Just How Bad Is the European Recession?

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Sept. 3 (Bloomberg) -- Bianco Research President Jim Bianco discusses the European recession with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

We will have much more on that verizon deal in just a few moments.

? telecom team is up behind- the-scenes, changing the face of the wireless industry for good.

Broadcast rights to, cbs is back on time warner cable, but the real fight over fees is just beginning.

Come back on the continent , while you were busy bargaining, europe made in manufacturing milestone.

A ton of deals to talk about as we kick off the month of september.

Is behind stocks from earlier, you are watching them, 59 minutes until the closing bell.

Nonetheless things are not quite where they were earlier in the session.

As we heard from john kerry, we are learning to wrestle with the syrian question.

The charts to you need to see that create the picture of what is happening right now, there you can see it, the dow industrial moving back to flat, trying to sort out what the syrian question ultimately means or all of us.

At home you can see the 10-year is moving up, which is a different story.

Here is why manufacturing in this country, spiking the highest in two years.

At least the economy seems to be doing better.

You understand why people are buying gold today.

$14, i should say 13 in the last trade.

Previews of stocks they need to watch headed into the close.

The best performer in the s&p 500 today on a percentage basis, there is not any new news today, but people are once again emphasizing the european commission approval that the company got for its i medication last week.

-- eye medication last week.

I know you're going to talk about microsoft and nokia.

I wanted to talk about a collateral gainer, blackberry.

Shares are up and it reports are now that it is selling a part of that.

There may be demand out there, potentially.

Talking about mergers and acquisitions today, mr.

Coffee among other brands and the fine yankee candle by madison dearborn partners.

Those shares were up 10% of that deal.

We will have the ceo coming up momentarily.

Microsoft agreed to purchase a nokia handset in an attempt to compete against apple and samsung.

Verizon agreeing to $130 million, the largest deal in over a decade.

The bottom line is that microsoft and horizon is attempting to secure a huge sum.

Mobil is everything, so who is next to get taken out in this telecom deal?

We want to ask the senior analyst at telecom advisory, as well as our own deals reporter, christina.

Jason, let's start with you.

Blackberry, does it still stand a shot at getting sold?

We are likely to see a continuing wave of long-term deals.

As you approach this cycle over the last 20 to 30 years, our sense is that you would want to see horizontal mergers in the the communications space, including time warner cable and charter talkscox.

Where does that leave blackberry?

Nothing surprises me.

Leap is a terrible company that at&t bought.

That is a risk for short- sellers, the company is certainly headed down.

Who is buying blackberry now?

It seems that the inventory is not moving with the new product, it would be tough to invest in that new stock.

Nokia and microsoft, did that one catch you by surprise?


$7 billion at a time when steve ballmer is leaving the country -- company?

Neither of these deals were big surprises for anyone, right?

Microsoft and nokia were partners for a very long time.

About why move?

From the standpoint of microsoft they say they can get more profit on each device that is sold.

From the microsoft standpoint it has a ton of cash overseas.

We have to weigh every deal that microsoft does against repatriating that cash and taking a huge tax hit.

If microsoft really wants to stay and become big in devices -- by the way, verizon and at&t have a vested interest in seeing a stronger third player outside of apple and samsung, so there is potentially a real play here before that becomes a very formidable competitor.

If microsoft cannot make service work, and it appears that they cannot -- they will just keep trying.

They have to make this work.

When they cut that deal years ago there were like -- listen, look up -- look at all of the employees we have, the marketing be halved, and it was not enough.

They have to own it and drive it more strongly forward.

Jason, are they just trying to guarantee a market for themselves?

They need to bring the operating system and hardware in house.

What microsoft can do is make the investments in the operating system that nokia could not make.

Becoming vertical the way that apple is vertical.

Microsoft has got to be able to make mobile work.

It has to compete against android and apple operating systems.

It is a must do deal.

Limiting the price.

I agree on the must do.

People are not buying pc's, the tablets are now selling at well.

This is the future where people access the internet on their devices and they need some and a strategy.

Listen, nokia is third largest, but not third largest smartphone.

They have got a lot of work to do to get that market back up.

Why is he doing this when he has effectively said he is out of here within 12 months?

I think that he was a potential target anyway.

He left microsoft and went to nokia, suddenly coming back?

Giving a in the family.

Could be.

So, if not him, does this make it more challenging for an incoming ceo?

We have talked about whether or not microsoft has gotten too big for its own good commonality is even bigger and it is one more thing that management is like to have to deal with, this integration of nokia.


A big challenge for any incoming ceo, including the candidates they speak to a externally for taking on this big job, you would think.

The other big deals to be will see, potentially, besides dish and directv, what is at&t going to do?

They have been rattling their cage, saying they want to expand in europe.

Do they go after vodafone now?

A lot of people are talking about the effect of a verizon wireless vodafone deal, that could be one of them.

Vodafone has said they want to focus on europe and africa.

Do you think they would entertain an approach from at&t? my sense is that at&t is trying to make this a globally scalable business.

I think that there are just greater crosses, given that verizon has a leverage ratio of three times, does that mean it is less effective?

Is that a positive force that needs to acquire spectrum?

Well, they both need to acquire spectrum, that is the issue they both have, they need to go after spectrum.

To your point, rising to be limited at this point, but what i am hearing from everyone around this deal is that once they are through rejiggering their balance sheet to get back to where was before the deal happened, they are going to go out and make other acquisitions potentially transforming verizon wireless from what it is essentially, a pipe into a true wireless service provider, may be providing all sorts of services for the home, like alarm monitoring or other things, your refrigerator telling you when you are out of milk.

You bring up a good point.

Because it was a 55% subsidiary it was effectively operated on an arm's length basis.

Some of the options that were made, like telmex , those can be applied more effectively to the wireless business.

Final word, walter?

When companies get big, growth slows down with interest rate going up and a stock at 52- week highs?

That is the time to buy.

This is the time that they buy.

Thank you so much, guys.

Coming up, adam?

While you were busy celebrating in the backyard barbecue, guess what?

The rest of the global work force was hard at work.

We will show you exactly why.

? ? while you were barbequing in the backyard, guess what?

Global manufacturers were hard at work.

This data all came out yesterday about we were relaxing.

Talking about manufacturing gains in august in july.

Look at europe, 51.4, an increase, china, mexico, brazil, the month of august vs.


At least in these five regions and countries, right?

For all the hand-wringing about europe, the data has been consistently getting better.

This is the same one going back to september of last year.

The trend is very clear.

Manufacturing is getting better.

Even though we may not think so.

This is like their version of the s&p 500 in europe.

Be found 19 of them that at least 10%. spain, did you notice that?

Rolls royce, holding the engine guys.

25% in the uk.

Out of germany, the point is that there are european industrials growing.

Most of them are exporters, not necessarily selling to europeans.

Here is, of course, of why we care.

The only european union industrial leaders be have, well more than the s&p 500, certainly more than the euro stock 50. i will post all of these on twitter.

There are some weird it tickers, we do not usually go with six or seven letters, said just bear with me, i will get them posted at the next commercial break.

We will be looking for them.

Thank you, a.j.. do not let the data fool you, the european union recession is worse than the thing since the end of world war ii.

We have the president of [indiscernible] research and he is in charge of market technicians.

You say that the european union is in its sixth year of recession?


Because it has been in six years of recession.

The peak of output was in 2007 and over the last six years we have had fits and starts, periods where look good and.

Where it looked bad, europe could not get out of its own way.

Like you do not believe the data?

I just think there are too many false starts and it is getting hard to save this one is going to get called back to the starting block again.

What is the data you are looking at that makes you think this is a broken record?

If you look at european data which pointed out correctly is a bunch of industrial exporters, which are looking good, but for europe to recover they would have to start making stuff for the 300 million people in europe.

Look at all the sales.

They are going in absolutely opposite directions.

Those all those sales are at their lowest level in 25 years.

And there is that yellow line.

But at that.

It is about sonic care, but if you think about where the u.s. has been, we went through our pain back in in europe did not feel it as badly.

It caught up with them that much later.

Who is to say that they are not now going into their better opportunity time as we eventually managed to make our way out?

They will at some point, but for eight months everyone has been telling me that the date of will get better and you have to buy it.

It continues to outperform, continues to outperform.

Typically when a market or economy turns, it is a rocket ship.

Not the kind of environment we have been in.

March 2009, it was a rocket ship.

40% in five months, that is what you would normally see while pulling out of it.

We have not seen anything like that in europe right now.

We are looking at the 10-year chart, certainly the s&p 500 has pulled away.

What happens?

Does europe eventually catch up with the u.s.? do those lines converge because europe rises?

Eventually what will happen is a kind of combination of the two.

Their biggest problem right now is the heavy interventionist governments.

They need to restructure their economy and they will not allow it.

They have got the governments of europe refusing to do austerity.

The thing about austerity, i know it gives pandora a lot, it allows economies and companies to restructure for new environments, but it will not allow that, so they are perpetually stuck with of growth.

You write about some of the manufacturing companies doing better, but i would not trumpet doing better.

What do you think of the u.s.? are we still in a good spot recovering from here?

Flex the famous line on wall street?

We have our own problems as well, except our shirt has more spots.

We will continue to struggle, but we are relatively much better than europe.

Where are you putting money?

Probably in the u.s. right now.

There is just nothing to really jump up and down about saying the u.s. is great, here we go, it just seems better than the emerging market option or european option than the asian law -- asian option right now.

Which do you like?

The consumer area.

Industrials continued to struggle, and there are too many legacies.

Technology evolves so quickly, you have to almost defray those.

Look at nokia, two years ago on the top of the world.

That is the problem with trading technology.

It sure is.

Gm is here all show.

-- jim is here with us all show.

Plus three takes in triple threat, coming up.

Switzerland, we have more in global outlook.

We will be right back with jim bianco.

? . ? two years ago in switzerland a big mac costs $17. no wonder i did not get -- did not get there.

Now you can get two with a toblerone mcflurry.

Basically, the swiss central bank is one of the most active in trying to weaken its own currency and at least in admitting it is trying to, much like the japanese central bank, and it has been very successful from two years ago, however, this has become -- i do not want to say the most hated, but it is the biggest sell on the street.

More analysts want to sell this than any other currency.

According to 50 analysts that resurveyed, they are expecting a 4.5% drop.

Correct me if i am wrong, it became the ultimate safe haven play in 2008, 2009. absolutely.

It continued to be a safe haven.

Although the price of the big mac came down, it has still been a popular currency.

The problem that the franc has over the yen is that it is right there in the middle of europe and as the european crisis continues to look worse, people are rushing to the franc for safety, but that has kind of turned around lately.

Europe is looking better and better and as it does, the franc becomes a much bigger sell.

Analysts are expecting a 1 per -- 1.5% drop.

Syria, if that heats up, might be writ -- might be see a return to safety in the swiss franc?

In my mind is always a safe haven, you think of some -- you tend to think of switzerland as a safe place, but i am not sure global investors are as antiquated as i am now.

What about gold?

They have historically track each other very closely and gold has rallied in the last few months.

Could that be seen as a move back?

Much more time with syria.

The swiss franc has a lot -- has rallied, but one of the strongest currencies is the pound.

I am sure there is a disconnect.

We will see you again before the close.

Coming up, the cbs deal.

Lockout over.


This text has been automatically generated. It may not be 100% accurate.


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