tv Bloomberg Markets European Close Bloomberg February 16, 2016 11:00am-12:01pm EST
-- mark barton. this is the european close. ♪ take you from new york to london to moscow in the next hour. here is what we are watching. the oil markets delivered this verdict. russia and saudi arabia not doing anything to drop up rises. mark: inflation u.k. rises to the highest level in a year. brendan: anglo american is selling off its units. we want to hear from the company's ceo. we are a half-hour away from the close of trade. tell us about it.
mark: we saw the stoxx 600 soar by 6% over two trading sessions. we have run out of steam, run out of gas after the news from russia and saudi arabia. excuse the pun. maybe investors expected more. 6%. these are the big movers. the comeback kid. earlier in the session, the miners sank as much as a percent. 1% speeding up plans to put out materials with better demands such as diamond, copper, and it's raising woodcut to junk yesterday. it is the first london major minor to suffer that distinction. it wants to cut the debt to 10
billion just over 12 billion. it will be a hard time to do that given the ongoing slide in its raw materials. since have jumped by 70% january the 20th. do not ignore the fact they are down by 17% in the last 12 months. up by 8.6% today, one of your's best performers. biggest power company and europe's biggest power company, announcing plans to cut costs. it wants to generate enough cash bycut dividends payments 2018. essentially, it has been borrowing money to pay dividends. it wants to change that by 2018. shares up. brendan: all right. and spiesy looks out inflation happening somewhere in
the world what changed in the u.k.? mark: there is not a lot of inflation. a rise by .3%, the biggest increase in a year. is the chart i made up just for you, brendan. from 2011 until two, this is the isyear on year, the 2% level the dotted line. as you can see, we have not actually hit the 2% level. of 2013. end way from 2%. blame it on oil prices. wage growth is slowing as well. the expectation for the rate hike, they are so far in the distant -- distance, i cannot even see them. brendan: we are looking at that almost arbitrary 2%. central bank all over the world adopted it. i'm looking right now and the terminal is telling me even when you strip out energy, food, and now call in the u.k., you are looking at 1.2%.
not a lot of inflation. 90 minutes in the inflation here in the u.s. we will head to the market desk where julie hyman has the latest. to thewe are holding on rally steadily. following some of the action we have seen around the globe, all the major averages higher him of the nasdaq has been leading gains, large tech knowledge he is -- tech technologies coming back. again, let's take a look at the sectors on the move. consumer discretionary's now, best-performing groups have be enough this year. consumer discretionary also seeing a rebound effect of financials more heavily weighted in the s&p 500. industrials are also gating -- gaining. all of these on a cyclical front, energy is now falling with oil prices and telecom utilities on the weaker side of the spectrum as we see the bond yields come up little bit. the latest temperature in the latest reading on world market cap, while we were all
celebrating presidents' day yesterday here in the united states, we saw an additional $831 billion in market caps, coming back into the global market cap. but is a little up here still down $2.5 trillion this year. we should say the s&p 500 rebound we have seen over the past two days is the best two day gain so far in february. interesting that oil is not derailing that with its decline today. over the past two days, little bit of a decoupling there from what has been a close correlation thus far this year. are we also seeing a corresponding unwinding in what happened to gold in the last month? julie: we are for now. we are seeing gold come down. by nearly 2%. it did not do much yesterday but
now coming down today as people risky.ng back into more currencies, we are seeing -- a little bit of a rebound. the colts a haven trade, the and has been a big beneficiary of that. and finally -- when i say little bit, we are tickseeing steel up by a today. we are seeing on a huge movement but a little bit of sailing in treasury. a reversal on that as well. brendan: thanks be are we will check in on first alert news. corny, what have you got? >> russia is denying in warplanes attacked a hospital in syria. it people are missing. the hospital was supported by the group doctors without borders. a spokesman for russia's president vladimir putin says those who blame russia cannot back up there -- and their claims. to a recruiting
network for the islamic state. 10 people were detained and they were not linked to the deadly attacks in paris last year. ahead of u.s. air force warns that china passes military's closing the technology gap. general robinson says experience and training still gives u.s. pilots a big hp or china has been modernizing its military with an emphasis on air force and navy. new satellite photos show china has expanded its building activity from the south china sea. the photo reportedly shows a helicopter under construction. that is happening as president obama meets with south asian in california. the u.s. and taiwan are among those complaint about china passes actions to mr. obama will hold a news compass later today and we will have live coverage of that. ♪ global news 24 hours a day powered by a 2400 journalists.
big question is, what do they get on board. ,oining us now from moscow henry meyer. has been the reaction in the oil market, does that tell us everything we need to know, that the market was expecting for something more? collects a freeze as we saw supply and demand, they produce too much oil and not demanding enough. that is probably, you look at over the medium-term, it is laying the foundation for probably something bigger. beginning of the process. mark: give me the timeline of the process. open to further action.
when, how soon, and what will happen when that happens? to decidew, starting when it will hold immediately. listey buy into a deal, a with iran to continue increasing the bid. -- it will be looking at what the market is doing. vienna iseeting in going to be held. looking at the reaction of the market, that is when we could have further action. what is in this for vladimir putin? >> russia has been pushing for this type of action for a long time. see today's deal, today's announcement, as an
admission that the current policy is not sustainable, that the saudi's are also suffering from the tumbling oil prices. -- russians are in a real bind at the moment. in a second year of recession. this is the longest recession in two decades. they really need relief. what we just heard is that this is the beginning of something. is that the right way of looking at this, that we are seeing in unclogging of lines between saudi arabia and russia? >> they are obviously still at odds strategically. they are backing opposing sides in the syrian civil war. on this issue, they have a common interest. so far, russia has not given much away. it has frozen production at record levels. this is the beginning of the process and the hope in moscow is that this will lead to something more substantial. 1990's were known
for the secrecy of discussions between opec members. are we returning to an era or can we compare now? >> what we have seen, 1998, 1999, bloomberg reported , we don't know if the meeting have been secret. been --now now it had it had been going on including the most important element of obviously, there , so it big differences will take time.
negotiationsea of by mexico to reach a deal. can be talking about months of low prices before we see what is really what the market is hoping for. russia, saudi arabia, is this the beginning of the beginning of a new cartel that ill replace opec? >> that is very interesting and yes, we have seen an unprecedented cooperation. they did in 1999 and again in 2001. this is the first time that really opec and saudi arabia are negotiating face-to-face and it almost feels like it is the beginning of something. the country's missing here. iran is not part of the deal. texas, oklahoma, we need them to
join. if they do not join, we will not have the kind of muscle we need to -- mark: are we entering a new area where russia and saudi arabia have some sort of control of the oil markets? i think we are a long way from that, to be honest. is clearly the two biggest producers and they have the ability to have a significant influence, but i do not think russia will tie itself, first of all, formerly to saudi arabia and secondly, as was pointed out, there are other players and therefore, i think the two of them even together cannot make this work. >> we have been talking about breakeven's for the last year and a half. when we look at russia, what is an oil price they could live with?
>> the price at the moment is about under $10. this is after the valuation of the ruble. an oility, they need price to the budget at the moment is premised on $50 per barrel. you can imagine at $30, they are hurting. think 40 is probably something they could live with but 30 is tough. it means deep cuts to spending. how the air, i was going to say probably nine hours ago that this looked like the end of the gyrations in the oil market. clearly, it has not. from opec ora cut not opec, will the gyrations continue? volatilel have a market. the market now will be reacting to every headline that we see, every movement means it could move the market, it could influence the market.
we may be entering a more volatile state. what these are doing for the market is reducing the rate goldman sachs and others were talking about of the oil going low $20 per barrel. that will be more difficult once we see some kind of dialogue between the biggest producers. more difficult and for sure, we will see big movement. on friday, we saw a 12% price , very few price movements of that magnitude. fasten your seatbelt for this one. mark: great to see you and thank you for being here. joining us from moscow today for how the air joining me in london. terminal,e bloomberg called opec go. if you have a bloomberg terminal, type in opec go and gives you everything you need to production,pec, spare capacity, and all sorts of other, valuable data.
mark: this is the european close. i am mark barton with and in greeley. let's turn to the big story of the day, shares of anglo america -- the company reported $5.6 billion quarter annual loss. on bloomberg us earlier and discussed shrinking the business. is a matter of stripping us back to the core, rebuilding the base and making sure we are fit to go forward in a positive and strongest way we can.
we have been making changes over the last 10 years that have been incremental. was time for a bold step out. working on the strategy over the last couple of years and in this market, the opportunity is there to reset and start with a different looking portfolio and making bold moves. shortly from a investors at this stage. if prices do not stabilize, do you think you will have to be putting further assets into the field as well? you have to do more than this? thoselook at all of issues, but i think with what we have done today, we have gotten ahead of that european we have gone back to the core businesses we think we have got competitive advantage. we have got leadership positions with great assets. we have drawn the line and identify those assets and there are some good assets or sale that will help us reset the balance sheet and help us create
a very different group for the future. i think we have got ahead of the curve. to dok we probably needed that for the last couple of years. i think we are there and making tough calls. we have made significant , 27% improvement in productivity, 27% reduction in cost and massive reductions in capital. we are making the right calls and setting the business up for success. very volatile this morning. what message would you try to give to people who are trying to figure out what your business is worth this morning? up, down, up, down, is anglo a volatile as this right now? is that just what we have to get used to going through the process? >> the mining industry is volatile with the sort of movements we have seen in commodity prices. if you focus on diamonds, the coppersiness, business, the quality of the
assets that underpin those distances and the long-term future we see, i think people will see a good story and that is what we will unpack for people during the course of today. rollout the00% rights issue? is is -- it is off the table at this stage? a i do not believe we need rights issue. we are generating cash, we have got assets or capital expenditures starting to fall away. the cash flow improves as we go into 2017. we have identified good assets were people will be willing and have demonstrated a willingness to bid real cash for those assets. we are in a good position and do not need the rights issue. it is a self-help story end with liquidity, we have got time to put all the pieces in place. give me the timeshare schedule on this are you talked about having time to how do you measure time at the moment? in waste, in months, in years?
collects the back will be broken with the work we have outlined in 2016. very clearly put, we are generating cash and 2016. we have advanced on most processes of selling assets. we expect to see 3 billion until 4 billion. net debt will be less than 10 billion by the end of 2016. in a relatively short time, i think we will be down around $6 billion in the portfolio, which in today's term would be generating 2.5 billion. i think we are in good shape and a timetable has been set up clearly in the conversations we have set up for today. anglo american chief executive mark there speaking on bloomberg earlier. i just want to check up final numbers here. we are a matter of minutes away from the close on this tuesday's session. with the stoxx 600, which started the day earlier after the biggest rally in chinese stocks in three months.
slower after this announcement by russia and saudi arabia. the freezing oil production, the ftse is higher, driven up by the minors. a look at fixed income space. we saw bond yields rise earlier in the day, declining in london at the end of the session, rising in germany and italy. i want to look at the euro-dollar before i head off. you can see, little changed, down and i want to finish off with a chart that shows credit risk. this is the chart to my right. the market was down for a third consecutive day, the longest run since december. it is now rising. ♪
the european markets are finishing for the day. this is the european close. i am mark barton with brendan greeley. up byoxx 600, which was three quarters of a percent drifted as the day progressed. it looks like it will close 6/10 of 1%. i'm disappointed with russia and saudi arabia in that they secret in their not so meeting to freeze production. oil stocks fell. after two days of gains, 6%, the since 2011,day gain stocks look like they will finish the tuesday session. anglo america, the volatile stock in the day down by 8%, finishing by 1.5%. the fourth year of losses for the minor. they will cut costs pulling out of coal and iron ore.
they are focusing on material with better demands. this was the company that was cut to junk yesterday by miners, the first u.k. to achieve that distinction. they want to cut their debt from $12.9 billion. moody says that will be of theatic the cousin following commodity price. what a run it has been. since the 20th of january, shares are up 70%. it is a binary move when it comes to anglo american. europe's biggest power play up nine percent, one of the big gainers, 85% by the french government announcing plans to cut. cash to cut dividend payments. what it is doing is that it has been rolling money to pay its dividends and it wants to change that by 2018. shares of line 9.2%. brendan: we had economic data
out. investor confidence in germany, what are we learning? fell investor confidence to the lowest level since october 2014. equities plunged. worried about china, the profitability of euro-area lenders. the tax has fallen 15%. the nation's domestic economy is looking strong. the chief energy access a stimulus along with a strong domestic job market that contributes with a acceleration in growth. this is the u.k. data of the day. inflation rose the most in a year because of the rise in , food, and clothing. we are up five point 3%, but we sinceot been above
2013. one of the many reasons the bank of england is a long way away from probably its first u.k. rate hike. maybe there will be a cut that. brendan: when you add the 2% target, that is just mean. mario draghi and janet yellen are going for a march of reckoning. they're assessing the speed bump that market growth has put in their path. janet yellen and assured lawmakers that they can weather a gradual tightening. yesterday, facing european lawmakers mario draghi repeated his mantra that he is ready to act if europe's recovery comes under threat. jeremy cook is the chief economist at the foreign exchange firm world first. about marioirst draghi. we had the testimony from the european parliament. it seems that all we learned from him is that he is still assessing and considering.
jeremy: absolutely. anything other than that from drug he would have been seen as a gung ho. we have to bear in mind what happens through q4 of last year, the noises coming out of the european central bank. that we were going to get a bazooka at the december meeting and markets fell off as a result disappointment of they treated the announcement with. policy fromations the ecb has somewhat tightened over the course of 2016. it is an obvious caveat around the european economy about transmissions through headline inflation for the economy and the financial volatility, the impacts on the european economy. given those two precursors, you hope you get something and large, but not the bazooka
everyone is looking for. thedan: we get minutes from fed tomorrow. what was you look for? jeremy: i'm not sure how much part of we will get as these minutes. i think we will get a lot of the stuff that we got from the testimonies last week. laying out exactly what the fed's thinking really is. everyone is talking about central banks. a lot of central banks are sounding similar. if you look at the fed, the bank of england, and not the bank of japan because you cannot trust them at the moment -- but everyone else's talking about local issues, domestic issues are ok. some unemployment markets are particularly strong. it is the external headwinds they are worried about. mark: of central banks lost the ability to alter rates of financial markets? jeremy: obviously still everyone
pays attention to what is going on. the engineering side, for example the bank of japan losing control of the yen by cutting it too negative rates and the yen strengthening 6%. it means they don't get exactly what they want. they make it over the longer-term, but if the market isn't buying it, they are dividing it in the immediate term. mark: the most in a year, still a long way from 2%. the morgan stanley start of the first rate hike is 40-months. 3.5 years. isn't that ridiculous? jeremy: i think so. i think it is ridiculous, as well. thesimilarities between u.s. and the u.k.'s labor markets, we've only seen unemployment rate, down and rates move higher and participation in improving. everyone is saying a be that is
the thing that keeps one or two fed rate hikes coming out of 2016. a similar thing could be generated in the u.k. over the course of q2 and q3. wayonths is a very bearish of looking at a very strong labor market in the u.k. brendan: i want to bring up something relevant to all central banks. there was a great piece in bloomberg news this morning about the flattening of the yield curve and how it is messing with predictive models of the economy. when you look at the flattened yield curves, the uc central-bank action -- do you see central-bank action messing with fundamentals or the reality of low inflation and low growth?
jeremy: you have to look at it as a mixture. this central-bank action has really depressed, like over yields over the past couple of years. the fundamentals of the world economy, we do not deserve those high yields quite yet. until we are in a position where we can sit here and generate inflation and reasonably expect inflation will remain at stable, but not elevated, levels. grading and inflation close to the 2% level that every central-bank seems to want. until that happens, they could remain where they are. brendan: what is your best guess of how they do this? the need to generate inflation, and sounding worried that inflation's have dropped a lower. what will cause inflation to recover? it is time and a pickup and emerging-market growth. short of something strange like the ecb holding a huge storage tank and buying oil, or going andand buy think shares other assets, unless we see the indonesias,ysias,
that block of manufacturing andomies stopping building generating and desire and demand for commodities -- mark: the ecb doesn't have the embark onty to outlandish measures. what would it take for them to orsider buying think bonds oil? some of the more extraordinary measures which economists like you are talking about. around, i are kicking don't think anyone is saying they are really pricing that in for the june meeting. it is something where you have to say, the line continues to crash to new levels -- mark: record lows already. .eremy: below 1% with a finger in the air kind of indicator that is continuing to come lower.
starts to come down toward zero in the u.s. or u.k. will have people worried. mark: jeremy cook, chief economist at world first. brendan: another european company is airbus, quietly taking over in the asia-pacific. in the past decade they have one 64% of all orders. the boom of low-cost airlines could be cutting into their success. with thengle caught up airbus ceo and asked if he is worried about the glut of new airlines who are not interested in lying new airplanes? >> many people talk about it, but we do not see it. the reality is that we have never had more customers. it is true, as well, that the look is the dynamic. there is a big fight among some competitors.
all in all, i can confirm asia-pacific accounts for 40% of our deliveries last year. , we is the area of growth expect collapses, but this is not the production. airways,ng of qatar here is upset with the delays in the engines and wants compensation. does that come from you? >> he right. we will not disclose commercial the feelns, but reduction -- it is a slower start than we expected for the second half of the week. -- every customer will be
pleased. >> icing indications from customers that with a low price of oil, new generation engines are not as welcome? even the a-380 that is proposed? >> it is clear we have to look at that, but the projections are the consumers will bid on the current spot price. barrel, it will make a difference. looking see airlines for the new generation aircraft. >> will you find customers for the a-380. from singapore airlines, asian customers have not come back to the table? >> we had a commitment from iran air for 12 aircraft.
the market doubles in size every 15 years. bigger when we need cities like singapore, hong kong, and the london. 54london, i think there are a-three 80's landing and taking off every day. the airbus ceo speaking to stephen engle at the european air show. in the u.s., markets are still open. abigail doolittle has more from the nasdaq in midtown manhattan. abigail: we have a risk on contact. they are of one percent, largely techn i the big cap names like apple. on news the company is planning its fifth multibillion-dollar bond deal since 2013. it will be returned capital -- to return capital to shareholders.
the offering looks attractive. it is unclear if this can turn the momentum out of stocks down more than 25 are sent from last july on all the concerns over the possibility of slowing iphone growth. the second-biggest point booth the nasdaq,boost to amazon is requiring advantage to enhance the payment solutions in india. we have a rally in amazon, up for four days in a row, but it is on lear if that is enough to turn the 30% drop from last year's highs at the end of 2015 bottom and 2014 it was a . the selling in amazon has been strong. up, a battle of the charts. mark, it will not the mark versus brendan, it will be mark versus joe weisenthal. mark: lifting prices to the
♪ brendan: it is time for our global battle of the charts. i just saw mark barton steeling himself for the battle. the most telling charge of the day and what they mean for investors. you can run the function featured at the bottom of your screen. kicking things off is the anchor of "what did you miss?", joe weisenthal. : sovereign debt is back in the spotlight in europe. here is the portuguese yield curve.
this green line is the portuguese yield curve as it stands. yellow line is where it stood a month ago. across the curve, big increases in what portugal has to borrow. there is worry about the government back tracking on its spending plan. there is worry about debt downgrades. they have not solved the problem of how do people feel about the creditworthiness of the government? brendan: i talk to you when you were in greece. are you laying the groundwork to return to lisbon? joe: i've never been, but i always want to go. that is what this is about, setting up that trip. brendan: mark? trading at ae is highest level since november 2015. the global benchmark is $46 a metric ton. the white line, since falling to
$38 in december, it has rebounded 20%. it is a name will market. it has fallen from 75% since reaching a record high in 2011, low supply coinciding with weak demand from china spurring the global glut. will the recent gains last? he saysg to an analyst, the rally is poised to unravel as china's demand weekends. -- weakens. has been rising since june of last year. other analysts concur, the median forecast for iron ore is $41 in the second quarter. that is still below today's price. iron over, will of the bull market last? brendan: what you are saying is reducer's are responding. theslow at the end of
commodity super cycle. do i see some small evidence consumers are responding? mark: they are responding. china does not want as much demand. it is binary. producers are doing what they can. the demand from the world's biggest consumer of iron ore is slumping, which is why most analysts say that we will head that way once again. brendan: i will give this to mark. this is a story and i see 2 yield curves. merging 2 different functions of the terminal to tell a complex story. i'm giving this one to mark. cruises will talk about and how they would get fancier. get ready to get on the ss united states, a cruise in europe, more money on luxury.
brendan: in today's pursuit, if you have plans to take a vacation and you have the scratch, the markets for cruises is getting more expensive and exclusive. one company's plan for the high seas, what is changing in cruises? crystalis changing with is that they are expanding broadly into planes, a different class of ship, and they are doing riverboats. initially started as numeral to mid sized crews ships. they have won 20 awards from leisure.vel when they were bought for $550
million, they decided they would expand. this ceo has decided to live , 2 giant ships coming online in 2018, and they have 4 riverboats. brendan: how have the demographics demand for cruising changed? >> they are responding to luxury travel. that is expanding and doing well . they have had these 2 ships for 20-years. i got a huge investment and decided they would expand into air-cruising. the four seasons has an airplane that takes you around the world, and they're getting into that, but they are buying a bigger plane. larger to 2 wide-bodied jets.
in 2018, they are bringing 2 huge hundred thousand gross ton ships, twice as big as the titanic, they will have condos that you can buy on board, so you can stay cruising for the rest of your life if you want. and i forgot to mention the yacht. i went on a yacht with them when they announce this in the seychelles. it has a couple of different things you cannot believe. the game changer is that they have a submarine if you decide you do not want to ruin your , you and look at the reefs can get into the james bond-style sub and look at the reefs. brendan: we will still be going on disney cruises for the immediate future. you can read more on luxury travel,including
watches, travel, and property on ni pursuits on the bloomberg. tell me how markets ended the day. mark: after 2 days and the biggest 2-day job in 4-years, it has left 6%. we have come to a halt with the .toxx 600 down for tenths of 1% the big story was the russia story, the saudi arabia story, freezing production. investors wanted more, that is why oil and oil stocks fell. "markets."
alix: from the bloomberg world headquarters in new york, good afternoon. i am alix steel. here is what we're watching. a new currency war. we get perspective on the fed, china, the oil glut and more. investors are running out of patience with european banks. the zika virus and the threat of airbnb, how much will these headwinds impact earnings? we have that preview. for more on today's activity, let's send over to julie hyman. julie: we have this rally going on. we seem to have skipped europe somehow but we are seeing this rebound effect with stocks in the u.s. rise for the second straight session after being closed yesterday. they are extending the gains here today, the nasdaq, the underperformer of