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tv   Bloomberg Markets European Close  Bloomberg  June 7, 2016 11:00am-12:01pm EDT

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trading day in europe. you are watching the european close on "bloomberg market." here is what we are watching this hour. continues asalogue they discuss global economic policy and strategy. we are live from beijing. vonnie: the ecb program is --ching on and the portugal the finance minister mario centeno is here to explain. mark: the referendum vote in the u.k. is just 16 days away. we are talking to one of the most vocal supporters of the brexit. is 90 minutes into the trading day and we have seen
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the dow across 18,000. julie hyman has been watching the dow. julie: i was getting excited about the 16 days. above butow did cross it is below that level and a nasdaq is in the red. stocks have come down just a touch from where they were earlier. it has to do with what is going on with oil prices. crude still up a half a percent, below $50 a barrel. it looks like $50 has been difficult to sustain, and conoco phillips says they were resuming production in canada. it looks like oil make have -- may have taken a little hit. blue is says that jet raising domestic fares and other competitors have followed suit and matched those increases.
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jetblue is leading some of the gains we have seen within the airlines. we are also looking at tech, apple and microsoft rising. they are two of the biggest contributors to the overall gains. biotech or the draggers. -- are the draggers. listurse valeant on the after that company's forecast for the year came in well short of what analysts had been estimating. ceo, stilla, the new trying to turn that ship. mark: earlier stocks were up 1.4% and they are up a mere 1% now but every industry group is being -- is rising. brent crude higher since october. every industry group rising.
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the view seems to be we are not going to see a fed rate hike in june. is july off the table or we looking to september? the scottish engineering company which manufactures pressure pumping equipment for extraction of energy resources is rising for a fourth day. it was raised to hold from cell. the price target, 12 pounds versus eight pounds 80. encana corporation, this is interesting, the outlook is still dire and it sees little fundamental new flow supporting the market's believe in recovery for oil and gas manufacturing, however it north american peers doubt the strength of the recovery even though it is hard to argue where to trade at a large discount. shares are up 3%.
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watching, ak worth capital return and expansion story that is not yet reflected in the stock. it is a buy rating on the stock today. at five euros 95, reflecting a 41% upside. they are implementing a capital light model. those are some of the reasons why jeffries says you should buy the stock, sending this -- the shares up 4%. nearer termso earning revisions -- real has fallen 15% since then. since hitting a seven-year low on january 20. shares, little change.
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2320, that iset, the 12 month price of analysts implying a desperate upside. -- and upside. vonnie: taylor riggs has more from our newsroom. bernie sanders is not anywhere. press saysted hillary clinton has enough delegates to clinch the nomination but sanders has not jumped on the bandwagon. democrats in six states cast now it's today and sanders hoping to pick up momentum. he is hoping to convince superdelegates for clinton to switch the vote. in istanbul, police are questioning for suspects in a deadly car bombing that killed at least 11 people and wounded dozens. nobody has claimed responsibility.
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kurdish rebels and islamic state have been blamed for a number of bombings in turkey. judges in the european union's top court could spread to the fight over whether the u.k. leaves the eu. when of the biggest issues in the brexit campaign is how the eu deals with those seeking asylum. in peru, no one is going out on a limb to call this election. counted,of the vote by half aynski leads percentage point. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am taylor riggs. vonnie: taylor, thank you. treasury secretary jack lew and --retary of state john kerry
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david gura is in beijing talking with secretary lew and joins us with the latest. both sides, the treasury and state department were pretty optimistic that the main goal should be just to talk. state john kerry was supposed to deliver a news conference at 7:00 but he arrived at 8:00, saying he had a good, long conversation with the president. let's take through some of the things the u.s. government wanted to accomplish, starting with currencies. the chinese government committed to an offshore yuan. reallyng they were talking to the chinese a lot about was industrial overcapacity and they were able to reach an agreement on steel.
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where they did have some disagreement was when it comes to a aluminum, another quality -- commodity that has been in the spotlight. the government could not see eye to eye with the chinese. ask,e: i was just going to the deputy governor of the pboc spoke to reporters today and an independent entity. what does he have to say? david: this is a very closely watched speech. the deputy stepped in and addressed some of the things americans have been talking about here. said the yuanhe had been floated at a level that he was comfortable with and was common. he addressed something a lot of folks have been talking about, the pace of fed rate hikes, what they will be like. .e expressed some nervousness stan fisher was here fielding
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questions from the chinese about the federal reserve but i do not think allowing too much information. what the deputy government said it was at the prospect of a fed rise could be good for china. there could be more demand for goods. mark: what is next for this bilateral relationship between china and the united states? there is a lot of stuff that was not hammered down while the two u.s. officials were here like the maritime issues in the south china sea. that is something john kerry says they will keep talking about. all of this is building up to the g-20 leaders summit that is taking place in september. jack lew will be back in china before then. that is sort of a motivating factor, that next meeting and a couple of months. mark: david gura in beijing. coming up, we are going to be
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speaking budget, banks, bonds, with the poor and it -- portugal finance minister, mario centeno. ♪
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vonnie: live from london and new york, i'm vonnie quinn. mark: i am mark barton. this is the european close on bloomberg television. portugal is the only bond market to lose money in the euro region. that is according to the bloomberg world bond indices. the yields have risen since october election to spread with
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greece, whose bonds do not qualify for the ecb's bond buying program. they have been narrowing to qe lows. vonnie: joining us is mario centeno. obviously said is true. of portugal and greece are narrowing. do you look for more relief from europe? mario: that is not in our plan. we are very much focused on a competition that targets we had for a fiscal deficit for this year. we presented a very demanding but ambitious stability program. the diamond trends we saw in 2014, we think that is the way to go and we will be very strict in our execution in terms of the
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budget. vonnie: the 10 year yield is up 3.13% and your debt to gdp ratio is significant. how do you anticipate meeting that without imposing more austerity measures? mario: we do have a vision in terms of our budget which is to accomplish most of what we have a reformlish through of the public administration, putting our expenditure aside in -- half --ct past, path and that is the main recipe. portugal has already been through many reforms and we need the economies to react. we need to generate the economic space and we need some advancements in terms of
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european integration. pt is also important for us economically so we think it is now time to let demand and act, and some sense to the reforms to materialize. nevertheless, we presented a very strong national reform program tackling innovation, knowledge base developments in our firms. it is very important to keep that also. mark: mario, the banking system is still burdened by nonperforming loans. what is happening when it comes to the capital increase? what is happening to the sale of novo banko? can you elaborate? mario: the cash deposit an issue
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is a broader issue than the capitalization. it is a mission -- a matter of board,ing a new presenting a new industrial plan that focuses on the domestic that allows low cash to play a very important role in terms of financing our economy. to do that we need capital. we are discussing with the authorities in france and brussels on these issues and it is important to be recognized that this capital process is the result of this board appointment, governance, and industrial plan, and changes so that this will make really an impact in terms of our economy. of course, we also have the
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noble banko -- novo banko issue. we are a couple of weeks away from any news on that process. the bank of portugal is leading the operation. we need to expect a successful closure of the process but we have to wait. mark: when it comes to nonperforming loans, many are saying the italian model, this rescue fund atlante might be suitable for portugal. is that something you are looking at? would you be able to raise the capital from banks like italy has done? how would it work in portugal? mario: we are looking at several possibilities. the italian example is certainly one case, that when need to be very careful on that precisely by what you mentioned, which is
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the requirements they may have in terms of capital for the bank. i think we need to first study all policy abilities -- all possibilities and discuss them with the authorities prior to coming up with solutions. vonnie: how about private investors, are you holding talks with any? mario: we are talking with the rating agencies and private -- investors, both portuguese and u.s. investors. scheduleen a very busy but very interesting, and listening to them we have a better sense of what we need to do. vonnie: he is sticking with us, mario centeno. we will have more from the portuguese finance minister when we return. ♪
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vonnie: we're back -- mark: we're back on bloomberg markets with portugal finance minister mario centeno. there a commitment within the eurozone to ease greece's debt burden, -- debt burden. what does that mean from portugal and other country's standpoint? do you think it is a possibility that some of your own debt conditions could be, whether it is lengthening maturity or writing off some debt? not looking at those types of solutions at this stage. as i mentioned before, we are very much focused on accomplishing our targets for the budget and the stability program. greecek the solution for
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will be made much more clear at the end of this year. can be taken as an example of how europe can strengthen its institution in terms of dealing with these problems. the european solution for that will definitely be our preferred solution, nothing especially tailor-made for portugal. that is going to be a discussion we will open at the euro group level. mark: from the lessening probability of a grexit to the rising probability of a brexit, how damaging to the eu project could and eu vote -- a u.k. vote to leave the eu be? will it be the first of many dominoes to fall if that happens? mario: i do not think so, athough that will mean
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knee-jerk reaction from the european leaders. in the short-term, definitely there will be an impact and that impact will not be a nice one, happensink, and if that , somehow i am expecting it not to happen, but if it happens it will definitely need a very quick reaction. europe is sitting on top of a pile with a large number of issues to deal with, and i hope it triggers european leaders to advance and do big advances in those discussions. vonnie: we just had the german 10 year yields go to a record .048% at a time when portugal's yields are rising. does it concern you that
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investors are looking at portugal as a little more risky in terms of european investments when you have negative yields and very low yields around europe? mario: that is the sign you can take out of those figures and it also shows that europe is still a very diverse economic area, and we need to work hard to make it a more uniform on. worknstitutions may towards the good of all regions in europe. hope,: that will be so but the hope from the european authorities would be that portugal with lifted stealth up by its bootstraps -- lift itself up by its bootstraps. it has not been doing well. mario: our exports from the beginning of this year are impacted by two shocks. in terms of dynamics it helps to understand the process. brazil,is in angola and
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if you take those out, for example in february our exports to the european union increased 7.2% which is a very good figure. it is through that that it takes term -- takes time for firms to adjust. we also see these occurring, but nevertheless, given the specific shocks in terms of the dynamics of the exports that are searching -- serving the portugal economy, that explains a lot of what we are getting. mark: how solid do you see your polymer entry support right now? -- parliamentary support right now? toward see solid support the end of your term? mario: we are doing lots of work on that.
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theconstant dialogue, approval of the stability of national reform programs, and steps on that direction, we do have government programs to apply this is what we are focusing. and i think the parliamentary support to the government is not the question at this stage. we see this as a very positive move. much tothanks very portugal's finance minister, mario centeno you -- mario centeno. they willks look like finish the day high, the close is next. ♪
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mark: live from london and new york, you are watching the european close. i am mark barton with vonnie quinn.
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let's take you through all the action, every industry group on the stoxx 600 rose today. the expectation now seems to be after fed chair janet yellen's meeting in philadelphia there will not be a rate hike in june and maybe not july. possibly we will have to wait until september. rallying today as wti hits its highest level since july, brent its highest level since october. she'll cutting at spending plans further, promising increased cutting itshell spending plan further, promising increased savings. the biggest european energy company will spend less this year. it was down from an earlier projection. synergy from the bg acquisition
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will provide $3.5 billion in savings for 2018. these are the big majors in the world since january 20 when as an industry group, they fell to a 13 year low. what a day for sterling. 5:00 a.m. london time spiking within seconds 1.5%. was it a fat finger, a slow algorithm, a stop loss order? we do not know but it shows the height of volatility ahead of the referendum. the polls showing the leave camp is ahead and sterling has risen .n two days up 4/10 of 1% expect further volatility in the next 16 days. percent.gdp .6 driven by a pickup in consumer spending.
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we know the economy will slow down in the second quarter, the ecb has said as much, but it did raise its gdp forecast to 1.6% from 1.4%. growth in theve eurozone but where is the inflation? zero 44n has been below consecutive months. nice to have a bit of growth but the ecb would love a bit of inflation. vonnie: that is for sure. it is about to start. corporate bonds earning are at very close to a record low. here are a few assets i am watching, starting with the dollar-yen. the tendency to strengthen is there, stronger by 2/10 of 1%. as things fizzle for governor kuroda in japan.
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a former trainer says the yen trader to 90 -- a former says the yen go to 90. they are under 93 basis points right now and pointing out, 100 -- one year ago it was 175 basis points. we have nymex crude oil and future still above $50 a barrel. a bull market for commodities. there are some that are not. one of those that is in look at theand to broader u.s. indices, the s&p up 4/10 of a percent and the dow up 4/10 of 1%. the nasdaq has turned back into the green up three points. abigail doolittle is live at the nasdaq. abigail: we are looking at a mainly unchanged nasdaq,
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fluctuating between small gains and losses. really dragging is the biotech sector down more than 2%. the two biggest drags are the shares of alexi and and biogen. theiron is down after drug sale did not meet the endpoint on a final stage but the ceo said there were positive points to come out of the study, and he is aware of other drugs that were approved despite meeting those endpoints. soer analysts are agreeing this will be one to keep an eye on. the biggest drag our shares of biogen, trading down after their ms drug failed to meet the endpoint. joshua schumer is saying it is time for "some changes at biogen especially around orangey -- rmb." it has been downgraded to
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a neutral. bearish action and the biotech world. along with some other biotech stocks, why don't you tell us what they are? abigail: those are the main stocks we are focusing on. ,f you look at a share chart here's the record peak in the biotech market. you can see the have traded in a pretty similar manner over the last year so there is a lot of selling pressure on this sector. the news today for both of these companies has not helped and the question is whether these stocks willheir record lows and the buyers step up to support these biotech shares, or will be ongoing bear market in biotech continue? another one where only time can tell. vonnie: but check in now on the bloomberg first word news. taylor: cannot get away from
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politics today. paul ryan is blasting the man he just endorsed for president, donald trump. he spoke in washington. >> claiming a person cannot do their job because of their race is a textbook definition of a racist comment. do i believe that hillary clinton is the answer? no, i do not. >> the u.s. district judge presiding over a case about trump university, and trump says he cannot be objective because of mexican heritage. the u.s. is said to have rejected in eu bid to shield banks from sanctions from iran. they have lifted sanctions regarding the nuclear program. it european commission says is working constructively with
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turkey on visa free travel after a warning from the turkish foreign minister. he says if the eu does not make good on its progress -- promise, they will not help reverse the influx of refugees. greek merchants are crying foul over new taxes. internet-based companies like netflix and airbnb will not have to pay. the taxes are part of the price greece is paying to get its latest bailout payment. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i am taylor riggs. mark: thank you very much. europe is not just one of the stronger markets for general motors but the company is making progress through its subsidiaries. gm sales totaling 1.1 million vehicles in europe last year, the best of all.
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gm increased its share of the european market. still profit is a loose of. with chuck inpoke an exclusive interview. you have lost money for quite a few years in europe. to break even.d before,e talked about our objective is to invest money in our companies where we can earn an adequate return over a sustained period of time. break even is not a sustained -- an adequate return. , the 2022 program, would be to drive that business to 5% profit margins and at that level we can earn an acceptable return on our investment.
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david: your goal is to make a profit. have you seen some places where it looked like it was not going to happen? you have not hesitated to pullout. are you worried you will be giving up future opportunities? a risk and is always when we make these decisions, we do not take them lightly. what is the long-term potential of the market, is it a real growth market? how long will it take to realize that growth? what kind of an investment do we need to be in to take advantage and what is our relative market presence? decisions over a long-term horizon. we cannot be all things to all people and we are going to focus investment where we can ensure we earn returns on a long-term, sustainable basis for our shareholders. vonnie: joining us now is david
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westin. he got a little bit of a tour of the factory and some of the new cars. david: i got to drive their new electric car. what you saw with chuck stevens represents where gm is now. they went through bankruptcy in 2009 and they are very much focused on the bottom line. they are making some very specific decisions based on money. vonnie: why are shareholders not responding to that? shareholders are not believing the story yet. david: i asked that question of the ceo, cfo, and the president and they all had a version of the same answer. the street is not sure the car business will keep growing. we have record card sales in america last year, 17.5 million. the are worried there will be a
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downturn. the street is anticipating a change ofl trans -- business. they think the whole business will go three major disruption. see: how does mary barra the threat from the likes of google and over? -- uber? david: they have invested in lyft so they put their bet to be part of that ridesharing ride hailing business. i think that is an important part of the future in urban, densely populated areas where the infrastructure is not there you can have these driverless cars that are shared. google sees that as a potential partner. they have been talking to google , and will continue to talk to google. that is a potential partner to bring some of the software in to
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match their hardware. mark: what other growth areas are there? i noticed the gm financial lending business could be a good growth area. david: we talked to chuck stevens about that, and they have been growing rather dramatically in gm financial. i asked her, what if there is a downturn? they stevens says no, think they have managed that adequately. they have a company they are monitoring and stress testing, but they think they got a fair amount of headroom to grow the business in terms of getting a larger portion of the auto finance by g.m. financial. vonnie: now that there's so much competition by the other three, what is the product they are pushing to beat ford and the others? david: they are doing very well in trucks and suvs, both of which make a lot of money.
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a big area for concentration, mary barra sat down with us and said she would only do it if her lieutenants do. cadillac, the upscale. there is a relatively modest portion of their sales. chuck stevens did not want to prediction but he believes they can do double cadillac. vonnie: they certainly have the ambition. mark: 4:43 in london. still ahead, as the referendum vote nears, the leave and stay cap's are in a dead heat. we are talking with a pro brexit politician, do not miss it. ♪
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vonnie: live from london and new york, i'm vonnie quinn. mark: i am mark barton. this is the european close on "bloomberg markets." vonnie: time for the bloomberg business flash. was -- kirby l has scored a victory in court. $510,000.arded him deutsche bank is normally they go to lender in europe's largest economy that is missing from the largest takeover. they do not have an advisory or
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finance role in the bid for monsanto. the bank is advising the chemical giant basf who set out the merger wave. the increase in british home prices may be about to slow down according to how fax. surging values have stressed affordability. prices rose 9% in the past year to an average of 310,000 u.s. dollars. that is your bloomberg business flash. time for our global battle of the charts. we take a look at some of the most telling charts of the day and their meaning for investors. you can access these charts on bloomberg. us.er renick is joining worried.'m a little it looks like you put a lot of
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extra work into it today. what i'm looking at is an interesting chart because it proposes some questions about what is happening in the equity market. the blue line is looking at the likelihood of a june hike. that is in correspondence with the white line which is the city economic surprise process. the other line is the s&p 500. in the past month you had the stock market rallying in the likelihood of a jew -- a june rating shot up. that did not happen. we thought people like economic data and are comfortable with the rate hike. we had a terrible payrolls report, that manufacturing and services numbers, yet the stock market is higher. i think it is about positioning, how people are short the market. it raises a lot of questions.
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vonnie: it is a little bit the old story of bad news -- of bad news is good news? stocks did not feel that way to weeks ago. number?what is the g g#1574. mark: a big day tomorrow for the ecb, starting at its bond buying program. they have fallen to unprecedented levels. check out the bloomberg euro investment grade european corporate bond index it's the ecb announced its bond buying program on march 10. it has returned 2% that there in lies the problem, yields are too low. investors are searching for
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which leads me to the bloomberg high-yield corporate bond index, up 4.5%. is nothing compared to the u.s. version, up 6.7%. the markets are becoming distorted the cousin of these ultra-loose, an orthodox central-bank policies and we will see more because of the ecb bond buying tomorrow. call me mr. normalize. vonnie: mark, congratulations. oliver, commiserations. more bloomberg markets just ahead. ♪
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vonnie: you are watching bloomberg markets. the latest poll shows the leave and remain camps are basically tied in the runoff to the brexit vote. mark: joining us from
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westminster is andrea leadsom, who supports brexit. she is a conservative member of parliament and a former chief secretary to the treasury. thank you for joining us. david cameron said today talking to the leave campaign, the leave campaign is resulting -- resorting to total untruths. if the leave campaign lying to the public over the risks of britain staying in the eu? andrea: my view is that the for the u.k. outside the eu are incredibly bright, and the risks of staying in it are incredibly serious. i think far from the remains suggestion that the status quo versus the unknown, the facts are that the u.k. is the worlds biggest -- fifth biggest economy
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and many of them are outside the eu. trading blocking and its economies are all going backwards or stagnating. they have flatlined for 10 years. the single market for services which is 75% of our economy, is not completed. even the commission admits it is yet, here we and are stuck in an eu trading area that is not succeeding in negotiating pre-trade agreements with our priority opportunities elsewhere. if we leave we can negotiate those free trade opportunities and it will be brighter. comments from the prime minister demonstrate the differences between the parties. they tearing the government apart? can you heal the rift after the
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referendum? thing itwo may, the will always be grateful to this prime minister for and i think it is unique in history, he said in advance of the announcement of the referendum, he called together his ministers and said, go with what is in your heart, do what you believe is in the best interest of your country. that is very big of him. i am so grateful to him for that and i genuinely think the conservative party respectfully admires him. you will always have a few people that do not agree with him but the majority of the party will stick together despite the decision. vonnie: yesterday, janet yellen said if an exit vote happened it would have serious economic repercussions for the u.s. and
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potentially the world. why would you want to back something that may have consequences that could drag down global growth? forecasting isc an honorable profession, but economic forecasters are only as good as the assumptions you put into your model. if your assumption is the u.s. -- u.k. will not ago she ate trade with the eu -- negotiate trade with the eu and they will not negotiate any other free trade agreement, not surprisingly you predict a depression, but that is not realistic. mark: thank you very much for joining us today, andrea leadsom. ♪
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>> it is near and midnight and hong kong. i'll come to bloomberg markets. -- welcome to bloomberg markets.
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from bloomberg world headquarters in new york, i am scarlet fu. here is what we are watching. with the s&ping 500 within striking distance of its all-time high. investors are drawing reinsurance from janet yellen's speech yesterday. we will speak live with mary barra. the sale of twitter, is it inevitable? one analyst says it is. first, we are halfway through the u.s. trading day so let's check in with julie hyman. the nasdaq, little change in the s&p up. julie: it appears to be mostly a commodity le

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