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tv   Bloomberg Markets European Close  Bloomberg  March 29, 2018 11:00am-12:00pm EDT

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headquarters, i am mark barton. vonnie: and i am vonnie quinn. this is the european close on bloomberg markets. ♪ mark: the top stories we are following from the bloomberg and around the world. the markets higher in the u.s., rebounding on the final trading day in what has been a volatile program -- a volatile quarter. barclays agrees to pay $2 billion in civil penalties to settle a u.s. investigation into its marketing of residential mortgage-backed security. a look at what is happening to european equities. the final trading day before the easter break. stocks heading for the first weekly rise in three.
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the worst stretch since august of last year. quarter of 2016, 2 years ago, the other markets are up. let's talk about the stoxx 600. track to post a loss of roughly 5%. gained or lost more times with signs of a rollover in number of economic indicators. coaster ride for european equities might just be beginning. let's talk about the u.k.
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economy. gdp data today and also consumers remaining under pressure as 2017 came to an end. disposable income rose just -- rose just .1%. --seholds saved and no more saved no more of their incomes. all, .4%,rowth over unrevised. the current account deficit narrowing to 3.6% of gdp. sterling, 12out months after article 50 was triggered, 12 month until the u.k. leaves the eu. a short position on sterling because the u.k. actually hasn't gotten started on trade talks. it was signed last week.
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investors warned the market may be underestimating the risks. they are bearish. we've got some breaking news. gkn,e: the tug-of-war on the u.k. engineering company is over. shareholders have accepted melrose's bid.-- it has been quite a contentious bid but gkn shareholders have melrose the millrose -- $12 billion offer. let's get to julie hyman for more on today's market action. seeing stocks extend their gains, all three averages up by at least 1%. it is kind of unusual -- it is
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not unusual to see these kinds of gyrations. that is what is happening today. even the nasdaq which has been the consistent underperformer is now roaring back. something that is helping the nasdaq in particular, microsoft. that stock is now up by 1%. turning around after we got an email from the ceo saying he is making some changes, forming two new engineering teams. microsoft also announcing that the executive vp of windows is leaving the company. that seems to have been one of the catalysts that is now pushing the nasdaq higher. as for other technology, we are also seeing some strength with one exception. apple, facebook and alphabet bouncing back today. the have been sliding since
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peak in technology we saw on march 12. the amazon selloff is still going on after we have the president tweeting this morning about the company. oil prices are bouncing back today after we had that larger than estimated building inventories -- build in inventories. oil majors are doing well. if you take a look at the bloomberg, these energy stocks have been lagging. they track pretty closely over the past. we have seen a little bit of a recovery, but oil prices have outpaced some of the gains we have seen in energy stocks. some earnings news we got today that has been interesting, constellation brands coming out with earnings that beat estimates.
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corona light in particular and corona premier. the watchmaker movado group beating estimates. corp., the maker of -- in klein vonnie: thank you for that. ,or more on the first quarter let's get to the macro should adjust for bloomberg -- macro strategist from bloomberg. we go down a lot over the past few days and then we go up a lot. the information content behind today's moves is pretty low. there is not a day when the president is tweeting, sort of trolling jeff bezos. is it a surprise?
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reason,ever windowdressing at the end of the quarter or even rebalancing. we are popping today. i am not sure if this tells us a lot about what next month or the next quarter are going to look like. -- about treasuries and how yields are being kept low, not because of reasons a through bonds need to make returns and guarantee some kind of returns. is that the same for the equity market? definitely in the new environment where we are seeing volatility but all of these institutions need to buy, right? >> if you look at corporate pensions in the united states, there have been massive shifts in allocations. before the crisis, they had
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substantially more equities in portfolios than they did in fixed income. after the crisis, that has reversed where corporate pensions in the u.s. own a lot more bonds than they do stocks. part of that is because the low level of interest rates increases the current liability of their future payments that they have to make to the retirees. what is known as asset liability, they have to buy more thes but the upshot is that hole in pensions in the u.s. has not closed at all, even as the stock market quadruples off of the lows. it is something that is not really talked about. united funds in the states do have this massive liability that low interest rates exacerbate. mark: something we have not talked about today, due to the
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news flow is the core pce deflator. how does this fit into the narrative? >> it was pretty much as expected. it underscores that nothing has really changed. the interesting thing will be next quarter. last year, verizon cut the price of its cell phone plan with the unlimited data which had -- which led to a very sharp decline in the price of cell phone services which knocked about 2/10 of 1% off most inflation measures including the core pce deflator. equal, you will see inflation on a core level and a headline level go up. in one fell swoop, we are halfway there and close only
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counts in horseshoes and hand grenades but in some accounts, they count for monetary policy as well. vonnie: we will leave it there. cameron crise. volatility, what forted out as a strong year wall street trading -- michael moore is here. michael: what we are hearing is a lot more optimistic -- a lot less optimistic. you had jpmorgan, citigroup, even credit suisse come out in the middle to late february to talk about trading revenue being up, year-over-year over what was a fairly strong quarter last year. in the last week, you have had some bankers come out and say maybe it is going to be more flat. it seems like what happened was you had a lot of volatility at the beginning of february, it
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spurred a lot of action, but it was so volatile that some thents stepped away, so second half of february and march was not as active as it was a year ago. you hear that from morgan stanley and credit suisse. credit suisse laid out the art of the quarter. it definitely died out a little bit. heard cameront talk about all these players in the treasury market. is there somebody else who bring up so -- hoovering up some of the business? ishael: it is unclear if it that competitive nature or just some other clients are not as active in the last few weeks. we saw a little pickup in this final week of the quarter that
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may help out a little bit, but certainly that late february early march period was not as good. mark: the big news for mark -- for barclays, it is paying a settlement of $2 billion in penalties to settle that doj investigation into its marketing of residential mortgage-backed security's. look at the stock price reaction. investors are cheering. michael: this is a win for jes staley -- for jeff daily. he was trying to draw a line in billion, and the doj said fine, we will take you to court and they did in late december of 2016 and there has been some battle in the courts over the last year or so, but it seems they have come to an agreement at that $2 billion that jeff daily did not want to go above.
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mark: talking about the tesla breaking news. vonnie: we are getting a headline now saying that has low was urging workers to prove -- that tesla was urging workers to prove haters wrong. it is pulling out all the stops to hit its production goals. it is giving a limited number of workers the option to work on the crucial model three line. this would suggest that perhaps they are very concerned about meeting some of those production goals. they are pulling workers off of model s and model x production.
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this is getting quite serious for tesla. it does need to ramp up and according to the email, it is using emotional language. tesla is down 1.3%. more next. this is bloomberg. ♪
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vonnie: back to breaking news on tesla. the stock is down 1.4%, picking up a little bit from a few moments ago. pulling out all the stops in production numbers. tesla executives urged people to prove it to the haters, the , offering ae haters
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limited number of workers to get off production of the model s or model x tomorrow in order to work on model threes. a reporter who broke all of this news, joining us now. very emotional emails. >> the reporter on this story got a hold of these internal emails from tesla manufacturing and engineering executives. it is important for the company to hit model three production numbers. they spent billions of dollars getting this car up and running. they had real trouble getting it going and that has been problematic for the company at this point, because they have not been able to get any return on that investment. vonnie: what does polling workers off of does coproductions -- production lines to put them on the model three line for a couple days do
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when you are only producing 200 was a day and wall street thinking you would be up to 200,000 cars by now. >> i do think it is a situation where it is only going to be incremental and one of those things you see in these emails is this idea that they were at about 200 per day at the time that one of the emails was sent and there was this urgency to get to 300 per day which is closer to the weekly production rate that they said they would be able to reach by the end of this quarter. there was in a knowledge met with this -- acknowledgment with this that they would not be able to hit their target. they still have some ways to go. they sort of used this idea of we have all of these short-sellers out here who are doubting us. let's prove the haters wrong, as you said. vonnie: this is a direct quote from this email. i find it personally insulting.
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let's make them regret ever betting against us. you will prove a bunch of haters wrong. talking about people who are shorting the stock. we can take a look at how many people are doing that right now. it looks like fewer people are shorting the stock then were, before. -- than were, before. why the vitriol from him? seen this you have succeed for tesla in the past. in 2016, elon musk sent out a similar email where he talked pie in the face of naysayers. that was something that actually succeeded for the company and they were able to show a one-time quarterly profit which is pretty rare for the company.
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it has worked as a motivational tool for the company in the past. i suppose why not just it off and try again? mark: we have talked about the stock. it's bonds have been down -- its bonds have been down. it is clearly burning through cash. is it going to have to raise more money this quarter, this year, to cover not only the cash burn but the debt that comes due in 2019? come outd see moody's earlier this week and downgrade the bonds further into junk and raised this prospect. the number they put out was somewhere north of $2 billion that they would need. they finished the fourth quarter a little better than analysts were expecting, but they used a
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lot of one-time maneuvers to sort of make their cash burn and it is going to be very difficult for them to hold that up in the first quarter despite the fact that they have had some improvement in the model three build rate. not close tol their target, so it is going to probably be a situation where we will see the company come back to the market needing some more cash because of fire member correctly, their cash balance of the end of last year was just over $3 billion and this is a company that has burned through more than $1 billion a quarter. several quarters last year. it is definitely a tough situation for them from a cash perspective and i think the general expectation in the market is whether it is doing another debt deal or raising
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money through a secondary stock offering. mark: there is the model three production question which clearly it is trying to address as we see from this story, but what about actual demand, because i know citi said tesla may be struggling to convert car shoppers into model three buyers. is that the case? craig: i quibble with that a little in terms of how much evidence we have for that at this point. i think we will be interested to see where this figure is when tesla reports quarterly earnings was at ahat number fairly significant level at the end of last year and until we see a drop off in that deposit figure, there is no reason to be concerned about a demand problem.
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they have to figure out how to mass-produce this car. vonnie: i would urge everyone to read this story. from 200ing to ramp up to 300 plus cars per day. greg, bloomberg's auto reporter. bloomberg's auto reporter. the stoxx 600 up 7/10 of 1%. we are all in the green. this is bloomberg. ♪
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vonnie: live from new york, i am vonnie quinn. mark: and i am mark barton. we are for the half minutes or so from the end of the thursday session. stocks are rising for the third day in a row.
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the biggest quarterly drop in two years. that puts the first quarter in perspective. the dax is up by 1.5%. check out the currency board. gdp data out of the u.k. confirming growth of .4%. sterling lower by about a third of 1% against the dollar. the euro little changed against the dollar. we had some german inflation data as well. i will leave you with the bond board which shows the u.k. 10 yields trading down, the that is. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. check out what happened at the end of the thursday session. stocks rising for the a third
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day heading to the first weekly the longest losing run since august 2017. it has been a tumultuous first quarter that's the worst quarterly performance for the and the stoxx 600 gained or lost more than 1% 16 times versus only three times and last year's fourth quarter shows a volatile nature of the market in the first quarter of the year. swiss three -- two in valeant the insurer as much as $39 billion according to people familiar with the matter. softbank is holding talks to buy 25% stake, and 102 105 swiss francs per share.
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would address the finances of carriers,ese phone and a move that narrows the actions of is this titans such as warren buffett was transforming his company into a technology investor. -- and thess re biggest decline since 2002, the french catering services company lowering its outlook for sales because of weaker business serving north american universities. and health care measures to improve the north american businesses that are not yielding results such as yet. and the big news over the last four hours regarding saudi arabia puts the ftse russell and its indices -- including saudi arabia, in its emerging market
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indices. a good run up ahead of the announcement that saudi shares earlier rising to the highest in almost 2.5 years after it one that classification by a major index compiler for the first time. this could and should attract billions in additional stock investor inflows. we heard from msci later this from msci later this year and if it follows suit in june, a further $10 billion could pour into saudi stocks. saudi stocks coming up a little bit today, and that is a look at european markets. vonnie: what we are seeing is treasury by in spite of the supplies this week. finishingr yield is at a quarter -- so curve flattening once again is quite strong. i want to point out the dollar
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index because we are back above 90, the weakness not erased but it is stronger today. uan is trading yuanger today -- and the is trading stronger. it is q1 and for the countries you see here, global macro movers, mark you mentioned european movers but we are seeing big movement in brazil and africa as well. and for the currency, the south african rand is down 8/10 of 1%, and the lira is stronger today after seeing weakness. we were at four at one point this week but below this week. the ruble also gaining today. and also with commodities, we haven't concentrated too much
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after all the talk of commodities and trade war wars, but we see a rebound. let's check on first world news with courtney donohoe. >> human rights leaders are calling for a thorough investigation to riots and fires that left 68 people dead at a police station jail on wednesday. they have been warning for some time of deterioration in the nations jails including hunger and overcrowding and many held for months where they should have been detained for only a few days. the so surviving suspect and the 2015 terrorist attacks in paris will learn his fate. his and trial in brussels for his involvement in a march 2016 should out months after an attack that killed 30 people. prosecutors are seeking a 20 year prison sentence for being a
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accomplice. officers are becoming more prevalent at american schools, and that is according to studies released today. the national center for education statistics say armed officers are present once a week schools,in 34% of compared to 31% of schools a decade before. last month's mass shooting at a florida high school spark debate if teachers and other school officials should carry guns. nobel peace prize winner says she is excited to be back in pakistan for the first time she militants. taliban today, she says she will continue her campaign. she was only 14 years old but already knows her stash when a toephone school van demanded
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know who she was before shooting her in the head. global news, 24 hours a day, powered by more than 2,700 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. prime minister theresa may is touring the u.k. marking one year to the day between -- before britain exits the eu. the mood among the public and the business community remains deeply divided. lyons,joined by gerard buildinge co-author of " all." brexit economy for join me in my time machine, it is 2019 and the day the u.k. leaves the eu, what brexit are we looking at today on march 20 9, 2019?
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two key things will stand out, first as we would have done a deal with the eu and that is favorable to the markets and both sides in terms of the eu and the u.k.. second will be entering the transition bill and it is important to stress as the bank of england pointed out yesterday -- for the financial markets during that 21 month transition that things will be too much as they are. the key thing is if you look at the markets are economies, constance is a key factor, and there is some uncertainty. by next year i think people will be more confident because there will be more greater clarity. mark: what gives you confidence there will be greater clarity a year after the process has begun? we haven't even started talking about the trade deal yet. -- id: we are where we are am sure people might approach it differently but the reality is we have gone through the first
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stage, namely addressing core issues, in particular funding arrangements were that u.k. will pay that you a lot of money. northern ireland is still up in the air. you got through the first stage of the process and now entering the next stage. -- itise is as we thought makes economic sense for both sides to agree. the politics is always in there but the backdrop is more favorable than many people expected. if you sit in london -- it is significant how the sentiment has shifted over the last 20 months. in the past there was concern but we have moved on to other technical terms and the mood has changed. i think there is confidence in terms of the financial markets that london but only will remain the major financial center of one or but will remain two on the global list as well. mark: what sort of trade deal are we looking at?
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people are saying it is going to que trade deal. gerard: we can get bogged down in the decal, but in terms of canada plus -- the u.k. is a sector economy and therefore the financial services figure services figure prominently. but from a european side we are one of their big export markets so in terms of key areas, it makes sense for both sides to reach a deal. financialks at the and economic perspective, there are two things we need to focus on. one is the domestic economy, second is the uk's relationship with the rest of the world, and the third is the future relationship with the eu. all the questions we talk about and much of the debate is about the lack -- that u.k. and eu relationship. we should forget the domestic scene and their ability to
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position themselves globally. and the u.k. economy since the referendum has grown at the same rate beforehand. -- wee the uncertainty saw data today showing u.k. investment in the last year has been the highest or has grown at the fastest rate among the g7. there are lots of pluses but you can't leave something you have been in for over 40 years and leave that easily. there are near-term challenges, but i think international investors and people in the u.k. should be positive about what lies ahead despite the politics. vonnie: is it your contention that this is good for the british economy to the outside of europe and do its own deal? at what point does it show up in gdp? gerard: gdp is holding up quite well. the outlook depends on the interaction between the fundamentals policy and confidence. confidence is the difficult thing to call.
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because we had so much uncertainty over the last 18 months because the politics is so unclear at times -- that held back confidence among businesses. but fundamentals have held quite well. in terms of the policy site it is constructive and much depends on the monetary and interest rates. i think we should be positive, but of course much depends on how policy turns out. not just in terms of the u.k.-eu relationship. why that aspect of economic policies next year. despite near-term uncertainty, i think brexit is positive for the u.k. and if the deal is done in a sensible way that is a win-win -- ition for both sides still has access to one of its big markets. vonnie: i see your arguments policy wise and social wise and see where you are going, but i don't see where you are going
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when it comes to gdp growth. can you model it out until we know what kind of trade deals are made? gerard: i think my views of the u.k. economy is it is going to grow 2% this year, two key positives is on the export site that is holding up quite well given the strength of global trade, and the second factor which is crucially important in answer your question is what happens to consumer spending at home. up, ison, which picked decelerating. so as we move into the second half of the year, i think there will be a boost to real spending power because wages will be growing at a faster rate than inflation. i think employment growth is solid so the export site will kick in and this consumer site will be somewhat more solid in the second half of the year. the big unknown is what happens the business plans in terms of investment. i can understand why -- in my view is i can understand why they will be held back until it
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comes clear. if the deal is a good one that pick up in investment will be seen at a later stage. in your bloomberg offices in london and if i look over last year, it is not just the market other international companies have proceeded with their previous land investments in london. what is happening now is some ice, and if we have a sensible deal both plants will go ahead and the future. i understand your concern, and further away from this -- it is easy to become confused by what is so many different angles to this. i think as we move in the next few months it will become clearer, or hopefully clearer. vonnie: if we get actual policies and might be easier to get less confused. tell us a little bit about the bank of england and if it can be a safety net should something go wrong? gerard: you keep asking negative
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questions. vonnie: the bank of england is there. i think the likelihood is the bank of england will be following the fed's footsteps and policy this year. we see the bank of england reverse its rate cut from 18 months ago. the likelihood in my view that we will see to rate hikes this year and the market expecting that -- the thing with monetary policy both here and in other countries is that a central bank is to move gradually and predictably. economies and financial markets have become used to low interest rates. we are now seeing greater volatility in the market and the bank of england and other central banks, they have been the shock absorber in the last decade. frome see exit strategies that chief money policy and america is leading the way. the bank of england is further
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behind but it is next in line. and that the europeans and japanese. provide stimulus this year. that it ist necessary the bank of england provide further policy boost, but the more likely scenario is as the economy picks up, consumer spending picks up, the bank of england can hide. but they don't have to move aggressively. mark: amidst concerns of global trade wars, protectionism -- is this the time for the u.k. to be going it alone and try to forge trade deals around the world? gerard: the u.k. nice to get its domestic economy right. in terms of the global picture, yes, even the european commission acknowledges 85% of global growth will be coming from outside the european union. that is very important for the you take the position globally. we shouldn't forget a decade ago the financial crisis highlighted the u.k. operate in balance.
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the global picture is vitally important, so too is the relationship with the eu and domestic policy. there'sd be positive, many challenges ahead of the global picture is a good one for the u.k. to position itself against. mark: gerard lyons, think you for joining us. this is bloomberg. ♪
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vonnie: it is time for a look at the charts -- if you haven't followed along we are mimicking march madness that will make it april madness. it is route to and we have a u.s. battle. we both have s&p charts,
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but the reason i like this chart is after years and years of an upward market, it is finally a stock tickers market and the reason i like this chart is there is a bloomberg reporter who picked what stock is going to win for the quarter. therapeutics is up for the year thus far and there are many stock funds that are important to it that are winning, including in oppenheimer fund that is one of the best performers this year. excel, and netflix, which is above the market despite the fears we see today. idea.: you stole marks i love it. let's get to kevin who is next. >> i have been an equity guy, and i couldn't pass this up especially after volatility. yes there is a ton of
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volatility, but not volatility is all bad. chart, a 30at this day moving average of the vix. the top is the s&p 500 one-day price change. we can see in higher corrective periods, we saw a lot of downward volatility. also saw a big rebound days. the is exciting about recent correction is we didn't have the upside volatility yet, so what our team is looking for out of this corrective period, is to come to the downside volatility. #btvan see that chart at g 4256. vonnie: it is very difficult -- but i am choosing somali to move to the next round. not that kevin's chart wasn't amazing -- it was. this is bloomberg.
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mark: the eu regulations to affect in mid-january jason kelly spoke with james singleton, chairman and chief executive's of fx platform about the new rules. >> the capital market does not like regulation and in our professional lifetimes -- whether it is dodd-frank or mifid -- there is a little bit of fear that becomes a motivator, because there are deadlines. method two is a very comprehensive set of regulations that affects all of the parties in the eu. as a result there are a lot of corporations that are investment managers and institutions who do get caught up in it because they are doing things overseas.
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what occurs all of a sudden -- they come out with the next generation and pronouncement of how market behavior should be considered defined best execution with more detail. didn't make it a best efforts practice, they say you have to actually do these things and prove these things. the real focus is the equity markets and fixed markets and derivative markets. foreign exchange market impacts and relates to all of those marketplaces when institutions are buying or selling securities outside of their domestic locale. too. is so massive, all of these different markets. some you think about it, of the markets are efficient when it comes to execution cost and they are transparent. and foreign-exchange, and asset manager may decide to make a big call in terms of buying or selling a foreign security.
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trade and the fx cost of that trade and efficient execution has real ramifications for that investment company and what they are doing. if they are not paying attention to it they can pay a lot of money that they are not going to see because there hasn't been this transparent focus. side -- the buy portions of the buy side, i don't like about them altogether because there are sophisticated asset managers who are very focused. there is a wide swath of institutions and managers who have been less so. methods to levels the playing field and says that all of you have got to follow a certain standard of conduct. a way of doing things. it is not the best price. this is the confusion, and unfortunately it is misnamed. an outcome, it is
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a process, and best execution is something you have to follow every day. it is the golden rule of taoism. you don't go bump, and there it is. this is a $5 trillion rocket place with liquidity and transactions occurring every microsecond around the world. the idea someone can say that is the best price available at that time is kind of a fleeting assumption. you have to perform and approach every trade in a fashion that allows for a best execution process to occur. vonnie: that is james singleton with bloomberg's jason kelly. balance of power is next. this is bloomberg. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
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near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.
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