tv Bloomberg Markets European Close Bloomberg December 19, 2016 11:00am-12:01pm EST
"bloomberg markets." mark: we are going to take you from new york to london. stories of scotland. saudi arabia and china. what we are watching. barclays narrowing its customers to focus on relationships. the firm readies to sell 7000 clients -- tell more clients to do more trading with the firm or take a hike. lagardehristine convicted of one count of negligence by a paris court. at the parisve courthouse over her handling of that dispute. one" led the domestic box office with $155 million at the box office. will the strategy of spinning new characters off of franchises
continue into the new year? mark: have a look at where equities are trading. gmm go. look at the red. those countries are declining. starting down by -- sterling down by 0.75. yields falling in austria. commodities and equity futures are your final two columns. let's get to some of the big corporate stories of the day. bp cementing its relationship with abu dhabi by swapping $2.2 billion of its own shares in exchange for a stake of onshore oil concessions. it will use new ordinary shares to pay for 10% of the other dobby onshore company -- abu
dhabi onshore company. this promises additional cash flow for bp and additional following the slashing of investment worldwide in the industry. the world's biggest yogurt maker today, shares are lower. sales growth will be slightly below target for 2016. fresh dairy shipments are topping for a third year. expected.n the activity a yogurt brand. a yogurt brand. of velveth maker tissues expands into wound care ahead of adics planned split from forest tree products.
they are purchasing the bandage maker from the private equity firm eqt, expecting to generate annual synergies of 30 million euros within three years. more breaking news. julie: i just wanted to recap the headlines. nyse has suspended trading on its arco platform -- arca platform. on the bloomberg. a really cool function that looks on volume on each of the trading platforms. this is november value. for arca value accounted 10.4% of trading value for that month. is the smaller platform, but still with about 10%. it is substantial. we will verify that trading is back online at 11:05.
let's go to abigail doolittle for the latest on what is moving. abigail: we are looking at a nice rally. the dow, the s&p, and the nasdaq higher. the dow has blend -- been flirting with a possibility of a record high. far from itss not all-time inter-day high. not surprisingly with the outperformance in the nasdaq, technology is one of the best sectors. apple and microsoft are two of the top. we have apple nicely higher, up three days in a row. pearson investors like the news that apple is fighting a $13.6 billion tax bill from the european union, asking the eu to overturn a tax repayment order made about august around back taxes from ireland. as for consumer discretionary stocks, we have some strength. amazon is a consumer discretionary stocks. one of the top points boost.
disney is the top point boost for the s&p 500. the dow, disney is the number one on the u.s. list for bank of america merrill lynch, saying a lot of good stuff is happening. the shares are nicely higher. 20% upside. not bad for a large-cap stocks. " powering, "rogue one it. the board of the international monetary fund says it will meet to discuss the ramifications of the convictions of christine lagarde. she has been convicted in a inade old finance case connection with being the french finance minister. the judge in the case says there is no need for a prison term or a fine. the un security council -- un security council unanimously
approved a move to send personnel to aleppo. meanwhile, evacuations from the beleaguered city are set to resume. the european union extended sanctions against russia for six more months. that is to pressure moscow to respect the agreement in ukraine. restrictive measures targeting energy sectorsnd will remain in force until the end of july. president-elect to donald trump has nominated billionaire vincent viola as secretary of the army. he was trained as an airborne ranger infantry officer and served in the 101st airborne division. he is the founder of several businesses and owns the national hockey league's florida panthers. global news powered by more than 2600 journalists and analysts.
i'm courtney donohoe. julie: let's get back to the markets. u.s. stocks trading near all-time highs. joining us for insight on what the oppenheimer fund portfolio manager for the global multi-asset group. even though i mentioned stocks, as i multi-asset manager, you watch different asset classes. you are seeing a little bit of a yen rally. the you focused on currencies for the coming year. do you think we will continue to see dollar strength? we have already been seeing it. what kind of magnitude of gains can we expect? >> dollar strength is one of our highest commission views going into the new year. in particular, we think that it could be frontloaded. much of the new impetus for the dollar comes from the election. and the potential for fiscal
thecy changes coming from new administration. what could be very conducive to dollar strength is a combination of fiscal expansion with monetary tightening in the u.s. we have seen the latest reaction from the fed, where they definitely stepped up their hawkishness. the exactncerned with opposite policies being run in the other major countries around the world. the u.k., the eurozone, japan, all running additional measures or strategies, together with relatively muted fiscal, negligible fiscal stimulus, or, to be honest, fiscal austerity is the problem. this type of recipe tends to lead to very large currency movement. to the second part of your question, how much can we expect? if we look at history, the main that isthat we had
similar to what we may be going through was the early 1980's under the reagan stimulus. there, the dollar rallied 30%-40%. julie: from a lower base, right? base,o: much lower cheaper valuations. the dollar is already overvalued. overshootstypically into 20% type of deviations. ford this be the catalyst the final leg in the dollar bull market? that is how we tend to think about it. julie: when you are looking to next year, specifically for the this since we see divergence in fiscal and monetary policy, what kind of target would you be looking for? alessio: we called for a break of parity, potentially even over the course of the first quarter of 2017. year-end 2016 or given that the
fed is out of the way and we have had the real main event, it is more difficult, unless there is some particular headline risk. would be a target for a break of parity. in 5% or 6% move. dollar-yen is another candidate for big strength. the boj is anchored. if the fed and u.s. treasuries and u.s. growth are able to have the current momentum potential for big moves. nyse arca problem has been resolved. what about emergent sing market -- emerging-market currencies, how are they able to weather the dollar strength? second to that, asian currencies. you say asian currencies won't.
alessio: that is where in emerging markets, you get some interesting valuation divergences. had thiswe still downward anchor from the potential for chinese renminbi ongoing devaluation. see us particularly stable, that whole asian bloc, including korea, singapore. that is also where valuations are arguably expensive. on the other side, the commodity link from the ruble, the brazilian real, the south , these currencies tend to offer higher risk premiums and are still cheap to their valuation metrics. one can construct a very interesting portfolio on long dollar, which tends to provide headwinds to emerging markets, but at the same time, have another driver in your portfolio that is looking for relative
-- you would call it a success if you are able to collect that. you are also looking at the credit market. anticipate to turning points in the credit cycle and what impact is that from an investment standpoint? alessio: we believe you can focus on certain important metrics to gauge where the credit cycle is going. with this particular credit cycle, it was different from the previous ones. we have had, in 2015 and early 2016, we had what felt like the end of the credit cycle. growth, particularly in the manufacturing sector globally, not only in the u.s., was in a recession. it was not an economy wide recession, but the manufacturing
sector experienced a recession. of the fed reacting to dollar strength and basically walking backward its hawkish rebounding, growth we have seen a renewed impetus in what is called the very aggressive spread compression in credit, particularly in high-yield, which has sort of restarted a mini credit cycle. however, we believe now as fiscal policy comes, you can have a couple more years, one or two years, really, of credit just being a good opportunity to harvest income, but we not not -- would not express -- expect much price appreciation. julie: we have to leave it there. , thank you for talking to us about fx and credit. mark: coming right up, able message from barclays.
julie: breaking headlines on clovis oncology. that stock is surging to 15%. it halted for volatility after the big surge. this was after the fda approved the company's ovarian cancer drug. the surge coming on the back of that. this is about a $1.5 billion biotech company that develops oncology drugs. a 15% surge after its oncology drug was approved by the fda. mark: let's talk about the banking sector. shares of barclays are falling as the lender prepares to tell
7000 clients to basically do more trading with the firm or find another bank. joining us now is stephen morris. -- it hasady cold a number ofed clients. why now? stephen: it has already ranked itsof these clients by computers and have determined that there are another 7000 clients that are not making enough to justify the relationship. left with 8000. that will be a quarter of what they had before. they are zeroing in on the most profitable relationships, work -- which are by and large with the largest hedge fund managers and acid banks. mark: will it work? stephen: this is what they are hoping. year ago, there were serious questions about whether
barclays was committed to staying under the business under ceo antony jenkins. the new ceo has come in and committed to it. he says the only way we can justify this to shareholders and investors as if we get returns up about 10%. bankingthe investment is back around 8.7%. it is not quite there. be moreping to selective about who it does business with to get it over the be more selective about who it does business with to get it over the top. julie: they are using some kind of new technology to suss out returns per client. it is also surprising to me that they would not have done something like this already. assess clients by levels of profitability. stephen: yes, they did have a previous system, which i think which they have replaced with two new ones. i think the problem before was that the systems were not talking to each other. nobody knew quite how much money they did with each client and
there was a lot of trust placed in a relationship manager saying , we might not make money on this loan, but we sold a lot of bonds and we do a lot of hedging. this is a way to try to quantify every relationship. if you go and have a difficult relationship with a client, it is a lot easier if you can point to a number generated by a supposedly impartial system and say, it is not us, it is you -- it is not you, it is us, sorry. julie: barclays is not the only company doing this. where do they go? do they have recourse? do they have other banks they can do business with? stephen: when i spoke to some people about this, they suggested that perhaps more of the local banks would get a look. they would have to return back to the smaller tier or second level, who may be more than willing to sweep some of these up, or the u.s. banks could try to take some of these clients. they are not under the same capital pressures and
profitability pressures that european banks are. we may see some of those sme move across to the u.s. banks. how this plays out in 5-10 years-time, we are not sure. the banks cannot continue on with the same broken operating models. mark: the most read story on the bloomberg today in the last eight hours. barclays severing ties with up to 7000 clients to boost returns. well done, stephen morris, are u.k. banking reporter. julie: still ahead, scotland's first minister issues an ultimatum to u.k. officials, threatening to hold another vote on independence. her conditions, next. this is bloomberg ♪
let's turn our attention to brexit. scotland will hold a new referendum on independence from the u.k. unless the country is able to retain access to the european single market. that is according to scotland's first minister nicola sturgeon, ultimatumentered her in a commentary piece. theresa may a short sturgeon she will look at the proposal. we are joined by the bloomberg news editor rodney jefferson. what do we know about sturgeon's plans? rodney: we know that scotland set out very clearly in june after the brexit vote that it was not going to accept the result. scotland.f for every region of scotland voted to remain in the european union. the thing we are waiting for is to find out what they will say about policies such as
immigration. would there be a border? also, with trade. how do you keep access to the single market if your biggest trading partner has just left it? that will hopefully be laid out. mark: what sort of arrangement does she want? does she want to stay a part of the u.k. and still have access to the single market even if the rest of the u.k. does not and if she does not get her way, it is another referendum, is that the basic idea? rodney: i think that is the basic idea, yes. there is an element of saber rattling here. she has said she will pursue an independence referendum, another one, should scotland not get its way on this. that is quite a high-risk strategy. there have been very few polls that show that the majority of scots would vote for independence. obviously, that could change in a campaign.
it is really just to suss out scotland's bargaining position to say, this is what we want from this, so that theresa may can be fully aware from that as she goes into the brexit negotiation. julie: given the picture you are painting, it does not sound like nicola sturgeon has a huge amount of bargaining power on her side, does this? well, it depends what you call bargaining power. remember, the relationship between the european union and years, goes back 43 really, in terms of membership. the union and the parliaments between edinburgh and london goes back 300 years. of somethinglement that the conservative party would not like to be seen as the country -- the party that let scotland fulfill independence. rodney, thanks for joining us.
bloomberg news editor in edinboro, rodney jefferson. i want to show you what is happening to the turkish lira. the dollar is rising against the lira off a record high. off of -- about 0.5%. a number of reports that the russian ambassador in turkey has been attacked. the russian ambassador has been shot at in turkey attending an ankara art show. shot in the back in ankara. the dollar rising against the turkish lira. we will bring you more on this developing story as soon as we get it. you are watching bloomberg television. this is bloomberg. it looks like we are going to close higher. ♪
below the daily average of the last 100 days as we approach the holiday season. performance with oil and gas the worst performers the worst decline after a second weekly gain on friday. don't forget the stoxx 600 finished at its highest level since december 31 last year. todayys is the big story back to tell 7000 clients to find another lender. the global investment bank coming under pressure to cut ties with some clients. moreare struggling to get management from your leap fund managers. that makes them rethink the traditional focus. love this chart, european companies with high sales to emerging markets have an inatively unhurt by the rout those countries financial markets. the goldman sachs tracking firm
such as unilever and volkswagen is up since the election. that is diverging, that is the white line, from a drop in the emerging markets index. it is relative to the world index. it is what they are exposed to on the white line and the emerging markets relative to developing markets is the blue line. european companies roughly get a third of the revenue from em according to a morgan stanley report. sticking with the em frontier market theme, the credit suisse is getting behind frontier stocks if they haven't recovered from the bear market. it is focused on 10 of them in a report last week it's a superior growth and demographic releases to invest in frontier markets. 2008, falling to 53% through the end of last week. the msci emerging market index
is the blue line, still down roughly 30% during that time. an index ofich is development it is up by 12% of the credit suisse is saying get behind frontier. any further movement? julie: we continue to see the dollar strengthened versus the turkish lira as mark just told us their multiple reports that the russian ambassador to turkey has been shot at an art gallery in the turkish capital of ankara. his condition is unknown at this time. you don't know what occurred there there is one report the gunman shouted something about aleppo. that is unconfirmed and we don't have more details at this time. there was clearly a market reaction a selling of the turkish lira. we're watching the russian ruble as well.
the dollar versus the ruble is still lower on the day. keep monitoring headlines. we continue to see a rally of some measure today not act at record levels yet at the moment, but all major averages are rallying. participating in full up a half of 1%. if you look at the groups on the move today, we continue to have this divergence in groups. real estate stocks coming back .oday as we have rate lower a flipping of the script as we get towards the end of the year. at least of the past several we eks. that is also happening in other asset classes. we have oil lower, for example. and gold higher, which is a flip. we have the dollar trading lower
the u.s.ve buying in treasury market. let's check in on the bloomberg first word news. where monitoring news about the russian ambassador to turkey who shot while attending an art exhibit according to multiple reports. shows a man lying on the ground with his arms outstretched while a man with a gun gestures nearby. openedk says the man fire in the end and fired twice at the ambassador. no word yet on his condition. most americans would prefer the popular vote to decide the election rather than the electoral college. favor ofd that 45% in the popular vote while 40% support the electoral college. 46% say electors should be bound for the candidates that won their state while 44% said they should not be bound if they have concerned about the winning candidate.
the lawors will appeal that limits protections for lgbt people and lead to economic backlash. that is according to the incoming and outgoing governors. they will hold a special session to repeal the law. it requires people to use restrooms and many public buildings corresponding to the sex on their birth certificate. the obama administration issuing regulations to protect streams and groundwater from coal mining. the measure is likely to be targeted for repeal by congressional republicans. the industry says the protection stranded billions of dollars worth of coal in the ground. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. mark: exelon. imf chief christine lagarde has
been convicted of negligence over her handling of a multimillion euro dispute as france's finance minister. caroline, why was she convicted of negligence? caroline: initially she was charged with two counts of ordering the arbitration and failing to overturn it. on the first count she wasn't found negligent on ordering the initial arbitration but she was found negligent of failing to overturn it in 2008 a year later when she had the ability to do so. the president of the court said that given the christine lagarde was a lawyer for 20 years she should've known better and received many memos from investment agencies warning her that there was a possibility to appeal. she said that at the time she
thought the chances of success were very little. specifically, i want to mention that the president of the court was officially concerned about the fact that christine lagarde should have showed proper selection on 45 million euros of this payout related to the thele prejudice when president of the court said that at least 45 million euros specifically could actually be seen as a misuse of public funds. however, the court also said that given the big financial crisis at the time it 2007 and given the international nature of her today she will receive no jail time so she will not go to prison. and in no fine. mark: given that she will receive a -- not receive a fine or jail time how damaging is today's conviction?
caroline: it is very damaging for her reputation for the imf, which is an institution that has been traumatized from 2011 and the departure of dominique strauss-kahn. the imf board said they will meet shortly and haven't made any decisions yet. she hasn't decided to appeal either. person i spoke with a couple hours ago here in paris she did not attend. the lawyer told me that he was actually be 80% satisfied with the verdict given that she has no jail time and no penalty in that case. it is not clear yet what thismeans for her job at the imf, and if she will appeal. were: the events that contested here occurred more than 10 years ago. why did it take so long to bring it to trial?
caroline: yes, in fact, this is also one of the reasons that the judge said she was not negligent in seeking the initial arbitration. the reason for that is that she was trying to do something in a case that dates back to 1993, was sold to adidas the french state and this is when he thought he was accusing a year later of defrauding him because the stake was sold a year later for more than double the amount. case startedse -- 15 years ago. this is one of the reasons that
in 2007 christine lagarde sato the arbitration. -- sought the arbitration. the head of orange company told her that everything had been tried, except the arbitration. mark: caroline, thank you in paris. want to get back to this russian ambassador story we have been telling you about. the russian ambassador has been taken to the hospital and ankara. he has been hospitalized. given the news, the lira has weakened against the dollar after the russian ambassador was shot. foreigns the russian ministry and it's also confirmed that the ambassador has been shot. the initial news came from cnn-turk that said he was attacked attending an ankara art show. the ambassadorot
agencies reporting this in detail. bloomberg now confirming the ambassador has been shot. the earlier breaking news that centered on cnn-turk that city was shot in the back in ankara while attending an art show. the man who shot him shouted about aleppo. in syria. course, we are confirming that ambassador has been hospitalized in turkey with a gunshot wound. you will see the lira has moved against the dollar. it was nearing record lows anyway but it has weakened against the dollar will stop just to elaborate on the story man wearing a suit shouted about where, the city in syria, russia's military backed an offensive by the syrian government forces after shooting the ambassador andrei karlov in gallery.in the city's
were meant to be ongoing as of 7:25 and and cholera -- ankara. julie: we continue to update you on it. meantime turning back to the market and turning to one company in particular, nintendo. shares of that company tumbling more than 70% after lukewarm reviews of the debut of "suep per mario run." startis off to a rough for nintendo. it is been a couple of days since the game is come out. it is making money for nintendo, but is facing backlash from fans for the many people unhappy with what they say is an unfair deal that nintendo is giving them both a basically free download the game right now it is available for all apple devices
and is free to download and you get access to the first three levels. so he jumps around and you can play it as many time as you want but then after that to get access to all 24 levels in the to pay $10. this is what nintendo is asking for. many fans are unhappy about this post at the used a games being available for free and you can buy stuff within the game bus that they say $10 is just too much -- within the game. they say $10 is just too much. pay $10 you can so clear it quickly. this is why you're facing a big stocksh from fans and why prices dropped by 11% in the last two trading days. i think investors are worried by the nintendo is maybe not executing their strategy as well as they were expecting. we will see how this plays out. for now, super mario run off to a bit of a shaky start of the many people are unhappy about it.
mark: let's stay on entertainment, "rogue one: a star wars story" posting the second biggest opening weekend ever. 55 million in1 theaters. last year star wars old the record for the largest december 240 $8 million. joining us more on disney's new strategy of spinning characters off of the sci-fi classic is paul sweeney a bloomberg intelligence director. paul, great to talk to you. the question in 2012 when disney paid $4 billion was a question back then is this money well spent? it seems to be, doesn't it? >> it really does. bob iger and the disney team have made a great strategy by buying into inherent to strong franchises with pixar, then
marvel, and lucasfilm. now we have two star wars films out of the marketplace both performing extraordinarily well. there is no end in sight. what was interesting about this film was they introduced a whole new set of characters most of this was a set that the market was not familiar with. they still had a very strong opening weekend globally. that really bodes well for the franchise long-term. mark: are we facing star wars overkill? due tore four more films be released through 2020. you have four marvel superhero films in 2018, is it marvel-star wars overkill? saturation point? >> we haven't seen it yet. i know many investors have stepped back and said is there a superhero overkill? is there a sequel overkill? where are the fresh ideas? the reality is for these hollywood moguls sitting in
their offices in hollywood all they see is these huge global box office from many of these franchises. there is absolutely no reason to stop putting them out into the marketplace because they play not only well here in the u.s. but also around the world. that is clearly where the global film business is going. i am curious also, personally, as someone who grew up with star wars, demographically, doing now about who the new movies are appealing to? is it people of my generation who grew up with star wars who feel that nostalgia, is it attracting enough new fans to keep it going? >> the force awakens, the first film that disney came out with a appeal to a older demographic. this film was a holy set of characters that were outside the sixstream from the first movies. we're seeing younger demographics in the opening week in which really bodes well for
disney and star wars as they think about expanding this cast of characters in this franchise over a broader universal stub what is also interesting is these characters generally were not developed outside of the u.s. that well in the 70's and 80's these movies are performing well globally as well including china. julie: obviously star wars is this enormous leviathan-machine and get attention. much does this offset the espn issue? back overck is now $100. what it does is it just highlights want again for many investors the diversification of this company. it is not just a cable network business with espn also that is still the main driver of the stock but the film business is also over the next five years in great shape. parks and resorts are doing well but clearly disney has to get a handle on espn and show that it
can become a growth story once again. julie: all right, paul sweeney, thank you very much. mark: to the breaking new of russia's ambassador to turkey, andrei karlov, has been shot well attending an art exhibit in ankara. a man before shooting shouted about aleppo. after shooting him in the gallery, according to cnn-turk, the lira is falling against the dollar. this is bloomberg. ♪
10% in little more than 10% on the year. the commodity complex via the bloomberg commodity index we take a longer-term look at these indexes. is a 20ent story, this year charted orangery of the bloomberg commodity index. thehart, in orange we have bloomberg commodity index for submitting they seem to converge at various points. with look at this massive divergence. the question is how will the greek converge? perhaps the commodity complex it isp to meet stocks, more likely was he pullback in 2017 or maybe 2018 sometimes these things go much longer than we think. this may suggest at some point the second longest bull market for stocks is going to come to an end. one of the tells may be right there in the commodity complex. a little bit of
pessimism, think is a much abigail. mark, what do you have? mark: i love the big d, divergence. we like our divergence. i have one here, the blue line is the euro stock, the fear index our measure of volatility expectations. fallingthat on friday, to the lowest level since september 2014. ahead of the brexit referendum in rose to almost 40. since the election victory does come down from 25. we are at low levels. isnwhile, the white line where policy uncertainty in the region is on the rise first of this is an index tracking newspaper references to subjects such as regulation, budget, and central banks. this is the european economic policy uncertainty composite index. we are near record levels. we saw post-brexit what is
interesting even though there is no volatility in stocks investors are trading futures betting on stocks swings in four months time like never before. we love the big d, divergence. %110 four always give r panache. i will give it to abigail today because he like this long-term view of stocks. mark: how about him equities finishing the session it was a day of decline after two weeks of gains. the stoxx 600 down by a 10th of 1%. ♪
scarlet: we are covering stories from new york to washington and london this hour. more than half $1 trillion in deals were recorded this year the most since 2008 we break in action.e m&a plus, barclays is preparing to tell 7000 clients to do more dealings with the firm or find another bank. it is whittling down customers that don't produce significant profits. china pushes back against donald trump's claim that his military stolen american naval drone. we look at what is to comment. .- what is to come abigail joins us now with the latest starting on the final trading week with modest gains. abigail: we are off the high, in fact we were on pace for new record c