquitoes -- courtney: the threat by mosquitoes has led to birth defects. agreed to airdrop
humanitarian aid to beseeched syrian cities. forcesrch will halt the but the coalition will still be able to attack the islamic state. uae has agreed to send soldiers to syria to locate sunni arab fighters. that is the islamic state group's capital. forces from the key persian gulf ally would train local fighters. george clooney and his wife had a private meeting with angela merkel to discuss the crisis in efforts inurope's the refugee crisis. clooneys plan to meet with refugees in berlin later today. local news 24 hours a day powered by our 2400 journalists,
live at the event with the director of the boston celtics, steve pagliuca. wear many hats and being an nba team owner is just one. one would say the biggest opportunity for tech would be around betting. what is your take on the fanduel drafting model at this point? >> i think that is an embryonic industry, and those companies are really responding to fans' needs. they have been playing fantasy games before the technology, so there is a lot of complex questions. if you have appropriate regulation and he gets the fans engaged, and i believe it is personally more a game of skill. people who are been playing fantasy for 20, 25 years, those companies are just automating what they did. >> within tec is lots of
embryonic sub industries but we have seen a lot of highflying valuations in the past couple of years. do you think we will start to see that term? a that is we are at good news for investors now but bad news for those who have had investments. i think you have seen that with the overall stock market as well. >> where do you see things going? we have clearly had a rough start to the year in terms of global markets. >> i think this is a correction, it is not a systemic issue. the u.s. banks are extremely strong. jamie dimon just bought $500 million of stock in his own bank. >> i love that. >> we had the market at very high levels, selling at 90% of the top multiples over the years so it is a correction. oil prices are still very low. interest rates are down and
employment is up so america, i think is well-positioned. themployment is up with consumer is not spending, and you have a real deep understanding of consumer companies. who is the consumer today and where are they spending? one would say gas prices where they are, they should be in shopping malls. >> we have not seen it go to the retail side. people have been paying off debt and using the money for experiences, not so much goods. there are companies that are selling very well. what is interesting, just about this year millennials are now 80 million people. that surpassed the baby boom generation. they are saving and they will begin to spend again. intoven that we are moving this experienced economy, are you changing the kind of companies you look out to buy? >> we have different groups who
look at health care, technology. groups throughout the world so we are not changing our approach, we are diversified. say,ied to look at it and is this a good company that can gain share? to use the marketing data to do acquisitions to grow them, and so we put a macro overlay on what really is a microanalysis. pain and thebrutal markets globally, is there a sector you are more excited about today than you were a couple months ago? >> technology has taken a beating so they will probably be some interesting tech opportunities. health care also, because valuations are down but it has become 60% or 17% of the gdp in america, so i think those will be good investments. >> how about that financing for the lbo space? >> we have not had it problem --
a problem financing hours. it has been a little choppy in the markets because everybody is going into cash because the markets are down and people are pulling back. we have seen that happy many -- happen many, many times. >> when you say you see the u.s. economy doing ok, d you think janet yellen should be staying the course? she could end up in a quantitative easing situation again at the markets continue to drop. >> we look at businesses and say, can they gain share and grow? i think the fed has taken a good approach to proceed with caution. you do not want to raise the interest rates too much, but at the same time we have to get back to more normalized rates so the cost of capital is more reasonable. could one make the argument
this is a better time for investment for you because momentum being out of the equity market, we are back to fundamentals? absolutely, more opportunities for private equity. >> d's think the write-downs we have seen have made sense? -- investedot exist and a lot of those companies. >> i see that smile. you are going, i do not have that problem. >> we have always been fundamentalists and we went through the 1999 period, bain capital, we did not know investments. everything was very high at that point in time so we may be made one or two investments that year. our partners do not like it, but they like it after they saw what happened after 1999. world, when you
think about geopolitics, economics, the presidential race , is there something for you that is the most important thing that could be affecting the economy in terms of the way you invest? into arally we have gone period for there is a lot of geopolitical instability, so that may be the undercurrent of the talk of the economic forum. people have been talking about quantitative easing, but underlying that is, probably since the cold war we have not had so much strife in the world so that will hopefully comb down. probably in the last 30 years we have not had this much strife. >> if oil prices are going to save oppressed, -- stay depressed, you look to china? >> it is moving to a services economy. if you look at all the economies across the world that have done that, there is still a slowing of growth but they are still
growing 6% or 7% a year. i think they have done a pretty good job managing their economy. it is difficult in these conditions but long-term, they have a highly educated workforce. they need growth. people recognize they want to improve the standard of learning. >> you have been raising money for social impact investing. could that fall by the wayside if the market continues to push down? it is a great, innovative idea in a bull market. >> i do not think so. it is still embryonic. people are still trying to find their way, the objective in social impact investing is to have a double bottom line, to grow a company and do great for workers. certainly some of our fund holders want to be in that market. work with great people, is that why you own a basketball team or is it a business opportunity? it is your passion.
>> it was interesting when it was for sale. my partner called me and said, would i be part of that. i did it to bring back a championship to boston. there was not a lot of talk about financial returns. the stadium was not sold out. the labor of love has worked out to be a good investment. that is the love that the group has for boston basketball. >> duke basketball. >> duke basketball as well. >> i am rooting for them against uva this weekend. we are signing off from the nba tech summit. betty: thank you, stephanie. stephanie ruhle and steve pagliuca. coming up on bloomberg television, we will have much more live coverage from the nba .ll-star tech
mark: this is the european close, i am mark barton with a little. -- with betty liu. speaking to bloomberg teach -- chief development -- >> with today's numbers we have already said -- sent a strong message and now i have to check with the way going forward is, and how the compliant system works. i think that bank stocks in the moment look rather cheap than expensive, and in the end i am not on our own stock. and: commerzbank results
what is going on with deutsche bank. this a sign there is a light at the end of the tunnel for european banks? as one and vest or was speaking to yesterday said, there is always light at the end of the tunnel but the question is how long is that tunnel? we have definitely had a bright spot from commerzbank today. i do think it is also a very specific issue to commerzbank. of themquestion exceeding expectations on their capital bill and showing people they will be winding down quicker than expected. they have higher profit this year but it will be too soon to say if that is a good sign for the whole sector. mark: mr. blessing is coming to
the end of his tenure as chief executive of commerce bank. what do we know about his successor? nicholas: not a whole lot. we have gotten a memo from the namenk saying that they have speculated about in the media are quite far off the mark. well we do not know the name of this person, we know that challenge they will have to deal with, mainly they have to wind down a lot of solid assets. they have a tough economy to deal with. from thethe disruption fin tech. who ite we do not know will be, we know about the challenges they will be facing. mark: it has been a week of wild gyrations for deutsche bank. it has announced it will buy back some of its debt. what are the implications for the lender? nicholas: people are really
split on this. investors really going in completely different directions. some guys will tell you this is a sign of real strength because they have liquidity to buy back the bonds, and it will be good for their earnings. others say, the actual impact on earnings is minimal as is that on capital, and the liquidity, it is obvious they have this money because central banks are flooding markets and the bank is deleveraging. while the people we speak to are divided, the reaction we have seen in the credits bad, the cds is coming down from record levels. has definitely got to be pleasing a lot of people with deutsche bank. mark: nicolas, thank you. how are u.s. markets looking? higher,e are powering breaking the five-day losing streak. the dow is up over 500 points.
energy is leading the s&p. mark: minutes away from the european close, have a look at the main european forces. we will close higher for the second day in 10. for the week, it has been a period of decline for the european stock market, but they will be happy about today. energy leading today's advance. coming up, stick with us. ♪
this is our world equity indices function. you can see the middle portion of the shot very clearly. this is the column i want you to look at, the percentage increases for europe's big equity forces. around, and only the second day of gains in 10 for the stoxx 600. all 19 industry groups gaining today, led by basic resource, oil, and bank stock. it has been a different story over the weekend -- over the week -- taking its annual decline to 15%. banks this week have risen today but are down 7% over the week and are falling for the seventh consecutive week, the longest losing stretch since the height of the financial crisis in 2008. what does this mean for deutsche bank shares? it is planning to buy back $5.4
andion of bonds in euros dollars to ease concern about its finances. the shares plunged nine and a half percent on monday, 4% on tuesday. investors were worrying about its ability to pay coupons on its riskiest debt. shares bounced 10% on wednesday on speculation it would buy back its debt. down 6% thursday, up 10%. it looks like we might close higher by about 4/10 of 1%. rolls-royce shares, investors overlooking the fact that the jet engine maker is cutting its dividends for the first time in 25 years. there are choosing to focus on news the company is maintaining its outlook. 14%,hares closing up biggest rise in 14 years. betty: a big day.
euro area economic data, i know you mentioned this before, this diverging fortune of the countries. what did we learn? mark: the german economy grew by .3%. the euro zone economy itself grew by .3% so germany left the drive -- led the drive. , said therecession take away is that more stimulus is going to be necessary if they have both inflation and interest rates. we have had the european commission already cut its growth and inflation for the euro area for this year, citing emerging markets in the refugee crisis. week.s the euro over the euro-dollar, dollar weaker against the euro by half a percent, and the euro has risen three weeks against the dollar.
whatever draghi promises he pulled do, it does not seem to be able to weaken the euro. was just saying about the european close, we did post a strong rally. bank shares gripped the market. today's rally is having an impact on the bond market after a big slide yesterday. the german 10 year yield is climbing back. richard jones is a four x strategist at bloomberg. i want to pick up off what mark was just saying, which is it seems like the markets rather than an hearing to the old guideline -- adhering to the old guideline, it may seem to be doing exactly that. why? richard: i think the narrative has shifted so much since the beginning of this year, where especially in the case of the fed, i think they were quite upbeat about economic prospects. they said they were going to
hike four times this year and the way that markets have rateed since the last fed rise in december has given him pause for thought. i think markets have gotten ahead of the fed and said there is no chance they will be able to raise rates given the volunteer -- volatility we have seen. therefore, the fed is probably going to be more dovish than everyone anticipated. we have seen the boj act, the riksbank act. whatever view we had at the beginning of the year, central bank is going to be even more dovish. when: one might zero -- might zero rate cuts start working? richard: it is really difficult to say because i think, it seems to me that the market is saying the monetary policy on its own might have run its course and that we are may be going to need to accompany it.
i think it is going to be a very challenging year ahead for all the central banks, even if they more -- are more dovish and accommodative. betty: and the dollar heads where? richard: i think we have had a big repricing of the dollar, certainly during the course of this year. i think it really depends on the rate path from here. pair, what arey those central banks going to do? is the fed going to stay accommodative? what is the boj going to do? differentials have been important in driving these currency pairs and will continue to be important. whereit has been a week negative interest rates have come in for the pummeling. early to write an rip
sign over negative interest rates? richard: i think it is too early , and before we see what happened with the yen, i think everybody was kind of on the page that if we get more stimulus, this will weaken the currency. i think the initial reaction was to weaken the yen. in the case of the euro and the yen, because they have a special safe haven status, it has kind of thrown that narrative off course. mark: could we bring up my favorite chart on the plasma to my right? this is the morgan stanley gauge, which tells us using market pricing how many months it is to the first u.k. rate hike. right now we are at 41 months. at the beginning of the year we were at eight months. 41 months, but now we are not even discussing rate hikes because the market is talking about rate cuts in the week that the you year -- u.k. 10 year
yield fell to a low. richard: when all of us sat down coming back from our holiday break, we actually had a full 25 basis point rate hike christ in. now -- priced in. now we are looking at a 2% chance we will get a 25 basis point cut. that is a sharp turnaround in ofe weeks, and it is because the volatility that we have seen in all the other asset classes. i think there is a little bit of brexit risk in their. richard, great to see you. richard: my pleasure. mark: richard jones, rate strategist at bloomberg. betty: let's get a check on how stocks are training in the u.s. strong we are in the dow, up almost 250 points.
jpmorgan, goldman sachs are the big rulers on the dow this morning. abigail doolittle has a look at some of the tech shares at the nasdaq. abigail: we are certainly looking at a rally at the nasdaq. one source of strength, when resort. they beat estimates by a whopping 35%. $1.03 in theade december quarter per-share, versus estimates of $.76 per share. carlos sent to rally and deutsche bank is saying the near-term set up his compelling. he likes the fact that they are bullish on the las vegas operation, and the fact that steve wynn has been buying stock. perhaps a near-term trade for some investors. betty: abigail doolittle at the nasdaq, thank you. mark, you are within tech
technology -- sin tech technology. bank of america ceo says his bank spence $3 million a year on coding to keep up with the times. mark: some analysts are calling it the uber movement of financial. cofounder and managing partner at augmentin him, he joins us today. how much are the world's biggest financial services firms set to lose to fin tech startups? the reality is we are at the start of this journey. they are coming into line with what is happening in the public market. we are really at the start of that journey. it is hard to estimate and be too specific, but we would think tens of billions, hundreds of
billions of revenue over the next 10 years will shift from traditional financial services to technology driven fin tech businesses. mark: can bank keep par with changes that are happening? themselves finng tech companies. of people are talking about fin tech and not everybody understands it. i think the banks will be a integral part. we are not going to see what happens in the vetting industry. i think the financial services industry is too big. i think it will be in collaboration with a lot of these emerging technologies and business is coming out. in some cases you will have businesses that do not exist today that will be several billions of dollars in a few years' time as a result of collaborations with the bank. betty: technology disrupting the financial world and accelerating
developments in other parts. if there is any industry that needs risk control, it is the financial system, the financial industry. might this whole acceleration open the doors for a lot more wrongdoing without regulatory framework? tim: i think it is a fair question and the challenge you have if you regulate too heavy, you stifle innovation. i think what we have in the u.k. is one of the most forward-looking regulators in the fca. you have a government that puts at the heart of its strategy that fin tech needs to be very much on the forefront, and they have talked about a regulatory sandbox. there's no question that over the next few years we will see a lot of innovative businesses coming as a result of forward-looking and ovation. i think pragmatic is what we will see in the u.k., which is
why i think we will see the u.k. lead the way. betty: how about here in the u.s.? is that a reason the u.s. might fall behind? tim: there is no question that in many cases you are looking at state i state regulation. we saw the issue with zenefits in washington. i do not think you would see that issue in the u.k. the u.s. is going to have to evolve its thinking and the state and local governments will have to get together and try to harmonize regulation. is, i thinkhow it they will lose market share to the u.k. in particular. mark: what thin tech companies are you investing in? .im: we backed the biggest two. lender in europe and one of the biggest equity crowdfunding services. i would look at the insurance industry.
the insurance industry is in the stone age and is yet to be disrupted. today, every other pitch we hear is about insurance. we are seeing the noise and the chatter, and the time is now for some major insurance businesses to be built purely in a fin tech environment. levine, at augmentin capital. betty: staying on european stock, one company you have focused on quite a bit is volkswagen, still waiting through the repercussions of its admissions -- emissions scandal. dark hasan find overseen many victim compensation funds. he is currently the administration -- the administrator of the vw claims process. >> i think volkswagen is trying to work out with the government, the regulators what might be the
appropriate remedies that might be made available to owners of these automobiles, so it has taken a while. one cannot set up a protocol and , voluntarily ask people to submit claims until they know what the remedies will be. betty: are you taking claims right now? no claims at this point. kenneth: we have not designed the claims protocol because it is premature. still as you said, it is tbd in terms of the compensation , but what could the compensation look like? kenneth: it could be fixing the automobile or a buyback or placement of the automobile. betty: or cash. tim: but it depends on what is finally worked out, and that will take some time, but when it is finally worked out we will move forward. betty: is it more complicated
because it does not involve deaths? this is not an emotional project as it has been for you in years past. no death orre is physical industries, it is an automobile part -- problem, and that makes it less emotional. betty: does that make it more complicated? kenneth: i think it makes it less complicated because you are not calculating cost for deaf. that makes it, i think less complicated, certainly less emotional and traumatic. i think that is all to the good. betty: just on the possibility of criminal prosecution of volkswagen, that threat, does that change at all your job? tim: that has nothing to do with me, that is between the government and volkswagen. betty: that was part of my conversation with ken feinberg.
betty: it is time now for the global battle of the charts, where we take a look at some of the most telling charts of the day and what they mean for investors. you can access these charts on bloomberg. mark barton will be kicking things off. mark: thanks and europe have been falling for seven weeks, the longest run since 2008.
got was a month before draghi said his favorite words -- his famous words. the stoxx 600 has fallen below 30 12 times this year. more than atord, the height of the financial crisis in 2008. the priced earnings estimate is eight and that is cheaper than the broader market by 40%. that is almost a record. buy.: buy, buy, matt: i have more of a function than a chart. what we are showing you hear is, if you put in any index or any kind of industry group, it will show you improving sectors, leading sectors, weakening, and lagging. the energy index is lagging but
headed towards improving. the same is true with basic materials. financials are fairly weak. weakening, headed towards losses really industrial and tech stocks. betty: a very cold chart. mark, i'm going to give it to matt miller because you do not realize how many charts that has prepared to battle you. he had like five or six. i feel guilty because we are like four and one. betty: you have been keeping track? matt: we are competitive. mark: it was more of a weather report than a chart. it looked like he was doing the weather. i love miller. matt: love you too, buddy. betty: much more ahead,
mark: in today's pursuit, it is fashion work -- fashion week season in london. there is a threat from digital. some brands are trying to adapt to the digital age. let's bring in andrea felt tip joining us in london. burberry has always been ahead when it comes to digital. what is in the fashion? andrea: what are they doing as rather than you having to wait clothes, nowr the you can buy them straight from the catwalk. you can go and buy them straight away. burberry overestimated the capacity of its systems, its supply chain to deal with the expected surge in orders? has already been
experimenting with this for about the last six years, and it has not got a choice. the luxury market is not growing like it was, so you have to use all the weapons you can. in burberry's case, that is digital. mark: can others replicate this idea? andrea: i think tom ford is going to do a similar thing, but her breed has really been at the vanguard. work, it can make it has probably got the best chance. the man who is not too aware of the fashion calendar. all taking photos of ourselves on instagram and snapping fashion shows, and that means we want it now. we take a picture of our self in an outfit and we do not want to repeat that outfit again so we need to go and buy a new outfit.
it is a similar thing happening on the catwalk. we are taking selfies and we have to go by them straight away. now the luxury brands are having to do it. as -- hermes, firm , what is going on? andrea: the market just is not growing like it was. movementextravagance in china has taken away a lot of the growth that has been fueling the market for the last few years, so brands have really got to adapt, whether that is , expanding their business, they have really got to adapt. betty: andrea, thank you so much. you can read more about luxury fashion at bloomberg pursuits, your destination for the finer things in life, including
travel, watches, dining, and tragedy. just had to ni pursuit on bloomberg. the stocks are rallying ahead. the marks landed on a high note in the european stocks. mark: we are down for the week, dropping for a second week almost 5%. it was the banks stealing the limelight. commerzbank, biggest jump in six years returning to profit in the fourth quarter. there you have it, that is it for bloomberg markets european close. betty, you are off for a week and we will miss you. ♪
betty: welcome to bloomberg markets. from bloomberg world headquarters in new york, tgif, i am scarlet fu. alix: and i am alix steel. >> oil prices rebounding. alix: and bonds have been popular in europe for the last year. but are they about to pop? betty : first, we want to get to julie hyman. julie: retail sales are coming better than estimated, but we are seeing a rally on a couple of things.