tv Bloomberg Markets Bloomberg June 28, 2016 3:00pm-4:01pm EDT
a.m. in hong kong. matt: live from new york, this is bloomberg markets. we are live from london. i am at miller. -- matt miller. david: here is what we are following this hour, a decision eu..k. voters to leave the will it lead to economic trouble in the united states? our guest says there is no reason to worry and will tell us why. bonnie: will the relief rally last? matt: and at the bottom of the hour, mohamed el-erian will join us. we are one hour from the close of trading in the u.s. last 30hot up in the
minutes or so. let's get to the markets desk. session highs hit in the last 15 minutes or so. coming off that a bit. this is where we stand now. the nasdaq is the biggest gainer. the s&p up by 1.5 percent. i did some calculations right before this. we recouped about 360 billion dollars or so after the losses we saw from brexit. those total about 1.7 trillion dollars. we are still about 1/5 of the way back from where we started pre-brexit. let's take a look at my bloomberg. i will show you the imf function with the 10 sectors in the last hour. seven were in the green. right now, firmly in the green sectors.l telecommunications just barely above the flat line. but energy has been the biggest leader all day, up 2.5% right now.
this is in large part because of oil. ,atural gas also hitting highs up about 7.5 percent. financials recouping some losses here, and information technology up. let's take a look at some of the biggest equity concerns right now. facebook, exxon mobil, microsoft are the top three to speak of. biggest has had the jump. exxon mobil is in the number one spot on the s&p, up 2%. to session highs. microsoft up by nearly 2%. in addition to technology stocks, i want to take a look at with the semi conductor space. across the board, we are seeing nice, green bumps.
this is in part because of the nikkei reporting that apple, while being more conservative with its chip orders earlier this year is now being more aggressive. david: i have to ask you about punsports and issue a alert. are we getting a lift in the transportation sector? >> yes, a lift, a rise, a sore. it.% after falling post >> this is the biggest jump in three weeks. after three days of losses. after steve for saying lessdelta airlines has exposure to brexit pan american. board, see across the
..s. airlines are all up these are all on pace to close of the highest since brexit. just want to show viewers the incredible move in stocks over the last 30 minutes. we were up all day. we are looking at rallies across the board in the u.s. we are looking a big, big rallies in europe. up 2.6e closed percent-two .7%, making back more today than we lost 2.7%.rday -- 2.6%-two stocks really rising. it's the biggest game we have seen since march 11. we have had a couple of rough days, a couple of down days, and we have been waiting for this kind of volatility. we are really seeing it on the
upside as well as what we saw on the downside. energy companies leading the s&p. crude oil up. mark crumpton has more from the news desk. callsdonald trump president obama a member of the global elite. obama says that trump is trying to tap the same sentiment the drove britain out of the european union. mr. obama: there is a xenophobia cropping up in great britain in europe that has parallels with what mr. trump is trying to stir up her. mark -- here. president says trump is appealing to fear of newcomers and outsiders in the
same strategy has been used by far right leaders in europe. has lost ayn confidence most. it wasn't close. 172-40. caused a masse exit of his team. he has no plans to step down. election to the un security council in the first round of voting. the netherlands and italy must now fight for a second open seat. the security council includes five per in a members with veto power, the united states, russia, china, britain, and france, and 10 nonpermanent members elected for two-year terms. texts reveal that one of the exits at pulse nightclub was inoperable. the records released today also suggest the nightclub had twice the number of exits needed to
accommodate its maximum occupancy of 300 patrons. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 company -- countries. u.s. stocks are recovering. one of the factors boosting optimism are reports -- is a report showing the economy expanding more than expected. you first ofsk all, in light of that, in light of the consumer confidence news we got today that it has increased for the first time in three month, i am curious how you think the brexit vote will weigh on the u.s. going forward? >> i don't think it will have to much of an effect. we saw an immediate reaction. we saw the selloff. but when you look at the reality of it, the u.s. is just not that exposed to europe. it's not that exposed to great
britain in particular. there is not much there there. about the currency impact? will we see a further impact on the u.s. dollar as people look to a safe haven? see a littleobably bit of that. but it is still at the lower end of the range. it's not as good as it was, but we are better off than we were three months ago. so, is a good? no. toit going to be something be afraid of? no. the poundave seen stripped down. we are now looking at 1.30 three and change. traders were spooked. they were kind of hyperventilating. but we could go down to 1.20 over the next couple of weeks. george soros has also said that we could go down that low. do you think we could see the pound drift any further? >> i think the pound has
probably stabilized. what we are seeing in all of the markets is people sold off out of fear and then we are starting to reassess the reality. the reality is even though --hing has changed everything has changed, nothing has changed yet. there is a reaction and then we will go back to something approaching normal. bonnie: we talk about this constantly. what is the one question they are asking you? what is the fear of the moment? >> is this the big one? is this what tips us into another 2008? and it isn't. if you look at 2011, the situation in many respects was worse, and we got through that. this is just one more thing we're going to look at data and say, what was that? it's a big deal, but it's a limited big deal. you got into the office monday morning after the weekend in time to digest, did you do any readjusting to the portfolio? >> the time to adjust, if we
were going to, was before the vote. we didn't think it was necessary. we still don't think it's necessary. a lot of attention has been paid to the potential downside. seeing, fordy example, the british government revoke are not going to article 50. angela merkel has said we have to be patient about this. patient -- has to be everyone has to be patient about how to work this out. david cameron doesn't exit until september or october. it will take two years to negotiate their way out of the european union. but what if we see others follow? what if this union slowly falls apart? then are you concerned? >> that is the real risk. it is not the immediate risk that could emerge.
we have already seen le pen say we are going for a french referendum. weis very important that deal with this immediately to prevent that kind of contagion. and we have already seen a statement from the eu that says we recognize that a united europe is not always the answer. i think there could be a door opened to britain not leaving. that's an underappreciated possibility. are the providers in your network anticipating a federal reserve increase in the near future? >> i think there was some expectation that rates were going up from commonwealth advisers. but what we at the commonwealth headquarters were saying was that after the most recent terrible jobs report, that's something that's probably off the table. despite the good news, the fed clearly seems to be a little bit rattled. so no, i don't think that was
crisis. the island is about $2 billion in debt with bond payments due friday. the governor of the island says it will default. whore joined by john miller is at the been asset management which oversees bonds. ask you about the bipartisan piece of legislation that the white house has backed. likely to get through? how devastating will it be for puerto rico if it doesn't. >> we think it is highly likely that it will pass as soon as thursday. technical and has been developed in the house of representatives the a a significant number of compromises to work out a lot of these details. if you rio open this can of worms in the senate, that could substantial delays and
destabilize things for the second half of the year. bonnie: let's assume it gets done. what happens the next day? where does puerto rico stand. >> they have cash revenues on tod, but they will need that get through the next year. , they will probably save money by defaulting on principle. maybe they make some interest payments. maybe they make partial payments. they will have cash on hand for government services. the has been a criticism of this legislation, that it does nothing to jumpstart growth. should this get past, what is the next step, do you think? >> i agree that this legislation
is really focused on debt restructuring and due diligence. it does not have growth initiatives and it. part of what the oversight board is charged to do is come up with ideas to restart growth. let tax incentives for manufacturing expire and that has produced 10 years of recession. there is not an obvious turnaround agenda in terms of the economy itself. that is one thing people need to work on. bonnie: what is your position on puerto rico at the moment? you do hold debt but it is all hedged? >> our bones are all insured -- bonds are all injured by various companies. we are relying on the insurance companies in that case. bonnie: so you will win either way. >> we should be ok. david: looking at the market
ahead of this vote, what have you been seeing? >> the bulk of the market has traded exceptionally well over the last six months. consistent returns, solid returns. and actually benefiting from lower interest rates. i think now we will probably benefit from the federal reserve backing away from their hike stance, pushing that out to 2017. that actually has created stronger inflow, stronger demand for security broadly. supply has flattened year-over-year, but demand has increased. returns have been consistent but positive across the markets. you make of the u.k. downgrades? are you waiting to see whether things get worse? things we aree of
looking at is what the fallout might be on u.s. growth, u.s. inflation, and the u.s. dollar. so far, the initial reaction has been dollar strengthening. it probably places downward pressure on inflation here in the u.s.. this is generally positive for u.s. income. does the outcome of the referendum change her outlook on where we are in the credit cycle? >> not yet. follow forseen the the u.s.. i think the slowdown -- we have seen week unemployment reports at the beginning of the month. that's followed by further weakness in the labor market -- if that's followed by further weakness in the labor market, that would be a bit more of a concern. waiting to see
the outcome of this event. what is your position at the moment? >> we tend to be longer duration overall. we tend to be skewed -- more of to assets are skewed tax-free. longer on the yield curve, longer duration has translated to more yield, and yield has been a driver of returns. you go short? >> at some point, but the yield curve is still too steep to go short. we sacrifice too much income. bonnie: thank you. still ahead, today's options insight, investing and consumer staples may be boring, but they pay a high dividend. this is bloomberg. ♪
david: this is bloomberg markets live from new york and london. i am david gura along with bonnie and matt miller. matt: i want to welcome mark sebastian over at options. david: always good to speak with you. i want to ask you a little bit about the markets right now, hovering near session highs. trillion,e about $1.7 what is your noteworthy take away from this? at the ballook smash over the last couple of days. we did see a little bit of a weird close in the complex yesterday, but over the last couple of days, the vix has come back below 20. still 90 points lower from where we started. while we have reset were the s&p 500 is going to be trading
around, we have also reset volatility. reasons.of we have the long weekend coming up. traders are looking to go on vacation. take away is that now that we have the jolt out of the system, traders are looking around and saying, unless another big shoe drops, which i don't think is going to happen in the next month or so, it may be hard to hold a 25-30 vix because there is not a cataclysmic, immediate risk in front of the markets face. that's my they take away of what we are seeing in the options market right now. it was going to ask you about the volatility of volatility. you don't think this will increase because of what happening with brexit? >> i think in the fall, once we
get to who is going to be the next prime minister, that is when things could heat up. are they going to bring in somebody centrist from the conservative party or forest johnson from the far right? that is when we could see activity heat up again. we are probably heading back to below 100. still really elevated from where we normally are. normally, this is around 90. but off the panic levels. with the market still down 90 points, i think there is more behind this relief rally and i think we could run higher from here. looking at consumer staples, a little bit of a defensive play. why are you looking at it and what is your play? >> i think it's a smart
defensive play because interest-rate policy has changed. if you think rates are going to be stable or even lower from xl he a really nice dividend. is a really nice dividend. premium.llecting that if xlp gets thrown out, baby with the bathwater, i will take the stock below $52 a share. that's a decent level for an etf with a high dividend. >> we believe it there. mark sebastian, thank you so much. more bloomberg markets coming up. this is bloomberg. ♪
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bloomberg markets. joe: i'm joe weisenthal. matt: mark crumpton has a check on the first word headlines. mark: a pair of explosions rocked is stumbleupon's airport. the associated press sites turkey's interior minister he says the blast resulted in multiple injuries. the cause of the explosions was not immediately clear but an eyewitness told cnn turkey up a blast took place shortly after gunfire between police officers and unidentified individuals near the carpark. we will have more on this story as soon as it becomes available. hillary clinton says the nation should move on a republicans on house benghazi committee released a report critical of the response in libya. the report concluded as secretary of state, miss clinton should have recognize that extremist opposed a risk in the
embassy at the time. the u.s. and three others died in the violence. donald trump talking trade today at a campaign event in pennsylvania. he highlighted his opposition to u.s. trade deals and painted hillary clinton as a champion of the kind of globalization that sent u.s. manufacturing jobs elsewhere. mr. trump: as bernie sanders said, hillary clinton loaded for her -- voted for virtually every trade agreement that costed voters in this country millions of jobs. trade reform and the negotiation of great trade deal is the quickest way to bring our jobs back to our country. mark: trump called for a renegotiation of nafta, the north the area -- north american free trade agreement. he says he opposes the transpacific partnership. thousands of protesters marched in paris as the senate approved a hotly debated bill approving labor laws.
the reforms must be debated again in july in france's lower house of parliament, which is led by a socialist majority. the march was mostly peaceful, but police used your gas to counter demonstrators throwing projectiles. a minnesota judge presiding over the estate of prince set a july 8 deadline for attorneys to weigh in on particles for genetic testing. the music icon died without a known will or children. the judge is working on ground rules to determine potential heirs. a sister and five half siblings are in line to inherit the estate. global news 24 hours day powered by more than 2600 journalists and analysts in more than 120 countries. i mark crumpton. this is bloomberg. carol: markets closing in under 30 minutes. let's head to the nasdaq to see
how tech stocks are trading. abigail: today is all about recovery after the nasdaq had its worst today slumped since august of last year. we're now looking at a nice dayy, on pace for its best in more than a month. first taking a look at tech microsoft and amazon and not far behind, apple. iphone sevening cycle could set up a huge .pgrade cycle for the iphone they are advising investors to hold on for the long-term. tech, theook at a nasdaq biotech surging, up and on pace for its best move since early april. it's led by gilead sciences coming -- gilead science of
having his best day since february. thessible sticking point is somewhat shocking price tag of $75,000 for a 12 week course of the medication. with: we will be talking the head of carnival cruise later on. what has caught your attention? abigail: american airlines is having its west day since october of 2015 after falling within 6% of its ipo price yesterday. stocks, is it a real rally? thank you very much. matt: tensions mounting in britain since david cameron and other leaders met for the first time since the brexit vote.
here's a sample. >> we are leaving the european union. we mustn't be turning our back on europe. these countries are our neighbors, friends and allies. to start theready , without the enthusiasm you can imagine. we now offer a beacon of hope to democrats across the rest of the european continent. i will make one prediction -- the u.s. -- the united kingdom will not be the last member state to leave the european union. >> i am surprised you are here. fighting for the exit. matt: i want to bring in mohamed el-erian who wrote a piece for bloomberg today. i love the piece.
i've written a number of questions. hopefully we can walk through this together. you open up saying after three years, we avoided a global recession but that the u.k. fell into a global recession. why is it that bad for the u.k. and how does the global recession get avoided? expectfor two reasons, business investments to come down. .ompanies will wait and see this is a big structural shock to the u.k.. trading relations are really important, so if you are a company, you can wait and see. second, consumer confidence is going to take a hit. but these two things together and even though i expect the bank of england to cut rates, i don't u.k. can avoid a recession. effectgest spillover will be limited. note,n the wake of this
we are hearing a lot more about the policy responses that could turn things around and you hear about more aggressive use of fiscal policy and more policy directed at improving the origins of the developed world's middle class whose incomes have stagnated. do you see any actual change in the offing or are things is going to go in the same trajectory at politics will continue to deteriorate and a lot of developed countries? bits of there are two good news. there's recognition that you need inclusive growth. second, there is consensus as to what that implies in terms of a policy response and is a combination of demand led and supply led policy. but it has always been about it will to implement.
it's not clear that this is when the political class will respond. it may be,hope that but i think it is just a hope right now. i read your story this morning and i found it interesting. happensous as to what to the european union as a result? ultimately, it will be a stronger your union because you're going to lash out those who view the eu as nothing more than a super free-trade zone. they will concentrate more on the ever closer union and will no longer yet into these silly debates. we will get there. i'm not a believer the eu breaks up. i believe it gets stronger, but there will be a few more casualties. anticipate greece
comes out of the european union? mohamed: ultimately, greece is more of a eurozone issue then a european union issue. the problem with greece and the difficulties it faces to be within the eurozone dominated by german economics. greece may exit the eurozone. i'm surprised it has not got relief yet. you need debt relief if this country has any chance of growing and the politicians have not delivered. we hear grumblings that is going to happen if the ecb is able to buy greek debt with quantitative easing. i wonder what you think about a stronger eu? if i play devil's advocate, it's a political construct more than anything else. if you want to strengthen it, you have to have european treasury, european legislation, elected officials running the european union. you have to make it that and
when i talk to people in brussels, guys who work on the european commission, they don't want to come out and say it because it is too controversial. are we going to get there over the next two or three years? mohamed: i said in the piece that they have to complete the architecture. they can't try to run a union with an incomplete architecture. big question, and we are yet to see what happens is that the brexit can do one or two things -- it can bold and the antiestablishment movements and we see a series of referenda around europe, or alternatively, people witness buyers remorse and say it's not easy to replace something with nothing. let's see what we can do with what we have. withpect we will end up the second one, but we will look at the first one. antiestablishment
movement to get a lot louder but i don't think they will be as influential as they were in britain. joe: so you are not convinced this will be the spark for the political class to get smarter about more inclusive growth. what would be the catalyst i'mtion mark mohamed: afraid to say it would be a bigger economic and financial crisis. and as you know, i have this notion that the road we have in on that has been characterized by two things -- low but stable growth and central banks able to process financial stability. it's why we are seeing all of these unthinkable and improbable's. an end.d is coming to politicians do not preempt further problems, then you will get a crisis, economic and financial, and the question becomes how big a crisis do you need to wake up the political class?
my hope is we can avoid the crisis but i suspect we may end up needing a crisis as a wake-up call. carol: and that is the worst outcome, that you write in your column, that we could see political dysfunction. i am nervous about placing bets on our global lawmakers, how about you? pasted: if you look at the few years, you are right to be nervous. but i believe there is a learning process and people -- i look at coming out of the great recession. class focus was cyclical, that somehow, we would notce back and they did realize that this is structural in nature. now the recognition has sunk in. my hope is that there is a learning process, but i do not draw much comfort from what has happened so far. joe: mohamed el-erian, thank you for joining us. carol: a great read that
interior ministry. it is not immediately clear what caused the blast. there are some explosions likely caused by hand grenades the state -- and the state broadcaster says it took place at a check point for arriving passengers. an evolving situation and we will continue to monitor it and of it you as more is known. matt: u.k. independent party leader, nigel farage thomas is the european union has more to lose if it hinders trade with countries. spoke with ryan chilcote earlier today and said he is not concerned about the economic chaos the brexit has created markets. nigel: let's get a few things straight. the sterling has been down a bit. brian: it's at a three-year low. nigel: we've seen a declining currency for a long time. ftse today was up 3%.
12% of february was. from friday.down nigel: still up from february. we don't come to a grown-up trade deal between the united kingdom and the eurozone, it will hurt the eurozone. which is why today of parliament, was urging a grown-up approach. ryan: he also said he's going to leave the competitive valuation and start a currency war. nigel: all of my experience coming into politics says to me that the worst systems are not ones where currencies go down and go up. the ones we fix currencies and people find themselves trapped inside an economic prison. that is what happened to greece, it happened to italy and spain. i would rather go completely against draghi and have
competitive relations. ryan: you say you would like to see mark carney resign. why? nigel: he played a completely partisan role in the referendum. ryan: vodafone says they may move their headquarters from the u.k.? nigel: where are they going to move? paris? the -- outside this european union, we have the opportunity to become the competitive center of the european time zone. that is the opportunity. we just need to grip it. you want access to the single market, you have to be subject to the european law and allow the free movement of labor, both of which i'm guessing are no goes or you. nigel: this is the biggest lie. let's clear this up.
ryan: equal access -- nigel: every country in the world has access to the single market. the question is on what terms? at the moment, we have tariffs free access. in a world of much lower tariffs and a cost of membership far outweighs any care benefit. my argument to everyone in this they sell us 70 million pounds every year more than we sell them. why don't we have a simple free trade agreement between the u.k. and the european union. uecker's tookude a jab at you and send you let the campaign to exit the european union and you are in the parliament today. if the role isle to get out of the european union?
war, no you --he now we have to win the peace. you have to make sure the wishes of 17.5 million people are carried out and i will engage in a parliament until we leave, but only when it affects brexit. get a bid from boris johnson. would you support him? nigel: if he stands up for the right thing, i will some word everybody. i'm confuse exactly where he stands on this tough. womant care which man or wins the tory party leadership and becomes our prime minister, provided they have first and foremost in their mind 17.5 million voters who voted to get back the ability to make our own laws, have our own judgments and control our own borders. ryan: do you think if the labour party gets a new leader that it could give the conservative party to run for its money?
the irony is that people opposing corbyn are the same people who backed remain last week. we know he is a lever and was forced by his party into not taking that position. had he backed the leave campaign, the labour party would be in good hands. ryan: donald trump was in scotland and said the brexit is a great victory for not just the u.k., but for all of europe and the united states. what is the crossover in your mind between the success with the referendum and donald trump? nigel: the crossover is people like myself have taken on difficult issues that the politically correct class have carpeto area under the and we have made them political debating points. there are some issues on which we would not the eye to eye, but he has challenged the consensus. farage, thes nigel
carol: this is bloomberg markets. we are just a few moments away from the close. let's take a look at some charts that them in straight what is going on internally in the market. matt: i have so many charts i could not decide which to choose. i'm going to kick it off with a look at market caps. if you look at the global market caps of a few different regions, you can see how much the u.k. has lost the exit vote.
the white line is the market cap of u.k. stocks. purple line is german and french stocks combined. both of those markets combined. the blue line is japan. you can see when francoise aligned to -- when president hollande camedent to power in france, you can see this valuation has fallen so much. could go an hour, i over all the charts but we don't. chart?u have another another charte that i can show you. into the dividend. it is interesting to see -- a
lot of people invest for dividends and the white line is the dividend yield of the foot the. it is yielding 4.5% because prices have fallen. blue on the s&p, assuming they did not cut their dividends, you would earn 4.5%. joe: or you could ge steamrolled. carol: matt miller, i love your charts. that will do it for bloomberg markets. a quick check on the markets as we had to a break. -- as we head to a break. ♪
scarlet who is off today. [closing bell ringing] u.s. stocks closing higher this tuesday afternoon, the best day for the s&p 500 since march. joe: the question is "what'd you miss?" global stocks taking a breather from the brexit selloff. on farm ais focus week. we will take a deep dive into the global business of pharmaceuticals and biotechnology. matt: nike has more than doubled the total of the s&p 500 but has fallen far behind in 16. we will break down the company's earnings in just a few minutes. carol: a lot going on on this tuesday and we are going to begin with our market minute. let's walk you through what is