tv Bloomberg Markets European Close Bloomberg June 12, 2017 11:00am-12:01pm EDT
from new york, i am vonnie quinn. this is the "european clothes" on "bloomberg markets." ♪ "european close" on "bloomberg markets." mark: stocks in europe poised to start the week on a sour note. tech shares dragging on the index today. facesminister theresa may her tory colleagues for the first time since the election. there is pressure on her to resign following her political gamble. we will hear from the ecb board , who saysoit coeure he sees signs of progress in europe's economy. at where european equities are treating now. 30 minutes until the end of the monday session.
the lowest level since the end of april in the stocks. led down by technology companies. ,overeign bond yields are your final two columns. sterling fell by 1.6%, which boosted the ftse 100, the more domestic-centric. all three indices are falling ponder thevestors a, primary search recent may, and b, -- of a, prime minister theresa may, and b, the path of brexit. they need to pay a premium of
roughly 105 basis points. on friday, the premium reached as wide as 194 basis points before closing at 130. sterling is lower. option traders are less bearish. this is certainly one of the chart of the day. 9292. .ptimism plunging a survey of business leaders showed 67% pessimistic about the prospects of britain's economy. 43% of executives were voting for when brexit. 92% were worried about the makeup of the government and the impact on the economy. they were most worried about the ability to secure a trade deal with the e.u.
how are tech companies faring now? julie: still selling off, but it is abating to some extent. downasdaq down 7/10 of 1%, more than 1% earlier. the dow and the s&p declines also abating to some extent. one of the trends we are seeing today is the incredible divergence between groups in the s&p 500, between tech and everything else. this is the imap on the bloomberg showing groups on the move. an equal amount of red and green, it is just tech is down one and a quarter of 1%. telecom stocks are up strong. financials and energy are rising. breaking with the rest of the market. another way to look at what is going on with technology is to tech index.s&p this looks at the percentage of
52 week highs in that index on any given day versus 52-week lows. beforeu saw last week this selloff is nearly 45% of the stock in the s&p tech index were trading at least at 52-week highs. wordnies like microsoft trait -- companies like microsoft were trading at record highs. it only happened twice before with a percentage, the rest -- breadth at these highs, then seeing the tech sector rollover. outside of the biggest tech stocks we have been talking about, the apple's and amazon's and microsoft's of the world, here are the others where we are seeing declines. , which we usually view as a tech stock. advanced micro devices, with goldman sachs reiterating its cell rating. it got a boost on crypto
currency prices rising and the suppose it demand -- the supposed demand for miners of those ships -- chips. finally, general electric getting an new ceo. that is one of the reasons the dow is not as -- not down as much as jeffrey immelt will exit the company. , one of theg reasons the dow is down the least of the three major averages. vonnie: breaking news regarding the testimony of attorney general jeff sessions. the attorney general requested tomorrow's hearing before the senate intelligence committee be public, a public hearing from the a.g., answering questions about moscow meddling in u.s. elections. this statement from the
department of justice, also saying that sessions believes it is "important for the american people to hear the truth directly from him and looks forward to answering the committee's questions tomorrow." let's get a check of the other headlines on the bloomberg. here is courtney donohoe. courtney: in france, voters have given a resounding victory to president emmanuel macron's party. it was the big winner in the parliamentary elections. -- backers are it would put macron in the front position to enact his agenda. the u.s. has refused to sign a environmental -- the u.s. said it would not join the others in reaffirming their paris commitments. instead, the u.s. plans to take
action on their own to reduce carbon emissions. theimir putin brought up idea of joining nato in talks with bill clinton in 2000. told oliver stone the u.s. president said "why not?" but then the u.s. delegation got very nervous, according to put in. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney donohoe. thanks. prime minister theresa may could be bracing for civil war within her own party. this comes after last week's elections. pressure from lawmakers who hold her responsible for the results of the snap election. this comes on the heels of the first meeting with the after the election. nejra cehic is live. thereuld be fair to say
is not much appetite in the conservative party to have another leadership election, thereby probably there is not much appetite to go to the public to have another general election, which leads to the conclusion that the prime minister is safe in her job, at least for now. nejra: yes, i think it is fair to say that. of course, there is the question of whether she is working with borrowed time. i am keeping a close eye on this door, because the prime minister has been holding her cabinet meeting. leading members of that cabinet have come out in sean support of her, including boris johnson and -- cabinet have come out in strong support of her, including boris johnson and david davis. theresa may is due to meet with the 19 22 committee, the rank and file members of the tory party.
it is here that some say she may face opposition, some anger over the rather disastrous election campaign, which led to conservatives losing their majority in parliament friday. the chairman of the 1922 committee was talking on u.k. tv and said "i do not think there is any clamor for another election and certainly do not see any other -- do not see any clamor for my colleagues for another election." theresa may say for now, it certainly looks like it. at 10 downinghic street. in france, president emmanuel macron is on track for a landslide victory in the french parliamentary elections. sleep.ty set to his party is set to sweep the elections.
kit juckes is here. let's move on to brexit. heart, soft, soft, hard. hard, hard, soft, soft. what is kit juckes' perspective? still do not understand how we could imagine a soft enough brexit to have unfettered access to the single market centralgiving in to the pillars of the european union's arrangements, which is to have free movement of labor within europe. that seems to me to be a principal. and if we want to have control over our borders to a did agree -- to a degree implied in the vote and the referendum on brexit, i do not see how you get a soft enough brexit. you can soften it around the margins, certainly not as hard
as no deal is better than a bad deal. there will be a deal at some point. but the degree of softness to make economic difference, i do not see a. mark: this is sterling-dollar. we show this chart on friday. 123.50. there was a flash where maywood happily stay on. the pound fell. -- there was a flash where may would probably stay on, and the pound fell. departure be positive for sterling? kit: there was a sense of that, that she is a champion of hard drugs it, from this line that no deal is better than a bad -- , from this brexit line that no deal is better than a bad deal.
i still hear a lot of people saying why can we not be like norway, like the european economic area? because they have to concede ground on movements of labor within europe. i think we have to decide where we want to be. we cannot just have our cake and eat it. i want to briefly come in and mention of attorney general jeff sessions will testify before the senate intelligence committee tomorrow in an open hearing. in a statement, the committee has put out a statement saying that will be open testimony and will take place at 2:30 eastern tomorrow. kit juckes, does it matter what kind of coalitions we have? clearly, it is not an easy collision between theresa may's collision an easy between theresa may's -- it is not an easy coalition
between theresa may's party and the d.u.p. nothing is actually worse than the coalition of chaos where no one knows what they want and no one can agree on anything. that just gives us two years with businessty and consumer confidence suffering. anything is better than that. i think we can avoid that. down to theit comes question about theresa may. i inc. the conservative -- i think the conservative party wants her to get stability back into this, get a coalition that can agree about the pathway to europe. you have a cabinet that demand something that is not the hardest form of brexit, demands a deal behind you, and makes some progress down that. my fear for her is that she gets
ditched once she sets the party down that course. think theative, i danger is we get back to another election, and i cannot think there is anyone excited for that, except perhaps jeremy corbyn. vonnie: yes, he said there might be another election next year. there is any amount of guesses as to where it will go next. what about race in the u.k.? does that go lower still, the basis points? kit: it is a story of two ends of the curve. the economic outlook is not disastrous, but just poor. as other countries are likely to raise rates, the european central bank is edging toward higher banks, the u.k. is stuck with low rates for a long time to come.
and ofchors the front the yield curve -- that anchors the front end of the yield curve. , real are just too low yields, inflation-adjusted yields are incredibly low. in the middle, the 10-year follows. if we get rising bond yields, it little bit,ields a but they mostly stay not very far from here now. i do not think that is where the action will be in the u.k. market. wishes sheheresa may was emmanuel macron, when you look at how his fortune and political fate has turned out in recent months. the spread tells the story. the french and german 10-year coming down to 34 basis points. does that continue narrowing? what does it mean for other peripheral spreads, throwing into the conversation the ecb as
well. kit: that will be one we get closer to the timing, with people talking about when the ecb will pull the trigger on a steady pace of decrease in their monthly bond purchases. but by and large, the political risk, the existential threat, the thing that anglo-saxons keep talking about has sort of melted away with the snow now pay the center of european politics -- has sort of melted away with the snow now. throughout the course of the next month or so, there is a following wind, and the spreads get tighter. mark: thanks for joining us. income.es, socgen fixed strategist. vonnie: ecb executive board member benoit coeure spoke
♪ live from bloomberg world headquarters in new york, i am vonnie quinn. mark: live from london, i am mark artan. counting down to the european close -- i am mark barton. counting down to the european close. ecb executive board member benoit coeure spoke exclusively to bloomberg's francine lacqua about his outlook on inflation in the eurozone. benoit: we are still not seeing inflation where we would like it to be. still not seeing the criteria that we set for inflation to be
sustainable being met. you need a sense of patients here -- patience here. francine: how sean a nightmare of -- is stronger gdp? benoit: it is unqualified good news. we changed our communication to adapt to the changing reality. arelso shows the measures working. the jobs being created in the eurozone the last three or four years, a lot of them have been created thanks to the economy. mandate.inflation when it comes to the next steps, we have to focus on inflation. francine: why was tapering not discussed? benoit: it is too early to discuss it. we have to acknowledge the changing reality. i would discuss a lot the situation.
there was a sense of progress when it comes to inflation where in spite of the inflation being done, if you look carefully at the stock forecast, you will see inflation is dependent on our monetary policy measures, which is one step in the right direction but is not yet enough to speak of tapering. francine: wendy's think tapering needs to be discussed, even just -- what do you think tapering needs to be discussed? benoit: we are driven by fax. we discussed -- we are driven by facts. we will discuss tapering when the conditions are right for it -- ripe for it. francine: do you have an idea of when tapering should be discussed and what it will look like? benoit: that will depend a lot on inflation.
we will have to discuss it before the end of the year, given what we said about buying bonds for the end of the year, if necessary. francine: is july and alive -- is july a live meeting? there is usually low volatility in the markets. july.: we do work in nice around, but we do work in july. the discussion was about taking stock of the progress and the taking stock of an improved path for inflation. one lesson of what we decided last week was we have to it keep in line with -- we have to keep in line with reality. executive board member
benoit coeure with francine lacqua. more breaking news, vonnie. vonnie: attorney general jeff sessions will testify in public before the senate intelligence committee tomorrow. in a statement, the committee says it will take place at tomorrow. said that he wants americans to hear the truth directly from him in a doj statement. general,ions, attorney will testify in an open hearing tomorrow at 2:30 p.m. eastern. this is bloomberg. ♪
he drastically reshaped one of the world's biggest manufacturers. he will be replaced by john flannery, who now runs the health care division. ge has in under pressure from trian fund management. assets in selling off monsanto. according to people familiar two the matter, the companies expressed interest in acquiring the bayer unit. is a matter close of minutes away. stocks falling. ♪
the biggest drop since may 17. we were down 1.1%. biggest drop today for tech years since june what last . index was 4.5% lower. on friday, it closed at its highest level in 15.5 years. the stoxx 600 technology index has risen 228%, the benchmark stoxx 600 has risen 142%. this is sterling percentage moves. remember the? day after brexit vote?
we were down by 2.5%, finished down 1.6%, biggest drop since october. friday's close the lowest since april. the view is this inconclusive election result my result in a less hard brexit, which could support sterling. in the meantime, the prolonged uncertainty will keep the currency under pressure, down a further .7% today. barometer, brexit dropping today after rising on friday to the highest since may 26. it tracks well in the u.k. using various metrics. indicates reading well-being.
andave been positive, quickly, gold steady after the first weekly drop in five. some turmoil in the u.k. on the political front, but the fed meeting could lead to another hike in rates. on june 6 come the highest since november. vonnie: the sessions of gains for the u.s. dollar, the index now unchanged. that mexican peso is rapidly declining towards 18, pretty much unchanged on the day. it has erased all of its the kleins since the election as we continue to get headlines about trade. 2.21 percent on the 10 year yield.
wednesday is the big day for rates here. 46.48. down move to the gmm , across the board. is one ofafrican rand the currencies reversing some declines today. let's get to abigail doolittle now. indices moving is the nasdaq. movement around the tech-heavy nasdaq. of the a two-day chart nasdaq 100. now on the day, we have the lows, aell off the small inverse head and shoulders pattern, a by the dip pattern. flatuld take the nasdaq to on the day, but a bit of relief,
down 2.9% on the day, the worst of selloff since september last year. is the biggest component to the nasdaq 100, nearly 12%, down 4% on friday, down 2.6% today. two-day selloff since april last year when they put out that horrible quarter and revenue growth dropped for the first time in a long tan. downgrade, so a bit of the cell the high flyer mentality. apple taking many suppliers down. some real selling here. we may have a little relief for the nasdaq and nasdaq 100, but , about 8% of apple the nasdaq come the selling may
continue. is #9306, a one-year chart, and we see around the election that apple did slide below its 50 day moving average. friday and today, below that 50 day moving average, suggesting we could see the stock moved to the 200 day moving average, almost a 20% drop from the top, so we may see more selling ahead , even if it is a baking a little bit today. president trump making comments to reporters at a cabinet meeting saying that will be "major" legislation on aluminum and steel dumping very soon. that legislation according to the president. some of the other headlines,
saying few presidents have passed as much legislation as he has. fdr is one of the presidents who has done more by this time in his tenure. democrats obstructionist and mentioned that in two weeks he will hold a news briefing on the terror fight. sessions'eneral jeff testimony will be public. joins us with perspective. does that suggest he has something else to say public? >> the questions continue. several points of interest are whether or not the attorney that he hadifies other meetings with the russian diplomats, officials,
ambassadors that were previously undisclosed. that is what we are hearing in washington, that james comey testified to last week following the public hearing. the second point the attorney general will likely receive questions upon according to sources is for an update on his relationship with the president, because there have been reports that there has been friction with jeff sessions and president trump. campsuld note that both have denied that, but it is also he himselfg that upset the president, who was not on board with that decision. reporting i have gathered is that attorney general session says it you are not happy with that decision are, i could resign, so all of this will be made public tomorrow at 2:30 in the afternoon when he is set to testify publicly, but it is
another example as the president is trying to focus on workforce development week that these headlines will be dominated by the attorney general's testimony. you will see it live here on bloomberg television. week is upontech us. it kicks up today. in anyor of london exclusive interview, he told us his vision for tech innovation in the city while addressing brexit and his relationship with president trump. be smarter.o we have to use technology to do how we do withto issues of climate change, the , the globalffects disability, helping those who have issues around disability,
access to transport and jobs, better skills, a consequence of technology. london ising about our ability to attract talent, venture capital, and the great is we will london open a massive connected business compass, the largest in europe, making sure we can help startups to incubate, flourish, and thrive. it is important for people around the world that the system we have here will help you learn and thrive. >> you are hiring new team members to drive the focus forward. did have seen what new york , chicago, and others. what i have advertised for is london's chief digital officer whose focus is making sure we are better connected.
how can we use open data to allow the private sector to pioneer? ensure -- can we ensure local authorities are more savvy with technology that , but better for consumers, citizens, londoners. why do you think the concerns around brexit haven't put off investors. >> three words are really important, london is open. that we willted stop being open-minded and outward looking and somehow change and become inward focused and the world must recognize that is not the case. the one region that voted to remain in the eu. we recognize the contributions it makes to our city, accessing the market makes, accessing countries that it takes.
doing is i'm negotiating with the government a different deal for london. in the meantime, we will carry on and off her and innovation to entrepreneurs. over 1000 years, we have been open to people with different backgrounds, ideas. >> what you want to see? the government recognizes we need a flexible immigration deal. i respect the people voted to leave the eu, and one of the reasons was concerns around immigration, so whether it is in their interest or not, london needs immigration and talent, but also wanted as well. the government has to recognize that london contributes hugely to our country in revenue raise, economic growth, and i want us carrying on being the success story that we are and attracting talent. the current political
environment? >> i'm hoping theresa may and the cabinet will recognize the results of last week's general election. toryountry has rejected a extreme hard brexit, the version of brexit put forward by theresa may and her manifesto, and the government has to break guys that, otherwise they will be forced to recognize the consequence. the consequences businesses choosing not to come here, businesses choosing to leave, which is not good for the government or london. were just recently referencing an adage that was david cameron's. >> the polite version. >> what about the polite version of the relationship with donald trump? sure other people's priorities. i don't have time to do with tweets from donald trump. mayhe moment, theresa
decides to invite donald trump on a state visit, the moment she offers him a red carpet, for a number of reasons, one because of his views in the muslim ban, changing the long-standing ofl-respected of the policy the u.s. towards welcoming refugees, and a whole host of policies and views he had that i thought the red carpet was not the right thing to be rolled out for. we will see what happens. mark: the mayor of london there. president trump making comment at a cabinet meeting this morning, saying there will be major legislation soon on aluminum and steel dumping. thatso told reporters deals with saudi arabia will , saying we are stopping the funding of terrorism. on terror, he also said rex
lows for the day with apple contributing the most two declines. renick.ing in oliver is this the beginning of something or a little profit taking? there are a lot of interesting things going on, but whether or not this is systemic and this is the first issue to drop in a larger equity selloff or reversal, i think we might be getting ahead of ourselves. we got a lot of people watching valuations, moving into growth come many architecture over the past 6-12 months, then you had a note come out and a few people on the shortselling convergence had a of central banks a bit, so taking money off the table and selling out strategies, but across the market, things are still pretty
good in terms of equities in tact. it has not brought down the entire market, and that is a big deal. #9315, tech momentum growth, what does this tell us? >> this is where we are today. but these the lows, are the key metrics to be watching. tech companies, and within that, semiconductors. all of those getting slammed again today, so specifically something happening with semiconductors, but it's not always so much about specific countries or etf's it is about strategies like growth, like momentum. vonnie: we just had some great announcements from apple, positive news across the board, and again you also have another #9314.
some perspective to these are estimates within themselves because we are talking about earnings estimates. growth ing at the earnings expectations for the tech sector and s&p 500. the expectations for earnings growth have gone up and up. if you look at bloomberg analysis for earnings, 20 sent -- 20% growth, but it than any other sector in the s&p 500 apart from energy. the fundamental picture here, from the sell side is in fact, thathat also has a caveat if they are wrong and talks up a systemic issue, this will be bad for the market overall. could there be a
cascading effect? we are seeing some of that money go into european shares. that is a microcosm of an overall shift. if this group, tech companies, trading at a 24 multiple, the highest in the s&p 500 when you get rid of real estate and look past energy, so there are a lot of things going on. people are talking about momentum shift and the growth shift. of salt yourain want to take that with because there are still only so many people trading on the so-called want ideas. -- quant momentum. vonnie: we have to leave it there. mark: let's take you what is coming up next.
mark: time now for our battle of the charts. these charts on the bloomberg by running the function of the bottom of your screen. drumroll, christina his back. >> i know you are probably tired of talking about tech. there isn't much of a tech tantrum these days. if you look at the recent gains u.s.e tech sector, the selloff has spilled into asia and year, but recent gains where ,n the vicinity of 10% to 15%
nothing compared to the gains in 1999-2000 before the tech bubble burst, gains of 80%. don't talk about bubbles bursting just yet. we are not quite there. one thing to keep an eye on is volatility. we are new of the lowest level on record right now, a little lower than the slightly more elevated levels and 1999-2000, but as the chart shows, not m uch reason to panic. this is #9305. mark: don't and it, vonnie. what have you got? vonnie: the treasury does not have enough balance to fund there is no agreement on expanding the debt ceiling. this is the cash balance over the last year or so, well above this minimum of $150 billion in
terms of a cash cushion. what happens if you don't have that cash cushion? superstorm sandy in 2012 was the , so the recommendation is $150 billion on the cash cushion. we are close to it right now. saidreasury secretary has he can use accounting gimmicks to make it look like there is money left, but it is a big deal and it could be a big fight in august-september. you can see that chart at #9309. love that chart. ark: given that tech has dinner biggest theme, i have to
hand it to the lady that does the most colorful charts in the world. tech tantrum, history. well done. i endorse your decision. president trump making comments about his first full cabinet meeting since taking office. said there will be major legislation on aluminum and steel dumping and will hold a major briefing in the coming weeks on terrorism. i will leave you with this. that is it for bloomberg markets." this is bloomberg. ♪
."lcome to "bloomberg markets from bloomberg world headquarters in new york, the top stories we are following. the tech selloff easing. is this sector in for a roller coaster ride? ge,ging of the guard at longtime chairman steps down under pressure from activist investors. big week for global central banks, the fed, boe, boj releasing decisions, the key things to watch. first, the tech selloff. julie hyman is here to tell us more. julie: it has abated to some extent. off the lows, but down from the highs. the nasdaq was