tv Bloomberg Markets European Close Bloomberg June 23, 2017 11:00am-12:01pm EDT
new york. close" onuropean "bloomberg markets." ♪ nejra: here are the top stories we are covering from the bloomberg and around the world. when you're on since the brexit vote, the only certainty appears to be uncertainty as the leaders got in brussels to speak to exclusively to ireland's finance ministers what the country expects to achieve. president trump faces new questions over the firing of former fbi director james comey while in congress, some republicans already pushing back on the gop health care proposal. and if commodities, does booming u.s. shale production me oil prices have no shot going back over $60? what about opec? towill post these questions
a norwegian oil giant. let's have a look at where european equities are trading right now. minutes, under 30 minutes from the close of equity trading and we are seeing the stoxx 600 lower in today's session. it is heading for a weekly loss and headed for its first monthly decline since january, as you can see from this bart chart. a little bit of risk off inequities in the are seeing the risk off across the ftse. i showed you a chart of the ftse 100 in sterling and dollar terms because the thing with the ftse 100 is that the pound has weekend, we have seen the ftse 100 gained, but in dollar terms, it is not been so stunning. looking at the ftse 250, we have seen this chart normalized, some double-digit gains in this sort of index of mid-caps and the u.k., but again, those double-digit gains coming when you look at the ftse 250 in terms of sterling. when you look at it in dollar terms, it is down some 3% since
the brexit vote. that is looking at u.k. equities. taking a look at the gilt markets. we have seen strolling drop 15% since the brexit vote. andou look at the ftse 100 ftse 250, you see a different picture depending on the currency we are talking about. to the gilt markets, investors have been somewhat pouring money into u.k. gilts. with that said, look at the two-year gilt yields. we have been seeing these coming up over the past few days, and this has more to do with expectations of a hike from the bank of england. that probably of a hike in 2017 increasing somewhat. 0.24% on the two-year gilt yield. taking a look at the 10 year yield, 1.03% on that 10 year yield. we have seen it did below 1% this week and it has gone back above, but if you look over all since the brexit vote, we are down some 33 basis points on
that 10 year yield. we are looking at small gains for the major averages in the u.s. all three indices are higher. on the week, we also have the three major averages higher. the dow on pace for its fifth beginning in a row, the longest streak this year since december of last year. the russell 2000 up 2%. the russell reconstitution, the rebalancing. some are saying it will be -- it will bring frenzied trading action, but not have seen that you -- but not have been seeing that yet. energy, when was the last time we have seen energy at the top? on the bottom, health care. put in five river
closes up until today, but taking a breather on that sector rotation we have been watching. that the betty subsector doing quite well. homebuilders has lots of strength after the new home up 600,000 versus the estimate. nice gains here. plus a record has been set for the median price for a new home, and that is $345,000. not so bad. so the stats -- so these stocks are really rally on that information. turning to injury -- turning to energy, we have oil trading higher for the two days in a row, the first time we have seen that happen in quite sometime. oil of 8/10 of 1%. sector for the s&p 500. bit of a relief rally after all the bearishness. one question could be what does this mean for stocks?
term, it may not too much. andlue, we have oil and white we have the s&p 500. they are mainly correlated, but we had is the convergence act in the 1990's the are looking for an even bigger divergence. it could suggest oil higher and stocks lower. not too much of a correlation between stock and oil. nejra: interesting. thank you so much, abigail. when you're after britain voted to leave the european union, brexit's as a not going away on the political and economic front, however, you keep prime minister theresa may sound optimistic. here are her comments after meeting with leaders in brussels. >> we had a very positive discussion about the offer that the u.k. had made to e.u. citizens. and other leaders have also reacted positively to me on the offer that we have made. as the ftsecomes
100 is edging lower today on the when your anniversary of brexit. for more, let's bring in paul dobson and matt campbell. great to have you. one year on now. i have charts coming out of my ears, paul. sterling has dropped 15% since the vote. the ftse 100 in lukewarm currency term rises. though, whation is are strategists saying that happens from here? >> the u.k. economy seems to be at a turning point. on the one hand, inflation is looking very high at the moment. but that is doing is squeezing the consumers. people have less to spend as wages is not rising as fast as inflation is. the stock market is putting investors and a bit of a quandary.
the bank of england is looking at inflation thinking, do we think we need to raise interest rates? on the other hand, the are looking at the companies -- the retailers, that were struggling because people just don't have as much to spend. seeingunch plated we are is making it very hard to know where to go from here. will remain pretty much unchanged. nejra: matt, i want to turn to you because you have done some great reporting owing around the country, talking to berries companies. what have they been saying year on? matt: opinions are somewhat divided. in theere brexiteers corporate world. and do have a large proportion of business owners, chief executive, who want to borrow a phrase from theresa may, get on with it. whatever is coming, they want it
to happen so they can have some certainty and plan their businesses and investments accordingly. chart: paul, we have a and our chart library. the blue line, if we can see it is actually showing wages dropping. and the white line is inflation rising. does that trend continue, or does it rivers when there is more certainty or the central bank to something else? paul: we are seeing are seeing a great deal of hope that wages are rising. poundpact from the weak is something that is important that the moment. besides, policymakers are .tarting to express concerns there is a worry here that it is not going to go away and that squeeze will continue. i thathat is that investors have to consider when they are making their decisions on the pound. ceos,: matt, do company whether multinationals or small
and medium-size enterprises, do they like that with wages staying low inflation rising a little bit? vonnie, it really depends on what you are doing. lower wages are a problem if you don't have anyone to hire. there are issues if you look at the agricultural space, the service industry, they depend very much on european labor that is dried up to a huge extent. there are all of these factors doing around for anyone trying to run a business. nejra: matt, i wanted to ask you -- what are companies making of theresa may's decision on u.k.'s citizen's right. matt: this is the kind of thing that people, both within the conservative party and right across the business world, have been asking for, which is a framework that will lay out how
you citizens will stay in the u.k. there were some comments earlier sayingrom donald tusk this is not as far as the european council, which he leads, that he wants to u.k. to go. there will be back and forth there. but theresa may has laid out a principle that no one should be forced to leave. youa: paul, i want to ask about the bank of england. we have a dovish economy followed by a hawkish one it seems like the net affect has been a backup and yield gilts. but repricing of racing at the end of this week in terms of the gilts markets? the thing with gilts is that they had outperformed in terms of global bonds. will that continue? paul: there are a couple of different things that counts, i guess. in terms of overall performance of the market is the back end has held a particularly well,
but that is for the domestic bids come from. they held the gilt market. thehe front end, we have u.k. two-year yield, the highest since november, showing the sterling market and the money market, where people put their bets on what the banking industry will do. i think there was only one or two analysts that of come out that the bank of england will move, and we don't even know the full lineup for the ache of england -- for the bank of england. there is a little bit of uncertainty out there. if anything, the bank of england will be quite happy with a shift up in the yield curve. , that takes away some of the complacency in the rate market. it means the bank of england has the options if it wants to people will not be completely shocked and surprised by it. nejra: we had it interesting
story by bloomberg actually today, saying that it is really getting difficult for the bank of england to hike, almost out of fear. is that justified? well, i think the central bank has to stay independent and has to have the courage of its commitment. we have seen upon a vote against it in the past. it happened several times. it is possible. you go with the majority, that is why the panel is made up of independents and international, freethinking economist, coming up with a consensus. i don't think there is fear. i think the bank of england can think of itself as hamstrung, but they want clarity on brexit to make things a little bit easier. vonnie: it has been a full year. pretty hard to believe that. matt campbell, we have had three or four rounds of earnings' calls.
a rehearing the same things from ceos over the last three quarters -- are we hearing the same thing some ceos over the last three quarters on what is going to happen over the next quarter or two? matt: we just don't know. it is a bit of the monotonous refrain, but there are so many durables in this negotiation process, and they depend on what business you are in. if you are in the financial world, you have a completely different set of concerns about where these negotiations land and if you were airbus will source looking to coordinate european supply chains. have you say, the competition of the u.k. government will have a big effect on this. the important thing is to get these negotiations rolling, and to provide a bit of certainty the companies large and small about which way they are headed so they can plan and invest accordingly for their specific sectors. fora: peggy so much
bloomberg's -- thank you so much paul.t and vonnie: let's check in on bloomberg first word news. >> north korea is speaking up for the first time since the death of the american college student been jailed for more than a year. tonight that they cruelly treated otto warmbier who died on monday in ohio after being released last week in a coma. north korea says it treated him according to domestic law and international standards. president trump says his threat of possible tapes with meetings with james comey may have had an impact. president said the former fbi director may have changed his story is a caffe what happened and reiterated that he did not take the meetings, but that the president raised the possibility that there was government surveillance. in london, police say that manslaughter is among the charges being considered in that high-rise apartment fire. they said that the fire began in a whirlpool hot point
refrigerator. the manufacturer is not investigating, and the building is plotting and insulation saying the field safety test. 79 people died in the fire. president trump has made woody johnson to be ambassador to the u.k. he is the great-grandson of cofounder of johnson & johnson. he is a longtime computer to republican candidates and no mr. trump for years. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i'm courtney donohoe. vonnie: thanks. coming up, more on the latest drama and washington. plus, if the gop senate health care bill already dead in the water? this is bloomberg. ♪
♪ live from london, i'm nejra cehic, talking you down from the european close. vonnie: fly from new york, i'm vonnie quinn. the complicated relationship between present donald trump and james comey took another turn. in an interview, the president claims comey may have changed his story. pres. trump: when he found out that there may be takes out there, whether it's governmental tapes or anything else, who knows, i think his story may have changed. you will have to take a look at that because then he has to tell what actually took place at the events. vonnie: president trump tweeted that he did not make nor have any recordings of his conversations with comey. kevin cirilli is with us now. kevin, how much more do we talk about whether these tapes existed or whether there is
taping of the oval office from, you know, whatever side it might be? kevin: vonnie, i think you are right when you describe it is complicated because it is complicated. president trump being the one to really first drive home the notion that there could be recordings between himself and now fired former fbi director james comey, but right after our very own for jacobs and shannon pettypiece scoped that there were no takes the president had of the conversation, he then tweeted, with all the recently reported electronic surveillance in the can of information, i have no idea whether there are tapes are recordings of my conversations with james comey, but i did not make an do not have any such recordings. the president taking some type of legal advice from his legal counsel and tweeting that there are no tapes. but this was kind of, he was back-and-forth, back-and-forth for several weeks in terms of
whether or not he had them, but he is looking to put a conversation behind him. vonnie: today is a deadline for the white house to produce taken for comey to produce all of those memos about the meetings. i want to meet on to health care because yesterday, there were four senators that were not in favor of this bill once they had finally seen it. at least three others are on the fence, more saying they need to read it. any developments? kevin: i spoke to senator rand paul that they are proposing mitch mcconnell's health care bill as a result of it not being conservative enough. they fill they have to deliver a bill for the conservative's grassroots community. then you talk to moderates, people like senator susan watch isand the one to senator dean heller, a republican up for reelection in are from nevada who are
also very much him offense and if some cases, opposing it because they feel this legislation is too far right. they take issue with the funding plant. as well as a host of other cuts including medicaid that they feel would be bad for constituents. in some of these more moderate states, even democratic states, obamacare is still popular. at the equityook market, we are seeing health care stocks underperformed both in the u.s. and europe today, but i also want to ask about president trump naming the jet's woody johnson as ambassador to the would -- as a mentor to the u.k. -- as ambassador to the u.k.? knew woodyyone johnson was going to be the u.k. and that's it. , but noeagles fan question about it, woody johnson was one of the early supporters to former governor jeb bush, and
any crossed over into supporting trump.n-candidate donald ee is someone who quite frankly has been angling for it and if i got announced. it will be interesting to see if he can get president trump to meet with u.k. officials since we all know that the president was left off the agenda for an upcoming meeting in the fall. there has been quite some discrepancy as to if he is going to go over there to meet with folks in london. there has been a lot of confidence reporting on that. right, thank you to our chief authentic correspondent, kevin cirilli. still ahead, the effect of brexit extending beyond the u.k. nejra cehic will speak it lucidly -- will speak
♪ live from bloomberg headquarters in new york, i'm vonnie quinn. nejra: and live from london, i am nejra cehic. time for bloomberg's business flash. bought more new homes than expected last month and paid a record price for them. sales were up 2.9% to an annual rate of $610,000. the median sales price soared 17% to -- the supply of houses. to be at the lower end of the market. --has hit a speed bump. is one-time smartphone maker the art of the hardware business and missed analyst estimates for total revenue.
blackberry shares had risen 50% for the year, but most of its revenue comes from software. flashat is your business for this hour. we are heading to the european equity close in just a few minutes time. let's take a look where european markets are trading. the stoxx 600 off by 2/10 of 1% heading for the weekly loss at its first monthly loss in january. the ftse 100 off slightly on the anniversary of brexit, although it has gained in double digits in sterling terms. the dax leading the losses, down for tencent 1%. this is bloomberg. ♪ . .
with vonnie quinn you can see a s&p amount of red in the space in europe, portugal, spain, germany's taxes down by .8%. sincerst monthly law january. x spaceics face -- f seeing stronger after the brexit vote. it had declined to some 15% in the year following the brexit vote, even though it is higher today. in the fixed income space, we are seeing a backup on the front end. not a whole lot of movement in the 10-year we are not only seeing two-year yields edge , but be a-year edging higher as well. most industry groups are heading lower.
losses,are leading the .5%, whereas it was outperforming yesterday after the news on a health care bill out of the u.s. let's take a look here at the euro versus euro stock 60 sentiment. we are seeing a little bit of a emergence here where it ran -- divergence here where it ran in parallel. the euro stocks 50 index , three month option for both. 100,ked about the ftse talked about in sterling terms, in dollaruble-digit terms, it is sort of where it was pre-brexit vote. since brexit, we have seen the 50 gain in double
digits and also the world index. just yesterday, it had been a great week for the dollar. ht todaysee more weig and increasing. a good week for the u.s. dollar. also, the new zealand dollar is not doing very well. earlier,t gold, oil sometimes, gold is stronger. the lane from the federal reserve is also making gold buying a little more attractive. on the 10-year5 come a long stretch of offshore. seven straight sessions, which is the longest straight number of sessions in seven months. a quick look at the g10 movers.
obviously yields as well. nejra, you have big news for us. nejra: i do. thanks so much, vonnie. big news out of ireland. the country's government raised the allied irish bank sale, and turning to brexit, the uk's premise or, theresa may, sketched a post-brexit right for the system, but does her pledge go far enough. the formeruss with finance minister of ireland, paschal donohoe. minister, mr. donahoe, thank you for joining us and your giving us your time. great to see you in luxembourg last week. the ipo in the middle of the rain, and iab has risen about -- aib has risen about 5%. that was an ideal move according
to those familiar with the duration. whenne looking good, but the government sold shares two years ago, the government then began pressing lenders to cut mortgage rates, which help push down the permanent share price. assurendering how can we investors that the same thing won't happen with aib? mr. donohoe: because what we are dealing with an aib a completely different scale. i think the pricing achieved today and the response reflects of this.erstanding it is a bank that very much represents the strength and the irish economy. we know and believe come and we have it in common with the thestor community, that bank has very, very strong prospects in the future, and the share has been priced. nejra: are you little concerned
that if we do see a little bit of a stellar rally from here, a similarcome under situation that the u.k. came under with royal mail? mr. donohoe: no. we feel the share parts in the pricing parts are very positive. betweents of difference ourselves and royal mail, of course, is that the irish government and the irish people give the own system 5% of aib, so of course the further change in the share price of aib in the future, the value we hold in still retaining a majority of the bank will also go up. so we believe your investors will price this in a way that reflects the long-term trends both of the bank and this economy. dora: on that 35% that you still own it, when might you start selling the rest of that? nejra, wee: look,
are a few hours into what you yourself have acknowledged the largest transaction of its kind for quite some time now. if we look at the london stock we are left with the action to go ahead, 75%, and other shares that we have an irish banks at the moment. we continue to do what we believe is right, but our focus for the time being now is in enabling what we believe are very successful effects to conclude. you be into the idea bonuses for senior management? mr. donohoe: we have indicated our stance is that no bonuses are to be made
available to those, particularly executives, within those banks. but our policy is always reflect of where our banks and the irish economy is at any point in time. it is no bonus, as long as it is understood by people of the mona share in aib, as many people have done, and we believe this is the right policy overall, that continues to be in control of the irish government. nejra: you said earlier that you would ask the cabinet to approve more bank sales. can you say more about which banks? mr. donohoe: as you know, we are actions fromm any aib for some period of time. this focuses is in the process of concluding. as you are aware, we hold shares the s&prent forms to
and also the bank of ireland. we believe this is going to be a very positive transaction day. we are looking forward to seeing a continued narrative across the coming weeks and months, and as that unfolds, nejra, we will unfold policies. donohoe, i want to switch and talk a little bit about brexit. we heard from prime minister theresa may out landing her -- outlining her pledge on citizens' rights. around 300,000 of them actually irish. i know we are awaiting more details on monday. enough, and if not, what further commitments would you want to see? mr. donohoe: i prefer to see before ietail, nejra,
offer a view on behalf of the irish government. say that the status of irish citizens, the irish people, is a matter of grave importance for ireland. and the way in which we will be a priority is inside the totality of the european union. the european union has now programs the number of matches, grave is a matter of concern for ireland, the relationship we have with u.k., vis-à-vis northern ireland, and of course the issue with eu nationals. but i hold off further comment in relations to prime minister may's statements on details. nejra: yes, of course, the relationship with northern ireland and absolute key not just for you before the rest of
the eu, as you were saying. there are talks of a soft brexit, and there has been since the u.k. election, for example, chancellor hammond specifically said that the u.k. will remain in the customs union or that he wants it to. of course stocks are ongoing as well. i am wondering if the u.k. does not remain in the customs union, how likely is this order that the dmp is looking for? mr. donohoe: we feel it is exceptionally important and positive that the british government in its new composition that it is going to take focuses on a frictionless border. it is so important for northern ireland and the entire island of ireland, in terms of how it is going to happen, this will be one of the outcomes that will
come from the process now underway in the government of the united kingdom. in relation to their potential relationship and all of this is now grown into cv negotiations that we play -- and to see the negotiations that the u.k. and the eu have. -- the more easier it will be to allow a mechanism. much, fornk you too the finance minister of ireland, paschal donohoe, joining us in an exclusive interview from dublin. much appreciated. vonnie: great stuff, nejra. let's check in now on the first word news. vonnie.morning,
a list of demands given to qatar by saudi arabia and allies, according to officials involved with the talks, qatar was given a list of 13 demands aimed at ending the diplomatic standoff. qatar was told to shut on the al jazeera tv network, cutback ties with iran, and cut ties with the muslim brotherhood. is among, manslaughter the charges being considered in the high-rise apartment fire. authorities say the fire was started in a whirlpool refrigerator. the manufacturer is conducting tests. at least 79 people died in the fire. frisch authorities have charged conspiringwith murder. darren osborne killed one person and wounded several others. the biggest ponzi scheme are in
u.s. history says his problem was that he always wanted to please everybody. bernie made up was question in april as part of a lawsuit involving his investors. he also said he is not proud of what he did. he received a 100-year prison sentence for his crime. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney. this is bloomberg. vonnie? vonnie: thank you. the largest offshore operator is out with a report. we will speak with their chief economy next -- economist next. this is bloomberg. ♪
york, i am nejra cehic. vonnie: and i am vonnie quinn. turning over to energy and oil again thiss moved week, june not turning out to be the best month for commodities. a barrel costing something like $43 right now. for more, let's bring in a chief economist. the international energy company rolls out with a new report on the future of global energy markets. eirik, welcome. as chief economist of an oil how do you differ from a regular economist, if i can call it that? eirik: we have a look at the same areas, oil and gas is determined. globally. it in an oil and gas company, we have to be concerned both about the short-term and the really
long-term. better he also have rejections and better data to work from. eirik: to some extent, yes, because we have our own data. but everybody has to struggle with global data, and then we rely on international instances. vonnie: i imagine it is a little bit like running a campaign, having polling data and an outside data. talk about this year for the report and how it differs from last year's. had 2040 last year. when you do that, it becomes a bigger uncertainty. it becomes much wider. that is one difference. of course we have one more year of data, one more year of surprises. the current specifications was an important milestone. we had an election that was moving things, changes to the political climate, changes in
technology developments as well. which: speaking of paris, is obviously a global change, with the u.s. now pulling out, does that make a difference in your world and the picture for you, or is that just one country fulling out of a multi-country agreement? the rapid news was ratification by a letter countries, and then a significant pulling out some departing, is negative, and the long-term consequence on u.s. emissions are probably very limited. the market will drive this all the time anyway. development in the united states has not had much dependent on federal policies. course of the issues of is the mechanism in the paris agreement that might take a hit. you probablyecause need a lot of funding.
moving on, something very significant has changed. the power in the market when it comes to supply has really shifted. it used to be opec as a cartel. now, u.s. shale producers have a massive sway in some ways over high-end demand. do you ever see oil getting back about $60 an barrel? eirik: yes, definitely. it should happen relatively soon, but it does not happen tomorrow and to take quite a while. the resilience of u.s. shale oil ongoings to step up, that we keep production stable, also outside of the u.s. and non-opec countries for long, but at some point, it has to come up. vonnie: when is that point? five years, two years?
eirik: within five years, you should see a significant tightening of the market for a significant period. vonnie: does opec deepen cuts? eirik: if they deepen cuts, won't they increase production? --s is a patient's game patience game. what is important is the 60 million euros produced by non-opec producers. demand is increasing, at some point, we will see solar starting to all, and that is the key to getting a short-term price. vonnie: we have to leave it there. fascinating conversation. it also works in other various commodities, fascinating. with statoil, chief economist, thank you. nejra: vonnie, great stuff. things are looking very sweet
it is time now for our global battle of the charts. what they mean for investors, and you can access these charts on the bloomberg by running the function featured at the bottom of your screen. we have a chartfest today. kicking things off across the atlantic in london is christine athena. christine: thank you so much, vonnie. i had to do a brexit chart because it is the anniversary. -- it got a lot more expensive for me as our u.k. residence to are just
things at the grocery store, but it is quite the opposite for americans loading up on british goodies. my colleagues and i took a look at three when essential british items. three,d that for all prices have actually risen in the past year unless you convert it to u.s. dollars. the prices of all those three products in the u.s. dollars all down in the past year. drop of horse4% since brexit, as we can see in the blue line. for american viewers who want to hop up roughly on, load up on british goodies, check out this #btv 384.the # -- g she threw me off my game. now i just want candy. good tactic. the ftse russell rebalancing,
why should you know it? jonesbecause according to trading, 32 billion is in the market trading. in these green circles, i have rebalance days, and as you can tend tos when volumes be high-end records, check out what happened here in 2016. definitely one of those days where the turnover, the rebalancing for ftse russell occurred. keep an eye on that. just to give you some numbers, energy is expected to have a $1.8 billion inflow test, financials 2.6 outflow. this is something you need to be aware of as you are trading today. there are some idea that price movement will not be too much because as days occur, traders have already been gearing up for them. if you have not in this is the first time it, this is why i am here. you can check it out at g #btv 386. vonnie: all right, well, in kristine's favor, can i just say
that was a very smart chart? i like some golden crisps whenever people put in the order. maybe a little fruit and nut bar. that would be good. chart wise, we have not mentioned the rebounding at, and that is what it is all about. i will give a tie. nejra: that puts me in a difficult position, but you know what, kristine -- both charts à l excellent, but i will give it to kristine. stay tuned, because of next, "bloomberg real yield." ♪
nathan: from new york city for our viewers worldwide, i am jonathan ferro. this is "bloomberg real yield." ♪ coming up, crude enters the bear market, weighing on inflation expectations, reflecting balance sheets of energy companies. and the treasury curve is the flattest since 2007. credit investors put their foot down after companies get greedy, looking for even lower yields. we start with a big issue -- inflation expectations continue to break down, waiting on the yield curve. >