tv Bloomberg Markets Bloomberg January 26, 2016 11:00am-12:01pm EST
london as we wrap up trading in the next hour. good to see you, the fortunes of europe and stocks once again are tied to the gyrating oil price as investors shrugged off a slump in chinese equities. the european close start right now. matt: we will take you from new york to london to paris and madrid in the next hour. a jekyll and hyde day in european stock markets. this is the stoxx 600 intraday chart. we fell 2% in the first 30 minutes and we spent most of the day clawing back those losses. we registered gains early afternoon. oil and equities
are the most correlated since 2013. this proves it because we pretty much followed at the moves in the oil price today. we have shrugged off what happened in china earlier. the shanghai composite shrunk by 6.4%, to the lowest level since december, 2014. this is one of europe's best an's,rming stocks, ziem shares have risen the most in seven years after it raised its profit outlook. it was an unexpected move and it highlights the confidence that joe kaiser has in the ability of his company which makes gas turbines and medical scanners it highlights. the ability to rise out the economic downturn in china and ride out the dropping oil prices as well. it was up by 8.3% today. matt: it competes with phillips
to provide a number of products including health care products. up by 5%, company that focuses on health care and is big on medical scanners. it is focusing on health care and spinning off its licensing division. fourth-quarter profit beat estimates today because of growth in medical equipment in china and north america. this is a market which the chief massivee has got to the confidence in. he thinks the global health care industry will groom to $125 billion because of increasing demands of technology that allows hospitals to analyze clinical data and patience to monitor health and nutritional markers. in the interest of transparency, i have been known to use a phillips shaver and a phillips toothbrush ,you?
man. i think i am a braun i go with the german products. there 90 minutes into trading day so let's go over to the markets desk. ramy: i'm looking at the numbers move and we are now at session highs. the dow is up the most with a triple digit gain. it's up 1.6%. this is the 13th triple digit gain for this year out of 16. the s&p 500 is up 1% and the of 1% after by2/3 consumer confidence came in at 98.1 versus an estimate of 96.3. the markets shrugged off what happened in shanghai. i want to show you the wirp function. many people are looking at what's happening at the fed
today. this function is pricing in what happens with fed funds futures. for this week, the probability of a hike is a big fat zero. untily gets them september 21 when we see something along the lines of a higher probability, 57% of the fed funds rate hike happening. bonds, they are the safe haven, and that is up by about 1%, up two basis points for its yield. it had been at their lowest as investors awaited the fed meeting. it's now rising as we go into the policy meeting. matt: oil is rallying today. correlation but
gold is up as well and those who normally have gold, it's an inverse correlation. ramy: let's see what's happening with crude oil. about session highs, up by percent. we went positive around 6:00 a.m. overnight. we heard that saudi arabia and iraq might be holding back on supplies. let's take a look at what's happening with gold. it is rising and it usually goes the other way. at session highs, up by about 1%. it's the fourth day in a row of awin/ . matt: thank you so much. let's check in on first word news. y: a new post shows donald trump dominating the field of the republican presidential candidates. in the new national, 41% of trump.can voters backed
senator ted cruz is that 90% in the other candidates are in the single digits. tedher paul has trump and cruz in a virtual dead heat in iowa and the caucuses are coming up next monday. president obama has banned the use of solitary confinement for juveniles in federal present. the president said solitary confinement can lead to devastating lasting psychological consequences and set the change would affect about 10,000 inmates. in texas, the antiabortion activist behind the controversial undercover planned parenthood video has been indicted by a grand jury. he is charged with tampering record.ernment another antiabortion activist is also charged in the videos accused planned parenthood of a legally selling fetal body parts. walmart and several better -- beverage makers have pledged about -- bottled water to flint, michigan which is dealing with a
public health emergency. coca-cola, c, and nestle said they are donated up to 6.5 million models of water for about 10,000 schoolchildren. the estimates of the economic impact of the weekend blizzard on the east coast have been changed. the lost economic output was pegged at about $3 billion. that's relatively small in the context of the $16 trillion economy. global news powered by our 2000 journalists around the world. matt: thanks very much. coming up tomorrow, we will bring you a special edition of bloomberg markets. the fed decides. would breakrrow as down wednesday's fed announcement at 2:00 p.m. eastern time live right here on bloomberg television and on bloomberg radio. ♪
welcome back to bloomberg markets live from new york and london. this is the europe can close. matt: we are looking at stocks that are boosting the dow jones industrials. three, is up 5% and johnson & johnson are up on earnings that beat the street. gold is surging. to a two-month high. there is a $15 trillion equity decline. is go back in fashion? mark: it is, let's find out what's boosting it. rn fromoined by marco be
goldcorp. they are one of the leading gold brokers with $200 million in assets. thank you for joining us. >> thanks for having me on. in an interest rate tightening cycle, this is not good gold because goal does not fit a coupon or the dividends like stocks and bonds. you say when interest rates rise, that is a positive for gold. can you explain? the received wisdom is that rising interest rates are bad for gold but you look at the you can the charts, clearly see the most recent example of rising interest rates
from june-two thousand three, the fed funds rate was up upper 1% and rose to over 5% by june, 2006. in that environment, what did gold do? the narrative of the buying time was exactly that. we went fromose so 350 dollars in 2003, two $650 in june, 2006 so it went up more than 80% of a rising interest rate environment. that disproves the perceived wisdom that gold prices will fall a rising interest rate environment. it is very simplistic to say that rising interest rates are bad for gold. that's not the case. mark: tell us about the 1970's. >> from 1971, the fed rate was
the rateand by 1980, was over 18% and the gold price went from $35 to over $850. again it went up during a pre-of rising interest rates. have a realen you run on assets, that's bearish for gold. it's for the end of an interest rate height cycle that gold will be vulnerable. with gold down 40% from the highs, it's hard to know if it could go much lower given that the cross production and demand we are seeing out of china and india. rising todaygold as stocks rally typically, gold and stocks are inversely correlated. that thats
correlation has been weakening. how important is this inverse correlation? interesting, sometimes gold can be correlated with equities in the short term and we saw that in 2008. fell when the stock prices fell. basis, it tends to be an inverse correlation and we have been pleasantly surprised how gold has held up over the last few weeks. it tends to outperform over the medium and long time. the fact that gold was up year 500 is, i think the s&p down 6%, it's quite village. it makes is positive on the year
that we thought we would see weakness in the short-term but we are constructive for the price in the medium and long-term. the last time we had a start to the year this week for equities was 2009 and that ended with a 20% gain in equities. a recovery with stocks here, does that bode well or early for gold? >> -- or early gold? >>most likely poorly but we don't have a crystal ball in the short-term. might to predict what it do in the short term, most analysts are nervous in the short-term. the sentiment is beginning to change and some people are getting published in the short-term. getting bullish in the short-term. with stocks and bonds, if you own note an investment for folio, all the research shows an allocation of 5%-10% was the
alkyl -- was the allocation of gold as a safe haven asset. there is increasing research that you could go as high as to 2%. -- as high as 20%. you see it in the etf holdings within increase in to rooms of demand. it's probably the best start to a year in many years. people have not used to go because stocks and bonds have performed well the last couple of years. mark: let's talk about the fundamentals. what does demand from the likes of china and india and central-bank demand telling us now? it's a very strong. can you record highs both china and india and central banks are net buyers again.
they are some of the biggest net buyers and they are buying more every month. they are rebalancing their folios and they are a bit overweight in currencies including the dollar and diversifying into gold. that seems to be at the gold markets. highhinese demand is very we are at 60 metric tons per week on the shanghai gold exchange. you think given the crisis in china that that may increase. gold is a huge of the chinese culture. in gold and save don't see it as a speculative commodity. they see it as a form of money. we believe there is quite a
floor under the eyes and level of demand. mark: what's the best way of buying into gold? we believe if you are buying gold as a hedging instrument, the safest way is physical coins and bars. zurich is probably one of the favorite destinations. etf is great but it's more short-term. store of value a of the long term. mark: thanks for joining us. he is forecasting a 15%-to 2016 which is a big call it matt: absolutely, coming up later, we will get the former co-ceo take on goldrian's and he will talk about his predictions tomorrow's fed rate decision meeting and his new
matt: live from bloomberg world had carter is in midtown manhattan and london, this is the european close. let's go over desk. let's check on some of the company movers. ramy: i'm taking a look at some of the sectors that are being impacted by today's rise. there are some falls. ng stocks, the tech darlings, or all down. netflix is down and down the most. one of the reasons behind this se consumer confidence
being high come at looks like technology spending expectations are at their lowest since october. it could intentionally be weighing on some of the stocks can let's talk about the winners. over to the nasdaq 100, the stocks going the other way. sco is up in gilead is up by 1.5. it's interesting what a difference a day makes. oil stocks are going up. exxon mobil and chevron and 2%-percentr are up and financial winners were the third biggest loser yesterday. they are now the third biggest s&p winner with berkshire hathaway and bank of america up by about 2.5%.
sectors are green across the board s&p 500 is just about at its session high. mark: investors are bailing from vix funds like never before with 500 billion dollars coming out of the one of the most popular exchange traded products. this move say about the direction volatility will go? let's bring in camilla rousseau. thanks for joining us. investors are withdrawing money from securities that profit from higher volatility even as the vix itself is set for his biggest monthly gain since august. what is going on? >> it seems strange but the two most popular etf's tracking the vix which shows volatility in
the market are having outflows they are having 500 million which is a record for any month. that chartsllar one the same indexes having 300 million of outflows so investors are betting on lower volatility at least in the short-term. mark: what do they think will drain volatility out of the u.s. stock market? what will be the cause of this? mario draghi's comments last week have helped to ease concerns. the ecb might reconsider monetary policy as soon as march. also, analysts are pricing in
that the fed will start increasing interest rates again in september. most think it will raise rates as soon as march. that has helped of the market quite a bit. earnings season starting with u.s. companies and speeding estimates has also helped. theseors are thinking things will reduce volatility. matt: how high did volatility rise? looking at the u.s. market, we got fairly volatile but nothing compared to the volatility we see in asia. how does that compare with the volatility in europe? vix has hadght, the a big down this month at it is the biggest monthly gain since august which is another chaotic time for the market.
the u.s. stock market as a whole has had two 4 billion dollars a volatility so it has been a bad start to the year. matt: thank you so much. coming up, the exclusive interview with former greek finance minister, what he says about the tense behind the scenes talks to reach a bailout deal with europe. ♪
we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. matt: welcome back and right in the matt miller with mark barton from london. markets are finishing the day up. what are you saying?
will close up around 1%. you probably thought, here we go again, the stocks were down by 2% principally because of the setup we saw in china with the shanghai composite falling 6.4 percent, the biggest decline since the first week of the year when we saw the market turbulence. oil fortunes change, the fortunes of the stoxx 600 changes the correlation between oil and stocks at the highest since 2013. gainers, the's big region's biggest engineering company. almost. biggest game in over seven years. the company raised their profit outlook for the year. a bit of a surprise and it highlights the company's confidence in the ability to shrug up the chinese economy and a slumping oil price.
i want to quickly show you what is happening in the european bond market because we saw a in germany andds austria and in holland. the dutch to yield -43 basis points. mario draghi reiterating last night that the filling the ecb's mandate for inflation is crucial as the central bank remains willing to active necessary. ultimately, it all comes down to credibility. matt: we were talking about morning routines earlier, companies like phillips have a lot to do at that. how did those shares finish after forecast beating for quarter earnings? mark: it is up by 6.5% and it focuses on health care, and it is splitting off to focus on health care. that seems to be a sensible move because we did have a better fourth-quarter profit on growth in the medical equipment markets
like in china and north america. it gave us insight on how the splitting off of the licensing division is going. they have plans to separate the division in the first half on track and they say, "we are actively engaging with other potential bidders for the component division." but health care companies like phillips had a massive rise today. matt: thank you very much. ceo from spun who didn't spoke to bloomberg about the positive earnings report. hooten spoke to bloomberg about the positive earnings report. >> that came on the back of several weaker quarters, so we are seeing a bumpy road in china where gross is still possible. maybe not every quarter, but .ver one year or two years
i'm optimistic about opportunities in china. matt: for more, we bring in shape editor tara patel. what did you take from that/ ? tara: a little bit later in the interview this morning, the ceo of the lips was talking about how he really plans to set the two-pronged process to try this a lot the business and hit some hurdles last week when the sale of [indiscernible] andto the china consortium it was blocked by u.s. regulators. he came back today, assuring the market that lighting and his plan to sell lighting were on track and that the company was all set to focus on health care equipment. matt: we see the stock year to date, up 2% or 3%. i suspect that the defensive play by investors, because over the last 12 months, it has taken
a serious hit, down double digits, is he positioning this company? our analysts happy about this move? certainly, certainly, analysts today were very enthusiastic. they looked at the earnings and they said, health care equipment sales to china, there is a lot .f no clouds on the horizon medical scanners and all kinds of equipment in the u.s., this is a sector where investors and phillips think the company should be going. and not in lighting, which is considered by some to be an old style company. matt: we did not just speak to the chief executive, we spoke to the chief executive siemens. let's listen in to joe. >> rehab a potential of executing the program.
and with that help, we can become confident that we can do better than we originally had anticipated. mark: it was a bit of a surprise, was in it? siemens raising their profit card. does this signal a turnaround after years of stagnated profits? unclear is really whether it signals a turnaround. it signals that for the moment, the ceo is confident that all of this turmoil about slowdown in with a really steep drop in oil prices, he is not fazed. through a series -- he withdrew a series of the savings on taxes and pensions and other self-help, meaning that may be there is further cost-cutting this year. he could overcome these hurdles. matt: thank you.
tara joining us to verify on siemens.ke to our same cell and one is same cell on phillips. -- two are saying someone siemens and one saying sell on phillips. the dow jones industrial average of 232 points as we get some home health care products of our well.ing pretty procter & gamble mainly. some movers down in tech. bloombergs abigail doolittle has the nasdaq.from abigail: and rally mode. -- we are in rally mode. all three of the ship makers are among the top percentage performers in the nasdaq 100. what makes us stand up, they have been among the worst performers of western digital with some of the worst years today, down 24%.
in has weakness in the pc market and around the possibility of the western digital appeal not going through. today, some resources say the deal will go through kelly to be looking at a relief rally. on the other side, netflix has a stock down for the fifth straight day, the longest losing streak since september of last year, even if they reported a solid fourth quarter, last week's blowing a link subscriber numbers and they are not sure what is behind the weakness, but today, they are below their moving average and support after they revealed that a prominent short seller has established a bearish position. matt: thank you. i went to check in now honor bloomberg first word news. courtney donohoe has more. courtney: good morning. on day two of the trip to europe, iran's president with pope francis. he gave the pope a hug and asked for his prayers. afterwards, the vatican says iran has an important fight to
play in fighting terrorism. islamic state head of operations command [indiscernible] that is according to the european union's crime-fighting agency. the agency says islamic states want to carry out more attacks somewhat to the ones in paris that killed 130 people. in denmark, the parliament has plans to seize bibles worth more than $1500 from refugees seeking asylum. the money would be used to help pay for food and housing costs. danish citizens must sell assets worth more than $1500 before getting welfare. week prime minister alexis tsipras needs to convince the area that he is making good on his promises. is key to unlocking another $4 billion in economic aid. europe is waiting to see if he delivers on his pledges to update the labor market.
dayal news 24 hours a powered by our 2400 journalists and more than 150 new sparrows around the world. thank you. staying in greece are going to greece, one year ago today, greece saw anti-posterity parties and since then, the country has had referendums, reelections and a bailout package. earlier today, we spoke with the former greek finance minister yanis varoufakis about that time. yanis: we were collected -- we were collected to reboot the greek economy, and to really -- elected ollected to -- to reboot the greek economy. unfortunately, the other side, lenders were not interested in having a rational discussion. given that we are
continuing along the path of the famed program, business is continuing to sink deeper and deeper. we missed this chance collectively, creditors, lenders, the european union, we missed this great opportunity we had to stabilize greece and get off the headlines so you don't have to talk about greece again. >> basically, there is no chance of fixing greece? yanis: guardian angels cannot fix greece. am making is that even if you were to have guardian angels in charge, given the constraints of this understanding, can a broken economy like greece be amended by pushing almost everybody's service to 82%? -- canossibly -- henry
we fathom recovery if we have to prepay at 100 -- 300% of the 2016? in 2016? that is eight long years of permanent recession and continuing drops of gdp. >> the debate tonight is on the .ension is alexis tsipras on the wrong side of the debate? knows what needs to be done and it was already capitulated. the pension funds saw the 2012,lization to play in and the capital was effectively wiped out. they were forced to hold greek government bonds and those were massive haircuts. they had a double whammy. and were hit by the haircut
they were hit by the recession because the number of people working in work and contributing has collapsed. these pensiond systems by cutting further because the further cuts, the and this this belt-tightening will lead to further declining of economic stability and that would reduce employment further. arrest this crisis, and you cannot do it by cutting anymore. alexis tsipras knows that. >> he is pursuing this because he knows about the review money. yanis: it is simple. he capitulated to a series of policies that he knows will pale and they were imposed upon him by people who know that they will fail. it is what we have been doing for five years and grace, extending and attending. we are -- and pretending.
we are pretending that we are a solid-state in the banking sector and it can be overcome i loans on conditions of measures of national income. that cannot work. everybody knows this. speakingis varoufakis with bloomberg. breaking news in the currency market. this was frank has picked their highest gain of the europe since it was abandoned last january, almost one year to the day. the swiss franc has actually fallen on that day when it removed the 120 cap and they saw the euro fall by you roughly 20% 20% --day -- pop-out fall by 20% in a day. prepares to add more stimulus, which could put more upward pressure on the swiss franc.
it is time for a 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 and for viewers of the bloomberg terminal. you can access the charts by running the function future at the bottom of your screen. seeing the undisputed -- being the global champion of the undisputed charts, i will judge
the contest between joe weisenthal and mark barton. did you make this up for us? .oe: i made this up for you this is one of my favorite and i have been following it for years. i apologize. , the goldhe s&p 500 line, and the white chart is initial jobless claims inverted. as it goes up, that is an improvement. initial jobless claims are getting slightly worse, signs that the labor market may be weakening a little bit and we have seen the stock market tick together, obviously, nothing correlates perfectly but if you go back, there is a decent relationship between the underlying labor data and the stock market. it will be interesting to see if the labor day that continues to weaken and the line matches the stock market. matt: if that rolls over, we could get a reversal of the fed interest rate hike.
joe: it will raise more speculation. matt: that is an interesting chart and it will be difficult to beat. mark: i'm going to raise the bar and raise it again. we talk about the correlation between stock markets and oil. what about the correlation between dollar, yen, and the global stock market? this is the 120 day correlation between the yen exchange rate and world index, the index of develop stocks. it is the the record high reached in december, which was the highest of the year since it was freely floated back in 1973, before the miller or joe were born. 6.9 is the correlation because of the price. the yen is the first performing global currency, major currency, against the dollar, rising 2%. as we know, the timing of this could not be worse.
it is worse for the bank of japan which meets later this week. it has to contend with low oil prices and it has the contend with a stronger yen and that ain't good for inflation expectations. we are hearing according to people familiar that they may have to push out there inflation goal for the third time in a year. hinted thatrnor there would be further stimulus this week. goldman sachs says there could be and it is the more likely and in april before the boj we have the fed tomorrow. if the fed's stat -- slightly more dovish, will that's in the dollar lower and the end higher, putting further pressure on the boj? questions, questions, questions. central bank, central-bank, central bank. that bar has been raised so high. matt: i love correlations and i
love any look at the yen and the relationship to global stocks, but joe inverted his initial jobless claims line. i don't even know how to do that. joe: i will show you. you theam going to give wind, joe weisenthal. sorry, mark. also, good to have you back. still ahead on the european close, swiss watchmaker's watch out. the apple watch may be closing in on the verified world of high-end timepieces, and now it is swiss watchmaker's fighting back. ♪
december. smart watches may be having an impact on high-end swiss watch sales. is it the global gloom or the threat for brands like apple watch? let's bring in bloomberg's columnist andrea. great to see you. our switch watch -- our swiss watchmaker's shaking in their boots to the threat posed by the apple watch? andrea: they seem to be mocking them, but they should be worried because it was actually in the 200 to 500 frank category. that shows that the apple watch is just the price. mark: and that category really puts into focus the likes of swatch. andrea: that is right. mark: it is going up and cheaper than the apple watch. andrea: exactly. exec michael kors watches, and all of those, dkny, china
brands. matt: we are looking at a picture of a watch. apple is not attempting any competition with brands that are are story and watches that this expensive, i assume. andrea: they have been trying to bring got more expensive models. one of the gold models sort of goes into the thousands of pounds, but the one that really stands the most charm of competing with the more luxury watch is this tie up with hermes. it looks really good, it has to distinctanding, the double strap, and if they can get more things like this right, there is a chance. matt: i have noticed some havingkers, for example, more digital functions in their timepieces. can they maintain automatic movements while they do this? them are trying
to bring in more electronic functions. they have brought in a smart watch and that has quite a twist in that because if you decide in two years you do not like it, you can traded for a mechanical one. they are all having a go. mark: what is the spoof of the apple watch? k-swissit is a small watchmaker then has a mechanical portion of the apple watch, so it looks at the apple watch. mark: how much is it? andrea: around $25,000. mark: a bit out of my price range for a man who does not own a watch. one story that we just had on bloomberg was the u.k. posing -- posting the biggest change in watches. what is going on? andrea: we have a strong economy, we probably have a bit of tourists at the end of their
after the paris attack, but i think there is something going on in the british economy. if you have a home, low interest rates, and we now have a bit of wage growth, low oil prices. chieftalking to the executive of a high-end jeweler earlier and he said that swiss watches and rolexes are just fine. something is going on. mark: thank you. you can read more on bloomberg. ni pursuits on the terminal. cheers, matt. see you soon. matt: thanks, dude. ♪
alix: from bloomberg world headquarters, i am alix steel. scarlet: i am scarlet fu. alix: a horrendous start to the has not given federal reserve to raise interest rates. expectations are low that action will be taken, but what about the rest of the year? scarlet: we will look at what companies are prepared to do it oil prices go much higher. alix: also, houston has dragged on high energy costs, but the tide has turned. we would talk to the mayor about the challenges he faces. first, a look at today's market activity. we check in with ramey. we are recovering from yesterday's loss led by energy stocks and they are recovering. ramey: they are and it is basically a risk off the market right now. let's take a look.