tv Bloomberg Markets European Close Bloomberg August 13, 2021 11:00am-12:00pm EDT
and alyx . guy: you're being -- european stocks continuing to climb, the longest streak since 1999. with the premier league's new season kicking off, the european club hit hard by covid. now a look at european markets, can tuning two inch ever higher -- continuing to inch even higher. i think the record run is intact. the euro dollar a little higher. i wonder that is because of the
data that we are seeing from the university of michigan. i once bought a cap with the soy -- sole purpose of wearing matt miller. i think i should be wearing it today. kailey: or i should be wearing it. as you said, you mentioned consumer confidence changed everything at least in the bond markets, coming in at the lowest level since 2011. the s&p is still at a record, but the big tech is outperforming. you can see this showing up in the bond markets, the 10 year yield down. we are lower than where we started the week. as a result of that weaker dollar and the data, you are seeing a little bit of safety seeking, gold futures up about 1.4%. guy: let's talk about the impact
. incredible performance is being generated here in europe. we are on the longest winning streak we have seen since 1999. over the last year, just climbing and climbing. what i want to focus on is down here. normally -- normally you see some green and then a few reds. right now it is all green. this is the absolute level, but these moves are not big but they all add up, just a by die -- day by day getting higher and higher. kailey: we are not seeing any massive moves. we have not had a 1% move in the european equity markets since july 23. it is just inching higher. this isn't a monumental rally but it seems to be driven by the strength of the earnings season
in europe. we have the s&p 500 at a record high even though we had the disappointment on consumer confidence. now is joining us eddie. how long can this continue? eddie: there's just no bad news at the moment. i think part of the reason is that the consumer confidence is notoriously difficult, and it is a noise a signal, and at this point in the cycle consumers are affected by so many different things. it is hard to see whether it is their own earnings that is driving this forward. guy: you say there's no bad news. you got delta, the north atlantic still not open. i doesn't the market care about this?
eddie: i think the traders are looking at this and saying if there is bad news, then the fed will carry us through. if there is good news, that means the economy is stronger and we will keep on growing. we are early cycle. we have seen people conditioned by the dip and that will just continue for the time being. guy: thank you for stopping by. let's talk more about where these stocks are going. this is norman villamin joining us now. your opinion -- european stocks just inching up higher and higher. how long does this carry-on? norman: we think we are approaching the point where you
will see a deflection, the earning momentum story is behind us with the second quarter earnings reported now and we're just finishing that. those earnings compares things -- comparisons will become increasingly challenging. there is more uncertainty as we get towards the fourth quarter of the year. it is not so much time to get defensive in terms of the stock names that we are looking at, but it is time to rotate quality earning streams. the ones that are not so susceptible to economic downturn or slow down, much higher quality earning streams not relying on pe expansion, which is been a part of the total return story. guy: what does that mean in
terms of geographical distribution? norman: we are still very much in the u.s. big tech is a place we like a lot for the quality of earnings. in europe we are looking at things like health care where they have an attractive allocation both in the u.k. and here in switzerland going forward here in europe. kailey: how is the treasury market and permit your status at this point? norman: obviously the treasury has been drawing down from the general account associated with the debt ceiling. that should likely be resolved at the end of september, so then you have these fiscal packages that will increase issuance, so we think yields will probably rise year end command that will be a headwind in particular for
multiples. that will be a challenge for stock as well. guy: volatility is low at the moment. does that climb? what do you make of the current low level of volatility? norman: we think the overall economy in the u.s. and europe is a few months behind in shifting into a mini cycle. typically what you see is volatility trending higher. we have seen this in bond markets and as you move into 2022 you will probably see that in equity markets as well. kailey: what about china and the deceleration of growth there? norman: the deceleration is sometimes engineered and the thing we are more concerned about is the regulatory moves they are making to try to accelerate restructuring and reform. it does not look like they will
take their foot off the gas and as a result we don't think you will see them become much more accommodative in terms of policy. it is really a market for a bit more caution on china looking forward. guy: we were talking about the amazing performance that we are seeing in europe, and looking at this market it has been driven by the luxury section. the french market looks exposed to that chinese story. i am wondering whether or not as we see europe climbing to fresh highs, do you worry that the ripple effect will land on european shores soon? norman: we do think the china issue is underplayed because of the domestic recovery we are seeing in but the u.s. and europe, especially as we go into a time where the fed will start
draining the punch bowl a little . from that dynamic we are very much domestically focused here to try to cushion against the negatives on that front. kailey: what would need to happen for you to be more optimistic? norman: two things, we touched on one, we would need to be surprised in terms of the china appetite in terms of their stimulus and that coming sooner and larger than expected. the second piece of the puzzle is to look into 2022 in the u.s., we would want to see if you like the current bill that is been considered under reconciliation for the u.s. come somewhere near the $3 trillion mark and/or those tax proposals that are being put forward for
2022 watered down significantly to get us a earnings boost. kailey: seem like we often forget about the tax conversation. norman, thank you so much. elon musk meets with angela merkel's would be successor, the car company looking to gain ground in the push for ev's in germany, next. this is bloomberg. next. this is bloomberg.
future. we will do things that will make us want to learn. they cannot always be about problems every day. guy: that was a lawn mask earlier in berlin come and man sitting next to him is the front runner to succeed angela merkel at the gigafactory site. this as the country tries to modernize the auto sector. joining us now is maria tadeo. how much of a halo effect does musk bring to germany? can you hear me? i am assuming that maria is not
there. we will try to catch up with her later on. i remember interviewing elon m usk years ago in london. his conversation with me basically centered on the idea that i am here in europe to encourage engineers to take electric vehicles seriously. i guess you got to be careful of what you wish for. kailey: my question is really can't tesla compete with volkswagen? -- can tesla compete with volkswagen? i believe we have maria. how did things go today? maria: armand is running to be the next head of germany, and he went into this meeting hoping to reboot his campaign.
this is a very difficult campaign for him and for the cdu. the problem is that that meeting has backfired. there was a moment in the press conference in which they were joking around and he said we need to figure out what the future of cars will be and perhaps it will be hydrogen. at that point musk said it was a waste of time. it is electric. this came -- this came as yet another car crash. so the meeting did not go as planned and the take on this was to get this halo from elon musk is not really working as they had hoped for. guy: thank you very much indeed. now focusing on the european
auto segment. oaks wagon -- volkswagen is seeing a drop in sales thanks to the global chip shortage. have eight lamborghini launch later on. -- we have a lamborghini launch later on. let's try to answer some of these questions. how significant will the final up and running status of tesla in germany be in terms of reshaping the german auto industry? volkswagen is starting to get into gear in terms of production. >> that is exactly right. what we have seen is that tesla has started to really do well in europe in large part because of china because if you remember i'm a there's a plant in germany
that was supposed to be running already, so it is behind schedule and there was talk at the factory today about hopes that maybe they will get final approval for the factory in october, but for the time being tesla is in the situation of maybe not getting the demand that it was hoping for in china and using some of that capacity to actually put them towards experts for the european market where sales of electric vehicles are strong. we have seen a situation where volkswagen, and to your point, has made a huge incentive in the space not just with the brands, but also audi, so this is a case where these two will be duking it out for years to come in terms of leadership of the electric vehicle market in europe. kailey: they're both dealing with their own challenges.
the chip shortage is biting. how well are they equipped to handle this? craig: they talk about this idea that the expectation was the second quarter was where the shortage would hit them hardest. they have talked about how that kind of shifted a little bit when they felt like the third quarter they were -- was affected in the second quarter and will be in the third and what we've seen is a lot of these carmakers have very thin inventories and a situation where this time of year, you have summer shutdowns, so they are not going to replenish inventory. they will be really tight on supply. we are probably in for a few months of weak sales for the automakers and this is not a flexion of demand. it is a case or if you go to a dealership right now, it is slim pickings. guy: we ran a story about
finding charging stations. you can build electric bagels, but you have to plug them in. when do we start to see an impact of the evidence being made to build out the network? craig: it was a fascinating moment. he was very characteristically blunt about the idea that he was not all pleased with his experience, both stations being down or chargers being down at stations and also just not a premium experience. we've heard troubling's for months about the carmakers not being thrilled with efforts to get the infrastructure in place and whether not it is up to standard. it is possible that we will see some of these corporations, and
this was a venture between volkswagen and some others. we may see in move by some of these companies to take more of a hands-on role depending on how much it matters to them. we saw in this case that he was not happy with being up to snuff. to your point, it is not just a simple matter of making electric bagels -- vehicles and people will come, he really have a situation where a lot of buyers need to be convinced that this is going to work for them, hmmm charging really will go along way, but not everybody is able to charge at home. there are concerns about being able to get to destinations that running out of range. kailey: matt miller gets very excited about all of these things. he was super hyped about the lamborghini launch today. can you tell me why i should
care as matt miller? craig: it will be really neat. i think very business story come i think lamborghini is fascinating, a brand that could be held up as one that could rival ferrari in terms of recognition and luxury and performance reputation. we have seen ferrari as just this massive success story. there has been a lot of buzz about what volkswagen is going to do this brand, because it has so many brands -- mounts to feed. there is a lot of buzz about do they try to list something like lamborghini or something like porsche and sort of cash in on the fact that they have these assets that maybe would command a premium valuation of the type that are already has been able
to. guy: thank you very much indeed. i think we should just be clear, those are the ones that everybody used to lust after, with those cool doors. it was an amazing car. the new one i think looks more traditional, like it looks a little like -- the valuations on these companies could be superhigh. kailey: to me it just looks like an elephant sat on it or something happened to it. i wonder how matt miller could even fit inside. he is a pretty tall dude. guy: he is, but i imagine if he had the opportunity to drive one of those, he would take the opportunity.
kailey: alix steel is off today and this is that european close. i bet she will be really bummed she took the long weekend because we are going to talk about one of her favorite subjects, lord of the rings. amazon is moving the second season of the television series out of new zealand to the u.k. this move aligns with the studios strategy of investing in production space. this is one of the most expensive tv series ever made.
i bet she is so excited to watch it when it comes out. i think it is 2022. it will not be filmed in new zealand. guy: i'm not sure she would blow off a long weekend just to come and talk about this. you cannot get in, and that's the problem. this is a straightforward story. new zealand looks lovely, but you cannot get in, so there will be an issue. they are building a lot of real estate in terms of the moment. this is a fairly nice landscape here. kailey: for the record, she just rode and that she is super excited about this. -- wrote in that she is super excited about this. ♪
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stocks look like they will finish a little bit higher here in europe. these are not big gains, but they all add up incrementally. as you can see, europe again a sea of green. the gains are not the big, as we have been talking about. these are not big gains. however, they continue to add up. we are on the longest winning streak we have seen since 1999. we will show you what is happening here. these are the sets and -- session charts, going sideways. we are up another point to --
over that year, let's take a look at where we sat in terms of where we have -- as you can see, it is a fairly straight line. there's not been many acrid steps taken by these markets. they continue to move higher. that is something that i think is interesting, but i guess we have this earnings season, but are we at peak earnings? i think that is one of the questions. we are up by 19% year-to-date, really strong performances. i want to focus on what is happening with the cac, because we are getting up towards new records. you'll want to pay attention, we are just inches away from retaking the levels we saw and we have been a long time coming from back in 1999. other markets have been taking out levels on a daily basis.
fresh records being hit time and time again. in terms of what we looked like, a little bit of history. we all remember what happened in 2000. this was the last time we were at these kinds of levels. we are really not very far away, this market is only just reaching those kinds of levels. it is being driven by an interesting collection of stocks. loreal continues to be a big prime driver. in terms of what we are seeing, let's just kind of wrap things up this friday, real estate up by 8/10 of 1%, it is a more
defensive narrative here in europe today, bottom end of the market a bit of weakness in technology and energy. kailey: now more about the cac 40. 21 years after it last hit a closing record the index poised to do so again and it is luxury stocks that are powering that rally. katrina, will you be interesting this -- interested in these positions? >> it was surprising, in a recession you would not expect to have shortages of luxury goods. this pandemic gave us an opportunity to be able to buy what we saw as a quality franchise, and the stock has done well for us. it is not quite a buy but i
believe in that franchise and the value they are creating. we are getting another advantage, the changes on this angle. this is a great part of the investment piece of the story. guy: some of these luxury stocks, china has been a big driver, but we take a look at what is happening across a number of industries now and you wonder whether conspicuous consumption could be next. >> there are three stages of consumption, the first to buy a handbag and china and the neck stages you buy it outside of china and then the penultimate is you buy it at the paris flagship store and you take a picture of it in front of the eiffel tower. that last stage has not been happening, but we have seen those consumers continue to want to buy that handbag and luxury goods.
discontinued during covid. we are seeing the luxury stock i really big beneficiary of that. kailey: do more upside on a broader level for the cac 40? not just for the luxury names. >> i think what we are seeing is the fact that the market is really edging higher because we have not had any blowups. italy is managed by draghi. look at greece, it was blowing up a couple of years ago and that you have a pro-business person leading that and that is great. what we see for europe is not just good for europe and italy and greece, but it is also good for the markets. guy: is this industry better
positioned after the pandemic then it was before the pandemic? >> i think what we are seeing across the many industries is the investment in the multichannel, c had a real pickup in e-commerce, and we are seeing it here in this sector. the fact that they are transitioning away from going into the store and buying at their and she being able to get the same experience online, that expands the market. they don't just have to have people buying things that are close to the store. they can expand it to other geographies. i think that is good for the sector. kailey: what else do you want to be buying? >> i like airbus, and obviously from a competition perspective you are looking at -- boeing is on the back foot at the moment. you've seen airbus increase. obviously the delta. it is a bit of a concern, but as
we like at a longer-term basis, and that is how you have to invest, you have to look forward, we are positive on airbus. guy: in terms of the challenges that the cyclicals will face in europe, i want to come back to the china story. airbus has outperformed boeing significantly. how much longer is that advantage going to be there, and you ultimately think that some of these cyclicals can continue to drive forward in the way that they are if you're going to see the growth rate starting to abate back? >> looking at the growth, a lot of companies growth is being constrained by shortages. you had shortages in other areas in things such as transportation.
you can't get freight space because there is not enough fighters. what i think is while we thought 2021 could been the peak of earnings, we are seeing ace the labor of demand in 2022, so we think the momentum continues. i don't think you've seen the end of this rally. kailey: you mentioned looking for value. what do you do in the u.k.? >> we can go shopping anywhere. i think if you look at that u.k., some of the opportunities for us are in domestic ranch isis. -- franchises. i think the pandemic may have helped brexit, but in terms of some of these franchises, we think there is great opportunity . guy: do think private equity to
-- will get to those opportunities? huge numbers of u.k. stocks are being taken out. why is the public market being slow to respond where the private market could see those opportunities? >> i think you do have a different cost of capital and they were more brutal in terms of taking out the cost of everything. i think the public markets offer more. you have more ability to make a difference from the social side and from the environmental side, and also to create long-term sustainable franchises. i think while private equity is taking out companies they are not taking them out for the long term. they will come back as public equities, but from my perspective, we are looking at some great franchises with really strong management teams particulate and id u.k. -- in the u.k.
guy: great to see you today. thank you very much indeed for joining us. we are wrapping europe up. we are done for the day. these are the final numbers, a little higher during the auction process. the gains continue to add up. kailey: coming up, a subject that i'm trying to become more intelligent about, european football. the football world may have a pandemic recovery package coming soon. we will have more on that next. this is bloomberg. ♪
coming up jack lynch, and this is bloomberg. ♪ now checking in on the first word news. wages are rising as companies are trying to recover in the post lockdown time. there was a new record number of online job advertisements posted last week, and the british economy grew faster than expected in june, putting more pressure on employers to hire. let morris international inspiring -- is buying a group. -- phillip morris international buying a group. bloomberg has learned in that soccer organization, the final touches on what could be a
rescue package, designed to help teams recover from the impact of the pandemic, and the rescue also would impose new salary caps to prevent teams from gaining an unfair advantage. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. kailey: thank you. joining s now is david hellyer. treat me like a foreigner of european soccer. what do i need to know about this package? david: the first thing is that it is pretty obvious that football has been through a tough period during the pandemic. for the most of the past 16 months football has been played in front of empty stadiums, which means a decline in revenue.
it is said they are down by 13%. most clubs do not make a huge amount of money anyway so this is been catastrophic for them. uefa is trying to put something together. this is sort of a loan package that will help some of the most cash strong clubs. recently one of the clubs had to let go one of their best players because they could not afford his wages. in malan, another club in italy has just sold two of their best players. guy: you're seeing some of the richer clubs backed by very deep
pockets picking up those players . our salary caps going to be effective? do you think ultimately we are going to see player deflation in terms of wages? david: this is something that may happen, but it is hard because this is such a competitive business. these clubs cannot afford to let players go, because then they lose millions. the salary caps that they have come up with, it is a really difficult thing. the u.s. seems to have a very strong system. the system that uefa has been
using was reasonably successful but it hits a bit of a rock a couple of years ago. it is hard to keep a lid on the super rich clubs. guy: how do you think we are going to see football evolving question mark we have seen an attempt this year at a breakaway league. that did not happen, but if the big clubs are being throttled back, that pressure will be there. will there be others that want to join them? ultimately the revenue could be there if they were unshackled from the current structure. david: i think a super league is still a possibility, but i think it might be uefa to bring it
forward. i think the key factor that led to the disaster of the league was this promotion or relegation, such a key part of soccer. remember the premier league in england, which is not the most successful leak in europe, it broke away itself. it basically retained promotion and relegation. i think that is key to this concept working. i think the big clubs want to play each other more often and they want to capitalize. guy: thank you very much indeed.
on the stories around the football, premier league kicking off tonight in west london. news out of the united states on what is happening with evictions. kailey: a judge in washington has ruled that the ban on evictions put into place by the biden administration can indeed remain in place. we also yesterday had a decision from the supreme court about the ban here in new york and the court eased that, knocking down a provision because of the pandemic. guy: i think it was interesting, the way the biden administration structured this and this was all kind of done on the fly. it seemed as if they dropped the
ball in terms of extending it. i think there was always an appreciation that this would be called into question and could be a problem. they were prepared to do it, but this bought them a bit of re-think space. now the challenge is providing more opacity, but i think they appreciated that any that going into this. we will continue to monitor this. this is bloomberg. ♪
suppress got -- subscribers. despite the coronavirus, caused by the delta byron, -- by the delta variant -- credit suisse is making another attempt to enforce management teams in the wake of heavy losses. one executive has been nominated to head the board and the former chief risk officer has been named to a seat on the board. that is your latest business flash. kailey: thank you. we have to talk about what is
coming up in the week ahead. on monday is the deadline for 13s filings. some important you guess economic data with retail sales for july, and we are expecting them to fall month on month. on wednesday we will get the fed clues into the past, and more inflation data coming out of the u.k. when we get cpi on wednesday. guy: this is a massive week for retail. in terms of what else we are watching, the thursday story is about the rate decision, and friday consumer confidence, and what i think is asked mating, not only in terms of the industrial story but what is happening with china, this is such an interesting company in terms of what it says about the global economy. kailey: we have seen supply
chain issues showing up. that will wrap it up here for that european close on bloomberg markets. coming up, jack lynch joins balance of power with the david westin on bloomberg television and radio. guy: i am heading off to bloomberg radio. normally the cable is hosted by alix and myself, and she is not here. it will be a great show, and i am looking forward to it. have a great weekend. this is bloomberg. bloomberg.
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contribute to the supply-side of the economy. >> this is balance of power with david westin. david: from bloomberg world headquarters in new york, welcome to "balance of power." nancy pelosi seems to be caught between a rock and a hard place as she brings her colleagues back early to move forward with the budget. some insist that she go with a vote on infrastructure and not wait for the bullet -- for the budget and some set exact debts and some say the exact opposite. we welcome a veteran of the house of representatives, robert con sack. he represented -- they represented -- arbor comstock. they represented northern virginia. we are confident that they can do it not house, they did it in