as she goes the latest fad report says the u.s. economy grew at a modest pace. but is that enough for janet yellen to hit the button? middle fresh stimulus is expected, but will the ecb chief decides the government for not pulling their weight. and oil drops again, as opec ministers prepared to convene amid speculations that saudi is considering a deal. we are live in vienna. ♪ a very warm welcome to the program. live from london, i am anna
edwards. we will be joined by manus cranny from dubai. let us get to the risk radar can the last 24 hours or so. today's show brought you by the city of vienna. on the opec front and the ecb. putting aside for one moment, let us have a look at the asian session. the nikkei to do five down by 1.9%. it was down at one point by more than 2%, looking for the biggest drop around a month. and that is amid the wildly expected stimulus package by abe. level, towards that 109 perhaps more again strengthening this morning. a host of factors in here. here, boj,ax news in resident risk, all of that working its way to the japanese currency. and we have about her index in there for you. down two cents, and the page
veryovernight, a keyword, often used in that report, 23 times mentioned in just six pages. setting up the jobs report tomorrow and the meeting on the 15th of june. let us to the bloomberg first word news. here is rishaad salamat. trading for a fifth day, opec ministers meet in vienna to discuss policy, and industry data showing it is up, showing saudi arabia is ready to consider a surprise deal with fellow opec members in an attempt to mend divisions. but iran's oil minister said it is unlikely that a deal will be struck. the idea to have a country 00 -- i don't believe we can reach an agreement for this model.
the yen strengthening further after the bank of japan board members demanded reform,: the 2% inflation target a medium to long-term goal. criticizing the boj rate saying that it is tightening rather than easing of fact, and could hurt the stability of the financial system. and it is a day after the prime minister postponed next april's tax increase until 2019. signaling from the egyptair went downght 804 under clear skies from paris to cairo. all on board are believed to have died. it sent seven automated distress signals for disappearing off the radar. no mayday was heard from the pilot. goldman sachs has cut several investment banking jobs the last few weeks, joining security firms that are adjusting to the slowdown in activity. all this according to people familiar with the matter. they say dozens are lost,
including in london, new york, and hong kong. goldman sachs is on a cost-cutting drive, try to whether a slump in cost-cutting and deal. corbynarty leader jeremy will be warning today that a vote for the u.k. to leave the european union would threaten workers rights. he says that eu regulations have an title 26 billion workers to 28 paid days a year. part-time employees, and women are given maternity leave. meanwhile, primus or david cameron will field questions, focusing on the economic dangers of brexit, while supporters of a vote to leave are increasingly concentrating on the risk of immigration. global news each day, every day with 2400 journalists in more than 150 bureaus around the world. you can find our top stories at bloomberg top . anna: rishaad salamat in hong kong. let us check out the latest
market action. juliette has the latest on the descending on tokyo. juliette: i think the fact that we did not have any more stimulus announced from shinzo abe. when we had that coming through from the sales, a disappointed investors once again. thenikkei 225 down 1.8%, second session of losses there. we are seeing the yen continue to strengthen as well. this weakness coming through in japan is really weighing on the overall index, which is also down for a second consecutive session. we are seeing a little bit of weakness come through in china, the shanghai market down 2/10 of 1% on the lunch break. hong kong looking little bit better, most markets in southeast asia are higher, but it is certainly weakness coming through from japan that is playing. also, australia down. korea looking ok though. we had fourth-quarter gdp there.
looking at some of the stock as we have been watching, just rejecting a takeover from bane. a $2.7 billion australian dollar takeover, shares of 29.5%. on bank falling in sydney, reports that it could face court action over a supposed bank bill swap, similar to libor. and in hong kong down 4.4% on the lunch break. that is as google sold about 371 million shares in lenovo to raise $221 million. also, just checking on the chinese currency, the wind fixing rate has been raised by one third of 1%, the highest level since may 12. we're actually seeing the chinese yuan is still holding at five year low, still sinning a lot of money through the market. and a check on the japanese yen,
because it did have that very big spike today as we have a look at the one-day chart. excuse me, which is of course weighing on japanese equities as well, up one third of 1%. so a second session of losses. the sales tax delay also affecting the bank of japan. really breaking the ranks,: the 2% inflation target on achievable. anna? juliette sally, joining us. and hong kong as a modest pace across most of the country since middle of april. according to the labor markets, nudgeers continue to rates higher. that is according to the fed page book report. eric has the full details. >> with just two weeks to go before the next fed decision, the central banks latest report on the economy did not strengthen the case for a rate hike. the beige book, anecdotal reports from a 12 fed regional banks, shows u.s. is growing at
a modest pace. job growth and wage increases were also modest since the last book in april. in other words, that is not the kind of assessment that converts does into hawks. there is truly little if any in book thatige suggested urgent need to raise rates at the june 15 fmoc meeting. one thing that does stand up is the labor market. and difficulty hiring, in theory, should translate into wage and inflationary pressure in the months ahead. beige book can be a bit of a sleeper. but two weeks away from that meeting, it takes on added importance. even though it did not strengthen the case or a rate hike now, importantly, it does not take the fed off course. erik schatzker, bloomberg in washington. there.rik schatzker meanwhile, the european central bank meets in the enough for the latest policy decision today. president mario draghi will have
littelfuse stimulus -- little fresh stimulus with the updates report. like you to reinforce the perception that despite monetary easing, the ecb is still struggling to meet inflation goals. for more, bloomberg's head of western european central banks joins us now from frankfurt. that is a little glass half empty. the ecb is still getting through. we are going to be focusing on the forecast. on the upside, if they do not downgrade them that we the first time in a year? paul: yes, you can take the glass half old or empty. the projections in march did not incorporate the stimulus. it was announced that month. now, that is in place. and the forecast through 2018, they're not increasing. you have to ask what is going on? there are some signs of weakness, or at least fragility in the economy. and there is really very little in the way of price pressure coming through.
wage growth in the euro area was the lowest in the first quarter on record, going back to the foundation of the single currency. and the concern here among single banks, the policy meters in th the end of, they really helps from the government. anna: are we going to hear mario draghi channeling christine lagarde when he speaks later, calling on governments to do more? paul: i think there is a good chance of that. it was a big part of the debate of the less governing council meeting, the came out a little bit later on. and mario draghi did state in his last press conference that there was a renewed emphasis on the need for structural reforms. and you may see him pick that up once again today. , look we will do everything we can, but the longer governments do not put in place the fiscal flexibility where they haven't, the longer they wait on structural reforms, the national and the european level, calling for a european area finance
minister, the longer it will take. and the longer the risk is that everything is derailed by some kind of shock. anna: paul gordon, bloomberg's head of western european central banks join us there with a preview. we will bring you the ecb rate decision here on bloomberg, that will be followed by mario draghi's news conference 45 minutes later. during us now is sarah hewin, from standard chartered bank. great to have you here. nobody is expecting any big change in policy from the ecb. all about getting more detail on the policies that have already been announced to sarah: we had all the big policy announcements months ago. and now it is time for a moment asia. announcement. the and we have seen some impact in terms of reducing borrowing costs at the end of this month, we will see the corporate bond purchases starting to kick in. and so, no new announcements
expected they. we will get revisions of course for the forecast data. and i think we may see a few tweaks there to growth and inflation. that will be summoned to look out for. anna: really interesting, if they do tweak the forecast, move them up on inflation or growth, or even just one of them, how does that change the debate about whether the ecb is done with stimulus? because won't it be hard for stimulus to be argued, if these forecast move in an upward direction, even if only modestly. sarah: i think that is a fair point. as you mentioned earlier, the first time in a long time and have not cut forecast. if we look at what happened at the end of last year, the beginning of this year, we have seen a little bit more momentum. as some questions still about the direction in which the economy is going from the data, more shaky recently, but we have had is a big pickup and energy
prices. that is going to affect headline inflation quite substantially, in our view, over the next few months. so we think that inflation is going in the right direction. perhaps not right enough. anna: i have a five-year chart here. mario draghi likes to look at this, gives us a guide on where expectations are going. they're not falling off a cliff anymore. but they have restored a little higher, but not much. sarah: that is a good way of talking about it. because we are starting to see the low 5%. it is very difficult to argue that that is close to below 2%. but let us see what happens. over the next few months, in our view, we will see quite a strong pickup and headline inflation because of oil prices. we think that there will be a mismatch perhaps what is happening to inflation and what is happening to the underlying economy. anna: we might hear him call on governments to do more structural reform. labore strikes in paris, reform underlining just how difficult that is.
and as governments in europe face the rise of populist parties and fragmentation of european politics, you wonder how easy it will be to get structural reforms through. what,yes we talked about if anything is going to come out of the meeting. it will be new, but the forecast will be the same. he will reiterate that governments need to do more. and we know that the european central bank, the governing council feels most firmly that based on all of the heavy lifting so far, governments need to take action. we are seeing more action in japan. how far the european governments are really going to take note and pushed through the structural reforms, that is anybody's guess. anna: let's get your thoughts on the fed, talking central bank. the beige book brought to us by the word moderates, getting to mentions and to six pages. if that is the case, is that enough for janet yellen to push
that button, as we said in our headline, in june or even july? sarah: officially, it is not. and we still have quite a lot of concerns about the modest pace of economic recovery, not the recovery but the modest pace of growth in the u.s. book,y point in the beige talking tight labor markets, we know that is something that the fed is concerned about. is it having an impact on wages so far? but in time, it may start to raise rate behavior. so tight labor markets, we will see what the report says tomorrow. but i think that is probably going to be more of the focus for the fed, than the overall sentiment, which is still moderate growth. anna: wages still important. sarah hewin stays with us this morning. here are highlights for your trading day ahead.
opec starts its meeting indiana at 9 a.m. u.k. time. the 12:45, we get ecb policy at and the in a. bloomberg customers can fall of the developments at top . at the same time, we get u.s. initial jobless claims, coming ahead of course of tomorrow's key payroll data. and half an hour after that, bank of england governor mark carney launches the new u.k. five pound government no. that might not sound like some to focus on. but mark carney will be quizzed by reports on brexit. we may have to wait and see if he does comment on brexit, but you can be sure the u.k. politicians will be weighing in on the debate. we will get warnings about what, up next. ♪
1:19 in the afternoon if you're in hong kong. if you have the pleasure of that youthful view, that is victoria harbour. hang seng up by 2/10 of 1%. let's get the bloomberg business flash. rishaad: that view is right. uber saying it picked up a $3.5 billion and saudi arabia, the biggest investment today helping the ride handling company go public. saudi arabia has been looking to diversify interest e.on oil -- beyond oil. the prince previously invested in the u.s. rival lyft. the takeover of the london stock exchange may result in hundreds of job cuts, expected to lose at net 700 positions. and on the deal, they will make a decision next month. alibaba will pay $74 a share buyback $2 million of its share, saying the share of alibaba will
raise a total of $8.9 billion, the lowest in the stake of e-commerce company at 20%. they are embarking on an asset investment plan, designed to shore up finances and pay down debt. regulators may be said to approve the biggest beer merger ever. people familiar with the matter sang the department of justice could clear the $100 billion sab miller and ab inbev deal this month. defections may be placed on the tutors, from keeping smaller craft cleared up. that is your bloomberg business flash. anna: the u.k. labor carter jeremy corbyn today warned that a vote to leave the union with threaten workers right. they haven't title 26 million workers to 28 days of paid leave 40,000r and that opposes the year the right to maternity
will happen within the european union, after a possible brexit. which i don't believe will take place. there will be a sort of quantum leap into deepening of the union, or will the tendency prevail, and different euros skeptical forces raise their flag all over europe. as we see it now, it may be happening. anna: central bank governor speaking there. is still with us. with thisn the latest story. it seems like last week the momentum in the polling seem to be behind the remained camped. now it seems to be behind the leave camp, meanwhile, the economy waits to figure out what happened. i think it is quite interesting what we have seen in terms of polling. a big push of course on the remain side for all news to be dominated by the impact on the economy. on the remainat campaign, what are the risks to the economy to the u.k. leaving the eu? more recently, over the past week in particular, we have a lot more news over immigration, population, youth headline
statistics that have been released. raise morees seem to awareness of migration concern. consequently, leave is in the ascendant apparently. anna: statistics trying to put to facts, with regards migration figures. the different gaps that exist between long-term and short-term eu migration. annasarah: i think they were responding to questions over why there was such a big discrepancy between new national insurance numbers being issued and the official migration statistics. what they said is that a lot of difference is accounted for by short-term migration. people who come for a month or a few months, essentially people coming in less than a year, but not in the u.k. what is interesting though, the media did not really pay too much attention to the details,
focusing very much on the headline, which was close to 800,000 net migration in the u.k. last year. so, i think both sides are obviously focusing on different aspects. migration is certainly a key one for the leave campaign. anna: certainly, to de-tangle these arguments. we heard there from the polish central bank governor, on the impact of the rest of europe. do you think that if there were to be a brexit, how much closer to we get towards a sort of existential crisis for the eu? he talked about disintegration tendencies are failing. that is the bigger question really, isn't it? anna: it is certainly something that markets are going to be focusing on a lot, as we get closer to june 23. particularly, if the opinion polls are suggesting the gap is very close between leave and remain. it is clear that in some
european countries, there is support for a referendum on whether they should continue to stay in the eu. more broadly though, it is likely to be that there may be a referendum on migration. i think that has been a big issue on the continental shelf. anna: where do you see the brexit weighing on the economy already? construction? which parts? sarah: there seems to be decisions postponed until after june 23, that is evident in hiring, commercial activity, particularly commercial property for example. and some being held back before we get to the referendum date. so, at the moment, and looks as though the u.k. economy is running at a pretty weak pace. but that may all be given back in the second half of the year. anna: we will see, depending on
anna: welcome back. x: 30 in london. 7:30 in frankfurt or paris. let's get the bloomberg first word news. it was rishaad salamat. rishaad: the u.s. economy expanded at a modest pace across the country since mid april, causing the labral market to tighten. this comes as adding jobs and nudging wages higher, as the beige book major little to change the economy, using the word moderate 23 times in six pages summary. in vienna, president mario draghi will probably have little
fresh monetary status to offer. that is speaking to reporters after the council, following that projections will likely reinforce the perception that despite massive monetary easing, the ecb is still struggling to meet inflation goals. this after the bank of japan board members demand reform,: the 2% inflation target a medium to long-term goal. criticizing the negative rate policy, saying it is having a tightening rather than easing financial systems. it is a new blow to abenomics, posting the next day april tax hike until 2019. signals from the missing egypt airplane, two after the crash and mediterranean sea, edwin down under clear skies, while flying from paris to cairo on may 19. all 66 people on board are believed to be dead. it sent seven automated distress
signals before disappearing off the radar. there were no made a messages from the pilot. goldman sachs has cut dozens of investment banking jobs over the last few weeks. apparently by doing so, it is trying to join the adjusting slowdown in deal activity. this is according to people familiar with the activity. job or lost in london, new york, and here in hong kong. goldman sachs is on a big cost-cutting situation. global news each day every day, from 2400 journalists and 150 bureaus around the world. if you're a bloomberg user, just go to top go. back to you. anna: rishaad salamat in hong kong. asian stocks have fallen for a second day, as the yen weighs on japanese shares. with more on that, here is nejra. crucial of course, but general disappointment about what prime minister abe had to say about the lack of a stimulus program.
nejra: we're at the beginning of a month weather is a lot at stake. of course we have the ecb meeting, opec, the fed, the brexit though. not a lot of risk-taking, globally really. as you say, asian stocks down for a second day. we are seeing the pacific index up by a tense of 1%. japanese stocks jumping but most of the month, largely down to the stronger yen. the yen is heading for its first three-day rally in a month, holding gains after a surge of more than 1% over the dollar yesterday. yes, abe pledged to delay the ax hike read any of back a widely expected stiglitz -- fiscal stimulus package. that is playing into this. but of course, is about risk, too and if we look at the euro, that is strengthening ahead of the
ecb but also the u.s. jobs data. the job data is about janet yellen and the fed. we are at 112 now. we broke through that on euro-dollar. what i want to show you, this is interesting. this is volatility, the curve is deepening. they sickly, one-week volatility, the premium one-month volatility has been rising. i tracked where the zero line in. it is above that zero line into positive territory, basically for the first time since one-month volatility started capturing the referendum, the referendum on brexit. so what this really seems to show is a focus, at least in the short term, shifting very much in this trade from the brexit risk to janet yellen. because we do have janet yellen speaking in philadelphia on june 6. and as i said, the euro dollar trade being driven very much by the moment. a big day for oil. opec meeting in vienna.
we will go live there in a moment. but first, manus joins us with a chart of the hour from dubai. it is oil related. good morning to you. manus: good morning, anna. there is a skittishness in the oil market, carry through with the dollar market, and all on thereally coagulate price of oil. what i have for you is price of equity, the all world equity index and the price of oil. here is the dividing line in december. ryan knows more of the semantics, but this is about abandoning the cap on production. that is where we went down, a 13 year low. the question is, the dollar undid a lot of value through that period of time, and we are holding this $49 a barrel. japanese stocks are down the most in a month. the dollar oil and your view on global growth are all inextricably linked.
we know the correlation, and i think this shows it really, really strongly behind these lines. what comes out of opec today, will the saudi's demonstrate that opec will get banged for but when they go to vienna. anna: thank you very much, manus. oil ministers say they will discuss saudi's proposed output ceiling, but it will require iran support. that is unlikely. ryan chilcote is in the inaccurate the morning to you. this is a surprise. i have seen other supports that maybe the iranians might get their first with her own proposal. run us through the proposals. ryan: yeah, very confusing. it is a bit of a surprise. i am not sure it would actually add or take away any barrels, in terms of supply from opec. but what this saudi initiative, if it was accepted, would show that opec is able to agree on
something. so, the production ceiling, just to be clear, the target is the basic architecture, the basic tool that opec as used for the last 35 years to influence prices. at the last meeting in december, they threw it out the window. they said, let us produce as much as we want. that is something the saudi's wanted, against the wishes of some of the countries that would like to see a higher oil price, or need a higher oil price. , now the idea is that the saudi's will try to mend relations. the iranians are saying, well, ok. we are happy with the production target. but we really want to see is individual country quotas. in other words, if were going to have a production target, let us have individual responsibility. you agree to 3 million barrels a day, we agree to 4 million barrels a day. and that would actually work, it would not just be a propaganda tool. have a listen to iran's oil minister last night.
idea todea, the main have a country quota. i do not believe that in this environment we can do that, for this matter. is, ofhe other thing course, these quotas that he is talking about have also been something that opec has abandoned. they have not actually had individual country quotas for five years. you heard the iranian oil minister said he does this he happening at the meeting. we shall see. what the market is looking for is for opec to demonstrate its ability to agree on something, anything really, that would really help things. annamanus: ryan, good morning. this is about demonstrate that opec has not lost all credibility, in terms of everybody saying it is the fracking in the u.s.
but this comes down to leadership. where are we on the new secretary-general? what can we expect that will do for opec? ryan: well, that has been messy. manus, they are trying to appoint a new secretary-general to lead opec for the last four years. you know the current secretary-general is looking to resign. he has been in the post for more than two terms. that is the maximum of what you are supposed to do. but because they have agreed on anything, they have kept them in there. now we have a nigerian candidate that looks like he is the front runner. and it looks like we have some momentum to actually get agreement on who was going to be secretary general. i want to bring in a guest, abhishek deshpande:. . he's a fantastic analysts. thank you so much for joining us. let us kick off this whole conversation about the production target. the saudis are rumored,
reporting to float this idea to kind of repair relations. does it matter? will the price of oil move at all, when you get a policy announcement from opec this afternoon? absolutely.hpande: if they were to have a consensus to agree to a total target for production, of course that will help markets get a sentiment that opec once again is trying to make things work. opec once again is trying to go the same direction. and opec once again is working together for the common cause of supporting on balancing the market. but you are right. it does not require it right now for the time being. especially with the markets tightening by themselves. what are the chances of a freeze? in fact, compared to when we had the markets unbalanced. on top of that, they want to see every other member contributing to this. ryan: they want to see that,
too. they want individual country quotas. they want individual responsibility, written out. what are the chances we see that? they haven't done that for five years. abhishek deshpande: they believe it is just not individual quotas.they have to agree on the cap, as well. you cannot agree, but it doesn't necessarily meet the expected target gap coming from the opec nations. both together have to work hand-in-hand, and agree that if they are one by one agreeing to the quotas, which is the ideal solution of the end of the day, they must also stick to the quota. they can agree to one thing. but they do not stick to the quota, it does not work. ryan: will we get a new secretary-general? there are a lot of people that think the nigerian candidate can actually get the job. how would things change under his leadership? abhishek deshpande: we could, definitely. there are chances they are having a completely fresh perspective.
but i do not see anything changing dramatically, with the election of nigeria's oil minister. ryan: we have just 20 seconds. is opec's the relevant? abhishek deshpande: maybe not today, as we speak, but in the medium-term maybe yes. it will be, as the market tightens. it really depends, to be honest, how they work as a group together. ryan: that is really what today is about. abhishek deshpande, thank you very much. fantastic oil analyst joining us to talk about what is really a day of unity, or least what opec would like it to be. back to you. anna: ryan chilcote with abhishek deshpande there indiana. sarah hewin still in the studio. we talked about central banks so far. and the oil story plays very much into the battle to try and find inflation in the west certainly. where do you see it heading on the oil price? how must watch the day-to-day of
what is going on in the enough? sarah: i think it is important to step back from what is happening in the enough and see the oil price in february, the january february dip. what has been driving it higher? a large part, it has been a rebalancing of supply and demand. we know the demand has continued to grow at a reasonable pace, even in china. as we hear the chinese economy picking up steam, we think about continuing. on the supply side, away from the enough and opec, what is happening to the non-opec supplier? that is being constrained. we know from the u.s. side, production is now starting to decline. and we think that those reduction falls are going to accelerate in the coming months. that is going to be a key factor behind was happening to the oil price of the next few months. in our view, it will continue to rise, whatever the decision is taken in thvienna today.
manus: i know you love this, anna edwards. sarah, good morning. from where i am sitting, there is a huge amount of fiscal constraint. saudi is reducing expenditure, abu dhabi reducing, all directly linked to breaking even. we are nowhere near the break even. this whole geography, or the members of opec, need. and i think you see the accelerator effect on the economy. look at the u.s., looking around the region in terms of the financial multipliers. sarah: i think it is very true. initially, when we saw the large decline in oil price, i think most economists were very excited thinking we would see a big stimulus for the economy. of course, in places like europe, where the low oil prices been a big help to activity,
that has all been pretty much positive news. in many parts of the economy, the world economy is of course not seeing positive news in emerging markets, and of course in the middle east region. but we think that the increase in oil prices that we have seen since the start of the year will continue, through to the end of to year, taking us brent up $60 a barrel by the end of the year. and rising further in 2017. so this is going to be positive news for the economy's in the middle east region. and in other emerging markets as well. anna: sarah hewin, chief european economist at standard chartered bank. we will take a short break. up next, steady as she goes. is that enough for janet yellen to hit the rate hike button? we will discuss that, next. ♪
6:48 in london. 9:48 in dubai. futures indicating lower, on the u.s. equity futures, more than 24 hours to go until we find of the state of jobs report. let us get the bloomberg business flash. with rishaad salamat. picking up three and a half billion dollars from saudi arabia, the biggest investment to date helping the ride hailing company go public. they're looking ways to oil, and theond prince priestly invested $100 billion in the main u.s. rival lyft. deutsche bosses taking over the london stock exchange, resulting in hundreds of job losses, expecting to lose a net 700 producers. setting to vote on the deal next month. alibaba will pay $64 a share to buy back to billion dollars of its own stock in softbank.
shares will raise a total of $8.9 billion, the lowest stake in the e-commerce company to 28%. a comes as the japanese telecom giant is embarking on an asset divestment plan, designed to shore up finances and pay off debt. u.s. regulators set to approve the biggest beer merger, saying the department of justice could clear the $100 billion sab miller and ab inbev deal this month. however, restrictions may be placed on ownership of distributors, all designed to prevent smaller craft brewers from being squeezed out. and that is your bloomberg business flash. anna: rishaad salamat. , thank you. the u.s. economy expanded at a modest pace across most of the country since the middle of april. causing the labor market to tighten, as employers added jobs and nudging rates higher. that is according to the barrel reserve. but the latest beige book
report may do little to change official outlook for the economy. in new versions, they used versions of the word modest or moderate 26 times. watson,ring in marilyn from blackrock. reportg in the beige suggested you that we are very close, or even slightly close to a fed rate hike in july or june? marilyn: certainly since janet yellen spoke last week, expectations have risen quite significant leave a hike in june or july. despite the fact that the modest word was mentioned 27 times. anna: 23 times. that is prettynk consistent with the message shofar. even what we heard last week, from other committee members, that even when they do raise rates, it will be very slow, very cautious, remaining very
data-dependent. so if we look at the potential for a june and july hike, what the market is now thinking, maybe july is 50% price them. it is only, in our view, equally, in a way it does not matter. it is the fact that they will continue to start to raise rates further. , and if that is the case we do think it will remain at a moderate pace. anna manus:manus: good morning,. you are channeling janet yellen. i want to have a conversation about how do we trade ahead of that? how do we position ourselves then for a rate hike cycle? does that take us into three hikes next year? that must be based are predicated on a return of moderate inflation. how can i position myself? is it time to buy pimco? average earnings, which are ticking upwards, you also have
three-month unemployment as well, which is just considering down. is it time to look for inflation protected tips? marilyn: yeah, so i definitely think particularly in the long end, investors still have value to be found in inflation-linked bonds. and i think even in nominal treasuries there, we still like the flat turner. because while, as i mentioned, if it is priced in for june july, it is still not fully priced them. the market is not pricing in two hikes this year. it is possible they still good for fill the forecast, and actually hike again in december. also a possibility as well, three might be a stretch. certainly two is within the realm of possibility. and when you look at they inflation in the u.s., compared to the rest of the world, then we are seeing it accelerating. we are seeing it on an uphill trajectory.
so we do see value in the inflationary bond. anna: since you suggested, this outpouring of hawkish commentary from various fed officials, expectation shifting around her and i pulled up the work function. it does still show only a 53% chance of a rate hike by july. was that much higher a month or so ago? still only 53%. it is going to take a big leap in the markets thinking, really, for them not to be wrongfooted. for participants not to be wrongfooted by a hike the summer. welcome as you mentioned, so much of the wording in the communication has been massively emphasizing the moderate nature, the slow nature. we saw a huge pricing at the beginning of this year. i think it caught a lot of the markets off guard. i think there is a lot of caution in the markets. but that being said, there is significant pricing, a few we stillo, and so,
think there is not enough risk in the pricing on the front and. it has already significant interest, i would say. manus: marilyn, let us talk about the dollar. the fed was fairly obsessed about the strength of the dollar, the weakness in the global economy. that was a lot earlier in the year, the backend of 2015. but we have had this rignet renaissance and resurgence in the dollar. how do they balance that? a fine line between dollar strength and tipping it over the edge, in terms of being a problem for the fed again? marilyn: yeah, the dollar is something the markets are very cautious about. where we are now, i would expect to see it in a relatively stable range. and the dollar is currently being affected by a lot of global events. so not only yesterday, we saw a
huge impact on cable, from the news on the u.k. referendum. we also saw a huge impact again from dollar yen, in terms of japan not announcing a fiscal stimulus that the market was really hoping for. it in terms of the dollar, is also very impacted by i would say external effects, that are very difficult for the fed to control. anna: a quick word on emerging markets. i know you like india mexico. the mexican peso is a real underperformer, year-to-date against the u.s. dollar. marilyn: that is right. on evaluation, we like it on paper. and we like currency bond. it has pretty stable growth, and inflation is very modest, 3.5%. and we think obviously also the mexican economy, and mexico is very related to the fed, as well. we do still like mexico. anna: marilyn watson from blackrock stays with us. manus: we have a whole host of
manus: steady as she goes. the latest fed report says that u.s. economy grew at a modest pace. is that enough for janet yellen to hit the rate hike button? decision day for mario draghi. a little extra stimulus is expected, but will the ecb chief criticize governments for not pulling their weight? opec ministers prepared to convene a mixed speculation that saudi is considering a deal. we are live to vienna. ♪ manus: welcome to "countdown."
i am manus cranny in dubai. ina: and i am anna edwards london. let's take a look at the futures. we are expected to open on european equity markets when we get there an hour from now. we are expected to be a little bit weaker at the start of the trading day. real weakness in part of the asian session, particularly the japanese session. that is specific to japan around again and fiscal stimulus. we are expected to be weaker around .3% when we open up trading. -- that is what the futures are suggesting at the moment. speaking of the japanese, you have them in the risk radar. manus: a little bit of yen and a little bit of nikkei. the ecb today, mario draghi say what happens out of opec and that relationship to the equity markets? the nikkei down 2.3%. , downs a cracking stat
the most in a month. it is due to the fact that there is no fiscal stimulus package just yet. where do we go? no fiscal stimulus, no tax hikes. the sales tax news, the brexit risk, our guest says this is all paid -- playing out in terms of the dollar index. modest 23 times. that does not inspire me in terms of the move. you have the bonds. european bond markets opening at 7:00 this morning. where are we on the day that the ecb meets in vienna? to startus on the u.s. with. we have the europeans for you as well. the german 10-year yield is 0. 14%. the japanese 10-year in negative territory. not a big move coming through in bond markets this morning.
let's get the bloomberg first word news with rishaad salamat. rishaad: opec ministers preparing to meet in vienna. industry data shows that u.s. inventories are on the up. saudi arabia is ready to consider a surprise deal with fellow opec members in an attempt to mend divisions. i runs -- iran's oil minister says it is unlikely a deal will be struck. ideas is tor main have a country quota. we cant believe acclimate for this matter. the bank of japan calling the 2% inflation target a medium to long-term goal.
it is a new low for abenomics coming a day after the prime minister postponed next april's sales tax increase until 2019. the governor of the bank of japan is making the world's biggest debt load manageable. by one estimate, the effective borrowing burden is plunging. shifts as liabilities from the private sector to the boj, rendering them effectively irrelevant. a french navy ship has detected signals from the miss it -- the missing egyptair plain two weeks after it crashed into the mediterranean. it went down under clear skies while flying from paris to cairo on the 19th of may. all on board are believed to have been killed. seven automated
distress messages, but no mayday from the pilot himself. goldman sachs has cut dozens of investment banking jobs in the last few weeks. it joins other companies that are adjusting to a slowdown in deal activity. goldman is on a big cost-cutting drive as it tries to whether a slump in trading and deals. jeremy corbyn warned that a vote for the u.k. to leave the european union would threaten workers rights. he said that eu regulations have entitled 26 million workers in britain to 28 days of paid leave per year as well as granted 340,000 women per year the right to maternity leave. david cameron will field voter questions in a tv special tonight. he will talk about the economic dangers of a brexit and
concentrate on the risks of immigration. global news powered by 2400 journalists in more than 150 news bureaus around the world. thank you very much. it is what we do every day when we walked in the building. let's get to juliette saly. she is on top of these markets. juliette: not a great day for asian equities. another day in the red. the nikkei having its biggest fall, down 2.3%, in over a month. rish was talking about the strengthening yen. there was also no new stimulus announced from shinzo abe during the press conference when he officially delayed the sales tax. led to investors and a member of the boj breaking ranks, saying it is unlikely that they will reach the 2.3% inflation target.
exporters dragging on the index and taking the rest of the index down. despite some good games coming through in southeast asia, a little pickup on the hong kong market. in late trade, the shanghai composite making a turnaround. in korea, first-quarter gdp was a beat, sending the cost be -- k on the close. disappointing data coming out of australia. of course, the weaker oil price at $49 ahead of the opec meeting , weighing on equities in australia. quickly looking at some of the stocks that we have been .atching, a big boost in sydney a hospitality company has risen the most since 1966 after it walked away from a takeover offer. yahoo! japan soaring on the close after a report from nikkei
that softbank may increase its ownership in the country -- in the company. lenovo group calling in hong kong, down over 4%. google selling $221 million worth of shares. rate,oc raising the yuan but it is still holding your five-year lows. check out this moment in the -- movement in the yen. of course, the big spike that we have seen, another reason we are seeing japanese equities so low. anna: thank you. meanwhile, the ecb meets in vienna for its latest policy decision today. president mario draghi will probably have little fresh monetary stimulus to offer when he briefed reporters. updated economic projections are likely to reinforce perceptions that despite easing, the ecb is
still struggling to meet its inflation goals. ecb's latest stimulus package is still feeding through. might we see them actually increase their forecast? >> there is a slim chance of that. that is not what we understand. the key to remember is that back in march, when the last projections were given, that did not incorporate the quantitative easing boost, when the rate cuts and the new banking loans were announced. now we are getting revised projections. you would expect to see them revise higher. we expect there will probably in 2016. that is largely down to rising oil prices. the concern is not so much whether monetary stimulus is working, but whether it is enough and what needs to be done. more, but thedo key thing is governments.
they have got to come up with fiscal stimulus if they can, and the structural reforms. that is the rub of the issue. they have put this ceiling in terms of debt to gdp. the ecb has continually made this point. .hey are undermined by inaction every time we hear him speak at this news conference, he asks for reforms and action from government. who is he talking to? because they are not listening. >> at his last press conference, he said there was a renewed emphasis on the need for structural reforms, saying they expect something like that to be reared a -- reiterated today. that is the key, he says, to ensuring there is faith in the fiscal soundness of the euro area. some countries have room and they should use it.
the composition of balance sheets is very important. they need to spend money in productive ways. unemployment is about 10%. structural unemployment might be as high as 8%. growth potential in the euro area, 1.5% maybe. not enough. anna: thank you very much. we will bring you the ecb rate decision here on bloomberg tv, followed by mario draghi's news conference 45 minutes later. youou are in frankfurt and are heading for the conference, you are in the wrong city. vienna, that is where you will find them. you can find them on bloomberg top . marilyn is still with us in the studio. what are your expectations ahead of the ecb meeting today? the first quarter was not so bad or are you focusing on the negative? marilyn: we are definitely
seeing an improvement in overall growth. gdp in the first quarter was very strong. second quarter, not as strong. you would expect feedback from the first quarter. we are not expecting a huge amount of new news from the ecb. not had a few programs started. we expect the ecb to wait a few months to see the impact of those programs before we see anything new. look to see whether we hear something about greece, a bit more about the potential for them to be included in the qe program. we have not had any news yet about the greek parliament passing the reforms that it needs, but that is something. as paul mentioned, we might hear about an extension of the qe program. manus: i want to show you wbix.
this is world bond returns. delivering 7.8%. look at the bloomberg 500 index year to date. in a relative sense, 3.25%. , deliveringd market 3.3 percent overall comp is it return, is there still a compression trade? is there still momentum to be had in terms of bond exposure? they have been the winner relative to equities and asset classes thus far in 2016. marilyn: that is right. i think there is still value to be found there. .articularly on the long end we still need to see more flattening. we think there is compression to be found there. we think there is value to be found if you look at corporate bonds both in subordinated debt in europe and financials.
investment-grade, more generally, in the u.s. we do like some emerging markets, such as mexico and india. there is still value to be found. there are opportunities in the bond market, but it has been a very strong year. how do you measure the success of the ecb and everything they have done with their qe program and negative interest rates for the euro zone economy? we had a great story talking about how the largest banks of the region have done lesser lending in the first quarter as the ecb experiments with negative interest rates. that is the negative what this has done to some of the banks. there is a chart here that shows how euro area banks and -- bank lending has accelerated. it has been picking up over the past year. you mentioned the strength in the first quarter. can the ecb use this as signs
that what they are doing is working in europe? so.lyn: i think we continue to see improvements in the eurozone. when you look at the whole rate of statistics, credit is expanding. but if you look at economic activity, unemployment rate, a whole rash of different measures, we are seeing improvement in the eurozone. anna: thank you very much. marilyn joining us this morning. manus? we are going to be on oil watch. new york crude dropped for the fifth day. can a deal be struck? that is the question. can they mend the divisions? all of that will be discussed right here on "countdown." ♪
always a bit gloomy out there. the best weather in hong kong. that is where we find juliette saly. received acting from saudi arabia's sovereign wealth fund. it is their biggest investment to date, helping them to delay the need to go public. saudi arabia has been looking for ways to diversify its interest be on oil. the billion or previously invested $100 million in uber's main u.s. rival, lyft. a filing from the two companies said they expect to lose a net 700 positions. shareholders are expected to vote on the deal next month. alibaba will pay $74 a share to buy back to billion dollars of its own stock from saw. softbank says that share sale will raise $8.9 billion and it lowers its stake in the e-commerce company to 28%.
is japanese telecoms china embarking on an asset sale to shore up finances. u.s. regulators may be set to approve the biggest beer merger ever. people familiar with the matter say the department of justice month.lear the deal this restrictions may be placed on ownership to prevent smaller craft brewers from being squeezed out. that is your bloomberg business flash. manus: thank you very much. juliette saly with the latest business news. oil is just holding $49 a barrel. speculum -- speculation that the saudi's may be considered a -- considering a deal. ryan chilcote is our man on the ground. i was quite surprised when i saw this this morning.
this could be the new stamp from the new man. brian: -- that is right. it is a bit of a surprise. while this would not necessarily changed the barrels of oil that opec delivers to the market, one way or another, it would show the 13 opec ministers can at least agree on something. so this production target has effectively been the single most basic, elementary tool of opec's ability to influence the market for the last 35 years. if you remember, they did away with it at the december meeting. they say, we do not need a production target. that was done against the wishes of some of the smaller opec producers that need a higher oil price. now the saudi's want to mend
relations with them. i caught up with the iranian oil minister yesterday and he said production target, maybe. what we want is individual quotas. in other words, they would sit down, do the math, and each country would sign up, pledging to keep their production at a certain level. have a listen to what he had to say. >> one of our main ideas is having a country quota. believe that we can reach agreement for this matter. ton: the saudis are set reach this production target. the iranians one individual quotas. is there a copper my's? to discuss it, we have jason checker, the number one forecaster on the bloomberg turnover -- terminal for wti. eric and. we have two
is there any room to do a deal? jason: i think there is. both parties have interest behind their positions. from the iranian standpoint, the interest is they want to see their oil production rise. for the rest of the members, they want to see the price of oil rise and they might be willing to leave production relatively unchanged. there are two ways around this. as we have seen with other countries, when they lose production, they are not considered part of the target. you could see a target that excludes iran. that is possible. the second thing you could see instead would be potentially a range. not theht quotas might ideal. on a month-to-month basis, you could see production levels change. those are two of the options. the third option is seeing if all of the countries publish their quotas.
they have not done that in a long time, so it seems unlikely. that is how they would get to one of those two numbers. ryan: would any of this move the price of oil? jason: if you saw a concerted effort to come to turns, some kind of it fixed number, i think that would be perceived as bullish. i think there is a doubt about the value of opec, where it is willing to contribute to the space that came in after doha, that debacle. i think there is a desire to move forward. it is an institution that the members are vested in. they want to see it move forward. the only way we can do that is by sending this signal, coming level ofove -- some agreement. we could see something different today than what we have seen before. have been forecasts
spot on. where do you see the oil price in the second half of the year? >> we will be in the range of $40-$60 a barrel. i think the midrange, right around where we are now. as youcould see swings see more cost cutting, bankruptcies come to the oil patch. even a $50 a barrel, a lot more companies are going to blow up. ryan: if the fed raises rates, how does that change things? jason: there will be some pressure on oil in the near term and the next president to come on and encouraged the arbitrage. that would be negative for u.s. growth. that is why we see the average around $50 for the end of the year and not higher. ryan: where do you see the oil price in 2017 and beyond?
higher, in thet $50-$60 plus range. beyond that, there is a lot more upside. we could see significantly higher prices. lots of upside because there is new investment going into the space. n: jason has a book out, called "recession proof." it is a much of -- a must read. it is very entertaining and informing. back to you. manus: -- anna: something that is thriving today and that is vienna. the hotel industry being propped up. that is it for "countdown." " is on next. the global ceo of wealth management will join the team here at bloomberg view stay with us for that conversation. just want to check the futures.
anna: welcome to "on the move." we are counting you down to the european open. i am caroline hyde alongside matt miller, who is based in germany. here is what we are watching today. decision day for mario draghi. leaderspress european to do more? taxing time. the nikkei plunges as they yen rally gains momentum. one board member says monetary