tv Bloomberg Markets European Close Bloomberg June 2, 2017 11:00am-12:01pm EDT
"bloomberg markets." ♪ mark: here are the top stories we are covering from the bloomberg and from around the world. and mixed in a jobs report for the u.s. economy. the unemployment rate a 16 year slowerntrasting with forecast hiring and wage growth. they don't obsess over one number. and then count down to elections in the u.k., polls show prime minister theresa may will likely fall short of a parliamentary majority, meanwhile, jeremy corbyn attacking the prime minister for her response to america's paris accord exit. and speaking of climate, everyone from world leaders to reacting to present at all trump's decision to leave the paris accord. we examine the global fallout this hour.
we have a look at where european equities are trading right now 30 minutes until the end of the friday session. stocks arising across europe for a second day, up over the week. the first weekend for as well. the ftse 100 at a record high. by .5% today, up to levels we haven't seen since last september ahead of the big one, the ecb meeting on thursday. bonds, commodities, and cbs is your final three columns. volatility, how's it looking ahead of the u.k. election on thursday? white line,latility yellow line, one month volatility. 11 -- one month volatility highest since march, one week is the highest since january as well. it was all calm until the polls narrowed last week with the
beginning of the move in volatility when that poll came out showing the gap narrowed to 5% when a month ago it was 20 percentage points ahead. 20% or 24 percentage points ahead. traders the most bearish on sterling since october. still a far cry from what we were seeing. look at the record bearishness we saw have the brexit vote last june. bearish positioning back then was at a record. changing, sentiment is in the pound dollar positioning. this is a great chart, the bloomberg brexit barometer, the bliss index. as is the gauge of well-being here in the u.k., at its lowest yesterday before today since 2016, since july. it tracks the health of the economy in the wake of the brexit vote and measures or gauges measures such as inflation, economic activity,
employment, and uncertainty. the positive rating suggests well-being is above average and belowve readings suggest average. the post-brexit high was 51 in september, the post-brexit low was -13 in july. today, 71% higher today, the most since august 2016. for the first time in four days, construction pmi activity unexpectedly increasing. you've seen the trend in the last month, it's definitely been a declining trend, but still above zero at 17.7%. 90 minutes into the trading day in the u.s., julie, what is it looking like? all inwe have records all three averages on an intraday basis, the dow getting to that level. $21,169 was the number to go above to be that intraday record.
morning's mixed jobs report notwithstanding, there were reasons to be optimistic and reasons to be pessimistic, and it seems as though the economist read on that is a little bit of a weaker nonfarm payrolls number than estimated is estimated of the tightness of the jobs market forcing all three major averages to rise to their highs of the session, even if the gains in the dow and the s&p specifically are relatively anemic. i want to check on volume as well. volume is about in line with the 20 day average for the s&p 500. getting too specific movers as well, retail earnings continuing to come out with a sharp divergence in two of them, lululemon, coming out with sales that a little better than estimated, they still dropped but better than estimated. innings beating estimates the company raising its forecast for earnings for the full year. also lululemon will be scaling back on its girls brand and moving it mostly online. then you have restoration hardware, down sharply after
cutting forecasts were given just two months ago, analysts are questioning management's credibility after the cuts to that forecast. shares down 26%. we are also watching a food deal that apparently is not to be, pinnacle brands quickly fell the session lows as you saw earlier this morning, cnbc's david faber says talks between the companies are said to have ended. that is pinnacle foods and conagra. reuters reporting the two had been in talks. pinnacle falling, conagra shares saw similar patterns, the knock-down is much, down by nearly 2% here. to otherck around assets reacting to the jobs report, the u.s. dollar is certainly one of them, you see a very sharp reaction to the numbers down now .4%. is interesting different assets reading the report differently. vonnie: the dollar index has been on the decline this week
anyways. julie, thank you. mixed reports from the u.s. labor department, the u.s. adding 138,000 jobs in may, short of consensus estimates. the unemployment rate fell to a 15 year low, that was because the participation rate declined for the most part. earlier today bloomberg spoke to gary cohn and asked whether the lower participation rate was a disappointment for the administration, which is made a big deal about people returning to work. >> don't assess on anyone number on any report. the overall trend is really good. since inauguration day, the you six rate is down 1%. we brought back close to 200,000 people that were dissatisfied or underemployed in the u.s. workforce. that, to us, is an amazing trend. there is some very good news in this labor report, as you
pointed out in the opening, we're down to an unemployment rate that we haven't been down to since 2001. the trend is very good, is a trend we like a lot. that said, we still think there's an awful lot that we in the administration can do and we're working on that. we are working on regulatory reform and tax reform and infrastructure. as we these are areas continue to improve, we continue to draw more workers back to the workforce and improve wages. mark: why do you think the bond market is biased? you know the market as well as anyone, is about 80 something basis points. the market is not buying your story. inflation and reflation and growth, the story you are telling us right now isn't real. why do you think the white house is difficult to recognize -- reconcile the view of the bond market? are getting a bunch of diversions. the equity market is tell you a different story. the equity market was that
all-time record highs across the board and the equity market opened up higher today. we are in a time of sustained growth in the market is telling you that we are in a time of sustained growth and as i said is morewe think there we has an administration can do to drive the economy and i think the bond market is telling you there's more that can be done to drive the economy in the bond market is saying we are ready for you to drive this economy and we know that there is opportunities here, but we are happy to own bonds in the meantime. mark: let's take your example and look at the xe market. they were buying the market story in a big way. you saw the lights of goldman sachs doing terrifically. the story over the last couple of months doesn't spell out a success for the trump administration at all. bank stocks are down, the feedback in march. the outperformance has come from a handful of companies, facebook, amazon, google, whose path is completely independent of anything that happens in d.c. how do you see a record high equity market has anything to do
with what your demonstrations doing right now? >> there's a record high across the board indices. , there'ss being driven a record high, meaning investors are creating wealth, the president said yesterday we driven over $3 trillion of wealth into individual investors and into endowments and trust. we are creating wealth by people owning equity assets in the u.s. market. we've got broad consensus across the market if you only indices and you own index products, which are what a lot of investors own in the world today, they are benefiting from what's going on in the market. they are benefiting from the appreciation. if you go back to november 8, the day the election and you look at market appreciation, it's been pretty broad brush across all the indices. >> if you take a look at banks, they are not participating. how do you have a rally of banks don't participate that's actually sustainable that underpinned by something with not enough breath? >> go back to november 8 values
and tell me if there is breath or not? beutilities it's going to bond prices is not going to be industrials or materials or banks. to take anynt sector or any silo the market at any given time, you can. a month ago we were been talking the complete opposite. i'm not what is it here and debate market moves over a 28 day market period. i'm going back to november 8 and giving the trend and i like the trend. tax reform, which talked about it before. there are rumblings on capitol mighthat the white house be dragging its heels little bit waiting for some leadership out of the white house. when are we going to have a specific proposal that goes beyond that outlined the people can look at? >> we set is quite publicly, we are actively engaged with both house and senate leadership in
working out a tax plan that both the house and the senate and the white house are going to agree to. we are going to release the tax plan we have a negotiated with those groups and there's consensus among all of us. in the meantime, we are holding a variety of listening sessions with industry groups and leadership groups and governing groups all around to get as much input as we can. we think the most effective way to get tax reform done is when we release of bill to have a final bill done and not been negotiating on the floor of the house or the floor of the senate , to have bill done when we know there's consensus and uniform body and when we release the bill. that's where we're headed. we said this is going to be a long process and we would get to it towards the end of the year. we were committed to get tax reform done by year-end. david: you are still committed to by year-end have tax were done? >> we are working as hard as we can to get it done this year. mark: that was u.s. economic council director gary cohn on
vonnie: live from bloomberg world headquarters in new york, on vonnie quinn. mark: live from london, i am mark barton. roughly 60 minutes to the european close. day two of the international economic forum, and russia's big theme has been global commodities and bloomberg search after sat down with the founder of the biggest aluminum producer outside of china, oleg
deripaska, discussing a possible ipo. it will happen when we have enough requests. erik: is that likely to take place? mr. deripaska: it may have been in the next -- it may happen in the next 18 months. erik: how much money? mr. deripaska: depends, up to $1.5 billion. erik: and what with the capital raise allowed to do? mr. deripaska: we offset the debt. erik:and plans are investment? there'spaska: investments, but we are supported by banks and project investors. we need enough capital for the next private -- five or seven years. that we invested in
the whole commodities sector in 2007, 2012, it's different commodities were different we developed and now, lumina needs restructured, we expect 5 million chinese capacity should be offer various reasons because the environment and because it's all technology and that it will than thetter pricing company should really take this issue. you expect the u.s. investigation into aluminum imports to affect your business on the market? mr. deripaska: it will not affect our business and our understanding is the investigation was triggered by this illegal activity which some chinese company tried to do export mexico when they
fabricated product and some u.s. media people found they get a now, theychina and move the stock to vietnam and malaysia and that's why it triggers some concern from u.s. doubt whyons which and how such sheet-metal could and, it was really cheap then they started this -- erik: might it serve to drain supply from the market? mr. deripaska: no. china,kets outside of it's in deficit. 1.3 million pounds, 1.7 million pounds. have a balanced stock which we inherited from the crisis in 2008, 2009 which now we are
supporting the demand. is also ana, there balanced market and the small expert which we can see from rare question of what would happen with them and how it would be in terms of long-term capability of chinese not to give their cost in a way that they could supply product [indiscernible] this is what concerns chinese producers. they don't understand. they take their economy, and a there are calculations. it was how cheap the chinese could sell it without subsidies and this is what concerns the u.s. government. erik: are you supportive of that investigation? mr. deripaska: we can't support it, it's not our business. how about commodity
markets in general? we are off of the lows the commodity markets that in 2015. in that has to do with the oil price. but other commodities remain depressed. what do you think it will take to revive commodity prices to the point where they are maybe not active previous highs, but at healthy levels and they are now? mr. deripaska: first of all, as balanced anduld be they shouldn't be new and unreasonable investment like this in iron ore in copper. erik: they created oversupply. mr. deripaska: yes. companies who have a lot of financial, they shouldn't think they should invest every year as much amount they did the last 10 years.
i think it's why we have these activities in the markets. erik: the problem is it's taken a long time to drain the excess supply. mr. faries: --mr. deripaska: that's why in aluminum, it's almost 10 years. it started in 2008, now, we think is going to be another year and a half, two years before the market will be completely balanced. it was a mistake which was done by a few market players on behalf of shareholders, shareholders remember those big deals and now, no one can justify those deals. we use a very rational approach and we need to see what china, andructuring about goods -- thisnvironmental
announcement that the u.s. may consider to quit the pairs agreement. that was our exclusive interview with billionaire oleg deripaska, president of the russian aluminum producer. a week away from the u.k. general election, next thursday, continued uncertainty sending sterling lower theresa , a bulls likely fall short muted response of paris -- of pulling out of the paris climate agreement. it went in a little closer. >> we don't know if we can trust them or not. it's not the usual polls which failed, it's the you go for
it's projecting at the moment which will be short of a majority. investors are starting to get jittery and the volatility that people are taking seriously the risk that it will just be the case. mark: talk us through hung parliament scenarios. have the tories falling short of a majority and they might be able to convince a to lend themmakers the support they need to govern. is theblem with that leadership would be in question and you can't rule out a leadership challenge after that. the tories are ruthlessly comes to not tolerating leaders that are considered strong. the tories could still get a majority and tim roth yesterday
did a poll of pollsters and the cold pollsters showed that a majority of pollsters do expect may to get the majority. a comfortable majority. mark: coalition or not. emma: labor would go either as an ad hoc arrangement where they have the democrats and the greens, which is more likely than the formal coalition scenario. corbyn said he would create one million jobs within five years of he was elected last week, good jobs. could he do that? what industries would be hiring? and is it convincing people? emma: it's hard to say whether the arts -- the argument is convincing people. is the main theme of the election, both parties offering -- dabbling in populism as you like.
conservatives traditionally are consider the party that is most competent on the economy in the polls still show conservatives are confident on the economy. there is some momentum behind corbin and we will see that tested again tonight, there's a question time tonight where members of the studio audience can put questions to may and corbin and that will be a real test of how they are getting through. vonnie: we get her next thursday and friday, what will be the first scrabbling the following week for this and then the newly mandated leader? emma: well, brexit. the only have about 10 days until brexit starts. his corbin one -- if corbin won, there could be an extension.
brexit talks are happening soon and she is saying only she is prepared to do that. mark: the tory candidate has been charged in a probe into the 2015 election. emma: that's right. , he's beenspending charged and he says he's innocent and theresa may has also offered him her backing. andill continue to run conservatives have been clear. we will see. thomas, six days to go. , newsroomomberg news chief, emma ross thomas. we're five minutes away from the end of the friday session. what a big week we've got next week, the election, the ecb, three big events we are covering
in-depth on bloomberg television. the stoxx 600 up for a second day, up over the week as well, the ftse is lower, he was at a record little earlier. the currency board, the euro highest level since september. of its forwardng guidance, one of the many questions we want answered. let's finish off the currency four as we approach minutes away to the end of the friday session. here on bloomberg. this is bloomberg. ♪
the fourth monthly increase, the best run since december 2015. by 5% next corrects week, this would be the longest since goldman, decline since it's launch. we have to go back to the mid-1990's to see the last time we have had to wait so long for a 5% pullback. i am going to bore you a little bit. i was singing the praises of this function yesterday. it is so important ahead of next week's election. it has so much information on it. the polls are at the bottom. look at the top right. this is the yougov methodology. it gives the conservatives 313 seats. majority326 to get a in the house of commons. 313 falls short.
u.k. election results gives the conservatives no majority. tracker,top issues brexit is clearly the top issue. health care is moving up. brexit coming down. wonderful function. let's get to the ftse. this is the ftse in pounds white line, ftse in dollars blue line, and ftse in euros purple line. we are going to close at a record. this shows where we have come since the brexit vote. the pound's decline lifted the level of the benchmark. we are 90% higher. we are also higher versus the euro and the dollar. we talked about this earlier,
but i think it is important chart. this is the city to price index. if you are above zero, it is, below zero it isn't. we are below zero. look at the blue line in the wake of today's jobs report. since februaryst last year. the only one that is positive is the eurozone as we approach next week. what a big week next week. vonnie: i cannot wait. there seems to be something every week. next week is one of them. stocks are trading near records after the may jobs report. dow industrial is up 39 points. the record close was 21144. we are already above the previous record close. the s&p 500 is up almost 0.2%. the nasdaq is up more than 0.5%, running away with things at
6280. we know how investors are feeling about the report. what will the fed make of these numbers? let's bring in richard jones. richard, a lot made of the data today and how it can be viewed as mixed. a little weight on the u.s. dollar. where are currency traders trading this? >> i think the currency and rate market is looking at the currency report in the final analysis as weak. yields are lower across the curve. yields are flattening in the u.s. it does not shift for the june fed meeting. investors are expecting a high in june -- a hike in june. further out, it looks less likely we will get additional hike.s -- hikes.
the september meeting is in play. it is a continuation of what we have seen over the past few months. if we look at the most recent core pce numbers, those are soft out of the u.s. it is looking increasingly less likely that we are going to get more rate hikes than the two or three that are nailed on for this year. vonnie: you mentioned that to send spread. hit 83t 87 now and earlier on. is there a fundamental shift in the treasury market or u.s. yield curve, or are we grinding tighter and tighter? >> what we saw after the election was a function of the relation trade and the beliefs that we would get the types of fiscal policies and stimulus from the trump administration that would lead to a steeper curve.
we have seen that fizzle out. i think the flatness of the curve we have seen since then is a function of that it we start with high expectations at the start of this year, and those have abated. u.k. next thursday is the election, ecb, coming testimony. week,lity, one week, two one month to my right. were investors a little too omplacent a week ago? >> i think the optics have shifted and the polls have become much tighter. even a few weeks ago we were looking at a 100 seat majority for the conservatives. that -- mark: isn't complacency? >> i think markets have reacted to the fact that we are looking
impressive conservative majority is looking less likely. mark: give me some areas, hung parliament? what happens to sterling? >> we have a very sharp selloff as a knee-jerk reaction. mark: ecb as well. let's look at the numbers chart. this is the euro index, which we do not talk about every day. this is the euro versus a basket. unhappyi going to be with the euro descent or not? notven though the ecb does target the exchange rate, it is an input to their decision-making process. it has strengthened four out of five months this year. as a result, that has tightened monetary conditions in the euro area.
seen, the things we have weakening inflation and the strength of the euro might keep the ecb messaging on hold next week. mark: great to see you. richard jones, fx and rate strategist for bloomberg markets. time,: back just in thrilled to have him back. it is time for first word news. >> vladimir putin says it is impossible to agree on a global climate plan without the u.s. he spoke in st. petersburg a day after president trump withdrew from the paris climate accord. >> such countries with such large issues such as the u.s. are not going to work and not going to come no agreement in this field of activity could be ready for signing or ratified. any badjoked that
weather around the world can be blamed on american imperialism. in manila, and attempted robbery appears to be the reason for a casino attack that left 37 people dead. according to authorities, the government officials stormed the resort while the gunmen tried to play with casino chips. the gunmen killed himself. police have released new security images of the manchester bombers last moments. the investigation continues into last week's attacks that killed 22 people at a concert. six men have been released. be on the verge of a huge social and generational change. the country's ruling party is inspected to choose a new leader, putting him on track to become the next prime minister of ireland. he is 38 and openly gay.
global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: thank you. coming up, the business community lashes back at donald trump's decision to ditch the paris climate accord. levine releases his first tweet. this is bloomberg. ♪
u.s. toecision of the pull out of the paris agreement is regrettable. >> i do respect the decision, mistake,nk it is a both for the u.s. and for our planet. >> they have taken a different decision. we continue to commit to the agreement. we think it is an important global agreement to deal with climate change. the u.k. is at the forefront of dealing with climate change, and we remain committed. >> there is no backsliding on the paris agreement. the: let's get reaction on paris climate change decision. tim cook says he is disappointed. mark zuckerberg says abandoning
the climate is bad for the environment and the economy. [cory johnson in san francisco. -- let's bring in cory johnson in san francisco. we would have to say lloyd blankfein and richard branson stand out. >> absolutely. we talked to richard branson after the announcement. he called it a sad day. americaingly, said that lost global leadership. i think the reaction has been interesting and rod -- broad. there have been so many people from different industries, tim cook, lloyd blankfein with direct words. this administration as a number of people from goldman sachs. lloyd blankfein said this was a setback for the environment and the u.s. leadership position in the world. that was exactly the tone
richard branson had for us on air yesterday. what is interesting is this is a business issue, a leadership issue, but also an issue that business leaders have expressed in their roles as people, parents, grandfathers and grandmothers. it has affected a lot of people in a lot of ways. i think it is surprising to see such an outcry from the world of business. mark: elon musk withdrawing from that presidential panel as a result of this. what sort of blow to the president's credibility is that? >> more and more people abandon the president in different ways. he received a minority of the u.s. but, that was not reflected in the u.s. business community. you have people like bob iger and elon musk joining him, wanting to be in the room. bob iger was criticized during
his most recent shareholder meeting for being involved. he said, as a matter of principle he has resigned. he has defended this in the past, saying he wanted to be in , to bem, voting hamilton there where the decisions are made and to make those decisions smarter and just. it is hard to argue with a ceo who has had such incredible success like bob iger. mark: thanks for joining us. giving us an update on this c-suite reaction to donald trump going out of the paris climate accord. tonie: to get more reaction this decision, joining us is gina mccarthy, former administrator for the united states environmental protection agency. the face of president obama's global climate change initiative. is there a potential this might
galvanize other actors such as ceos, states, and so forth, to meet goals and maybe even go further? >> you certainly can see that already happening. as soon as the announcement was made, united states, city leaders, individuals standing up and saying the people of the u.s. are going to make good on their own to actually achieve these reductions that we vowed under the paris agreement, whether or not this president is going to do anything at the federal level. we can make it happen. everything that happens in the u.s. in the environment and public health starts at the local level and works its way up. we are going to achieve these reductions even if the president wants to deny the science and abandon his responsibility to protect public health and support the economy in this country. the -- of are at
this for a long time. you have seen what the ramifications of being in or out of this. what do you think the more dangerous ones are? >> for example, it really calls into question whether the u.s. is a good partner and can be relied on to meet its commitments. it actually looks as if we are walking away from an agreement that is essentially important for us both economically and environmentally. generally, i look at the public health benefits associated with actions taken. that is where my job has always lied. this for once is following the way the energy market is working in the u.s. we are seeing renewable energy, energy efficiency as the jobs of today and the future. and how we are going to keep our economy strong.
is allis actually cedes of the benefits of technology, they lose -- breakthroughs and improvements. other countries will provide that leadership. we have never done that before. we should not do it today. i have never liked the statement, it is the economy stupid, but it is. vonnie: what do you imagine those that are pleased by this and how can we convince them otherwise? >> it is challenging to understand it, but i know the president seems to have made a calculus that at least a strong portion of his faith is base ised -- his interested in turning back the clock to energy that was michael decades ago -- vital decades ago but is no longer part of the
future of this country. i think the president and others should focus not just on what we are doing to invest in clean energy today because the markets are doing that, but really focus on the benefits of working internationally. climate change is an international challenge. we need to be at the table actually doing our fair share but also making sure that all the other countries are being accountable as well. that is the only way we can protect our future. the likes of china, russia, these other massive countries that are also major polluters, they are on board. is there a possibility they could take over the mantle, and even if donald trump tries to stop states from doing their own thing, things will improve globally? >> first of all, i don't think stop statest can and individuals from acting in
our individual and collective best benefits for all of us economically and from the health and safety perspective. i do think we are already seeing the eu and china working on a bilateral agreement where they are going to provide the leadership. we already see since paris was ratified, we see china stepping up and investing multi-billions of dollars in clean energy, reducing the amount of investment they are making in coal moving forward. we see india moving forward. all that at a pace we never anticipated. what is interesting in the u.s. and this decision is that the u.s. itself is moving forward at a pace we did not anticipate when the u.s. made the paris commitment. for this president to say he has to pull out because it is going to rob jobs or weaken the
economy is contrary to fact. what we are actually doing by pulling out is ceding economic benefits to others, and they are going to fill the gaps we leave behind. vonnie: our thanks to gina mccarthy, from boston. mark: great interview. coming up, two of our lead reporters face off in today's battle of the charts. this is bloomberg. ♪
>> if someone told me they wanted me to dress up, i wish i would have known. i know danny is going to bring the heat today. it is going to become wicked. mine is simple. it is friday. this is an overlooked facet of the earnings market in the s&p 500. the whole conversation is about earnings rebounding doing better. you is true overall, but if take deeper, there's something disturbing, which is companies that don't report earnings more and more. the white line is the eps for companies that report positive earnings. there is a big gap between those two measures as you can see here and demonstrated down here in the spread. in almost four years. that means companies that are either losing money, energy companies, technology companies that don't report profits are
dragging down the overall earnings landscape. that is pretty concerning. easy to figure out, big implication. mark: that is a tough chart to beat. what have you got? >> none of us dressed like wonder woman, that this is the wonder woman of charts. i am tired of us talking about banks all of the time. i want to look at another thing that might be driving the market , and that is balance sheet risk. the banks stocks are very cash rich. as an example that, the bottom line in this blue color is the debt ratio equal weighted. the other is debt ratio of normal market cap rated. death are concerned about without the bank stock -- debt
without the bank stocks. that means the most risky companies have underperformed this year by about 14 percentage points. always so impossible. brilliantly fought. i'm going for the wonder woman of charts. vonnie: it wasn't even a question. i am sorry. , where your costume and maybe he will win. i think danny blew us away. >> the reporter answered the why question. vonnie: he is a good loser. this is bloomberg. ♪
vonnie: i am -- jonathan: this is "bloomberg real yield." ♪ jonathan: coming up, a downside surprise on payrolls. numbersmoa disappoint. the 10 year yield plunges to a new low. spreads just keep grinding tighter. we start with the big issue, the payrolls report injecting uncertainty into the fed's next move