tv Bloomberg Markets European Close Bloomberg February 26, 2016 11:00am-12:01pm EST
barton. this is the european close. matt: we are going to take you from new york to london to zürich in the next hour. shares of royal bank of scotland most since 2012 after reporting and eight consecutive annual loss. we will look at what the bank is doing to try to turn things around after reporting on $3 billion in losses last year. mark: fifa approving reforms aimed at ending corruption in soccer. the" to replace satellite blatter goes to a second round. matt: sotheby's posts a fourth-quarter loss, hurt by
signs of a slowdown in the art market. we are half an hour away from the close of trading. mark, tell us about today's market action there. mark: more room for monetary easing, stocks across europe rally today. by 1.8%. 600 up we are down 3% in february, but we are up by 9% from the 2.5-year low set on february 11. this is -- it is going to happen again. always happens on a friday. do stay with me, matt. there you go. beat the gremlins in my technology. by the british taxpayer commissioner sinking as much as 11.5% in most in more than four years. it will take longer than it originally planned to resume dividends.
it reported its eighth consecutive annual loss because of past misconduct. this is the level, the weight of the government breaks even on its stake in rbs. that the prize -- look at the price. not looking too good. let's look at basf shares. basically, it raised its dividend, even though it fell by 23% this year. matt: bsf. mark, uncertainty over the membership in the eu for great britain has weighed heavily on the pound this week. how is that working out for consumer sentiment? up,: it is starting to show matt, and other measures. this is the u.k. consumers economic optimism over the next 12 months. this is the measure from gfk, plunging to its lowest level in years. the referendum is going to have
risks of uncertainty about the u.k. economy. despite the positives for households, the feeble outlook for growth, and the variety of economic uncertainty since the start of the year, it has to press our new year optimism. as you have said, matt, sterling has been hammered this week with the dollar falling 3.2%, biggest weekly drop since 2000. there are still 120 or so days to go before the referendum. matt: all right, mark, very interesting. we will continue to watch it. my reservation to fly over there and buy you a pitcher. jules, what are you looking at? julie: i'm looking at the prospect for inflation. the economic data we got this morning, effecting stocks, you could argue negatively and positively. we got a fourth-quarter gdp number that shows a quicker than
expected pace of gdp in 1%, part businessecause of inventories. inflation was an aspect of that. and then at 10:00 a.m., we got personal spending and income and another measure of inflation comes this one for january. this is a measure that the fed closely watches. we saw it lies year-over-year, 1.3%. still a fairly far cry from the 2% that is the fed's target closer incrementally to that level. we have seen a change in expectations built into these futures for the fed interest-rate increases. now we are seeing the more than 50% chance, 1.7%, to be exact, being priced into the december futures for the rate increase at , 41%time, going up to 43% in november and september respectively. a little bit of a change for today. also, the probability of the cut, at least for today.
if you look at the treasury market, this is playing out there as well. a bump up in yields in the 10-year. and then a rise in the dollar as well is what we are seeing, especially after be nine inflation data -- after benign inflation data coming out of your. against the japanese yen. movesyou are seeing more in credit and currencies and commodities that you are in equities. what is moving inside the major equity averages? julie: let's look at the map for the sectors on the move. weakness in utilities, that tends to happen when we see more strength in rates. materials and energy are the leading groups. es are seeing financial driv and technology shares gaining strength. individually, we are watching some of the beaten up names that
are now gaining strength once again. sharply, freeport mcmoran copper and gold dating. let's check on oil and copper. we are seeing a rebound after chinese officials made noises about potential stimulus. crude oil and copper are bouncing today. mark: let's check in on the bloomberg first word news this morning. what have you got? the irs -- the regional revenue service saying there is nothing that prevents donald trump from releasing income tax returns if he wants. last night he said he would release his returns put he would wait until an irs audit is done. in a statement to nbc news, the agency indicated that is really not the case. marco rubio and ted cruz have said they will release their tax returns. meanwhile, rubio went on the attack against trump in last night's presidential debate and he stayed on offense today. marco rubio on "cbs this
morning." con artist is a about to take over the republican party and the conservative movement and look at the report you just did. donald trump had no issues on the answer of health care and if you listen to the report, the media is pumping him up as an unstoppable force. matt: rubio and cruz have catching up to do for super tuesday. trump is backed by 37% of likely voters. rubio and cruz are tied at only 20%. an unarmed minuteman missile capable of carrying nuclear weapons was launched out of the california coast and roared out over the pacific. it was routine test but also a reminder to north korea and other potential u.s. adversaries . in january, north korea conducted its own atomic test. it also test fired a missile. global news 24 hours a day,
powered by our 2400 journalists in more than 150 news bureaus around the world. i am matt miller. mark barton? mark: fifa delegates are meeting in zürich, try to write a new chapter for the organization after the massive corruption scandal. the election is going to the next round of voting. hugo miller is a reporter at bloomberg news covering the elections. he joins us from zürich. very good afternoon. contestvorites in this have gotten the most votes in the first round. just remind us about the tally. yes, it is starting to get exciting, but getting exciting very slowly, because the voting happens one country by one country, and there are 207 delegates countries that have to go up and deliver their votes. the long-standing with 88 votes,al
bahrain who from has of the asian confederation. 5 candidates were sitting watching the blue ballot papers being counted. infantino has a good poker face because he was looking very glum. the betting going in was that he was going to lose or come out short in the first round and he actually came out ahead. now it is a question of delegates going back for the second round of voting, and the horse trading begins. dok: hugo, let's be honest, truer of them represent change or not? byo: let's take them one one. often my left here, you have protest -- off to my left here,
talking ofotesters torture they say it happened in bahrain. no one has made a direct suggestion about al khalifa but there are suggestions he was complicit. you have that baggage at the least that has come to this election for the sheikh. and then you have infantino. he is clean but he is an insider. man,s michelle platini's and platini is now banned from fifa activities. there is no clean candidates here. who is really best? that is what the 207 delegates are trying to decide. honestly, a lot of them are not necessarily thinking that way. they are thinking who can do best for our confederation? we had of the african football
this week or the head of the african football confederation -- we heard the head of the african football confederation say they are backing al khalifa because he understands football problems. clearly thinking about global football, and according how has the giant cleat maker, or football boot scandal?ne during this was whistlinghere and blowing from the protesters. repeat that again? matt: adidas has backed platina, according to focus, and i'm wondering how much weight adidas carries. they make a ton of football boots. and how the company has done during the fifa scandal. hugo: well, i think it is a big question mark.
adidas and the other sponsors are really holding their breath here. we saw them come out from an unusual step, in favor of candidates, but we had one of the five candidates today from south africa who then surprisingly in the course of his pre-election speech withdrew his candidacy. but he came out and said sponsors, say what you want, called the need for reform, but .o not start picking favorites he was very explicit that he said that should not be going on . there is a line that sponsors crossed, according to him. i don't know if the sponsors are necessarily going to heed that morning but obviously they are going to weigh and in some or. we will be asking them to weigh victory today. mark: hugo, great to chat with you. we will look forward to the results whenever it takes place. hugo miller in zürich on the
mark: live from london and new york, this is the european close. i am mark barton with matt miller. iranians turned out to vote for the first election since the nuclear deal ended the country's isolation. president hassan rouhani is seeking pollsters to support parliament, where they have stymied his economic agenda. >> they want to elect as many reformists as they can and it
probably will that there are certainly a lot of them who won't -- that is the honest thing about iran, it looks to a degree like a democratic election when you look at what is going on and people lining up to vote, but the number of people, the kinds of people that they have a choice from constrained very dramatically. mark: joining us for perspective pchak ofegion's cliff ku the eurasia group. thank for joining us today. cliff: shirley. reformistshere many candidates even up for election? many were disqualified from the vetting council. cliff: there are not many reformists but i would like to put this to finley. centrists andtic reformists. the question isn't really how wealthy reformists are going to do, because there aren't many of
them. the question is is this brought government coalition going to do better than the security-oriented hardliners? i think there is a chance they may do better. mark: what is that mean for policies? what sort of policies is president rouhani going to be able to push through before the next big election, the presidential one, which possibly he will stand for next year? look, rouhani doesn't run the country. khamenei runs the country. i don't think given the ideological nature of the supreme leader that there are real stewards to this country and -- that are the real stewards to this country that there will be much change. i think it will be a mistake to wait for change. not going to happen. matt: if i'm wondering about the impact on markets, the first thing i wonder about is oil. i'm assuming this will have zero impact on that, because they're
going to export as much as they can for now, aren't they? cliff: they are going to export as much as they can come up to 2 million barrels a day. they may have a marginal impact on how foreign investors view iran. if you get at least the same or slightly more pragmatic liberal parliament, investors are going to say, well, there contract structure may be better . to get a hard-line in parliament, the sentiment may be dimmer than that. matt: if we get a hard-line parliament, what you are saying is we may not be as much foreign investment in iran, and then they may not be able to boost capacity much more than they've already got? cliff: well, i think they can boost capacity pretty much with the european services companies going in and they are going to go in. what is more a question is the longer run.
i think this election could have an effect on. cliff, what are the applications on a regional basis? the hotbeds of disarray within the middle east? what are the applications within the middle east as a result of this election? cliff: again, i don't think there are many implications. it kind of works like this -- there is a common misunderstanding out there that president rouhani runs iranian foreign policy. that is just wrong. again, the supreme leader, a hard-line right-wing ideologue, runs foreign policy. i'll see towards syria, policy -- policyhrain towards syria, policy towards bahrain. none of that is going to change could it will remain open his brew regardless of the election. mark: i've got you want and we are talking politics so i've got
to ask you about the big geopolitical issue we're focusing on in the u.k. right now, the possibility of britain leaving the eu. how do you think this is going to play out? cliff: a one in three chance, if i were a betting man. but look, prime minister cameron had a good week last week. he got the intra-eu exemption for social benefits up to seven years, four years. and i think that the momentum -- the british establishment doesn't want to leave. most brits are scared of the economic consequences of leaving. there are 2 wildcards. boris johnson, very influential, among the public and within the conservative party. secondly, the referenda, they are fickle things. people can show up and vote out because they are angry about migrants. i think one in three. not a small number.
mark: royal bank of scotland is having a good day. a 2bank posted billion-pound loss, shares down as much as 11%. what more can be done? richard partington is here, our u.k. banking report. when is this dividend to come? possibly in the first order of next year but the push back has caused a big drop in shares. is the: absolutely, that
big thing investors are looking for from the website of scotland. the dividend is key to the especially -- as it is with many stocks in the u.k. regulators are asking them to roll it around 13%. a measure of financial strength there. you have more than 15%. 2 full percentage points of capital could be returned to investors to their got to get through significant items this year. they've got to get through a potential fine from u.s. authorities over the mortgage backed securities sales. they have got to pass the bank of england stress tests. only at that point will the be able to return the capital to shareholders. at that point in time, it seems to be getting further and further into the future. that is the real negative in the stock today. mark: 8 years of losses. eight years of net losses. when is the next profit going to come? how patient can investors be? richard: it is a serious case
for royal bank of scotland. they are not seen a profit in 2016 by analysts from the notes i've been reading so far. we have the 2013 lost, your number eight. year number nine is likely to be lost again. chargeson restructuring and the potential for fines. perhaps year 10 out from its bailout come out from the financial crisis, we could see a net profit. skeptical wright state american woods -- red state and mark and would say how well one can the bank be when the government owns 80% of the? richard: that is an issue that investors consider quite highly. are of the u.s. investors the biggest holders of rbs' stock and they have said to us they would like to see the government out of this. over the past two years we have
seen a number of changes at royal bank of scotland. who knows how much involvement the treasury in the u.k. has had in that? it has never -- it is never officially confirmed. big changes at this institution, including cutting back on the investment bank, and these are things that the government are clearly happy with. one has to wonder how much longer investors with like to see that going on for. mark: rbs, big story today. richard, good to see you for the second day running. richard partington of bloomberg. check it out, stocks look like they are going to finish the week higher for the day, for the week as well. 2 weeks of gains for european stocks. ♪
matt miller. saids rising after china it sees room for further monetary easing. we are up for two consecutive weeks. that's exactly how january played out. we are still down 3% for theuary, but up i 9% off low. all the major indices trading higher today. is 73% owned by the u.k. government, falling 11.5% originally. the biggest loss in four years. it will take longer than planned to resume dividends after reporting its eighth straight annual loss. below theding government breakeven price of 470.
sterling the big story of the week. it will be the big story for the next 127 days. sterling'son charts performance against all 155 of its peers this week. only a handful of currencies have actually fallen against sterling. the best performer, the eritrean currency. matt: and has been a long time since i was in every treritrea. mark: at least you've been there. i've never spoken about the currency, myself. matt: a great function for that. as you go into your close, notice that in the u.s., the dow jones industrial average is now down on the day. we are not getting the momentum in u.s. markets that european
investors are seeing over there. it is less than two weeks until the next ecb policy meeting. i will inflation data be received by policymakers? you've been looking heavily at inflation today. getting a lot of data. mark: we have spanish inflation, german inflation, french inflation. -.9%, theflation worst since september the german inflation -.2%. it leads up to the ecb meeting on march 10 with negative inflation likely to be confirmed at the eurozone level next monday or near so. much action of how do we get and will mario draghi disappoint like he did at the beginning of december? they're interesting
because on a day when we here in the u.s. get our personal consumption expenditure, the inflation measure the fed likes to look at most, better than expected or higher than expected. we are just four months away from the so-called brexit boat. -- a vote. policymakers at showing much inside of the debate they are in come including the finance minister from spain. thatis is one element could be instrumental to everybody. the brexit is not a real alternative. it will increase the risk of recession in the u.k. and the whole region. we have to stress that brexit should be avoided. matt: uncertainty is already
rippling through markets. our next guest released a report saying a vote for a brexit could have huge consequences for all subclasses. elizabeth martins at hsbc in london. huge consequences in what direction? negative for all asset classes? not quite all >>, but it really depends. you have two cases. reaction one initial ofthe vote and then a period two years of uncertainty while we negotiate what the exit would look like. big shock and uncertainty over two years and then after that, everything depends on what the u.k. can do in terms of striking trade agreement come in terms of which companies followthrough. -- follow through. it depends on all of those factors.
matt: over here in the u.s., the only -- we only hear from academics, politicians, investors who are pro-eu and not voicing leave interests come other than boris johnson. do you have any of the elite rooting for next it from the eu other than boris? >> some people have been that the story has not been as vocal as expected as the case to stay in. boris johnson is the big figure in favor of leaving the eu. if we look at the economic arguments, there's a lot of uncertainty. mark: make a case for staying in. let's turn this on its head. dynamic.will remain it will achieve a strong economic performance whether
britain votes to stay in or to leave. is there an economic case to leave the european union? >> we think the u.k. should remain in the european union. the people associated with --ving well julie: julie: will outweigh any benefits from leaving. thate who would advocate would hope business would lighterfrom a regulatory burden. we laid out three scenarios in this report. comeople vote for brexit on june 24, people get what they want, they should be happy and we should have a confidence boost. we see big risks to that scenario. mark: the bank of england, despite your projection for sterling declining 15% will hold
interest rates. why wouldn't they be raising interest rates? there will be huge push up to inflation. >> we have two potential scenarios. one in which a sterling falls to that degree and inflation goes higher. we can cope with inflation going a bit higher. that in thethrough event of growth being really badly hit. in that sense, to raise rates would exacerbate a gn economic slowdown. you'd capital outflows and you get really worried about the u.k. account deficit. you do have to have the bank of england raising rates. negativeyone else on and zero interest rates, you may not have to do very much to attract that capital back in. for: what is the benefit
boris johnson putting his support behind the leave group? if all the other elite voices in the world are saying that is a bad idea. why does this help him? >> i'm not going to comment on politics. i would rather just stick with the economic indications. i'm sure all of our politicians have looked through these issues and come to their own decisions. how about the implications on the market? single-handedly responsible for the worst week in the british pound versus the dollars and 2009? is there any other reason we saw the pound fall by 3% this week? >> it is pretty impressive for individual to have the power to bring sterling down -- everyone came in to work on monday, there was a sense of momentum with the lead campaign -- leave campaign.
migration good for the economy. a better place demographically than our neighbors. if labor restrictions are imposed as a result of a brexit, you save labor costs could rise -- say labor costs could rise. we could ultimately cherry pick immigrants from all over the world. that could be an upside to brexit and forge a new partnership. >> we would have more control in terms of the quality of the labor and flows we are getting. perhaps people will come on a project by project basis. the benefits of that could be offset by a big decline in the numbers. if we look at george osborne's forecast, that relies on edward migration of 180,000 people per year. -- inward migration.
if we leave the eu come it would increase the ability to do that but have implications for the number of taxpayers and investors and so on. mark: a great report. elizabeth martins. map come all yours. matt: european markets are done for the day but u.s. markets are still open and fairly volatile. abigail doolittle has more from the nasdaq. abigail: the nasdaq at this time is holding on to its gains just narrowly. surging afteru the company beat for what revenue estimates. it looks like the company's investments in mobile are paying off. two upgrades out there. many have been reassured by the companies recent recovery in margins and movement into new areas.
the company could be producing self driving cars on a commercial basis within five years. another winner at the nasdaq the big data of software provider soaring after the company beat fiscal first order earnings and revenue estimates by a wide margin. they also raised full-year revenue outlook after adding 600 new enterprise customers for a total of 11,000. the ceo says these results show the company is truly differentiated in the marketplace. 12 analysts change their price target after the results. 50% upside to the average price target of $64. let's check in on our bloomberg first word news at this hour. ireland is choosing who will run the country in the first election since exiting an international bailout. leaves --minister leads the coalition government.
his coalition leads in the polls. iran -- voters casting ballots for the first time since that agreement was reached. rouhani looking to increase its political support in parliament. the pentagon is launching more cyber attacks against islamic state. among the tactics, preventing militants from recruiting industry beating propaganda through social media. the pentagon says it will have 133 cyber teams in place by 2018. maybe it's the brooklyn nets way of saying we are sorry to their fans. the teams with one of the worst records in the entire nba will cut ticket prices by 24% next year. the discounts will apply to season tickets. front row seats not included.
news 24 hours a day powered by a 2400 journalists in more than 115 is bureau's around the world. -- 150 news bureaus around the world. mark: euro area inflation cooling more than expected with the four biggest economies missing estimates. i'm taking a bigger look at core inflation levels around the globe. stay with us. ♪
the bottom of your screen. let's kick things off with joe weisenthal's chart. we battled today. you up your game today. >> everybody knows that the fed has two sides to its mandate, the employment side and inflation side. it is pretty strong on the employment side but weak on the inflation side but it is getting better. ,he data we have out on cpi core pc, they've both been going up lately. inflation is trending higher in the u.s.. pce, a looks at core different indicator with different weights and it's been much lower than core cpi. i've charted the spread between cpi and pce to show how much difference there is. health inflation very heavily weighted in core pce has been low. as the fed falls behind this
target -- it has recently been jumping up again. the spread at its narrowest level since june. i think janet yellen be relieved by some of the data we got. matt: very interesting. i will check out the chart. mark, what have you got? mark: core inflation, continuing joe's team. i thought about it when the japanese inflation figures came out earlier. headline inflation zero. headline inflation excluding food, zero. excluding food and energy, .7%. it has been stuck below 1% for a long time. if you strip out the effect of the sales tax increase a couple of years ago, which made me
search far and wide for the other big core inflation indices throughout the world. starting with the u.s. where core inflation is above 2% leading up to the fed's battle to underpin inflation. we rose by .3% in january in the u.s. core inflation in the u.s. is strong. what about the u.k.? 1.2% core inflation. the .8 percent level reached in june, the lowest since 2001, but still below december's 1.4% and below that 1.8%.y's-- matt core inflation in the euro area at 1%.
we think the ecb will ignore that because today come up had headline inflation in spain falling, headline inflation in germany falling and headline inflation in france falling. which means headline inflation in the eurozone when announced on monday will be close to zero. check out my chart. it's all about inflation today. matt: i like the global look. but i'm going to dock you for using epi. i will give the win to joe. you find the pce ticker and charted out 100 times. joe weisenthal, thank you for joining us. mark barton come always a pleasure. , the famed auction house reported an $11 million loss.
matt: welcome back to bloomberg markets. in today's pursuits, so there views reported a loss of $11.2 million in the fourth quarter. by's.uther sales off 50% from one year ago. atya.ng me now is k she covers the art market for us at bloomberg. a just did this story about $500 million sale, two paintings, a jackson pollock. yet, you are saying that was then because that was over the summer, this is now, different art market.
>> a different world really. that sale took place over the summer. the market has changed quite dramatically. the auction market is a fraction of the overall art market. they've announced preliminary results -- it was not a success. so far, first quarter results 32% below the same quarter one year ago. will haveys they difficult quarters ahead. they cannot completely affect the art market on their own, but there is a new ceo on the scene. i'm sure he has some changes to make things better during the rough market. matt: the company is under
pressure from the largest shareholder. it's been going on since 2013. ted has been there since march. he's been implementing different changes, the biggest one most recently, he acquired a private company for $85 million. people who are top advisers. they come in as cochairman of this new our division -- new art division. they will revamp sales. on the other hand, we've seen several big departures. yesterday, the company confirmed that two of their biggest dealmakers are leaving. there's decades-old relationships with collectors. it will be an adjustment. aredifficult quarters ahead
in preparation for fallout for that this fallout from that. mark: is this just a bubble deflating the art market? >> we don't know how significant it is. we are just seeing the first cracks in the market. that has been incredibly robust for five years. yet, is no need to panic but even the ceo said everybody is in a wait-and-see mode. everybody is looking at the upcoming auctions in may. next week in new york, we will art several very large sales, a test of the market. while the auctions are down this year, private dealers and galleries have told me that their business is very strong.
there is a bit of a discrepancy there. we will see how it plays out. matt: no bubble? if you are saying $500 million he a jackson pollock -- could have bought the building he works in for less than those two paintings. always interesting to follow. thank you so much for joining us. you can read more of the story at bloomberg pursuits. your destination for the finest things in life. back here on bloomberg. ♪
scarlet: good friday afternoon. i'm scarlet fu. our emerging markets the trade of the decade or a value trap? the debate over this asset class heating up. scarlet: goldman sachs president says the u.s. consumer is strong , echoing similar comments from jamie dimon. u.s.rowth hinges on the dollar. alix: central bankers gathering for a two-day meeting hoping for policy.nated effort on first,