tv Bloomberg Markets European Close Bloomberg May 3, 2017 11:00am-12:01pm EDT
this is the european close on bloomberg markets. ♪ will take you from new york to london. covering stories out of frankfurt, paris and washington. you're the top stories -- here are the top stories. theresa may saying some eu officials have made threats to britain and once the brexit negotiations to fail. sterling moving on the news. vonnie: emmanuel macron and marine le pen face-off tonight in their final debate. our asset managers increasing european holdings with polls showing a 10 point macron lead? debt crisiss continues, the u.s. is dealing with its own debt headache.
we will speak to an advisor to a top puerto rico bondholder as the island just misses a critical deadline. at where's have a look european equities are trading right now. little changed today asterisk rising to the 20 month high yesterday. gmm go is your functional. moving in the wake of theresa may's comments. we have had some data out of the eurozone and the u.k. which i will talk about. just want to talk about some earnings. the world's biggest maker of insulin shares up by 7% today. it's effort to cut costs starting to pay off. as it grapples with rising pressure on prices. its comments market departure from previous quarters and sets
it apart from rivals like johnson & johnson, eli lilly. shares are rising. the u.k. broadcaster in the news today. shares were lower. chief executive stepping down. leaving the company. struggling with a brexit derived advertising slowdown. will be announced in due course. blaming and outlook in march over economic uncertainty following brexit in the wake of the brexit vote and ahead of pending negotiations to leave the eu. gdp unchanged from the prior quarter. still within expectations. strengthening the case for
those pressuring the ecb to sketch out stimulus. policymakers expressing differing views about the sturdiness of the economy. it's a solid and broad recovery. 90 minutes into the trading day. how's it looking? julie: i want to start with oil prices. seeing bouncing around. oil took a pretty sharp like lower. now it seems to be recovering. crude inventories overall. the drawdown was smaller than escalated. u.s. crude production continued to rise. it appears to be somewhat reassuring. oil continues to bounce around. we are seeing a continuing decline in stocks. the nasdaq being the tech heavy index is down the most.
let's take a look at the stock. we are seeing it down today. down the most since mid-november. only down about 1%. we have not seen very big moves in apple stock. some of the suppliers are down. not seeing any declines. interesting things to do in the wake of an apple earnings report is track the suppliers. you can do that on the bloomberg with s plc. you can see some of them listed here. the effect of apple earnings is more outsized on the companies that are smaller. the tech companies that don't necessarily rely on apple are doing even worse today. has begun using alternative
vendors. the internet traffic company revenue is going to be worse than ever. groupon also missing estimates. the non-apple technology declines are much larger. apple supplies falling in europe today. let's get some big developments today. prime minister theresa speaking just a few minutes ago. >> we want a deep and special partnership with the european union and we want the eu to succeed. last few daysthe have shown that whatever our wishes and however reasonable the position of our leaders there are some in brussels who do not want these talks to succeed. who do not want britain to prosper. mark: joining us now is eddie buckle.
she is firing on all cylinders right now. >> this is really fighting talk. she has been talking about the european commission hardening its negotiating stance. saying britain's negotiating position has been misrepresented in the european press. that article that came out at the weekend talking about jean-claude being shocked at how she was talking -- conducting her brexit negotiations. tok: deliberately timed influence the election results. >> she wants a big majority in the elections on june 8. she is saying she is the only person who can deliver it. jeremy corbyn can't deliver it. about strongg stable leadership. she wants to be the person who the brexit result
she says britain once. mark: fighting talk from david davis also today. this perceived 100 billion euro bill. he is suggesting the u.k. could break away. >> he says britain isn't prepared to pay 100 billion euros. he is saying we don't want to walk away but we are keeping the option open. the mantra they keep repeating is that no deal is better than a bad deal. mark: great to see you. thanks for joining us. eddie buckle. sticking with the economic .mpact of brexit j.p. morgan chase is planning to move offices in dublin, frankfurt and luxembourg. joining us now is eu blanking -- banking analysts for bloomberg.
this is just possibly the beginning. >> absolutely. they are giving us more detail. frankfurt, dublin, luxembourg. treasury.ankfurt, the negotiations have just started. very clear. we've already got the lobbyists from frankfurt, paris, london business.win france as being very vocal about. exactly. it this going to kick off a domino effect whereby as banks start moving jobs it will be much more likely that will move off britain's mainland?
jpmorgan approach makes a lot of sense. they are saying we knew we had to move anyway. the world is going to change. we will move some now. weending on how bad it gets will move the rest by the end of the two-year period. i would expect to hear more banks talking about frankford. this and theore of clearing debate could become very contentious. if anything you could see new york benefiting from that. to lobbyho is there and who might be doing the lobbying. in the u.s. there is very clear lobbying landscape. what happens in britain and who is lobbying? >> each country -- for example france.
they got a very amusing cartoon. .hey called it frog versus fog that's their campaign and they have been lobbying banks aggressively. frankfurt has been talking about the enormous space it can offer. there isn't as much available space. for example, warsaw. back office. have a lot of skill. it's a lot cheaper. late to theame very party. they started talking a couple months ago. sauce?hat's the secret this is a company whose trading revenue has actually -- absolutely trounced its european rivals. equity and structure finance has done well for them. and clearly they have been happy to stay at risk on.
i saw them talking being more confident. they were saying definitely 50% pay out. we are funding growth. they haven't had to go through the pain of restructuring. that's the difference. the impact the restructuring has had we have actually seen. there can be a day without a deutsche bank story. is an ankara investor a good thing for deutsche bank? the billion they have just raised is all they need. it's not like we haven't seen the chinese out there. capital outflows. what does it mean, i'm not sure it means a lot. they obviously took the issue. andgot foreign investors they probably want to keep the capital out of the country.
this isn't a short-term trade for them. mark: thanks for joining us, jonathan. let's check in on the bloomberg first word news. courtney donohoe is here. >> fbi director james comey said it would have been catastrophic to conceal discovered emails from hillary clinton before the election. he is testifying before the senate judiciary committee. democrats blame him for undermining the clinton campaign by disclosing just before the election that the fbi had reopened its investigation into her emails. he said disclosing the probe was the right choice. you can watch the hearing on bloomberg. president trump meets today with palestinian president moffat mahmoud abbas. president trump may ask him to hold payments to families of palestinians killed or jailed in the conflict with israel.
in france, emmanuel macron and marine le pen are preparing for their one chance or a knockout in the presidential race. later today is their only one-on-one debate before sunday's vote. polls show macron with a 20 point lead. this is bloomberg. vonnie: coming up, we will discuss the biggest risk facing the global markets right now with head of research at deutsche asset management. keene sits down for a conversation with former fed chair ben bernanke. at that conversation live 12:20 p.m. new york time. this is bloomberg. ♪
vonnie: live from new york, i'm vonnie quinn. .ark: i'm mark barton counting down to the european close. the markets.k to theresa may making comments on brexit. many looking to a provincial -- presidential vote in france. joining us now is philip pull. thanks for joining us today. theresa may has spoken. seems like the fight is on between brexit and the eu given comments in recent days. it also brings us to the french election on sunday. if we overcome the french election, have we seen the
upside in stocks? or is there further to go? further tothere is go actually. the first round was the most important one. i think there is still some risk in european stocks. further opportunities for peripheral splits. cutting european holdings to a record. how have you changed your stance from february through may? there seems to be a bit of a change in opinion of european equities or assets since the beginning of the year. >> it became more positive. we see more value in europe than in the u.s. part of that is washed out.
we think there was a bit more to go. is more attractive. european economy is growing quite nicely. u.s.el looking at the there's probably too much optimism priced in. these are the trump stimulus program. expectations in terms of what we see being delivered in the short term. u.s.,: yesterday in the converge ask talked about markets that are priced in. things like republican policy. reserve ecbderal action. if some of them don't pan out the way the market is expecting that we could have a major pullback in the u.s.? went into caps on a degree. we haven't really seen that
happening yet. european stocks have performed quite well on the back of the election result. relative to the u.s. of the is the ability trump administration to deliver on stimulus. our expectation is that it's going to be less expensive and take longer than people are pricing. we will see something of a correction. we could see a three to 5% correction without a problem. vonnie: are you keeping the like you have in things treasuries and safer assets or are you looking further abroad? we increased cash position. we switched more into europe. in an emerging market context. we like it -- we have spread it
around a bit. expecting to really deploy back into the u.s. in the not-too-distant future. affect aheads this of a fed announcement later? >> we are expecting the fed to raise rates in june. we're looking for more moves this year. one in the first quarter of next year. it's a gradual process. it is still data dependent. the next is what happens to the balance sheet. the extent to which that gets fleshed out. mark: taper tantrum part two or not? >> li na. the fed is going to be very cautious about what it does with the balance sheet. there could be a trade-off. it is still steady as she goes
in terms of taking away that accommodation. our view is it probably won't lead to a massive market disturbance. mark: the implications for the peak in yield and the u.s. dollar going forward. >> u.s. treasury yields higher. we've got a 12 month target of 3% on 10 year. we see the dollar generally stronger. on theo has bounced washing out of political risk. mark: has sterling seen its highs or not? some say we have seen the worst of the brexit noise which means sterling could rise. some say it will continue. where do you live? will intensify from here. we're just getting into the debates.
clearly the u.k. doesn't have a strong negotiating hand in this negotiation at least in my view. sterling is really the barometer of how these negotiations play out. it wouldn't surprise me to see sterling weaken significantly from here. thenecessarily back to lows. we could come off sharply from here. this is a negotiation dictated by the terms of the eu 27. join our special coverage of that said rate decision. 2:00 p.m. eastern. we will get the latest reaction from janus capital's bill gross. this is bloomberg. ♪
european close just six minutes away. time for the bloomberg business flash. sprint offers the cheapest unlimited data plans in the u.s. they lost more subscribers than expected in the last quarter. 100 18,000. the country's fourth-largest wireless provider did manage to post sale does -- that beat estimates. a merger with t-mobile is the most obvious way to better take on at&t and verizon >>. . duffy automotive is prepared for electric caused by cars and self driving technology. the company will it off its powertrain units and vehicles computing system. it expects the spinoff to be completed by next march. facebook is setting up its review of criminal and suicide videos after recent murders in
cleveland and thailand were posted on its website. mark zuckerberg said the company will hire an additional 3000 workers on top of the 4500 in place.already facebook has been criticized for not doing enough to prevent such videos from spreading. that's your bloomberg business flash. breaking news. vonnie: puerto rico, the federal board has filed for bankruptcy. it has filed what's called title iii. we will be digging into the details. it will have major ramifications across municipal markets here in the u.s. we are speaking with the representative of one of the bondholders. ♪
down .1% today. yesterday we did close at the highest level in 20 months. b.n.p. paribas posting trends in revenues. revenue with the global markets division rose 33%. net income up 4.4%. the chief executive is one of the bosses targeting growth aiming to increase global markets revenue by roughly 5% annually through 2020. bank.ading peers deutsche 6% in the quarter since the first round of the presidential election. shares have risen 6%. the highest since 2008. .6% today. this is implied volatility.
brexit was the highest in six years. we were nowhere near the levels. ahead of the french election. pre-brexit vote last june. investors team less concerned about the outcome of the election. something we will discuss momentarily. this is my new favorite chart of the day. reflecting the probability. one of the euro area countries will leave the euro within a 12 month rise. this is based on a monthly survey of individual and institutional investors. we went up to about 40%. 2012 the height of the sovereign debt crisis. a 13% chance we will see one eurozone in the
next 12 months. the power of the bloomberg. wonderful chart. vonnie: we are keeping on the dollar index. will it move after the fomc statement? maybe. the spread is back down to 101 basis points. still little compression. the canadian dollar staying weaker until we get more details . crude oil futures after the inventories data today didn't give any hope for higher prices. we are looking at g10 movers today. the yen is up. the little weakness for the yen. currencies are also weaker today. looking at yield. the one to point out would be the united states to year yield. in that market.
abigail doolittle with a deeper look at what's ahead as the fed decides in little more than two hours. >> most investors seem to think that the fomc decision due out today is basically not live. probability puts it at a 13% chance the fed could raise rates. investors may be looking for is language on what's ahead. this chart tells us that investors think there is a 1.4, 1.5 rate raised this year. it was for two rate rises this year. investors at this point are expecting the fed to be more on hold than they had been before. this big did back in april came at the time the fed could use an
unwind of its balance sheet as a policy tool. that took expectations down. surprisingly when we take a look at the asset classes, this chart probably suggests the fact the fed maybe a little bit less vigorous and its rate hike activity this year. backup of yields out of the election. we had yields fall into this range after the fed raised rates in december. we had rounding down all of this. we could see the 10 year yield breaking right out of this range. the cio of guggenheim did tell us a few weeks ago that he thinks this range means we are likely to see a measured move mark to 2% or below. pretty interesting stuff.
thanks abigail. numbersaribas posting that trounced its rivals. he said he doesn't see more hedging that could be linked to the french election. see like whates you saw in the u.s., things grinding to a halt. waiting how things would evolve. it seems in france things .ontinue >> you haven't seen any more hedging? seen anything that can be linked into the political uncertainty. >> you can't deny there is a political risk. this could have an impact on interest rates. how do you plan for that? what do you see in terms of
longer-term impact? >> for the moment interest rates are low. we really stay close to our client. held them in their projects. first quarter results of french retail you can see loans of 7%. continuerend would that would be helped to offset overtime to low interest rate environment. if on top of that the interest rates would pick up that would further boost the contribution. cfo. b.n.p. paribas let's get more on the french election ahead of emmanuel macron and marine le pen's only one to one debate. european banks preparing. during us now, maxine. so many wonderful pieces.
this is why macron can keep champagne on ice. it's based on your research. got six scenarios. under all of them but one it looks good for macron. chances.ot very good what matters really is how the voters of the first round who didn't cast a ballot for macron or le pen will be save -- behave at this time. his chances are pretty good. in five of six scenarios we see him winning. central location is 59 for him, 49 for her. participation is key good he has very good chances of winning on sunday. electoraln that the arithmetic is so against her, what does it take for le pen to win on sunday? stars aligned.ny
she needs participation to be historically low. french people usually like to go to vote especially for a presidential election. it's around 80%. she needs the moderates to stay home. melenchoneeds the voters to split evenly between her, macron and the rest 50% staying home. that's a lot of changes and events. very unlikely chain of events that needs to happen for her to win. vonnie: i was reading saying the market is underpricing her chances of winning. them isin between diminishing. there's only a 10 point lead now for macron. it the market underpricing a le pen victory? >> the first round polls were very accurate. markets forlame
being too optimistic on a macron victory given the fact that the it's wides is stable, and it will be on the margin of error. right ints are pretty terms of looking at the macron victory on sunday. vonnie: what could possibly go wrong between macron and then? what does he need to do if he wins to be a workable party in france? >> that's the next question. what could go wrong, we have a debate tonight. it's probably going to be the most heated debate in french presidential history. win,matters is not only to it's very different than winning 15%. roundctually a full election. you have the second round monday. you have parliamentary election in june.
he needs some momentum to actually go for it. mps to go out and campaign. that is0% victory score much more likely for him to succeed. to answer the question posed by a bloomberg story today, macron's verbosity may aid le pen's last chance for presidency. there is a view that he might talk of it too much. his language might go ahead -- over the heads of many the election. >> there is a danger of course. we know that we have something like 20% of voters still undecided. theould point out this is first exercise for both of them. there is no experience bonus tonight for either one. mark: bloomberg intelligence economist. let's get it over to the
bloomberg first word news desk. courtney donohoe has the latest in new york. back atsa may struck the european commission president, accusing his team of leaking details of their brexit discussions to sabotage the election. she spoke outside the 10 downing street office. deep and special partnership with the european union and we want the eu to succeed. but the events of the last few days have shown that whatever our wishes and however reasonable the positions of europe's other leaders there are some in brussels who do not want these talks to succeed. who do not want britain to prosper. may says the task of whoever wins the election is to get the best deal for the u.k. the u.k.preparing for to lose market access.
last week deutsche bank said it may move 4000 workers from london and goldman sachs said it will probably begin relocations next year. in washington james comey testifying right now about election related investigations. he says it would have been catastrophic to conceal new lead discovered emails from hillary clinton before the election. republicans want to know if there were any improper links between russia and the trump campaign or if the fbi is just chasing a conspiracy theory. at full hearing on bloomberg tv . i'm courtney donohoe. this is bloomberg. up, puerto rico's federal board files a bankruptcy case in u.s. court, making it the largest government to seek help from its creditors in united states history. we have more next. this is bloomberg. ♪
vonnie: back to the breaking news on puerto rico, declaring bankruptcy. this is a major deal. julie hyman has been taking into market reaction. julie: it's difficult to track this. it's mostly in the municipal bond market. i want to start by looking at the bloomberg at a chart. this is just one of the general obligation bonds for puerto rico. in 2035.he 8% bond due this tracks the price of the bond over time going back to mid-2015 when the governor first declared the deaths of an payable. the moratorium was announced and
the fiscal plan came out. today we are seeing an increase in price as investors are trying to position ahead of this form of bankruptcy and trying to figure out how much of their money they might recover. the other way to measure market reaction is to look at the bond insurance companies. we are seeing declines in those share prices. if you look at some of those , not down very much. you can see declining from highs in the session. down closer to 2% as these headlines across and mbia as well. those shares have been hauling. quite a lot of bouncing around. down .3% out the moment. news.: fascinating thank you for that market update. for more on the situation we have matt rodriguez.
advisor to a debt holder. i guess that figure might change now. i'm tempted to say are they happy now? >> the figure is correct. our clients hold $2.5 billion of kofi net debt. bonds the original rescue which was put in place during the first fiscal crisis in 2006. since then it has been the vehicle of choice for individuals, retirees on island. our clients welcome the development. they think title iii is the right next step. why did your clients force the puerto rican government to undertake this? just yesterday he offered something that would have given your client $.90 on the dollar. the governor offered the
general obligation bond holders $.90 on the dollar. we think our clients will commensurate or greater than that. the governor and the oversight board made this decision of their own will. it is not something my clients forced on them. if anything it was forced on them by the unsecured aunt holders who yesterday sued in state court. vonnie: your client hadn't accepted any previous offer either. >> we had been engaged in constructive negotiations. unfortunately those hadn't come to a deal. this is the right next step. in the opinion of the creditors. i want to put up what the puerto rico governor tweeted in the last half-hour. he wrote, after the inability of
obtaining an agreement of creditors, we request the som board the protection for puerto rico under title iii. we have tod negotiate in good faith. before the current scenario we choose to protect our people. what does title iii bankruptcy mean? title iii provides a couple of things. it gives a forum in which all creditors rights can be heard. it also provides a litigation stake. there's nearly 20 suits pending against the government of puerto rico. that's going to consolidate those cases and provide a forum and it will protect the people of puerto rico. also going to protect secured creditors. is great for the creditors. what about the ratings for the island? what about the debt and the servicing payment on the shoulders of citizens?
what about its long-term obligations? is this chronic for puerto rico? >> it is certainly not chronic. there could be an orderly process for the restructuring. that's what the title iii filing will do. it will allow puerto rico the opportunity to get on the right economic footing. i welcome the governor's comments that he wants to continue to negotiate with creditors. that is something we are looking forward to. vonnie: you guys drive a tough bargain sometimes i imagine. thank you. still ahead, the white house is confident the house is now just a couple of votes away from passing a health care bill. we are live in washington. that's next. this is bloomberg. ♪
mark: i'm mark barton. vonnie: i'm vonnie quinn. this is the european the white is confident in passing the health care bill. kevin cirilli has been speaking with members of the house. what changed? representatives including representative often and long, conservatives in the house of representatives who had concerns about the legislation regarding health care said they met with president trump and they emerged and said they would be able to support this deal. representative upton telling reporters he anticipates a vote could come as soon as tomorrow. think it is likely to pass in the house. we will see what happens. then it goes to the senate and there will be a conference.
this bill will change from where it is today and likely from my percent of and others probably for the better. >> the ongoing battle continues with representative upton introducing an amendment late last evening that has garnered the support of prominent republicans including the house freedom caucus. this is all centered around the issue of pre-existing conditions and high risk pools. this amendment would allocate $8 billion over five years in order to help those with pre-existing conditions. -- chuckenator chuck's schumer says it is like administering cough medicine to someone with stage four cancer. if the senate is not going to let it go through, is there any point in having a vote in the house? republicans i have spoken with in the negotiations for passing this can see the
point that they are giving up some political control from when this relation should make it to the senate. there's also a concern with of the house members have in tracking this. this is a white house led by reince priebus. working all angles. the president has been working the phones all week. he wants this political win before the house goes into recess on friday. theie: we were watching palestinian authority arriving at the white house. it's going to be an interesting meeting. interesting global reaction. any idea what we might hear from >> we'llbal leaders? have to wait and see. the conversation will center around terrorism and national security. thinks -- thanks kevin
cirilli. keene sitsg up, tom down with former fed chairman ben bernanke. look for that live in just a couple of minutes. reminder of what happened to european equities. little change for the stoxx 600. after the decline reaching the highest level in 20 months yesterday. strong economic data out of the germane on gdp unemployment. bloomberg markets continues. this is bloomberg. ♪
from bloomberg world headquarters in new york we are taking you from washington to san francisco this hour. u.s. stocks slipping from records high ahead of the fomc decision. apple shares weighing on the .ajor averages the u.s. dollar is gaining against most of its g10 peers. the white house is confident that they are only a few votes away from passing a health care care bill. president trump is expected to give a joint statement with palestinian authority mahmoud abbas. coming up on bloomberg television and radio, tom keene sits down for a conversation with ben bernanke. halfway into this trading