tv Bloomberg Markets European Close Bloomberg June 13, 2017 11:00am-12:01pm EDT
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 connections to russia and the firing of james comey.
stockske a look at how are doing your the end of this tuesday session. stocks are rising for the second day. yesterday, technology stocks rebounding. sterling is rebounding today as well as commodities. this is the euro against the pound. yesterday, the euro reached a seven-month high against the pound. we're looking at this eight-month traini -- trading phase. this was the post exit high after october of less year -- of last year. dropsts has forecasted a in the fourth quarter. hsbc is forecasting parity. the high for the euro against on december was 97
the 30th 2008. we have some data today. we have german investor confidence expected to be dropping in june. it was a sign of exaggerated optimism. europe's biggest economy is beginning to fluctuate. analyst expectations predict economic development. economists were estimating 21.7. business confidence at the highest level since 1991. manufacturers, service is, providers -- services and promoting strong economic fundamentals. this is a nice, little chart today. it is a bearish warning for brent crude. futuresfollowing -- falling on monday. the moving average following --
falling below the 200 day moving average. it could signify a change in short-term momentum as it did at the end of 2014. look at what happened across the 50 day in 2014. we went from 110 down to 30. i not suggesting it is going to happen. history sometimes is a good indicator of the future, but sometimes it is not. 90 minutes into the trading day in the u.s.. how are we looking over their? -- over there? julie: things are going little bit south. technology is weakening as the day progresses. i'm going to call an audible here. i want to show you the nasdaq chart as we plumb the lows of the early session here. we have pulled up the
semiconductor index, and it has started to turn lower here by about nearly half a percent as we see technology pair some of its earlier bounceback. technology earlier was in the top spot. it is now drop down here to number seven. technology now up just 0.1%. things are changing rather rapidly. it is not clear what spurred the change here as we see this fate as the day goes on. take a look at the large cap tech movers. we are seeing them individually hair their gains. -- individually pare their gains. stilland alphabet trending higher, but not quite as high as earlier. overall ins&p 500 blue and tech in white. we have seen technology really outpacing gains over the past two days.
on the bottom, we have a ratio of the two. here's the 10 day moving average. above still around 25% that 10 year average. it is interesting here that even given the selloff we have seen it, technology is still on par to per -- to outperform the rest of the market. thelly, we have looked at car rental companies striking. this is after piper jaffray saying this is attributed to an revised look at consumer pricing from the automobile administration. these stocks are heavily shorted. upward move,an then perhaps you see some short covering. mark: we are getting this from the european it u.k. commissioner, he says that the
second review on greece is within reach. he has also updated the eu on exit. brexit that the eu hopes negotiations can start very soon. take a look at the markets. tomorrow, we expect decision from the fed. joining us now is andrew milligan. hello, andrew. investments, less attractive or more attractive or the same? >> anyone worried about brexit of course finds it less attractive. in the context of the global economy, what is happening with u.k. politics is fairly unimportant. you cover the two most important trends which is firstly oil. if that does fall towards $40, then that could stay very important to markets. is expensive, but it
is one of the few growth areas. people have been looking for growth stories. tech is showing some growth out there. those are the two big stories. type of brexit are we looking at now given the inconclusive election results? > do we know if they u.k. -- the european union will look like out five-years time? it is not just a u.k. negotiation. also involves the eu. think certain parts can be done quite quickly. i am sure negotiations will start monday if not earlier. we will get into technical
-- let's say we get out of the way in about six months or so, can you tell me what the european union look like in five years time? mark: could not tell you. >> then how can we tell about their relationship within -- the uk's relationship with an unknown organization. vonnie: they are absolutely gluing rocket participants to scream -- two screens right now, because there is so much market uncertainty. >> let's go back to what we do know. some of the basics are that the economy is growing. -- the fed and ecb are telling us that interest rates are not going to rise aggressively for the next 18 months. that is a system -- the situation we have to look at portfolios and start thinking about markets and sectors you want to buy. the lyrical uncertainty is great
to worry about -- is great to think about, but you do not really see it as a long-term change to market. material changes, not so sure about that. vonnie: vonnie: we -- vonnie: we have been seeing it little bit in currency markets, but not elsewhere. would you be adding cash? a lot of folks who come on the show have talked about having plenty of cash on the sidelines. >> i think it is about pumping the cash. it suggests that cash levels have risen. i think that is heavily because valuations of some markets are relatively high. that is not just tech, but also u.s. market generally. you have to choose relatively carefully when it comes to emerging markets. europe is overly liked i a lot
of people, but global equity is looking good. we are not raising cash. mark: do not be mesmerized by the blue skies. all markets are increasingly at risk. that is not my words. that was from bill gross who wrote in. continuousretty theme. >> absolutely. of course, we have much respect for his views. there are demographics like aging that we know about, but central banks are still manipulating financial markets. they are manipulative government and yields. your screen tells the story. he is absolutely right. it is a danger, but it is not in the next year or two. the central banks normalize policy by reducing balance
sheets honestly. no one knows what the impact of that will be. the academic -- the academics have not quite worked out what the impact will be. mark: in the meantime, do we just get on with it and keep adding to it? >> know, do not keep adding to it. highs are not particularly should we have been quite measured in what we are doing. we have seen a lot of money in high-yield, fixed income. yen in our japanese portfolio. mark: what are your risk levels for those? what are they relative to brexit and the financial crisis? thatrtainly rather high,
we are on target to reach our annual performance with the levels we have. there are major dangers out there. what is good to be happening to china in the next 12 to 18 months? the discount rate is not where it should be. of if's outlot there, but in 18 months, the global economy looks good. i think we could still see some headway for equities markets. thankandrew milligan, you. vonnie: let's check in now on the bloomberg first word news. >> a few hours from now, attorney general jeff sessions will take his seat in the spotlight. the senate intelligence committee will question him about his role in the firing of james comey from the fbi. he will also talk about his contact with other russian
officials -- with russian officials. meanwhile, the russian hacking of the u.s. election last year was far more widespread than rishel -- then originally revealed. russian hackers successfully infiltrated voter systems and 39 states which is twice as many as originally reported. european union will talk about president trump in their summit next week. they will reject project -- they will reject protectionism and underline that the paris climate records cannot be renegotiation. the eu is unhappy with president trump's rejection of global free trade and the paris accords. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. this is bloomberg. mark: courtney, thank you. after the election backfired, we of theresaith an mp
♪ from bloomberg world headquarters in new york city, imo vonnie quinn. i am vonnie quinn. david: and i am mark barton in london. in's talk about theresa may her struggle to hold on after the election backfired. is standing by with a member of the conservative party. she was formerly the education secretary. she has just come out of the house of commons where we have heard from theresa may and also
jeremy corbyn. jeremy corbyn mocking what he called the coalition of chaos. theresa may has talks with the dup today. what kind of impact do you think a coalition could have on exit? -- brexit? >> i have to say it is a bit rich for the labor leader to poke fun. they did not win the election. they got a much smaller number of seats. we will wait to see what is in the agreement, but the issues between the northern island and the rest of ireland will be a part of it. there is an opportunity with the new makeup of the house of commons to see it there are any issues. to see at some new form of trade agreement can be reached. happen.hink brexit will
we are not going to be members of the european union in a couple of years time. >> how do you feel about staying in certain -- >> the desire for the u.k. to control its own bureaus. union is something that might be explored. what is interesting as a result of the election is the call for a commission to work on exit. that is something that the former conservative party leader was advocating. it was something raised by theresa may when she spoke with conservatives last night. i think the promised her want to take the country with her on brexit. >> and we'll talk about the cross party commission in a moment, as that is certainly interesting. first, bloomberg had an interview earlier where it was mentioned that brexit could be overturned and the u.k. would be welcomed back. could brexit be overturned?
>> it is unlikely. i do appreciate it, but it looks like everyone who wants to leave still wants to leave. we need to have the most sensible deal that does not undermine our economy. [inaudible] >> one party calling for the has is a leader calling for a cross party negotiation commission on brexit. with that the useful -- would that be useful? >> the prime minister recognized last night the need to listen to the views across the house of commons. at the end of the day, this has been a hugely divisive issue for the country. we want to take not only the
house of commons but also the country with us. we will work on a cross party basis, we will not bring everyone -- but we will not be able to bring everyone on board. of course we will not. but if the economy remains strong, and that is something has to be explored. >> it is interesting how thoughts have shifted on the prime minister even in the past couple of days. the work calls for her to resign , and the committee yesterday seemed largely supportive of her. you said that in someday there could -- you said that there could be a leadership conference as early as this summer. you still see that happening? >> i go back to what i said earlier on. there is no appetite in the party or country for any kind of early election. there is concern that theresa may, if she stays as prime minister, that she will form a meeting with the deity -- the
dup. -- theresa may did say yesterday that she would be the leader of the party for as long as we want her to be. i think that means at some point there will be a new conservative party leader. i am not sure my politics is what the conservative party would want. i think we need to get theresa may time to get her government in place. >> who could replace her? >> there is a lot of speculation. it will takence, some years of experience in the conservative party to decide who the next leader will be. >> nicky morgan, a conservative mp and former education secretary speaking with us here. today, we will hear more from our exclusive interview coming up with tim cook including his strategy to increase sales in china. this is bloomberg.
♪ mark: live from london, i am mark barton with the european close just moments away. vonnie: in new york, i am vonnie quinn. let's hear more from our exclusive interview with apple ceo tim cook. emily chang asked him about his strategy to increase sales in china. >> in china, for us, we are focused on the long term. we are not investing for next quarter or next year. we are focused on many years out. as i stand back and look at china, i see trends there that make it an incredible market. i do not mean a market justice sell in, but i also mean a market for -- a market just to sell in, but i also see a market
for application development. an incredible marketplace for talent and in terms of the size of the marketplace. short-term kinds of economic moves up and down, i do not get too excited about. expected is it for apple to increase double-digit growth with china? >> at think we would do better this quarter than we have the past several. it does not mean we are growing double-digit or that we will grow, but it does mean that we will be better year-over-year. the iphone 7 is the most popular smartphone in china. the iphone 7 as is the third most popular smartphone in china. last year, the size of our business was greater in china.
we are going to stick at it, because i think china is a huge opportunity overtime. cook apple ceo tim speaking exclusively with bloomberg. vonnie: let's take -- apple ceo tim cook speaking exclusively with bloomberg. atk: that's take a look where european markets are at the head of the close. check out the currency boards. the sterling is up after two days of declines. it is the biggest today drop since october. i will finish up with the bond board. as stocks rise, this is what is happening with bonds. this is bloomberg. ♪
yesterday we saw technology stocks leap. tech shares up by 1.1%. we are up for the second day. of almostbiggest drop a month yesterday where the stoxx 600 fell 1.1%. fell 3%, thex biggest drop since the days of the brexit vote last year. rebound this year. some of the declines have been washed away. over 15est level in years. big inflation resuming the upward path last month accelerating more than forecasted. the fastest pace headlined in two years. we had an increase in price for computers,mes, partially reflected by the decline in sterling. inflation rates of 2.9%, the blue line, highest since 2013. the core rates include energy
and 2.6% higher since november 2012. the price pickup in additional pressure on households that are not seeing their wages keep pace. slowing to 2.2% in the last quarter partially because of weaker consumer spending. a big day tomorrow, wages could continue to see a squeeze on real wages. sterling the biggest decline since october when it fell by 2.3%. it is out today. theresa may apologizing to her own mps yesterday. she's trying to forge some kind of arrangement to ensure that the conservative party can continue governing. interesting to see what analysts are saying about sterling's trajectory in 2018. they see 1.28 in the fourth quarter. we're at 127.
the forecast was 123. speculators have amassed the biggest bullish on the euro in more than six years. speculative positioning has been bullish for five weeks after three years of negative positioning. analysts are forecasting 1.12 in the fourth quarter. in march they were bearish. one analyst, one projecting parity in the fourth quarter. how's it looking over their? vonnie: day 144 of the trump administration. the market looks like it is focusing on the f1 three meeting. above 97.l trading nymex crude oil down another .5% . it looks like concerns are not being addressed by saudi arabia.
45.83 for a barrel of crude. the yield on the 10 year is not moving much. 2.1 six has been the five-year average. we are a little above that. it is the short in that is moving. we are at a low of 84.59. the canadian dollar is diverting a little from the other oil currencies. has been surprisingly good in canada giving strength to the canadian dollar. the mexican peso is -- three-day meeting is kicking off today. tomorrow we will have the policy decision for world interest rate probability giving and 97 percent probability that the fed will raise rates tomorrow. the last five days we have had bond selloff so little. 10 basisar yield is up
points. possibly a flight to safety. we had the tech selloff, a little rebound today. the move up from yield, regional banks rallying in a big way. arently the regional banks lockstep to the 10 year yield because of the lending activity. the question is, what next? especially after the fed does potentially raise rates. this is g #btv 9299, a nine-month chart. after the election we see a backup in rates, then when the fed raised rates in december. in march, uncertainty. we see yields dropping as bonds rallied. same in march. recently, we have the 10 year testing to the moving average. will that test continue to be successful? there is a reason we could see the 10 year yield the outs to the bottom of the blue line, but
more so this chart is bearish. overthey would drop minor 39. she thinks this could be a weighted move. see would suggest we would and opposite reaction of what many have been calling for. it also gets a some ring about the fed balance sheets. this is g #btv 7515. we have the fed talents sheet $4.5 trillion. all-times you have the highs. the 10 year yield is down. if it continues to go down, it may suggest there might not be too much use of that balance sheet. that balance sheet coming in and the 10 year yield going down at the same time. .ark: to brexit the german finance minister speaking to matt miller earlier today. he said that when it comes to brexit there is a chance to reverse course.
colleague told me what it means. a lot of young voters voted for labor, not the conservative party. they have the idea that they voted more for brexit. y are thinking. look, if you look at the french election, the second round of the presidential election, the younger generation is very much citizenship. there is a new opportunity to bring your forward. -- bring europe forward. brexit is a decision, but we
will minimize the potential damage and maximize the mutual benefit. >> do you think these young voters, do you think britain has the ability to turn that around? is there the possibility that brexit doesn't even happen? >> the speculation that that if they wanted to , they wouldision find open doors. that is not very likely. >> what if they wanted more time to negotiate. the u.k. needs to sort things out before they come to the table. it has been three months since article 50 and they haven't started. can they have more time? >> the legal process will now
start. election, the first round, they will negotiate the brexit. we can as it is done and furtherallel relations with the u.k. after brexit in a single market and european union. therefore, that starts the negotiation and we will always come to reasonable decisions, start thetoo early to discussion. the eu proposing a two-tier system for clearing houses. the proposal could force u.k. derivatives clearing firms to
say goodbye to london post-brexit. let's bring in the bloomberg financial regulation reporter. requirement, it could prove hugely contentious. indeed. that is why the commissioner has chosen a more cautious approach to this whole thing. you just heard the commissioner of financial services say at a press, rents that this proposal is not about moving business for the sake of moving business it is ensuring financial stability. that is why there is no general requirement, for example, by imposing a threshold. more the commission is setting out how to provide and determine when a firm needs to live relocate -- needs to relocate. it is unclear at this point. vonnie: what would be the
criteria? widget be being in the vicinity -- would it be being in the facility of regulators, or something else? alexander: one criteria is that the biggest clearing houses outside of the eu that are important for the eu will be subject to regulations from the european union and also or provisions. that means on-site inspections by european supervisors and to data. if there is an agreement that ensures this, allocation policy could actually be avoided. there is another tier of systemically important pieces. one expert called them mega, that could everything become subject to a location requirement. mark: changing the view that
clearing is going to be a political hot potato when the brexit negotiation truly gets underway. alexander: i personally don't think so. thet of all, we have power the commission keeps to impose a location requirement is still there. it gives it a little more leverage over the u.k.. on the other hand, we will also u.k. as france has called for a more generalized location requirement. germany has been more cautious. it will have to remain a political hot potato. mark: thanks, alexander. bloomberg reporter for the eu financial regulations from brussels. vonnie: a lot of hot potatoes
these days. first word news with courtney donohoe. courtney: president trump says former attorney general loretta lynch broke the laws for secretary clinton. in a tweet he says that lynch gave clinton a free calling it "totally illegal." former fbi director james comey said lynch lost credibility because she met with former president clinton. lynch said they never discuss the investigation. in the u.k., prime minister theresa may discussing a possible alliance with the northern ireland democratic party. last week's election cost her the conservative party majority in parliament. conservatives are angry about the election disaster. also said she would rethink her approach to brexit. any u.k., inflation rose to the fastest pace in four years. an annual rate of 2.9%.
having an impact across the computer games and laptops. spain, international soccer star cristiano rinaldo could face tax fraud charges. madridlege the real player defrauded the government of $17 million. rinaldo probably would not go to prison as a first-time offender, even if he was found guilty. mobile news powered by 2700 journalists and analysts in 120 countries. the russia investigation intensify as jeff sessions faces questions from senators on russia contacts. we will be asking, how concerned should the administration the? this is bloomberg. ♪ -- administration be? this is bloomberg. ♪
mark: live from london and new york, i am mark barton. vonnie: the european close on bloomberg markets. all eyes will be on the testimony of jeff sessions as he is questioned in a public senate hearing about ties to russia. kevin cirilli caught up with democratic senator ron white. about what he is looking to hear from sessions. important especially to me are the circumstances with respect to his recusal. in the open hearing, i asked mr. comey about that. mr. comey said he could not give a full answer because he responded to me there were problematic matters that he could not discuss in public.
vonnie: for more on what we can today, what are the odds that sessions doesn't evoke insect get information? >> part of the expectation is attorney general sessions may invoke executive privilege. that seems to be the expectation. that is not going to satisfy democrats. senator wyden myself yesterday, who mentioned he intends to ask the attorney general about what james comey, the former fbi director, said at his own testimony when he said he learned things about sessions that made it problematic for him to continue in the russia probe. as suggested, he is going to ask about the circumstances of his recusal. he said that it does not seem like a real recusal.
the fact that he was participating in the recommendation to fire james comey, who was involved in the investigation. in the background, the hasf executive of newsmax suggested trump is considering firing the special counselor overseeing the fbi inquiry. is there truth in this? >> we don't know the extent to which the white house is seriously considering this. it could be just something that was brought up in a conversation that is now being conveyed that was not a serious piece of consideration. speaker ryan said he has andidence and bob mueller the best thing to do would be to let him do his job. perilousbe a pretty political pill to swallow.
it would suggest the white house has something to hide when they say theyit would suggest te house has something to hide when they say they haven't. i don't know that would be helpful to them. vonnie: he will be in wisconsin for workforce week making a speech. do you anticipate he will be watching jeff sessions' testimony closely and be concerned in any way? .> he will certainly follow it he wants to know what he says. he will either watch it or be briefed. the president has a full day. he will absolutely want to know what jeff sessions said and the extent to which he discusses any private conversations he had with the president. treasury steve mnuchin secretary's testimony has wrapped up. what were the highlights? from thest interesting hearing with the treasury secretary is he walked back what is known as the mnuchin rule.
that the white house does not want an absolute tax cut for the wealthy. this is a hot button political issue. that has led democrats declined what is known as the mnuchin rule. he walked that back and said he did not make it a rule or that it was more of an objective been a redline. he got a lot of criticism from senator wyden on that issue. seenax proposal is being from the white house and republicans include significant tax breaks for the highest earners in the united states. kapur.ahil live coverage of mr. sessions' testimony. 7:30 p.m. u.k. time. do not miss that. coming up, battle of the charts. massive moves in turkish stocks, can it do you thrown the fed?
going -- if there wasn't enough going on today, it is time for the battle of the charts. what they mean for investors. you can access these charts by running the function at the bottom of your screen. we have an all-star lineup. big dayrow, we have a for a fed watchers. starting with cpi data. then the fed decision later in the day. i have a chart that wraps up the developments we are talking about and will get updates on tomorrow. the blue line shows the real yield on five-year treasury inflation protected securities. the best estimate of the fed neutral rate. that is what they have said.
that the line shows fed funds rate, the expected fed funds rate over the next year minus the core cti inflation rate. we had a dramatic tightening. we are barreling towards neutral for the first half of the year. part of that is the fed raising rates. the other part is the inflation data has been coming down. we want to see, does the inflation data keep rolling over and boosting the white line further? later in the day, what is the fed signal for the rest of the year that has the potential to boost the white line further and bring the fed pretty much to neutral, which would imply not much tightening going forward. vonnie: if the inflation data lightens up tomorrow, that is not good for the economy, right? >> it is not great. this is the tension. do they keep tightening even if the inflation data continues to weaken?
that is what we will find out. is my: taking on matt base colleague mark barton. mark: speaking of on-the-fly decision-makers, down 20,000. down 21,000. so boring. istanbul, 100,000. the turkish benchmark today crossing 100,000. .00,000 for the first time ever in the pie graph we have stronger than expected turkish economy growth, 5% in the first quarter driven by government expenditure in the wake of the failed coup last year. fiscal policy recovering. europe helping exports. 27%.benchmark of 27% -- up it is the fourth best-performing benchmark in the world. discount to other
emerging markets, still, 368% higher since its post-financial crisis low versus the world which is 149% and the emerging markets, up 117%. the dow 20,000. the turkish, 100,000. vonnie: if it had stayed above that number, perhaps you might have won. one hundred thousand close might have been a winner. matt, you get the win. congratulations. sorry, mark. more markets ahead. ♪
vonnie: from bloomberg world headquarters in new york here are the top stories. the federal reserve has kicked off its tuesday meeting. it is expected to hike rates for the second time this year. how will the central bank shrink? attorney general jeff sessions faces lawmakers on russia and the firing of james comey. the story behind one of the largest digital hikes in history. billion could $55 have been stolen in virtual currency and why there was no way to stop it. we are halfway into the trading day. julie hyman is here to explain. julie: it has been entertaining in a strange way