tv Bloomberg Markets European Open Bloomberg June 30, 2017 2:30am-4:01am EDT
♪ >> good morning, welcome. this is "bloomberg markets: european open." cash is about to open. we will bring you the first trade. i am told that berlin is somewhat underwater, or has been. with matt miller firmly afloat. what are we watching this morning? growl, butere's a will this week really be remembered as a watershed?
yes, that is a bear rolling down a hill. is sub target inflation a short-term phenomenon? as draghi projects, is it merely a sniffle? we are less than a half-hour away from the european open. a lot to talk about in markets this friday. maybe the equity indexes are not really going to be your focus. you can see equity index futures here, little changed. slightly to the upside. you want to look at sovereign debt across the eurozone. i have a chart of one's -- of bunds as they'll ways do. from the three debut, we are timing relatively steeply. you will hear this all day. i will pull it out to a one month view, and this is why everybody is saying the same
thing happen. you see this when you look at gilts as well. it if you look at the bund, is really pronounced. a huge jump at the end of the month in yields, up to 0.459% and climbing. guy: take that to one year for me now, because i think this tells a different story. change it to a year and look at the range. 0.5%, 0.5%.range, we have struggled to make it above that. the target on the bloomberg is a 0.6%. i think we are off to the races. you have to get out of this trading range before you start talking about this being a major story. yes, we have come a long way very quickly, but i think that one a year chart tells the story of what it has been like this year. tight range. you can see the same thing on the blue screen.
we have guests lined up to talk about that. going to pointt out, you will hear all day about bond spreads and bonded yields, and you are right. if you look at the one year range, if you pull it out to the max view which goes back to the reunification of 1989, you can see that we had a head of fake move in the past, where the books like it yields will recover, and they don't. this is a 28 year chart of german bunds. the trend is clearly down. guy: is it still raining? matt: it is still raining. the flooding, in fact. we have two feet of water throughout the capital here. guy: excellent. for once, it feels good to be in london in terms of the weather. matt has some great stories to tell us about coming up. if you want to get those, we will talk about them during the program and ib him.
matt was talking about how markets were not going anywhere. a went somewhere yesterday. look at what happened here, dax down by 1.83%. the cac was down. australia down by 1.66%. china, today we bounce back a bit. take a look at this long-term chart. what else is going on in these markets around the world? the japanese 10 year is up another three basis points. we are not even talking about the levels we are seeing in germany, but that is the move. the australian bond market is interesting. take a look at the mliv. they have smart analysis. there is plenty going on. the bond market is the story. but use that would context. let's look at what is going on around the world.
u.s. president donald trump and his russian counterpoint vladimir putin is to meet for the first time as heads of state. the meeting during the g 20 summit in hamburg qualcomm as relations between the two countries are at their lowest in decades. war in syria, moscow's intervention in ukraine, american sanctions, and investigations into russian meddling in the u.s. election, including possible collusion between trump officials and the russian government. in the united states, the revised travel ban pit criticism. it began 8:00 p.m. eastern. half an hour before the band started, hawaii asked a judge to clarify whether the government violated supreme court instructions by deciding who is covered by the ban.
the u.k. prime minister has won parliamentary approval for her legislative program after being forced into concession on abortion rights to stave off a potential defeat. theresa may's brexit dominated agenda passed by 232 votes. earlier, the government defeated to opposition amendments to end measu8res -- measures. the confidence index has dropped to -10 this month from minus five in may. this is due to the inconclusive election preventing britons from spending on big-ticket items. the world's second-largest economy maintained in that the second quarter. the manufacturing purchasing index beat estimates, while nonmanufacturing also gained.
it gives policymakers room to cool the property sector. global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. guy, matt. guy: asian markets following the u.s. dropped the most in six weeks while volatility spiked higher. here is the central bank tightening that pushed up yields. they certainly moved. the delta, yields, the rate of change has been strong. maybe we need to get to some levels that are quite exciting. they are .46% now. -- am iselling this? underselling this? mark cudmore joins us.
been rogan,have particularly with the yield, but i take a look at the bunds at .46%. being aing to end up very similar story, or is it different? mark: i listened to what you were saying earlier. at it on the longer-term picture, it looks as though it is a significant point. i would say that the 10 year bond yield has gone up this week. if it moves at least 20, it goes further than that. this week may not be the end of it. we may be at the beginning of a move. it is possible that something will happen today. mario draghi mace be today and calm everyone down, but if he speak today and, everyone down, but if you doesn't, we may have a 0.5%
yield that you were talking about. matt: where is that money going? rk: probably back into the very short end. when people get nervous about these kind of things, they get back into very short-term. we were writing today about 2-year note's becoming a defensive play, and some of that money goes there. the u.s. move has are ready happens. if you are moving out of europe, one of the safest places to go is back into the united states. guy: does the end of the month have a factor here? the window dressing will have happens, but is that a contributing factor to what we have seen this week? it probably is, because if you are sitting on the conversation thinking you can cruise into the end of the quarter and then you have this from the last few days, it may force some people to liquidate who were not planning on doing so. matt: i want to point out a chart to you that you guys might
want to use on mliv today. on the seasonality chart global stocks. you can see in the second row, a row of green. that is 2017. these are monthly moves on the msci global stock index. we have not had a pullback any month this year. you can use this chart to go back 20 years. this is the longest on a record that we have gone without having a monthly pullback in a year. a full six months without a pullback. where is this stocks rally going to end? mark: who knows? it has defied a lot of people already. we have gotten into territory that is so high that people who have no experience with this before. one thing it does tell you is that it has been going on for such a long time, it is hard to
explain when it is still going. when it turns around, it could be nasty. if you start to see week is, maybe that is a sign not to stick around too long. just get out. out, as you say, opposite a long run. ark it's go up, up, up, and go down quickly. cranfield joining us, fantastic insight throughout the day. giving you an understanding on where we are and possibly where we are going. your bloomberg. if you are a bloomberg customer, access tv . you get the video stream, and you also get the sidebar. you can pull out the great charts that are generated on mliv and here on the tb department. a good year for the mexican peso. here -- the ibe
delivering a rosy forecast and announcing new plans to forge a closer relationship with shoppers. adidas announced that they expected sales to increase this year, excluding currency effects. -- deutscheunveiled bank has knowing -- named a new cohead of asia-pacific. he is one of more than 10 directors and managing directors hired by the equity group in the asia-pacific. the move is part of a broader push by the german bank as it sees client assets rebound from a tough 2016. boeing briefly suspended flights of its new 737 max jetliner last month because of a possible flaw in an engine part produced by arconic. it is another blow to arconic, which is facing possible lawsuits.
arconic said in an a mel statement, we strive for perfect quality, and continuously improve in a partnerships with our companies. a french billionaire has told bloomberg he plans to put paris on par with silicon valley in innovation. his push to encourage algebra newer's supported talks -- to encourage entrepreneurs lined up with emmanuel macron. -- we are that fromng for young people the outside of paris. we wanted to create the company. juliette: that is your bloomberg business flash. guy, matt. data breaking because
draghi says any pickups -- the low inflation is a temporary phenomenon. that certainly seems to surprise a few people. french cpi is out. you wouldy what describe as exciting. year on year, the number is 0.7%. flat.nth to month is the eu harmonized number, 0.8%. inflation in spain is going nowhere. 2.1%.ro is you would think there would be a relationship, but it does not seem to be as clear. that is the data. you can access the screen on eco .anus matt has a different route, but
i am right. matt: if you go through weco , you can get colorful flags. if you consider higher inflation a good thing, they are in line with expectations. the markets knew where they were going. let's talk about the asian equity markets. a slid after they fell off in the u.s. reawakenedhas been as the quarter draws to a close. woesechnology sectors deepened as the years biggest winners were sold off. led to declines in the s&p 500 in the u.s. banks were impressive with their stress test results. bloomberg's editor of cross asset analysis garfield reynolds is in sydney. garfield, asia is awash in red think as we get set -- in a red theas we get ready for
european open. is there any fundamental driving these drops? garfield: there doesn't seem to be much sign of that. that has been some talk u.s. stocks have dropped because of concerns about global tightening cycles. although, if there is a global tightening cycle the way the market is reacting, the bond market is reacting seems to indicate that yellen is not expected to be leading that anymore. andu.s. dollar is down, there is no significant tightening seen in a markets in the u.s. asia has mostly been playing follow the leader. aussie indexes are down. surprisingly, if you are looking for a big drop in a korean heavy stock index, the cost be is down but only by -- the kospi is dow n, but only by about 0.2% .
thee people are taking chances to take profit off the table because the has been big share gains this year. guy: this is not including china as you much -- as much as you would thought. that fits the political narrative. but it is an has not been associated with this move we see elsewhere. now that we start connecting china to the rest of the world, does that kind of a difference -- does that difference stay moreus, or actually the integrated it gets, the more we --rt seeing when china garfield: there is a lot to unpack in that. think that the market has been waiting so long for the chinese inclusion that it is probably not surprising that when it came
, there were not too many bells and whistles that accompanied it. goes, part of the impact is that some of the asian stock markets matter less than they used to. to takeanother reason money out of there. i think going forward, broadly, as long as china moves toward this stable economic growth that it probably is going to be something that if anything helps to act as a stabilizing factor, especially when there has been so much concern over what might european political offense, u.s. political events. china is pretty stable on that front. integrating into the rest of this stock world you would think would add to the stability. guy: i haven't thought about it that way around.
if they can stabilize their market, that may act as a couple of stabilizers on either side of the market share. garfield, thank you very much. our editor across assets managed -- of cross asset management. we will take a look at the movers next. nike is beating estimates. this is bloomberg. ♪ matt: we are five minutes away
from the open. let's look at stocks to keep an eye on. today.ll start trading the euro is the biggest hike -- in years.n germany it seems where to call them a tech company, they basically deliver food to your door, but the idea is it is the internet platform and the app. the one i heard it on german radio today called it the ebay of food, except the food is used, of course. it is interesting that this prices at the top of the range when blue apron had to cut its price before listing. they are fairly similar. they will face competition from amazon. the difference being that delivery hero is more of a middleman between local restaurants and your front door. guy: match, keep an eye on that.
let's take a look at where the fair value on the bloomberg is this morning. yesterday, big moves. the market was down 1.8% around europe yesterday. that fair value mispriced line, you can see. hopefully get it and a more stable situation. it has been an interesting week. matt: it has. it has been an interesting quarter and year. it is good to take stock of where equities have gone this year. we have a stock on the bloomberg -- we have a chart on the
bloomberg that shows you how much of global equities have bluerformed commodities in and the aggregate bond index in yellow. equities have been a massive winner so far this year. the question is, does anyone want to take profit? guy: i don't like anybody is going to be doing anything at the get-go this morning. the market is flat. going nowhere in a hurry. bonds have done incredibly well. how much of that move we have seen this week is down to a calendar event? the stoxx 600 is opening in positive territory. the ftse is down less than 1/10 of a percent. gilts are opening. manus cranny, over to you. manus: how much equity valued
you want to take? you are seeing a rotation out of technology into financials. here is europe. europe financials up. we are waiting to see if there is any carryover today from the flu and the technology puke up. let's talk about the propensity for rate hikes in the u.k. we are now looking at this. 66% probability of rate increase in the united kingdom by the end of the year. is that realistic? is that a reasonable assumption to have? i had paul donovan here.
after speak of rates from central bankers. he said to bear in mind we have the downton abbey of policy tightening from the united states. it is not going to be aggressive. market got to ahead of itself in terms of over extrapolating the governor's comments from fincher? inse are our major purchases the u.k. this is also consumer confidence. that is waiting. -- waning. you look at consumer confidence in europe, at a 16 year high. curve. the yield the gilt market begins to open. probability of a rate hike is being more aggressively priced in the u.k.
gold is an interesting one. it is getting cheaper in euros to buy gold. yesterday, clearly a discernible move in key sectors. the market was down by 1.8% yesterday. to hold where we are now is something to pay attention to. matt: absolutely. it's very interesting to watch what happens, especially later in the trading day as we get closer to the quarter and and people need more of that window dressing. let's take a look at where european bond yields are trading. surging yields have driven the global bond and equity selloff after mario draghi and mark carney signaled that tightening could be on the way. with us is freddie lait. what do you make of the big surge we have seen in bond yields? is this investors taking profits at the end of the quarter or is there something more? it ise: it is hard to say
any more than that. it has been exasperated that it is the end of the summer quarter . change inbeen a step global coordination by central bank to try and attempts to play catch-up with the fed. they have been a few years ahead on their tapering and rate hiking cycle. the news from the bank of england and mario draghi this week has been blown slightly at a proportion, but it was a more hawkish stance, and some selloff and deal expansion is warranted. -- yield expansion is warranted. matt: i am going to pull up a chart. 465 is the number. .his is inflation the headline in white. the core in blue. it is coming down. equallych cpi number
unimpressive. our central bankers really determined to look through this and continue to get less dovish? freddie: looking at that chart specifically, i am looking at the comment that we are in a reflationary environment, i think he is attempting to talk the market up. he wants to continue. cpi itself is one measure of inflation. there are others. he wants price inflation to continue through a tapering. i think they have to positively. if you are a central banker and not sitting in the federal reserve, you are sitting on zero interest rate. -- interest rates. you want to try and normalize policy a little bit. moment, it is clear the european economy is looking stronger. there has been that reflationary impulse. the franco german axis looks stronger. ands the right time to try
talk the market and rates up. guy: let's take a look at a chart because back a year. we have struggled to go above .5. the rates changing have been quick. we still have not gotten above those levels. does this have legs? freddie: it is hard to tell. that is a quarter and exasperation of a slight policy change of the ecb. i can see it going beyond .5. guy: would it go much beyond that? freddie: that is probably a fair estimate. bankso you think central are doing this in aggregate, or do you think they are doing it for individual reasons? the reasoning looks different from different places. freddie: i think it is coordinated.
that it isis clear everyone of -- everyone else versus the dollar. the global economy looks good. we word six month ago when we were talking about the end of globalization. that is not -- has not happened. risk for been a tail the last few years. now it is looking stable. of policyeven years experiment through qe has worked. look at us with our coordinated catch-up with the fed. that sends a positive message to the market. matt: do they run the risk of getting the markets hopes up? envision a situation in which mario draghi does not start to talk about tapering and continues to intervene in the markets at a pace of around 60 billion a month throughout next year. if he does not get the inflation
he wants and he has to continue with the accommodative monetary policy, is that a big bummer? freddie: it is. more very likely to talk seriously about it then to implement changes in policy. ist you will see initially that through the taper tantrum in america in 2013, the dollar rose against most of its pairs. aree have any sense we normalizing against that in the bank of england or ecb, you should close a substantial portion of that gap. that is a huge amount of financial tightening for a system without any change to tapering or rates. that move in the currency will do some of the work for him. i think it will be harder to act the way he is talking, but it is right to be talking the way he is. -- whenemmanuel macron donald trump was elected, the market went nuts expecting
change. we were expecting big things for the u.s. economy. take a look at the french papers. expectations for what and mental can deliver are so olivia did. -- for what emmanuel macron can deliver are so elevated. expectations of what he can do and his -- and the change he is going to deliver in europe are skyhigh. i am wondering whether or not we are about to see that story being played out again, maybe differently, but a similar vibe. isddie: i think the analogy fair. there is a huge amount of hope in emmanuel macron. in terms of the analogy, i think it stops there. donald trump the election has left increased political uncertainty and the most important economy in the world. that remains.
charges, policies. there is potential. the election of emmanuel macron has more fiscal stability. , ceo ateddie lait latitude investment management will stay with us on the european open. i want to take a look at tv . it is a function you can watch the show on and follow along if you click into the panel and see which functions we are using. see the charts we use on air. the linklso click on down here and ask the guest a question. we will keep your name confidential. --next, we will talk the
marriage bill. 393 to 226.nt, it looks like they have caught up with a lot of the western world and passed a gay marriage bill. and more left parties were for it. a lot of the cdu voted against this, although the chancellor has said she recently has rethought the issue. breaking news there. the bundestag passing gay marriage, hundred 93 to 226. to 226. haveundestag, many would voted against this them up and possibly the thing is so many would vote for it it pass. -- it passed.
let's check in on the markets and see how we are doing 15 minutes into the trading day. we had a drop in u.s. market carry through to asia. it is not really shown itself in european markets. ucb stoxx 600, the broader benchmark of european stocks, really unchanged. the ftse is down, but we see pound strength. the dax and pack our unchanged as well. not a lot of movement in equities. i think people are focused on bunds and bunds and currencies. guy: the pound has been one of the big stories as well. it is a contributing factor to the ftse 100. sterling has erased all of its postelection losses. yuki equities, that is my question. what does it mean in terms of policies going forward for the bank of england?
.et's get back to freddie lait the pound is going up. there is a call that maybe the bank of england needs to think about rates. the pound goes up, it heightens financial conditions. do the banks wait and see how far this run goes? freddie: i think that is how they have to play it. post be tempered -- taper tantrum in america, we have had brexit and of the reasons why the pound has gone south. to see some normalization of the , you could see pound going to 135 in the medium-term. it changes the inflation outlook . conditions financial
without moving the short break of the curve. you need to watch the economy digest that and think about raising. i think a raise this year from the bank of england is less likely than the market is pricing in. it is difficult to buy ftse 100 stocks, given 85% of the aggregate earnings are overseas. it is a big currency call. so many of those stocks are not represented of the u.k. market. guy: when you like fits that bill. -- one you like fits that bill. it shows you the price target, 198. the crank -- the price probably 171. you are expecting headroom. how much? how much does the stocks go up?
it was moving towards its margin target. it should be a 300 p stock. it is not a 12 month price target. i think this is doing everything it needs to do to rebuild the foundations of the industry. it is a low-cost provider. it cost costs by 3%. -- it cut costs by 3%. matt: is tesco a story of a company that is beating competitors and taking a share? we hear the horror stories of the lack of marmite. is that a problem for tesco? problem are bigger other companies and the threat
of online grocery, which has been exasperated by amazon buying whole foods. in terms of supply of goods, it is a debate. i think tesco will end up winning. you can hold out on price a little bit and do something with supplies, but the company is winning more and there farm bread business, easing price pressure. guy: is one a hedge against the other? freddie: not really. some people debate whether the consumer goods companies have all of the pricing power and will squeezing margins for the retailers. to a degree that is true. it is making up a smaller portion of the basket these days.
more local brands are making up a larger portion. it is a clear concept. consumers are moving more towards local brands and away from massive u.s. generally or international brands. matt: you mentioned amazon. doesn't amazon come in here and bigfoot every single grocery store? i can still see going to pick up a few things at smaller grocery stores, but any big shopping you would do online, right? onlyie: we're still it tell percent or 15% online in the u.k. only 12% orll at 15% online in the u.k. it takes time for people to get there.
we will continue to serve a -- it will continue to serve a large purpose. i think the largest share of online grocery is a difficult thing to do. amazon has proved this point by thinking it was all mine only. -- online only. people want in store as a gallery for products, and they want online. i think you need to get more on the channel. -- omni-channel. guy: matt did really well talking about u.k. supermarkets. it is something he struggles with. adjusted.just earnings impact on the
brazilian crop story. i have the mov screen up. moved to itst biggest loser. volkswagen still the biggest is something to pay attention to. bayer taking a hit. freddie lait will stick with us. we will talk about what is happening in the tech landscape. we will be back to the movers next. this is bloomberg. ♪ ♪
matt: welcome back to the european open. a quick look at delivery hero in my bloomberg. trade.s the they started trading at 25.50 a share. now trading at -- another stock that will be touched by amazon, whole foods. guy: bayer getting knocked this morning. it looks like a brazil story. going to expect a
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bund bears growl. will this week be remembered as a watershed moment? a sub target inflation a short-term phenomenon as a mario draghi suggests? fang flew or merely a sniffle? where next for tech stocks after this week's philip? -- this week's tech stocks? -- where next for tech stocks after this week's selloff?
i heard it rained 100 leaders in seven hours. according to the newscaster, that is a lot. 100 liters sounds like a lot of water. that is the picture right now. after yesterday's move, that is pretty unexciting. i think the market is marking the end of the quarter with a sign of relief. you have to assume that some of what we have seen this week, a may be has to do with the fact that we have come to the end of the quarter ended has been a reasonable run of late. tothing to provide an excuse get out, maybe that is what we have seen. the shot of tranquility. -- the shroud of and cody. -- the shroud of tranquility.
this year, we will see how things turn up. freddie lait is here. you like these. let's walk through the chart. this is the offense the beginning of the year. -- this is since the beginning of the year. facebook is the white line. amazon, 30%. netflix, 31%. alphabet, 18%. why are you invested in the one that has gone up the least? freddie: i think it is a more normal business. the others have much trapper g curves. amazon makes little money in aggregates. of forward a lot thinking about where that business is going to be to find a more traditional by jewish in metric. google trades on cap earnings.
-- gap earnings. a much mores ordinary business. it will go up less, follow the market, and it should go down less as a result. guy: matt, usa question. --you ask a question. matt: tech stocks are the biggest gainer of the year. it strikes me as interesting that european tech stocks with and nokia could be valued as highly as u.s. tech stocks. what do you think about the u.s. -european differences? freddie: to be clear, they have gone up as much. nokia is still trading cheaply.
in terms of valuation, it is a different prospect compared to the software companies we are talking about. it is much more of a hardware, product cycle story. you were not going to have that strong momentum for a year or year and a half. that is an interesting start for the future. stock for the future. there is a lot of value lifted european tech stocks. -- there is a lot of value left in european tech stocks. matt: we have seen this resurgence in growth and europe, and so many of the wealthier countries are being pushed to invest in infrastructure. to put morermany money in infrastructure, roads and bridges.
infrastructure, is this going to be a continued boon for tech talks -- tech stocks in europe? freddie: they are cheaper than their american peers. the american peers can to be more forward thinking, have a larger capital basis. it is a fiscal challenge to keep up with them on the software front. europe did its building over the last 15 years. they have invested in hard infrastructure. the next stage will come of the telecom industries. guy: you have to tax people if you want to get money invested in this. these companies must look like a decent target. when do we start to see the tax take go up? how big an impact will have a long-term prospects? freddie: that is the biggest their case.
-- bear case. if we think about tax in a broader sense in the weather it is regulatory or a royalty to -- down the cost of spectrum has been a. increased competition has been a. it is been a difficult cycle. that could apply to these companies. google -- also bit -- also but has risk to the upside. -- alphabet has risk to the upside. guy: let's talk about twitter.
yesterday, and this is an interesting story. here about the "morning joe" team and futures go down. the thinking seems to be is that the market basis saying, for heavens sake, you have paul ryan and the rest of the team trying to get stuff done, and you are tweeting about this. it is a washington is going to think about right now. that pushes all of that stuff even further down the road. are we underplaying trump, or we simply just not going to get anything done? his ability to get stuff done. you talk about the u.s. needing bridges and roads, spending huge
amounts of money on the subway system. there is a sense that the u.s. needs tax reform, health care reform, changes. trump has promised some of this, and the market bid on that, now it has faded. i am wondering whether or not we are in a position where the midterms are approaching. are we done for now? freddie: i think that is more right. .ou had that trump bump we thought we were going to get this huge infrastructure spending. that is now nearly all the first. i think it is right. i don't the you going to achieve a huge amount of dramatic policy reform. you can do quite a lot at a state level. hopefully, because they found the election the desire for spending and potential more released from the central government, there may be more spending at a state level. i think more coordinated massive infrastructure spend is unlikely. thank you for joining us on
are aligned for france to become a have in the future -- eight hub in the future? emmanuel macron upon is so .oung and has so much energy he is for friends and startups. -- he is for france and startups. >> do you think paris will take advantage of brexit? >> it is possible. it depends on the way u.k. manages brexit. we have english startups, and maybe we will have more. we are here to help france.
it: 45 in london. this is the market open in europe. 10:00 a.m. u.k. time we get inflation data. tomorrow, hong kong's 20th anniversary. right now, bert colijn. let's talk about inflation data that is coming out later this morning. mario draghi says this fact that it has been in -- impacting the downside is temporary. to find temporary for me. bert: it is difficult to define. i think he might be overstating a little bit how temporary some of these things are we are looking at, given the fact that
wage growth in most asset markets have not been returning. we are looking at factors like structural move from manufacturing to service jobs, which is keeping wage growth down. that might be temporary, but might be temporary for decades. overreacted?market when you heard what mario draghi think, this is a huge change? the ecb is pivoting. or did you say this is going to be a flow, drawnout process? bert: if you look at the first paragraphs of what he was saying, it may sound bullish, but if you look at the latter parts of the speech, it is much -- very much in line with the rest of the communication that has been coming out. i do not think it is that exciting. everything has been misconstrued .
they know how it is being construed, right? central bankers must all talk to each other. been known dovish comments. dovish comments. has this been coordinated. ? bert: i don't know. the economy has been performing well. the problem is inflation is not picking up. that is the target variable the ecb is working with. matt: are they fighting an uphill battle? we have been looking at inflation charts. after a brief resurgence, it is coming back down. can mario draghi take accommodation away if you are .7% on a core% --
inflation number? bert: that is the point. inflation is likely to be week for the rest of the year, given the oil price move. the same holds good for core inflation, even that factors like wage growth are not picking up yet. i think it looks like accommodation will begin with us -- will be with us for quite some time. the fed is tightening. they are sounding more hawkish. it is mild, but it is still tightening policy. when the fed is doing that, others have to react. is there a factor behind that? andhe fed leading the story
everybody else has to follow behind? think we are different stages of the growth cycle. the u.s. has been a long expansion already. the eurozone has been expanding since 2013, but it is dealing with an outward gap. the growth we are seeing now is catch-up growth as to mystic a demand is recovering on the back of some of that employment recovery. i think it is a much more concerning situation in europe from an economic perspective in that it is more fragile than the united states. matt: everybody in the u.s. was excited and that the getting of the are about donald trump putting more money into and givingure stimulus to the system. that has not happened yet or impressed anyone. do you expect that to be a driving force in europe as well? so many are talking about investment in infrastructure here in europe. they actually have the money to do it. bert: it looks like investment
is a showing cautious signs of recovery. it is overdue. we have seen investment rates that have been a depressive levels for a long time. it is important that some of that investment is going to occur. any movement towards that would already be helpful. guy: thank you very much for joining us. bert colijn joining us from ing. here's the bloomberg first word news. andstian: donald trump vladimir putin will meet for the first time as heads of state at the g 20 summit in hamburg next week. relations between the countries are at their lowest in decades. in the u.s., the trump administration's revised travel
ban to faced a new court challenge before it took effect. it began at 8:00 p.m. eastern time, but a half hour before it started, hawaii asked a judge to clarify whether the government violated u.s. supreme court instructions in defining who is covered by the ban. the justice department declined to comment. germany's parliament has voted to legalize gay marriage. the chancellor unexpectedly dropped her part -- parties traditional objection to same-sex unions this week. many voted in favor of gay marriage rights. has one prime minister parliamentary approval for him -- for her legislature he approval. earlier, the government defeated
to opposition amendments. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. traders who fled banks for hedge funds are heading back to wall street. banks are interesting employers again a decade after the financial crisis. they look to president trump to ease regulatory burdens. many macro funds do not make money anymore. what are you hearing in terms of the trend of people moving from banks and hedge funds? what we are seeing recently is a flow of people that are
deciding to join the banks. this is the main reason why hedge funds are having a hard time and macro funds are not making money anymore. guy: how important is the regulatory story in this? >> it is a -- it plays a big role. there is expectation that donald trump will be good for banks. we like to join banks again, because they may take more risk or have more freedom. this is on -- only an expectation for now. matt: we may expect a higher
flow? go think more people will there as hedge funds failed to make money and banks start to make more? >> yes. matt: thank you very much. we all remember when the bankers left their big banks and started their boutique shops, and now we are seeing them go back. i want to bring you german and employment figures coming across the bloomberg, rising to an adjusted 7000. we were looking for a drop of 10,000. unemployment rises 7000 compared to the drop. the rates do it 5.7%. -- the rate still at 5.7%. continue to see positive
employment numbers. it strikes me that we see continued low inflation numbers. you got that cpi number from france, only .7%. guy: it is a lumpy series. you can see the data series coming through. that is the latest numbers. we have been picking up a little bit, but not by much. we are in that low range we have been occupying. we have plenty coming up. we are going to continue to deal with the data. we get cpi data out of europe later. surveillance is up next. they will break that down for you. we have bloomberg radio coming up as well.