tv Bloomberg Markets European Close Bloomberg April 29, 2016 11:00am-12:01pm EDT
european close on "bloomberg markets." marc: from new york to london in the next hour, here's what we're watching today. we got a snapshot of progress in the euro area recovery, showing first quarter g.d.p. expanded, while unemployment dropped, inflation came in lower than expected. we'll dig spew all the data. betty: we will indeed. meanwhile, the dollar is headed for its lowest close in all of the year, as the prospect for another fed rate hike rose even more slim. how much more could the curps a pull back? mark: with the referendum vote just a few months away, bloomberg television hosted a breakfast debate with some of the most passionate voices on the issue. we'll have all the highlights. betty: 90 minutes into the
trading session in the u.s., i want to head back to the markets desk, where julie hyman has the latest, particularly after our discussion with the dallas fed president, who said, you know, not surprisingly, that if the data improves, he'd back a rate hike. julie: sort of echos what we've been hearing, data dependent f. the data does continue to strengthen, a rate hike would occur. generally the markets have not taken that kind of commentary very positively. we are seeing the three major averages go to the lows of the session. we are also seeing a close mirrors of oil prices today. look at the bloomberg here, just the intraday chart of the s&p 500 in white versus noil yellow, sort of expanded it out. you can see they've been tracking very closely in today's session, so that is also helping drive some of the trading that we're seeing, and then there are earnings reports as well to consider. on the plus side, amazon profit and sales beating estimates. amazon reporting record net quarterly income as the company benefited not just from its core business, but from the
amazon web services, as well as cloud services, business up 10%. gilead is the biggest drag on the s&p 500 today. that company is missing analyst estimates for the profit, for its profit. sales also of its blockbuster hepatitis c treatment were less than analyst had been anticipating. also, elsewhere in earnings accident just sort of doing a survey of good and bad, monster beverage getting a boost from its coke distribution deal, expedia profit topping estimates as well and also coming out ahead of what analysts had been anticipating in terms of its sales number. on the down side, an unthinkable forecast, according to analysts. those shares down sharply. seagate, the disc drive maker, also come out th aorast that's below estimates, and sky works, the chipmaker, a victim of leaker apple iphone demand, one of the suppliers there. so that proving to be an issue.
actually i'm going toss it back to mark now. mark: julie, it's all red here. look at that, the stoxx 600 down by 1.8%, biggest decline in a month. the index is set for its first weekly decline in three, but it is on track for a second consecutive monthly advance. this morning the best performing industry group facing resources, and oil and gas facing resources best performing industry group today, but down by a fifth of 1%. busy earnings day, busy earnings week. astrazeneca wrapping up a busy week for drug makers. first quarter earnings falling by 12%, below estimates. it also detailed plans to cut costs as its best-selling treatments face generic competition. the chief executive warned in february the profit and sales would decline this year due to, and i quote, massive expiration. the company faces products such as its cholesterol treatment
crestor. these are the big drug players in europe in the last 12 months. glaxo is down by 5%. roche down, novartis also down. sanofi today, big, big day for the company. it reported little change in first quarter profit, another drug maker, and also a decline in sales. one month, one day, of course, after disclosing its interest in medication for $9.3 billion to rekindle growth. now, they responded, it reject the hostile offer, saying, and i quote, substantially undervalues the drug maker and isn't in the best interest of its shareholders. sanofi consequently is trading down by 6%. this is the biggest decliner in europe today. restaurant group, it's a u.k. restaurant group, shares have fallen to a four-year low, biggest decline since 2008.
shares down by 27%. this company operates 500 restaurants and restaurants. basically it issued a profits warning amiths deteriorating sales. it's starting a strategic review. the c.f.o. is leaving. basic it's been hurt by increasing competition from casual dining chains and also a drop in businesses to u.k. retail parks, where many of its outlook are located. not only do we need you to come over to the u.k. and spend some of your money in luxury hotels, when you're here saying hi to me, we need you to visit some of these retail parks. betty: you don't need to ask me twice, mark, at all. let's check in on the bloomberg first word news this morning. taylor has more from our newsroom. taylor? taylor: a helicopter carrying people back from a oil and gas deal has crashed in norway. 13 people were on board, 11 died and two are missing.
there were reports of an explosion and thick smoke. the helicopter's hull was found 20 feet from the water. boaters in iran are deciding whether moderate or hard-liners will control the parliament. polls have opened for elections determining the last 68 seats. in february, reformists and moderate supporters won a majority. it was a setback for those opposed to last year's nuclear deal with the u.s. and others. and the debt crisis in puerto rico tipped into a new phase this weekend. unless the u.s. commonwealth can strike a deal to defer a $470 million bond payment in the next few days, it's in danger of default. congress is working on a rescue plan for puerto rico, but it probably won't be ready until lawmakers return from a recess on may 10. global news 24 hours a day, powered by our 2,400 journalists around the world. mark? mark: thanks very much indeed. mario draghi's policy challenge was highlighted once again
today. europe's economic growth grew the fastest in a year, but it was overshadowed, betty, by a renewed drop in consumer prices. betty: indeed. despite solid growth momentum, inflation is not picking up. what does that mean for the eurozone's economic outlook? i want to bring in citigroup's global markets senior economist for europe. this is really a conundrum for the e.c.b. maybe it's because their policies still need some more time. you tell me. what do these numbers say to you? guillaume: well, it's been a pretty good first quarter for the eurozone, same as the u.k. there's a bit of a spring in the data step going into the second quarter. what we see is slightly above trend growth in the u.k., but i think that the reason why is it's still by inflation was because the gap remains quite
large. so the pace at which the eurozone is currently suggest to us that we close this gap problem that the eurozone has in about three to four years' time. and in the meantime, the e.c.b. has to be very stimulative. more of the same. no changes in policy stance, no changes in rates for the e.c.b. in the foreseeable future. betty: they have to basically keep their foot to the pedal then and continue with their program. guillaume, does the eurozone risk at all stagflation in the eurozone? guillaume: no, because stag haitian would be zero growth of inflation, and i'm not really sure that this is something that's the outlook. we think there's going to be a pickup in inflation probably around 12 months from now, because it largely affects energy prices, but also because of the trajectory of the economy is sufficiently strong to confirm the trend of unemployment, a decent job growth. and if you look at the credit
data, the money supply and lending behavior of the bank, they're starting to expand cheaper loans to the private sector, and that's going to be cementing, i think, a modest recovery going forward. mark: what does it mean when it comes to stimulus, guillaume? we've had another batch in march. how long before the e.c.b. is going to have to press that stimulus button once again, in 2016? guillaume: we think that they have done enough to take a step back until the september meeting. down to the june forecasts, when they are published and released, we'll show higher g.d.p. numbers, higher inflation numbers, certainly in the 2017-2018 range. when you think about september, by then there will be six months of purchase programs left. we suspect that might be a bit too little for participants to remain calm the prospective.
so i would just suspect that six months extension looks the most reasonable policy they can make, perhaps also a small cut in the refinancing rate to incentivize banks to lend and borrow more. mark: guillaume, we spoke to the european union commissioner earlier. before i ask you about what he had to say, listen in. e's speaking about portugal. >> what is really important right now is that portugal appears to fiscal discipline, that it continues with a structural reform measures to strengthen the competitiveness. and more important part really for portugal's economy continue its economic recovery. mark: waiting for a rating agency to finish its review of portugal's ratings, it's
markets. if it chooses to push portugal into not investment rate territory, does it mean the e.c.b. is unable to buy portuguese debt because the other rating agencies already have it as junk? guillaume: i think it is very difficult to rewrite the rules. if the investment grade rating is no longer, then undoubtedly the government council has to find a solution to stop the program unless there is a precautionary credit line put in place. it's very clear, i don't think that they will remake the rule book for this. portugal i think is doing just about enough to be able to keep this investment grade rating for now. the recovery is modest. the progress is slow. a bit of unwinding on the fiscal, but what is the key now is to support growth. i think it is constructive enough at this stage i think to avoid this scenario unfolding this evening. mark: yeah, that review could
take a listen to this. >> we want free trade in europe. we want friendly international relations with europe and little else. that's the right long-term place to be. this decision is all about the future. it's the long-term health of this proud nation. >> i'm afraid there will be serious disadvantages for u.k. consumers, businesses, and for the u.k. in case of leaving. >> the present situation in the e.u. was not satisfactory, and it needed radical change. i'm sorry to say i don't think that that radical change was met. it was disappointing. given we didn't achieve what we thought was necessary, then i think on balance, we ought to leave. >> market access around the world through trade deals is valuable. it's valuable for jobs. it's valuable for investment. it's valuable for the future prosperity of our country.
what they tell us is that they don't see any way of getting that same market access from outside the european union. >> this is crazy to be linking to and tied into a political rodge which we don't want to be part of. we don't agree with the objective. and it's something which is an economic value. we will do far better with the freedom outside the european union. >> i think that the u.k. should stay and the damage will be most eager for u.k. than for e.u. mark: it was a wonderful debate. it was a fiery and a fascinating debate. and i have to say, it was a tie. one of the fascinating elements, betty, was right at the end when questions were put to the floor. one of the attendees said with respect to all of you aged panelists, where are all the under 30-year-olds? it's a valid point, isn't it? because often in this debate, we're seeing more of the
eminent parts of society and less of the under 30-year-olds. so it was a really, really valid point, betty. i want to bring up a chart, betty, which highlights the fact that brexit concerns, and we've been talking about this the last month -- how brexit concerns have eased. this is a great shot, showing how foreign investors bought 7.8 billion pounds of u.k. debt in march. that's the highest proportion of purchases since november. it follows the biggest trend of back-to-back declines since april. so what it shows us is that investors seem to have confidence in u.k. assets after all. after the initial selloff and after investors, as you can see from this chart, were less interested in u.k. guilt. but you're going to show us a lovely function, aren't you, betty orkt bloomberg, which tells us it's still neck-and-neck, isn't it? betty: it is, but it is leaning a little bit more towards taying within the e.u.
this latest poll, as you can see here, says 43% say to remain, 40% still say to leave. ut that has gone down. there's still 17% who just haven't decided. i don't want to let that comment you made go too quickly. i think it's absolutely important and very valid that service 30, that we their opinions, because we can see from our own elections how important it is for that younger class and how much they can sway the polls. speaking of polls, i know london is going to hold their mayor y'all election the. who is going to replace boris johnson? is that going to have any effect on this? mark: it's interesting, because it could be seen as a gauge of the referendum. but to be fair, the favorite is the labor candidate. he's up against the torre
candidate, zach goldsmith. this is a chart which highlights labour's advantage in london in the election last year, when the conservative party won. we saw london seeing the biggest increase in the labour vote for any area in the u.k., and that's the problem which zach golded some smith has. it's a bit of a stronghold for labour. boris johnson's victories actually went against the trend. boris very charismatic, it's very difficult to follow boris johnson, betty. so you have to say, according to the poll, never trust the poll, especially in u. k. elections. you have to say mr. khan is the favorite, but we've still got a few days to go. anything can happen. betty: indeed. as you said, it is pretty hard to follow in boris johnson's footsteps, i imagine. still ahead on bloomberg television -- drama in the boardroom at deutsche bank. why one board member is stepping out early, plus we're breaking down the health of
mark: i'm mark barton in london. betty: and i'm betty liu in new york. this is the european close. it is time for the bloomberg business flash, a look at some of the biggest stories in the news right now. shares of exxonmobil are rising. they posted their smallest profit in 17 years due to falling prices for sandoil natural gas. that was partially offset by a big jump in earnings from exxon's chemicals business. earlier this week, standard & poor's revoked exxon's triple a credit rating for the first time since the great depression. roby corporation has agreed to buy tivo, one of the pioneers in digital video recording. the price tag, $1.1 billion in ash and stock. rovi acquires patted incidents
for set top boxes, just as competition for those devices heats up. the company will adopt the tivo name. and americans kept their wallets in their pockets last month. consumer spending up less than forecast in march, up just .1%. meanwhile, incomes also increased and consumers saved the most money since december of 2012. that is your bloomberg business flash this hour. mark? mark: betty, let's talk banks. what a week it's been, a week of infighting, one of deutsche bank's supervisory board members is stepping down. gail thomas was criticized for being overzealous. he was requesting internal probes of company executives. for more, let's bring in michael moore in london. what's he been up to then? overzealous? michael: some are saying what did you expect? he was head of the integrity committee on the board. a long time attorney brought in
to kind of clean up the banks compliance and controls, and apparently he went about that very aggressively, and there's been some criticism of deutsche that they haven't wrapped up these probes quick enough, they've been spending too much money on the legal side. so there are issues here, but some people are saying, you know, this is what you asked him to do. mark: exact. the chairman acts like that, he actually heralded his arrival, didn't he? michael: it seems there was a split sometime over the last couple of years as these legal ssues heated up. mark: banks of all size and geographic location have to deal with it. let's talk about r.b.s. today, michael. we had a larger than expected forecast loss. what was behind that? michael: the part that we knew about was the payment to the
u.k. government, the dividend access share to try to start the process of getting the government out of r.b.s. and returning to paying dividends. that was the part that was known. there were other things that kind of drove that loss. revenue was down, you had larger impairments from a portfolio of shipping loans that they are trying to get out of. so it seems that, you know, for how long it's been, the eight years of r.b.s. trying to turn this around, there's still quite a ways to go. mark: not long since we've had a dividend. it's 2017. that was the hope, wasn't it? michael: that was the latest hope, yes. and it looks like that is unlikely, because the major obstacle now seems to be williams & glenn, the consumer unit they're being forced to spin out. they came out with a warning yesterday saying that may not happen by the 2017 deadline that has been set. they're having issues with the
technology separating that out from their inhouse technology and getting it ready for sale. that's just one more obstacle. mark: michael, thanks for joining us all week on a very busy week for european bank earnings. it continues next week, right here on bloomberg. european close, bloomberg markets, check out what's happening to the big bosses. looks like they're going to close down for the day and for the week. it's been a good month, though, if you're a long equity picker. there you go. have a look at the sectors as well. i'll finish with those. four minutes to go to the european close. every single section is trading lower. it's been a massive week for earnings. i'll take you through some of the big players. the close is next. ♪
there's the intraday chart. we peaked mid-morning and been drifting lower ever since, down by 2%. biggest decline in a month, we're down for the week, first drop in three. we're up for the month for the second consecutive month. stocks finishing 2% lower on the stoxx 600. big, big week for earnings. just chatted to michael moore about r.b.s. it missed estimates because of a 225 pound impairment charge. it's looking to exit and also paid 1.2 billion pounds to the u.k. treasury as part of its bailout repayment. 7.2% lower next week. you've got hsbc to look forward to here in the u.k. biggest nk, den mark's bank, profit beat estimates. it was able to navigate this negative interest rate
environment that banks have to navigate through in denmark. it's a volatile marketplace there. denmark has had negative rates for the better part of four years. most economists don't expect policy to go positive until 2018 at the earliest, but they've navigated well. shares up by 3.7% today. and sanofi, big, big stocks today, big, big move yesterday as well. 6% lower today on the earnings side. sales dropped. that was a disappointment. that, of course, was one day after disclosing its interest in the san francisco drug maker for $9.3 billion to rekinleds growth. that thing was hostile. medivation rejected the hostile bid, saying it substantially undervalues the drug maker and isn't in the best interest of its shareholders. the chief executive of this company, by the way, is desperately searching for new areas of growth.
general ricks are easing into sales of its biggest sellers and it's promising new cholesterol drugs. they face challenges in the united states. busy two days for sanofi. shares down by 6%. let's talk bull runs, betty. betty: that's right, mark. ben bernanke bernanke said economic expansions don't die of old age, but if you look at the rally on the s&p, it certainly seems like we're getting into senior citizen status here. it's been the longest bull run on record. the one beforehand was back in the 1950's, mark, i'll give you one number. 2,608 days, how long the current rally has been lasting on the s&p. that means we've gone up 207% and $15 trillion has been added into the stock gains. some of that flowing through.
where's my part? let's check in on how u.s. stocks are trading right now. we are lower, though, as well, mark, so let's turn to bloomberg's abigail doolittle, who has more live from the nasdaq. abigail: the nasdaq down more than 1%. the index is now down seven days in a row. if the nasdaq finishes lower, it will make for a seven-day losing streak and the longest since the beginning of january. the second biggest drag on the nasdaq today, betty, gilead sciences. shares of the biotech giant are plunging after the company missed first quarter earnings and sales estimates. earnings were down 18% on a sequential basis, and it looks like discounting and rebates in the company's key hepatitis c drug are weighing on the results. this is enough to cause maxim to downgrade shares of gilead from a hold buy, but mark goodman at u.b.s. has had patience with the shares of gilead. he sees more than 25% upside for the stock, a stock that is bearishly back below its 50,
100 and 200-day moving averages. betty: gilead dragging down the index, but what's soaring here? what tech stock is rising? abigail: amazon. shares are surging after the e-commerce giant did beat first quarter sales estimates. the earnings beat was huge, 88% above consensus. amazon made $1.07 per share. con sins was 57% per share. the strength was driven by amazon prime along with the cloud unit. losses of analysts have raised their price target, who says it's all just working. he now sees a price target of $915 per share, suggesting that amazon could trade higher by 35% from current levels, a stock that has had a very volatile trading path over the last year. betty: let's check in on first word news this morning. taylor riggs has more from our newsroom. taylor? taylor: two british men have been accused of giving money to a key suspect. prosecutors say the men gave
more than $4,000 to a suspect in july. he was the man in the hat seen on video footage just before the bombing at brussels airport. and a 94-year-old star has told a german court he's ashamed that he served as a guard in the nazis' auschwitz death camp. the man said he knew what was going on there, but did nothing to stop t. he faces 170 counts of accessory to murder. more violence today in syria. government-run tv says that rebel forces shelled a mosque in the city of aleppo, killing at least 15 people. that came after government air strikes on rebel-held areas killed more than 100 people. aleppo was not included in the syrian cease-fire. vice president joe biden is looking for pope fran francis' help in the long-shot effort to cure cancer. he was at the vatican today speaking on regenerative medicine. he asked foreign governments and pharmaceutical companies to join the cancer fight.
biden's oldest son died of cancer a year ago. global news 24 hours a day powered by 150 news bureaus around the world. mark: taylor, thanks very much. the fed decision in april is in the books. the dollar is at a 11-month low. the yen is at an 18-month high. what does it all mean? what does the movement mean, at least on the fed's part? what does it signal about the global economy as we turn the calendar to may? joining us now, richard, rate strategist. we need a name for this segment, richard. we got to come up with a name. let's start with this first chart. it's a lovely chart. 's a five-day chart of the u.s. two-year yield. just talk us through the knee-jerk reaction and thereafter.
>> i think the great thing is it shows the confusion that was -- that markets participants had directly in the wake of the announcement. i've read reports of this being a humanish minutes, being dovish, and the way that sort of -- the yields jumped and then tailed off really, really quickly shows that sort of mixed reaction. but the fact that we're now quite a bit lower than we were before the fed meeting in that two-year yield shows that the market is sort of saying the fed is keeping rates steady, they're not going to move any time soon, and even we might not get a rate rise this year. >> robert kaplan was just on, the dallas fed president, and he said he will move closer to advocating for a rate hike in june if the economic data improves, which he suspects it will. put there is a caveat, brexit. the fed meets on june 15, and the fed will take that into account, won't they? >> yeah, eight days before. i think the timing of the
meeting and when the brexit vote happens is very important. i watched the interview you did with mr. kaplan, and he's, i think, certainly the second fed official that i've noticed who's talked about brexit. we've had dennis lockhath also talk about it. i think it's something that's playing into the decision making process, and, of course, it's only eight weeks away now. betty: richard, how conscious do you think fed officials are? even though they may not say it, if we're wreaking havoc on the markets, in some sense given the weakness of the dollar in the face of pending ate hikes here in the u.s. richard: the dollar has been weak since the december rate hike, and it's kind of a catch-22 for the fed, i think, because i think they'll welcome the fact that financial conditions are loosening from a weaker dollar. it's something that's welcome in the u.s. but if they take a more hawkish stance, then the dollar might strengthen and turn that dynamic on its head, and that's
something that i think they want to avoid. mark: let's talk a central bank that's meeting next week, richard, the r.b.a., the reserve bank of australia. something interesting occurred this week, some inflation data was released. it's turned everything on its head. tell us what this chart means first. richard: the data itself was weak, but weak across the board. it was nontradable goods. there was the currency impact there. and because of the shock of the data, we had australian yields fall quite sharply ahead of next week's r.b.a. meeting. we had odds of a rate cut before the data, about 20%. that joumped all the way up to 60%. mark: there you go. richard: you can see those yields absolutely collapsed. if you look at the red line, we're now looking at rates over an index which closely track this report about 18, 20 basis lower. that shows that anticipation is high into next week's meeting,
and that it's definitely alive in play. betty: richard brrk we go, let's talk about the bank of japan and what's next. it seems like the central banker -- the central bank is saying, you know, from it is, like we need the structural reform. there's not much more we're doing right now to help the economy. richard: i think you're right. i think they want more fiscal and structural reform to actually come in and complement monetary policy. i also think they're taking the same tack that we've heard from the e.c.b. when they've enacted monetary easing t. takes time for these things to feed through, and they want to wait and see for a while just to see what the impact of the monetary policy is, see what happens on the structural side in the coming months, and then if they need to cut again, they've left their options open and they can ease monetary policy. they've got lots of tools. but for now, they want to wait and see what they've already done and how does that take effect in the economy.
it was one more sign of the investment properties before a tax hike took effect this month. the e.u. wants to make sure cheap steel doesn't threaten european producers such as thesen krupp, so it -- such as thyssen krupp, especially from china, the world's biggest steel producer. china pledged to cut steel capacity, but the e.u. said that still wouldn't be enough to rebalance the market. that is the latest bloomberg business flash. the u.s. dollar takes its lowest level in 11 months. the greenback is selling off, but the fed apparently in no rush to raise rates, leaving us to the wait and see mode until the june meeting, betty. betty: indeed, keeping us on tinder hooks here. joining from us boston is eric stein, the global income co-director and portfolio manager at eaton vance. mark was just talking about the
dollar hitting an 11-month low. how much further do you expect that the dollar is going to go in the face of monetary policy, and could it easily reverse? eric: right now the markets are very focused on the fed and saying that the fed is dovish. i agree the meeting could be interpreted as either dovish or hawkish. but certainly the weak dollar environment most of this year after a strong dollar environment the previous two years. betty: indeed. it's been puzzling since the december rate hike we have seen the dollar weaken considerably. and given that, we were speaking earlier with robert kaplan, the dallas fed president, who wouldn't speak specifically about the dollar's impact, but really on the economy, which he thinks is going to improve through the second half of the year. eric, i want to you hear what he said about that. >> we need to reconcile g.d.p. data with job data.
that's going to happen one of two ways. either the job data is going to get weaker, or more likely, g.d.p. is going to get stronger. i'm expecting the latter. and i think if that happens, i personally will be moving toward advocating some removal of accommodations sooner rather than later. betty: is that in your forecast too? eric: yes, i think g.d.p. has been weak in the first quarter, then rebounded somewhat. people don't fn there are seasonal issues going back to the financial crisis. but given what we have going on in the labor market, i think output is certainly better than the anemic growth in the first quarter. it's not super strong, but the u.s. economy is certainly doing, overall better than the first quarter. mark: when it comes to the dollar, could we reach central bank policy makers some sort of agreement, an accord to keep the dollar in some sort of range that benefits everybody? eric: well, certainly there's
lots of talk. in february, was there an agreement to stop the dollar from strengthening? since then we've seen dollar weakness. from a u.s. policymaker perspective, i think there's too much focus on the dollar, but i guess if you're janet yellen or jack lue, it's fine. if you're an emerge willing market country, that's great. but if you're japan or europe and you're not hitting your inflation target, the last thing you want is a stronger you're owe orient. certainly the world doesn't want a massively stronger dollar, but a lot weaker has its own host of issues. mark: of course, europe's no closer to reaching its inflation target, is it? we had inflation data today falling minus .2%. but on the plus side, you know, the economy is all right t. grew by .6%, better than expected. unemployment is down to a four-year low. if there's a try up invite, can draghi boost inflation, because the boxes for unemployment is certainly moving in the right direction and the economy is efinitely growing.
eric: europe is having a small rebound. it was better than expectations. on the inflation side, though, with the higher euro, it's going to make it even harder for the e.c.b. to hit its inflation target, maybe less of a chance of outright deflation right now, but still harder to hit the target. i really think it's the e.c.b. and d.o.j. most concerned about the recent rise in their particular currencies. betty: what are you recommending, eric? what's most attractive in the second environment? eric: a trade that we like is being long the swedish krona versus the euro. you talk about central banks that should be tightening or don't need to be as accommodative, the bank in swede suspect right there. the economy is strong, growing at 4%. yes, inflation is low, but it's low everywhere. that's a relative value trade that we like versus the euro. mark: how do we trade the u.k.
ahead of the referendum? what would you recommend? any ideas? eric: right now, now that it's come back, it's not time to put on a short position. ultimately the u.k. will probably remain, but i think there's going to be more volatility. we could see another round of sterling weakness. i think we've had sterling strength the past couple of weeks, but i think there's continued volatility around that. i also think it's interesting, when you had robert kaplan on before from the dallas fed, the fed seems focused on the brexit as well. mark: everyone is focused on the brexit. you can't get away from it, even betty liu. she's more focused it. betty: because mark talks about it all the time. mark: betty can't wait for june 24. so, betty, if we vote to leave, it's not going to stop. it's not going to end. betty: no, actually i don't think it's going to stop either way. mark: it's never going to end. eric, thanks for joining us. eric stein joining us, of course, from boston. betty, it's the big one.
betty: we are live from new york and london. mark: i'm mark barton. you're watching -- betty: it's my favorite part. mark: she had enough. she's sick of brexit, she disappeared. betty: i'm definitely not sick of our charts. i anticipate this every day. we take a look at some of the most telling charts of the day. you can access these charts on
the bloomberg by running the function feature at the bottom of your screen. kicking things off is -- he called you ollie. i can't imagine you like. be oliver: first step in making me feel smaller as we begin the battle. take whatever help you need, because i got a really great chart here. honestly, this is one of the most important charts to the equity market right now. mark can get as esoteric as you want, but this bottom line is going to be a big deal going forward as far as equity prices go. we're looking at this idea we had a hated rally, and in particular, this 15% bounced up since february has really been no different. the day goes back to october. these dark bars on the top, this is a cash level by portfolio managers around the world. you can see it goes all the way to april. it's been vacillating, as the markets really have this strong rebound, they've actually
raised their cash levels. they haven't been impress and had are putting more money in the safer access, like cash. down here, we're looking at mutual funds. as you can see, it's been negative since october. this is u.s.-based domestic mutual funds, and then we've got another big draw down here in the past month. fine stocks are rallying, people are taking money out of the market. and then the line here tracks hort interest. that stent look like much, but it's bigger than the start of the year, and it's close to all-time highs. the reason why this matters is because you have to think about whether or not the market can move down. we had a correction, a 10% dip, but i think there's a lot of smart minds that will tell nut absence of exuberance, you have a really hard time seeing the big market boom. betty: pretty much the smart money here, right? oliver: maybe.
betty: ok. mark? are you getting esoteric? mark: i'd like to congratulate oliver for bringing up his chart. he wasn't able to last week. but he needed to raise his game today for me. betty, the big question today is, is the e.c.b.'s balance sheet, which as you know is expanding, are the rewards bearing fruit? let's have a look. this is the white line, the balance sheet. it's a four-year chartment since the middle of 2014, the balance sheet, betty, has expanded to three trillion euros, gone up by a trillion euros in that space of time, as the e.c.b. is buying bonds to the tune of 18 billion euros. if you look at inflation, it doesn't seem to be bearing the fruits it wishes, because inflation, the yellow line, has come down to minus .2%. yes, it's an improvement from last january's minus .6%, but betty, it hasn't been above 2%.
it needs to be near that level since the beginning of 2013. the positive is inflation expectations. the break-even rate, which is the difference between the government bonds and inflation linked debt, has been coming up, betty, but it's at 1%, still well below the e.c.b.'s inflation level. lovely, lovely chart. and if you want to see that chart, i haven't got a clue. there you go. betty: there you go. i'm going to hand it to oliver. that's a really nice chart, lots of colors. mark: well done, oliver. betty: ollie gets it. we'll be back. ♪ âi
>> from blorg world headquarters in new york, good friday afternoon. i'm scarlet fu. >> and i'm tracy in for alix steel. here's what we're watching this hour. u.s. stocks are down for a second straight day. there are a few signs of pickup in economic growth. what does the fed need to see before it raises interest rates again? we have an interview with the dallas fed president, robert kaplan. >> the oil industry's incredibly shrinking profits. exxon's earnings haven't been this small since 1999, and chevron posted a lot. >> and amazon soaring. jeff bezos finds a way to make money, even while spending a fortune on future hardware and entertainment. >> we are halfway through the u.s. trading day. let's check in with julie hyman at the markets desk. we talk about how amazon's earnings are so amazing in that they beat estimates, yet not giving a lift to the broader market. o