tv Bloomberg Markets Americas Bloomberg June 27, 2017 10:00am-11:01am EDT
vonnie: we are covering health care, central banks and more over the course of the next two hours. let's get to some breaking economic data in the united states, consumer confidence. julie: it is coming in better than estimated. this is the consumer confidence rating from the con rinse board. -- from the conference board. a little bit stronger than estimated. the is in line with some of numbers we have gotten recently that have been relatively strong. 118.9 is the reading on consumer confidence. it has not been rosy on the economic front. the international monetary front cutting its forecast for the american economy.
the imf cutting forecast for growth to 2.1%. says-- what's more, it next year's growth will only be 2.1%. we are seeing a downdraft in stocks. it is not a big one, the dow just falling nearly 18 points. the nasdaq down half of 1%. we are taking a look at selloff in the bond market and it is pushing yields higher. a five basis point move in the 10 year yield at the moment with these weak economic numbers. theses we look at sentiment numbers, investor sentiment is not strong. this is a look at the s&p 500 in white and it looks at citigroup
implied sentiment indicator. it measures the instances that mention bullish or bearish sentiment in news stories. when it is more bullish, you see this go green. when it is bearish, you see it go read. there is more bearishness being discussed in the media than is indicated by the red bar, even as the s&p 500 continues to push higher. technologiesoned are the worst performing group, google shares, alphabet trading lower after that big fine from the european union of 2.4 billion euros. the regulators in the eu say that google skewed results to thwart smalling -- smaller shopping services. for offld be an issue of that is if the company is forced to change its practices, change it search engine algorithms. that could potentially be more
of an issue, but it is unclear what exactly google is going to do. shares down 1% after falling 1.5% yesterday. we are watching telecom stocks, broadly lower with the exception of sprint. this is as charter and comcast met with executives of sprint in the past month to discuss reselling wireless services. it sounds like it would not be an outright acquisition of sprint. some kind of partnership. comcast and charter both trading lower, as is t-mobile. there has been talk about t-mobile teaming up with sprint. sprint is the one that is higher. mark: 90 minutes until the end of the tuesday session. the weaker dollar boy -- boosting basic resource stocks, but it is largely red we are seeing on our screen.
we have seen draghi speak, we have had carney. yellen is in london. banking news comes thick and fast. the focus was on italy, today -- yesterday. today, it is on spain. spain looking to recoup the cost of bailing out these two nationalize lending -- nationalized lenders. the government looking to recover that 41 billion euros in funds it took in 2012 to prop up lenders under pressure from the country's real estate double burst. 2.6 billion in aid. 1.65 billion. given today is about inflation,
i thought we would start with oil. the white line is the stoxx 600 oil index. the blue line is brent crude. shares have tumbled with oil over the last month. most analysts have avoided cutting price targets. this disparity could lead to another down draw should analysts start revising their targets lower. six petroleum companies are among the 20 stocks with the most elevated targets compared with the actual prices according to analysis of the stoxx 600 members based on data compiled by bloomberg. according to barclays analysts, the industry is becoming increasingly challenged with several companies struggling to present a growth avenue. given it is a day of central
bankers, i thought we would look at the outlook for inflation. these are the five-year breakevens for the top line u.s. , bottom line eurozone. we are bouncing back a little bit, but inflationary pressures have diminished from those highs we saw earlier, this year. something to consider given the comments from draghi, carney and the ones we will get later from yellen. vonnie: seems to be going in one direction, that's for sure. a developing story, doesn't think -- dozens of companies in russia and ukraine have been hit by a ransom where computer -- ransomware virus. last month, euro poll said that 200,000 computers were infected in a global cyber attack. -- the u.s. coast guard is now confronting major delays
in unloading and loading container ships at new york harbor as a result of the cyber attack. we are seeing cybersecurity stocks lower on the news. sometimes they rise, so it is interesting to see this reaction. we will continue to monitor this developing story. it is time to turn to health care and washington. the senate health care bill facing stiff opposition. at least 3 -- three republican senators have said they will vote to block the bill. the congressional area budget office found the bill will increase the number of insured that uninsured americans by 20 million in a decade. let's bring in kevin cirilli and anna edney. the day that we would see a procedural vote which would allow a debate. will the bill even get to the floor? kevin: it is unclear.
senator susan collins says she cannot bring herself to advance the measure. people like senator rand paul as well. ist are two republicans, he saying the bill was not conservative enough and they are saying they will not allow this to come to a vote. that is a detrimental blow should this not happen. you also have a republican from nevada who is out against this bill. they are trying to have these negotiations but it is increasingly unclear whether or not this will come to a vote. what does mitch mcconnell have up his sleeve that he could possibly offer these three to five senators -- three defiant senators? anna: they are trying to make sure that people have better access to coverage. whether that is through medicaid or through purchasing plans on the individual insurance market, possibly, he's got about $200 billion to play with, as far as
being able to give concessions to these senators. that money could be injected in ways that might make them more comfortable. people could gain access to coverage better than they are able to, now. there might be some hardship in trying to afford deductibles or being kicked off of medicaid. mark: a delayed vote is clearly better than a vote that does not -- that is not successful. howe do get a delayed vote, close into the distance might a vote happened? remember when vice president pence suggested we may not get a vote until the end of the year. he walked back those comments but he was laying the groundwork for hunting policies. this is a congress that likes to say it can walk and chew gum at the same time, but it is really unclear that they can. as we move forward, there is
this notion that there has to be a juxtaposition of having health care policy reform before tax reform. that is the longer the case. now everybody is talking about lumping together tax reform and if the structure. and a makes a good point -- and a -- anna makes a good point. on the basis of that, you have a senators who are saying the bill is not conservative enough. they will have to go back to the drawing board after this week and it's unclear senators whethy even have enough political capital to get something through when they have other things on their radar. this is going to dramatically reshape the 2018 midterm elections and upset the base. mark: what does this mean for tax reform? anna: certainly a big part of this health care bill is repealing taxes that were on medical devices, pharmaceuticals
and insurance companies. also a big challenge -- a big chunk of taxes on the wealthy. you have to deal with those taxes down the line as part of tax reform and that limits what they can do and the pot of money they will be working with. vonnie: we will keep everyone up to date. thank you to kevin cirilli and anna edney. let's check in on the "first word news with emma chandra -- "first word news" with emma chandra. -- has to do is google's soft -- shopping search service. bloomberg spoke with the europe competition commissioner. >> google has taken advantage for its own shopping comparison on the cost of its rivals and being able to do so by misusing the dominant position in general search and that is the key of the case. we have found google to be dominant.
emma: the company has been given 90 days to change his behavior. google says it is reviewing the decision and considering whether or not to appeal. the imf has said the them -- said the u.s. will not meet trump's target of 3% growth. the u.s. economy will probably grow 2.1%, down 2/10 of a percent from april's update. the uk's brexit secretary is trying to ease concerns of business leaders over the effect works it will have on the nation's capital me. david davis stressed his government's belief that britain would be better off leaving the european union. he told the group the eu was not able to be flexible. companies and government agencies in russia and the ukraine have been hit by a rantwar -- ransomware virus that lucks commuters and demand $300 encryptor currency -- locks
computers and demands $300 in crypto currency. global news 24 hour was a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. vonnie: as republican leaders are speaking at a news conference, this as the senate health bill faces stiff opposition. there is speaker paul ryan. you can watch full remarks on the bloomberg. this is bloomberg. confidence in the integrity and impartiality of the cbo? ♪
monitor the developing story on the cyber attack. we are just hearing it is being confirmed that the russian oil company wpp, and ukraine have been hit by this suspected global cyber attack. annie: earlier, we also heard huge container shipping company was also hit and is causing delays at new york harbor in loading and unloading. a massive cyber attack according to a cybersecurity company based in moscow. it has hit 150 companies -- more than 150 countries, more than 250,000 companies. mark: check out wpp shares. shares were down going into the revelation that wpp is one of the companies hit by that cyber attack. we will continue to monitor this developing story.
gold is rebounding. from the cme to discuss it is bob iaccino. fact --s the suppose it fat finger that saw a big buy-in. how we moved on from that? bob: i did not think we had that .roblem, anymore gold to me, given to what the world thinks of the gold economy, it should be a lot lower than it is and it's not. we should be trading closer to 1050, 1100. but itflation in europe, is not there and it has to do with the undertones of this white house and some of the geopolitical timebombs that are sitting around between syria,
north korea and some of the other things i could go on and list. not to mention saudi arabia and qatar. gold to be lower, fundamentally. the only real fundamental things we have is potential geopolitical events and the tax that goes into effect in india which has people stockpiling the physical. mark: what would it take for you to be a buyer? i am a slave to price action and price action for me needs to get above 1260. want to be long gold because when it pops, it is going to pop on a geopolitical event. i need to get price action about 1260 and then we can see 1279 -- above 1260 and then we can see 1279. mark: you are long and oil, right now. where up to the fourth day, our best run in a month. only going to drift upwards little bit?
is 30 looking likely in the short to medium term? bob: i would say medium-term is a good call. for me, we need more news in crude oil. we get these short-term speculative balance ranges. news to have enough push us to where probably the supply versus demand story should go. we are coming in to what should be the peak of summer driving season. the july 4 holiday has not really materialize like it has, in the past. global demand is still going up and should outstrip supply, even with the excess that nigeria has put out, libya, iraq who is cheating on the production cuts, and the u.s. we have seen a bit of a tale in -- i think $30 is definitely
in the medium term. mark: great to see you, bobby a chino from path trading partners. wpp all hit by this cyber attack. wpp has been told to turn off their computers. they said to tell their employees not to use their computers or wi-fi. wpp is the world ticket biggest advertising company. vonnie: this is spreading around the world -- world's biggest advertising company. vonnie: this is spreading around the world. this virus has been used before. it blocks computers and then demands some ransom. currency inn crypto order to unlock these computers. we are also hearing that delays in new york harbor. this is the actual operations
mark: this is bloomberg markets. vonnie: i'm vonnie quinn. it is time for our beta segment. julie: just when you thought the world of etf could not get any quirkier, we have a new filing threat etf that has been a big topic of discussion. it kicks off what might be a weld new area in etf investing. for more, we are joined by eric balchunas via facetime. he is our etf expert. etf, a quincy jones
definitely not the first thing you might think of. what is this? eric: i have seen everything and i was shocked. basically it is the quincy jones streaming music, entertainment media. let's remove the name quincy jones. streaming music entertainment is not a bad scene. there is a fundamental story here. andlked to my colleague streaming revenue has grown about fourfold. not a bad basket of stocks. what is unique is that quincy jones comes first and he has nothing to do with it, they paid him to use his name, so they licensed his name to get attention to the filing of the etf. emma: the chart is that bloomberg intelligence data on spending on streaming which has been going up quite a bit. just to go back a second, so quincy jones, he does not have
anything to do with the etf? eric: they basically paid him to use his name. it is a crowded world for etf out there, and it shows how issuers are a little more desperate to get attention. vanguard, blackrock and state street -- 1500 products are fighting over a couple hundred billion dollars in assets. the question is, will anyone care? there is already an etf from powershares. it contains a lot of old media. it is not raking in the cash. in etf's isabout 20 a hit. there are a dozen others they go right to the graveyard. the odds are against it, but we have seen crazier things happen.
julie: is it smart beta? does it use factors to figure out what to put in it? eric: the screening process is so unique and the weighting process will be slightly tilt on market caps. it is smart beta, just on the edge. julie: eric balchunas, talking quincy jones. vonnie: thank you. still ahead, cibc ceo victor dodig joins us in a exclusive interview. this is the canadian lender pushing deeper into the united states. this is bloomberg. ♪
let's check in on bloomberg "first word news." have syria and russia dismissed allegations that they are preparing for another chemical attack. president trump warned president assad that they will become sequences. president trump ordered a missile strike on a syrian target after syria launched a chemical attack on rebels. -- preventable causes. that number has been rising thanks to adobe go to views and car crashes involving drivers distracted by mobile owns. that's according to the national safety council. the group says the death toll rose more than 7% in 2015. deadlyllout from that fire in the u.k. the british government has called for a major investigation. 95 buildings failed safety tests.
a new survey says america's image overseas has plummeted since president trump took office. according to the research center, 22% of those surveyed have confidence in the president to do the right thing. that compares with 64% at the end of barack obama's presidency. day innews 24 hours a more than 120 countries. this is bloomberg. mark: let's get back to the story we are watching closely. british advertising agency wpp has been hit by this cyber amid hacking attacks in banks, russia and the u.k. -- and the ukraine. hackers have planted a virus that locks computers. than 80 companies in russia and ukraine have been affected.
it disables computers and it titles -- it tells users to pay $300 in crypto currency to unlock the computer. the virus is spreading in a similar fashion to the one in may. that virus affected hundreds of thousands of computers in more than 150 countries as extortionist demand of $300 in bitcoin. wpp has confirmed it has been affected by this attack and it says it's i.t. systems in several companies have been affected by the suspected cyber attack and it is assessing the situation. vonnie: we will keep you updated. canada's banks are in love with and spent $28tes
billion and acquisitions in the past decade and there may be more to come. cibc has bought to congo's private banker for $5 million. ceo victor dodig is standing by with our own erik schatzker. erik: good to see you. we are focusing on the middle market, private banking. nevertheless, cibc is a tiny player in this market, relative to several of your canadian peers. royal bank of canada generates 20% of its revenue here. didi and female both to 30% plus beam oh -- bmod do 30% plus in the united states. victor: we have been in business for 150 years. we just celebrated our anniversary.
our -- our strategy was clearly a test purely a client driven strategy. the.op 80% do business in united states we did not have that full service -- banking platform we needed, and we went looking for the right bank and we found the right bank in the private bank, a bank that is focused on clients, focus on relationships, private business and wealth management, which we believe is the most attractive part of the banking value change. erik: so even if i adjust your financial to reflect that, less than 10% of your revenue would have come from the united states. where do you go? do you want to catch up to these other companies you compete with and generate 20% or more of your revenue in this market? victor: our goal is to follow our clients. before the acquisition, 5% of
our earnings came from the u.s. and now 10% comes from the u.s. that will happen through organic growth, with our investment in the private bank, with the help management platform -- with the wealth management platform and with the private bank, we will have a $40 billion wealth manager. we have a fully functioning bank, we have a fully integrated wealth manager and we are on our way to grow, organically, over the short to medium term and deploy more capital over the long-term. erik: a growth of that size would have to consume a lot of capital. victor: it will, but in the initial stages, our goal is to focus on organic growth. from a banking standpoint, we to provide the cibc credit rating to the
banking platform and continue to grow our capital markets by staying close to those clients in wealth management and the commercial bank. that all 3%f said growth target for the american economy is unrealistic -- that trump's 3% growth target for the american economy is unrealistic. victor: when i look at the overall north american economy, i think there is a tremendous opportunity for growth. we are going through a little transition where policies are being debated as to how to best generate that growth in the canadian market and rated 3.7%. u.s. market is generating between 2% and 3% depending on the quarter. we see it as a healthy economy with a tremendous amount of growth and of the right policies are put in place and that requires legislative change, we are very encouraged by the strength of the u.s. economy. erik: as a banking industry in
has been growing faster than cb -- cibc, many banks in the country, but less profitably. why is the structure less profitable? victor: if you look at the specific banks that operate in the u.s., private banking has one of the highest r.o.e.'s at well over 10%, which is not true -- erik: it's not 18. victor: i think it is a function of one's business model. the more focused the business model in banking, the more focused it is on client relationships, the more likely it is to have a better return on equity. the model,sparate the lower the return on equity. erik: let me bring up a chart.
how do you close the asset gap between cibc and the rest of canada's big banks? 20 years ago, cibc was the biggest bank in the country and now it is number five. victor: the best way to judge a bank is by total shareholder return over the medium-term. being large is not our goal. being client focused is our goal. focusing on clients in such a way that we can generate the highest total -- highest total shareholder return. erik: let's define the medium-term as five years. over the past five years, you are also in fifth place. victor: we have been going through a transition, as a bank and selling assets, buying assets and reshaping cibc for the future. i believe we have a very focused strategy. it also has a digital age, we're the number one mobile bank, the number one online bank as rated
by forrester for the last three to four years. we are performing well. our goal is to build a formidable business and wealth management bank across both sides of our border. that has a very attractive return, done right. bringing our capital markets business closer to serving the middle market ekman, we believe that we will begin to manage our costs well as we transform our cost base, stay close to our clients and generate the type of shareholder return that will be in the top end of the market. --k: even canadians note given americans know that the canadian housing market has been smoking hot, especially in toronto and vancouver, but also places like hamilton and victoria. so far, the taxes government has imposed on foreign buyers has not cool things down. why are bankers -- cooled things down. so cool about the
potential for a housing crash? victor: the canadian mortgage market and the housing market is very different from what the u.s. experienced before the financial crisis and too often i hear the comparison of it looks like just before the financial crisis of 2008. it's a very different mortgage market. very different structure. we as a lender are focused on prudent lending. we don't do any subprime lending in the mortgage space. we look at our client base coming into our portfolio. they are doing mortgage business with us, but deposit business with us, investment business with us. there is a prudence to our underwriting. there is no doubt that house prices have gone up dramatically in toronto and vancouver, in particular. they have attracted a lot of foreign capital as a place for people to buy a home. in vancouver, you have seen a
bit of a slowdown as a result of the government policies. you have seen the same things start to happen in toronto. erik: we charted the balance. the growth -- growth and mortgage balances for canadian banks and cibc is growing these balances at a very healthy clip, while three of your rivals are stepping off the gas pedal. doubter my look at that and say that does look like what some banks were doing before the mortgage crisis of 2008. some banks sped ahead while others backed off and the ones that sped ahead and did up getting into deeper trouble. why won't that scenario repeats itself in canada? victor: we are the number four mortgage lender in the country. we transitioned out of the mortgage broker business where it was difficult to build relationships with clients. we have been investing in a mobile platform, mobile mortgage advisors.
we have grown that faster than anyone else as we transition from people who were not part of our bank to people who were part of our bank. as a result, we are building deeper relationships. it is important to look at what else is coming in with those mortgages. are those clients full clients of cibc and i would say today, the portfolio looks much better than it did six or seven years ago. a lot of it is a game of catch-up. erik: generally speaking, higher rates are good for banks. would you like to see the bank of canada raise interest rates sooner than later? victor: i would say that globally speaking, the quantitative easing and a lower rate environment has helped us come out of the financial isis. broadly speaking, -- financial crisis. broadly speaking, interest rates have been too low. it is time to start ratcheting
them back up. that is a decision from governor to make. people make that when he sees the conditions for that to occur. erik: it might not be purely a function of higher interest rates but let me put this question to you. what would have to happen in canada for real damage to be done to your balance sheet? victor: the most adverse condition for the canadian economy would be for unemployment to increase. right now, employment is healthy. we have a good trading relationship with the united states and the broader continent. we are building on our natural resource strengths and moving into more -- into a more dirt -- diversified economy. unemployment is always a concern. erik: i want to thank you for spending time with us. good to see you. that is victor dodig, the ceo of
industry is struggling stable demand for the shortage. according to the s&p core logic roseindex, property values 5.7% in april from a year earlier. higher prices are keeping some first-time buyers out of the market. two u.s. senators are considering a plan to break up freddie mac and fannie mae. the proposal is inserted bob corker and mark warner is aimed at offering software competition in the secondary mortgage market. the government took control of freddie and fannie in 2008, when the housing market crashed. pandora is stepping down. he is also leaving the company's board of directors. the cfo will become interim ceo of pandora. pandora has struggled to compete with these -- with the fast
growth of spotify and apple music. amazon and google are investing billions in music. that is the latest bloomberg business flash. our bloombergor quick takeover we provide context and background on issues of interest. today we are looking at zombie banks. that issue is back in the news as italy provides a $19 billion lifeline. zombies are stalking europe. zombie banks, solvent in name only. the phenomenon is not new. zombies weighed down japan over 20 years. they are usually born of financial panic when loans go bad, capitals freeze and assets tumble. the rhino good choices wins on the banks are on the march. shutting them down can cause further panic. restoring them to health can require hundreds of billions of dollars. letting them fester can cripple an economy for years.
isope has been slow and it -- in its approach to troubled banks. cashrs increase figure for -- italy, repeated attempts to believe banks of sour loans have failed to restore trust. regulators just killed off one zombie with a forced sale of the failing bank. the terms on the bank was coined back in 1987 to refer to u.s. savings and loan institutions that had essentially been wiped out by commercial mortgage losses but were allowed to stay in business. by the time they gave up and cleaned up the mess, the losses of the zombies had tripled. in japan, zombie banks popped up on the company's. the prime example of a top approach is sweden, which nationalized ailing bank -- ailing banks back in the 90's. european lenders say that more than $1 trillion in debt loans did not earn the many money and
prevents them from making new loans that the region's economy needs to grow. critics point to the double-dip recession and a unemployment rate. have since -- soul -- slowly sold off toxic assets, but there is a risk. the cheap money the federal reserve pumped into the economy may have fueled the new bubble which could start the cycle all over again. you can read more on the bloomberg. mark: we are continuing to monitor that developing story on a cyber attack, similar to one i -- spreading across europe and hitting businesses. wpp, the world's biggest advertising company. it is disrupting government systems in ukraine as well. more than 80 kind -- 80 companies in russia and ukraine have been hit.
mark: live from london and new york, i'm mark artan. vonnie: -- mark barton. vonnie: and i'm vonnie quinn. -- prosecutor charged the embattled president with passive corruption based on secret reporting between hammer and the former ceo of the meatpacking giant jbm. joining us now is julia leite who is in new york with us.
reportingypical that might've been -- recording might have been made in secret. is it usable? can a convict a president? julia: there was a lot of debate about the recording. itthe quality is terrible, is hard to hear what is being said. it is all very low. so far, it has been deemed legal. -- hisal -- his legal legal team has been able to write the recording. what is the prosecutor going after? impeachment? julia: the prosecutor filed charges which need to be accepted how the lid -- by the lower house to proceed. if the lower house votes to affect, then it goes to the supreme court and at that point, he would need to temporarily step down while the supreme court rules on whether he should permanently be ousted or not. mark: does he have enough
support to survive a vote in congress? julia: so far, what we hear is that he does. lawmakers to vote against him for him to be ousted or for the proceedings to go on. his coalition has been much stronger than that. he has been getting two thirds of congress in his favor, so it would be -- it would take a big shift. mark: brazil is trying to emerge from its worst recession on record. to what extent does this complicate the reform agenda that he has been trying to push through? julia: that is a great question. togress is now likely going stop everything they are doing just to deal with this. there are a lot of procedures and proceedings that they need to discuss. it is unlikely we see much of the reform agenda moving forward and certainly not as quickly as it was.
vonnie: is there a candidate that would replace him? julia: not really, and we don't know what the proceedings to replace him with look like or how the election would even look. it would be indirect elections, but you have the former ubs executive citing bribes to over 800 politicians. vonnie: it is a story ongoing. thanks, julia leite. mark: coming up on the european close, we are following stocks less than 35 minutes until the end of the tuesday session. stocks are lower today. a day dominated by central bankers. we have had the ecb president speaking in portugal. janet yellen speaks in london, later. ♪
vonnie quinn. this is the european close on "bloomberg markets." ♪ mark: here are the top stories we're covering from around the world and bloomberg. major technology stories today -- the eu slapping google with a record $2.7 million fine allegedly boosting its own search results. companies from merck tech and advertising giant hit with a cyber attack. big news from central banks today. ando draghi is in portugal is the boe's connie going to toughen requirements for lenders? that is due before janet yellen speaks to the. day. oil prices hovering around the lowest levels in two months.