tv Bloomberg Markets European Close Bloomberg March 29, 2017 11:00am-12:01pm EDT
this is the european close on "bloomberg markets." ♪ mark: we will take you from new york to london. and covering stories out of brussels and washington. the top stories we're following. in politics, it is official, the u.k. triggers article 50. theresa may valves to get the best deal for the u.k. while eu leaders seek an orderly withdrawal. we are live and westminster and brussels. vonnie: how global markets are reacting to brexit near-term and long-term. the pound sterling on this historic day. and company news, samsung set to unveil the latest version of its
flagship smartphone, will it get the company back on track? mark: have a look at where european equities are trading now. 30 minutes left until the end of the wednesday session. theresa may triggered article 50 today. european stocks rising, they have been up and down. currencies falling against the dollar today. sovereign bonds and commodities and credit default swaps. let's get to the big story. let's get to the triggering of article 50. , this iserful function the landing page for all things related to elections and demographics for european countries. the part that is interesting, all of it is interesting, is this, post-brexit gdp forecast. the u.k. post-brexit forecast down.
ireland and lithuania and romania, these are the countries affected by the brexit vote to pull the u.k. out of the eu. this is the news and this is the u.k. health check. i advise you to check it out. financial u.k. conditions index tracks the overall level of financial stress in the u.k. money, bond, and equity markets. to assess the availability and the cost of credit, positive valuation indicates the financial conditions and negative evaluations indicate tighter financial conditions relative to precrisis and pre-financial crisis norms with the record low -10.6 in november of 2008. the high 1.7 in july of 2014. up .68 and have been positive since after the brexit vote in
august. gold could be in the early stages of a bull market with prices could climb to $1400 to 5000 announced according to a company. goal last traded at $4000 in september 2013. great chart. 90 minutes into the trading day in the u.s. julie: thanks looking better than an hour ago. the dow down a quarter percent and the s&p has turned up very slightly. the nasdaq up to 10th of 1%. a lot of it has to do with the inventory report for oil, it put oil prices higher and energy stocks higher as a result. half-hour after we got the inventory numbers, up 1.5%. climbing after the numbers showed a drawdown in cushing, a
smaller than expecting built overall in inventory and larger than estimates drawdown in gasoline. that is helping natural gas and oil. chesapeake range resources higher. in terms of individual point showed, s&p, zyrtec positive results for a secure mental treatment for cystic fibrosis. google is -- alphabet contributing to gains. wall street journal highlighted today, margin debt which rose to a record in january. the latest month for which figures are available. $513 billion, margin debt is collateral that investors pledge stocks.out -- buy a larger term -- a longer term chart. if you look at these bars.
there have been times in the past when the big jump in margin debt has presaged a downturn in stocks, not in the past few years. the last time we got a record was in 2015. something to watch. vonnie: thank you for that comprehensive chart. back to brexit, theresa may said the u.k. on course for leaving the european union, saying they will take their own decisions and make their own laws. our next guest says the political landscape in europe could have significant economic impacts on their shore and on the u.s. where do you imagine the impact will be most felt? >> in investments. companies in europe and britain need to know what the framework is going forward.
who can they look to as suppliers and how is the service market in europe, particularly with the u.k. being a banking and insurance center, how will that be affected by brexit? it depends on the next two years worth of negotiations. the clock is ticking, they have two years to figure it out. brexit will be hard. that was an open question after the vote, hard brexit means the u.k. will leave the common market. we do not know how hard brexit will be. will they, -- will they have an exit agreement? one of the things standing in the way of that is the eu wants 60 billion pounds in payment from the u.k. british voters do not think they own the eu anything. that is one of the first obstacles. vonnie: this is article 50, small, when it comes to services , something overlooked,
financial services, yes, what about asset managers? do they need to move? >> the u.k. is placing a lot of hope and that, even if they leave, they will have some sort of free trade agreement. the problemely -- is free trade agreements are mainly focused on goods and not services. the market access that companies based in london will have or will not have, towards their markets in europe, that is an open question. you have a lot of banks thinking -- do we need to relocate somewhere within the continental europe? or can we stay in london? hopefully the negotiations will help settle this. mark: you were in brussels last week and one of your main takeaways was, less of an appetite for them to punish the u.k. that is music to the ears of theresa may. >> there have been two ships,
and the u.k., the lack of any immediate negative economic impact from brexit has made them -- at least the british leadership and political class, cocky, as, maybe a bit lot less intimidated about the possibility of brexit. also, the support that has been voiced by president trump has enforced that. on the eu side, in brussels, initially there was a lot of talk, immediately after the brexit vote, britain -- they must make an example of britain so other countries do not follow its example. what change that was the election of president trump. when i was in brussels, there was a poll that pew showed, they asked thought leaders in the u.s. and the -- and europe,
whether the united states -- if there was a conflict between the european country and russia, where the u.s. stand by its native commitment? 49% said yes and 48% said no, i'm amazingly tepid response. not just on economics but on security. europeans are saying we need all the friends we can get. after brexit, we need as positive a relationship with the u.k. as possible, on security and economic. that has led to a much more pragmatic outlook than they may have had nine months ago. mark: theresa may in her letter link security to a trade deal. almost like that was her implicit threat. we want a trade deal, but we will only get one if we use security as a marketing tool. -- bargaining tool. is that a key marketing tool for the u.k. -- bargaining tool for
the u.k.? >> it is but they have to play it carefully, how explicitly will it be part of the package and how much of it will be implicit? europe facing a lot of challenges. with the future of nato, and that mines in question, security relationship with the u.k. takes on a new importance. vonnie: something that has been -- i don't know if overlooked, the last point in article 50 come if a state has withdrawn from the union and asked to rejoin, it can through article 49 which means going to the process again. the you see a situation where that may happen? >> that would be looking for i had to we have -- ahead. britian has always had an interesting relationship with the rest of the european union, initially blocked in the 1960's
but eventually joined. it did not join the common currency. wheel onen the wobbly the card. that's ca -- cart. vonnie: there must be ways to make money, certain industries? >> short-term, we have to realize this is a market globally which is glass half-full. we have had a number of political risks that have emerged on the scene. and political setbacks that have taken place over the past couple of weeks but the market has largely shrugged them off and investors need to realize that is the move and the mindset the market is in. unless something happens to shake that. investors should be cautious about translating -- drawing a straight line between the political risks that are real, and are out there, to a negative market response. the market is inclined to want to see actual negative
consequences and not just political risk. vonnie: we will have to continue this discussion another time. the chief strategist and columbia professor. let's check in on the bloomberg first word news. police car inms a washington near the capital and tried to run over opposites on foot. authorities say it was not terrorism and describe the suspect as a woman who was erratic and an aggressive driver. she has been arrested. officers fired shots but no one waited. a group of president trump's wealthy backers have started a media blitz and tried to get democratic senators to support the president or think twice before piling on. a nonprofit will spend $1 million on a tv campaign that starts today. the group is thinning $300,000 on digital advertising -- spending $300,000 on digital advertising. europe one early in a lawsuit
that may make your -- the ukraine play. -- pay. argued that russia's annexation of crimea and his backing of rebels constitutes unlawful aggression and the country is likely to appeal. in south africa, three officials of the ruling party told the president that they oppose his plan to fire the finance minister according to a person with knowledge of the matter. that person said zuma met -- plans to fire him because he was speaking to overseas investors. the president was pressure to appoint him in 2015. global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. mark: coming up, we go to brussels for the reaction from eu member states from today's brexit negotiation's. -- negotiations. this is bloomberg. ♪
♪ vonnie: live from bloomberg world takeovers in new york, i am vonnie quinn. mark: i am mark barton and we are counting down to the european close in 14 minutes. let your reaction to brexit from europe. -- joining us is our european union editor. we were talking about the conciliatory nature of theresa may's comments to the house of ammons and someone took conciliatory tone. >> he took his tone from hers. .fter he had seen the letter
they were both good to be conciliatory on both sides. he was focused on the optics. if you look at the pictures of him receiving the notification from the u.k. ambassador in brussels, he is tried to keep an even expression. you may call it a poker face. perhaps looking ahead to negotiations. mark: going beneath the one,liatory nature of day is the battle lines, clearly they are -- you have to pay your play, itthe order of seems as if may wants to do both at once as in divorce and a new deal by the eu as a different view -- but the eu has a different view? >> that will be the first bone of contention is the sequence of the negotiations. now that article 50 has been given in, now that it has been
triggered, the leverage goes to the eu and time is on their side . not on the u.k. side. you will see a lot more power coming from the eu on this. not sure how it will work out. they all want a deal in the end, but it is unclear. chances are 50-50 that we will have something at the end of two years. vonnie: can i read something from her letter, she read the u.s. has responsibility to stand up for free trade on behalf of all our citizens, is that a little bit disingenuous? did she not win a little bit on protectionism? >> perhaps. look at this as negotiating tactics. a lot of things in the letter you could read more into or maybe we are waiting not enough into the -- reading not enough into. this will all go into the mix
and -- over the next month before the eu comes up with his official response on a summit on april 29. we will have back-and-forth ahead of that. mark: we had the eu parliament president making a statement on -- right now. he is saying they fully respect the democratic will of the u.k. people. they were from the eu today was orderly, wasn't it? the primary purpose of these negotiations from an eu perspective is tuesday united. -- tuesday united. united.ay big -- thea question. -- good question.
a lot of people are surprised the eu has managed to stay united until this point. everybody expected some of the countries to go on their own issues. the unity would be undermined. so far, they have stuck together very well. for the coming months, for the start of the negotiations, it looks like that will continue. the parliament is interesting because they have an ultimate and have set up a resolution that they will vote on next week. that is calling for strong things and will be interesting to see how it fits in with the negotiations as well. mark: you have a busy couple of years. go out with those pictures . the european parliament president is speaking right now. article 50, the start of a very difficult negotiation. this is bloomberg.
mark: let's get to westminster. nejra cehic is standing by with a guest. nejra: thank you. i will get straight to it with mp and the former business minister. you were in the house of commons during the prime investors questions, what was your biggest concern given theresa may's statement to the house? >> there is an honesty and her letter. to the eu who will be involved in these negotiations. that was good and her tone was good. leave,ly, if we have to i hope we remember the single market, that is what business needs.
solution tovide the northern ireland, where they are a very serious concerns about how brexit will affect the border and life and peace between northern ireland and -- it would solve all of those problems. as a former business minister, theresa may was very clear that she wanted to -- a free trade deal that included key areas like financial services. how realistic is it that he achieved that? >> i do not know, it is a huge ask. ,t will be extremely difficult especially to try and say, can we have this one or that one? when they say you cannot cherry pick and we agreed that you cannot. financial services is a definite, pharmaceutical is very important. you run out of sectors. you want them all with the free trade deal.
there was a very good argument that it is not the government to say this sector is more important than others. you have to listen to business. they know best. every government since the mid-1970's have listened to business and respected business. nejra: what no deal be worth possible outcome? >> no deal is a rubbish deal, a bad idea and a disaster for this country. andidea we fall off a cliff go to the world trade organization, that would be bad. and to lose the custom union would be bad. mark? mark: great job at westminster. the day that article 50 was invoked. what is happening to european equity markets, 4.5 minutes away from the end of the trading session.
stock europe 600 abbvie a third of 1% today and the ftse up by one third. have a look at the currency. what is happening to sterling on the day that article 50 was triggered. sterling down. decline posted june 23 was 19% and stuck in a 5% 27ading range of 120 to 1 cents october. let's finish off with the bonds. ♪ live-stream your favorite sport
at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app. xfinity. the future of awesome. mark: the day that article 50 was triggered, the european parliament richard -- brexit chief speaks along with the
european parliament president, saying a few moments ago that the european parliament does have to approve the brexit deal, something we were aware of. this is the reason why. the u.k. and the eu might want to rough up these negotiations within 18 months so the parliament can approve the deal and the u.k. parliament can approve the deal as well. brexitopean parliament chief speaking there. have a look at european equities today, wrapping up today with the highest close since december 2015 led by financial services oil and gas, this is our brexit barometer. the white line versus sterling. the brexit barometer is a health andk of the u.k. economy includes measures for employment, growth and uncertainty for the u.k. you want an index above zero. as you can see from the white
line, the index is above zero, where it has been since looking at the left-hand corner. just after the brexit vote in june. plunging, stuck in that narrow trade. what is interesting is how these go back to 2001. 2012,yed just up until when as you can see, sterling's decline and the brexit barometer move a different direction. what does that tell us about the possibility for sterling upside or the index coming to the downside? we will keep an eye on that as we will on u.k. equities. which are rising today in the wake of the triggering of article 50. the small cap index is the online. the two to 50 is the blue line. -- ftse 250 is the blue line. they have gone to new highs and
all will depend on the strength of sterling and the strength of u.k. economy. this is the policy uncertainty index which tracks the general state of the economy as it relates to businesses. more than half since the brexit vote. it is nowhere near as low as it was in april 2014. nothing like the uncertainty levels it was post-brexit nine months ago. vonnie: optimism raining. keep it coming. a quick check at the dollar index. floating at the 100 mark again. it is stronger today. the trend is for a weaker dollar index. the ruble is strengthening. it has been a wild since it strengthened for a sustained period. futures,out gold testing of the moving average, although those two-year yields
are down slightly, three basis points, there has been buying in the front end. risingnt-end has been since the decision. let's move it now to cmm country market movers. when it comes to the currency markets, you can see the british pound obviously is a bit weaker and the euro is a little bit weaker as well off the back of that. crude oil up $49 a barrel. let's get to abigail doolittle with the nasdaq and how big tech has been taking off. fore have trading action the major actions, but would you believe the nasdaq 100 index is on pace for yet another record close. this is the nasdaq 100, comprised of the largest technology stocks on the year, up more than 10% relative to the dow, up just four and a half percent of the year. technology is really outperforming the sector.
today, lots of big internet names including amazon, alphabet and netflix lost strength. alphabet up for a third day in a row. this after five days in a row next week on the news that big advertisers were pulling ads on google or youtube over objectionable content. they should now be able to control what videos their ads showed against, but most seemed unconcerned. g #bcb 2366,at this is alphabet advertising revenue and it is close to $19 billion, falling off just a little bit. off at 19% growth year-over-year, bloomberg intelligence analysts make the point that for a $90 billion company this growth is pretty phenomenal. you will not find it elsewhere. said that right now this is a reputation issue for
so much anot business one. if they can contain it it should not be an issue. more agreeing with paul sweeney, saying it is not too much of a big issue. there is some reason to think there could be some near-term volatility. two 370.btb isently, on last week, it slightly below a 50 day moving average and blue. the last time this happened we saw that shares about that fell. right now on the 200 day moving average. suggesting that again, there could be some volatility ahead. that is despite the three days of strength in this mark. mark: article 50 has been invoked. theresa may setting the course for the u.k. for leaving the eu in a couple of years time. it raises dozens of questions of uncertainty. for more on the pitfalls that
lie ahead for businesses in brexit negotiations, former u.k. trade and investment minister francis maude is joining us from our washington bureau. senior adviser at covington and former shadow chancellor. iq for joining us today. i am just watching the european parliament and the brexit negotiator giving a news conference. interesting to see the tone of the comments. the u.k. must respect obligations until the last day. the u.k. must honor its financial commitments to the u.k. are we headed for a clash as soon as the negotiations begin over the timetable of discussions? meaning, brexit divorce first and trade deals second and then brexit itself. could these talks realistically fall apart almost as soon as they have begun? >> you can't rule anything out but i think it is unlikely.
there is a deep recognition on there is athat collective self-interest, a joint self-interest on both sides in reaching a sensible agreement. i think the tone of theresa may's letter and how she has spoken about this has been absolutely right, saying that britain wants to have a deep and special relationship, a partnership with the eu going forward. of course, there are going to be difficult issues to resolve, around the rights of british citizens living in the eu and eu citizens living in britain. they ought to be resolved quickly. there are going to be big issues for business around trading arrangements. i think there is a wide recognition that there will need transitional arrangements, what could be called an implementation period. eu onere are some in the the other side that take a very
hard line view on all of this. but it is likely that pragmatism will win the day. wantusinesses, what they is as much certainty as possible. they will need to get stuck in, because there are huge numbers of issues affecting lots of different sectors and they should not just assume that this is something that is happening to them which they cannot influence. they need to be influencing both the u.k. government, the european commission, and also the member states. the 27 other member states in the eu, all of whom have an important voice. mark: and one sector that will be eagerly awaiting developments is the financial services sector. is set to pursue a bold and ambitious free trade with greater scope and ambition as any other such agreement before, covering
financial services and network industries. can a trade deal, a free-trade arrangement, be struck that involves financial services? >> yes. that could definitely be the case. there are lots of differences. banking, insurance, brokering, securities, there is a whole range of different financial services sectors and there are different arrangements around for the single market services. it is not yet complete and neither is the digital single market. it isn't as if there is a single monolithic set of arrangements that will continue or not continue. it means there are lots of al discussionsor that need to be resolved in the transitional period afterwards. for businesses, insuring that businesses concerned or heard --
are heard and understood and that advocacy on their behalf takes place. raft ofthere is a whole headaches for the likes of scotland, northern ireland and wales. theresa may said today that this is going to give the administration a lot more power, to negotiate various things. if you have any of those administrations, what should their next step be? >> it is a very good offer. i will say what is involved with the u.k. leaving the eu is that powers which currently are collectively exercised by the eu will come back to the u.k. and theresa may has openly said that the decision is to be made on how those share out. some of those powers could be transferred not to the u.k. government but to the scottish, northern ireland or welsh assembly government. those are the decisions which those in ministrations would be
well advised to get stuck into and work out in their particular interests to seek to get back. it would not surprise me if the scottish government wanted to have much more control over fisheries policies for example. this is a discussion that needs to happen quickly. vonnie: do you imagine that this will actually facilitate other scottish boat -- another scottish vote? >> as soon as you hear someone saying such and such cannot happen, you bet on it happening. that't think it is likely there will be a vote on scottish independence in any kind of the foreseeable future. it wouldn't make sense for scotland to do that and the economics of independence didn't look good when oil was $150 a barrel. they look much worse at $50 a barrel.
and, of course, if the concerned scottish government has to do with not being part of the european single market, with britain not being in that signal -- single market, it is hard to see how it makes sense for scotland to be out of the single trading area with the rest of the u.k. which is obviously overwhelming. mark: really quickly, i am being pushed by my producer, can theresa may keep the conservative party united, given the opposing remainders and brexiteers? >> there are different views within the conservative party. there have been from the moment when i was first elected to the house of commons back in 1983. i was minister for europe under thatcher. but by and large the
conservative party manages to handle their differences of view in a grown-up way and i am sure that will happen as we go forward over this crucial next two-year period. vonnie: thank you for joining us. former trade and investment minister. let's check in now on the bloomberg first word news market. a driver rammed a police car near the capital and try to run over officers on foot. authorities say it was not terrorism. they described the suspect as a woman who was "erratic and aggressive." she has been arrested. officers fired shots but no one was wounded. president trump will be briefed tomorrow on the various options for tax reform. advisor, economic former goldman sachs president gary cohn will be among those inducted. one of the proposals is the border adjustment tax. that would replace the 35% corporate tax with a 20% tax on
companies with domestic sales and importing goods. some senate democrats are willing to risk a so-called nuclear fight over supreme court nominee neil gorsuch. right now he needs 60 votes to be confirmed as democrats try to block the confirmation. publicans could use their nuclear option and change the rule. only a simple majority vote is required. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: courtney, thanks. ericg headlines now, rosenberg is talking about a rate hike at every other meeting in 2017 being suitable. he said that basically it is important to avoid creating an overhauled economy. consistent with gradual improvements in the economy. today, in an interview with the and 6:45 int 1:45
mark: live from london and new york, i am mark barton. vonnie: i am vonnie quinn. this is the european close. samsung is unveiling right now the latest edition of a flagship smartphone, the galaxy s8. it is the first since they recalled the note 7 device last year over fire danger. it is betting the new design will bring users back. mark gurman in san francisco. this headline would make me very curious about this new device market. this is called facial
recognition? >> this is a big deal. there is lots of new fonts analogy. voice assistant basically lets you control the whole phone with your voice. with siri on the iphone, you hold down the button and you can do certain actions in the voice application but on the samsung phone it is just systemwide voice control. racial recognition is cool as well. -- facial recognition is cool as well. mark: how critical is that for samsung now? this is make it or break it. if it succeeds samsung can go back to being one of the premier smartphone makers and if it flops samsung is in a bad position. especially after the explosion situation with the note 7. a big call, make or break. is that how analysts are viewing it? if this is a big success, is that it for samsung's smartphones?
>> it is not it but it will certainly put them in a very bad position. 2017 is a massive year of change for the smartphone industry. screens are a key component. lg came out with taller displays for their d6 phone. samsung is transitioning to that one. the whole picture here is that there is no band around the screen. the screen sizes are much larger but the phones themselves are slower. it is more productivity, more features which is what people want. vonnie: they obviously were very keen on getting out ahead of the iphone eight rollout which a lot of people have been waiting for. how much do we know yet? five points? >> the iphone eight is going to be critical. this is the interesting thing. if samsung messes this up and they don't get good reviews and positive feedback and they had issues, problems are right around the corner.
apple wins out in the fall and it will have a lot of features that could cause samsung issues today. we know they are not going to have some sort of explosion issue like samsung was prone to last year. they will have the smaller bezels on the side, the sharper us play. the competition will heat up during the holiday season. for thethe retail price galaxy s eight is at 720 8040 -- $728,040. that is mark gurman in san francisco. mark: it is tournament time. china inflation takes on u.s. equities. this is bloomberg. ♪
mohamed el-erian i am loving it. -- is noour next contestant average. 8 we have -- >> i am looking at two conflicting signals in the u.s. equity market. first, this white line. this is a survey of u.s. household councils in the u.s. equities. it is the highest since january 2000. it really means that the market, the last time that happened, obviously we went into a bear market two months later. people are thinking that is a bad sign but not so fast. look at the blue line. that is the growth for the s&p 500 which is also the highest that we have seen on record. it is important to note this. if you want to compare that to we have basically
deadlines going into the yellow line. about a marketll collapsed you shouldn't be. #btvan see my chart at g 7245. vonnie: with a soft data or hard data? >> the white line is the soft data and the forecast could be hard. the biggest debates right now going on in the market and the economy is what is happening with inflation or ation orn or trumpfl whatever you want to call about it. it is important to decompose what is really going on. you might argue we are less optimistic about fiscal policy in the u.s. so some of that is perhaps cooling off. but it is important to remember that is not the entire story.
this chart is chinese producer price index. in the amountaged of overcapacity in the chinese industrial sector where there is a lot of overcapacity in chinese factories. they can export inflation because they are exporting goods. but lately, after many months of inflation, and the chinese wholesale secretary has really been surging up to 7.8% year-over-year. pce, which at core is the preferred case of inflation, it kind of tracks what is going on in chinese factories over the last year and then picking up. if the reflation is about this global phenomenon of the strong global economy and the u.s. is a sideshow or distraction, maybe the inflation can continue regardless of fiscal policy. you can check out that chart at
#btv 7244. mark: we are pushed for time, w. by a smidgen, joe vonnie: when they get together it is always a feast for the eyes and ears. you are the winner. we will see you, we just want to go out on the day. the pictureshow you of that news conference taking place between the eu president and the eu president brexit negotiator. that, of course, is taking place with a couple of headlines. from today to brexit, the u.k. subject -- ♪
we are going to take you this hour from london to detroit and new york and san francisco, here are your top stories on bloomberg and around the world. the separation begins. the u.k. prime minister formally triggered two years of negotiations that will end with britain breaking ties with the european union. with a request for a sweeping free-trade deal, covering industry such as banking and technology. in markets the pound sterling weakening. u.k. stocks are fluctuating, as our u.s. stocks. oil extending gains as inventory grows less than forecast. blackrock is betting big on france after years of gains. the world's biggest money manager is replacing people with machines. t