tv Bloomberg Markets Bloomberg July 6, 2016 10:00am-11:01am EDT
this is bloomberg markets on bloomberg television. ♪ going to cover stories from washington to san francisco to switzerland in the next hour. here is what you are watching. theout cowboys likened economy to a game of malala -- monopoly. mark: two investors around the world, they assess significance of the britain vote to leave the eu. sending wants to test bonds to record lows. vonnie: the future of the industry. this year, -- our top of the
mind. about 30 minutes into the trading day, julie hyman has the latest. julie: we are seeing a selloff in stocks here we see little change of direction. one a look at what is going in the u.s. markets at the moment. we are seeing declines, smaller than they were at the opening bell. a little bit of a pairing of the declines we see. bonds.ake a look at we are seeing a little bit of a change in direction here. bond yields actually going green in the past few moments after earlier falling to a record low of 13180. movement and what we have seen. we are now selling in the bond
market. driving those although he up to 1.83%. level. very low that means a region gray of what we mean by the stock market. take a look at the imap on the bloomberg here. earlier, we were seeing utilities on the green. that has traded lower because we see an inverse relationship. health care and consumer discretionary very slightly. now down only about one third of 1%. pairing to clients as we are seeing the movement here in the bond. moving the groups we are watching today, we have netflix trading lower after a downgrade at jefferies. a new analyst including a coverage of stock. here. $80 per share thatew analyst here saying
the growth of u.s. maybe flatter than estimated, that amazon will make the market much more competitive. the argument is not new when it comes to netflix but he is baking in some lower assumptions for the stock price as well. we're looking at steelmakers today. the analyst at deutsche bank saying they expect sales prices to be higher. dynamics all higher on the day. mark: stocks falling for the the stoxxecutive day, 600 down 8% since june the 24th. evie industry group is falling. sterling, lowest level against
the dollar since 1985. group through 130. around midnight u.k. time, it oversold against the dollar. since june 24, it has fallen 13% . the biggest nine-day drops in september. a key level, 12753. earlier we had 12798. it says the next catalyst for the pound selloff could be next thursday, forecasting a 25 basis points cut, 25 in august. says we will see 100 billion pounds of qe, including corporate bonds by november. let's have a look, a similar story to a julie was saying. earlier, record low yields on the 10 year from the u.k., france, and germany. those picking up a fraction. yield falling in italy today.
i want to focus on asset managers today. estate fund, $9 sparked ater brexit flurry of redemption. morgan stanley sees the potential of further -- designed its circuit breaker but sentiments generated can still drive a negative feedback loop similar to the scene during the financial crisis. both down roughly 12 and 19% since june the 24th. down the 23% and henderson group, the asset manager down by 26%. since the dayine
brexit became apparent. vonnie: absolutely. i would direct our viewers about lessons to be learned from 2008. more from our newsroom. calls the -- the invasion iraq a failure. governmentes ministers, and the military. be tonyest impact may blair, responsible for britain's involvement. it is a chance for the military alliance to show unity in the face of the more aggressive yet -- russia. nato plans to announce deployments to reassure members that it is committed to join them. it will be too little to deter a potential russian assault.
the prime minister greece is trying to boost the chances of winning another term in office. their government has to post doing away with the bonus awarded to the party that wins most seats in parliament. it might lead greece's fragile system to be more prone to break down. in south africa, double-amputee olympian has been sentenced to six years in prison. convicted of murdering his confidence three years ago. for autors had asked six-year sentence. argued he was only guilty when he fired for bullets through bathroom door. killing. dayal news 24 hours a howard by 26 such a journalist's and analyst and more than 120 countries. this is bloomberg. vonnie: thanks.
warning there are clouds on the horizon, including the from the brexit vote. saying if it is confined to just kingdom,and -- united if it leads to greater questions about the stability of the european union, it could have more significant concert is. deeper within the federal reserve coming out of this than investors -- 2:00 p.m. eastern, may shed some light on what they're thinking. an equity strategist at bmp. we did see the trade deficit and economic saying a quarter of that widening is asked down and at u.k. are down. >> really, there is a negligible as far as the referendum on the u.s. what is important in our review
is potential financial contagion from the eu, the u.k., and the u.s. one of the most surprising moves has been in the u.s. race, substantially lower. that is supportive of growth. when you look at financial assets helping growth, lower rates are supported. we have offsets from a stronger dollar, lower equity prices, and a wider credit spread. this is something the fed will be watching to decide what impact will be to the u.s. economy. classic ackley. lower rates on the one hand may not be so good. are we going to see it at some point? >> at the end of the economic cycle, we see it flat between the fed funds and the 10 year yield.
we see a reasonably high recession probability in the u.s., excluding the impact of the referendum and potential implications. we think underlying corporate profitability is slowing. the payroll should show a little pickup but still, the underlying trend is lower and earnings are deteriorating. from that basis, we could see a flatter yield curve. that's what we were cast for 20 18 and 2017. mark: results to be made about dividend yields, the s&p 500 versus the u.s. 10 year, is 2009, the battle of the chart today. this is the s&p 500 dividend , this is not seen every day. explain to me yes, dividend yields are high. what sort of companies should we
be looking at? >> thanks. one thing we have to be looked to the paperack recently written about the current state of the world. there is an extremely high premium on governments carry, treasuries, for instance. shifte see a structural between dividend and bond yields, with bond yields relatively lower. one thing that is interesting is if you look at the all in yield, relative almost at all-time highs. of 2016. if you think about the all in after the yield, it is roughly 5%. from that perspective, we will continue to see an outperformance of potentially , with the s&p
outperforming the index 13%. could see a continued performance by sectors such as utilities despite the fact that their buyback yields are lower. >> how do you assess the european stock market relative to the world index. the stoxx 600 cheaper since 2012. do you look at european stocks? do they plan the relative valuation basis or not? >> we are still somewhat cautious of european equities. a number of headline risk are yet to come. asdo not have a resolution to when article 50 may be involved. especially this is fun to have later in the year. certainly after october. we do not have clarity as far as the severity of the italian banking situation. potential finance meeting on july 11 and 12, which could show
sanctions against torture and spain for failing to meet budget targets. clarification a as far as the stress test likely to be released later this month. we favor perspective, the s&p over the ftse 100 and potentially the euro stock is tough. vonnie: what about emerging markets? little bit emerging markets with the rebound happening. >> yes. that is one thing we have been highlighting. looking at emerging markets relevant to things such as gold itself. we saw the price ratio relationship between emerging markets and gold was almost at a all-time well at least in the past few years. an interesting balancing act between dollar
how far yields can go down 30 see it relatively contain of these levels and i think emerging markets could be a clear out performer. mark: the forecast for the end of the year is 2152. we are 2081 right now. it is interesting the forecasts have remained static since it bottomed in february. i asked all of your colleagues this type of question. when will we hit a new high? will it either second half of the year? have not seen it is may of last year. >> i think that is a great question. there is a question by investors , are we potentially going to or continueom here in this relationship we have seen over the past months. from my perspective and the banks are stuck to come a week inc. we are going to continue in this regime because we have
offsetting factors including strong buybacks on the positive side and equities but there were also negative factors such as deteriorating rapidly. from that perspective, i think lower yields say it all. there are so few investment alternatives, you higher multiples, especially if inflation is relatively contained. mark: thank you for joining us today, equity strategist. andie: president obama vetted to make a statement around 1012 -- 10:25 eastern on afghans and. the tesla going to discuss the number of troop levels in the country. of course, we bring that to you as soon as it begins. this is bloomberg. ♪
mark: live from london and new york, i am mark barton. time for a look at some of the biggest business stories in the news right now. whole grains posting quarterly profit that beat estimates. cutting costs and rising sales of fiction drugs. waiting for a regulator to prove its $9 billion takeover of raided. tech, an buy nor american company. the price, $2.8 billion, a 38% premium over the price yesterday. an investment company that wants to benefit from the growing u.s. company. that is your business flash. let's head straight to the market just where julie hyman is looking at movers.
julie: one of them is hard, a harley davidson. surge on speculation over a buyout of the company, down 3.5%. in 4.5% of the , highlighting some key risks coming in aging fromraphic and competition the revised indian brand, all of that weighing on the shares. we're looking at the bank, specifically yesterday, morgan stanley, oppenheimer, to outperform, he says he doesn't think the company will be consensus estimates, down a little more than 1%. saying it is losing market share
, in addition to that, we are seeing berkeley say investors in risk, and stocks have quality growth and self say itements, and they is not in that category and hence the downgrade. mark: thanks a lot. still ahead, navigating turbulence and uncertainty. we will hear from the chairman next. president obama is extended to make a statement around 10:25 eastern. troops, down 8400 from on high -- 9800. we will bring you that it's an is it begins. this is bloomberg. ♪
vonnie: you are watching bloomberg markets. mark: this is bloomberg television. the market focus is back on post brexit insurgency. earlier today, chairman lorenzo shared his perspective on the new challenges facing inspectors after the referendum. he spoke with my colleague, guy johnson and caroline hyde from the euro place financial forum in paris. >> you have uncertainty and do not know what will happen. there is no rationality. there is no basis for rational movement did it is emotional. given the uncertainty, i think what the governor said his right. -- is right. , realizing people are starting to withdraw from the market and go to liquid assets.
>> can i talk to you a little bit about the way the market is functioning? i have on my bloomberg, which you cannot see, the u.k. libor spread. elevated thatans it is beginning to elevate. we are back at levels we saw in august of 2007. theou worry we are at beginning of another crisis, that the market may not function, that interbank lending may start to dry up, or do you think that is something the central bankers have now >> 2007, we saw some spikes until one year later, we found out it was not solved. conflict -- compared to 2007,
central banks have one day lesson, giving liquidity to absorb all the shots, it is not necessarily enough but this is a difference compared to 2007. done forore need to be the italian banking system? ,he unraveling in particular does the european union need to allow a bailout of the banks? >> we are getting into a situation where -- pressure, we have adopted the how and when and under which conditions to inject new capital and even public money into the banking systems.
these rules have to be assessed in an environment where maybe there is a system in crisis. the rules have a possibility to suspend the care of the markets and actually even small investors out of the market. it is a situation where we have to assess with some discretion and some dispense -- some suspension of the rules made, we need to comply. vonnie: that was lorenzo on lessons learned. speaking earlier on bloomberg. we will have more of that interview in the next hour. also, more of his takes on italian banks and how they are suffering. president obama is expected to make a statement in -- on afghanistan. announced fively point 5000. the ap reporting that the number than 8000o be higher he will also be speaking with ash carter and chairman of the
staff.hiefs of they will be joining him in the roosevelt room as well. there is a lot of attention in the u.k. on former prime minister tony blair. which wasnted report a report seven years into the making, behind the us-led invasion of iraq. startlinggs are quite , tony blair responded to the report minutes ago with a long speech. of the report says britain passes involvement of the us-led invasion of iraq was carried out the fourth useful options had been exhausted, and was based on intelligence that was overstated. that conclusion was fairly down -- damming. aftermath.tion, and
obama: 14 years ago, the united states went to war in afghanistan against these terrorists and the taliban that harbored them. thanks to heroic efforts by our military, our intelligence community, diplomats, we pushed al qaeda out of its camps, helped the afghan people topple the taliban, and help them establish a democratic government. we dealt crippling blows to the al qaeda leadership. we deliver justice to osama bin laden. to we trained afghan forces take responsibility for their own security. given that progress a year-and-a-half ago, december of 2014, america's combat mission in afghanistan came to a responsible end.
to the 100,000 troops we had their, today, fewer than 10,000 remained. compared to their previous mission, helping to lead the fight, our forces are now focused on two narrow missions and advising afghan forces, and supporting counterterrorist operations against the remnants of al qaeda , as well as other terrorist groups, including isil. in short, even as we have caseained a relentless against those who are are no longer, we engaged in a major ground war in afghanistan. even these narrow missions continue to be dangerous. over the past year and a half, 38 americans, military and civilian, have lost their lives in afghanistan on behalf of our security.
we honor their sacrifice. we stand with the families in their grief and pride. we resolve to carry on the mission which they gave a full measure of devotion. this is also not america's mission alone. in afghanistan, we are joined by 41 allies and partners, a coalition that tributes more than 6000 troops. we have a partner in the afghan government and afghan people who support a partnership with the united states. afghans continue to step up. for the second year, afghan forces are fully responsible for their own security. every day, nearly 320 thousand afghan soldiers and police are serving and fighting. they gave the last to defend their country. to their credit and in the face of an insurgency and terrorist
remain infghan forces control of all major population centers, provincial capitals, and most district centers. afghan forces have beaten back attacks and pushed the taliban nevertheless, the security situation in afghanistan remains precarious. they are still not as strong as they need to be. logistics, 80 8 -- aviation, and commander control. threat.ban remains a they have gained ground, threats and suicide bombings, because
the taliban and deliver it -- deliberately target innocent civilians, more afghan men, women, and children are dying. in the globaled refugee crisis, millions of afghans fled their homes and many are fleeing their country. as president and commander in clear i have made it will not allow afghanistan to be used as a safe haven for terrorists again. i constantly review our strategy with my national security team, including our manners in afghanistan. all these reviews were guided by the facts. what is happening on the ground, to determine what is working and what needs to be changed. i have made adjustments, for example by slowing the drawdown of our forces and more recently, giving u.s. forces more flexibility to support afghan forces on the ground and the air.
i strongly believe it is in our national security interest, especially after all of the blood we have invested in afghanistan over the years, that we give our afghan partners the very best opportunity to succeed. upon taking command of coalition generalhis spring, the conducted a review of the security situation in afghanistan. it was good to get a fresh set of eyes. race on the recommendation of general nicholson as well as secretary carter and chairman , and following extensive consultations with my national security team, as well as congress and the afghan governor ,- government, i'm announcing instead of going down to 5500 troops to the end of this year, the united states will maintain approximately 8400 troops in afghanistan into next year
through the end of my administration. assigned to our forces will not change. they are focused on supporting afghan forces and going after terrorists. but maintaining our forces at this specific level based on our assessment of security conditions and the strength of afghan forces, will allow us to continue to provide support to help and afghan forces continue to improve. bases, we will be able to continue supporting afghan forces on the ground and in the air and we continue supporting critical to -- counterterrorism operations. i am reaffirming the enduring commitment of the united states to afghanistan and its people. you todayon i make could help allies and partners align our own commitments. from the natopart -- chiefere i
executive abdullah. many of our allies and partners have already stepped forward with commitments of troops and running. we could keep strengthening afghan forces through the end of the decade, the nato summit will be an opportunity for more allies and partners to perform their contributions and i'm confident that they will. all of us have a vital interest in the security and stability of my decisionduring also sends a message to the taliban and all those who up those afghanistan's progress. you have now been waging war against the afghan people for many years and you have been unable to prevail. afghan security forces continue to grow stronger and the commitment of the international community, including the united states to afghanistan and its people, will and door. conflictway to end the and achieve a full drawdown of foreign forces from afghanistan is through a lasting political
settlement between the afghan government and the tally than. -- taliban. that is the only way. the united states will continue to support and afghan led reconciliation progress -- process and why we call all countries in the region to and safe havens for militants and terrorists. decision best's tells my successor to make decisions about afghanistan. in january, the next u.s. president wilson the most solemn responsibility of the commander in chief. the security of the united states and the safety of the american people. the decision i make you today and chores my successor has a solid foundation for continued progress in afghanistan as well as the flexibility to address the threat of terrorism as it evolves. in closing, i want to directly address what i know is on the
minds of many americans, is ashley our troops and their families who have borne a heavy burden for security. when we first sent our forces into afghanistan 14 years ago, feud -- few americans imagine we would be there in any capacity for this long. president, i focus our strategy on training and building up afghan forces. it has been continually my belief it is up to afghan to defend the country. emphasizedhave training their capabilities, we have been able to end our ground were there and bring 90% of our troops back home. even as we work for peace, we have to do with the reality of the world as it is. we cannot forget what is at stake in afghanistan. this is where al qaeda is trying to regroup. this is where isil continues to try to expand its presence. if the terrorists succeed in
regaining areas where they can train and plot, they will attempt more attacks against us. we cannot allow that to happen. i will not allow that to happen. this september will mark 15 years since the attacks of 9/11. once more, we will pause to remember the lives that we lost. americans and peoples from around the world. they will stand with their and survivors who still bear the scars of the day, will think the first responders who anded to save others, perhaps most importantly, will salute our men and women in uniform, the 9/11 generation, who have served in afghanistan and beyond for our security. will honor the memory of all of ultimate made the sacrifice, including more than 2200 american patriots who have given their lives in
afghanistan. will -- we must -- r forget afghanistan is not a perfect place. it remains one of the poorest countries in the world. he will continue to take time for them to build up military sometimes takee for granted. given the enormous challenges we people need the partnership in the world. mothers and children. the afghans have kept the balance of democratic elections.
the current national unity government continues to pursue reforms to strengthen their helpry over time to decrease the need for international support. government is a strong partner with us in combating terrorism. that is the progress we have helped make possible. troops have helped make possible and our diplomats and our development personnel. that is the progress we can help with then partnerships afghan people and coalition partners. i firmly believe the decision we announced today is the right thing to do. for afghanistan, the united states, and for the world. troops and allur
those who served to protect us and may god bless the united states of america. you have been listening .o president barack obama 280 400. the number is 5500. 8400 by the end of the year. he also said the conflict is now almost entering its 15th year and at that time, it has taken the lives of 2300 american soldiers. for $5 billion in aid annually. we will continue next. ♪
mark: i am mark barton. vonnie: i am vonnie quinn. apple dropped to fifth place in china passes shipments, losing ground in its biggest overseas market. mark: italy's story is close to being sold to a chinese group. owner insists on finding a buyer who would make a major investment in the club. gold is racing to new highs again. is there a case to be made again? apple is losing ground. iphones made up less than 11%, down from 12% a year ago.
chinese company now has a 17% market share. meanwhile, samsung is said to is a south korean company wants to build on the success of its galaxy s seven phone, $5 million for its display and semiconductor units. wants to build up its other major businesses with competitors and bring out new partners. mark: british industries agreed to buy nor tech, an american company, the price is $2.8 billion. premiumresents a 38% over the closing price yesterday. an investment company wants to benefit from the growing u.s. construction industry. brexit may be an opportunity for
south america. spoke to bloomberg television's caroline hyde in berlin. going forward between the south american bloc. >> the region in which they have , it is natural that we should work together. pushing for a trade deal since he took off last december. -- the italian prime minister says he agreed to the deal with the group. the condition is the buyers invest at least $244 million in the club.
inhas not won any titles five years. time now for a quick take where we provide comments and background. investors are once again turning to gold in global uncertainty. the boom and bust in the precious metal another cycle or is it a change in human appetite question mark here is the situation. gold's record high of 1921 as they in 2011 came struggled in the wake of a financial crisis. expanded and quantitative easing. -- the fastest pace in almost six years here is the background. the precious metal was discarded as a monetary system when the inlar was head to gold ended
the 1970's p or after spiking in the 1980's, prices slumped, banks run the world to shrink their reserve. lifted into thousand three p or here is the argument. there are few reasons to own it now because central banks of engineered the central bank recovery without sparking inflation. economic growth is boosting the dollar, another safe haven, interest rates make gold less attractive. history, gold has proven its worth. both say threats to the global economy -- investors fear another financial crisis and it is one of the few possible havens. that is your business report. for more stories, visit bloomberg.com. mark: breaking news, another
property fund has and suspended here in the u k, henderson's is ending its u.k. property pay fund. exceptional liquidity pressures. million assets. you will remember before this, we had three of the u.k.'s largest real estate funds. 9 billion pounds of assets aozen after brexit transit flurry of redemptions, investment commentators, worry that values could fall as much as 20% within three years of the u.k. leaving the eu. another fund suspended here. this is bloomberg. ♪
vonnie: what do you do with diamonds? i can big of a couple of things fair that is something he has to decide over several months. of a newive director york-based jewelry -- jeweler. have a listen. >> 160 carats. quality ever since. two diamonds, around 80 carats. i am not sure what i want to do. the middle of the night thinking, what is the best to do? joining us now who met
with -- having trouble with names today. in new york just before. is it?e has it ever been seen before? >> they say it is the 27th largest ever, the largest ever discovered in that single mine, state owned. these do not come around every day, certainly. there are only certain things he can do with diamonds. him whatnds will tell can be down with it. >> exactly. they first do imaging but cannot actually understand the precise in professions of the diamonds until a few preliminary cuts that happened last week. make these little exploratory windows at the top and from there, they actually agure out if they could make
giant diamond or a couple of 80 caret once, still quite large. how much is the finished product going to cost? >> that is the question to her they are still figuring it out, looking at a timeline of three months to six months. they put out the number of $200,000 per carry. that is optimistic. a recent 800 carried diamond sold around $75,000 per carat, a significant amount of money. if it were to sell around 200,000 per carat, you would look at $36 million if the feynman -- final diamond is around 160 carats. they do not know who will be the buyer. are you interested? i do not know.
>> there was interest from asia, certainly. they said a lot of clients are taking a wait and see approach to see how they cut it. vonnie: if there are any little sprinklings, they can take them off. all right. james, you can see this story is a fascinating read. you can read all about this, and head toories, bloomberg. mark: they are assessing the significance of the vote to leave eu. setting the bond yield to lowe's. the low against the dollar today. plus, the chairman, a possible systemic crisis. we will have more in the next
hour. have a look at what is happening, down for the third consecutive day. the loss since june the 24th, the day the vote became apparent for the stoxx 600 is now 8%. today down 1.87%. have a look at what is happening to currencies and bonds as well. the big move, starling falling below 130. 1985. level since june of how low cantion is, sterling fall? the euro is up against the pound and the euro lower against the dollar. the european close is next. this is bloomberg. ♪
watching the european close on bloomberg markets. ♪ mark: we are alive new york and london at this hour. a truly global show. here is what we are watching today. post brexit fears back in the market today. on deals continue to rally. the pounds sinking to a 31 year low. couldn't time banks trigger a full on financial crisis in europe? mark: and the football superstar, down to 21 months. all of this to pay millions in fines for tax fraud by the spanish court. will actually serveou