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tv   Bloomberg Markets European Close  Bloomberg  October 10, 2016 11:00am-12:01pm EDT

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you are watching the european close on bloomberg markets. ♪ from st. louisu to london. stories from turkey and germany and more. here is what we are watching today. sterling resuming its decline as wait or clues about the cause of the flash crash and whether britain is truly headed for a hard brexit at the same time. bank of america rules banks of liquidity via -- vanishing in times of stress. >> donald trump and hillary clinton talking about past scandals. opera discussing the fence and trade in the second debate. a recap of personal attacks and policy. cold -- full call on
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european banks. citigroup says it appears to be more companies than systemic. >> european equities are trading just under 30 minutes. there is your equities column. look at the green gains. norway, germany, netherlands. all rising because of the rebound in oil price on comments the russian president that russia is prepared to stake -- to take part in the freeze between opec and nato producers. these are your currencies policies -- currencies falling and bond yields. look at brent crude. up by 2.5%. getting to william hill. shares up by 6.5%, the most since july.
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announcing it is in talks on a with ae combination poker stars maker. it would be the latest in a round of industry consolidation. $14 billion by the way has been splurged on betting company takeovers in the past couple of years according to bloomberg data. another stock rising, shows up by 2.8%. proposal to buy the portfolio for 783 million pounds. returning more than 700 million pounds. interestingly, had previously agreed to sell the portfolio to a fund managed by goldman sachs and a pension plan for roughly
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680 pence per share. the plot thickens there. shares getting hammered last week. the first drop in annual profit since 2009. foreign currency costs. socgen cutting the stock from cell to hold. the carrier faces a double whammy of stocks to demand with headwinds as well. 90 minutes into the trade. going to the markets desk. we have a rally in the u.s. as well. the best thing for the s&p 500 and over a week. last week we only saw its no more than half a percent. it is really the nasdaq that is a standout today. the nasdaq composite is at a record.
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dani burger just telling me this would be the 13 record close for the nasdaq. number of most highest number of record closes. what has led to this? taking a performers, you have nvidia doubling. a lot of activity, m&a activity sending the stocks higher. net ease as high -- higher by the 4.3%. the other stopped to watch is oil. a big gain. we heard vladimir putin at a meeting in istanbul say russia is ready to freeze, if not actually cut production at this point. the rise getting a boost not just to energy producers the chemical companies as well. seeing a rally in materials helped by the chemical makers.
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julie hyman, thank you. courtney donohoe with more from the newsroom. hillary clinton and donald trump in the second presidential debate last night at washington university in st. louis. trump reeling from last week's release of the 2005 tape in which he was caught discussing a woman in lewd and degrading terms offered another apology for his behavior. secretary clinton says this latest revelation is the latest in a long chain. not only women and this video that raises questions about his fitness to be our president. targetede has also immigrants, african-americans,
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latinos, people with disabilities, p.o.w., muslims, and so many others. this is who donald trump is. the question for us, the question our country must answer, is that this is not who we are. >> prior to the debate, trump made an appearance with a trio of women who have previously latinos, people with disabilities, p.o.w., muslims, and so many others. this is who donald trump clintol misconduct. inaccused iraq, preparing for tt asnificant role in year is the u.s. and iraqi troops prepare for an assault on the city of modal. =-- mosul. the u.s. has 6000 soldiers in iraq. special forces already taking part in raids in the surrounding area. least 14 people have been killed in a suicide bombing in the southern province. an official says it happened today in the city and that 10 police officers were killed. the city has been under siege i militants who officials say entered earlier in the day. officials say a refugee acted applauding an attack models his plan on previous attacks in
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brussels. granteday the suspect asylum last term may have had links to the islamic state. he was turned in by those who recognized him by online postal -- online posters. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. mark: thank you very much. last week's stunning flash crash. the volatility may have come as no supplies to think of america. the 5arlier liquidity in trillion dollar per day global market was far worse than anyone could have imagined. us.k you for joining this should not be happening to a currency like the pound.
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this is more akin to a frontier currency. how significant is that make friday's -- crash? right to point out this is a huge deal in foreign exchange markets. currency.gest traded it has some people sitting up in their seats. that we spoke to said it scared the hell out of everybody. the point that bank of america mentions is the fact that when traders need to do something, they need to transact foreign exchange, things may look fine on the screen, but as soon as they have a big trade they need to do with urgency, the liquidity absolutely vanishes. is far lessuidity in the 5 trillion per day market than anyone can imagine? >> it sounds like liquidity is very poor and the volumes are declining. this is due to several reasons.
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they are stepping back from the market and making function in the foreign exchange markets and high-speed traders, exited else and ex tx stepping in and becoming market makers but they have not been able to fill that gap. underhe market goes stress, suddenly the liquidity seems to vanish. report that's volumes have not decreased. fx is beingcts -- traded. .> at it is both the volumes are declining. the market structure is absolutely changing. of the banks and reluctance to step in and times of stress has caused the market to undergo project. we saw this in the pound move
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friday. the absolute worst time to trade currency. when something happens, suddenly everything goes haywire. what do strategists do when it is very difficult and underlying things that can go wrong that you have no control over and could not possibly predict? is an interesting point because the strategists are well behind what happened in the pound. strategists are predicting at 127. moveey really missed the on the downside. it remains to be seen whether they will go back to the drawing board and recast expectations for to go lower after what we have already seen. >> interesting.
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thank you for joining us. coming up next, we will hear from the swiss national bank president for the impact on negative interest rate and what he from the fed and european central bank. this is bloomberg. ♪
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mark: live from london in the -- in new york, i mark barton. 17 minutes away until the european close. i am vonnie quinn. time now for the latest flash.rg business saudi arabia will start meeting before a this week potential international bond sale according to a person familiar with the matter.
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conducting meetings starting wednesday. italian industrial production unexpectedly increase for a second month supporting expectations for a revival in economic growth. output rose 1.7% in august from the previous month. the median estimate of 17 economist calls for a drop. increasing its stake in vivendi to more than 20%. they tighten the grip over the media conglomerates. 29% of voting rights by april 20. take into account double voting rights for shares it is acquiring. that is your bloomberg business flash for this hour. talking about switzerland.
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cutting interest rates further for negative territory is needed. he spoke to bloomberg television francine lacqua in an exclusive interview and the imf meetings in washington. >> it makes sense for switzerland. you have to distinguish between an exchange rate channel for negative interest rates. a lot of evidence that it is working. we have much lower interest rates compared to the eurozone. rate spread shrunk a lot. we could increase the spread by introducing negative spreads. of negativeence interest rates working. >> will you be comfortable going further into negative territory? >> we have went quite far, but we still have room to go if necessary.
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increased butg not that much. we do not see mass supporting for cash at the moment. we had an increase in this but it stabilized. >> what other rules can you play with? what else can you do? >> negative interest rates. necessary.rvene if the combination is extremely important for us in order to diminish this. >> there is nothing else apart from direct intervention? >> at the moment we are implementing it. >> did you meet with mario draghi when you are here? brexit was an issue.
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the outlook in europe was very important for us. >> is there any lessons that britain should be taking from switzerland? saydit is very difficult to . >> did you speak which are yellen? >> yes, i did. it is all about monetary policy at the moment. monetary policy globally, and then four different countries negative interest rate. risk, and all these kinds of issues. >> does an interest rate hike from the fed make your life easier? >> for us, it is very important that double economy is growing stronger. this would be proof the u.s. economy continues to grow, and that would be very helpful for us of course.
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>> we had a story saying mario ecb was looking at tapering. a they do start announcing date when they are thinking of tapering, does it make your job easier? >> for us, two things are important, close -- growth locally. and interest level of different currencies. if we have an improvement of the economy, that would make our life a lot easier. think there is growth coming back to the global economy? we are hearing very mixed signals. >> monetary policy alone cannot do the trick. we need structural reforms. the effectiveness of monetary policy would increase again. this would help all central banks. >> how many years have we heard that? >> now is the time to start.
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we should not postpone. especially in europe. extreme monetary policy continues, we have more side effects. so that theant effectiveness of monetary policy can be increased. and over time the monetary be normalized. >> vonnie thomas jordan exclusive interview with francine lacqua. a towering man. >> that is for sure because francine is also quite large. shows at deutsche bank are trading higher. story they are in talks with the u.s. justice department and continuing over the the size of the fine. this is bloomberg. ♪
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vonnie: breaking news headlines now from the conference call .etween gop members paul ryan telling house gop he will focus on keeping the majority, according to politico. also telling house republicans he will not defend trump. paul ryan saying he will not defend trump. there we have pictures of donald trump at the debate last night. he is not resending the trump endorsement. the trumping endorsement, but he did say he will not defend trump either. >> talking about deutsche bank. we will come back to the deutsche bank executive failing to reach an agreement on the multibillion-dollar penalties in washington. bloomberg negotiations are continuing.
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a typical day in the life. 3.3%.ey are up by where are we in the doj investigation? >> i think we're in the stage where everyone has a lot of jitters. the doj came out with a number of 14 billion. that would be way over what they have set aside. everyone is watching every little thing. people want to know if they are making progress or not. >> we know we have the $6.2 billion litigation. so what would be a good settlement figure for deutsche bank investors? >> anything far away from the 14 billion would be good. we've reported they offered between 2 billion. i think a lot of people are
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estimating it may end up somewhere in the middle. one analysis that the train 4 billion and 8 billion. anything below with the accepted. you have to remember, this is not the only potential find deutsche bank is facing. they have money laundering and russia as well. what about the idea we may have more difficulties to come, whether it is the fine or ?lsewhere that bank stocks are just under pressure and that will not help. >> the environment for all banks is all difficult. the businesses where deutsche bank was traditionally strong including fixed income is not coming back. question is what does
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deutsche bank went to be going forward? do they stick to the universal banking model where they offer investmentfrom banking to asset management to retail banking or do they focus on their core? these are all of the questions investors are asking, and there are very little answers. sure we're -- they are sick into this and will not >> theyily change that? have not, with the change to the strategic plan. their announcement before was very focused on cost cuts. people are now wondering, they want something new and a fresh overview. do they sell part of asset management? >> we have heard about the royal family.
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investors that are interested in giving the money if necessary. saying he is not planning at capital increase or does not want state aid recently. they are talking to banks. i think it all comes down to the doj fine. if that is really big, bigger than expected, the immediate question is are they capitalized enough? these are open-ended questions we are trying to answer. take a look at where european markets are trading. what a day to spend today. stocks are rallying on the big news from an stumble. -- istanbul. ♪
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mark: live from london and new york, you're watching the european close. i'm mark barton with vonnie quinn.
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although one industry group gaining. gas after those comments from vladimir putin in istanbul that russia is ready to take part in a production freeze if opec gets their house in order by that meeting. oil and gas companies the best-performing industry today. first gain after a second weekly losing run for a most of month. it comes as investors withdraw money from the regions equity fund. billion according to bank of america merrill lynch on friday. royal family is considering increasing its stake in deutsche bank. this essentially is security ownership.
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blackrock owns 3.67% of outstanding shares. paramount services supreme universal. these are holding vehicles for the royal family. these are the top holders of deutsche bank stock. some say would be to increase control according to people familiar with the matter. continuing over its handling of residential mortgage-backed security's according to people familiar with the matter. these shares are up by 4.8% today. the investor who became chairman of this company is increasing his stake which owns the
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universal music group from 15%. the billionaire investor wants to cement his control. he wants to expand his business beyond music. this is a weekly move in sterling against the dollar. you can see the last week the pound had its biggest acquiring since the brexit week. you have seen big moves in sterling. of the biggest moves since the height of the financial crisis in 2008. the concern is we are heading for a pound -- hard brexit and the pound is falling. how low does sterling go? wenie: that is a question will be speculating over for some time. bond marketu.s. the is closed. it is columbus day. above 14 this
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morning. it has come down a little bit now. nothing to write home about. before friday's jobs report we had a high of 97.2. still relative strength. the mexican peso is another one we are keeping an ion today. it looks less and less likely that donald trump will reach victory. the odds of a hillary clinton at 80% now. the mexican peso feeling more positive. one of the major stories today, russia joining the party. branch is above $53 a barrel. they friday jobs report not hurting.
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the nasdaq up .8%. let's take a look at the nasdaq in more detail. abigail doolittle is in manhattan. >> we are looking at a nice rally for the nasdaq. trading at an all-time intraday high. nasdaq is close to its record high. nice turnaround here. as for what is boosting the -- petere most today stabler at wells fargo is saying both of these internet giants are on pace to beat or made estimates for the third quarter. he believed they are going to continue to gain share from
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non-tv media. we have facebook up 24%. all year this has been the top gainer. we have amazon climbing ahead of facebook. it will be interesting to see whether that dynamic holds once this company reports their quarters. been a littlehas bit more choppy. what are the big percentage winners today? the top percentage performer in the nasdaq 100 mylan shares. their best pace for day since november of last year after the company agreed to pay $465 million in an epipen settlement to the doj. we have the stock rebounding from a three-year low on this. the company is making no
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admission of wrongdoing. in on thet's check bloomberg first word news with courtney donohoe. and donaldclinton trump in the ring again at washington university in st. louis. the gloves came off. trump's campaign reeling from last week's release of the 2005 tape and which the republican nominee discussed women integrating terms. he tried to make bill clinton's 90's era sex scandals part of the dialogue. people have been -- their lives have been described for doing 1/5 of what you've done and it's a disgrace and you should be assumed to be her self -- ashamed of yourself. it isrything he just said absolutely false. i'm not surprised.
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someone with the temperament of donald trump is not in charge of the law. >> because you would be in jail. >> trump made an appearance live on facebook with the women who had accused bill clinton of sexual misconduct. 55% of debate watchers say hillary clinton won. donald trump did. more than 60% said trump topped expectations while 39% said the same of clinton. the u.s. national hurricane center said hurricanes matthews wins are diminishing. power is slowly being restraint to hundreds of thousands of people in south and north carolina. virginia officials are reporting one storm related deaths
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bringing the death toll in the u.s. to at least 21. theia and turkey are giving green light to a pipeline to transport russian natural gas to turkey and eu countries. relations have formed after .urkey apologized both countries wanted to press again with the project. i'm courtney donohoe. this is bloomberg. european banking stocks have been hit very hard this year. the stoxx 600 down more than 20%. lingering concerns about deutsche bank solvency. our next guest says it's time to start taking about some of these banks. joining us now, jonathan stubbs. great to see you.
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why is it time to start buying some of these european banking stocks? >> there are three big value trades. commodities, e.m. and banks. those value traps that become value trade. banks have been a big value trap. globally and in europe risks are reducing. we have smaller current account deficit across the market. less volatility from the dollar. . global economy we think the overall economy is getting better. aren't banks fundamentals mixed though? yes.
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you have fundamentals. we think are improving on valuation. the bank sector in europe is pricing risk. we thought valuation metric back to financial crisis levels. they are in certain well-known italian or german banks. hasbank sector at large done a good job deleveraging and raised a lot of capital over the last six or seven years. on the fundamental side they are mixed. fundamentals look great. actually having a mixed fundamental environment. every single euro zone economy -- we thinkprecious
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it is a mismatch between the system risk evaluation and the selected risks in the sector we are being. we think these modest improvements will be supported by bank share prices. weeke: a note just last calling the bank sector the good the bad and the ugly. the scandinavian banks are really doing very well. really talking ugly. how do you play this? do you just by the euro stoxx 600 bank index? it gets pretty stock specific when you get down to it. are happyine level we buying banks relative to our other sector.
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which have taken health care down. we are happy to take banks over health care. industrial hedges from economic risks. we have already seen banks around the world perform better. the roadmap for europe next year. we see them as cheap stocks rather than expensive banks. we like playing those against the markets. more broadly we think it's time for investors to take on more exposure to the broader sector. as industrials which we think are expensive and cyclical. vonnie: we are about to head into earnings season. goldman sachs issuing a warning asically saying more of
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profit recession that we are underestimating that risk. what are you looking for in earnings season? earnings are the lifeblood of any equity market. we have had eps trends falling. earnings expectations have fallen from 10% to zero each of the last three years. emerging market earnings expectations have gone 10 to seven. we think the same thing will happen into next year because of a more benign dollar market and because of a more benign commodity market. synchronized growth. if that happens growth will be better. mark: what does it take for european banks to be a momentum trade? trap. have value
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value trade. momentum trade. to go from value trap to value trade you need the risk environment to improve. they need the fundamentals to improve. are a long way away from that but we think there is enough to go from value trap to value trade. to get to the momentum the fundamentals need to improve now. we are watching what the ecb ins in the december meeting relation to messaging the market. perhaps a reduction in and bond purchases which would be to the benefit of banks around europe. we are watching that closely. it's quite likely that over the next couple of meetings we go to a reduction in stevens theich yield curve. that would be good for europe's financials.
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mark: from value trap to value trade. jonathan stubbs. global and equity strategist. mark mobius says emerging markets could be blindsided when the fed raises interest rates. we will hear from him next. this is bloomberg. ♪
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mark: live from london and new york, i'm mark barton. vonnie: i'm vonnie quinn. this is the european close. a lot of speculation to how the markets will react to a reserve rate hike. mark mobius is executive
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chairman at templeton emerging markets. at the 10 year history there is absolutely no correlation between interest rates and the markets. it's really interesting. >> we have had a temper tantrum in the past. >> the market went up with interest rates. i would say that we could be blindsided when ray go up. they will go up by a very small amount and i don't think it will be material. a lot of the emerging markets are dealing with 5% 6% interest rates. i'm not that worried about it. have seen a rally and emerging-market stocks or equities. really beent keeping up in terms of number and size. why is that? basically because the latent fear that people have of the markets generally.
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you can see more and more ipos in china. a lot of the companies coming in to hong kong do their ipos. as the emerging markets continue to outperform you will see more ipos. >> how do you choose what countries are more investable? brazil doesn't look as good as mexico. >> brazil is quite interesting. there are going through this reform process. mexico looks good. china is where the game is and india in particular. india looks very exciting with all the reforms coming in. i look at where we are in emerging markets. percentage points of return do i pick up if i have courage to be in emerging markets versus being in developed countries stocks over the next 10 years? >> i would say you're talking about 8% difference.
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emerging markets are running at 4% average growth because many companies are doing much better than that. usually the equities will be about double that. >> everybody watching worldwide just leaned forward. we are all yield hogs now. are equities the new yield give her? i think that is the case. heart that is the distortions. much government they have depressed yields. we know they pushed a lot of investors into corporate bonds. into equities. were traditionally buying domestic equities have to look into the emerging world to find yield and potential appreciation. a lot of this is a distortion that starts in the core markets and keeps spreading. >> we heard bob since talk about it dollar lift coming up.
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in the dollar. how do the dollar dynamics change if i'm in the u.s.? >> recently emerging-market currencies have gotten stronger. get stronger against those that will be a negative for a lot of investors. i don't see that happening to any great extent. there's a lot of emerging-market current he's still at their very low points. mark mobius on bloomberg. coming up in battle of the charts, twitter shares face off against the spirits industry. this is bloomberg. ♪
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vonnie: it's time for our global
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battle of the charts where we take a look at the most telling charts of the day. you can access these on the bloomberg by running the function at the bottom of your screen. kicking things off is joe weisenthal. joe: this chart relates to the goings-on at twitter. shares getting clobbered again today. falling below $17 a share. that's below where it was when the talk of the sale came up. this charts the sentiment on twitter. the red lines are tweaked that are negative on the company. the green lines are tweeps that are positive on the company. ofng back to the middle september people were very excited. i thought maybe twitter was finally going to get a sale. long-suffering twitter shareholders finally getting a payday. notrts coming out there is going to be a sale anytime soon. we see how negative the
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sentiment has become. perfect social media corollary to what's happening in the market. that's very meta. what have you got for us? this is an industry that has been heard by slowdown in toryism. is the s&p global luxury index. luxury related companies. it has fallen 3.5% this year. of its constituents have dropped over 10%. a big factory is watch sales. industrywide. the purple line is down by 17%. this has a broader product range. shares are off by 7.5%.
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boosted by sales of cognac and other spirit. a business that cartier is not in. vonnie: that is fascinating. i adore that chart. i'm going to give it to joe because it is such an unusual chart. tweets about twitter. they are both worth looking at. check them out. we will be back with you a little bit later on. ♪
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pimcdavid: i'm david gura. welcome to bloomberg markets. ♪
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david: we are covering stories from san francisco to washington and tokyo this morning. last night second presidential debate mixes personal attacks and policy. hillary clinton says trump's behavior makes him unfit for office. played intobrexit the landscape for european m&a? we will speak with alasdair warren. and a take on how they a constrained the yen is inflation and growth targets. let's go to julie hyman for a look at the latest. julie: we have a rally going on. the nasdaq is actually training at a record. the dow and the s&p holding up


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