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tv   The Pulse  Bloomberg  June 8, 2016 4:00am-5:01am EDT

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francine: clinton claims victory . hillary becomes the first woman to run as the presidential candidate of a major u.s. party, but when does bernie sanders bow out? mario draghi's ecb buys corporate bonds as the world bank cuts its growth outlook. the german 10 year yields hit a record low. -- shareholders are expected to protest the package at today's agm. how much of a fight will he put up? ♪ francine: welcome to "the pulse."
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life from bloomberg's european headquarters here in london. i'm francine lacqua. let's get straight to the board and to the market. here is the picture for european stocks. we did see a reversal a little bit. a lot of these asian equities, the euro stoxx 600 getting down to 0.5%. i want to focus on german bonds, the 10 year at a new fresh record low. pulling off $50 a barrel. the japanese 10 year bond yield sinking to a year -- sinking to a low. caroline: francine, thank you. china's export -- exports stabilized in may. overseas shipments fell in dollar terms. imports slipped just north of .4%.
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meanwhile the pboc has kept its 2016 growth forecast unchanged. it provides that cpi forecast up from 1.7%. japan's economy grew slightly more than reported in the first quarter, helped by revisions and private consumption. gdp expanded 1.9% giving some relief to shinzo abe. the british prime minister and leader of the u.k. have argued each side of the exit issue in a tv special -- of the brexit issue in a tv special. for argued that the eu costs britain far too much in what he calls a rotten deal. >> area after area, things that affect our great country, we would have no say. we want to try and make sure i run cannot get -- iran cannot get a nuclear weapon.
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we need to work in these organizations. we need to work in nato, the u.n. and yes we need to work in the eu. >> let's say they despite just they cut off their note -- they cut off the nose to spite their face. than tariffs will be lower our next financial conservation. no deal is better than a rotten deal that we have at the moment. caroline: global news, 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world. you can have more on these stories on the bloomberg at top . francine: thank you so much. caroline hyde there with some top stories. barack obama has congratulated hillary clinton for victory in the democratic nomination race. the president also spoke to bernie sanders and will meet him at the white house tomorrow. earlier laquon addressed just earlier clinton addressed supporters in brooklyn -- earlier, clinton addressed supporters in brooklyn. >> thing to you -- thanks to
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you, we reached a milestone. the first time in the nation's history that a woman will be a major party's nominee. for more let's speak to our bureau chief, megan murphy. how does clinton plan to reach out to bernie sanders supporters? megan: she echoed history by becoming the first female and a major political party in the u.s.. care, especially calling for them to joyner, saying please join me now, make this campaign stronger as we head into what is likely to be a very brutal election campaign with donald trump. francine: why is bernie sanders not stepping down? megan: i think he is weighing his demands.
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the unexpectedly strong campaign he has run so far this way it what can i get out of the platform? what is so important? whether it is a $15 minimum wage , or some type of improvement, tuition long relief. he has a big say on the platform going into the credit convention . he wants to use all of the leverage he can to go further with his aggressive demands. progressive at the same time, not do any long-term damage that could weaken them. francine: as long as bernie sanders does not step down, how difficult is it going to be hillary clinton to focus on taking down donald trump? megan: the question is where is bernie going to -- there comes a time when you are becoming an impediment. with a nominee like hillary , the country should
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women have made, there will come a time where the media turns and says wait a second, is this party and to be able to unite? that is a distraction. bernie knows that and they will be working to prevent that, particularly with president obama encouraging him to think .bout his future francine: from the donald trump side, how much do we know about how his campaign is going to look like. do we have a sense of how he is going to try and win this? megan: we saw a very different donald trump last night in westchester. we saw him by helicopter. we saw him on -- by teleprompter. and we saw him on a leash. he had a terrible week last week. he went last night with a very different approach, with a "i can be a leader."
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whether that will be the same donald that voters gravitated to, is a very different question . it is one thing to see him unleash, it is another to think that is going to be as compelling. francine: megan, five more months of fun. thank you for joining us. insipid, that was the world bank's assessment. the bank cited sluggish corporate spending. it cut its global outlook. the forecast will grow by 2.4% this year, downward revision of the 2.9% back in january. insipid is what we want to focus on, but this is what our next guest is. khiem: this -- pimco described it as a stable but not secure. what are the risk factors to growth? this is our chart of the hour.
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we're looking at the german 10 year yields. at a record low this morning. this is the blue line pit when you look the white line, the so-called term premium dropping. this is from the u.s., job in 20.47% at the end of last week. .or more on all this how you deal with risk and uncertainty? we are joined by geraldine sundstrom. think you for coming back. when you look at the german -- thank you for coming back here it when you look at the -- coming back. theyyou look at the -- want that slide to safety. geraldine: it is understandable and we have tremendous monetary stimulus around the world. economy [indiscernible] what we can see is we are running without a spare tire.
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should there be a shock on the horizon, it is something that we cannot see at the moment, it is unclear what central bank can do. the return on easing monetary policy is diminishing and people are nervous. it is evident as you show on the chart. francine: it can continue for one or two years. a lot of these yields -- if you look at how much more further they can go, is it negative next? geraldine: germany is very close with us. we are trying to avoid those negative yields. insecure but stable. we try to focus on that and try to avoid those negative yields. try to find secure and safe income and other areas of the market. there is no overheating in the system. we have a dovish central banks
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that are not there to embrace the system either. francine: where do you find value? geraldine: growth is mediocre. credita that we like and secured, asset banking security. we find good return there. we see investment grade and certain areas not shying away from the -- certain areas. not shying away those risks. francine: something in emerging markets. the -- markets. it does seem risky, doesn't it? geraldine: chinese tradition unclear.y insecure and also the fact that the dollar was very strong. it was seen those three factors have diminished somewhat. commodities have bounced. central banks are behaving very dovish, including the fed.
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we see that now emerging markets , you can start to prudently [indiscernible] you need to be careful where you go. very country specific. we see, yes, good opportunity in the bond sector and also equities. francine: geraldine, thank you so much it will get more on the specifics. geraldine sundstrom there, portfolio manager at pimco. draghi goes corporate. the ecb buys corporate bonds -- buys company bonds hit we break down what is on this shopping list. some shareholders are expecting to vote for a salary cut at today's agm it can they pushed that through -- agm. can they pushed that through? that is all coming up right here on the pulse. stay tuned for bloombergs
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interview with the former u.k. prime minister, tony blair. john mickelson wait will speak to him. ♪
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francine: welcome back. let's get to the bloomberg business flash. here's caroline hyde. caroline: clerk oh --
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hundreds of them as traitors -- pro-democracy sinker. it's long cold bland -- after chinese called for a product boycott. the singer is known for her call for hong kong's -- billionaire investor ron baron is predicting that tesla motors will become one of the biggest companies in the world, growing the fold in market value. his market sent shares higher. baron is one of tesla's biggest investors. his company has a stake in the -- market value. to unit is facing more bumps in the road and the state is -- the companyir says the issue can also affect the radio. francine: caroline hyde with the latest on corporate stories.
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the ecb iss set -- said to have [indiscernible] sally bank well joins us. you have been covering the story closely. geraldine sundstrom is still with us. sally, he looked the balance sheet, it is rising. this is a great chart, courtesy of my great inducer. -- great producer. is there enough bonds that you could i corporate? sally: that is the question on everyone's mind at the moment. the market is incredibly liquid. ou can buy insurance and companies on a bank. there is not a lot out there for it to buy it analysts are saying in its to buy 5 billion euros a month and noted for the program to maintain a level of credibility, and in order month
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prices so that the investors will not look to sell. maybe investors and analysts are slightly haunted by some of the programs past less than successful bond buying escapades. majority announced -- when draghi announced that it would buy security bonds, prices rose to a high. francine: geraldine, will this be a success? geraldine: i could only hope. their fact that you have access to the primary market is quite critical. we have seen one more issuance in the euro market. hopefully there will be supply of bonds as well. we think we are hopeful pete we can see spread coming through -- hopeful. we can see spread coming through. francine: what is the story?
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is this an ever inventive central bank, much like japan? showing is the limit of what they can do. we're talking about helicopter money. the ecb is buying corporate bonds. something that was unthinkable three month ago. geraldine: they are doing more qe in different shape and form. helicopter money is the next phase. francine: how do they decide what to buy? we will have an update every month on what they are holding. we understand there are humility -- there are utilities. it is difficult. there are a lot of countries. do they pitch? >> we will find out a lot more today. they clearly started with the utilities sector because some of the biggest issuers are in the utilities sector.
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in the market, there is liquidity. we have estimates that there are 1000 securities out there, totaling about 620 billion euros. we'll find a more today. probably see more sectors emerging. some of the sectors we cannot find those big issuers. another sector we will be looking at. francine: overall as it yields on sovereign bonds keep going down, do you think there will be more appetites for corporate bonds in europe? church -- geraldine: certainly so. people are reaching out for yields and this is what central bank wants. hopefully we will see more demand and credit growth. this is the hope. francine: geraldine, thank you so much. sum, portfolio manager
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-- geraldine sundstrom, portfolio manner just manager for pimco stays with us. next investor pressure at today's agm. that story up next. ♪
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francine: welcome back. it did he bp shareholders are set to voice their anger over pay average.
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--receives the biggest u.k. a third of shareholders may vote against conversation at today's agm. stephanie, great to have you on the program. how likely is it that martin sorrell will have his pay voted down yet stephanie: it is hard to predict what we have seen so far is a higher than average shareholder dissent in opposition to what they think are excessive pay packages. only a very small number of companies that have lost those out right, you have to remember here that this is just an advisory vote. this is not a binding vote. martin sorrell will still get his 70 million pound pay package. francine: what are we expecting him to respond?
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stephanie: he has previously refused to apologize and he says that his pay is linked to the company's performance and indeed wpp's share price has more than doubled over the past five years. shareholders are saying his pay is way out of line with the average of ftse 100 ceos, more than 14 times the average. that the board should consider this as an excessive pay package. francine: how will this culture of shareholder backlashes affect executive pay more widely? we are seeing this in the u.s. as well. stephanie: what is happening is shareholders are sending a message to boards that as they revamp their pay packages for next year, they really need to take this and can test into consideration -- into consideration. they are showing they are fed up with outside pay deals even when companies have performed quite .ell like the bpp has
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next year, you're going to see more companies hold binding vote on the compensation policies, and over the summer, you're going to see heated discussions between shareholders and boards about coming up with a more realistic alignment of company policy and shareholders. francine: think so much. stephanie baker, -- let's get back to geraldine sundstrom. when you look at stories like that, it goes back to the quality. it goes back to the possible central-bank action. central-bank was always there to promote growth. it seems politicians have not taken that window of opportunity. you told me that growth is modest. are you concerned that if there is a major risk happening, we go into recession? why -- we ares is running without spare tires. there is a risk on the outlook.
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one in a couple of weeks and some may come that we do not know about. this environment of radical uncertainty that is leading people to vote for a safe haven. -- to go for safe haven. it is indeed compensated which is why we are running on a very moderate level of risk in our portfolio. francine: what do you buy? equities? we are seeing so much volatility on currencies. income.e: we go to save it doesn't mean negative yielding -- save income here at it doesn't mean negative yielding. in the euro area where nate -- where rates are negative, going into secure asset banks, certain -- going all the way to emerging markets. make sure time is your friend and you have a positive yielding portfolio, it is already something.
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being patient is going to be crucial. we are going to have more volatility in the markets. francine: geraldine, thank you so much. she stays with us. we will be discussing brexit and risk aversion next. ♪
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francine: welcome to the pulse live from bloomberg's european headquarters in london. i am francine lacqua. time to look at some of the companies linked to the corporate bonds that the ecb is buying. this is the day for mario draghi who is starting to fire his gun on the corporate bond purchase in europe. this is according to a bloomberg scope, we reported earlier that they have bought some e.on and rwe corporate bonds.
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we also understand according to a person familiar with the matter that france's central in the buying bonds secondary market on behalf of the ecb. it certainly does have an impact not only on e.on and rwe but the sector at large. we were just speaking with geraldine sundstrom and she said she is expecting more issuance. they are saying it is in the utilities that the ecb has started probably because we have seen increased issuance. let's get straight to the bloomberg first word news. caroline: barack obama has congratulated hillary clinton for winning the democratic nomination but bernie sanders says he will continue to fight. -- he addressed -- she addressed voters and new york. >> thanks dear we have reached a
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milestone. first time in our nation's history that a woman will be a major party candidate. exports: china's stabilized in may with a weakening currency giving some support to growth. 4.2% andshipment fell imports slipped just north of 4%. the pboc has kept its 2016 growth forecast unchanged. -- japan's economy grew slightly more than initially reported in the first quarter, helped by revisions in the private sector and business. relief to the prime minister shinzo abe. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world.
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you can find more stories on the bloomberg. tom: thank you very much -- francine: thank you very much, caroline hyde. manufacturing surged. what this tells us is the data is in stark contrast to what we saw in previous surveys, be it gdp or investment showing that lackluster activity with settling in the u.k. this goes against everything the we know so far with u.k. production posting largest monthly gain. i do not know if we have an impact on pound. we did see pound-dollar quite volatile on the last couple of days. british pound, i think this is in u.s. time but the correct figure, 1.4564. markets have been shy this
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morning. mark: shy after two days of getting. as you said earlier, we are seeing gains in utilities because the ecb is said to be buying corporate bonds of utilities. among the few industry groups that are gaining today are basic resources and utilities which are up by 6/10 of 1%. -- igo back to the ecb will go back to the ecb in just a minute. exportsta out of china, stabilized in may with a weaker currency giving some support to growth in the world's second-biggest trading nation. 4.1% in shipments fell dollar terms from a year earlier. imports slipped .4%, the smallest trop since late 2014.
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with an improvement and imports, numberses -- car sales show purchases climbed 11% in may for a nice gain in 10 months. this is the import and export data in dollar terms going back to 2000 and 10. the red line is zero. elsewhere, we look at the price of crude oil, u.s. weekly industry data showing crude declines, falling by 5.7 million barrels last week according to the american petroleum institute. today is forecast to show supplies drop. i thought we would look at a chart comparing the bloomberg dollar spot index and crude oil, the white line the dollar, the blue line crude oil. they have traditionally moved in
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opposite directions. at the beginning of may, both were leading upward, which led to the question will one give? the dollar is declining after that weaker than forecast jobs report on friday. going back to the ecb's corporate bond buying program which target today, i thought we would look at some useful european corporate and high index -- high bond indices. yields onve seen is european corporate debt fall to unproductive invented -- unprecedented levels ahead of the bond by. index has risen 2%. u.s. high-yield bonds are up by 7%. highlighting the distortion in
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the bond market caused by central banks, they are pushing yields lower, forcing investors to search for higher yields elsewhere. the corporate on buying program has begun, francine. francine: thank you so much, mark barton. we had two breaking news stories. our hearts go out to anyone involved in this. according to the turkish main broadcaster a bomb attack against a police headquarters in idyat town. this follows yesterday and attack were seven police were targeted. yesterday the president of turkey was pointing to pkk, the rebels of the one deliberation of north kurdistan. we will keep an eye on this.
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in the last couple of minutes coming from turkey, a bomb attack against police headquarters. we also had breaking news separate from what we saw in turkey. a corporate story. we understand the ceo will be willing down and suzuki take management steps -- steps against the management at a staff level. improper fuel economy testing. it did hit credibility on suzuki. dealers were saying that it also anda lot of the models vehicles that exceeded the fuel consumption ratings. that hit basically because of the improper fuel economy testing methods they had been using. on the back of that scandal, some of the executives also at honda are stepping down.
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the ceo and a chairman will take a 40% pay cut for six months at suzuki. a lot of breaking news. we have to look at the ecb and the other risks out there. let's continue the conversation with geraldine sundstrom, our guest host. we are just getting some breaking news about what the ecb is binding. will look at the share price in just the second. at things they are pretty undescribed in a tour. they need to make sure they hit corporate bonds in every company -- country. geraldine: i think that is precisely the aim. they do not want to create more distortion in the market and will buy across the board. what can be said for the second half of the year is not only is corporate debt going to be supported by ecb purchases but also earnings outlook for
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companies is learning a lot better for the second half of the year. we are coming out of a very serious earnings recession globally for the past year and i would say that things are looking up. barring any unforeseen risks on the outlook, things are going to look at her for corporations now that commodity prices have turned, the dollar is less strong, and emerging-market currencies being less stronger. this is going to support corporations. francine: how do you manage success of this corporate bond buying? do we have to see them increase wage to increase inflation? geraldine: ideally we would like to see it lead to more investment. the cycle has seen very little investment and companies have been using this money mostly to buy back shares in some cases. hopefully more productive outlook would be good news. francine: your favorite
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investment at the moment, what is being mispriced and what is your top pick? geraldine: and the portfolios that we currently manage, it would be some of the emerging-market currencies which are high-yielding. there have been a lot of adjustments in there and balances and stronger commodity prices in somewhat stable china, this has good days ahead. francine: like what? geraldine: we like the russian --le, the brazilian rail brazilian real, and high-yielding currencies. francine: geraldine, what a pleasure to host you. stay tuned for bloombergs interview with tony blair about brexit and the fate of british politics. coming up next, clinton claims victory.
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the u.s. presidential campaign kicks off in earnest. ♪
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francine: welcome back to the pulse. saudi arabia is considering a plan to tax millions of foreign residents after seeking to reduce its reliance on oil revenue. tracy is in abu dhabi for us. what does this tell us about the
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government's needs to increase income? therehink it tells you are quite a few options on the table and that there is a sense of urgency to this proposal. the interesting thing is we have actually seen saudi arabia is finance minister back away from this plan a little bit, he says it is an old proposal and has not really been can centered. quite a few economists have pointed out that in the context of what saudi arabia is trying to do, taxing ex-pats might not make sense. cinema, there is no music in public. there is certainly no alcohol so for a lot of ex-pats the only motivating factor to be there is the money and if that goes away, a could hit saudi arabia's drive to bring in more skilled labor. francine: we understand they do
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want to be more of a financial presence in the middle east the middle east. aside from an next pack -- x tax, what else are they talking about? tracy: people are pointing out that the timeline is very ambitious. we are talking about growing nonoil revenue from $40 billion to more than 140 billion by 2020. that is a pretty ambitious timeframe. a lot of economists are pointing out that one of the most unusual things in the plan is the idea of key performance targets. someone will actually be watching to see whether or not these initiatives are being met, are on course to meet the deadline, and that is quite a departure from what saudi arabia has done historically. they have a history of starting historic -- starting projects
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but not seeing them through. it seems saudi arabia is really serious about this particular transformation. francine: thank you so much. after months of primaries and caucuses we are heading into the final stretch. still a couple of months until the u.s. presidential elections. hillary clinton declared herself when her of the democratic race and turned her attention to donald trump. for more to expect -- from more to -- for more on what to expect, let's bring in morris reid. he worked in the bill clinton administration. please do not be tainted. is it, given that she becomes president or is it 50/50? morris: statistically she is the nominee and i think that is the only given. i think she has a 60% chance of becoming president but it was a
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great moment last night for america and her. i think you will see the contrast between her campaign and donald trump's, who wants to take us back and not forwards. francine: i still cannot figure it out. she has all the credentials but she is just not like. can she turn that around? morris: i think so, and it is about a personality versus substance. policy,rsonality versus what can you do for me? it is absolutely important. when you have a situation of donald trump and hillary clinton where they have overwhelming toatives, you really have focus on what you're going to do from a policy standpoint. take the personal out. they need to really focus on substance, and she has to in particular, she has to tell a story.
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this has been her achilles heel. she has not been able to tell a story where the american people can see themselves as part of her journey. francine: can she convince bernie sanders to step down? how damaging is it that he has not? how critical is her vice president? politicse always say -- in politics, candidates do not leave until they run out of money. she has to bring him into the fold, give him a serious role, and unleash the bern. francine: will he play along? morris: i think he will. it is more important to have influence with hillary clinton. francine: but he wants a revelation. he is not going to get a revolution with hillary clinton. morris: there is a revolution
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with a r or a small are. you cannot have a revelation with a revelation with the r if you are not the nominee. ohio will be important for hillary clinton, colorado comes to mind. those states will play a pivotal role. i believe firm -- florida is firmly in the democratic camp. i think ohio, colorado, and pennsylvania are the states she needs to focus on so i would pick someone from one of those states. would you even explore the idea of getting bernie sanders as vp or is that crazy? morris: if i am advising bernie sanders i would tell him, do not go on the ticket. if you are on the ticket you need to fall in mind with the nominee. if you are part of the team you can have more wiggle room an impact on the outcome.
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i do not see him joining a ticket but playing a fundamental role. francine: what does donald trump need to do not to screw it up? morris: he has tone down the xenophobia. he has to turn and the aspirational. he has been able to do soundbite politics, rhetoric, but can he turn those into actual policy and make it resonate with a larger population than the small group of people he has motivated so far? it is not impossible. donald trump is a serious threat. if she does not focus, he could be president. francine: morris reid, thank you very much. a great bloomberg exclusive. we look at the big tech push next. ♪
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francine: welcome back. it is the day where mario draghi has started buying corporate bonds. fundsment grade corporate to its 80 billion euro purchase program. all of our team of reporters across europe have been hitting the friends trying to figure out what he has been buying -- hitting the fronts, trying to figure out what he has been buying.
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and --ica, jenna rolle, jenna rolle -- generali and engie. -- disclose not this until july 17, but this is bloomberg scopes. you can see some of the share prices are reacting very differently. we are seeing a little bit of a rise to the german utility companies. there is speculation the ecb is buying those sorts of companies because they have had some large issuance. e.on, rwe rising to the highest level in the last six weeks after we understand the ecb is buying corporate bonds. fiat is said to be in partnership talks with uber. ceo looks fore more ventures with tech companies.
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let's bring in thomas and part -- googlele eberhardt first, now uber. what are they after? >> clearly they have a different strategy than other carmakers. it is competing or investing in tech companies, trying to strike deals with them. fiat was the first maker to buy -- to sign a deal with google. heard they had initial contacts with amazon. francine: we will get plenty more throughout the day, and you can check out his story on, and on the terminal. stay tuned for bloomberg's interview with tony blair.
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next withnce" is up tom keene. we will be talking about the world bank report that they expect growth to be slower than they thought. that is coming up next. ♪
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francine: clinton claims vick three, hillary becomes the first woman to run as a presidential candidate of a major u.s. party. mario draghi's ecb buys corporate bonds as the world bank cuts its growth outlook. the german 10 year hits a low. shareholders are expected to $70 millionceo's pay package. i am francine lacqua in


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