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

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anna: june traders. a hawkish tone out of the fed. bets on china. short interest in one of the largest china stocks are just to the highest level in a year. no slow down inside. india's finance minister tells us that growth is set to continue at a world beating pace. welcome to countdown. nejra: i am in for anna edwards. manus: i am manus cranny, live
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in dubai. let us kick it off with what is going on. we are trying to absorb everything from janet yellen. the treasury market returned aggressively with pace yesterday. i want to show you the dollar. take a look back here over the years. go back to 2009, selling in mae and going away. that is not the case. the dollar has climbed 3.4%. best performance in may since 2012. this is relative to some of the other asset classes. the aussie and the yen are the biggest casualties to dollar strength. we are going to pick up on all of these greenback gains against the major currencies. i love the irony. except for the good old british pound.
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if history is anything to show itself by, selling in mae is not the trade of the day when it comes to the dollar. nejra: we are also going to talk about china. i have a chart that shows a little bit of jitters possibly. looking at csi 300 futures. we solve the stock index futures plunge. you saw the line drop for the daily limit. it snapped back in less than a minute. the second sudden swing to rattle traders. the talk is that this could have been due with more concern coming back into the market. short sellers piling it in front of those markets in china. we will discuss that a lot more. let us bring up our risk radar. see what we're watching. there we go. starting with old because we have gold up today. almost 0.7% after nine days
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of losses. gold is one of the asset classes that has borne the brunt from the prospect of more rate increases from the fed. rude oil rebounding. longest run ofts monthly gains in five years. output disruption from nigeria and canada reducing supply. we are looking at head to the opec meeting on thursday. and finally, i want to bring up the you want. it weekend yesterday against the dollar. it is flat now. that to theered lowest level since 2011. let us go now to the bloomberg first word. rishaad is with us. japanese industrial output rising by 0.3%. year on year. drop at hads the 5%
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been forecasted. lowerold spending, 0.4% than a year ago. the data coming as investors wait for an announcement from increasingdelay to the country's sales tax. equities once again in the cross hairs of short-sellers. -- fivefold this month. datais all according to compiled by bloomberg. positivism -- the pessimism before proved to be well-founded. include the msci global indices shooting up to 70%. rules, theywnership are beneficial according to
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goldman sachs. reports of north korea's medium-range rocket but it appears to have failed. staff arechiefs of saying it was fired around dawn but the launch went wrong. it was thought to have a range of 3000 miles. this follows the north's failed missile launch last month. zero -- zurich insurance former ceo has committed suicide.
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the chairman of the european parliament's foreign affairs committee and a member of merkel's party says all of the arguments are in favor of staying in the block. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top . manus: let us check in on these markets. juliette saly is standing by. good day to you. juliette: a better session to round out the month of may for the regional index. -- it isrently for currently up for a fifth session in a row and china is doing the heavy lifting. up by 2.5%. further gains coming in from the nikkei. the yen is holding at 0.7%. the hong kong market is quite
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solid. selling coming through in india and parts of southeast asia and australia down to 0.2%. the game we have seen on the regional index today. most sectors are tracking higher. the monthlyoss with index. the regional index will close out the month of may down i about 1.5%. the five sessions of gains we have had over the past trading thathas helped pair back loss. a few movers we are watching in the region. takata is higher in tokyo. it says it will roll out bankruptcy as a way of reducing its exposure to liabilities following the air wide -- the worldwide airbag recall. singapore airlines saying in an e-mail to bloomberg that it will reduce its stake in virgin
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australia if the deal goes ahead to 21.3%. both of those companies in focus today. generally, we are seeing a pretty solid session across the region. nejra: juliette saly in hong kong. the fed has shifted towards raising interest rates as economic data continues to surpassed analyst forecasts. treasuries have lost their edge over stocks stagnating in the second quarter. the s&p 500 has returned over 2%. let us bring in our guest. the senior advisor at credit suisse. bob parker is here. coming into the u.k. market later today after we heard from janet yellen on friday, do you think what she said on friday begs the question of when and not if? during the third quarter
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and probably july, we will see the next bed rate increase. i would be surprised if we saw it in june. month'swe need another wea to confirm the uptrend have seen in the u.s. economy in april and may after a weak first quarter. a very mediocre performance. january and february data were poor. as we go into june and july i think the data will improve. particularly, we could see todline unemployment down 4.7% at the end of september confirming the just -- confirming justifying the fed raising rates by 25 basis points. with the prospect of another 25 basis points at the end of the year. manus: that is exactly what i was going to ask you.
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what is the propensity for this said to stretch out more -- for this fed to stretch out more? the dollar position is flipping. the dollar bulls are back. the question is, how much more could the fed reasonably do in terms of hikes? how would you want to play it from the fx position? bob: i have taken the view that we have been stuck in a range of dollar-zero of 105 .15. if we go back six weeks, we were at the higher end of that range. that was a trading opportunity to buy the u.s. dollar. i think we could easily see a move over the next two month down to 105-107. if you are long on the dollar, the message is clear to stay long. the only copy arts are on -- the
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caveats would be on sterling. the short positions have now been closed off which is why we at onee sterling up point 47. long positions on sterling, profits are being taken. nejra: what about treasuries. the 10 year yield and 82.2%. how will the yield curve look? bob: the selloff in the u.s. treasuries market has been frustrated for more investors for a number of years. i do think that if we end up with a fed fund rate at the end of the year, we will inevitably see some selloff in the u.s. treasury market. i think it will be pain release slowntil we -- painfully until we get clear acceleration.
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a more substantial selloff will be delayed until 2017. 2017 could be quite a difficult year. if we see headline inflation 2.5%-3%towards 2.5-debt by the middle of 2017, that will put pressure on the fed to move away from this moderate policy. we could see it move more aggressively. the answer is, not yet. manus: as you say, that could put a lot of fear in market participants. bob parker, senior advisor over at credit suisse. our next focus is india. a backdrop of uncertainty into the global economy. that will not stop india from growing according to the finance minister who spoke exclusively to rishaad during a visit to tokyo. >> if you look at the
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performance of the government over the last two years, we took over at a stage where the rest startedorld had almost disregarding india. we were off the radar. the government started virtually on a clear slate with an image that india ended -- entered into a season of policy paralysis. but decision-making actually became easier. we have consistently moved in one direction, step after that. a series of steps we have taken opening up markets, easing businesses, rationalizing taxation, having a more nondiscriminatory system of resource allocation, making entries and exits for businesses easier. we have crossed all of the barriers.
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nejra: some highlights of the day at head. in half an hour, we get inflation data out of france. and then german unemployment. an hour after that, it is italian inflation data followed by gdp. 1:30 p.m., u.k. time, personal income and spending data in the u.s. manus: up next, the big short is back. we will be looking at what is spurring the bearish bets on china. ♪
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a.m. int is 6:17 london. let us get the bloomberg business flash. takata ruling out bankruptcy as a way of reducing exposure to worldwide liabilities.
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they say the company will carry through the crisis. land rover helping tata motors in the fast lane. profit trickling to more than 700 $70 million thanks to the luxury brand sales in europe and in china. deliveries in china picking up. a doing well in the u.s. tata motors has put aside almost 100 million dollars for repairs of the tech had a airbags. as thee bank has emerged focus of a probe into whether auctions.rs rigged investigators are narrowing their focus after reviewing documents and communications
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from all of the 22 primary dealers. spokes -- the spokesperson for the lender declined to comment. that is your bloomberg business flash. wrist shot, thank you very much. china is the focus. short interest is rising. the yuan is moving. the bond market is moving. bob, we have a currency which is you want against the dollar in lieu and that is coming down. the biggest move since last year when the devaluation happened. -- theying at the msci revived the optimism. market -- yields are rising for 12 months. the question is -- have we finished our sweet spot of serenity in the chinese market
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and should i be more worried by these market moves? bob: i think you need to be negative on the chinese renminbi. the move we have seen over the last few weeks is set to continue. behind that is two factors. first, if you look at china's , wecial reserves, at cic peek at close to $4 trillion. now we are down to about $3.1 trillion. that is a time when china has a current account surplus. the decline in reserves is due to capital outflow. we always seem market instability in the chinese renminbi and in the stock market when we have bouts of capital outflow. that was the case in january and in august last year.
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number one, look at the capital account. there has been some pressure on the capital account in the last few weeks. chinese pbocat official policy. ideally, they would like to see a slow controlled downward movement in the renminbi. i stick to my view. and of the third quarter, we will see an exchange rate of 6.7. i think they can control the slow movement. ones: short interest in hong kong trading fund. chinese stock index futures plunged are the daily limit earlier in the session of forex snapping back in less than a minute. let us get more from sam. what is behind this? there are a lot of reasons. currency plays a big part.
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there are expectations that the dollar will get stronger with a rate hike coming at some point. there are concerns about chinese currency. when you get those things happening at the same time, you get people looking to get out of some sort of chinese assets. manus: the last time we saw was annterest hike, it auspicious. -- inauspicious. 5 billion was wiped off the value. could we see that again? sam: anything is possible. there are some circumstances that are different now as we were hearing. the pboc is control -- is determined to have a controlled weakening of the currency which may forestall panic. the shanghai composite is down 40% in the last year.
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the values are still quite elevated but not like we solve before the huge selloff last summer. nejra: given how much the shanghai composite has fallen, does the market still think chinese stocks are overvalued? sam: we mentioned the index, the , if you look at the member constituent companies, their average pe trailing is 97 which is pretty high. there is a sense that they are overvalued. whether that means there will be imminent correction, who knows. head of asia market structure, sam. thank you, very much. let us bring bob parker back into our conversation. you have made a robust case on
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where you see the currency going. the other big focus is with abe. he made a statement about global risks. he sees them possibly going back to levels that we have not seen since 2008. that is a rather serious question to raise on the global stage. everyone is talking about china and the wealth management project. how serious is this morning? by: i was quite surprised his comments. if you say we are going back to 2008, let us not forget where the s&p was after the lehman crash after 2008 and prior to the market forming a base in 2009. i would make a bold statement by saying the probability of us going back to those levels whether it be on the s&p or the msci world is close to zero. i don't think we will have that market correction that we had in
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2008 or from the beginning of 2000 until 2003. having said that, if you look at global equity markets in the last year, we have been trading sideways this may of 2015. i think the bull market we had in 2009 through 2015 is over. in all be trading sideways frustrating market for the next few years. nejra: looking at japan domestically. we are quite a bit of data out. when do you think we will see more stimulus from the bank of japan? bob: that is a tough question because they are the only major buyer of corporate paper. bey have been lying -- uying etf's. program,current qb they will be taking their
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balance sheet by the third quarter up to 85% of japanese gdp. fedut that in context, the is at 35% of u.s. gdp. the bank of japan is doing more than twice what the fed did with its qe program. i question whether monetary in japan.ks an interesting question -- where you have aging demographics in country, do negative interest rates work? you could argue that with a neck -- with an elderly population, negative interest rates encourages them to save more. nejra: bob parker, thank you for joining us. you will stay with us. is volkswagen on the road to recovery? earnings are due this morning and there are signs it could be shaking off the consequences of the e-mail and scandal.
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emission in scandal. we look at that next. ♪ okay, ready?
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manus: it is 6:30 a.m. in london and 9:30 a.m. in dubai. welcome back to countdown. we have the bloomberg first word news with rishaad. rishaad: take a look at japanese output rising 0.3%. better than anticipated. it has declined year on year. investors are awaiting an announcement from the prime minister on the likely delay to
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increasing the country's sales tax. the finance minister or reversing course and joining the ranks of lawmakers. sellers are in the crosshairs. tracking domestic chinese tax. coming in at its highest level in a year according to data we have compiled at bloomberg. the last time bearish bets were so high -- the poses them -- the pessimism did prove to be well-founded. the bull market proved to be a five -- $5 trillion route. the government's efforts to curb trading and clarify beneficial ownership rules. goldman sachs thinks these steps have addressed issues. regarding the inclusion of a shares. korea testing a medium-range rockets but it has failed. the ballistic missile was fired local timen -- dawn
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but the launch went wrong. range supposed to have a that could make the u.s. and guam potential targets. north korea also had a failed missile launch last month. -- the mostending since january 2009. record low interest rates providing encouragement. a jump in corporate borrowing facing growth in mortgage lending. the first time in more than seven years as banks tighten amid regulatory pressure. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. you can find more stories on the bloomberg at top .
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nejra: rishaad, thank you. let us talk oil and nigerian production has lived to the lowest since 1994. that is the subject of our chart of the hour. manus: nigeria is producing the least and amount of oil since 1994. what we have is a winning streak. bob, check this out. rent both rock both rocking it high. i am calling $50-$60. $60 is the new $50 that is the message from the uae minister. market isiving this that the traders are beginning to capitulate. speculators are reducing their net short positions to the lowest level in 11 months. is $60 the new $50? do you want to be long oil or long stock?
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i want to bring bob back into the picture. we are up 80% from the lows. from the investment perspective, should i get in here and trade outright or do you think it is time to look at bp and conoco it next? the oil companies -- what is your take? recommended back in january and february that investors go long on oil whether you go long in the futures market or direct positions. it was very clear that oil was very oversold and that we were having significant cutbacks in the american shale industry and in other high cost areas such as the north sea and alaska. you have had since january and february a significant reduction in supply.
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that has been compounded by some disruption whether it is nigeria. one needs to watch venezuela given the economic problems they are going through at the moment havehe canadian tar sands seen interruption as well. the cutback in supply. demand-supply balance. having said that, the first answer to your question is that if you went long oil in february i would tend to take some profits. if you want exposure to oil, i would go into the company's and you mentioned two which have lied to the recovery in the -- which have lagged the oil recovery. tell: tell me this cap -- me this, the world is going in crisis according to the prime minister abe.
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2%-three percent growth with oil above $60? is that the risk? challenge abe's comment about the world going into crisis. i don't think that is happening. i think we are going through a time frame of mediocre growth but not in crisis. when oil came down in 2014 $110 perune 2016 from barrel to the lows of below $30 per barrel -- that was a tax cut for consumers. i would question whether we go $50 becausey above i think supply, particularly from the american shale industry will come to back desk will come back in again as iran increases production and saudi arabia
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increases production by a million barrels a day and the russians are also producing more than 11 billion barrels of oil a day. i question whether we will shoot up significantly from these levels. barrel, i up to $70 a would be negative on -- that would be negative for global growth. nejra: bob parker, senior advisor at credit suisse stays with us. volkswagen first-quarter earnings are due later this morning. the samelower than timeframe a year ago but they are showing signs of recovery from the emissions scandal. what are we expecting from vw today? chris: analysts are expecting a drop in volkswagen's earnings. bloomberg consensus is that it is 18% lower than a year ago. that sounds significant but it
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is only down to a level of 2013. even that it is its worst crisis in history, that drop is not that significant. the underlying business has quite a bit of resilience to it. does it mean for vw going forward? are they passing peak crisis? quarterhis is the first they will not take significant provisions for this scandal. so far, they have set aside extreme point to billion euros. -- 16.2 billion euros. the underlying business is quite good with audi and porsche. to the crisis totally behind them, it will still take a few months. they have quite a bit left to do this month with talks with u.s.
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authorities to get that deal totally settled. they have their investigation report which is still several months away. peak crisis but it is phil -- it is still not over yet. nejra: bob parker at credit suisse is still with us. bob, i brought up on the bloomberg how the different industry groups have been performing on the stoxx 600. analysts have been cutting their forecasts for the end of the year. do you see what is happening here changing at all by the end of the year? rally we have had a basic resources in oil and gas is on the basis of the recovery in the commodity markets. priceslly in commodity is starting to look tired. i question whether oil prices
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can accelerate up to $60 a barrel and stay there. i think we will be stuck at about $50 a barrel. nowcommodity led rally is -- i would take profits on that. the second observation is that if you look at european worker earnings, the big winners over the next three months, those that benefit from a weaker euro and i do think the euro is going back to 105 in the next three months. if you have a cost base in euro, i think your cost will show up in improved earnings. atcommodity prices stall current levels, if i am a consumer of commodities, i have them as an input into my business. i think that will flow through to the bottom line. europeanews for earnings overall is that topline earnings growth, revenue
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generation will still be a struggle and that is against the background of the first quarter in european growth being good but if we settle down with eurozone growth averaging year on year 1.6%, we have not actually got that boost to demand which will spur corporate earnings. manus: one of the big market moves we have seen was in gold. it has dropped off in the last nine sessions. turning it around a little bit this morning. what i have is the dollar and old. both crossing over one another. the fed, that is the timeline of the hike. would you have a little bit of gold in the swag bag given that you have the spanish election, the u.s. election and donald trump potentially sitting in the white house? bob: the answer is yes.
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i have been fairly negative on gold for many years. if we look at the next ask months to one year, the u.s. inflation will pick up in 2017. if we look at the fed, an interesting question is, is the fed behind the curve at the moment? my answer is that yes it is behind the curve. that is positive for gold. we have a yields on 17 european government want markets. if you look at gold as a zero interest rate currently, it is competitive relative to those negative yields we have in european markets and compared to negative yields across the japanese yield curve as well. lyricalu mentioned risk. an interesting question is -- is geopolitical risk going to be a factor? of risks thatries
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are supportive of gold. as an insurance policy for inflation picking up in the state next year, negative rates on european --, investing in gold make sense. bob parker stays with us. up next, we look at how stable holding is in the brexit referenda. ♪
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nejra: it is 6:46 a.m. in london. look at new york, looking gorgeous at 1:46 a.m. in the morning. let us get the bloomberg is nist/from rishaad. is -- tech data is rolling out bankruptcy. -- takata is ruling out
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bankruptcy. the company is instead seeking buyers to take a controlling portion. they hope to find a suitor by the end of the first quarter. -- iser is putting getting into the fast lane. the luxury brand is having success in china and europe. about globaltic growth as deliveries in china pick up. takata airbag scandal would affect about 100,000 of its cars. -- deutsche bank is emerging in a probe. no bank hasat -- been accused of wrongdoing. investigators are narrowing their focus. deutsche bank is -- has not disclosed that it is under
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investigation. that is your bloomberg business flash. rishaad, thank you. officer inxecutive zurich that stepped down has committed suicide. good morning. what details do we have so far behind the suicide? we do not have many details so far about the reasons of the suicide. dead at hisas found holiday residence on friday. the news was made public by zurich insurance on monday. they were citing family. our understanding is that he did not leave behind a suicide note and the company did not provide any further details on this suicide.
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as you pointed out, this comes six months after his departure. it wast month, challenging for the company and the ceo. manus: a tough time for many industry leaders and all around. this is the second suicide in three years in zurich. what shape is the company in? throughhe company went a difficult time frame. group consecutive profit warnings in qqq consecutive quarters. two consecutive profit warnings in two consecutive quarters. the company had some reserve issues connected to the north american auto business ultimately leading to the
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departure. in the first quarter, you have which shows the company was not in such a bad shape. it still paid out it's dividends. -- its dividends. it has a high dividend yield. it is not in bad shape. you very much. the latest details out of zurich. the bookmaker william hill has shortened its brexit odds after 85% of all eu referendum bets taken yesterday. the telegraph newspaper shows 51% wanting tuesday and 46% favoring an exit. things sosters got
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wrong the last time, let us see how they do this time. stephan shakespeare will be tonight. debate should we be listening to the pollsters or the bookies? stephan: polls and bookies do different things. polls tell you what the state of opinion is right now. we have that as even. a dead heat. markets dos do and is look to the final outcome. we would agree with the markets. we think the most likely thing to happen from here is that people become nervous about change. we solve this in the scottish referendum which flirted with change. up moment when leaving went to 51% and then it came back down about 5%. we got that completely right.
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two weeks out, we had that very close and then on the day, people got nervous. manus: one number that reverberates. that are undecided. what kind of event, what kind of momentum changes 19%? when you look at these variances. what sways the unknowns? ofphan: it is a combination some piece of news. the campaign has been well set to exploit. we saw a little bit of that with the migration figures which reminded people one of the main reasons why the exit people want to leave. those figures were bad figures. believe campaign was able -- teh campaign came in with an attack strategy on
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cameron. leave campaign can get of ends to bring migration issues to the forefront, they have something like a chance. it is much more likely that the economy will figure increasingly as we get towards the end again and that will bring people back into staying. manus: -- immigration,than what are the risks for cameron going up to june 23? stephan: you could see an event like a bank going west. we have heard speculation about that quite often. it is unlikely. anything that shows the eurozone is unsafe. could again make people worried about migration. they are not connected necessarily but in the minds of voters they can be connected.
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anything that makes europe look unsafe either on the economic or the security front can help the leave campaign. manus: one of our main stories -- brexit, everything you need. the headline is -- chaos awaits. of the siege to cameron -- a no matterameron the results. if he loses or if the country votes for brexit, he is a lame-duck prime minister. have you any updates in how people see cameron? stephan: trust in cameron has fallen insipidus late over the campaign -- has fallen preci pitously over the campaign.
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he has a heavy-handed campaign. people are wondering if they can trust cameron. .is trust scores have halved he has wounded himself. well, he will be able to put that behind him. but there will be a big legacy of the negative feeling towards him as a result of the emotions that have come through in this campaign. stefan shakespeare, ceo of yougov. bob parker, senior advisor at credit suisse is still with us. so much uncertainty. a lot of people are saying you have to position yourself for both events. what is the best way to position yourself so you gain if the u.k. stays in the eu but you are also hedged if we get the brexit? behavior is different
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in referendums rather than elections. people only really make up their minds in the week or so prior to the referendum. in the general election, voting intentions are reasonably clear well before the election. the conclusion is that do not be surprised if we see big swings in the opinion polls over the next few weeks. that will compound the uncertainty and potentially compound the volatility. if you are trading markets, being long volatility makes sense. ve vote, one lea still has to recognize that britain still has a current account deficit. we need capital inflow. t vote would probably
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damage at that. and you have to be long dollar in that scenario. manus: we will take that as it to the markets at the top of the hour. stay with us. jeremy cook joins us and we will right here on- fx "countdown. ♪
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>> june jitters as a hawkish tone of the fed dominic school trading. bearish bets and china. one of the largest chinese stock bp of searches to the sun highest level in a year. as you on -- as u.n. losses -- as yuan losses escalate. growth is set to continue at a world beating pace. i >> welcome to "countdown"
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am manus cranny. >> i'm nejra cehic in london. we have european futures just opening up. broad-basedretty days in asia. it looks like european stocks could open slightly higher. we futures up 1/10 of a percent. 0.2%.tures up cac 40 futures up 0.1%. we might see some modest gains at the open. >> let's get into risk radar. we have bombs moving but you have gold managing to turn it around 1213. nine days. $100 in may as the dollar moves it around. more.the fed do crude it 4965.
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alanis winning week -- winning streak on oil and five years is go to the opec meeting. what we haven't seen since 2011. by the voice of the traders are cutting their short positions of the lowest in seven months. 6.50, 8.45.ne you are seeing that sweet spot dissipating. all about the bonds. let's show you what is going on. futures are trading lower in terms of yields. we are waiting for the other flashes to come through. let's take the board down because we are waiting for some of the cash prizes to come through and of course there is a lovely story this morning, the treasury loomed over the fed as received a response that made them. a solid return 2.3% in terms of the equity return. >> let's get the bloomberg first salamat. with rishaad
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rishaad: japanese investors showing up 0.3% from april. that's not as bad as the 5% drop we had been forecast. meanwhile, spending up by 4/10 of 1% a year ago, less than the 1.3% drop which have been forecast. they're increasing the country's scale tax. the reverse goals have joined the ranks. againe equities are once with short-term risk, short interest on one of the largest hong kong exchange traded funds. all of that according to data compiled by bloomberg and by markets. such optimism has proved well-founded as the bull market
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turns to a $5 trillion route. -- inclusion have shot up to 70%. that's for government efforts to confirm trading holds and clarify beneficial ownership rules. all that according to goldman sachs. -- the rocket early in the day appears to have failed. south korea's joint chief of staff says the ballistic missile was filed around don local time. it's estimated to have a range of 3000 kilometers in japan". there are doubts over its accuracy. the chief executive officer and a distillery shop has committed
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suicide. they said they were profoundly shocked by the news. and german chancellor under the merkel says britain must cast -- resistles and risk clinging to its imperial power. the chairman of the european parliament for affairs committee saying that all the political arguments favor staying in but on the other side there are emotions. and 1502400 journalists news bureaus globally and for all of our top stories, it's the most useful -- >> thank you very much. yesterday we brought you breaking news a german legislation headhunted -- halted its slide today we have breaking data in regards to retail sales. telling us a very negative story. on the month retail sales declined by 9/10 of 1%.
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the market survey was for an expansion, a rise of 9/10 of 1% and of course in the previous month we have a drop as well. overall, on the year on your comparison we have risen by 2.3%. germany is the strong bellwether within the european story. ae month on month number little bit of a worse reading is the eurozone figure there. as we get more details, of course we bring them back to you. the eurorl -- nejra: is pretty much flat against the dollar at the moment. >> there has been a pretty good session for asian equities to roundup the final trading day of the month on what has not been a particularly good month for asian equities. it looks like it will be down over 1.5% over the course of may. today there is some very heavy lifting from the asian market in shanghai up by almost 3% in late
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trade. only on the speculation that the likely inclusion into the msci global index -- we are also seeing some come through in hong kong and japan closing up by 1% held again by a week again. bit of a disappointing move from and shrill you way down by commodities there down one half of 1%. new zealand has closed higher by one third of 1% and southeast asia is generally weaker but we can see that game coming through from china with it picture on the regional index with everything trading higher except that oil and gas which is being sold off to the tune of around one third percent. also watching the chinese renminbi today we have seen the to itsaken or cut the lowest level since february 2011 for the second consecutive day. pretty flat there, 6.58 and if we look at the offshore renminbi we are seeing it also reflect there.
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the aussie dollar making a comeback so we have seen a bit comingduced strength through into commodity currencies. in australia we had food -- building approvals for april and the current account balance they said 20.8 billion dollars in deficit. the aussie dollar is a pretty solid rise when that came through. the japanese yen is pretty flat at the moment but certainly weakness is sent to tenths of 1%. helping out that rally we have seen in japanese equities. a solid finish for japan and australia on the close china looking very strong but listing the regional index on the final trading day of the month. >> thank you. >> the fed has shifted toward raising interest rates as economic data continues to surpass analyst forecast. meanwhile treasuries have lost their edge over stocks
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stagnating in the second quarter. the s&p on the other hand delivered a return of over 2% stop let's bring in our next guest, he joins the conversation. the chief economist at world first in the u.k.. market,rns on the stock the machinations in the bond market -- it is all about the dollar and we saw this progressive shift. we have a lovely story on the terminal which says, if you saw the dollar in may over the past lostears, you've actually money. we are up over 3% in the dollar is very much locking in a view that yellen is probably in the coming months going for a hike in june or july. do you need a press conference if they hike question mark what will they do. >> think they fold off in june. i still think that financial conditions and financial stability is something that may worry them in the short term but in the grand scheme of things.
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this week is quite important week for the u.s.. and if we see the wages pick up higher on friday that's going to be a big boost to hike over the course of june or july. in july they have to have a press conference if they hike. we have started the path of normalization in december and the was a press conference with that, maybe the first percent of interest rate rises, the u.s. consumer, u.s. corporate and markets will when janet yellen to come out and say this is not an over change in our stance to medically it's going to be very slow we will bleed these into the market so as not to scare the horses. >> are we assuming that we are going to see dollar strength through to the end of the year given the expectation about that over the rate hikes and if we are, where are the casualties going to be? >> i do think that we see a stronger dollar through the end of the year and i think it is a stronger dollar regardless of what happens with the fed. think the global risk profile
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still necessitate stronger u.s. data. i think the casualties have to be -- looking at engineers. were going to see. we very seen this and other emerging market currencies in the indonesian currency and china is literally just catching up. there are definitely other lakes to this as we continue to see dollar strength. >> i'm as excited as you of that the problem of the fed hike. i am as excited as you are in terms of not having a news conference in the fed rate hike, but with does not excite me is the personal consumption expenditure. it is not there. retail salesabout but the benchmark which the federal reserve uses his lower. >> it has come lower in the
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short-term. i think this is definitely a reason why people are only talking about one interest rate hike this year. anyone out there talking about two would have to sit there and say this turns around dramatically in the short-term. in the grand scheme of things if we are stunning to see wage pressure, it's worse for everyone in the economy. if we can see a decent pickup and wages, they can believe as pc starts to come higher. >> what else are they going to be watching for going through to the end of the year? >> a think that a lot of their radar has to be focused on the political risks, colo killy. -- colloquially.
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we've seen them shocked and for inability to show everything is a little bit scary. we are going to hand back and i think that limits on how data dependent they are. if we do get a massive shock, you're talking about brexit before the break. they can kind of thing easily sit there and push things back by nine to 12 months. the way it ist of the eu migrant crisis. they will still sit on their hands as far as the financial conditions regardless of what the data is doing. manus: if we are ticking along and we don't get trump and brexit off the agenda, the world should look like a rosier place. what is your growth target? if those things clear off the table there will be nobody more excited than my pension advisor. what does that do to u.s. growth or global growth. that theree with a is no way were going back to the
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crisis led situation? >> i think i agree with bob that the chances of a global recession or a move back to the fear and pain of 2008 is very low in single digits of probability. you have to say that with those risks out of the way, a non-trump white house with the u.k. remaining part of the eu, you would like to see growth in the united states above 3%, that is entirely possible as long as the oil prices do not get too volatile in the last half of the year. if they remain around 50% that is still broadly stimulatory for consumption in the united states. i think that brings things higher. to see as we continue strong exporting base that is positive as well. >> we have a lot to be hopeful and thankful for. we have a lot more to get
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through. jerry mccook's chief economist at world's first in the u.k.. coming up white india growth will defy the global slowdown. our exclusive interview with the country's finance minister. ♪
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>> london on a tuesday morning. some might say it is miserable but i think it looks romantic. it's a 17 in frankfurt let's get to the bloomberg business flash. >> to cut a has ruled out anchor of c as a way of reducing its exposure to the liability from a storewide airbag recall. that's according to a person with knowledge of the restructuring process. they say the company is instead taking buyers to take a controlling stake and carry it
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through. the and visor will meet manufacturers and financial firms with the aim of finding a tutor by the third quarter. jag wire land rover -- jake you are land rover -- jaguar lan droove -- the company says it is cautiously optimistic about global growth. scandal mayir bank -- the tackett to air banks -- a airbag scandal has already -- reporting that deutsche bank has emerged as the focus of approve and to whether traders rigged auctions for u.s. government debt. the paper says that no bank has been accused of wrongdoing but investigators are narrowing their focus after requesting documents and communications from all of the 22 primary dealers and treasuries. the post says that deutsche bank has not disclosed that it is under investigation and the spokeswoman for the lender declined to comment. that is your bloomberg business
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flash. >> thank you very much. uncertainty for the global economy will not stop india from growing. according to the finance minister who spoke exclusively to bloomberg's rishaad salamat during a vistula -- visit to tokyo. >> if you look at the performance of the government over the last two years, i think we took over at a stage where the rest of the world had almost .tarted disregarding india the government started on a clean slate with the image that india entered into a phase of policy paralysis. decision-making had become easier. over the last two years we have consistently moved in one direction step after step.
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we've been rationalizing having a more nondiscriminatory system of resource allocation, making entries into businesses easier, making exits out of business easier. crossed all of those barriers one after another. >> short interest in one of hong kong's biggest exchange trader funds tracking domestic chinese stocks have surged. byording to data compiled market analyst. let's get more with bloomberg's head of asia market structures send the moody. what is the behind the jump in chinese stocks? >> i think the way to think about it is as a currency play. the chinese currency has been declining steadily, their
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expectations are going to keep falling at the same time were talking about rate hikes in the u.s.. you'll see people wanting to pull out chinese assets and that expectation is what is encouraging short-sellers. >> the short-sellers are fast merchants really. certainly from the last time round. inn they are in, they are hard and heavy. this, the crash and the stocks a last time around, is that what we should be building up for? and perhaps less contained. china is better prepared for any kind of tumble or rumble that they see. august and january were very big learning experiences. bankers said that
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the decline in the currency will be controlled. will use a lot of different mechanisms that some work and some didn't work in the last to klein. the other thing to remember is that the shanghai composite is year andin the last they can still be overvalued socks but you don't see quite the same bubble that we were seeing this time last year. >> bloomberg's head of asia market structure, thank you indeed. jeremy cook the chief economist is still with us. jeremy if we look at china we have seen the pboc lower the fixing of the yuan for two days in a row. should we be concerned of a repeat of august? >> i don't think there is an incentive for them to really -- you can see how big seachange is such false. we have seen the move into the imf basket.
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it precludes a certain amount of stability within that currency and i think the chinese officials take that seriously. we're still in a path where they want the yuan to be weaker against the u.s. dollar. but take moves. you'd have to see something huge for that to happen. >> jerry what i have for you here is a little bit of an indication. this is a capital flow coming out of china at the bottom. you have capital flow ticking higher along with dollar-yuan rate. my question to you is a great deal of debt was built-up in this growth period. is this a flight of capital or is this debt repayment or perhaps we are being overly aggressive? >> i think it is a mixture of both.
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you have to look at the graphs and see exactly how much money is coming out of china moving into hong kong and from there moving throughout the rest of the world. there's huge amounts of money. it's having more and more of an effect. the debt repayment structure is an interesting thing to look at in the short term. it does continue and certainly ways on the u.n. moving forward but at the moment i think the fears are just around where china is going, how slow the data is and how week the prospects may be. >> jeremy on the bloomberg here just to broaden this conversation up to other risks other than china this shows euro-dollar the premium. in other words it option signal a higher degree of worry in the future. so all these risks, china the brexit in the u.s. election, how do you position yourself in the currency market? >> i like to go long dollar at the moment. i think it has advantages in
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both a brexit and non-brexit scenario. on a hiking rate acis. i think those moves are broadly symptomatic that regardless of what happens on june 23 it will be worse in the eurozone them for the u.k.. u.k.a short issue for the no longer problem for the eu as a whole. there may be another referendum in the netherlands and france. the we have seen in european politics certainly lead us to believe that a more natural start is coming through and that's the kind of thing that promotes a vote to leave the european union. so i would be long dollar staying away from the eu. away as long dollar. great to have you with near and myself today. and from me.m era countdown is up next. if a slight uptick there. mira, i will throw it back to
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you you have some very clear messages. ballpark or sing that a has not ot it right
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>> welcome to "on the move. we are counting you down to the european open. berlin and here's what we're watching today. the road ahead is embattled. will we see signs of recovery in the wake of the emissions scandal's. the treasury stagnates as the dollar dominates the month of may. that are the markets prepared for the fed shift?

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