tv Bloomberg Markets Americas Bloomberg June 13, 2017 10:00am-11:01am EDT
mark: and i am mark barton. welcome to "numbered markets." ♪ vonnie: here are the top stories we are covering around the world. jeff session takes his turn in the hot seat today. meanwhile, a bloomberg exclusive finds that russian hacking was more widespread than keep -- than previously recorded. pressure on theresa may as she scrambles to form a government. with european politics in -- with british politics in flux, the european union is starting to crease -- to increase bandwidth brexit negotiations drawing near. the fed is expected to make a decision about raising rates tomorrow. is it a foregone conclusion? i think the answer is public yes, that we are about 30
minutes into the tuesday -- yes, but we are about 30 minutes into the tuesday session. abigail: we have seen a bit of a bounce back from the declines we have seen recently. there is still some debate about the wind down of the fed balance sheet. we are seeing a bounce back that is taking the dow to a new record high. it at least touched one during the session today. the nasdaq is also bouncing back of 1%. 2/3's the tech stocks are also coming back. in fact, they are the best performing group in the s&p 500. they are not bouncing back by that much, recouping their losses, but they are making some progress in that direction. apple, microsoft, and also that making -- and alphabet making a comeback to some extent.
at the bloomberg. this is a chart we have been consulting over the past couple of days. this is a look at the nasdaq volatility to the s&p 500 volatility. we're showing a long-term chart here back to 2002, because we saw the biggest fight in relative volatility in 14 years time over the past couple of days. after a volatility shock like that, what then happens? we will discuss that in the coming days as we watch what technology does. elsewhere, we have some movers to look at. that includes cheesecake factory. they have been holding up well in what has been called a difficult casual dining environment. they have cut their earnings, margins, and same-store sales. the pharmaceutical -- a pharmaceutical company is rising after wells fargo reports they are looking at all strategic
options including going private. analysts met with the pharmaceutical company last friday. we will look for any headlines on that. a quick check on the 10-year note. the fed is indeed meeting, and we have been seeing a decline in yield going into that meeting. seven basis points for the 10 year yield. high expectations for an interest rate increase. as always, we will pay close attention to the commentary surrounding that anticipated increase. we will watch the bond market action as well. mark: the bank of england, the boj, this was -- the swiss national bank all also holding a day.ing to let's look at technology. let me show you the stock 600 -- the stoxx 600 tech sector movement. they saw the biggest drop on
monday since june 27 of last year. that was just after the brexit referendum. they finished the previous write a at -- previous friday at the highest point in years. let's take a look at u.k. inflation today as it resumes its upward march. it is accelerating to the fastest pace in four years. for -- seen an increase andease demand for laptops computers. you can see it at about 2.9% which is the highest since june 2013. core inflation excludes food and energy, and a quick and in may as well. it is the highest since november 2012. the price pickup meeting -- meaning additional emphasis on households. let's finish up with a sterling.
this is the final chart i will show you. it is a three-day chart which signifies a steadying sterling. maye minister theresa apologized yesterday to her own .'s at a private meeting. she took full response ability or the the lester -- for the disastrous election results. how soon before the conservative strike a the du p deal? i wonder if it is a foregone conclusion that they will strike a deal. let's go now to washington in a bloomberg exclusive. we have learned that the russian hacking of the u.s. election was wider than previously reported, much wider. people with direct knowledge of the investigation say that 39 states were hit in the cyber attack. the news comes as the attorney general jeff sessions gets ready
to testify publicly before the senate intelligence committee. they are investigating russian meddling in the u.s. elections. joining us now is one of the reporters who wrote up the story. also joining us is our chief washington correspondent on capitol hill. for cabinet members are actually testifying today, what all eyes are going to be on the attorney general. will he invoke executive privilege on any of these questions and not answer them to full capacity? >> when it comes to the news reported this morning regarding the 39 states that had systems , itby the russian hackers is unclear what the attorney general will say on that. the point of the story is that the attacks were much wider than previously known. everything inclusive and that calls into question whether there was actual tampering of campaign-finance roles, voter registration roles, and the
like. it certainly calls into question run ine elections were these states and counties. jeffmains unclear whether sessions will invoke executive privilege today. about: a few more details the hacking into the election systems? >> this is the most concrete numbers we have received so far. everyone knew that the russian hackers compromised the dnc databases and hillary clinton's campaign in males, because elite all those. what was more unclear is how -- because they leaked all of those. what was unclear is how much exposure they had to campaign-finance -- to campaign finance systems and voter registration systems.
39 states were flagged where systems were compromised. we consider elector -- including systems as but a registration systems. within the government, this set off a lot of alarms in the government and the white house come up because illinois was the first state to sort of flagged this -- the white house, because illinois was the first state to sort of flagged this information. if you change in the information and someone goes into the polls, they are not in the poll book for that location, and it will create chaos. mark: let's get to just sessions'-- jeff sessions' testimony. is he going to claim executive privilege? how much will he answer today? kevin: he did say that he had previously undisclosed meetings
with the russian ambassador. i would also pay attention to whether there is anything between the president and attorney general. sources close to the attorney general say that might be overplayed. there is no question right now that all attention is focusing on how to respond to the t of the hacking of the 2016 election things to that great reporting from our colleague. 39 states were impacted. i think lawmakers are trying to reach consensus on whether they need to impose sections against russia. we heard from senator ron paul who said that not all republicans are on board with that. first, they need to see if there was evidence of corruption or collusion. to right now, not a lot of republicans and their is enough there. -- republicans think there is a
lot there. vonnie: we also know steven mnuchin will testify on the budget, and the president is in wisconsin talking about infrastructure and labor force. distract in any way from jeff sessions'testimony -- sessions'ons -- jeff testimony. kevin:> they are trying to push an apprenticeship system, but all attention will be on just session -- on it jeff sessions sessions'eff testimony. >> when james comey testified
last week, he said there was no evidence that the russians actively compromised the election. i think we should think more likely that the russians are doing reconnaissance. withmay have not tempered actual votes, but learning how to access these databases is critical if you are trying to disrupt an election. they may not have pulled a trigger in the major way during the 2016 election, but they are getting the knowledge on how to access these databases, which ones are worth targeting, and how much you can get away with. that is extraordinary intelligence for these hacking operations. you can expect they will refine their techniques and come back for more in the elections in the following years. so, they are picking up knowledge on how fractured our electoral system is and how it works. vonnie: and that is really rather terrifying. .hank you both so much
you can watch our live coverage of the testimony today at 2:30 new york time. let's check in on the first word news. emma: secretary of state rex tillerson says that north korea has released the u.s. student who was serving prison time. the university of virginia student was sentence after he cheerfully confessed on tv to trying to steal a banner. president trump is looking to open up cuba to u.s. trade and travel. is that president -- president trump has called the deal with cuba one-sided.
in the u k, prime minister theresa may is discussing a possible alliance with ireland's unionist party. may has apologized to fellow conservatives about the election disaster and says she will get the party out of its current mess. she has also signaled that she is willing to rethink her approach to brexit. cristiano ronaldo could face tax fraud charges. tax authorities allege that the did --l player has even evaded owing the government millions of dollars. however, he is unlikely to go to prison as a first-time offender. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. vonnie: coming up, we are kicking off the central bank parade this week.
♪ live from london, i am mark barton. vonnie: in new york, i am vonnie quinn. this is "bloomberg market." time now for futures in focus. joining us now from the cme to discuss the fed is oliver sloup. oliver, what is everyone saying about the possibility of a dovish hike or hawkish hike? what does it mean for cme traders? >> yes, there is a lot of
attention on what it could mean for tomorrow and going forward. i think the dollar has been the main focus for a lot of these traders. looking at the dollar, we have been in consolidation for the better part of the last couple of weeks after a tremendous downturn over the past couple of months. i think we are seeing a little bit of a bottoming. we have seen a lot of shorts in the market. realistically, we are looking at a short rally in the u.s. dollar over the next one or two weeks. from there, we will look at data to see where it points as going forward. vonnie: the problem is that the narrative at the moment is focused on europe, britain, and other parts. wherere much control over it goes? oliver, i was asking if the dollar will have much control over where it goes even how much momentum for assets moving in europe and britain at the moment? atyes, when you are looking
trading the dollar, i think we are starting to top out with the euro. shorts covering about two thirds of their position over the past couple of weeks. i think that leaves little room for the upside. if you look at the u.s. dollar rebounded, we are -- you are absolutely right. we are seeing the euro regarding a little bit. this is a short-term setup. we have to see with it that it takes us. sloup: that was oliver with today's futures in focus. be sure to catch our special coverage of the credit decision tomorrow starting at 2:00 new york time and 7:00 in london. ts have a lineup of gues including chief national economist at deutsche bank and more. great stuff happening
right now on capitol hill. paul ryan is holding a news conference who says it would be smartest to let the fbi investigation to go on independently. also, u.s. treasury secretary steve mnuchin testified before the senate is it committee about his department's proposed budget. you can watch both of those on the bloomberg. this is bloomberg. ♪
♪ happening right now on capitol hill, u.s. treasury secretary steve mnuchin is testified before the senate is it committee about the department's proposed budget. in his prepared remarks, he said budgetesident trump's may involve tough decisions. he also says there is a plan for the government to be funded through september. opening statements are ongoing. you can watch the secretary's
full testimony on the bloomberg and also on bloomberg tv. we will continue to keep you updated. time now for our etf segment. julie hyman has that. with the fed expected to hike tomorrow, how should we look at the etf specifically? joining me now is eric balchu nas, senior etf analysis at bloomberg intelligence. how do these senior etf's that into smart data? fit into smart data? the value is a little bit bigger at 155. dividends were the biggest one. in a low rate environment, everyone likes dividends. the rates and a kind of go up after the dividends did not take in any more money. values started to take in money
because they outperformed. in terms of how they fit into the smart beta tent is interesting, it is considered a big circus tent. dividends are not a factor. dividends,ay that their returns can be explained by a value -- by value, market data, and other factors. they are not really given credence in the academic world, but they are popular with investors. julie: as you say, one of the things that has been of concern is perhaps they do not do as well when we see rates go up. is that some of the risk here?
treasury yields more. if you are going for yields, that is not going to work for you. you could do better with treasuries. the other dividend is high paying stocks. vanguard has several products that yield a lot. the good news is that these are going to yield about 2.8 or 3.5%. the bad news is that you are going to have overweight factors, heavy staples, utilities. they are definitely good products. the question is, what are the investors' needs? the dividends though already you less than treasuries. julie: and there are some they get more specific as etf's always do. what were some of the other choices for investors? t-div is the first textbased etf.
dividends, butut not all of them. ibm, texassco, instruments, but it yields at 2%, and it supplement your lack of tech in other areas. also, d-fang. investors who are looking at t-div works that way. julie: you also have a multi-asset etf. what is that about? >> it is 20% dividend paying stocks. high-yield debt. it yields 5.6%. it is almost like doing the job of what an advisor would do. it is definitely portable to rising rates, but this is basically hitting the easy button. julie: eric, think it's a much. etf's for us at
bloomberg intelligence. vonnie: coming up, the federal reserve kicking off a two-day meeting today. we do expect a rate hike. we will talk about the banks' op tions to get monetary policy act normal, what ever that is, next. yahoo!'s coren of internet business one of the fused with aol. we will speak with tim armstrong. this is bloomberg. ♪
this is "bloomberg markets." let's check in on the bloomberg first word news desk. election --ssian the russian hacking of the u.s. election is far more widespread than originally thought. according to an investigation, russian hackers were able to infiltrate software systems in about 39 states. that is about twice as many states as previously reported. attorney general jeff sessions is going to be in the spotlight soon as he faces the senate intelligence committee about his role in the firing of james comey from the fbi. he will also speak about any meetings that he and president trump they have had with russian officials. you can see more about his testimony starting today at 2:00 p.m. eastern time. in the u k, inflation unexpectedly rose last month in the fastest pace in four years.
the weaker pound is having an impact. the cost of computer games, laptops, and more all rows. , a boost from china to isolate the island. biggest usersecond of the panama canal. taipeions recognize rather than beijing. i am emma chandra. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. mark: tim cook sat down with an exclusive -- for an exclusive interview with emily chang. he spoke about their plans to enter the automotive -- the automotive industry through self driving technology. kim: i think there is a major disruption limning their for
self driving cars and also you -- also you lecture fixation -- and also ele ctrification . if you have never driven in electric car, it is a marvelous experience. plus, you have ridesharing on top of this. so, you have about three vectors of change happening generally in the same timeframe. on,what we are focusing what we have spoke about focusing on a publicly -- we are focusing on autonomous systems. clearly, one purpose of economists systems is self driving cars -- of autonomous systems is self driving cars, but there are others. we see it as the mother of all ai projects. it is probably one of the most difficult ai projects to work
on. it is incredibly exciting for us , and we will see where it takes us. we are not saying from a product point of view what we will do, but we are being straightforward and that it is a core technology that we view as very important. mark: emily chang was there for that executive interview. you can catch more of that interview with tim cook throughout the day on bloomberg television. vonnie: let's look back at u.s. economics. investors looking ahead to the interest rate decision tomorrow. the committee begins its to date meeting today. the central bank is expect it to raise the benchmark rate and provide more details on any plans to shrink its balance sheet. for more, let's bring in u.s. intelligence senior correspondent. the market is obviously expecting a rate increase, but we are also looking for updated
projections. what are we likely to see? >> i think the projections will be updated moderately. we might see an increase in projections for economic growth. in the minutes, the fed mentions economy -- that the global economy is doing much better, and that will allow them to boost their private -- boost their projections for gdp a little bit. we will probably also see a downgrade to the unemployment rate. we are currently at 4.7% for the long-term projection. they might lower that to something like 4.6%. we think currently we are below the natural rate for unemployment. vonnie: what will they discuss? we are already talking about tapering off medical securities and how they will manage to do that. will it be at the beginning of this year or next year? how will all of that be brought
up and discussed? >> i think the economic conditions are quite favorable to what they are doing right now. they are pretty much the same. as long as we see a rebound in the second quarter of next year in terms of economic growth, and that is what we are seeing right now based on economic data available, and if the unemployment rate in tenure as the hover around historic lows, then they will -- the unemployment rate continues to hover around his door close, then they will proceed as expected. we will also expect them to talk about the balance sheet unwind. early forably too them to formalize the details of that. but we will probably get some information from the conference. the function is nailed on at 97%, but the yacht that it is
isking -- but beyond that it looking less likely we will see a hike later in the year. things will change after the it is only at 39% in december. what is the chance for the next rate hike? >> the future markets are not expecting the rate hike after the june meeting until the end of the year. successfully engineered the expectations for the june rate hike. that is what they are trying to do with the balance sheet. that is what they will do if they need to for the september meeting. so, bloomberg intelligence economists expect a june rate hike, of course, and after that a rate hike after the september meeting followed by the balance sheet unwind by the end of the
year. mark: it makes you wonder if such a pathway will give a boost to yields. that is something that has not quite happened in this rate hiking cycle. with the fed like the 10 year yield to be higher than it is? >> this is what they are trying to do, obviously. it is something they have to do when the economy is improving. that is what they will continue doing. eventually, as president dudley ago,oned just a few months if they do not see a response from the markets then they will just push harder. that is what they are ready to do. anythingill we see about asset prices and whether some of them are inflated and if that is the reason why the fed is continuing to raise interest rates? >> she will probably be asked that, and that is a great
question. we have a function on the bloomberg that shows the fed financial editions very easily. it is definitely -- financial conditions very easily. it is definitely something keeping them up at night and the reason why they will continue their policy. look like aoes fascinating function. thank you for joining us. bloomberg will bring you special coverage of the that decision tomorrow along with the press conference starting at 1:00 p.m. new york time and 6:00 p.m. london time. mark: a big day tomorrow. coming up, the fate of brexit lies with northern london. prime minister theresa may faces some demand from the party that could give her a minority position. the charts are still down by about 1.4% as you can see. this is bloomberg.
♪ vonnie: live from new york, i am vonnie quinn. mark: in london, i am mark barton. this is "bloomberg markets." us take a look at some of the businessews stories in right now. fordrug is being studied aren't you -- are the arthritis and cancer pain. the designation comes as the u.s. government deals with the country's painkiller addiction crisis according to the national institute on drug abuse. he recently said that millions of americans died from
painkiller overdoses in 2016. a new report from opec about the problems they are having in reducing the worldwide oil flood. they plan to extend production cuts. output was actually rising. they are seeing a revised outlook now that has been stopped by taxes and political crisis. of exports to china. the agricultural department says has trade rules with asian been finalizing. in 2013nke the exports due to concerns about mad cow disease. that is the latest bloomberg business flash. time now for our bloomberg quick take were we provide context and background on issues of interest. this time, we are going to be talking about bonds. not just any bonds, but in terms
of prices culture investors swooped in to steal the cheapest assets. investors get a chance to profit from other people's disasters. bolger investors take in money owed by strangling governments. argentina's that. here is the situation. goldman sachs came under fire in venezuela. bondss dubbed their "hunger bonds," because there has been covering the imports of food and medicine to cover payments. owners were led by paul singer of hedge fund elliott management.
latin america among financial troubles in 2015 checked on their bonds. they found out that the country would not reach a deal with its creditors. here's the background, the simplest example of culture fromting buys of bonds struggling companies with the hope that they will regain some lost value as the companies' restructure. vulture funds got their start in the light -- the late 1980's with the latin american debt crisis. sayics of the altar funds that their success with the argentina case could make it harder for countries to restructure debts by encouraging holdouts. in defense, the vulture investors say they are simply standing up for their business right. you can find out more on the quick take on bloomberg. mark: theresa may trying to save
face after garnering anger from her own policy -- party. the recent election cost her party in majority in parliament. she's going to reach a deal with northern ireland's unionist party. nejra, do you have any indication of how the meeting dup the du p/e -- the went? >> we did get a tweet that said that the meetings didn't go well and we can expect a good conclusion from them. we could see a deal on tomorrow or thursday. again, we did get a tweet that the talks had gone well. we will wait to see what the dup demands as far as any coalition
with the conservative party. that the dealay could, with exchange of money. it could come with the exchange of a billion pounds. being pro-brexit have said that what they are looking for is a softer brexit and what theresa may was originally going for. mark: also looking for a softer brexit's and then who know something about the former eu, the former prime minister john major. the only is he dubious about a , he up with the dup certainly things that the election result means we need to be heading in a less hard direction. >> that is correct. you are referring to john major, the former prime minister of the u.k., as he was being interviewed with u.k. radio.
we are increasingly getting signs from the conservatives that a softer exit may be in the cards. theresa may had hurt committee meeting yesterday where she had a closed-door meeting with rank-and-file members of the tory party. in this meeting, not only did you take full responsibility for the disastrous election results, saying basically that she was responsible -- saying that she brought the party into this mess and she will get the party out of it, but she also signaled she may be willing to rethink her views on brexit. she has also overseen a bit of a reshuffle in the brexit ministry just days before the administration -- deliberations are scheduled to begin. there is a lot of discussion about what form brexit will take. we have also heard from the liberal democrats saying that he a cross partyding negotiating committee on brexit which means that other views may
have to be taken into account in these negotiations even as the conservatives move forward with them with the eu. we have also had news that the thed history ministry -- treasury ministry has seen a step down. she was responsible for the financial services side of the exit deal -- the brexit deal. mark: breaking news out of pimco. pimco has named their next coat ceo as president jacob -- the as president jacob is set to retire in september. that is what is happening with him go. let's get back over to -- with pimco.
she is heading to france, and she is heading to an end who -- to a man who she might be envious of considering the recent election. what will come out of their meeting later? >> it is interesting how things turn out. when theresa may called the snap election, she was pulling 20% ahead of labor in the polls. she was firm in effect that she was expecting to increase her majority in the house of parliament to push through the version of brexit she wanted. she is now having to rethink brexit. it is still unclear what form it will take with just days before the negotiations will start. she is working together to put together -- she is working to put together a minority government at the moment. about hisacron spoke odds of pushing through his agenda.
in paris, what we have heard is that it is likely to focus on antiterrorism measures. we have already heard some news about the pressure on tech companies on that front. in terms of brexit, which will be the elephant in the room, we have yet to see if that will be discussed. of course, that is what we will be waiting for. mark: nejra at westminster, thank you. let me reiterate that breaking news. this from pimco. pimco president j jacobs is set to retire in september. pimco has appointed a co-ceo with emmanuel jacobs. coming up, why lenders are offering to play -- to pay a portion of bonuses is being met with resistance.
♪ mark: live from london and new york, i am mark barton along with vonnie quinn. this is "bloomberg markets." deutsche bank's new proposal to pay for fines with misconduct. the german lender offering to pay former board members a portion of their bonus as an exchange for export members to forfeit their claims to payments. ons joins us with a breakdown. what does this mean for the former board members? steven: it is an interesting proposal. ist deutsche bank is saying -- look, you can keep your
unvested bonuses when they vest, but we are going to take away most of your suspended bonuses, and that would be a voluntary financial contribution to the bank, showing their willingness to contribute to the bank and their difficulties. mark: how is the proposal being met by former board members? steven: there are some who seem to be in favor of it. there is a group that did does -- that does not like it so much. it is unclear how many are in support or opposition. what is clear, given that this is being offered, they can keep their unvested bonuses when they group withhe larger suspended bonuses are not quite as happy. mark: do all board members have to agree simultaneously?
>> they do not legally. disagreement could be with each of them individually. honestly, they are not employees of the bank anymore. for this to work, the bank needs an agreement with all of them at the same time. it is part of german corporate law which sees joint responsibility by the management when for events happening people were on the board. so, if one of them decides not to accept the agreement and decides to go to court, that would open up a whole new risk for the bank and potentially for the other board members and export members. should -- exmbers board members. much they willow forfeit in each individual share -- do we know how much they will
forfeit in each individual share? >> we did get information about how many bonuses were suspended for andrew james and another x ceo. we are talking about a few million in euros for each of them. plus, a significant amount of shares. i not sure how many of that they will need to forfeit, but it will be a substantial number. mark: stephen, a great story -- steven, a great story. what are the most read stories on the bloomberg there. steven arons, thank you. this is bloomberg. ♪
quinn. this is the european close on "bloomberg markets." ♪ here are the top stories we are covering from around the world. stocks trending towards the upside as the sterling marches on. -- fed efforts to form efforts to form a new conservative government continues as prime minister theresa may clings to power. tellsng schaeuble bloomberg germany what needs to u.k.t into brexit if the stays in the eu. attorney general jeff sessions faces senators today. what he will face in terms of questions with his own -- in terms of questions on his own c