Just under 30 minutes until the end of the close of equity trading. A big picture at across asset, equities, a little bit of a mixed picture, ftse 100 in the u. K. With a record high today. Dax and cac 40 trading sideways, a mixed picture in other industries and in the fx face, broad based weakness and the today,shed through 119 just below that now but up 3 10 of 1 . Cable meanwhile has gone above 134, slightly below that now, 133. 97. Up to 10 sub 1 . Fixed income space, the 10 year yields, generally yields moving lower. Metals on the front foot, let an aluminium moving higher with brent crude down 6 10 of 1 . One stock i want to highlight, the today chart for impact. Ams drop as much as 14 today, down a present or 9 , one of the apple stories. Concern over the past couple of days about apple and the iphone x. As the european markets have somened, we have seen companies drop. Looking at industries, tech stocks providing the biggest downward drag, down 3 10 of 1 . On the upside, materials outperforming, not a surprise given what i said about metals and the gains in the space metals. Stoxx 600 up to tenths of 1 . Of 1 . Ftse 100 hit a record high even with sterling, cable back above 134. Taylor riggs has more from new york. Taylor we are seeing a little bit of gains on the major averages. This morning, volume off about 50 . More green on the screen, in particular i would note the russell 2000, smallcap stocks have benefited from tax reform and seen the biggest gain, up 3 10 of 1 . Head, ithe nail on the is the story over the last few days has been apple and the suppliers. There were reports that apple was cutting production because of lack of demand. Apple and the chip makers had sold off yesterday and chipmakers coming back. Much less bearish and said this is part of their normal operating procedure. And ultimately it will be better than expected for the iphone x. I want to stick with that theme look at semiconductors. Say fromt is easy to this chart we are in the middle of a bull cycle market. Or some of the semiconductors with the internet of things, artificial intelligence, memory chips, all of these leading to a big surge in the semiconductor index. What is not higher today, some of the media stocks, tv networks, in particular fire come, off about 2 viacom off about 2 . A series of studio misfires. Downsizing came in a distant third. The theme of networks losing subscribers to streaming services. Nejra thank you. Lets turn to europes economy for our outlook 2018 series, momentum expected to continue into the new year but how long can it sustain the current pace of growth . Area bring in a euro economist for bloomberg. Great to see you and great outlook. The eurozone surprise many on the upside in 2017, what does 2018 hold . What can investors expect from the ecb, given the strength of the recovery this year . 2018 will be a strong year in terms of growth for the euro area and the momentum in 2017 surprised everyone just about to the upside. Likely to carry into next year which will give us elevated levels of growth and keep the taperppy, happy enough to one last time where qe program the qe program and have committed to nine months of purchases at 30 billion. Once they are up in september, they were probably do one last tapering. And carry that on for six months. Buoyant Growth Outlook in the euro area. Qera that is in terms of and we can talk more about rates and a second. In a second. Lets talk about inflation. In this chart ,8187, the headline versus the core. Core inflation still pretty far from the ecbs target, how far is that likely to become next year . The advanced inflation, likely very gradual. Not many signs of buoyant wage growth. Even though the unemployment rates have fallen considerably. Any recovery will first have to be seen in wages and then eventually go into the other measures of inflation and importantly consumer prices. That is some way off, a gradual process. That is why the ecb is in the rest to cut off qe and to finish the stimulus program. Nejra ecb policymakers have to focus on the rally and euro cents april. They currencies Real Effective Exchange rate, how is it doing . The currency, if anything, is slightly undervalued, according to most models a fair value or the currency. The ecb does not have much to complain about in terms of levels of currency. The concern the ecb previously was the speed of the advanced. That has slowed down at this stage appeared we are very at this stage. We are far from the extreme levels of overvaluation, the concern of the ecb a decade ago and the concerns he will not likely be a major theme in 2018. Shery when it comes to the economy, we saw a pickup. Given the age and population and the tracking workforce, is it too optimistic to think that the modest growth could start blooming anytime soon blooming anytime soon booming anytime soon . The Sustainable Growth rate in the eurozone, once all capacity has been eroded in the economy, the difference between potential output, likely to happen in 2018, the rate of ,rowth will slow the trend rate which is only about 1. 5 or so. Once the recovery is done, naturally the rate of growth will be lower than the in the euro area. Chief, the portuguese finance minister, i spoke to him recently about the eurozone reform. What potential upside to growth that we get from any reform in 2018 . Or is it too early . The focus is france. That is where the momentum is as germany is dealing with their own domestic politics. Ae president of france has clear mandate from the people to reform the labor market here in their biggest economic labor market. The biggest problem. Measures last year he put in ofce and more in the spring 2018. Most of those reforms aimed at lowering the cost to businesses, employing people and incentivizing them to hire more people which should lower the unemployment in france and provide a boost to the economy. Nejra politics and france not as much in focus as it was in 2017. Where else in europe could politics provide a little bit of a headwind, italy or elsewhere . Italy, almost 20 countries in the Monetary Union with never a dull moment in terms of politics and always election going on summer. The italians have to go to the polls before the spring of this year, or in the spring of this year, excuse me, there is a bit of an unknown. Previously the fivestar movement, a populist movement had favored a referendum that pulled away from that and they said, if we cannot get what we want, we would consider it but a party not truly behind the euro and italy is the place to be most concerned about. Opinion polls show the italians less happy in the euro that other people of Major Economies in europe. Nejra italy will be in focus this weekend in 2018. Thank you, david powell, a Bloomberg Economics would be 2018 euro zone economic outlook. Shery lets look at the first word news with courtney donohoe. British labor lawmakers have philip hammondr to publish the treasury analysis of brexit potential impact on the u. K. Economy. And a letter, 25 Lawmakers Said it is vital that the light is shed on the modeling and analysis that the treasury has carried out. Philip hammond told the committee previously that the ministry was prepared for a wide range of alternative structures that have not revealed the specifics. The number of Islamic State fighters in iraq and syria has dwindled to fewer than 1000 as the u. S. Led coalition told reuters it is a third of the figure from just three weeks ago. Syria and iraq declared victory over Islamic State after fierce fighting hurt their hold in key cities. During a meeting on december 24, the french president called on saudi arabia to end the blockade of yemen. The comments made public through a text message. He says ending the blockade will allow humanitarian aid to enter yemen and that the parties should return to the negotiating table. Chinas leading policymakers planted this discuss amending the National Constitution for the First Time Since 2004. They decision was made today at a policy meeting headed by the president xi jinping. They party will convene in january but no details on possible changes were provided. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Shery breaking news, Kindred Healthcare holder Brigade Capital is expected to vote against a deal. They say a nine dollar per share. Erger is inadequate Brigade Capital holds 5. 8 of Kindred Healthcare and is its largest shareholder and the humanity of expected to happen with two private equity firms and a 4. 1 deal. Brigade capital saying it will vote against the merger. , we are talking all things luxury. This is bloomberg. Live from bloomberg world Head Quarters in new york, i am shery ahn. Nejra live from london, i am nejra cehic counting you down to the european close. It worlds biggest Beauty Products company is on a mission to transform its business boasting a portfolio of 34 International Brands it is heavily investing in ecommerce. Their ceo talked about the companies secret to success and how demand in china is growing. We asked what is trending right now. Theater r, luxury luxury. Luxury is booming mostly with chinese customers. They love beauty and luxury. They love our brands and our business with chinese consumers everywhere has been booming, not only in china, but they are in hong kong, japan, even in london. Have you had to that to the Chinese Market . Yes, the products we sell, not for all brands, some are same all over the world, but loreal, they may maybelline, products we sell in china are made in china by chinese labs. Because of regulation . Wantnly but we week to create a product that is right for them. There needs, skin are specifically different. An hour chinese labs and manufacturing in our chinese factories. Is the number one beauty brent in china. Is your success through distribution come advertisement, success through distribution, advertisement, celebrities . Number one, it is quality. For all of our brands, absolute priority is the quality and safety of our products. Something that the chinese respect a lot. It is important for them. Innovation is also extremely important to an industry where you have to innovate a lot, more than 15 of our products every year our new. To keep an inflation innovation flowing. It is the imagery of the brand. Paris,mb, loreal beautiful imagery. Chinese consumers are very sensitive to that. They like it. Ceoa that was the loreal with francine lacqua. Confidence in highend Luxury Brands is mounting as the year comes to an end according to analysts and bloomberg intelligence. The reach of ecommerce has launched new products and rebounding key asian markets are stimulating demand. Joining us with more is Deborah Aitken, our Senior Analyst for luxury goods. I want to start with this chart, it shows heritage gaining favor over passage fashion, we mean younger fashion, why . And the because of asia demand from asia and the countries in which they domicile. Shery when it comes to where these consumers are shopping, it seems to be that the u. K. Proves to be a good place to go. This chart showing you that when you put the chinese yuan, Chinese Tourists shop a lot overseas, they pound has fallen, the euro line in blue, against the euro it has risen and become more expensive to shop the euro than in the u. K. Well this trend be sustained . Deborah i believe so. Ae companies are expecting difficult time in europe the first half of 2018 and when we look at the u. K. Side of things, quarter three was against a difficult base because we had year on year weakening of sterling because of brexit. As we go through quarter for with 5 sales growth against a difficult base out of the u. K. And we expect that to better in the first half of 2018. Nejra going back to the heritage brands, i find this interesting, do you expect the outperformance to continue and in which brands in particular . What about burberry . That ties the u. K. , sterling together. Deborah they had a difficult time to the first half of the year in 2017, coming into quarter three, just a 5 samestore sales rise. The persont perhaps leaving after 10 years could be heading to burberry. There is a lot going on for the brand. Redefining their outerwear. New collaborations with good celebrities. There is a lot happening across the spectrum overall. Nejra what other brands should investors be looking at, in terms of what looks interesting to you in terms of outperformance in 2018 . Deborah one of the areas we will see a performance people performance will be with Peak Performance with m a, Share Performance last year, an ipo which was heavily overprescribed. Jimmy choo by michael chores michael kors, very high share Price Performance and those kind of things will be here in 2018. Also strong standalone ,erformances from montclair gucci brands. Their exposure to mold a new. Totwo millennials millennials. Nejra thank you to Deborah Aitken of bloomberg intelligence. Coming up, the european close and the ftse 100 has hit a record today. 7628. We will bring you that and more, all the details on european equities at the close. This is bloomberg. Shery live from bloomberg World Headquarters in new york, i am shery ahn. Nejra live from our new European Headquarters in london, i am nejra cehic. Time for the Bloomberg Business flash. Prime central homeboys in london fell 7 10 of a percent in december, the smallest decline since june of 2016. 40 of homes valued at less than than 2 in pounds less million pounds. Shell expects u. S. Tax reform to have a federal impact on the company and the operations in america primarily because of the future reduction in the Corporate Income tax rate from 35 to 20 . 21 . They expect changes in the Fourth Quarter results but says analyst analysis is not yet complete. That is your business flash. Lets look at where european equities are trading as we head to the close with the ftse 100 hitting a record with the dax and cac 40 not gaining quite so much. This is bloomberg. London, this is the european close, i am nejra cehic with shery ahn in new york. Stocks finishing up in european trading and lets take you through the market action. This is across europe with the lovely map. A little bit more in the green that earlier. Earlier the stoxx 600 was treading water but it has ended the session slightly in the green. Ftse 100 with a fresh record today and of the cac 40 in the green and 1 10 of a percent in france after it was flat earlier. Dax struggling to gain momentum, trading sideways. Italy is flat and spain slightly in the red. A mixed picture but remember it is fairly thin trading after the holiday. Across the sectors, i showed you the Different Countries and this is the stoxx 600, closing up 2 10 of 1 as we reopen after the christmas holiday. Materials stocks leading the gains, up 8 10 of 1 . Largely because of the gains in industrial metals. Meanwhile, tech stocks have been underperforming, down 2 10 of 1 . Apples acquires posting losses apple suppliers posting losses. We had been seeing gains in industrial metals, in copper, reaching a threeyear high. This is a mid china supply cuts. One stock i have been focusing the best performer of the stoxx 600, up 26 but it did gain some 70 earlier in the session and rose the most since 2003. It is a commercial property country company. That has placed shery u. S. Shery u. S. Equity markets higher, the dow gaining and u. S. Consumers upbeat about the economy and Consumer Confidence day to showing that. A little bit below estimates with health care and Telecom Stocks leading the gains. 1 in most2 10 of sectors in the green except for energy because oil prices now coming down from the twoyear high we saw yesterday. Overall, tech is rebounding from the selloff in the last session. Markets. Ome other gmm go is the function. In the americas, argentinas leading gains, up 1 . The central bank in argentina steadyay help their rate so the argentinian peso taking a dive. That means that the argentinian peso at the weakest level on record since trading in the 1990s. It is in the red. Overall, currency markets in the green because of a broader dollar selloff. The u. S. Dollar all in for a third consecutive session. Weakest levels since december 1. That is giving a push to the other currencies. The mexican peso rebounding from losses in the previous session. Natural gas up 3 in the u. S. It has become cold here and natural gas demand is booming. Nejra we will return to commodities and oil rally losing steam as coppers weddings great gaining momentum. Joining us is stuart wallace, our executive editor for energy and commodities. We talked about this but is it it is important to point out because individual moves in oil and copper. The bloomberg the total return index, it measures returns, you pointed out that it is unchanged on the year. What does this tell you in an investor in how to approach . Stuart go long across the entire sector. There is a lot of different stories going on. Commodities are not like a decade ago where everything was a buy. You worry about market structure. We are always talking about the oil price. The thing to watch for is the price today relative to what the market will think market think it will be in three months. What is the oil curve showing us . We have a chart. What is the oil curve telling us . Stuart a couple of things, shortterm worries about shortterm supply. Very much ill be back of the opec decision. On the back of the opec decision. There is caution about where we will be in one year, two years, three years, saudi arabia already making forecasts for where they will be in six years with oil revenue. The oil market is being more cautious and not pricing in those numbers. Shery great you mentioned saudi arabia because 75 girls per 2023 is huge, with a not extend their output curve next year . Stuart looking at the budget estimates, someone suggested they increase production and are talking about 11 Million Barrels per day, talking 5, 6 years out, a longtime in funds in terms of the oil market. Be few there would people who wouldve predicted correctly five years ago what happened. No explanation for how you can do both things at the same time. Shery you mentioned being more discerning when it comes to commodities. Showing you the discrepancy between iron and copper because copper shooting up in the past year but iron ore underperforming. Why do we see this divergence and how much of a role does china play in this . Stuart china is essential to both. Iron ore, it has been chasing the higher grade, if you get out of australia and south america, it is a question of higher prices making it worthwhile. With the copper story, it is all about china. This week, more on the supply side but on the demand side also. Can the Central Government in china maintain the growth rate and control the economy to the same extent we saw in the last couple of years . If they can come expectations should be for higher demand. No great story on the supply side. Nejra when it comes to metals and the outlook for 2018, are we expecting base metals to outperform Precious Metals . What are analysts saying about this . One of the winners of this year was palladium. Stuart you have to think about it not just palladium and in the precious metal categories but a more industrial metals, they will plate more into gdp. Gdp. Ay more into in terms of where Commodity Prices are going, to some extent tell me what will happen in china and with the dollar and i will give you a fair idea of where Commodity Prices will be. They questions. Big questions. Commodities generally have probably not hit the peak but plenty of people on the sell side. , thank you soace much. Shery lets check in on the first word news with courtney donohoe. Ministry,in interior thousands of police reinforce the point to catalonia in the runup to an independence referendum. Spain took control after a declaration of independence by the catalog parliament and the countrys Central Government in madrid this missed it and dissolved the regional parliament. Russia plans to limit the number of bases airbases the u. S. Can use to launch reconnaissance lysis under the open sky treaty. According to the staterun news agency, the head of the Russian Foreign Ministry North American Department Says the restrictions cover a response to u. S. Measures to limit Russian Military flights in its airspace and the move will set to take effect on january 1. In israel, allies of benjamin are trying to limit police power in future corruption investigations. The proposed legislation would prevent cops from publicizing recommendations to state prosecutors on whether to indict a suspect. A vote on the bill is expected this week and Prime Minister has said that any new law would not apply to a current investigation and has denied involvement in two separate corruption cases. Large areas of the United States are facing bitter cold and dangerous conditions in the days ahead. Every, pennsylvania has seen more than five feet of snow since Christmas Day while falling temperatures could pose a greater risk and windchill advisories in effect for parts of the midwest and northeast, including new york and meteorologist warned that frostbite is possible with as little as 30 minutes of exposure. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Shery coming up, great stocks up more than 27 for greek stocks up more than 27 this year and somebody thats the rally will roll into next year. This is bloomberg. I am nejram london, cehic. Shery a new york, i am shery ahn. More of our best conversations from 2017. Had his eyes on china for the past few years and this year his focus shifted elsewhere. He explained to us why he is long greece. Greece has gone through a great depression. High to low gdp decline of all most 30 and the greek people and government have suffered mightily over the last eight years because they do not have a currency of their own to make the adjustment that needed to be made to their economy, close financial crisis and post european banking crisis. They have been at the mercy of others and the European Union and the imap together let a lot of money to greece to keep the European Union together. Imf is being too punitive with their requirements or demands on greece. The good news is that they ended up coming to a imf is being too much better mutual conclusion post the writing of our peace. Why now . Someeason i ask is because people would look at the great straight and say it is already played out nicely for people in greek government bonds, they have been rallying, up 16 already this year. A different difference between the bonds and equity, the bonds banks only have about 10 billion of Market Capital. Bank Market Capital to gdp, the lowest in the world. When you think about an economy that is just now starting to show green everywhere, whether it is tourism, new vehicle registration, gdp, primary deficit, no matter how you look at the macro indicators for the country, for the first time in eight years, they are starting to flash green. I think you have an interesting political situation in greece where there will be a currentfrom the government to a more slightly centerright but very economically independent new leadership in the next 18 months. You asked why now. You are starting to see green shoots, the banks do the right things, finally in greece and about to have new leadership. I think you are going to see if you remember argentina as to somewhathandoff much more focused on business and economics, then being i somethingwill see slightly similar in greece with Leadership Today that may not be the right leadership and the will make in waiting something great happen in greece in the next two years. Hand the reins makes it sound more friendly that is typically is. You would like in the opportunity in greece do what you and others enjoyed in argentina with the transfer of power . I would. There is not a great parallel to that other than i think ward is notin word i happening to a large scale because the political situation is what it is. Local investors need more economically friendly leadership to take over before you see true privatization happen in greece. You will see some privatization of the next couple of years. How much money can you make in greece on an unlevered basis . When you spot opportunity, in terms of what . Look at the greek banks, traded at third of book value. Even at the countries in europe that went through restructuring, portugal, spain, ireland, these 50 , 60 aded down to of book and many now north of book value. ,lmost 25 of book value today you have the opportunity to make several turns on your money unlevered in the next few years, if things work as planned. Why make this case now . By arguing against austerity, you are just helping the government . Are you not . I am not arguing against austerity. Greece has hit the fiscal targets they have been asked to hit by the creditors. Some of the targets were designed we do not want to get deep into the minutia but what they have done to create the primary surplus was to agree to an economic contraction. A new government may be able to negotiate some of the primary surplus points for spending, if they are willing to adhere to a more strict framework and the rest of the economy and where they will spend the money . They will not just give it to the people in a christmas bonus which we saw happened last year with generated less than two points a favorable polling for the current government. That is just burning money as we need to structurally reform greece and a few things going on, in greece, two things they do for sport not done here, tax evasion and selectively defaulting on your loans. Those things are about to change for a number of different organizational reasons. There are all kinds of behind the scenes structural changes going on that makes it interesting. Given new democracy is falling well, a private mr. Calls an election, what happens to greek Financial Markets . In a that were to happen surprise which we do not think will happen anytime really soon but sometimes next year, in the time continuing of market, next year is in attorney but in 12 months you will see 12 elections called and the market will go up 20 , 30 . In a single day . In a week, close. An immediate reevaluation of stocks . N general, bank the greek market in general, yes. Shery kyle bass speaking to Erik Schatzker in october. Nejra time for the Bloomberg Business flash, a look at the biggest business stories in the news right now. They recently passed u. S. Tax overhaul will cost barclays a onetime charge of 1. 3 billion, it is requiring some companies to be exactly the tax assets that have accumulated on the balance sheets. The british lender said it expects to benefit from the bill longterm and its ultimate impact is still under review. South korean prosecutors want a samsung heir apparent to spend an additional seven years in jail, he is already appearing appealing his fiveyear sentence for allegedly bribing his way to bigger control. A panelist is expected to decide the matter in january. Of sales says the head for its domestic consumer business has been detained in a corruption investigation. The china Biggest Smartphone markers said they have taken immediate action on suspicion on taking bribes. Chinas consumer sales for the company which over this year rose to number one in smartphones and ranks number three globally and is a major rival to apple and samsung. That is the Bloomberg Business flash. Coming up, the battle of the charge. Can be and him non th nejra time for our global battle of the charts where we look at some of the most telling charts of the day and what they mean for investors. Access these on the bloomberg. Starting things is taylor riggs. Taylor i knew i was going to be first, maybe a good sign. Oil prices, we talked about the rally in oil and one point up near its highest going back two years. Oil prices in blue, a little bit of the rally. Energy stocks in white. They have not kept up with the oil prices. They have been highly correlated. Do the Energy Stocks in white catch up with oil prices in blue, or does the blue line fall down to match the Energy Stocks . They have been pretty bullish on Energy Stocks and on this intermediateterm which could be a boost for some of the Energy Stocks. Find this btv 164. Shery love talking up nejra love talking about correlations. Shery a vision of the future, mainly 2018 and when a key theme will be, trade. Am taking you to vietnam when President Trump took office , he pulled out of the Transpacific Partnership and people said vietnam will be the worst hit but since then, sales to the u. S. Have increased 8 this year. If you cannot sell to the u. S. , go somewhere else, they are going to china. These fight in sales to china and to europe where you are. Globalization, we are all linked together. Just go to a walmart in the u. S. And you can see they are selling furniture from vietnam. A company from there. A vision into the future with vietnam. Nejra who can question a visionary. Yours, i did saw not know where you will take it. Yours was brilliant as well. I want to tie you but it is sherys first time and she sold it well. Shery thank you, my first when. Win. Nejra coming up, our first show focused exclusively on etf. Time at 5 30 london time. This is bloomberg. We will bring you the latest. At how should wall street firms respond to the new u. S. Tax regime, we will explore what options are on the table. What is in the stars for the year ahead in mergers, the makers who appeared destined for m a and 2018. In 2018. Halfway into the trading day
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