tv Bloomberg Markets European Close Bloomberg July 7, 2016 11:00am-12:01pm EDT
you are watching the european close on bloomberg martin's -- bloomberg markets. vonnie: first, oil inventories are due to be released at any moment, so let's go to julie hyman. have a seventh straight week of declining inventories in the united states. a drawdown of 2.2 million barrels, slightly bigger than the 2.1 million analysts had been projecting. i'm also seeing a drawdown in gasoline inventories and in distal ends -- distillates. byinery utilization falling .5%. these numbers appear to be bullish for oil prices. looks like oil is holding relatively steady with an advance of about .8%.
that i look at the bloomberg, we are seeing a leg lower in oil prices, so we will continue to watch. it does take the market some time to digest and it looks like the market is going negative on the numbers even though we did get a larger than anticipated drawdown. weekly change in inventories. i'm just going to change the dates to bring it up to today to show a seventh straight weekly drop in inventories. there has also been declining production in the u.s. in theory, you have a more bullish picture for inventories at the moment. stocks, it back to u.s. i'm going to take a look at what is going on with the major averages. all three major averages hanging on to gains but pairing the gains in the first 90 minutes of trading. the dow now just barely hire by
about 12 points. let's look at what the push and pull looks like here. energy stocks remain higher, utilities and telecoms are dragging things down. gas on the move with a build in natural gas inventories but inventories climbing less than anticipated. that might be weighing on the utilities. we're watching technology today. western digital came out with earnings that beat estimates. it is pulling seagate, it's competitor, up along with it. to looklipside, i want at samsung suppliers. that companies operating profits lead to estimates so other companies are trading higher this morning. global macro movers is the
function to look at. the ftse is up by 1.3%. --k at the currency column the sterling rising against the dollar. yesterday, sovereign bond yields rising in u.k., the 30 year yield up and credit default swaps rising in the u.k.. commodities as a sector are falling. a couple of stories to tell you it is adding the best selling u.s. soymilk brand and is expanding in health foods. the biggest gainer in europe -- a.b. food.s it makes ovaltine and twinings tea. the pound the klein post exit
will provide a favorable translation. the biggest gain since 2000. what a gain. one of the smaller home builders here trading on expectations. the average selling price of by 15%. housing fundamentals remain strong but it is too early to assess the referendum on the housing market. goodsse 350 household index has lost 9 billion pounds of value since june 24. these are the big layers -- barclays down, persimmons 36 lower. developments down by 39%. they have been absolutely hammered since the brexit vote. vonnie: let's check in on the
bloomberg first word news with courtney collins. : house republicans squared off against the director of the fbi today. was summoned to capitol hill over his decision not to recommend criminal charges against hillary clinton over her private e-mails. congressman jason chaffetz is chairman of the oversight committee. >> i have defended your integrity every step of the way. you are the definitive voice. i stand by that, but i am mystified and i am confused because you listen to your fact pattern and come to the conclusion that there is no consequence -- i don't know how to explain that. said there is no evidence clinton nor her aides knew anything they were doing was against the law. sanders is innie
talks to endorse clinton before the democratic presidential convention. there could be an event with the two next week in new hampshire. clinton clinched the nomination weeks ago but sanders has never conceded defeat. to buy gunsshed after the orlando massacre last month. in the weeks after the shooting, for guns rosets and background checks rose. gun purchases often rise after mass killings because of their because of fear for new gun laws. to six sentenced the men years behind bars for conspiring to rig libor. u.s. and british regulators find barclays more than $400 million. global news 24 hours a day powered by more than 2600
journalists and analysts in more than 120 countries. thank you. all eyes on this week's jobs report. investors and economists want to know if it was a blip or confirmation of a loss of momentum. officials continue to weigh risks like the brexit. joining us now is patrick spencer. good to see you. focus.the u.s. is your but how has the exit vote changed one's assessment of the u.k. stock market? mega caps have outperformed profit estimates but have risen .n recent days how is our assessment of the u.k. stock market? i'm an economics student
and economics 101 says of your currency falls i 10%, it's a huge beneficiary. beneficiaries,he which are the big exporters. 250 has done well, obviously with concerns about ongoing domestic policy. i would have thought for the country and the big cap stocks that it is a real boon and valuations of some of these countries are pretty attractive. the winners and losers got segregated and chosen quickly and i know we have had some casualties since then. can we just look at the chart that i showed -- the home builders have been absolutely hammered. 27th, these on the monday after the referendum, some were sitting on 40% losses.
bargaining -- is bargain-hunting on the cards? guest: they are looking to buy properties in the u.k. a lot of these companies balance sheets are in great shape. they paid dividends upward of 5% which are very well covered. the environment is still reasonable. two years and a lot of these politicians are saying that they will engage with brexit but once they get a lot of these domestic issues are quite important. you will find the single market will be an important consideration for them and i think a will start to make concessions. the bank of england has said it
will be the lender of last resort and has been providing a lot of liquidity. andr interest rates consumption. recent figures have been quite strong and through to make him retail sales are up 5%, so you have extremely strong data and very low interest rates and a group that has very well covered dividends. at some stage, they will recover. vonnie: you are assuming quite a best willing the happen and deals will get done and that there will not be any blips along the way. what if there are and what if can send thengland decline? like i said, with the
destruction of the sterling, it's a huge boon for the domestic economy. figures, twouction thirds of what we do is based on the consumer. fullave virtually employment in the u.s. and i can't see a situation where you are going to see any rise in interest rates. continue.tion will even if they don't get their act together, there may be some indecision but it's the more economic issue, not an one. if you step back a year and if you said to us last year that you would have had this oil contagion and concerns that all the knock on effect we have had, there are concerns about gdp growth in the u.s. and worries about terrorism and rising rates
in the u.s. and the brexit, youyone would have thought were in a no way to environment. really, this is a political issue, not an economic one. equities are still a great place to be in my humble opinion. vonnie: what about the companies that are exporters but also need to import a lot of their materials? only 15% of our economy is manufacturing. most of that is a service led economy, so i would have thought that was usually prevalent. has beene dollar strong against sterling, but if you look at on a global stage, it is down 2% against the global currency. a lot of these countries currencies, the commodity values are traded in dollars.
it is beneficial for them. i don't think it's going to be a big deal, personally. straight weeks of outflows from u.s. equity funds and still they are sitting at 1% of its record. are you still a cheerleader for the u.s. stock market? you always put me on the spot when i come here and i'm going to go on record again and say records will be broken again this year. i'm so encouraged by the pessimism that is out there. the thing we talked about last time was the improvement and the breadth in the overall market. if you see the spreads, they are a little bit related and have risen a little in the last week but nothing dramatic. the u.k. is less than 5% export market for the u.s. it's basically a domestic economy.
70% of u.s. economy sell everything and if you look at what is happening to the jobs market, irrespective of whether it is good or bad, the jobs market is in very good health and that has put retail sales in a good position. atause jobs are so scared -- -- jobs are so scarce at 4.5% unemployment, it's a consumption-led economy so earnings will see a nice recovery. we see 1% this year and 15% next year and certainly the corporate buybacks are certainly continuing. especially the ones with reasonable yields are i think in reasonable shape. the valuations are not excessive. .hey've got good reason you are looking at 15% growth in earnings next year and a majority of these companies --
it goes back to the initial point we always talk about. it's rare that equities yield more than bonds and you have not seen a spike up in yields or corporate spreads, but when you get yields of 2%, you get to just about 2% in the s&p and only 1.4 in treasuries. liquidityng to force into the equity market. it istime it has happened double digits. fbi director james comey is continuing to take questions from lawmakers on capitol hill. he is defending his recommendation that no criminal charges be brought against hillary clinton for using private e-mail servers containing classified information. we will continue to monitor this hearing and the latest comments,
vonnie: live from london and new york, i'm vonnie quinn. mark: and i'm mark barton. this is the european close on bloomberg television. vonnie: time for a look at some of the biggest business stories in the news. the microsoft ceo is organizing his management team because the chief operating officer is leaving for a job at citadel.
he appointed to executives to split up sales responsibilities. other microsoft managers will take on other parts of the job. fort time paying unemployment benefits have not been this low since april. claims dropped by 15,000. firings have been hovering around a four decade low. the government comes out with the june jobs report tomorrow morning. put the sale of its u.k. assets on hold. many bidders pulled out due to uncertainty in the wake of the exit vote. that is your bloomberg business flash for this hour. mark: we are 11 minutes away from the end of the thursday session. in three.day of gains
an appetite for risk has returned across the european equity space. below the level was at the close on june 23 below -- look at the currency board. belowrising today, still 130. the euro is lower against the pound and down against the dollar and was frank. we want to bring you some pictures live from the hearing of fbi director james comey. he is defending the fbi recommendation that no criminal charges be wrought ends hillary clinton for the use of private e-mail servers while secretary of state. we continue to monitor the hearing and some of the latest assertions are that the clinton
mark: some breaking news out of the u.k. in the tory leadership race. next prime be the minister -- theresa may and andrea led some have progressed to the final runoff. the justice secretary has been eliminated from the tory leadership contest. three withntest of michael go receiving 46 votes in the contest.
theresa may is the home secretary, the longest-serving home secretary for over a century. she was the victor in the first round on tuesday. we had stephen crabb drop out and liam fox came last. they both threw their support behind theresa may. thoseassume according to who are laying bets that theresa may and andrea led some would prevail and it has proven so. it goes to the party members and a grassroots supporters. there are roughly 150,000, so
the remaining candidates will put their case to the membership of the conservative party and we should have a leader by september 9. not only will we have a leader of the conservative party onset timber ninth, we will have a prime minister as well. pushing for the process to be quickened because this race was hastened by the elimination of the former defense secretary, but it is an all-female race to be the next prime minister. becomes a now campaign something like the type we are more familiar with in the united states. once again, the ordinary average voter will not get to vote on this. it will be hard-line thatrvative party members
they will have to convince to vote for them and we will get a vote at some point. you have to wonder if he made the right decision when he decided to take the reins from boris johnson. used many say the way he -- he dealt with boris johnson essentiallytab, assuring he did not end up in the final six. take a look at where european stocks are trading. first daying for the on the euros 600. this is bloomberg. ♪
session -- finishing higher for the first day with every industry group rising led by travel and leisure. still 7% below the levels it closed on june 23. itx and spencer reporting clothing ever. same store cost of sales and home goods sporting 9% in the 14 weeks ending july 2. by 1.4%, but it is an update in the markets. this is a piece of data that really matters. business confidence sinking to a four and a half year low -- this law bank is this broner sliding
to six from 32, at the lowest level since 2011, height of the european sovereign debt crisis. we are nowhere near the lows we reached in the financial crisis. the ftse 100 companies in the next 12 months, what has happened since the referendum results is they have shot up incentagewise by 4% or 5% the last week. it's the sharpest such upgrade in a week. , and analystsling think profits for ftse 100 companies will contract by 5.7% and forecast a contraction of eight .5%. they have cut their estimates for stoxx 600 companies and the companies that are set to benefit the most from the sterling decline are rolls-royce holdings, burberry -- i
andlutely love this chart if i was not in the otc, that would be my chart. we are going to be speaking a little bit related to that. i think i have learned a lot from you in the last couple of months. let's check in on the first word news with courtney collins in the newsroom. : the fbi director defended himself on capitol hill today. he testified about his decision not to bring charges against hillary clinton over the use of e-mail while secretary of state. end of the daye people can disagree or agree but they will at least understand the decision was made and recommendation was made the way you would want it to be, by people who did not give a hoot about politics but cared about what are the facts, what is the law, and how have all people been treated in the past.
jason chaffetz said he was mystified by the decision. it is the latest threat from islamic state in iraq -- they are using small commercial drones armed with explosive devices against u.s. and iraqi troops. they are also equipped with spy cameras. the pentagon is asking congress for $20 million to be used in a counter drone effort. a three day truce in the syrian civil war appears to be holding. the government said it would halt operations to coincide with the end of rum and on. fighting continued between islamic state forces -- previous cease-fires have not applied to islamic state. satellite data shows the toxic air choking the indian subcontinent. as much as 10 times more sunlight was blocked by pollution in india as in the u.s. new delhi has tried a number of measures, including taking half
the city's cars off the street. 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. to the breaking news just a few minutes ago, the big news that theresa may and the -- after prime minister david cameron step down. is simon kennedy 's brexit chief man. great to see you. as expected, and all female runoff. as all female runoff for the conservative party membership. the ballots are due by september 9. the runoff of
experience versus relative inexperience. guest: in theresa may, you got the home secretary for the last decade, but she was on the remain side. against andrea led some, she's minister which has been under scrutiny when she worked for financial services, but she was on the winning side, so is a test of how strong support it is and whether ey want to go with the experience or trade route. vonnie: one way or another, it is going to be a female p.m.. did michael gold really anticipate he would only get 40%? guest: he was eliminated as the justice secretary. i guess it will define whether he has a strong job in the next
cabinet. andainly our trust issues he broke with david cameron and last week's decision to dump boris johnson and run for the leadership himself. there are some tactics to decide in the next few weeks. vonnie: which of these two will receive the money they need to campaign among grassroots conservatives or doesn't work that way? guest: it does not work that way. it's small ball politics. there are limits and rules, so they will be doing that. much -- thist very
is not one campaigns are going to throw a huge amount of money at. she spoke today and painted an optimistic outlook. our outlook is based on positivity and she has tried to create some distance between her and theresa may. quickly she wants the extrication process to be underway. the toughest job is to deal with europe and she was on the right side of the campaign considering the results. to work with europe to form that settlement, theresa may who was and has had remain
to buffer her efforts, so you can look to her to try to underscore the skepticism on the campaign trail. this we will chat more of through september 9. simon kennedy, overseeing brexit coverage for bloomberg news. setting fresh three decade lows this week, the pound sterling is getting a little relief, but forecasters are warning the worst is not over. the pound has delivered a windfall essential to tourists eager to snatch up goods and services on the cheap. if we put aside tourism for a second, how much the import and export at harrods and how will a weaker pound the fact that?
guest: the vast majority of industry comes from europe, says 70% of the world's luxury industry is based in europe and the majority of that is for cards and electronics -- cars and electronics from germany. that may mean more expensive products for you. will you be upping your prices to offset the effect? guest: at the moment, we tend to buy long-term. already bought our winter collection which is going into the stores them as though everything has a pretty delayed action. give us a sense of the numbers since june 24th. guest: it's difficult to do it over such a short distance because a majority of our major spenders are from the middle
east which has been going through ramadan and for china, which takes an age to get the visa to come and visit us. we have had an immediate increase in transaction value where they are spending more and we will now start to see an increase in visitor numbers. it will take some time. with sizable declines on a trade weighted acis since the result, is it a green light to everyone outside to get over here and spend some money? the shopper is very wily and you can see that across asia. the shopper moves with it so we will see the influx into the u.k. but it is also a flight to quality. the luxury in the top and is
doing very well. the bottom and is doing well, but the middle has some problems. we see the european visitor coming. vonnie: will you spend advertising on trying to lure the british customer more? there have been more foreigners that can sell to britain. guest: i think we always sell to britain. customers areour within two kilometers of our store. we have a strong british presence and we continue to make sure we attract them. , but it isdvertise hitting that local elite. there will be great hope that michael forges -- there will be great hope that britain forges new deals. open the possibility
for new exotic items you can bring in for your customers? guest: our buyers are always searching the world for those exotic items. the key is to look for those markets to make sure britain is insulated. than thebigger business with the united states and our first quarter, so we should look to some of those smaller nations and make sure the ability to get the says and get into the country is there. we are open to business with those countries. the managing director of harrods. do you have some breaking news? the fbi director continuing to take questions from lawmakers on capitol hill. he is defending the fbi's recommendation that no criminal charges be brought against hillary clinton for her use of private e-mail servers. we will continue to monitor the hearing.
conspiring to manipulate libor. the first man convicted is serving an 11 year prison term. bloomberg now is our enforcement and investigative reporter. why are they different? guest: the judge made it very they areay that different behaviors. one of them was an instigator and worked across banks and this one was very much an inside barclays job. these individuals were charged with one count -- conspiracy to defraud. so the maximum sentences were different. mark: was there an impact from the tom hayes case? guest: lawyers very much tried to distance themselves from him.
he was the only person to be sent to jail in the u.k. and it was nervousness around the fact that their clients would be jailed for a similar amount of time. the judge made it clear he did see a very different case. the trial on conspiring is the u.k.e libor, approach to white collar crime getting tougher? guest: that is what we have seen. we have had a number of long sentences meted out over the last year. the message very much seems to be coming if you look at the sentencing remarks that they are not going to deal with white-collar crime differently to violent crime. you will get a comparable sentence. vonnie: does this case close the book on the libor trials? .uest: i'm afraid it does not
we've got a number more in the pipeline and a number of individuals that have outstanding charges, so i think we will be watching libor trials for many years to come. some might say the sentences here are more harsh than we have seen in the u.s. is that an explanation? different laws in different sentencing guidelines and it is quite interesting because there's this misconception that the u.s. when it comes to these kinds of crimes can be harder. as you can see, we have had sentences for one and two years which is far less than the sentences given here. refused to take that into consideration and other individuals have gotten much
less sentences. hes was not something considered. mark: thank you for bringing us up to date. getting asys traders much as six and a half years in prison. time for the bloomberg business flash, looking at some of the biggest news in business right now. british retailer marks & spencer's, sales of a pair of and home goods fell almost 9%, much worse than estimate. -- than estimated. consumer confidence weekend in the run-up to the referendum. the chains sales have been falling for four years. santa fe will team up with the a zikamy to develop virus. they will transfer its technology to santa fe and be
responsible for human trials. russia has emerged as an investor in the transportation technology proposed by elon musk. the company conducted a test in nevada where a cart on rails accelerated from zero to 160 miles an hour in little more than one second. the russian government sees the technology is being able to transform the freight industry. that's the latest bloomberg business flash. vonnie: we just want to bring you up-to-date once again with the hearing -- fbi director james, he taking questions from lawmakers on capitol hill. they are asking him about the decision from the fbi not to prosecute hillary clinton, having found there was carelessness in her use of private e-mail servers. has become a political issue
our global battle of the charts. we take a look at some of the most telling chart of the day and what they mean for you, the investor. i will be the judge today. ourer: let's not let previous chart battles intervene with your ability to judge. i was looking at a chart brought up by an analyst and spotted by a reporter. this chart is looking at this idea of dovish in this by the in and how it is showing up
inflation break evens and the s&p. the purple line and blue line track the s&p 500 where the blue line is the price and purple is the pe level and down here you are looking at the break evens. we have a fed that is off the table if you are judging from the fed funds futures market, but there has been no picture in this expecting any kind of inflation. you would think lower rates for longer could potentially boost inflation but stocks have taken a bid after this move down in fed fund futures, so you have to wonder whether they are telling the same story and if it matches up and that is concerning to stock valuations, which you can see have actually out paste the price of the s&p.
could we continue to see a diversion's as you see there's no evidence of inflation expectations running away from us? maybe the s&p will climb and the gap will widen. oliver: given what has happened the past couple of years is that is fully possible. vonnie: i was looking at them in relation to treasuries, so i decided -- i -- this is one of and i don't like being on this side of the camera. i'm looking at two trade weighted indexes. you have the deutsche bank in index ande weighted this is the british pound trade weighted index, the morgan stanley one. we are not talking about the
pound having much of an impact but it is impacted by the u.s. dollar and the euro. you can see huge strength and huge diversions and it's not clear if this is going to be benign or malicious for the british pound or for japan. you can see one trade rated .ndex thisu listen to our guests morning, they would say it is good for the u.k. economy because of imports and exports but we will explain more. the winner is -- it's a tie. i love both of your charts. that's it for the european close. ♪
♪ >> good afternoon. >> we take you from new york to london and paris. here is what we are watching. asglobal stocks are rising treasury and the dollar are declining ahead of the jobs report. investors are hoping to it clues about when the fed will raise rates. we have complete coverage. >> take you live to the alan idaho.nce in sun valley discussing everything from exit to the presidential election. dannan is adding soymilk and kale. it is tig