tv Bloomberg Markets Bloomberg June 23, 2016 10:00am-11:01am EDT
bloomberg television. ♪ mark: we will take you to new york to london to washington in the next hour. here is what we are watching today. voters go registered to the polls today to cast their ballot. we will be following all the action across a day of special coverage tomorrow. vonnie: federal reserve is set to release those from its latest round of stress tests on 33 banks. why banks like citigroup and bank of america and their shareholders are bracing for today's reports? mark: michael kors is announcing a partnership with mclaren honda racing team. about theew talking
u.k. flagship store. sales have home crossed the bloomberg. let's head to the markets desk with julie hyman. julie: we did see new home sales a decline in estimated -- but a decline more than estimated. it was 6% month over month. we got the index of leading economic indicators that felt by 2/10 of 1%. economists were forecasting a gain of 4/10 of 1%. but reaction to the housing number, you can look at the s&p home and, still higher on the day. we will continue to watch homebuilders to see how they are reacting to that. there was an interesting chart that looked at the number of homes being sold that are about 300,000.
that percentage of the total has been rising and we will see how that shakes out in this particular month. let's take a look at the major averages. onaking abroad, it is a risk kind of day. look at the a groups on the move on the bloomberg. utilities is the only group trading lower. that is the only small, red slice of the pie. financials are getting the most today. the banks are being very receptive and reactive to risk on an risk off. bank of america all rising. we are getting the results of the stress tests after the close today. they don't tend to react as much as in this phase as in the capital plan approval phase that happens next week. we are seeing a rise of european banks, which is why we have this
risk-on sentiment. take a look at oil today, trading higher about 1.4%. we have a pullback in the dollar that has been helping oil prices as well. let's check on u.s. rates. the tenure treasury -- seeing the yield go higher to 1.72%. some selling in the treasury market as we see money flowing into stocks today. banksthanks driving -- driving stocks harder -- driving stocks higher. thanks again in the only ndustry -- investors have been adding cash
this week. this is a chart that goes back all the way to june of last year. look at what has been happening since february. investors have been pulling money from the etf that tracks the eurozone equities. that tells a barry big -- that tells a very big story. it is a gauge and manufacturing and a gauge of services. .t has fallen that is the lowest level session you marry. it was driven by a slowdown in service activity. business expectations within services slipping to the weakest it has in years. expansion. it is still above 50. that is significant. check out this chart. greekb -- great news for last night allowing the nation's
bank to cheaper financing, but stopped short in including such bonds and its qe program. it was decided after the government approved its payment of 7.5 billion euros to two greece. the move should improve a significant improvement and set a positive tone for deposit inflows. it has increase confidence in the banking sector. we have seen the 10 yield government bond fall. we are seeing greek banks rallying today. index is atse banks gauge of the biggest banks in greece and is rising 3.5%. i have gone back to history. i have gone back to 2007. a november the 6, 2007, we saw a
record high for greek banks. .ince then, we are down 99.93% that is the disappearance of 81 billion euros of value. always good to get some perspective. vonnie: that is some perspective. bloombergk in on first word news. citizens -- u.k. citizens are embracing for the referendum of the european union. -- prevents usts discussing referendum issues. but we will be following all the results. cover starts at 5:00 p.m. eastern. ordered sixts have people to be detained in the investigation into the terror attacks in paris. one of the detainees is being investigated for the suicide
bombings that killed 32 people in brussels. setairport in frankford is for a makeover. it is investing millions of dollars in upgrades to include yoga rooms, playgrounds, and a forest-like-- recreational area. its use of defending economic sanctions against venezuelan. the obama administration says the sanctions are a way to respond to oppression. the u.s. is trying to break an and pass -- to break an impasse. it is seeking a referendum. the city of baltimore is bracing for a verdict today in the trial of the police officer easy murder charges for the death of freddie gray. a judge is expected to deliver a decision this morning. officer caesar goodson opted for a bench trial instead of a jury. he drove the van in which
freddie gray suffer the fatal spinal injury. he is the third of six officers to go on trial. the first two trials did not end in convictions. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. e?nnie a smart vonnie vonnie: the fed is conducting stress tests. graham fisher joins me to talk about the release of the results. what will we learn? >> this is the quantitative portion. , but being ast over capitalized as they are, i do not expect the major banks to have problems in this round. 29th whenwill be the we go to the qualitative side, which is a black box, and no one is sure what the fed will be
focused on. that will be where you define the payout ratios. is unlikely that bank of america will have the same problems as last year. $180 million to take care of the problems caused them to resubmit. a 10%aid, you are seeing increase in credit and in commercial real estate concerns and problems. that is going to be the question on the qualitative side. i expect ratios to go up dramatically. vonnie: we will show a screen of what banks have been paying. city, more america, than 68. there is a big difference. fed may not be considering a severe scenario of negative interest rates at a time when janet yellen says to
congress -- >> they put up three scenarios. the most rest scenario is supposed to replicate a depression. that really becomes the issue. i think that is why they are doing it. i don't think anyone expects the banks will have to withstand that. on the quantitative side, i do not think there are any concerns. mark: what about foreign banks? had deutsche bank and spain's bank failing the test and saw their capital plans rejected. will he be better this year? >> those are still major risks. with the state of the foreign markets, it becomes a real problem. you can see it on the other side. wells fargo will probably go up 77% or so.
i do think the european banks with u.s. operations will remain at risk. mark: check out this charge. it is a great chart. it is an alternative measure of systemic risk presented by new york university economist. it suggests the top six u.s. banks would face a capital shortfall of $376 billion in the event of a 40% decline in the stock market. does that tell us there are feelings in the stress tests both in the u.s. and in europe? are you a fan or not? >> i am not really a fan. have -- ts at the end of the day, they create a false picture. we are now subjecting ourselves to a system of models that are really fallible and have never been tested themselves through a
cycle. i do discount the value of them beyond the fact that markets have to look at them. it has become an annual ritual and largely unfortunate and does not fully replaces or properly replaces traditional bank supervision strategies where you look at capital adequacy, assets, management earnings, and interest rate sensitivity. a replacementbe for on the crown examinations and misleading to assume otherwise. vonnie: where will we see stresses increase? > so afteroncerned less yellen's testimony. if there is a rate increase, i am concerned on commercial real estate. commercial and industrial loans are problematic. you see that at some of the high-yield markets.
that said, right now, there is nothing particularly worrying. that really takes is to my bigger concern, which is -- i think the banks are fine. there is not much there other than dividend yield to look at. the top line is not growing. the bottom line is not terribly attractive. , it is biggest banks sort of a why are we here? mark: josh, banks for joining us. the president that has been good for business. we will have details on u.s. president's barack obama where he talks everything from regulation and free trade. and why his daughters will not work for wall street? that is coming up next on "bloomberg markets." ♪
♪ vonnie: breaking news -- decisions from the supreme court with an opinion being released. a divided u.s. supreme court giving a surprise victory to from an action in college admissions. an admissions process at the university of texas. it was upheld by the u.s. supreme court. the justices voted for-three. voted 4-3.ices mark? mark: michael kors is making a push into menswear. they announced a partnership with the formula one racing team. of a strategy to
of over customers outside customers who buy women's handbags. >> michael kors is going deeper into the menswear business. we have always been in the business, but we have made a statement that this will be a great extension for growth. mclaren has a great history in formula one and one of the greatest histories winning championships. when the style and innovation of the design that comes out of mclaren is something we think is a fit with our company. they had the new cars which are just spot on absolutely glamorous and very sexy and something that our guy wants to be associated with. do you want to sustain the
market and get the top prices. can you give us an idea of that arm of the strategy is working right now? >> certainly. ourissue with reducing department stores and united states is one that the environment and all of north america is one that has been challenged. the mall traffic is slowing down. resorting -- are [indiscernible] that is something that we think long-term will denigrate the brand. very deeplyery, involved with our partners. but a little less product, a little less promotion, and that will get the balance back in line. sense of you give us a partners you will be pulling
back from? >> we will not be stepping back from many partners, but there will be less trotted and more demand and more desire. everyone will benefit from the strategy. mark: you bought your china license. it will give you able opportunity to push into china. what comes after china? what does it mean for m&a? >> most importantly, we will focus on the growth of the company and asia will be a big opportunity for us. we think it will be $1 billion. we did announce we are looking at acquisitions. that is not something on the immediate horizon. but we had a very strong balance sheet and we have a lot of bandwidth inside the organization to be able to take on other fashion companies that will help to expand our range.
ark: final question, [indiscernible] >> i cannot speak to what the investor community thinks on a day-to-day basis. since we had in public, are company that our company continues to grow revenue every single year. i would put that up against most public companies in the fashion sector. i think michael kors has done a very good job and we will continue to do that. coors'hat was michael chief executive speaking with me yesterday. about -- i asked him some say the brand is diluted. determineds pretty in his assessment that revenue
is growing and the are really excited about this partnership with mclaren honda. and they are really excited about this push into menswear. men is the new women. [laughter] we have breaking news from the supreme court. just remind us what happened. vonnie: we got a decision out of 4-3, one ofcourt, the justices recused herself. person. an eight the decision we got surprised victory to affirmative action college admissions, the use of race in college admissions. the supreme court upheld an admissions policy that the university of austin in texas says it is crucial to fostering equality. -- fostering diversity. in woman said she was rejected in 2008.
♪ vonnie: you are watching "bloomberg markets." i'm like when along with mark barton. ago, we got a decision by the supreme court ising for-three, yes, that seven because one of the justices recused herself. case is the abigail fisher case, a white woman says she suffered unconstitutional discrimination when she was rejected by the university of texas at austin in 2008 it the texas system is a hybrid admission policy. it requires a school to admit three quarters of it -- middle-class solely on the base
of high school ranks. it looks racist on the surface, but it ensures a significant number of minorities. that is the origin of this case. without the opinion today. it is time now for our business flash. a look at some of the biggest new stories right now. bill gross has become the latest investment -- investor to bet on argentina. over the past year, argentine debt has posted the biggest return. the president has settled with disgruntled investors to pull argentine out of the fold. any credit card from citigroup has been a mess. they have endured -- customers complained that they have had trouble activating accounts. cardo pick the city visa
as a replacement. some of the biggest wall street are wanting to sue the labor department over new rules. according to people familiar with the matter, major banks wanted to avoid a battle over rules. the suit went ahead with support of regional firms. that is your bloomberg business flash. european stocks rising for a fifth consecutive day, the longest winning streak since may the 30th. and that period, shares have since8%, the most february 18. one hour until the european close. ♪
are watching "bloomberg markets" on bloomberg television. citizens are voting in a referendum on the country's european union. u.k. love presents -- prevents us on referendum issues while polls are open, but we will be following all the action as the results come in. special coverage starts at 5:00 eastern, 10:00 london. in paris, union workers are protesting. march tried to ban the concerning -- concerned that the march would become violent. donald trump interrupt his presidential campaign to fly to scotland tonight. plane-load of
journalists with him. trump had promised to great thousands of jobs there. 150 people at the resort. is thinking about where we go from here? his presidential campaign says that is the theme of his town hall and news conference later today in new york. sanders has not formally left the presidential race or endorsed hillary clinton. -- buta knowledge is he'd knowledge that he apparently will not be the nominee. the fbi has rated the office of a new york hedge fund. they are looking into operations at platinum partners after a manager at the firm was charged with driving a union boss according to people familiar with it. they are considering shutting down the main hedge fund. global news 24 hours a day, powered by 2400 journalists, in more than 150 news bureaus across the world. this is bloomberg.
vonnie: the market has been open an hour.-- julie: stocks have been trading twilio. see, there is not much to see at this point in terms of the directed stocks. but it is up on its first day of trading. to $13 a offering $12 piece. venturely the second company to go public this year. seeing a big boost in its first a of trading. i believe he will be hearing from the company later on? vonnie: yes. ii cannot tell you the exact time, but tune in. julie: good plan. vonnie: banks to julie hyman.
it the index about -- index up. the fed is having a big effect on performance of equities. it he is out with a report titled the power of the fed. does the fed has newfound power, jeff? particularly new, but store narrowly -- but it is an extraordinarily interesting situation. what markets want around the world, not just -- they want better growth. are in this imbalance between are we going to get better growth in the u.s.? does not mean the fed will raise rates.
that is typically supportive of e.m.. you are seeing these very sizable number of episodes with the fed is driving the market higher. year,: in january of last we had the emerging markets tantrum. of theme cannot speak all as a collective, but are they much more prepared should there be a shock to their systems, or could we see a lot more turmoil ahead? >> it is a complicated question. i think emerging markets are better able to deal with a shock . the fed will move very, very slowly in our opinion. emerging markets are ready for that. given this tremendous drop we 2015, --rrencies and , it has taken currencies
delta much cheaper levels. you're seeing a significant adjustment and account deficits over recent months compared to where we were before, and all of that is positive for e.m.. you never know what shocks could be out there. but the biggest shock, which will be barry -- very negative for e.m. is if we fly back into a recession. mark: we are looking at this emerging market chart per year. 27 -- 2007,back to that is where the highs were. we are roughly halfway between the highs and the lows. what will push us back to the highs or pushes down to the lows? we are stuck in that midrange, aren't we? word that will drive it higher is growth. the one reason it has been a
disappointing five-year period for emerging markets is we have had very disappointing growth numbers out of emerging markets from an economic growth pointed sake and for the markets' from a corporate earnings point of view. you need to see stronger growth. you need to see stronger -driven growth. the dollar is very strong. a weaker dollar and better growth would be the driver to move us back towards the highs of 2007. i think it is another shock at the global level. it is a move back towards conditions. aside from that, we are safe and that kind of selloff. we are getting breaking on volkswagen. it will pay owners up to
$700,000. they will agree to fund a grant program to upset evolution. this is under a $10 billion settlement be negotiated for submission to a federal judge according to people familiar with this. vonnie, you have other breaking news. vonnie: we have another opinion from the supreme court and more divisive. the supreme court is deadlocked in its blocking of its immigration plan. it is a 4-4 decision. the lower court's decision stand in this woodblock president obama is immigration plan -- president obama's immigration plan. this is ahead of november's election.
it permitted millions of undocumented immigrants to stay in the country. the supreme court is deadlocked to block the president's immigration plan following his executive order. you, i want to get back to and the emerging markets discussion. we got the news that bill gross is interested in argentina. what do you find attractive? jeff: again, a very broad subject. we have not been too keen on latin america. they had a terrible year last year. -- n america the region benefited dramatically from the stabilization of currencies and also from the rebound in
commodity prices, which has helped. at the end of the day, the domestic fundamentals in these countries, notably brazil, are fairly challenged. argentina's story is different. they are no longer a part of emerging markets. with the change of government their last november, you are ushering in much better economic policies, in particular, the abandoned of capital control and to get inflation lower and improve fiscal policy. goodtina looks there he do in a long-term story -- argentina looks. very good in a long-term story. futures.started with
which countries are most sensitive to heights and rates, and which ones are more defensive and emergent markets? , mexico, turkey, south africa, some of the smaller markets are vulnerable. your defensive markets to rising fed funds are the bigger markets -- taiwan, china and central europe, which does ready well when the fed is raising rates. mark: jeff dennis, global emerging markets analyst. i want to reiterate volkswagen news. it will pay up to $7,000 to customers and fund the grant program under a $10 billion settlement be negotiated for submission to a federal judge suite. this is according to people
familiar with the talks. this is a key authority for regulators looking to undo the carse of 482,000 diesel nitrogen oxide. volkswagen is not it able to repair all of the cars to the satisfaction of the epa. vt the news we are hearing, a part of awners $10 billion settlement. vonnie, just to reiterate that new supreme court news. vonnie: it was president obama's executive order for immigration that would allow 4 million immigrants to stay in the country and avoid deportation. we have an opinion from the supreme court and it is a 4-4 split and it is killing the
basically turning around president obama's executive order, which was permitting millions of undocumented immigrants to stay in the country and shielding them from deportation. factturns that around in a the supreme court deciding 4-4 that obama overstepped his authority. as 4shield of as many away andmmigrants goes block the president's executive order and puts millions of undocumented immigrants at risk for staying in the country. they may be deported. we will have more from our supreme court reporter. the fact that the supreme court was not a full bench, making this decision, and what it means and a very decisive -- divisive cycle. mark: breaking news out of germany. , it has beenle
reported, have been wounded in a shooting at a cinema in the southwest near frankfurt. fromriginal reports came the newspaper citing one heavily armed and masked man into the cinema 2:00 p.m. london time and barricaded himself inside adding that witnesses have heard gunshots. several people have been wounded. it was unclear whether the man was holding hostages. the complex has been core don't off.- cordoneed wanted to reiterate european equity markets. we are roughly 45 minutes away from the end of the thursday session. the stoxx 600 earlier was up.
we have seen quite a rally in the last five days amounting to almost 8%, the most since february 18. over 600 billion euros of value have an added. all but one were rising. banks, telecom, financial services all gaining today. in the currency and bond markets, sterling is at its high for the year against the dollar. is happening and that is at the currency move today. vonnie? let's go to abigail doolittle led the latest live in the nasdaq in midtown manhattan. abigail: we are looking at a nice rally for the nasdaq. it is up a 10th of 1%, a broad-based rally as all the major sector straight higher. amazon shares are nicely higher
as maxim group has initiated coverage with a buy rating and an analyst sees more than 14%. shares areital higher. during -- he sees an outside for the shares of western digital and his comments, seagate is trading higher. vonnie? vonnie: western digital higher today. i recall it rebounded sharply on the year at 50% a year. -- down 50%? abigail: we see damage has been done to the chart. that long-term uptrend has been broken. the buyers on the recent strength are trying to reclaim
that uptrend. that is pretty rare. this will be a good one to keep an eye on. vonnie: abigail, thank you. down withd, they sit an interview with president obama. we will talk with our washington bureau megan murphy who conducted part of the interview and will be asking megan about the most recent deadlock decision overturns president obama's executive order on immigration by leaving a lower court order intact. ♪
the court building. and we have a brand-new interview with president obama on tap with megan murphy and washington d.c. questioning president obama honors economic policies. the president has a few months left in their are other things that may form part of his legacy. saidne thing that has been is he is an antibusiness president. but when you look at the data, he is pro-business. cares what shape he leaves the economy. what comes through clearly is he really cares about making sure we have a workforce and an economy sustainable going forward given the disruptive forces at work with technology and automation. what he wants his legacy to be is he has taken us to where we are now, but he is super focused
on what i want to leave forward in terms of preparing us to compete? vonnie: one of the major things that will come out of his presidency or executive orders, and one was on immigration, and we just got from the supreme court, allowing the lower court's decision to stand, undocumentedons of immigrants may be deported. what happens next? to these people get deported immediately? megan: what he was trying to do -- this is a very big blow to his presidency, this deadlocked decision that leaves the judge's order in place to allow as many as 4 million undocumented immigrants to seek a deferred
status where they could work legally in gaining pathway forward. this is something that will hang over as the inability to perform immigration. core, toes is at its retain our competitiveness and grow and put us forward on a pathway to even bigger, stronger economic growth. vonnie: we have a supreme court reporter from washington d.c. outside of the supreme court. ray, this is a 4-4 decision. -- it is unlikely the decision would have been different. can you give us the kernel of some of the opinions? the court divides for-four, it just gives out a single piece of paper saying we are divided, meaning the lower will block the policy of the president. i want to make clear, these are not people who are about to be
deported at this point. the administration still does not have to deport them or have deport all of them. it means this program, which would have given them a shield from deportation and seek work authorization, that is not going to go forward during the obama presidency. vonnie: we had a decision today about affirmative action and it was a surprised decision, greg. explain to us why it was a seven person decision and why it could've gone a different way there was another judge on the bench? greg: one of the justices could not take part. we expected at least some new limits on affirmative action. the role at upheld the university of texas. in forortant whe
race-based college admissions. vonnie: i want to thank megan murphy for a fantastic interview with president obama. mark? mark: an arrest has been made in the german shooting according to the german newspaper. 25 people have been injured by pepper spray in an incident in the southern germantown 45 .inutes south of frankfurt we will continue to bring you updates on this developing story. coming up, it is the "european close." volkswagen shareholders split. the "european close" is next.
you are watching the european close on bloomberg markets. we are going to take you from new york to london in the next hour. here's what we are watching today. the uk's 46 million registered voters go to the poll to cast their ballots on eu membership. u.k. law prevents us from reporting on voting or discussion of referendum issues. but we will be following all the action across the day. two major rulings from the u.s. supreme court in the last hour, the high court agreed to affirmative action and college admissions, while sco presidentdlocked over obama's