tv Bloomberg Markets Bloomberg June 28, 2016 10:00am-11:01am EDT
♪ vonnie: we are going to take you from new york to london to brussels. here is what we are watching. , pounds,cks commodities gaining for the first time since britain's vote to leave the european union. of threend coming off .6 billion dollars with wipes off of global equities. tensions in brussels as european leaders meet with british prime minister david cameron for the first time since the brexit vote, discussing the next step in the u.k.'s breakup with the eu. vonnie: a permanent ceo. one hundred 79 jobs are cut. unexpectedlynd ceo resigns.
have a look at where equities are trading on this second trading day of the week . mmis is the wonderful g function. global macro movers. the ftse is up by 3%. switzerland up by 2.7%. markets rising by 2%. we have a whole host of currencies rising against the dollar. norway's krone and iceland's krone -- we should not talk about iceland since they beat england yesterday. in spain,lds falling ireland, and italy. the periphery, we have yields coming down. we have commodities rising. it is very much a risk on rally. this is the count against the
dollar in the last 12 months. i have the lending day average moving for you. you know that sterling has sunk in the biggest two-day decline on record. it is over 1%. 200-day moving average is over the 50-day moving average. the 30-day relative strength was over, that means the market has oversold. the bond market, money moving out of the u.k. bond market. yesterday, the yield on the u.k. tenure fell below 1%. we had a record low 30-year yield yesterday. the 10-year is rising. the two-year yield is rising. the last record for the two-year for 2012 was .06%. let's not forget the u.k. was stripped of its top credit rating by the global ratings.
search lowered its ranks. i want to tell you about nestle. they haven't new chief executive, schneider. could this be a capitalist of change for the world's biggest food maker and europe's biggest company? shares are up by 3.5%. we are 30 minutes into the trading day in the u.s.. at the markets desk. julie: almost a perfect inversion of yesterday across asset classes. a rebound in stocks. selling within the treasury market and we had economic data in the u.s. last quarter's being revised higher. forot a confidence rating june, 98. the estimate was for 93.5. an increase of 92.4 for the prior month. an interesting figure given everything we have seen. consumer confidence beating
estimates as stocks rise to the highest of the session. the s&p 500 above 2000. it is above the 200-day moving average. you were looking at the different levels. not only in stocks, a reversal in other assets. the 10-year yield going higher. the magnitude, true across the board, the magnitude is not as large. stocks sold off sharply in the s&p 500 -- we are not recouping the losses, just a change in direction. crude oil up 3%. the bloomberg dollar index is down today. move.t the groups on the a river so. utilities, are down today. discretionary, financials, all of the cyclical groups are coming back. we are looking at travel
companies that have been battered over the last couple of sessions. carnival coming out with earnings that beat estimates. they brought down the upper end of the forecast, but rebounding nonetheless. american airlines, delta, and expedia participating in the rally. automakers are heavily exposed to europe for sales. coming back today. ,inally, the investment banks which participated in the selloff. morgan stanley, goldman sachs, and lazard coming act. almost an across-the-board rebound. vonnie: let's check in with the bloomberg first word news with taylor raikes. taylor: angela merkel has a warning for the u.k.. she told german lawmakers that the u.k. will not get favored treatment when they leave the european union. make sure the taylor picking principle will not apply
in negotiation. in spain and acting prime minister is playing a waiting game. his people's party were the only group to increase its ranks when they held their second election in six months. he has not enable to form a government with rivals in parliament, but is expected to push negotiations to the point where they only point is for rivals to support him or seek a third election. releasing the report on hillary and the 2012 attack on american compounds in libya. clinton should have known that extremists posed a risk to officials in benghazi. new details have been revealed, including that clinton planned to visit libya in october of 2012. americans were killed, including the u.s. ambassador. democrats released a report on monday exonerating clinton. whocollege basketball coach
helped the women's game make the big time has died. pat summitt was 64 years old and had been battling dementia. and was8 championships the winningest coach in division i history. the nfl buddy ryan has died. his innovative defensive plays helped the 1985 chicago bears have one of the most dominant seasons in nfl history. he was 82 years old. global news, 24 hours a day, 2400ed by more than journalists in 150 news bureaus around the world. tok: david cameron is due attend a dinner with his european union counterparts this evening. he will have a chance to clarify the next steps for britain after the country voted to leave the -- the eu. ryan chilcote joins us from
brussels. i want to ask about an exchange between nigel farage and to be president of the european commission. i understand that things got heated? absolutely. the rhetoric is definitely heating up. you can tell that from this exchange. john called you a good is the president of the executive arm of the eu. it is his job as that president to carry out the collective will of the eu countries. then you have nigel farage, the leader of the eu independence party. he is not in the parliament in london or in his parliament members. he was a fierce campaigner for the u.k. to leave the european union.
>> that is the last time i'm applauding him. i'm very surprised that you are here. you are fighting for the exit. the british people voted in favor of the exit. you can hear the president of the european commission's bar is going down well with members of the european parliament. most of them support the european project. the point is legitimate. what is the role of britain. mep's of the british delegation at the commission. all they are doing is waiting in limbo, soon to negotiate their exit after the european union. vonnie: i cannot help but compare it to the difference of tone in the u.k. parliament. this is deadly serious. how did for -- how did he respond? ryan: i think they both know the
jokes.f thinly veiled he made one of the populist jabs at jean-claude juncker and members of the european parliament. ats who havee eurocr never had serious jobs. it went down very well during the campaign and lead up to the referendum. is aat i would like to see grown-up and sensible attitude to how we negotiate a different relationship. i know that virtually none of you have ever done a proper job in your lives. workeded in business, or
in trade, or ever created a job. ryan: to be clear, that was in the european parliament. we are in the council, that is where the 28 heads of state are gathering, where david cameron will have dinner with the remaining 27 eu leaders. the tone will be different. the british prime minister campaigned for the u.k. to remain in the european union. he is sitting down and will be discussing they will be leaving. as you know, he does not want to leave. i do not imagine the atmosphere will be quite as electric as it was in the european parliament today. mark: thank you. ryan chilcote in brussels. be jokeshere might soon enough depending on when things are ratified and move on. earlier, the london mayor is
taking this more seriously. he discussed the impact of the exit from the european union. to say withi air telling me is that the exit from the civil market is financial services. the banks and insurance sector and others will be leaving london or london, frankfurt, or paris. that means jobs leaving our cities. london remain a financial powerhouse? here to share insights from pieces, including cold really constructed ignorance winning barry ritholtz. it is almost fantastical? we're talking about people's livelihoods and the future of a country that was the fifth-largest in terms of gdp. barry: it is nice to hear that there is an adult in the room with the mayor of the city of london. it is amazing the populist
flag-blaming stuff that farage put forth in the eu. he is not looking to win friends or influence people. he is not having a positive but itfor the brits, plays well to a certain audience that reacts first and thinks second. vonnie: mayor khan was talking about pass boarding -- passporting for london and thinking about things to get done. what could it mean beyond offering special visas, assuming that banks would even keep headquarters there? barry: that is the multibillion-dollar question. i hate the term "uncertainty." people use it incorrectly. rolles not mean we will the dice. the outcome is not uncertain, you know the possible outcomes. in this case, it actually applies.
we do not know with the eu will do in response, what will happen in the u.k.. the rest of the country seems to forget in their angst of being left behind financially, and let's not minimize the impact of income inequality in the u.k., eu, and united states. that is firing a lot of the populist angst. they forget that london is a tremendous source of jobs, income, services, and wealth that benefits the entire country -- just not equally. mark: mohamed el-erian who writes on bloomberg like you do, he said that factors in transit to london will make sure that it is still an attractive destination for financial come needs. , language,n universities -- is that not a valid point?
barry: it is a valid point of intel be line in the sand where sudden -- i would point out until the line in the sand where the administrative complications for being an employee change. cheaper,ns out to be simpler, easier, to relocate -- ifeadquarters hypothetically this gods have another independence vote and say we hitched our wagon to the wrong artists and stay in the eu , you and up with edinburgh as a very cosmopolitan university bankthat is happy to take headquarters. we mentioned earlier in and frankfurt. let's not forget geneva, switzerland. given the tax changes in the united states, they would love to attract banking business and employment back to their city. i think that it is a danger to assume that these jobs will stay
in london. and a lot of big changes are potentially coming. they put london at risk of being no longer the european capital for finance. mark: buckley, a thing that you explore in your columns quickly, anything thing that you explore in your columns, no one knows anything. why did bookmakers get it so wrong? barry: it was a very close race leading up to the point of the referendum. no clear leader. it was almost split down the middle. there is a lot of wishful thinking. if you look at where most of the money spent on the prediction markets and bookmakers, it was coming from london. to some degree, people looked at that as an edge to what happened. sides to every
trade. in general, we vote the way we hope things turn out, not the way we expect. people were surprised. it was not a 90% to 10%, or 70% to 30%, this was a very close race. you don't know how the independence will break until the very last minute. mark: the columnist for bloomberg for you. coming up, the stocks moving in the early u.s. session. stay with us on "bloomberg markets." ♪
today. what is moving? julie: you have the broad rally and broad rebound, then specific calls helping individual stocks. one of them is dick's sporting goods. best positioned to benefit from the sports authority closures. the company is liquidating. the goldman sachs analyst is reiterating a buy adding dick's y. a conviction bu visa is overweight after the selloff. what is interesting is that visa is repurchasing visa europe. analysts say that eventually this will wear some fruit in terms of accelerated growth as a result of the transaction. those shares are up by 3%. travelers, being upgraded. bank of america and merrill lynch has to do with valuation. it is a somewhat defensive play
because of the situation with the brexit. most of its operations are in the u.s.. slower economic growth can mean fewer claims according to the analyst. shares up 2%. companythe oil services getting a boost from oil prices and being upgraded to neutral at susquehanna having to do with the recovery in crude prices and healthy stock has underperformed. only analyst calls, that is one of the better performers. mark: more bloomberg "bloomberg markets" ahead. ♪
live from london i am mark barton. this is bloomberg television. says theervyn king most important thing for the u.k. is a new and effective government. earlier on "surveillance" he spoke about how the uncertainty is driving volatility in financial markets. mervyn: nothing will take effect for a long time. the most significant effect of the referendum so far has been political turmoil. i think financial markets are reacting to that as much as anything else. it anne: was anti-globalization packs? moren: i think it was complex. it was about brigid's role in the european union. there are soft issues like sovereignty. the people admitted into the united kingdom. that was more important than a
general concern about globalization. francine: you mentioned the future of thinking. you don't know with the future of the u.k. banks will be with the eu would you think will be the best possible outcome? mervyn: i don't think there needs to be a particularly dramatic income. some will want to set up new subsidiaries or large subsidiaries to clear transactions in the european union. that will mean that some people will be moving. most decisions about the assets ivbuy or sell can be taken staff and their existing headquarters in london. tanks is stopping british from opening large branches or subsidiaries in the european not to do they chose so. they will only do so if they feel they have to. they will be some move in that direction and they will make all the noises that the french and
germans will want them to, but it will not have significant bearing on the future of the city. it is the european time zone financial center and much of the aspects are well outside the and has to doros with management, insurance, the legal system in britain is one that people want to use. i do not think we need to think of this as altering the status of london. vonnie: mervyn king, the former manager of the bank of england. still ahead, the european central bank is leading in portugal in the wake of the brexit vote. mario draghi talks about dealing with the fallout, next. ♪
television. a quick check on how the markets are doing. -- a big the dax rebound after the biggest two-day job on the stoxx 600. wiped offon euros was of european stocks, 10.85%. the biggest two-day drop since tober 2008. the decline sending the european gauge to the lowest since february 11. let's look at what is happening to the currency and the bond markets in europe. stirling is in favor after the largest two-day drop on record. it is up by 8/10 of 1%. the euro is out of favor against the pound. it is in favor against the dollar. the sterling against the yen, a double-digit decline. there was very much a flight to
the havens like the japanese yen . no record low yield for the european 10-year or german 10-year, but money is moving into the periphery or bond markets, italy and spain are inching lower. the latest in our newsroom in new york. taylor: the russian defense ministry and accusing the u.s. navy ship of sailing dangerously close to vessels in the mediterranean. the russian vessels were in international waters. u.s. officials have complained about russian military jets and missiles sailing to close to planes and vessels. president your delon on a diplomatic charm offensive. to improveedly moved relations with russia, apologizing for the turkish shooting down of a russian airplane. -- 're trying to
south korea is claiming the $17 billion fiscal stimulus package will be used to create jobs and support regional economies heard by corporate restructuring. the growth forecast was cut this year from 3.1% to 2.8%. is inlady michelle obama morocco. the second stop on a trip to promote education for girls. 36% of girls continue school beyond the primary level. traveling withre her. a tale of 2 popes at the vatican. theanniversary of successor.of his he entered the hall to applause and embraced benedict who stood up and removed his white skull cap in a sign of deference.
global news 24-hours a day powered by --global news, 24-hours a day, powered by our 2400 journalists, in 150 news bureaus around the world. i am taylor riggs. this is bloomberg. vonnie: in the shadow of the brexit vote, policy makers are meeting in portugal. they are trying to figure out how the u.k. referendum will alter their positions. elliott colton -- elliott g otkine is in portugal. a speech fromd mario draghi. everyone was expecting him to say something about the brexit and the vote to leave the european union. or what the european union would do to stem the turmoil. they did not inch in the brexit. nothing. all we know from last night is when he said he was saddened by the u.k. vote. we know they are ready to provide additional liquidity if
necessary. he focused on other matters. saying that policy makers central banks and governments should work more closely. >> we might not need formal coordination of policies, but we alignment ofrom an policies. what i mean by alignment is a shared diagnosis of the root causes of the challenges that affect us all. to found ouritment domestic policies on that diagnosis. he mentioned he was talking about low productivity and high outflow gap. that makes it hard to engender inflation and is not helping to implement growth in the euro zone economies and elsewhere around the world. mark: to what extent has the absence of janet yellen and mark carney -- the absent,
what extent has it diminished it as an exercise? suppose it is perhaps like paying for a rolling stones theert and all you get is putting act because the main act has not actually turned out. comeially, they did not because the panel they were to appear on had to be postponed because mario draghi decided that he was going to travel to meet with other eu leaders in brussels. janet yellen and mark carney have other things on their mind -- namely trying to deal with the turmoil from the british vote to leave the european union . it is disappointing for those gathering just outside of lisbon . it is a result tilt around a 14th century monastery -- it is
built around a 14th century monastery and has always been a haven. there is no haven from the markets around the world. from we will hear policymakers attending the big ecb conference in portugal. we will talk with the south african reserve bank's governor and how a brexit will impact his country. was it a surprise to most the way the markets -- it was not a surprise to most the way the markets responded. markets behaved rationally, but u.k. voters didn't. you wrote this wonderful piece before the referendum entitled "will u.k. vote against europe ?"it was very persuasive and you backed it up with wonderful arguments. what happened? >> it was a complete surprise. that means that all of the information that the markets had said this is how the vote will come out.
when it didn't, the markets reacted violently. you obviously did not know enough. what it had known was that just about everyone that was an authority on the suspect on dust on the subject said it is an the u.k.'s best interest to remain in the eu . when the majority of voters defied what was in their best interest, that came as a surprise. markets generally reflect human behavior operating out of self-interest. mark: you cited quebec in 1995, --tland 2014, and greece almost any year with greece, but 2015 was the year that you cited. will the brexit referendum be that outlined -- outlier from now on in predicted events? new be presumptuous to say that definitively, but probably. people,on is very few
having witnessed what happened here last week and over the past 2-days in the market, want to see anything like it again. i would say what happened in spain, the election fallout, was maybe a good reaction to what happened here. that was supposed to be an election up for grabs. even the market wasn't certain. the voters in spain said we will take what we have. we don't want the chaos that resulted from the brexit. that was a leading indicator, if anything. vonnie: would it be fair to say that pricing changed to after the murder of mp jo cox? that before markets were pricing in at more of a chance -- they were closer to the levels they are now? actually, markets started turning before that awful event. you could see the markets long-term,t over the
if you look at one-year volatility compared to the one-month volatility -- the one-year volatility in the pound was so much lower than the one-month volatility. that suggests there was an expectation that when the referendum was over it would be back to normal. that was consistent in the week before. there were other measures in the debt market, the equity market, that confirmed that. awful and tragic as her death was, and it clearly had an it certainly stopped people from campaigning for a day or two -- the markets were anticipating the remain side to prevail. vonnie: what does this tell us about future events that require voting or polling? this is a particularly strange event in the sense that the arguments being made were so dichotomous. i almost had nothing to do with
each other. the market in fat ugly said that it did not know enough. that is what took the pound almost instantly to its worst reversal ever. we had never seen the pound reverse itself in the order of the magnitude of 12%. what that suggests is that the market was taking in additional information. like, after the vote you had authorities saying some of the things that were promised to voters to leave turned out to be not true and unfounded. you did not see much jubilation from people on the leave side. just the opposite. usually when one side wins there is congratulations and tribulation. it was almost like a funeral. the fact that the pound, which is so dear to the british, which it should be, was appreciated to
the fact that it was, it is hard to see anything like this repeating itself soon. got the u.k.ls election last year wrong. right.kies got it this time, it was flipped. matt: the polls going into the pollgolf -- the ugov said 52 to 48 for remain. that was consistent with the betting. the polls and the betting were aligned right into the voting. mark: for investors to ignore the polls and betting? no.: the markets are supposed to take whatever information they can and price it into the pricing of assets. that is what markets have done.
this was a surprise. it was a negative surprise. it has had a serious impact and is kind of validating that all of the things that the experts defied -- these are the things that will happen. the markets said they were right . it is hard to say how the voters will take that and say nevermind. mark: matt winkler. 5:00 in london. three: 42 on bloomberg markets. u.k. labourf the party gets a hostile reception. the war of words is next. >> i know that virtually none of you have ever done a pro proper job in your life. ♪
bloomberg. i'm vonnie quinn. mark: i am mark barton. this is your global business report. vonnie: a reception for the leader of the u.k. independence party. thel farage is booed at european parliament, but he has choice words of his own. a chinesehing out to billionaire as it tries to capitalize on increasing interest in interest in the world's most populous nation. economists believe slow growth may have begun. there is disagreement on the cause. we look at the different theories. harsh words in the european parliament. european commission president jean-claude juncker accused nigel farage of lying during the brexit campaign. >> you lied. you did not tell the truth. you fabricated reality.
enjoyed debating and sparring with you. i think we share the same sense of humor. you used to have a sense of humor, i still do. i find regrettable this will be the last debate because you will not be coming back. tolde: nigel farage lawmakers they have done well in closing poverty on greece and the rest of the mediterranean. mark: the brexit vote will have no immediate impact. rolls-royce is sticking to its forecast. the jet engine maker says underlying profit will be close to break even in the first half and business will pick up in the second six months. expanding its footprint in china. the german sporting goods company has signed an agreement toh lin's wonder group develop soccer and basketball. they will also sponsor ironman
triathlon events this year. eliminateals will 2500 jobs and shut down factories in north carolina and japan as part of a revamped due to down taking control of dow corning, a joint venture that makes silicon-infused tires. million is how much it will take up too. the china business has been put on hold according to people familiar with the matter. ders missed a deadline and disagreed with the proposed $10 billion valuation. yum operates kfc and pizza hut in china. vonnie: it is time for our where we quick take provide context and background on issues of interest. secular stagnation is an ugly phrase among economists.
it means busts will not turn .nto booms lost jobs will not be regained. since the u.s. recovery began in 2009, gross domestic products have grown by 15%. a weak comeback historically. growth in the euro area has stalled. consumers are spending too little, aging populations, and the efforts of governments to build reserves has caused a global excess of desired savings over desired investment. with inflation low, real interest rates cannot fault enough. the term secular stagnation means long-term slower growth and isn't new. it was coined by harvard economist in 1938. the former u.s. secretary gave it an idea with new currency in
2013. suggesting the floor on interest rates might be a systemic inhibitor of growth. the arguments, one school of thought believes the new era of slow growth might have begun. there is disagreement on the cause. some stress the investment shortage and lack of policy tools. there is the diminishing power of innovation. others, including ben bernanke, thanks it is overdone. and concernshics are hard to dismiss. that is your global business report. or more, visit bloomberg.com. still ahead, lending club cutting jobs and naming new leadership. that story is next. ♪
i am mark barton. vonnie: i am vonnie quinn. mark: we look at some of the biggest business stories in the news. wagen's price tag to settle will be higher than expected. 40.7 billion dollars, almost $5 billion more than previously reported. in general, they settled in washington earlier. >> they must do three things. the company must pay consumers to get the cars off the road. the company must fund pollution reduction projects to offset the damage it has caused. invest iny must projects that will encourage americans to expand use of zero emissions in the future. mark: drivers will get up to
$10,000 per car for their trouble. boosting its presence in the world's second-biggest market for pharmaceuticals. pharma will invest in china , complexologics medicines made from living organisms. also they will make copycat versions known as bio similars. will buy's main farmer our again at $62 million. they are divesting projects to get antitrust approval for their own deal. that is your latest bloomberg business flash. vonnie: thanks. and battled lending club has a new leader. they named scott sanborn as the chief executive officer. at the same time, the company will dismiss 179 employees
because of a decline in loan volume caused by the turmoil. bloomberg's zeke faux joins us where were we anticipating that? : a lot of people thought they would bring in an outside ceo. scott is the acting ceo and a lending club guy. it is a surprise that asked him to stay. vonnie: it came on the same day this a premium court handed down an opinion they would not revisit a case some people were hoping. any coincidence? am i reading too much into it? lending club investors are worried there might be a risk of they don't know. it could stop them from lending at higher interest rate. -- interest rates. relieved there is not something horrible out there they don't know about. the company has been doing an
internal review since the founder left. they have been disclosing discrepancies that they have found. so far, they have not found anything that appears to be that major. that is why investors are relieved. mark: what is on scott sanborn's to do list? reassure investors and get people who were buying loans to come back again. off appeared to scare them was that they disclosed irregularities about the loans in the past. if they can convince investors that everything they have disclosed is all that there is, i think that investors might come back. admitted to things. one related to fixed private funds, and another was down by one third versus the first quarter. there were loans to the former ceo and his family.
are these things investors would be concerned about? zeke: the loans to the former ceo looks bad. what happened, the company says, look like9 to make it lending club was growing faster, the former ceo and his family members took out 32 loans. it wasn't for that much money, but maybe to hit a target. they say they were paid in full, but you have to imagine regulators would look at something like that or investors would be angry. vonnie: check out that story on bloomberg.com. lending club up 5.5%. we are live in westminster, coming up. jeremy corbyn fighting for his life. ♪
you are watching the close on mark: weg markets." will take you from new york to london. the aftershock of the brags it continuing to wreak havoc across the u.k. political landscape. live from westminster with the latest. global markets and sterling recovering somewhat. will the relief be enough? mark: mario draghi made no mention of the u.k. vote in his speech today. our other monetary leaders concerned? 90 minutes -- vonnie: