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

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close on bloomberg markets. >> we are going to take you from washington to zurich and cover stories out of china and germany in the next hour. here is what we are watching. sterling falls to a one-month low after home prices rose in the country, falling to a three-year low post brexit. egypt has struggled with growth and taxing foreign investments since the uprising. can the country finally flourish after receiving a $12 million -- $12 billion package from the iss. the largest u.s. department
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store massey surges in trading after progress and slowing sales decline. duncan talks to bloomberg on how it is reviving profit growth. let's have a look at where and european equities are trading right now, just under 30 minutes to the close. bringing up gmm on the bloomberg which gives you the big picture view across asset classes. switzerland up 9/10 of a percent, france up 9/10 of a percent, the euro stock up 7/10 of a percent. on the belgium 20, we are seeing gains of more than 1%. sterling off by 3/10 of a percent. it is the worst kara sea -- currency against the greenback. are seeingt-end, we
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yields had higher on the two-year yield, up five basic points where we are seeing those come down on the long end. let's just take a look at the stoxx 600. we are seeing the stoxx 600 rise today, heading towards erasing its post brexit loss. it has been slow to recover from brexit, but if we look at this valuation, it is interesting is year,ng its highest this but still, below valuations in the u.s.. the, as we take a look at groups on the gr are here, looking on to bloomberg where you can see it is the majority in the green. construction companies up one and a half percent. it is real estate lagging down to tenths of a percent.
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perhaps not a surprise given that we have seen a number of home builders providing a bit of a drag on the ftse 100 after that data showed a slump in the housing market. just to show.k., you the u.k.-japan 10 year yield spread. this has fallen to a record low. taking this back to 1989, we will talk more about that next. 98 minutes into the trading day in the u.s.. julie hyman has been following the action. those major averages extending the gains that we saw a earlier in the session here along with oil prices. --saw this oil coalition correlation yesterday. reversing earlier declines without a clear catalyst here, but it is only 73% right now and approaching $43 a barrel.
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take a look at the bloomberg here. imap showing a lot of green, so a broad-based rally. energy is in the top spot with a gain of 1%. that is because we are seeing a lot of retail gains today. vonnie talked about macy's and that company coming ahead. it is going to be closing 100 stores. we have seen a lot of low expectations, pessimism surrounding the retail sector. this defied those expectations, as did the numbers from kohl's. that company expands its gross margin and manages it inventory better. nordstrom, remember, ralph lauren reporting yesterday it rose. report yesterday helped spark something of a rebound in some of these retail stocks so it is continuing today after we
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saw some underperformance last week. what is good for the retailers is not necessarily good for the malls. macy's announcing the store closures, we've got them all on the decline even though former intelligence analysts say it is not really a surprise. finally, i want to mention casino operator wynn resorts which is having a surge in trading today. apparently, there is some speculation -- unfounded though it may be -- about a stake in the company. it is definitely unconfirmed at this point, but we want to point it out. vonnie: look at that. thank you. let's check in on the first word news. courtney donohoe has more. now,couple hours from hillary clinton will launch an
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attack on donald's economic plan and lay out her own. michigan, she is expected to portray from's tax cuts as nothing more than handouts to the rich. the head of the economic policies for the liberal center for american progress contrasted the two candidates approaches. -- the analyses suggest that her plan is totally paid for, his is not. hers is going to increase jobs by 10 million jobs and grow the economy. his plan is likely to cut 3.5 million jobs and send us into recession. trump has said that clinton will impose job killing taxes and regulations. bloomberg will have live coverage on clinton's speech at 1:15 eastern. ukraine is warning that russia is trying to ask -- escalate the conflict over crimea. bruton hasesident
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accused ukraine of engaging in terror tactics. russia annexed crimea in 2014. loan by then economy. egypt has been struggling since the ousting of the longtime leader in 2011. the plan cuts electricity subsidies and curbs increases in wage. 's turkey, president erdogan approval rating has soared. approve of the way he is handling his duties. news, 24 hours a day powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. nejra: now back to currencies.
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the one-year anniversary of china's shocked evaluation of the u.n.. .--yuanhe yuen joining us now with a look at flury.ngs fx is thomas he joins us from zurich. great to have you on the program. weking at some of the movies have had today, starting with the eu ceiling -- new zealand dollar, both rallying today. the new zealand dollar was on perhaps more expectations from the central bank but this is also about the hunt for yield, right? thing traders are looking for is opportunities. the new zealand dollar in the australian dollar are, when you
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go outside the emerging market world. they tried to weaken the movency with their rate and all they did, tailing currency trade. movebly, it is the last and they got a really good buying signal. to, theyeally want have to clean up in order to bring the currency down again. also, the question is how effective are central banks now? the bank of england, of course, has been effective at weakening sterling. yourave actually cut forecast for sterling. one interesting point you made
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to see going guilt delivering a positive yield compared to japanese government wants but i've got a chart that really shows the u.k.-japan 10 year yield spread dropping to the lowest on record. that seems to contradict what you are saying a little. >> just a little. i won'tirst place, claim the japanese versus u.k. rate is the important one to drive the value of. quite solid but on the other hand i would also claim that japan has its own problems. they have, currently, a monetary these momentsacks we can claim the bank of england had.
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we drive inflation higher or we keep inflation expectations. we serve to contribute to liquidity and difficult moments -- in difficult moments. the bank of japan is still waiting for their commitment. even the bank of england's , they say last week we do help the market as long as the brexit is in discussion. comfortable to forecast the pound. to become weaker. out concerning is it that central-bank actions don't seem to be having the impact they once did? look at the stronger yen for example and today's stronger qe. -- kiwi. >> you have either the possibility to value it even more from the central banking
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weaken theder to currency is that is your target or bring up inflation. in the case of japan, they said -- there is a discussion that the ministry of finance will issue forty-year bonds and the bank of japan could buy them. this is some form of helicopter money. a more convincing measure, probably for market but also more risky for central banks. say -- moment, i would there is always something you can do to become a bit more extensive in convincing but the nations need to become more risky. meantime, it is
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not doing other emerging markets bad, it is actually helping some emerging markets. are there some pairings that look attractive right now? there is certainly something which we look for for the one reale, whichzilian could be attractive. the american continent looks quite nice. advance --e of the but some of the outlands, korea or south africa, we are more they won'tcause follow up from the other currencies of the region. back to sterling, i want to remind people that your three-month target cut to 125 but you see a flaw at 120
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and you mentioned earlier this was also about the dollar side. you still expect the fed to raise rates this year. >> we certainly do expect them to raise rates. if you look at the labor market, the last two reports were quite nice. so it is a strong broadening of the participation rate. typically, the fed would have to go up over the last couple of years, but they were quite complacent about federal tax, probably correct to do so. but going forward, we have to the stronger labor market will bring one hike this year. and also lift expectations for the coming -- year.
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nejra: you see euro supported against sterling as well. >> yes. for the next couple of months or is next half year, it roughly nicely supported, maybe over 12 months gaining a little bit against the sterling. thomas flury, ubs global head of currency. vonnie: happening right now, donald trump is addressing the national association of home builders board of directors. home has just said builders face horrible regulations and his campaign is doing better than many people think. you can watch the full event on the bloomberg live, go. egypt has struck a preliminary deal for a $12 billion loan.
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this is bloomberg.
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vonnie: live from london and new york, i am vonnie quinn. nejra: i am nejra cehic. it is the bloomberg close on european markets. egypt has reached an initial agreement with the imf for a three-year $12 billion loan. the money will be used to grow foreign investments in egypt. still, the executive board must first give its approval. joining us from cairo is tarek el-tablawy.
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bloomberg's north africa bureau chief. this has been a long time coming. >> yes it has. if you look back further it is actually three or four years. are drawing the request earlier so this is the first time it has moved to that -- hopefully it will move beyond this step. hopefully the government will restore some reserves. nejra: that is presumably why it is so important. in terms of the overall state of the economy, tell us a little bit more about that, particularly the foreign currency -- crunch. >> the situation is pretty tough. you've got foreign reserves that are more than 50% below their december 2010 levels. about $15.5 billion.
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the spread between the official rate and the black market rate on the pound is 30 or 40%. complaining they are having a hard time accessing our currency dollars or otherwise. response, the central bank has been cracking down on the foreign exchange bureaus shutting down and withdrawing licenses. they have been stiffening jail terms, up to 10 years for illegal trading or speculation. put this into context, that is 422% of the quota. that is four times as much as what egypt would have gotten already through the imf. they did put out a statement saying they were -- there were urgent problems.
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what can cairo do to ensure social stability. >> that is the balancing act the government faces. you've got some tough reforms including cutting subsidies and the people who will benefit ostensibly the most are the poorest segment of the society which we are looking about 30 or 40% of the population living below the poverty line. it is a balancing act between being able to raise fuel prices and at the same time not doing it in such a way that is going to trigger the unrest government can't afford to see on the street. a us fromriq else cairo. our thanks. the pokemon go craze may be losing some steam but some companies are still catching him big. we will tell you about them next.
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vonnie: live from london, i am nejra cehic. counting down to the european close, we are just five minutes away. vonnie: i am vonnie quinn. look at some of the biggest business stories in the news. alibaba posted quarterly sales 59% eating estimates. despite china's slowing economies, revenue from computing services soared. positioning computing as one of its fastest-growing businesses. dow chemical and dupont say toee months over handling create the world's largest chemicals company. the eu wants to know if it will reduce competition. the initial pokemon go craze is subsiding. online retailers are cashing in.
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sales of pokemon items -- july. they range from toys to videogames to have to t-shirts. other companies benefiting, build a bear, party city, hasbro, and gamestop. that is your business flash. atra: let's take a look where european markets are trading because we are five minutes from the european close. look at european stocks. stoxx 600 up 6/10 of a percent. it is on its way to erasing its post brexit losses. the ftse 100 up for tenths of a percent. posting losses earlier, the dax up 6/10 of a percent still in bull market territory. it hasn't rallied too fast. oil very much in focus today.
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look, we've got wti up 3.6%, it was below 42 earlier today. bring up some russian assets because, of course, russia's economy shrank the least. that is putting it on the cusp of exiting the longest recession in two decades. wrubel gaining today up 3/10 of a percent as well. the european close is minutes away and this is bloomberg. ♪
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you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business. >> live from london and new york you are watching the european close. i am nejra cehic with vonnie quinn.
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stocks finishing up in europe, let's take you through all of the action. the stoxx 600 show you how the trading has gone. up almost 7/10 of a percent on europe's equity benchmark. it has risen to a seven-week high. it was on course to erase its post brexit losses. recovereen slower to that stocks in u.s. and asia. evaluation is on his way to its highest this year but still low the evaluation -- the evaluation of the msci global index. we are up 7/10 of a percent. i want to look at the dax because we have been seeing this had higher today but i wanted to highlight the relative strength index. the big question has been, was the rally too far too fast.
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in the strength index, we are touching 70 and their suggesting the dax could be overbought. let's see how some individual movers performed on germany's equity benchmarks. henkel up 4.8%. this had a better than estimated prophet and also an improved marston output -- margin output. margins beat expectation in all business units so taking some pressure off the ceo after he replaced the much-needed. we've got me on onnings yesterday, -- e earnings yesterday. the second-quarter loss narrowed after a per food -- an improved performance. cost cuts at a one-time tax
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rate. taxes have risen the most in almost a month for rwe. 100nt to finish on the ftse because earlier, this had snapped a five-day winning streak which had been the longest winning streak since its winning streak pre-brexit. we were getting some pressure earlier from the u.k., homebuilders with some housing data that showed a slump in the u.k. housing market from the royal inch -- royal institution. now, ftse 100 up 5/10 of a percent. 6901. i am looking at the kiwi because we've got some central action today but not perhaps as so theytraders wanted are punishing new zealand by strengthening the currency. if you look at the u.s. dollar versus the kiwi it is at 13785. that is a tenths of a percent
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stronger. we will move on to oil now and see that wti crude is back, stronger today, almost 4% in fact. industry data shows it was higher in saudi arabia and increased production in july. gold production is rising. the two-year yields, now at 70 basis points. we are seeing some green on the screen. the dow up two thirds of a percent, the s&p up have a 2185, and more from the nasdaq which is up for tenths of a percent. >> lots of green at the wall on the nasdaq.
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yesterday's loss, all this consolidating after the record highs made earlier this week. nasdaq is below those levels but the day is young. as for some excitement today, we do have met pace going public. this is a research contracting company and they have phrased money. -- they have raised money. this represents the nasdaq's 51st ipo this year, down sharply from last year. the nasdaq has captured about 75% of this year's ipo's in total. as for a boost for the nasdaq, netflix shares are up i 2%. -- up by 2%. , an analyst, says this stock has been swinging around in a big way on -- buyoutn
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speculation, first around disney or alibaba. does notrett says he want to speculate but objectively, "disney has the capital and there is a strategic fit their." the valuation could be high on netflix even with the stock down more than 15% this year. vonnie: what other big names? nejra: apple shares are higher up, the biggest boost for the nasdaq today. , he thinks that apple could and the fiscal first quarter of 2017 or the december quarter of this calendar year, could get a 5-6,000,000 iphone unit boost. that consensuss numbers may not reflect that boost. we have been hearing some more andish commentary recently
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the stock is certainly trading higher today. vonnie: time to check in on our first word news with courtney donohoe. sweden willrs from be allowed to question wikileaks founder julian assange about rape allegations. the interview will take place in london where a sans has been holed up since 2012. he refused to go to sweden, saying he would be at united to the u.s.. recently released e-mails stolen from the dnc. russia plans to expand its military footprint in syria. the kremlin will create a full-scale base with constant airport -- air force presence. wildfires are ripping through parts of southern france and portugal. forests and homes have been burned and hundreds of people have been evacuated. the airport has been rerouting
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incoming flights so that firefighting planes can take off and land. parliament says britain must do more to tackle the inequality faced by muslims. unemployment among muslims in the u.k. is more than double the national rate. existing measures to promote integration may raise tensions. theresa may has asked argentina to consider new airline flights to the disputed falkland islands. media,ng to the local they also want argentina to lift restrictions on oil exploration in the area. falklandscaptured the but was defeated by a british invasion force in 1982. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: just got some breaking news.
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the stoxx 600 up 8/10 of a percent that's a tenths of a percent. nejra: it has been the big question on that day, was it going to be able to race -- to erase that loss and it has. it has been slower to recover them the u.s. and asian benchmarks but it has recovered. now to germany's largest steelmaker. its fiscal third-quarter profit fell 18%. kerkhoff spoke. to see,we clearly have we will always have some dealings with long-term contract. q2,e are already announcing what we saw in q3 was mainly volume driven. we will see mainly coming through in q4, but what we see
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on the steel market overall is currently a rather flattening. nevertheless, we are above q3 levels that you see, so there is more to come. it comes in 39 million versus a loss, that market also improving. developing for the rest of 2016, i'm going to have a conversation with my guest about growth in the united face. what we see is basically two effects. improve our performance in brazil and the steel process is up in the u.s. sharply. half of our production is going to be west so we are participating in that. that is going to continue through q4 as well. we still have a certain lack with our deliveries.
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we saw the u.s. markets will continue to come throughout q4. potentialic is your tie up. his theresa may still offering you the same incentives to do this deal? >> you will understand i cannot comment on the details that the brexit was, for us like everyone else, a surprise but i would not value it as a good or bad event. everybody has to adjust to it. that is all. say whether you have or have had discussions? that continues. >> and the propositions on the table before brexit -- are they
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still on the table? >> i don't want to comment on any details, please do understand that. .onnie: that was guido kerkhoff turning to a corporate story in the united states, macy's chair is getting a boost after the company said it was going to shut 100 stores. earlier on, terry duncan spoke talked- terry lundgren about it turning a corner. we are seeing continuous improvement and it is directly in response to the initiative we took in january to get ourselves positioned for our come back. >> which are the ones that paid off the most for you? >> one of the biggest ones was to place a gigantic debt and invest in additional staffing and selling support and management in our stores.
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in advance of the actual sales coming in. we did that for our top 150 .ocations we are clearly seeing not just a sales improvement but an improvement in customer service scores. that was the first date, large that. bet.arge there were categories we are result working for us. on theed another bet denim business. works, it particularly benefits companies like macy's. just placing that that has worked very well. back to school is off to a very strong start because of the denim business. business has started to perform in a positive way so all of these things are direct response -- responsive to our initiative. >> you also send you are going
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to be closing 100 stores. how long will it take to get those off your books? have 730 stores, this will bring us back to 630 buildings, 575 full line stores, but what we did was week -- we took a map of the united days and populations, the shopping mall density, recognized there are 7.3 square feet for human beings in america versus the u.k. of 1.3. other countries -- the reality is the united states is over storm. stored. a trend that has been occurring is customers are balancing their spending with online as well as stores.
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your commentary earlier failed to mention we are the third largest internet company in america the we will benefit from this move towards more online sales. vonnie: that was terry lundgren with david weston. if you check out top charts on the bloomberg, they have moved that lately -- back in positive territory, leading the s&p 500 today. this downturn was what it looked like. even with pressure from the board, it looks like he is changing his mind and the stock is improving. coming up in the global battle of the charts, we look at what is driving some stocks including retail stocks.
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> it is time now for our global battle of the charts. we take a look at some of the most telling charts of the day and what they mean for investors. you can access those charts by running the function featured at the bottom of your screen. kicking things off is oliver reddick. take it away. >> i am going to look at something in particular that i guess is important this week because we have eia reports for oil. i'm going to be looking at the s&p 500, the energy companies. just a sector group versus oil. what is interesting here is this trend the past couple of weeks where it decoupled from what was happening with the commodities. the top panel here is looking at those energy stocks in white.
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blue is oil. the bottom panel is the 90 day correlation, they are moving in the same direction. check out this red box. you can see oil has been in this bear market since june. it has been falling. energy stocks are pretty much flat. they are down a little bit but roughly 2.3%. what sort of oil prices are low enough to cause those to go up? maybe these companies just don't have much room to go down. it is interesting to see if oil continues to rally like it has in the past week. they have kind of started going their own way. you have a lot of questions there. go for it. vonnie: my charges on retail.
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macy's finally deciding that it is going to have a real estate strategy following pressure from some of the board members. this chart shows some trends, the white line -- retail traffic -- going way back to 2011 where we have been in the range, with post holiday times and so forth for the last while we have been seeing a downtrend. in terms of internet traffic, it has been increasing. totals bution of the one is going one direction and the other is going the other direction. nejra: i have to say i am disappointed that on the yuanniversary, not a chart on the china or the yuan. it is tough. i am going to have to go with oliver. i know the asked a lot of questions but they were good goodions and it is a
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chart. i was thinking, why are we seeing this decoupling? you did posit some possibilities so i'm going to go with oliver on this one. >> i'll take it. and $83head, why billion european pension fund says it is cutting out hedge funds to boost returns. this is bloomberg. ♪
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nejra: live from london, i am nejra cehic. vonnie: and from new york i am vonnie quinn. hedge funds under pressure and lackluster returns. danish is finding better ways to invest its $83 billion in assets and is doing it by cutting out middlemen like hedge funds.
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oliver suess joins us from munich. what prompted this? you take a look at markets globally, low interest rates are definitely putting a lot of tried toand they all get those little percentage points wherever they can and this time -- is being revisited. vonnie: why are hedge funds revisiting fees? is this spreading to the whole pension fund industry? >> i guess so. really asion funds are very good customer for a lot of specialized fund managers including hedge funds or funds specializing on emerging markets like real estate, they are under a very strong pressure.
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they have to make specific contributions for their retirees in the future, so the return they are missing out is something that they maybe regret heavily in the future. i guess it is going to come. vonnie: which third-party managers are at the biggest risk of being replaced? what i have been talking to, people that have .elatively high fees also those who employ strategies that are relatively easy -- , that investable more in the public market and not in private markets. you would assume that private equity funds, for example with private assets would be at ,esser risk than hedge funds
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focused on equity market investments. are the risks doing more for themselves though? >> the pension funds universe is not such a transparent area of the asset management industry's. the oversight is not what it would be for insurance companies. if a lot of pension funds, especially the smaller ones invest on their own, who is going to make sure they are capable of what they are doing? vonnie: oliver suess in munich, thank you so much. you can find that story on bloomberg. let's look at where european markets ended. the stoxx 600 ended up 8/10 of a percent. the ftse 100 up 7/10 of a percent. the dax up 90 tenths of a percent in able market. -- in a bull market.
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it erased a post brexit drop. 7.8% chance drop. prior to this, the stoxx 600 was lagging. the ftse 100 index, for example recouped similar losses in just four days. let's look at the currency and see where they are trading. we are keeping an i on the kiwi, which did surge even after the central bank cut rates. not much action in the bond market today. sterling weaker, down for tenths of a percent, euro pretty much unchanged.
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oliver: it's noon in new york 5 p.m. in london and 1:00 a.m. in hong kong. nejra: welcome to bloomberg.
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scarlet: from bloomberg world headquarters in new york, good afternoon. be coveringill stories from new york and zurich and rio de janeiro. stocks have ticked higher as there has been earnings report u.s. retailers that were not as weak as feared. we will focus on a macy's. valeant is tumbling following its the report of a criminal by federal prosecutors. we will talk about the troubled company and its past history. focus onfirst we will the markets. let's go over to julie hyman. julie:


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