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tv   Countdown  Bloomberg  May 20, 2016 1:00am-2:31am EDT

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the fed,'t fight to black rock saying it is time for fed traders to start planning a move. the federal bank is moving closer to a rate hike in june, or july. finance face off in the g7. they're pressuring japan, with the yen strength in focus. and the hunt for the missing egypt airplane enters the second day for the search. a report that some of the jet has been found. ♪
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anna: welcome to the program, wn" and we'retdo live from london. let's get straight to what is happening in the market. the key feature has been the reevaluation of what the fed is going to do in their june meeting. we talked about that a lot yesterday. overnight, we continue to see this flow of hawkish currency coming from the fed, but the market hasn't been responding in the way that many would have anticipated. the wirp function bloomberg to run these through where fed futures are pressing the market will move and we have a 20% chance of the fed moving in the month of june, or hiking in the month of june. that number has moved a lot. it went up to 32% yesterday, but then it fell again. if the market is supposed to be
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a greasy on june is a time when rates interest rate, why did that contract a little bit? what we have from heard overnight, and also from blackrock that we need to start counting in the fed as a player in june. also suggesting in one note that perhaps the fact that u.s. equities fell last night, people are joining line between that and the likelihood of a fed rate hike. some of then to other risk assets. we pulled up the u.s. two-year, ties into this story. it has been coming down. that is tying in with a market struggling to price in a june increase. and in the asia-pacific, moving higher this morning up half a percent rebounding from six-week lows getting a boost while prices and the dollar coming
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down overnight. thanking and technology stocks are leading the way there. the energy market is also in focus, up 1.14%. nymex is up, and brent is not that far off, moving up by .9% overnight. let's get the bloomberg first word news with rishaad. risaad: through policing the federal reserve is moving closer to raising interest rates at one of its next two meetings. echoing sentiment in the april meeting which were published this week. >> june is definitely a live meeting, but what we do depends on what -- we're looking at the market expectations. it looks like june is roughly one in three, and tightening to the july looks like about 60% if you look at the futures market.
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: meanwhile, double on capital and blackrock think upon the traders need to start pricing that back into the federal reserve. it also saying that officials will likely wait until july to gauge the outcome and implications of britain's eu referendum on the 23rd of june. the mystery surrounding the disappearance of an egypt airline has deepened after greek authorities dismissed reports from egypt that debris from the jet had been found. of sudden turns before descending rapidly. 66 passengers and crew were on board, and the pilots had to know distress signal. the aircraft was approximately 10-15 miles inside egyptian airspace. dude of 37,000 feet, executed a turn of 360
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degrees towards the right, 15,000g from 37,000 to feet. in the picture we had was lost at about 10,000 feet. ad: the british economy slowed, and may require additional stimulus it does not rebound quickly. that is according to the bank of england. he says additional stimulus is that local also says money is inconsistent with the central bank's mandate. now, deutsche bank holding bonus payments to a group of employees while examining they improperly traded with the firm. the company is reviewing a transaction that may have involved unacceptable conflicts of interest. they may take disciplinary measures where appropriate. three time masters champion will return.
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in the 12, he picked up almost $1 million after acting on a tip from the gambler. -- hec describes him as a is not actually accused of wrongdoing but that money can be recovered. he does not want to benefit from a transaction the fcc deems "que stionable." for allews each day, our top stores, go to top go. and: thank you very much, hong kong, let's stick with the story out of hong kong right now and check what is happening in the asian market session. a great story of risk on and risk off and how that is gripping currency markets want to again. how that is tying various asset classes together. that's right, to some
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extent, that slight retracement besought the u.s. dollar overnight give a little bit of respite in terms of commodity prices, and these risk assets in emerging markets. seeing some modest gains across south east asia. looking at the rest of the region, it has been one lacked conviction. have some stronger gains coming through in the afternoon session. reversing up by .4%, course. the yen is starting to creep up a little bit. it is to be comfortable spot in terms of what it means for the bottom line. as an inauguration day hinted at perhaps a new economic model that involves fewer ties with the mainland. we see stronger gains coming to from australia led by his energy names, miners doing quite well despite that tumbling in the
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iron ore price overnight. much of that is the recovery rally. many of these stocks have been heavily sold off. kong, thens from hong hang seng up at this moment. malaysia is flat, we did have central bank and action from indonesia and malaysia yesterday. not too much of a reaction. regionally speaking, it is not been a great month. the fourth straight week of declines, this is the worst stretch sent september. talk about the yuan. of a move today, but it is on track for its worst string of losses since december. expectations perhaps that the fed may be going in june, expectations of further dollar strength going forward, it is driving lower when it comes to
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the yuan. anna: thank you very much, joining us there in hong kong. central bankers are gathering in japan, the meeting takes place against the backdrop of increasing pressure on the world's third-largest economy to avoid weakening the yen. currencywarned that intervention won't help boost global growth. now live with more is yvonne. what has washington been saying? hopinganese, who were this event, must feel very scrutinized going into it. certainly., the u.s. did not single out japan particularly in the statement, but are ramping up .he rhetoric ahead of g7 central bank governors and the finance ministers meet later on in a couple of hours. right now, those leaders are touring some of the areas hard-hit by the 2011 earthquake and to nami. part of the reason why japan
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decided to host the g7 in sendai, to show just how far the recovery has compassed a back to economic policy, we started off and picked up the event last night with a local tradition here in japan, the dashing of the panels. japan'ssee a dashing of economic policies, that seems unlikely. we'll heard from some central bank governors that say this is not high on the agenda even though japan has hinted that it will put the brakes on the currency this year. we also heard from boj governor last night's big to reporters here and sendai, who try to avoid a question about asset policy saying this was a matter that had to be taken on by the finance ministry. policyed about boj little bit saying they would take action if there are factors, including exchange rates, that put a risk on the inflation goal.
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take a listen. i have spoken to policymakers of other countries, and they understand our negative rate policy. the positive effect it started to be seen. it will take some time until the effect becomes obvious. we are ready to take any actions necessary. we also heard from the finance minister of japan, and he mentioned that high on the agenda will be back or economic reforms as well as structural reforms and some issues evasion and money laundering highlighted in the panama papers. those are top of the line. anna: thank you very much. joining us in sendai. let's bring in our guest host, joining us the chief economist at -- great to have you on the program this morning. as we look at what is going to happen in japan this week into next week, it'll be a big focus with these international gatherings. do you think we are increasingly
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going to focus on the fiscal side? will there be increased talk about what the fiscal side can do? or will we be back to talking about japanese intervention? >> we can't avoid talk about japan, although i think much of that talk is misplaced. this is almost an ever running story. the argumentys that somebody should change fiscal policy. there is not recognition as to what actually is happening. for instance, europe is often asked to do more the fiscal space. but europe is actually loosening its fiscal policy somewhat in the eurozone. i would be delighted if simply it was acknowledged that europe, after this, is now losing policy without being reckless. perez other countries, such as the u.s. and the u.k. probably don't have much fiscal space. anna: on the subject of currency
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, that will grab some of the attention. is the focus really on trying to define how normal or abnormal the moves have been in currency markets? holger: i think the moves are fairly normal. we have periods where the dollar was getting stronger because the market was looking ahead toward four fed rate hikes this year. also, we had a period late last year into early this year where ofey was spilling out emerging markets. mostly into the u.s. dollar, hence the dollar was stronger. by definition, other currencies were weaker. yearthe big message this is that you can say that markets hikes,ricing out fed rate whereas emerging markets you to be stabilizing post-up as a result, the dollar moves down as the yen moves up.
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we can talk about them a lot, we should talk about them a lot, but that is nothing that should really alarm global finance ministers. anna: the 10% increase in the yen this year is a response to what happened last you. japanese carmakers just had to do with that. a move this move is not that is unsettling to the global economy. and hence should be in major global concern. you can explain much of this in central bank expectations by market and can explain a bit of that move with money flowing out of emerging markets into the u.s. dollar. then money flowing back, and hence the dollar having a bit of a move. this is not the currency turbulent or disruption that would really warrant crisis talk. or this agreement to do some the about it, this is so far more or less normal market. re: somebody who has high
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or low expectations going into meeting such as g7? typically, low expectations. i don't see what they can do. in an acute crisis, coordinated action helps. the signal of correlated action helps a lot. but there is not an acute crisis. we are dealing mostly with moves that are sort of explained by central-bank behavior and fundamentals. then, finance ministers are not going to change their budget law at home after this meeting. and finance ministers don't really have much incentive. anna: i give her a much come you stay with us. here are some highlights for the next 24 hours in the market. at 3:00 p.m. u.k. time, we get home sales data after the market closes. we can also get a sovereign rating update on several areas. tomorrow, g7 finance ministers and central bank governors wrap up their meetings in japan. fed.xt, don't fight to the
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black rock saying it is time for bonded traders to start pricing and central-bank action. ♪
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anna: welcome back, you are watching "countdown." markets moving higher, up by more than 1%. a little smoky over a tory a harbor. rihaad has the business flash for us. rishaad: the mysteries run the disappearance of the egyptian airplane deepening after greek authorities dismissed reports egyptach of cut debris -- that to debris from the jet had been found. 66 passengers and crew were on board, the pilot dissented no distress signal. some jobs inng
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response to a revenue slump. that is according to people with knowledge of the situation. they say at least 100 people in the london branch lost their jobs. capital markets leveraged finance. almost half of its branches in india, they rely more digital banking to expand their consumer business. the london-based bank will cut 24 of its 50 branches. the right mix of digital versus physical branch distribution, they're pulling back agencies and shutting businesses to improve earnings which have been hurt by compliance costs. alibaba says it is determined to use data and technology to crack down on bad vendors. the company launched a
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anti-counterfeiting coalition. it is hoping to convince france it could be a powerful ally. confiscated millions of dollars worth of fake goods last year. just days after london's to crack down on the toxic smog, $400 million was raised. aey are developing the tx5, battery-powered version of the classic 19 58. editor bloomberg business flash. anna: thanks. new york fed president says the fed is moving closer to raising interest rates at one of its next few meetings. his remarks echoed sentiments published this week. definitely a live meeting come but what we do ,epends on how the congress
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looking at the market expectations, it looks like a june is roughly one in three. to july looks like about 60% if you look at the futures market. federal reserve bank or jeffrey also gave positive signals about a juen rat --june rate hike. >> those comfortable with the june production -- projection for rate increases, i don't think the data suggests the u.s. economy, suggests much of a change in views about the appropriateness of that. of like to get as close to that as we can by the end of the year. holger, markets are struggling to get a grip with the way the fed sees the world this month. has been almost
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consistent for quite a while, they would like to hike rates, and by more than -- if nothing happens, if there is no real bad news on the economy. no major international worries, no serious market turmoil, the fed will go ahead. good lifejuly, are options for the fed. the fed is never really told us the opposite. market earlier this year, until recently, just thought that the fed would not follow up on it earlier communications to raise rates. is what probably will happen june is very close. you may not get enough evidence that the economy is really rebounding pay enough from a week of first quarter. so july think is the better bet, but one of these meetings is probably a rate hike. anna: they could do it in july, and color press conference afterwards. that would allow the market to
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perhaps move in on july a little bit more. holger: you don't need that, necessarily, to hike rates. you could just suggest in june in july.kely to hike the markets would probably be forewarned, and a well worded statement in july would do the us conferences and explaining what the fed is doing. anna: there was no shortage of voices lining up the bond market saying you need to wake up to in thee had to voices last 24 hours hang bond markets need to be aware. back on the chart, this is term premium in the u.s. bond market, it is the lowest since 1962. you have to go back to the time is how far back you have to go to find premiums to slow. the bond markets are just struggling to see levels of inflation. holger: i must say, i will the
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time of kennedy, i just remember -- it was definitely not my and my parents focus at the time. the bond markets are not always a good predictor of what central banks are doing. the fairly consistent message on the fed is if they don't see a very clear reason to hold back, they will hike rates in the foreseeable future. yet, we learned last year that we can't trust the fed communications too much. last you they told us they would theny hike rates soon, ended up hiking them only in december. to some extent, bond markets have a point. but i think the fed would want to avoid last years experience, this time without any -- not a very clear reason to resist. it would likely go ahead the summer. anna: do you think of you would hearing from janet yellen right now we would hear the same hawkish messages? that maybeking about
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she wanted to let the economy run a little hotter? was a: i think that talk bit overdone. of course, there are significant of thences on the board fed, as there are the top of other central banks. that is normal, and yellen is likely on the more cautious side. she is probably the one who would balance and july 08 from june. it out -- i don't think she's arguing that a fed rate hike once this year in december would be good enough. it does not seem to be the intention of the fed. --a: we could ignore theater international situation. you think the domestic data will be strong enough for june, july? holger: the domestic data is strong enough at the moment already. which not look too much of these quarterly variations on economic terms.
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the rate hike is warranted. anna: thank you very much. up next, tightening his grip on turkey. the loyalist is set to take the premier prime minister post. ♪
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baltimore, this is " -- welcome back, this is "coun tdown." let's get update on the news now. right, looking at the new york fed presidents and the federal reserve is moving closer to raising interest rates. this at one of the next two meetings, that is his prediction there. that echo sentiments in the april meeting which will be published next week. >> what we do dependent how the economy, looking at the market
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expectations, it looks like june is roughly one in three, and tightening to the july looks like about 60%. blackrockeanwhile, for bond traders to start pricing back and a fed rate hike. officials will likely wait until july, the reason for that is it will gauge the outcome and applications of britain's eu referendum on the 23rd of june. the mystery surrounding the disappearance of each of airplane over the mediterranean, it has deepened. greek authorities dismissing reports from egypt that they believed the chet had been found. investigators say it made a series of sudden turns before descending rapidly. 66 passengers and crew were on board. the pilot since no distress signal. aircraft washe
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approximately 10-15 miles inside egyptian as study then at an altitude of 37,000 feet and executed a turn 90 degrees left than a turn of 360 degrees toward the right, dropping from 37,002 15,000 feet. rishaad: the british economy has slowed and may require the event stimulus in of the country staying in the european union. that it's according to a bank of england member who says additional stimulus is needed, both rate cuts and more qe should be on the table. the so-called helicopter money is not consistent with the central bank's mandate. deutsche bank open bonus payments to touch holding bonus payments while examining they improperly traded with a company. is revealing a
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transaction the could of had unacceptable conflicts of interest and will take disciplinary actions where appropriate. 2400 journalists and about 150 news bureaus around the world, this is bloomberg news. thank you very much. let's get to the luxury numbers this morning. they make luxury jewelry and watches, sales numbers are oddly in line with estimates. these sales came in at 11.1 billion euros. in terms of the outlook, they're saying they see no meaningful short-term improvements in the outlook and use of cash was for a much a focus going into these numbers. ebbing demand for watches in drops andrecent
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tourism in europe because of terror attacks. struggling with the strength of the franc, that has been hurting the company as well and have been cutting back on jobs. --st 100 jobs in this watchmaking host of they see no short-term improvement. that is the sales number coming withgh exactly in line estimates. no comment yet on whether they are seeing anything, like any kind of rebound in china. that outlook statement doesn't look overly optimistic this morning. let's get up-to-date with what is happening in asian markets. they have rebounded from a six-week low, the dollar retreated against higher yield and currencies. g the: we are seein asia-pacific index rebounding
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today. this after it fell to a six-week low yesterday. it wasn't just an asia we saw drops in stocks. globally, some $900 billion has been wiped off global stocks a last couple of days. a lot of that is sound to replacing going on because it expectations changing over a fed rate increase after those minutes we got showing that june is very much alive. we are seeing these stocks recover from the steep back-to-back losses. we could have a weekly gain this week, we will see if the shares hold on. but a rebound at the moment. in terms of the dollar, the index is pretty flat today. this after it jumped the most in six months to hit its highest level is quarter after those minutes from the fed. strongesting at its level since march. the big question is whether dollar strength will do the tight link for the fed. we saw the stronger dollar put pressure on commodities
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yesterday. we are seeing oil rebound today. rebounded to that six-month high heading for a weekly gain at $67 a barrel. did see stockpiles unexpectedly increased this week in the u.s. but production has been steadily declining this year and the droppedata shows a again. oil gaining today, i wanted to look at gold. it is pretty much unchanged, edging into negative territory for the but it is heading for its longest run of weekly losses this year. that is three weeks of losses, it has had a rally in 2016 at some prices rise to a 15 month key technical level of $1300 an ounce. 1253 at the moment, and that has been slowed over changing expectations of the fed. but expectations have been
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pulled back today. anna: thank you for much, now set to become turkish feminist or tightening the president to grip on the country. he will replace who is stepping down after losing a power the thee with president. how significant a step is this? lobby for a move for presidential system, undermining his own office. of therobably has one most unusual jobs in global politics. on paper, the turkish prime powerfulis the most politician in the country come head of the executive branch, but in reality, his trouble now be to work to basically make himself irrelevant. --will work to underline undermine the powers of parliament and the prime ministry to eventually turn to
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mothers powers to president who want to what he calls an executive presidency to get rid of what he calls a two headed system of government in which the prime minister and the vy updent div responsibilities. anna: what is the market impact -- what could it be of all of this? it is not just this story that drives the currency, but it is been quite a wild ride for the lira of late. >> the reaction in the past today has been quite muted. that said, the reaction to weeks ago when the prime minister said he would be stepping down was quite severe. we saw the lira fall by the most about eight years on that day. since then, the market has digested the message and come to terms with the fact that the name of the prime minister in turkey is not that important.
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there is one supreme politician in turkey, and that is the president. holger: thank you very much, but the bureau chief. benjamin harvey was joining us that from istanbul. is the policy -- politics or the only story happening in turkey right now? are the other positive still there? holger: they are sort of still there, the economy is coping fairly well. but, of course, it is -- turkey has domestic problems. politics play a major role. turkey is in the most volatile corner of europe. gateway between your up in the middle east. this is serious political stuff for europe, and if there is potential political trouble, in turkey, between turkey and europe, it might just be -- that
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is something that has a lot of potential for investors in turkey. we have to watch the politics much more than the economy. the economy will ultimately result from what happens to the political sphere. anna: thank you very much. let's change topics now, the hunt for the missing egypt airplane has entered its second day after greek authorities dismissed reports of finding debris from the jet. the fight was en route from paris to cairo with 66 people on board when it vanished over the mediterranean. us now, looking at the latest details on this. what is the latest? the mystery very much continues. what happened is that egyptian authorities said that some floating material got near the island may have come from the plane wreckage. but greek authorities have dismissed this. salvage crews will focus on
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trying to achieve the black boxes, the fight and data recorders. this could take days. what we know is that investigators are focusing on the last minute of the fight, what we know about the plane is that this was a relatively new plane compared to most of egyp'' s air. relatively good weather when it was flying for stomach made sudden movements before sweeping into a deep the. air-traffic control lost contact , according to authorities. the pilot scented no note emergency signal and the final contact with controllers showed no signs of distress. there is very much concerned that this could of been a deliberate act. but there is no evidence, as of yet. anna: we do not know what caused this as of yet. but the egyptian economy and its reliance on tourism, it is having a tough time recently. nejra: tourism has been declining already sent 2011.
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tourist arrivals in the first quarter of 2016 were 40% lower than a year earlier. the holiday industry now accounts for 3.5% of gdp, this compared to 5% before 2011. some economists are saying this latest crash, whatever the outcome, could affect andployment, consumption, other sectors linked to the tourist industry. path of theicts the government trying to rebuild the company since 2011 -- economy since 2011. there's been a foreign currency crunch that slowed economic activity, and kept investors away. it has a $12 billion annual funding gap. blow tos is the latest an economy that is already struggling. anna: thank you, the latest on egypt.
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holger, let's get your thoughts on what is happening in the eurozone. hear talking, you in the g7 with more focus on structural policy to promote the growth. the talked about that in the last hour. where, in europe, do we need to see that effort taking place? holger: he is right, he should be preaching that more in g7, althoughe preaching it in japan would be useful for some this is the right focus for the g7 meeting. what the world really needs is structurally reforms in underperforming economies such as japan, and france. finally has moved quite significantly that way, france needs more.hat if we have more structural reforms, that is where the ecb is completely right.
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then, we would have more growth, and everybody's job would be easier including the job of the ecb. some fiscal stimulus here, a currency move here and there, is good to talk about, but doesn't make a long-term difference to the outcome of the economy that an economy in place. so easy, make it sound but part of this politics get in the way, doesn't it? fairly easy to come up with a diagnosis. if an economy is underperforming, not just for a year, but for longer periods of time, it needs structural reforms. implement in that is difficult. having said that, it does happen. it happened in germany 10 years ago, it happened in the u.k. under margaret thatcher. it is ultimately a question of domestic circumstances.
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it is good at least to talk about a possible whether or not france doesn't want have much to do with the g7 statement. it is domestic political peculation. anna: with that in mind, how long do we wait for the ecb to do anything more? are they done easing for now? holger: i think so, the economy is holding up ok. we will see trend growth, that means no more easing. if there was a brexit, with serious consequences, let's talk again. that might be a different situation. anna: thank you very much. up next, we have an exclusive tells us with -- he why bloomberg is opening the door to the public.
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anna: welcome back, this is
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"countdown." let's the bloomberg business flash. france's foreign minister says the cooperation between his country and egypt of the flight that vanished over the mediterranean, but the mystery has deepened after greek authorities dismissed calls that the plane had been found. investigators say that the play made a series of sudden moves before declining rapidly. the pilot sent to know distress signal. ubs is trimming some subdivisions to reduce costs across the business in response to revenue slump. they say at least one dozen london-based employees in the securities division lost their jobs this week. they were limited in equities, leverage finance, and real estate. sbc will be shutting up half of
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areas in india. it london-based lender will cut 24 of its 50 branches as it makes the digital versions and branch distribution. the chief executive is paring back hsbc's sprawling global network. that is your bloomberg business flash. anna: thank you very much. the eldest son of the french , at 38 he heads up two of the groups brands, a he developed the idea of opening dozens of lvmh sites to the public. caroline asked him how, and why this special day canada.
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>> i remember it was a time when ofas frustrated by the image the group. i remembered that in 2011, being more considered at this point, almost like the firm, that we all saw or read. there was something a little bit with distance. when you spoke of the lvmh group, it was so far from reality i had the idea one afternoon of creating this open day. to relax a little bit, some transparency to be honest. transparency,e and open to the public. not a surly to our appliance, that is coming that appeared right at the time. imagene: it is also the in terms of personality, that you are trying to instill in the lvmh group. >> i don't know, we have different people come here from
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the same family. he is of another generation. evidently, my generation is ander to social networks, having a group discussion. very much in the tradition of my way of working. to brainstorm, and to have an open discussion. not opensaying he is to discussion come he very much is and is aware of everything going on not only in the markets but also inside his organization. it is a different way of doing business. but it is very, mentoring, as well. anna: you can to that exclusive interview in full at 9:40 u.k. time this morning. staying with the luxury sector, let's get a closer look at the numbers. turning us now is deborah from bloomberg intelligence. how better thinks gotten? after a read that line, them he
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got this number about april sales declining by 50%. -- 15%. deborah: it is going to surprise negatively, but it ties in with the export that we saw which was 16% in march. that was the worst since 2011. the company across the whole of the luxury area has been in hong kong. that is a big issue. anna: hong kong is an issue, are the chinese traveling, if so, where are they going? that seems to be a big driver for the sector. deborah: if we think of the chinese over all, and we talk about economies, where are they traveling? that would be for march, the number. where are they going? outside ofng them
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hong kong. down, ofthey're coming course, we have seen the difference between what has happened with the yuan as well. they were heavily growing numbers into japan last year. their step in a 10% rise in the yuan versus their currency. anna: thank you very much, joining us there from bloomberg intelligence with a look at these regional numbers. lger, let's come back to you. we're seeing a lot of interest in gold recently. not just because it looks nice to wear on your wrist as some people might suggest. also, because some are suggesting central banks around the world are still the valuing currencies. do you think gold goes higher on that kind of an argument? holger: i don't think it should go much higher, no. central banks, they're not really heavily buying into
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currencies across the board. the ecb is not into that game, the u.s. fed is not very much into that. in japan, we have the reaction now partly to the recent rebound or rise of the yen. all these currency moves of this year and last year are basically fairly normal. they are not crisis to push investors. all in all, and commodities, my guess is where stabilizing. i don't think there's a strong argument for growth, inflation likely creeping up a bit, overcoming. but that is probably not to such an extent to really weren't a move into gold as a hedge against inflation. gold as well the days were talking about risk and other things. a consortium bloomberg today talking about a risk-on and off kind of environment. explict commodities, and stocks,
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driving what happens in currency markets. it gets a bit circular, i guess. i have a chart that shows the correlation increasing, does that ring true with you? all of these asset classes moving in tandem? holger: that does ring true, it will likely hike interest rate in the summer despite market expectations recently that it would probably not be on the card is now a concern for markets. that is a typical risk factor. this is something that will have for a couple of weeks. we get used to the thought that if the u.s. economy warranted it, the fed will rate -- hike rates over the summer. i don't think a 25 basis point move in july will really upset the world economy, the fundamentals for that as a result, we get over this current about of many risk-off. anna: that is a good message to
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leave it off on. g7an excellent program, a finance ministers gathering in japan. we look at the growing pressure on tokyo to avoid yen intervention coming from america. ♪
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fed. don't fight the
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blackrock saying it is time for bond traders to start pricing in a move. finance ministers face-off at the g7. obama's administration is pressuring japan to avoid -- france's foreign minister says his company's incorporation and the hunt for the airplane enters a second day.
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a warm welcome to the program. this is countdown, i am anna edwards. we have ppi numbers coming through from germany and they look to be broadly in line with estimates. 0.1% and that is exactly what we got. an estimate on the year on your number for ppi for april to be down 3%. it's down by 3.1%. what are we hearing from the market in terms of what we are going to open up. suggest that we could be positive at the start of the trading day which is really interesting when you consider the continuation of the hawkish messages. up by 1.3% which is
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the estimate coming through from the futures market. they all can be higher by more than 1%. that would reflect the positive handover from the asian section. let's bring up the risk radar and show you what has been happening. suggesting that june is still very much like june or july increasingly being added into the conversation but the 2-year note not really adding to the hawkish vibe. asia-pacific is moving higher into the session but really by whatllied -- bouyed is coming in on the oil markets.
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we see canadian firefighters getting them under control. they continue to focus on producer numbers coming out of the u.s. and on those world myers. let's get the bloomberg's first word news now. dudley just been talking about moving interest rates closer to one of the next two meetings. >> definitely a live meeting. what we do depends on how it will evolve. looking at the market expectations. through july about 60% at the federal funds futures market. >> bond present disturbing into the fed.
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waiting for that eu referendum on the continuation within the european union. after greek authorities dismissed reports that debris from the plane had been found. investigators say the flight made a series of sudden turns before descending rapidly. the pilot sent no distress signal. >> at 3:37, the aircraft -- the ultimate executed a turn of 90 degrees left and then a turn of 360 degrees tour the right.
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-- toward the right. at picture we have was lost 10,000. the u.k. economy slowed and may require additional stimulus. going to the bank of england. he says additional stimulus is needed and ricketts and qe should be on the table. deutsche bank coping bouygues -- bonus pants with a group of employees will that examine whether the heart desperately traded with the company. there'll take disciplinary measures where appropriate. return --lson is to he picked up almost $1 million after acting on a tip from the gambler. they destroy him as a released
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defendant meeting he is not accused of wrongdoing, if the money can be recovered. global news 24 hours a day. with toy 400 journalists. -- with 2400 journalists at over 150 news bureaus around the world. >> things have not been all that bad in the asian section. it looks like we are giving you a positive handover. negative. the day having said that, from the six weeks -- we are set for a fourth
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week of decline along the stretch of declines for the taking a look in particular in hong kong we are seeing very strong buying coming through the hang seng index. rallying very strongly today. analysts say we are starting to see some good buying opportunities. been their worst performance in the month of may. the nikkei to do five putting on 225 putting nikkei on about half a percent. sydney stocks putting on 0.6% on by this rally was seen across energy names, oil related names as well as the basic mining with a 6% tumble been prices
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overnight. shanghai is up by 0.1% but it is holding at that 2800 level. the 2800 is seen to be that level that tends to attract. we are seeing quite a bit of moving to the downside. we are seeing that come off a little bit. anna: the g7 finance ministers and central bankers are gathering in japan. the meeting takes place against the backdrop of increasing pressures to avoid weakening the yen. the u.s. has warned that currency intervention will help boost rates.
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with more, what exactly is the message that washington is pushing out as we get to the meat of these meetings? are addingtainly onto the pressure. the finance ministers from g7 countries will meet and a couple of hours. at a time when it is weaker than it should be, the u.s. is saying that any country that comes with a movement in its currency or be --licies will in a way in terms of boosting competitiveness it will not help with the global growth recovery. intervention,en the bank of japan governor declined that comment. he said this was a matter that
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had to be addressed by the finance minister. too much saying the schedule on the agenda is more for macroeconomics and structural reforms. the bank of japan governor did mention a little about their policies saying this is going to --for domestic purposes i have spoken to policymakers of other countries and they understand the negative rate policy. the positive aspect is going to be seen. we are ready to take any actions if necessary. >> the u.s. has not single out japan in this latest statement. the so-called watchlist for currency manipulation. on another note we are increasingly starting to hear
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ofxit has creeped into some these discussions here. the sources are telling us more about the market impact on financial institutions and markets as well. those issues are being singled out. >> yvonne, thank you for that update in japan. taking a quick look at the futures this morning. you can't all be done to expectation and hope for what comes out of the g7.
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+++ i think europe is picking up on that sentiment. it looks like we will have a pretty decent open. >> does the g7 conversation focus on the fiscal policy. it might focus on whether the japanese will or won't intervene. is that going to have a bearing on your asset strategy? >> i think this kind of gathering will be the same as it has been for quite a while. anna: you do not have to up play it. >> what can we do to stimulate the economy. the monetary tools we are deploying our networking to the extent people are hoping. maybe they do need to talk about fiscal intervention. it will be tough. i think they have been banging same drum for quite a while. >> he was suggesting there are a lot of countries where governments have been giving more fiscal incentive and that has been paying off. do you see evidence of that?
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would you like to see recognition that has been taking place? that would thought fix the euro crisis and the reality is that it didn't. with germany and europe as a halt we see them allowing government spending to benefit parts of growth and the other area is china where is he a huge fiscal stimulus package. >> how is this factoring into your exit strategy? toopean equities are likely be supported by a continuing recovery in the eurozone. >> when we look at europe as a whole, growth in the first quarter is pretty decent. europe has the, nice tail wind . it should boost the european recovery. for our strategy heavily focused
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on the high-yield market and where the values are in european corporations. anna: will get more on that in a moment. the hunt for a missing egyptair plane has entered its second day after authorities dismissed reports of finding debris from the jet. get us up to speed what is the latest. >> the latest is essentially unchanged from yesterday. there are reports of some of the debris being found belonging to the plane.
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the positions where we are before with a lot of unanswered questions and family members for sitting and waiting for some sense of clarity as to what may have happened. >> as you suggest we don't know what caused this plane to disappear yet. but whatever caused it, egypt is a country where the economy has .een suffering tourism has been badly hit. >> this is really the last thing that egypt needed at this time. we had the october downing of the metrojet airliner over sinai which was a major blow to the tourism industry that prompted all types of talk about egyptian or aviation security. incident is sure to amplify those concerns and trigger more doubts about where things are going to go in the coming months.
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>> up next on the program, don't fight the fed. blackrock says it is time for bond traders to start pricing in the action.
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anna: welcome back, this is countdown. let's get to the bloomberg business flash. fronts's -- france's foreign minister says there is total cooperation between his country and egypt after they vanished over the mediterranean. the history -- the mystery has deepened after greek authorities said debris had been found. they said it made a series of descending turns. the pilot sent no distress
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signal. they do not expect the market for luxury goods to improve anytime soon. jewelry saw cartier a rise of 11.1 billion euros. but operating profit missed estimates as it fell. marvin gilbert says his firm has resisted some competitive efforts seeking to buy the company. he told francine lacqua that he plans to remain independent. >> we do get a lot of people wanting to buy us but so far, we have managed -- >> european? x european, everywhere around the world. the return on capital is so high. it often double and predictable.
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of interest but being independent is a massive benefit to us. >> that is your bloomberg business flash. >> the fed president says the federal reserve is moving closer to raising interest rates at one of its next two meetings. >> it's definitely a live meeting but what we do depends on how the economy will evolve. at the marketg expectations. it looks like june is one in three. tightening through the july meeting looks to be about 60% if you look at the federal fund futures market. anna: jeffrey lacher also gave positive signals about a june rate hike. >> uncomfortable with the december projection or the
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median sep predict -- projection this year. -- i't think that the data don't think the u.s. economy suggests much of a change in views about the appropriateness. i would like to get as close to that as we can by the end of the year. >> help me understand something. i pulled up the work function on my terminal earlier today and at the beginning of the week it's at a 4% chance of a rate hike in june. we get a continuation of the hawkish messages for the fed. why does the bond market find it's a difficult to get its head round or does not believe what the fed is saying? over the nexted couple of quarters have not been great. you have .5 it looks like you might rise up close to 1% in q1 but that is not growth in line
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with the fed that should be raising interest rates. the ecb still doing a huge much of stimulus. with the fed wants to move rates, how will that impact the dollar or will it tighten financial conditions and create a slowdown? >> i think the market is pushing back on that. >> what are your expectations. what is your expectation when you get a move. we are hearing in july, what is a press conference between friends? >> we would still say the second half of the year is more likely. like to see q2 growth move forward. those middle of q1 we had sorts of numbers and look where we ended up.
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the last report was pretty lackluster against expectations. if that continues to trail down they will really question whether tonight is the right time. i have a nice chart here on the bloomberg. we are talking about low levels on the u.s. 10 year. we haven't seen these kinds of level since 1962. expectations around inflation are pretty low. >> you could say that. the other thing is huge demand for u.s. assets. if you look at a global government bond index a universe of court government bonds is about $22 trillion worth. that yields more than 85% of that. when you compare that to germany it is shy of 20 basis points. the 10 year treasury is
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attracting volumes and we see that in all the data where you have foreign investors looking for some form of yield. >> when you go looking for yield you find places with higher yield to put your money. what are your expectations around that. attractive asset class for us at the moment. admittedly the yield is maybe not were people would've liked a few years ago talking 4.5%, but in a world where the average investment grade corporate bond is roundabout 1%, you have 30%-40% in europe. and europe is on the recovery. growth looks ok. some of the credit lending metrics are picking up and that to us means 4.5% is attractive. anna: your happy with a high yields that might be lower than in the u.s. but the risks are lower? >> i would say there are opportunities in the u.s. high-yield market.
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a lot of people would expect that. if you can get your analyst and cherry pick some good names there are some decent returns to be had. high-qualityng on financial institutions, where are you finding those? given the dreadful performance we have seen from banking stocks in europe staying away. >> there is a big difference between stocks and bonds. how are they going to generate their earnings. from a bondholders perspective we find that excellent because they have the cash set aside which means they can pay us back . and yields are looking pretty attractive. anna: thank you for joining us. joining us from j.p. morgan asset management. let's bring you up to speed with what we have heard from rish more.
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they give us very gloomy statistics for how their sales have fallen in the month of april to keep an eye on that at the start of the trading day. outside ouriew window. we will see you on the other side of the weekend.
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is 8:30 in berlin. we are counting you down to the european open. this is what we are watching. do not fight the fed. forkrock says it is time traders to start pricing in a move. is the bond market really ready? off at ministers face the g7.


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