tv Bloomberg Markets European Close Bloomberg August 3, 2018 11:00am-12:00pm EDT
on bloomberg markets. caroline: here are the top stories we are claim -- covering on the bloomberg. u.s. stocks rise, the dollar weakens and treasury yields fell after the latest report. we will get insight on u.s.
trade tensions with china and what it means to the global economy with mnuchin saying -- in a keyonds slumped meeting between the populist leaders and the finance minister about two get underway. -- in to get underway. we are up. it is a sea of green to end the week, but that is not the end of the week. we see risk appetite in the
market, financials up, utilities up. tech also up .5%. telecom, gathering steam, tiny bit of red in biotech. it is risk buying, and it was about earnings again. let's look at our movers we saw. i want to keep an eye
on rdf because finally we get the announcement a dividend is coming, interim dividend of .2% per share. up we go, even though we saw operating profit slump half percent this year last time. we are seeing talks about dividends returning in 2019 in terms of special dividends. we see the rdf back on track. heineken is up. this is adhering to the beer company is buying into china. in one particular
company, china resources beer holdings. beving on a be in bad -- abinvb in the largest market. liberalizing game in sports, but the u.k. is not looking pretty at the moment. hill offges, william as we see a slowdown in the u.k. market for that company. what's look at the assets because i am looking at italian bonds. look how we push towards three percentage points. this is the yield pushing higher, about political risk. the finance minister has seen a safe pair of habs -- hands. the government led by the right-wing party. has not been trusted by the market and we see that turbulence.
we are being pushed higher with a key meeting between the heads of government and the finance minister about to get going. i want to bring our attention to the british pound. a rocky ride. this was the move when they doubt -- they voted to raise rates but down the pound went versus the u.s. dollar because we heard mark carney talk about the risks of brexit. we heard it again this morning. it was lower in the pond -- in the pound. he said it was uncomfortably high. you could be a no deal brexit. bloomberg's abigail doolittle has more on that side of trading in the atlantic. reporter: small moves, the dow and s&p 500 slightly higher than nasdaq, slipping lower, breaking the three-day winning streak on the week. the dow is actually lower on the week, but the s&p 500 and the nasdaq higher. let's hop into the bloomberg and
look at this chart. weekly basis, pretty impressive, five weeks in a row. the first time we have seen that going all the way back to december last year. with volatility around the thing trade and apple's $1 trillion market cap helping the s&p 500. let's look at the movers, winners and losers. up nearly 12%, the best day since 2017 after they beat, and there is hike around new gains. kraft heinz up 8.3%. they beat, rising stocks that are, speculation on the possibility of a deal with campbell's. company,his security down 13.8%, slashing their workforce. and the lackluster view weighing on shares and then stericycle down 13%, a medical company. their shares are lower as the full year vote -- view is below consensus estimate, investors
not liking that. earlier this week, the nasdaq 100 down. you can see the volatility, then yesterday apple took off the $1 trillion market cap, now up 1%, the first in three weeks. it is interesting last week we have fallout from facebook. this week we have apple. if we were to include the fallout from last week we would be down, but we are looking at a gain. and you were talking about a haven. take a look at bonds, the yen and gold all rallying. the dow could go the way of the nasdaq, to the downside. some investors seeking haven assets. interesting, thank you. --caroline: interesting, thank you. europe is off to a good start. disappointment a . this is the research strategist for bloomberg intelligence.
past the midpoint, and when i dig into earnings analysis on the stoxx 600, -- reporter: in didi, and the days have checked by that percentages bumped up. running the numbers this afternoon for today, we are north of 55% on the win their that is less than 40% on the miss. there is in lines in between. it has been good. overall if you look at the total figures, expectations come in for 8% growth, now running around 10%. not bad, and the set up coming in was set after the falls from the peak in may for good capital and the market has responded. caroline: you talked about the catalyst being set the we saw sweden off to a good start. .et's talk about geography
when is good is there a breakdown we can look to? tim: sweden has wrapped up exceptionally well, notably better than expected, industrials and financials are big. france is the other that stands out on the standpoint of coming through notably better than expected. growth was supposed to be nine, it is closer to 13%. goods as a luxury high point. there are other segments. if you look at the u.k., netherlands, italy, spain, they had basically in line or better, but if you look at total figures because ofy down energy and that is disappointed. big numbers but not what was expected in momentum, and it has slowed. vonnie: what were the major themes that dominated? trade was one of the ones in the u.s.
did it figure heavily with european companies? tim: trade is a big worry. if you think about whether it is the u.k. or the region more broadly, you have somewhere even 60% ofto 50%, average sales of ftse 100 coming from abroad in one form or another whatever abroad means. trade is a big deal, currency another, which is a headwind. at current levels we are now a neutral issue. we will see how that goes. then as was commented earlier with brexit, more important for the u.k. companies than the european but even european companies are talking about contingency plans. that is all the more relevant and sticking point from the standpoint of implementation of plans now. so are the company
spending money to get in front of whatever might happen post-brexit, or are they not featuring as much in terms of revenues, or they have taken currency hit? how does it feature? tim: there are a couple of elements. the financials, they are thinking about how do we shift people. it could be a few people, larger groups to make sure we can continue to do the business we hope to do. industries,oducing whether it is autos, consumer products, medical, there is an issue of how much a tax will be charged, slowdown in the supply chain. those will feed through and be potential concerns if we end up on a hard brexit scenario. caroline: that is something connie was discussing today. in sector basis.
you said gm has disappointed and in france luxury makers are helping. as we look towards next week, where will we shine? tim: we have seen a bounce in the overall market so far this quarter. the earnings reporting it has been a positive catalyst notwithstanding the last couple of days of trade concerns here and there. yesterday for example. it has been a defensive rally. we have seen staples and health care do well. ok inlly they have done earnings. the standout over the last few days now we have got enough of the critical mass has been financials. we see better in the revenue better see a chunk through earnings statements, notwithstanding examples like deutsche bank. those are the notables. we look into the second half and more importantly 2019 as we flip , german autoshead
will be a standout. they had been a huge drag. it is one of the reasons why this has been a low performer in earnings and stock. next year is important. it will be recovery for germany led by financials and autos coming back to life. we will see whether it holds. haidi: before the trade tensions wrapup anymore. make it global, what should we be looking at europe versus u.s., asia and certain sectors? tim: it is interesting from that vantage point. wind at has had a big their back following the surprise tax reform. that turns into more difficult comparisons as we flip into the next several quarters. europe has been running with a currency headwinds and trade notwithstanding, let's set that
aside. europe is actually going to be celebrating growth into 2019 especially as we get progressively through the air. we are pretty constructive on europe. valuation seems reasonable with a historic context. earnings acceleration should move forward. we have had a nice reset with the outage plane through. we u.s., our compatriots there, gina adams, are comfortable with the u.s.. there is momentum story they think is stronger for longer, but we have seen a big surge with tough comparisons. we think margin expansion is starting to run its course. those are sticking points to be concerned about. caroline: ones to watch. bloombergead for intelligence.
vonnie: let's check in on the first word news. here is courtney. the july jobs report reinforced the study labor market growth in the u.s.. hiring cools off in july after previous months were revised upwards. 157,000 jobs, the unemployment rate held .1% and wages increased. that is all in line with federal reserve outlook for gradual rate increases. china is ready to retaliate if the u.s. moves ahead with tariffs on chinese products. beijing plans to levy duties from 5% to 25% on $60 billion of imports. china says it is defending its rights and trying to keep trade friction from escalating. the u.s. trade deficit rose in june for the first time in four months. in courts -- imports increase. the gap widened 7% to $46.3
billion. demand by american households is expected to keep supporting imports in the coming months. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: a quick check on the offshore yuan which has been one of the things traders have been checking every morning. 6.8411. it rose to 6.9 earlier this session. the yuan strengthening a little bit. it seems like the pboc is higher in the week. eight weeks of -- china trying to question the currency. this is bloomberg. ♪ is bloomberg. ♪
caroline: from london, i am caroline hyde. vonnie: in new york i am vonnie quinn. time for a bloomberg exclusive. the italian 10 year topped 3% earlier before a budget meeting between the populist leaders and the finance minister. we spoke to the ceo about the budget and how it was. minister is between very important but it is also important the institution framework and the rules of the game. in italy you cannot make expenditure without inflows. it is not possible. it is not constitutional to make something that increase debt without allowing increasing growth. in italy in my view they focus on production. they will try to accelerate investment for growth, so in terms of infrastructure, trying to work on the weakness, the
unemployment and especially younger programs and the south of italy, but in the end there is no other possibility. a lot of twitter, facebook, so something related to social, but we have to come back to reality. reality is you can make expenditures if you have inflows that can allow you to make expenditures. reporter: i know it would not make sense, but if you look at president trump which in certain regards has been [indiscernible] he is spending. is that why investors are concerned about fiscal situation? carlo: he is, but it is different compared to italy. italy is a strong country. we are smart with a lot of possibility but we are not usa so we have to leverage on what is the real point of the country. these savings for italian
families. at the same time we are the strongest exporter, much stronger than germany but we have a point of weakness, the debt. within the assets of the public we have a lot of real estate, so they have to work to make this disposal of real estate with a big project of reduction of public debt and at the same time investing in growth, in infrastructure and in the south of italy. caroline: that is the ceo of intesa sanpaolo. we will keep it with italy because we are seeing their budget battle and investor concerns continuing. kevin costello from rome. we haven't heard the ceo saying the point of weakness is the debt, but meanwhile we are hearing from the leadership, the government saying we will stick to our pretty bold spending plan. kevin: exactly, that is true.
thetop leaders met today in prime minister's office for two hours and they came out optimistic you can say. they have agreed on planning for the economic and financial matters for the budgets that are supposed to be worked out in september. they did not provide details. now the finance minister has come out saying in fact the italian budget targets are compatible with the spending plans that have made many investors nervous, so where the money is coming from will need to be determined. they said they would stick to the e.u. limit of 3% of gdp as the deficit, but we see the yield, particularly germany, 200 three basis points different between german and italian. where do you think this relationship between the finance and easter and the government
goes? adult in theis the room. the coalition partners have bowled spending plans, so it is the tension causing some concern in the markets, and that is likely what drove up the 10 year yield today because people are concerned about where this is complete what italy's relationship with the european union will be. vonnie: what is wrong with the 10-year yield, 3% or thereabouts ? doesn't sound like it is too onerous to shoulder the burden of repayments. up about theup, most in two months. because people worried the higher the yield goes, the more difficult for italy to pay off debts. the debt mountain is over 2 trillion euros. it will take a while to get it down.
10.9% unemployment was suggest something needs to be done. i know employment in the euro area is higher in terms of the normal rate of unemployment but it is quite high in italy. is there anyone think this is the right approach? -- saying this is the right approach? kevin: people are looking at that unemployment number around 11%. politician after politician says something must be done, but there has not really been a program that has worked bringing the number well below 11%. thank you, kevin costello. stay on the italian politics. vonnie: we have lots of italy charts. you can see them and other charts if you type in gtv on the bloomberg. you can browse all of the recent
vonnie: it is time for the bloomberg business flash. dutch brewer heineken hopes it found a way to grow in the chinese market. they have taken a $3.1 billion take in a bar -- beer maker. they will switch to premium and foreign bruise. shares of kraft heinz are rising. they reported quarterly sales topping estimates. there is a report kraft heinz has started elementary talks with campbell soup about a deal. now the list of bidders is narrower for the indian business is -- real estate controlled oil sincey posted its biggest
2011, rising crude prices offsetting sales. they have progress in cutting debt and is a publicly traded oil producer. biggest -- your bloomberg business flash. caroline: let's check in on the markets because european markets trading higher, and every single industry group is in the green. it is interesting how they have abo see.e they think it is helping drive investment higher. that is why the ftse is outperforming. this is bloomberg. ♪ omberg. ♪
than a week, the money flowing, the miners in particular, materials are up. yuane stabilizing of the in china flowing into metals rises. it is pushing to one side the tariffs imposed on metals by china. energy up, tech, utilities, they are driving higher. we have good numbers from the financial area. we have numbers looking strong. seems as though earnings are supporting this and china supporting it. we are up on friday. in the week we are down .6%. it wasn't all guns blazing from the weekly perspective. look att when you assets. looking at italian debt. we saw european markets in terms of bond markets perform well today. we saw yield ball but not italy, driving up 3%.
it went in excess at one point in the days trading. concerns about how they managed to dual out the battle of the budget. they think they cannot get a compromise between the high spending the populist parties want and the finance minister clearly wanting to ensure he can keep to the e.u. rules and keep the deficit within a few percentage points of gdp. they seem to be promising it but geopolitical risk pushing yields higher. but look at other asset classes. mark carney did it again, talking about brexit and his worries. we saw the pound a little higher on the back of the 90 -- 9-0 vote for a rate hike. words of warning from the press conference with governor carney talking about risks to brexit. he pushed the pound lower again, another interview, talking about the uncomfortably high
probability. he says it is low but high that we get a no deal brexit. if we did, we ran out of time because the u.k. government could not get a deal in time for march 2019 with the e.u. he is saying that it could be highly undesirable. that is a look at the european market. vonnie: in the u.s. we are related torrencies trade negotiations. a stronger mexican peso and canadian dollar as well. every country but china might be negotiating with the u.s. and end up with some deal. we are seeing improvements for those currencies. crude oil futures down .4%, trading 68.68. and i want to point to the 10-year yield. it is well backed off 3%, briefly hit earlier in the week. we are finishing the week on a
very green note. we should look at commodities. across the board they are much higher as trade ramps up in terms of rhetoric, particularly between china and the u.s. with the u.s. slumping more threats on china and china saying it will not back down. caroline: china not backing down. they have been ramping up their retaliation because the chinese central bank has been stepping in to support the yuan while it did that, following the record losses that saw the currency closing in on the key milestone of seven per dollar. we are joined by an investment officer. the market was trying to -- we have seen tariffs on copper and lithium, coming from china. retaliation is there but miners rallied in europe because they were pleased with support for the yuan. >> you saw the pboc mentioned how they would raise requirements if you will short
the fx. i have a feeling what the market is thinking, there is a lot going on. everyone knows negotiation is in full view of everyone to see but you look at the u.s., you are tariffsabout 10%, 25% on an economy which is going at 2.9%. it will hurt consumer strategy. if i am equity buyer, i take that into account how much can be delivered from the fight of the u.s. and if it is 4.1%, i am bullish. recently. a bad run only now you see recovery. i think things still look good and i discussed some of the news coming up in terms of it going haywire. caroline: bullish on the u.s., but what about global trade tensions have diffused between the e.u. in the u.s.?
autos feeling the pain, many speaking to the tariffs in concern going forward. is the e.u. overweight? manish: not at all. i don't buy the tension diffusion, but what mr. trump has said, he wants to bring jobs back. he looking at china. china has auto market 26 million. they import 2.1 million. the u.s. imports for more. trump has said that time and time again but he has been pushed aside. because china put tariffs on that and trump has a midterm election to win, so he has to find some way to buy soybeans or will have trouble. i see this as a temporary thing. statistics, 200 billion deficit. i would say not only that but even japan, if you look at numbers, it is not germany. the deficit the u.s. has with japan is twice as high. midtermyou have
elections, and i see this coming back because otherwise [indiscernible] vonnie: cross bridge capital to take advantage of this? i am underweight europe, overweight u.s., sticking to that, have been overweight u.s. for some time. out it looks to be doing ok. i do think u.s. is going to put more tariffs definitely, but they could show up with inflation numbers and the fed will have to act which means you thing thathe best will happen. i'm not saying there will be recession. long-term doesn't by this cold by thelong-term does not decision coming down the line. it will benefit. overweight consumer stocks, but underweight europe and emerging
notets are equal, but overweight. vonnie: we heard earlier today from jim craighead how well europe has been doing earnings wise. is this a macro view? manish: i think it is. let's look at the numbers. u.s. is 4.1% growing. france [indiscernible] europe? invest in then taking into account what i mentioned now about what will happen to tariffs, why would i expose myself to europe in a bigger way and take losses? i think it will be a problem. i can invest in the u.s. and get better return and that is the view i am taking. caroline: you said we might see inflationary impact from the tariffs. you are factoring in more than four hikes? goes with mr. trump
all of this, i think it could be a bad scenario overall. i don't think that is the base scenario, but it is hard to say what he will do. the way he has talked about we can go. that,llion, if he does americans will find out. that will be terrible. the consequence will be severe he will not go down the path. if he does, something that could come down the line. i think he will show the inflation number, midterms will be over and he will be happy to get back at take some back. they have to compromise. the china and u.s. have to give and come up with a solution otherwise both sides have trouble. i don't think it is happening. the fed will come in, you will see rate hikes and that will bring the market down. vonnie: you said you were neutral on emerging markets. where is china? manish: china, very few people
trade. means look at china, it tech stocks, alibaba -- caroline: tencent has had an awful run of things. manish: look at alibaba, baidu, microtechnology. despite what is happening i am long that. i think it will be a solution. micro technology, 50% revenue comes from china. the have done badly part of year, now recovery. i am playing international stocks with the u.s. listing and not domestic. caroline: great to have you in the conversation. around the world in five minutes . he is overweight u.s., neutral on emerging markets, underweight europe. vonnie: let's check in on first word news. here is courtney. reporter: the u.s. economy has never been on april like this one. it has added jobs for 94 months
in a row. employers brought on 157,000 workers in july, less than expected. the labor department revised the figures from may and june upward and the unemployment rate fell to 3.9%. u.s.ces industries in the expected in july at the slowest in 11 months. they were dragged down by sharp pullbacks and business activity suggesting the economy is polling -- holding -- service providers are 90% of the economy. strike backsed to if the trump administration will impose tariffs on $200 billion of chinese products. they will retaliate with a sliding scale of duties on $60 billion of american goods are the hardest hit will be meet, wheat, wine and liquefied natural gas. 17 states are taking steps to counteract the trump administration's expansion of health plans that don't comply
with obamacare requirements. that is from the commonwealth fund. the number of people enrolled in the plans will grow quickly from 122,000 at the end of 2017 to 1.6 million by 2022. the plans don't cover copperheads of benefit and pre-existing medical conditions. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: on battle of the charts, u.s. truckers go the distance. these are the charts you don't want to miss. this is bloomberg. ♪ s bloomberg. ♪
vonnie: it is time for the global battle of the charts. you can see these on the bloomberg, run the faction -- function gtv . we have the fed reporter met volcker. >> today is another jobs day, i am looking at the labor market for truck drivers because we have been hearing a lot about driver shortages. the cost of free shipping has surged in the united states, which has been driving up prices more generally across the board and a lot of the executives put this down to a driver shortage. in the jobs data we got today, you can see the employment industry,the trucking the white line, is accelerating. it is growing faster than jobs in general. wages, wage growth, the blue line for long-haul truckers, it is still very depressed and not picking up. you would think if there was a driver shortage, you would see
slower employment growth and higher wage growth. we are seeing the opposite. that leads to questions on how serious a problem it is and i think it encapsulates the bigger labor market story we have seen in the u.s. over the last several years which is low unemployment but wage growth not picking up. we are still seeing big strong job gains and the trucker labor market sort of perfectly encapsulates that. vonnie: i like it. now send it across to caroline. is -- e: it reporter: it is me today, christine. i was working from home on my couch and what got me off my couch was not the u.s. jobs report, it was news out of china in terms of comments on trade as well as the move to make shorting the yuan more expensive. the importance of applying currency has increased this year. the correlation with cyclical
assets, talking about stocks in argentina, turkey, all of those assets are sensitive to the global trade situation because they extended their declines as china has. china's yuan has extended its decline against the u.s. dollar. story followed, it is very important, crucial what happens to assets for the rest of the world, not just the u.s. it is on gtv , this chart. vonnie: i guess we both pick a winner, me and caroline. my pick even though i have been impressed by both charts is matt . he swayed me with his charts. caroline? caroline: you are trying to tell me you actually started the day working at home and came in because of this data. kristine: exactly. caroline: for that reason i have got to go with her. what a drive to work and it has
theie: it is time for bloomberg business flash, looking at the biggest stories in the news now. the parents of british airways hold second quarter -- quarter earnings of missed estimates. of air traffice control strike at exchange rates that reduced the value of u.k. sales. the shares fell the most [indiscernible] -- bookings are healthy on the north american routes which are lucrative. scotland the bank of
has laid out a plan to pay off a dividend. of that.with the cfo >> it is a huge event for the bank. 2007 was the last time we paid a dividend. we need to sign the department of justice agreement with rbs they announced a three months ago. once it is signed, we declare today to pay our first interim dividend. i think it is a great start. two cents a share, could that increase? >> we expect it to. capital ratio has been healthy. it is above 16%. we have a long-term target of 13%. not only are we city -- sitting on a lot of at the moment, the bank is back to earning regular earnings. the rbs ceo speaking
earlier. that is the latest. caroline: more executives for you now, let's stay with earnings. alliance improved stability and exceeded estimates in the second quarter. the cfo junior -- the cfo talked to bloomberg about performance. >> when you look at the performance, it is very strong with operated profit increasing 20%, adjusting for a fixed compared to the level of last year. we are at a sort of slower momentum in the second quarter but we see inflows getting back to positive and the underlying performance of income franchises very strong. that is asset management. i want to ask about acquisitions. are you looking to make any? i do not make comments
about acquisition. i can tell you what we did. there was an announcement a couple weeks ago that we are [indiscernible] which is a sort of repair in kind service provider. to our a good fit operations especially to our operations in south europe and our strategy where we believe in the future we need to combine assurance with services. this is a transition we will complete in the second half of the year, and we are going to look to other transitions but clearly not going to make any comment what we might be doing in the future. the only thing i can say is we efficient capital deployment. we did a buyback in july on the
same side. we did small acquisition. both options are available to us. caroline: so you will be disciplined on capital and i hear you under -- you won't tell us about the future but in terms of gaps in the business, as -- all as diverse mentioned as political targets. can you talk about the gaps in alliance that need to be filled? on the m&a -- giulio: on the m&a side we are looking at [indiscernible] our main area of focus. we might be looking also an acquisition is a management. we have less of an appetite. from geographic point of view, the united states, but we think it is also very challenging to close this gap because of the valuation you
have. isresponse to your question we have a strong franchise. we don't need m&a to provide value to stakeholders. we can provide a lot of value by organic growth, but clearly if we are going to have good opportunity, we are going to look at that. caroline: the cfo of alliance speaking to bloomberg earlier. vonnie: it is time for the stock of the hour. shares of semantic falling the lowest in two years. the company will cut 8% of the workforce and forecast revenue missed analyst estimates. joining us with expedition is taylor riggs. reporter: i want to start with the drop in the workforce because they want to reduce that march.etween now and if you see on the chart, they have been reducing headcount since the fiscal fourth-quarter, 2017, and it has been slowly
declining. a lot of this is because of future revenue profit. it is interesting to sort of the broader trend between what is going on between personal business and antivirus software for your computer versus enterprise corporate business. a lot see a drop in future earnings and revenue. we have a chart showing it down to $.32 a share. the corporate side actually is not doing as well. it is a lot of competition from cycleate, a longer sales and that makes 60% of their revenue. that was supposed to be a key theer because the consumer, more retail side has been slowing. we are reviewing antivirus software on the personal computers. that did pretty well this year. it is interesting divergence. caroline: questions about the internal order. taylor: in may they announced the share price has been pretty
poor. they did not discuss it this earnings call. in may they launched an internal investigation after accusations an employee made. the drop in the consumer enterprise business may be because of uncertainty surrounding the investigation. caroline: thank you for that stock of the hour. caroline, what about europe? caroline: sticking with stocks, we saw gains across the board to finish this week, driven higher by the banks, good numbers to help the ftse. the car companies helping the dax. the s&p 500 is up .5%. this is bloomberg. ♪ is bloomberg. ♪