Sure looks like you're missing a part. Cable shouldn't be exiting at that point - my guess is it's being pinched by the bracket cover. The cable should fit inside part 6 on the spec sheet below and travel further down the bar before it exits from under bar tape.

http://techdocs.shimano.com/media/te...9830612670.pdf

EDIT: on closer look that may not be a shimano lever but I still think the problem is incorrect installation. As a few others have noted there doesn't seem to be any housing. There is a pinch (or friction) point along the line such that it requires more force to pull the cable. Not only is this a comfort problem but a big safety concern. The cable will fray and you'll reach for the breaks and " snap" you won't find them.