tv Bloomberg Markets Americas Bloomberg March 9, 2017 10:00am-11:01am EST
vonnie: from new york to london in the next hour and we cover stories out of washington. here are the top stories where following -- in markets, oil is hitting its lowest point this year, below $50 per barrel and u.s. stocks are following their european counterparts lower. bank the european central keeps its qe program study but president mario draghi is striking a less dovish tone. parts: and we will hear of the exclusive interview with j.p. morgan chase ceo jamie dimon who says he's confident the president trump will get parts of his agenda through congress and he gives the president credit for bringing back animal spirit.
spiritse if the animal are evident today after 30 minutes into the trading session and markets are bouncing around. julie hyman has more. julie: when you look at consumer sentiment readings, we just got the latest, and it is the highest in a decade. dimoneflects what jamie was talking about, the business confidence and consumer confidence that has infused many of the surveys since the election. it has not necessarily infused stocks in the last week or so. going into today, the s&p 500 pullback more than 1% from its record close on march 1. today, it is an upward bias but it's more of a draft. haves already this morning been bouncing between gains and losses and are now early in the green at the moment -- and are now -- and are narrowly in the greater the moment. by 1% and wedown
got the supply data from the u.s. yesterday that showed crude stockpiles rising to a seasonally adjusted record. harold hamm, the u.s. shale billionaire said the industry could kill the crude market if it has another spending binge. oil is down below $50 per barrel. we have a couple of earnings lingering to talk about. signet jewelers limited bouncing and the stock has been battered lately by a number of different issues. the company says it will be closing locations in malls and opening in other locations. butad reduced its forecast the earnings came in above estimates and staples is also closing stores, about 70 of them in north america. comparable said store sales in north america fell by 7%. and oil,f stocks treasuries still continue this
yields are up 21 basis points over the past couple of weeks and now the ninth straight session. at the 10e a look year yield versus the s&p 500 seeings yield, we are essentially that treasuries are looking cheap versus stocks on that particular basis. mark: we are off of the highs of the day after a less dovish mario draghi held court. this is an intraday stoxx 600 chart which is when the news conference began. these are the industry groups led by banks with yield rising in germany and declining in the periphery. stocks are up for the second consecutive day having been negative when mario draghi kicked off today.
he raised gdp forecast for this year and next year and raising inflation forecast for this year and next year. the risk to the economic outlook remained tilted to the downside. just theto the out economic outlook was less dovish. the euro started moving up by about half of 1% today rising for the first day in for. there is a below parity forecast for the second quarter. this is the yield between the periphery. it's the difference in the 10 year yield on the spread is narrowed by two basis points to 1.85%, highlighting the slightly less dovish mario draghi today. the big stock story today is the biggest gain since
2008 with a record that was rejecting a 29 billion takeover from pg industries m&a separated special -- a specialty chemical business to boost the shop -- the stock price so shares are up to a record. vonnie: thank you. ecb president mario draghi listed a number of reasons why the ecb policy has been successful so far. he made it clear that the central bank cannot be the only game in town. for more, let's talk to matt miller but let's listen to what mario draghi had to say. reap the full benefits from our monetary policy measures, other policy areas must contribute much more sizable he to strengthening economic growth. vonnie: and we have matt miller
in frankfurt. it seems like mario draghi was trying to sound more of beat but at the same time, nothing has really changed policy wise. said that thetely has to the european economy dissipated to some extent. he also said the council had a cursory discussion talking about the possibility of removing the threat or the promise depending on which side of the trade you're on that it can lower interest rates further from here and they did, in fact, remove a part of the statement last time that said they are ready to use bolsterures in order to the european economy. he said they did this because they don't see the need to project the kind of urgency they had in the past. he is slightly less concerned about the european economy but he is still concerned about it and he says he will continue to look through inflation. the germanen we got
finance minister in a speech today in berlin saying monetary policy has achieved all that it to and he urges the ecb enter into a strategy toward an exit. is looking to get a little help from other euro area finance ministers but also saying that he is still important to the european economy. mark: are we any closer to the ecb truly beginning the tapering process? up until now, mario draghi said the ecb has not discussed this. not call itld tapering but what else can you call it when they reduce their monthly bond purchases by 25%. buy 80nth, they will billion euros of bonds as they have for months and months going back a couple of years.
next month, they will only by 60 billion euros of bonds. from now on until at least the end of the year, that's about the level they will look at. you are definitely seeing that reaction in markets with yields up a little bit. traders are buying the euro today. if you don't call that tapering, you've got to think of another word for it. it is a reduction in ecb intervention. mark: great job, thank you. let's continue the conversation. of's talk to the pimco head portfolio management in germany and he joins us from newport beach, california. great to have you here. continuing with the tapering -- mariow does mariota
draghi begin to communicate to the ecb -- that the ecb will truly wind down its qe program? morning, how and when -- i think the sequencing for the exit is first forward guidance, theging that, then changing asset purchases, the tapering, and then the policy rates. i think that came through in today's press conference. i think they will be looking at the june meeting as the earliest for changing the forward guidance in a significant way. there was the forward guidance of downsizing the risks but the real change would come earlier at the june meeting. getink they will want to over the french election hop. there is the risk -- french
election hump. tot could put their outlook a different projector rate. that's not our baseline but we want to get those uncertainties behind us. if we feel the same sort of momentum we see in the global data like the u.s. labor market, if that keeps going, june should be the time when we see significant change on the forward guidance. mark: if it was a slightly less today, oneo draghi data projection stands out, the 2019 inflation forecast which was kept unchanged. with --quite a bit below the ecb target. how much faith do you have in the ecb ability over that horizon, to get inflation, to get headline inflation up? >> very little is the short
answer. of 2019that forecast is a bitdot and there of a political element to it. you can see it as a component of forward guidance as well. the issue they have is there is simply not enough wage inflation particularly in germany and the other core countries to really sbc enter the 1.8 -- 2% zone. that would be on target. this lowot to balance inflation profile with what is looking like better growth. we have come to the conclusion that they are behaving that if the inflation target were more -- 2% 1%-to present zone
zone, that would lead them to continue to exit on this path. i think we will not see the inflation numbers on that long-term forecast above 1.8%. itnie: how much is distorting the european sovereign yields? we are having a squeezeathon. it's -84 basis points right now. bonds as wellying as the european central bank. what does that due to the german economy? ultra-stimulative for the german economy. we have to dissect all the different money market interest rates. officialays, the ecb
rates of deposit facility and a marginal lending rate, those rates are no longer important for the killer segments of the front and of the yield curve. it's the purchasing by the national central bank and the ecb and the qe programs that are setting the marginal price for government bonds. rates are having very little impact on that. you see the distortion between the big spread between the shots and swaps. if the macro data gets positive, it would be a very confusing signal, a difficult signal for the ecb to communicate. what about u.s. yields?
the 10 year in the u.s. is 2.8% and of a goes much higher, we will be testing three-year highs. where does ago from here? -- where does it go from here. >> my view is that it will probably be in the 2.5-3% zone. there is enough room for the fed to keep doing what it has been doing and maybe even increase the pace of hikes. at the same time, this is a very mature business cycle. elevated equity valuations. therefore, it's a question on the longer-term horizon how far this can keep going. vonnie: our thanks to you. let's check in on first word news. in the u.s., the trump administration has asked 68 nations fighting islamic state
to plan their next move as the militant group gains ground in iraq and syria and the summit will be led by the u.s. secretary of state, rex tillerson. republicans took the first step to get rid of the obamacare. a health committee approved a measure that would repeal tax penalties for people who don't buy insurance. the legislation would replace subsidies with tax credits that are largely based on age. another conservative republicans are opposed to the bill and doctors groups have come out against it. in europe, scotland may hold a second referendum on whether to stay part of the u.k. late next year. that's according to scottish sources. they say there must be more clarity about the britons exit from the european union. scotland voted to stay in the eu. they say independence is inevitable unless britain
this drops below $50 per barrel. yesterday was one of the strongest days we have seen since the opec news of production cuts. a certain news flow we've gotten in crude oil based off of the opec production cuts that are fun to watch. a 20% rally when they agreed to agree and over a 30% rally when they announced the depth of the cuts and then january 3, the first real trading day that the cuts were in effect, you got the belief there would not be opec compliance. our biggest down days and one of our biggest volume days and since then it's been a sideways-on grind that we broke out of yesterday. there has been a lot of talk about the record longs. yesterday was the first day of the year other than january 3, with over 9000 in volume and it was a down day. vonnie: is it just positioning or is the real conviction that oil should be lower? the oil rig count is higher and
efforts andpeline that bodes well for supply in the future. what are the reasons behind the drop? things with u.s. production, slow production is sticky production. they have been grinding in terms of rate r --ig counts. the production is come online quicker for the saudi's but not for people familiar with the situation. they have not been shutting down . leaned out,y have they can turn things on and off and don't have to lay off 60% of the workforce because they have not hired that workforce back so this is sticky production. there has to be another opec agreement or an extension of this agreement in order for prices to rally again and for these longs to stay long. a lot has been coming since september. vonnie: is oil trading on its own as an asset class or is it
dependent on how yields are moving or equities? curve, it has the a lot to do with the general economy. front curve a speculators who tend to run 5-10% of the price at minimum. we are seeing that now but we still have contango out the curve. that used to be a huge push in production by 117 dollars on hedging but that's not the case anymore. as long as we have contango in the curve, it's slight but still there, they can sell those and produce. vonnie: our thanks to bob iacci no. still ahead, turkey supports its struggling currency we will hear from their economy minister next. this is bloomberg. ♪
vonnie: this is bloomberg markets from new york. mark barton in london. in turkey, the country launched a series of initiatives to support its currency which has weakened nearly 30% against the dollar. i sat down with the economy minister of turkey and i asked him how sustainable these measures are. >> there was pressure on turkey to increase the interest rates to value the turkish lira by increasing the interest rates or there was pressure, not pressure, there was a kind of idea on the table to go to the central bank and sell the currency to the market. down the dollar value. they did not do it. they prefer other things because we have other instruments in turkey as a government.
we lowered the demand on the u.s. dollars. he also spoke about the turkish budget deficit. >> inflation in turkey is around 8%. withoute to lower it losing the fiscal discipline. without increasing the budget which will be around 1%, we will not increase a lot. amid his comments came uncertainty as citizens prepare for a referendum next month on whether or not the president should have broader powers over legislature. it's time for our latest bloomberg business flash. -- let beginlevy of you a quotation on the british lira. americans are feeling the heat from activist investors. ceo peter hancock is stepping down and will stay
until a new chief executive is named and aig has lost money for out of the last six quarters. staples will close about 70 stores in north america this year. it's trying to overhaul operations while it deals with the climbing sales. it wants to sell more business services and connect with customers online. that is your latest bloomberg business flash. still ahead, jamie dimon says president trump has awaken animal spirits and brought a new wave of consumer confidence. we will hear from him next. this is bloomberg. ♪
let's check in on first word news. in the u.s., president trump selected former republican presidential candidate jon huntsman to be ambassador to russia according to a white house official. he is a former utah governor previously was ambassador to china and singapore. he would be going to moscow at a time when the fbi is investigating russian interference in the election. filings for unemployment benefits rose after hitting a 44 year low. jobless claims were up 20,000. that is consistent with the trend of historic low claims that signals a tightening labor market. a february jobs report comes out tomorrow. angela merkel was among the eu inders gathering or a summit brussels. it's a show of opposition to the trump administration's protectionist ideal. index rose atrice
an annual rate of 6.8%. passse exporters expect to on the higher cost to consumers. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. chairmanmorgan chase and chief executive jamie dimon believes president trump will get at least part of his agenda done. he may come as today as part of an exclusive interview with at the globala markets conference in paris. he was asked whether he is confused about what the trump administration will do for the u.s. economy. lookre's what's positive, at the policies, forget the tweets but look at the people on the ground, top professionals in the military, defense, secretary of state, secretary of treasury, serious people deep knowledge and deep experience and their
admission is to have a growth agenda and that agenda is reduced -- is to reduce corporate taxes and build better infrastructure, reducing the regulatory regime. good forhe agenda is all americans, middle-class, low-paying on the job creation. you saw business concept jumped a lot. probably because of the progrowth agenda. >> do you have any doubt he can follow through? >> i have been watching policies for years and a republican of the house and the senate and 30 plus governors. they have a better chance of getting those things done. i don't know the timetable. the democrats acknowledge that everyone wants good infrastructure. most people like knowledge that
it's time to look at the regulatory regime and look at it again and recalibrate and make sure it's conducive to growth and does not hurt small business formation and things like that. >> what is the one question you get asked the most by european, -- clients? is it trump or china? >> how come you won't take our deposits? these are investing clients. it's mostly around the new administration. that's traditional. you have a change of leadership and things will be concerned and interested. around the world, it is mostly about trump. today at lunch, i asked around the table and we did not get to trump until the seventh question. >> what was the first question? ,> a lot about regulatory inclusive capitalism and things like that. >> investors are concerned it
will affect their investments? they are thinking more long-term. i think capitalism can do a better job of creating jobs and building wages and helping kids get jobs and helping lower wages. goodis promoting what's for all americans including expanding things like the earned tax credit. big companies are socially advanced and give medical benefits and trainer people. but we can do a better job with policies that are better for the communities and it's true in europe and the united states. education is important to business. it was a trend that was before or did president trump waken the animal spirit? >> it seems like he woke the animal spirits. one ceo said we have not had
such a pro-business president since the founding fathers. i'm not sure that's true but consumer confidence, small business confidence, it all sky rocket it -- rocketed because it's a progrowth agenda. how much of what is expected is priced in even if he doesn't deliver a tiny bit? >> i don't worry that much about that. stocks went up rationally because of the growth agenda and now they have to do it. i think they will get it done but it will take time. if he gets it done even part of it, it will be good for growth and good for jobs and good for americans. i am fairly confident you'll get that done. >> will he get the regulation right? >> i hope so. i hear people say we had a crisis and we had to throw out everything.
we want them to look at things inside, not just dodd-frank but things that need to be recalibrated and coordinated. there are too many people involved in mortgages. this is hurting lower paid first time homebuyers and small business owners. we need to do it for the sake of all people. was done, no one can say it was proper or fair or consistent. we say open it up and have an intelligent conversation about what is working and what are the side effects and can we the economy going faster? if you don't have a healthy financial system, you will not have a healthy economy. it's good for the citizens of the country, not just the financial players. financial system is a bad idea if you want jobs and growth. >> you feel the dialogue with the trump administration is healthy and constructive? >> yes. >> he is consulting ceos? gary: two steve mnuchin,
i am firmly about collaboration i think that will win. thing or. -- finger-pointing will not. problems,solutions to how can we get to the solution? when you have buzzed this -- when you have business and civilians collaborating together, we all win. we try to take care of people and our clients. even during the crisis, we did not need government help. we were trying to help people. i want to make sure we do our job helping growth. mark: jamie dimon from j.p. in that exclusive interview. later today, we will get insight from bill gross of janus capital who says janet yellen is walking a tightrope at the fed due to record debt levels. vonnie: yeah and coming up, the latest on what's driving oil prices lower below $50 per
vonnie: you are watching bloomberg. mark: this is your global business report. the u.s. house of representatives passes a defense bill that favors a bigger military. a look at which companies stand to profit. german retailer hugo boss says is a turnaround is starting to take shape and the ceo tells us where he is seeing growth. mark: the controversy surrounding israeli settlements in the west bank, are they a
roadblock to peace in the region? boeing and lockheed martin are the big winners in a defense bill that covers the rest of the fiscal year. boeing would get money to build the8 fighter planes than junta gun. lucky would get enough money for fighters which is more than the defense department asked for. mark: royal dutch shell is taking a shot at his 30 -- at its $30 billion divestment project. they are selling their tar sands unit. hugo boss says his turnaround plan is starting to take hold and could provide cover growth as soon as this year. the retailer has been cutting stores and brands and selling more clothes online.
the chief executive spoke to bloomberg. >> we have seen a stronger rebound than expected and building on this momentum. we are in a restructuring phase in the u.s. market but taking the right measures. i'm also confident the european 2017t will stable out in with new brands taking place and we are confident we will have the stable revenue and profit into 2017. mark: it's lowest profitability since 2010 and profit margin for the year fell to less than 9%. bmw lost leadership of the global luxury car sales market to mercedes-benz. the company has ramped up spending in a race to get next generation technology on the road. vonnie: it's time for our bloomberg quick take where we provide context and background on issues of interest and today we are looking at is really settlements in the west bank.
>> the palestinians must recognize the jewish faith. >> the election of donald trump has emboldened betjeman not in yahoo!. after the inauguration, the netanyahu government revealed it would rivet -- it would announce the first settlements and a quarter century. breaking with decades of u.s. policy, the trump administration says it does not view the existing settlements as a block to peace. responding to the announcement, u.s. officials say expanding settlements may not be helpful in achieving peace. >> i would like to see you hold back on settlements for a little bit. we will work something out. >> peers the situation -- the west bank is populated mostly by palestinians who have to make it part of an -- you hope to make a part of an independent state. since israel conquered the territory have a century ago, israel numbers have increased. the population of settlers has grown four times faster than
israel itself. or dovishawkish government, the israelis have supported the expansion of settlements. why do israelis choose to settle in the west bank question mark one is religion, many religious jews point to the bible which says the land was promised to them by god. also security, some israelis think settlements is a defense against attacks of the kind that occurred in 1948 when our countries invaded israel. others likebility, the relatively high standards of living made possible by government subsidies to the settlements. according to the international court of justice, israeli settlements are in breach of international law. argument, barriers, buffer zones and the presence of israeli soldiers to secure settlers make life difficult for palestinians but palestinians and some israelis say the settlement plays into a bigger problem -- they prevent these by eating up and dividing the land
left to the establishment of a viable palestinian state. any peace agreement would likely hinge on israel undertaking the tough task of removing tens of thousands of settlers to the west bank.israel has removed settlers as it with -- as it with your from occupied territory in the past but they are smaller numbers. >> even if every single settlement would be -- were to be dismantled tomorrow, these would so not be attainable without both sides acknowledging uncomfortable truths and making difficult choices. to shareorders, how jerusalem, and how to ensure each side's security. vonnie: you can read more about israel and our quick takes. go to bloomberg.com for more stories. mark: we will take a look at oil today at the lowest level. we have more. abigail: one of the big stories this week's oil which is a -- this is a five-day chart of oil with oil down for days in a row.
these are the longest drops since last november. most of this drop came yesterday after the department of energy report suggested that inventories were at a record up nine supply gut weeks in a row and we can see this quite well. we have you as inventories and blue and yellow is the price of oil. and are the nine up weeks the record levels are starting to weigh on oil so it will be interesting to see what next week will bring. is ahing it will bring quadruple witching of futures and options at the same time. from a technical perspective, oil may be ok. this is a longer-term chart of oil. pink, the 50 day moving average which acts as reduces -- as resistance for oil and in yellow, the 200 day moving average which acts as support.
one analyst thinks oil will find support at the 200 day moving average. one thing of note, back in 2014, oil moved right below both so it will be important to watch the 200 day moving average and if it ask as support. for theat this is doing stocks, we take a look at the big oil names, they are actually in the green. exxon mobil and marathon oil are both higher. they have been lower earlier this week. sold some assets and bought some assets but we are seeing some red for halliburton and transocean. a little bit of a mixed picture for energy but overall, it's up on the day. great stuff, thank you. the man known as the man who bankrolled britain and we will hear from the chief executive of the u.k. debt management office, robert stephen.
vonnie: live from london and new york, i'm vonnie quinn. mark: this is bloomberg markets. the treasury debt management office in the u.k. announced gilt cutting. they reduced the government's borrowing ability. the king of debt, the man who bankrolled britain, cmo robertstheemen. i don't know what you think about those nicknames. why such a big reduction in gilt thesece question mark >> plans were made on the basis of the forecast we had from the obr. there has been quite a
significant shift which is a result of high receipts coming in in the first few months of this year and that has affected, in particular, with the bond requirement will look like in the coming financial year which starts in april. mark: you announced 115.1. 100 9.7.ers wanted -- 109.7. why should you disappoint them? >> that was the average expectation. they were pretty close. i have never seen in terms of such anedictions average being as close to the figure as they were. they were pretty accurate. have what we call a net finance department of 105 billion. they were even closer than one or 215. because we are issuing slightly fewer treasury bills this year, it means more gilt. mark: is at the beginning of a
sustained decline? can you look beyond the year? >> we can't in the sense that we are only given a number that we have to borrow. having said that, there are forecast which are produced and from which we can calculate what we call the gross borrowing requirements over the next few years. that number has a habit of changing frequently. years, theuple of gross financing requirement is predicted to be slightly higher than what we are going to do in this coming year. mark: how is demand question mark many would have assumed --t rex it demand post-brexit demand would not be in shipshape. -- tell us german the journey from june 23 until today. >> as far as demand, it has held up remarkably well. say that one of the
more interesting things at what -- is what yields have done. wethe immediate aftermath, saw a decline in yield. that decline carried on throughout the summer into the august-september area. mark: we went to 50 basis points on the 10 year. >> absolutely and then october, it started to rise again. the yield began to rise into this year only to come down. in absolute terms, these are relative small. terms, these are quite large movements. mark: that's a big move over that short time. weeks ago, we were about 1.4%. mark: have we seen the lows? >> i have no idea. mark: let's bring up a chart. it shows us how foreign investors reduced their holdings
of gilt by the most in almost three years in january. two he put it down to political risk or is it the impact of the 29 billion pound maturity? >> that's a good question. to mention maturity a significant because maturity seven major impact in terms of monthly flows. what you can see from that is that there is a huge seasonal pattern to these things. i think it is really hard to read too much into that. what i would say is if you look at the flows in the immediate aftermath of the referendum itself, you can see considerable gilt --lows in which is in which is probably not surprising. mark: is it very links to the currency? >> i believe it is and it always has been and it is likely to stay that way. mark: what about political risk
in europe with key events coming up? haven forprovide a the u.k. bond market? >> i always say only partly in jest that you can tell the world is a dangerous place when the u.k. becomes a safe haven. it's interesting that people have used that expression in the few weeks. it's the same expression they used about four or five years ago as well. what i think is perhaps a more accurate description, rather than a safe haven, is that people recognize we have a bond market that's liquid and functions well and we are the sovereign issuer in the market. five, ick in 2000 interviewed you and i asked you about the outlook for the bonds. is there a demandtec for these bonds? >> there is an there has been.
back in 2005 is when we started to issue. since then, we have issued longer than 50 years. we filled up the entire curve from 30-50 years. you can see the curve is populated with a number of gilt in maturities and there continues to be demand. i would say some of the demand is beginning to be slightly shorter. having said that, we have a long run. mark: good to see you. next, the european close and we are following stocks, about 35 minutes until the end of trading, this is bloomberg. ♪
markets. mark: we will take you from new york to london. covering stories out of washington, and brussels. here are stories we are following. mario draghi says the recovery .s picking up steam how will it impact markets going forward? vonnie: then, jamie dimon seeks to bloomberg in an exclusive interview. the regulating banks alone will not finance growth. and president trump due to the with cumin and bank ceos.