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tv   Bloomberg Markets Americas  Bloomberg  June 30, 2017 10:00am-11:01am EDT

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am mark martin. welcome to bloomberg markets. vonnie: president trump is due to meet with the south korean president at this hour and we are following trading for the end of the second quarter -- can you believe that. we have a report on consumer confidence from julie hyman. julie: it is the review from the university of michigan. it was the initial meeting on the consumer confidence. we also look beneath the hood within the numbers, the overall sentiment index at 95.1%, a decrease from may, even though it was a revision higher from the original number. what is disappointing here is the expectations measure. it dropped to 83.9 in june, the lowest since october. meanwhile, we saw an increase in gauge.rent conditions
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things right now looking pretty good, but people not so rosy about what is coming. as for markets, we are seeing something of a bounce back. not a huge one following the selloff we saw in technology. the nasdaq only bouncing by five points. the dow and the s&p are up more significantly. if you look at large tech cap stocks -- large-cap tech stocks, you have a mixed picture. ander cap like microsoft apple holding on gains, but i'll ply materials only down -- applied materials only down .10%. better news in the sneaker business. nike out with numbers after the close, and its outlook is helping to boost shares. the company says shares will mid- to high --
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-single digits. the key also saying you can buy sneakers directly on and stick them. that new partnership is causing -- nike also saying you can buy sneakers directly on instagram. one stock that has not been faring as well today -- blue apron -- in just its second day as a public company, shares are below the ipo price of $10. down by 4.7%. we did see them rise yesterday -- not by much, but they did rise in their first day of trading after blue apron raise $300 million in its initial public offering. the quarter, we talked so much about volatility, which has been rising recently, but for the quarter it is the lowest on average going on way back to 2006. mark: i am going to bombard you with specs. we are up for the day, but on track for the fourth weekly
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drop, the longest losing runs in june, 2016, also the biggest weekly fall since november. for the firsting quarter in a full year today --. it is up almost 6% versus global stocks, the all country world index. best first half of your since 1998. those are your stats. so much to tell you about -- gdp up by .2% in the first quarter. weakest in the year -- on -- on revised from the first quarter. consumer spending has kept the economy chugging along since the brexit referendum at half the pace in the previous quarter. this is what this chart is about -- britain saved a smaller portion of their incomes that in on point -- at any point record.
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the low level, by the way, of the savings race. the have little in reserve as they are forced to spend more to maintain the same standard of living. what a data point today -- more data on u.k.. sentiment among households fallen to the lowest level since the brexit vote. the rising cost of living, inconclusive elections, deterring britains from spending on big-ticket items. andrvey carried out before after the election -- that is important -- we found that attitude toward the economy and their personal finances deteriorated. wonderful,art -- showing the probability of a rate hike here in december. look at that, up to 56.1%. the middle of june, we are at roughly 5% -- negligible. how we have shot up suggesting rates may need to rise. 50/50 for a rate hike this year.
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vonnie: pretty phenomenal, mark. pretty phenomenal here, too -- senate health care negotiations containment, but no deal between the -- before the july 4 recess. president trump tweeted about a possible alternative -- he said if senators are unable to pass with their working on they should repeal and replace at a later date. lawmakers will return to washington the week of july 10. they have three weeks before the august recess to work an agenda that includes health care, government spending, tax reform. presumably they will take those recesses, though there are calls for them not to. rivlin,us now, alice former white house budget director, first-ever director of the congressional budget office, and former said vice chair. vice chair. you say republicans are letting the opportunity pass.
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what kind of congress could work -- what is a win for republicans -- anything short of repeal? rivlin: i don't know the answer to that, and neither do republicans. they are caught in a dilemma of their own making, and they do not have a consensus of what to do. they have a hard, right-wing minority that would just assume do nothing -- repair the -- repeal the affordable care act and go home. they have more moderate senators that are worried about cutbacks in insurance for their constituents, and they have been going back and forth on this for weeks. i don't see an obvious resolution to this, and even if they do find one, it is going to be a very hard sell to the public. vonnie: well, we thought that there would be anything out of the house, and then a couple of days later, suddenly, magically
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appeared something that did actually pass. could that happen this time in order for the gop to save face, as it were? dr. rivlin: it could. they saved more money in the senate version than the house did, so they have, sort of, a slush fund that they can use to try to affect some of the senators that are holding back, particularly the ones that are worried about deep cuts for low-income people in their insurance, and some of the same ones that are worried about cutting back when we have an open you a crisis -- opioid crisis. assuaging their fears will make it more difficult for the right wing to buy in. it is not, as they say, a slamdunk. it is very, very difficult. one wonders why they want to do it, because any way you look at
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it, this will be a cobbled together bill with lots of vulnerabilities as they head into another election. it will, inevitably, cut a lot of people off insurance -- many of them in states that trump won , and that is not an easy thing to defend if you are running for reelection. rivlin, it was a big week for central bank speakers, and it was interesting that janet yellen's speech in london was over saturday -- overshadowed by what was going on in sintra. do you read the math -- the message as a coordinated effort to alert markets and market participants that policy is about to change? dr. rivlin: well, i don't know if they coordinated or not.
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they talk to each other all the time. i think the situation is similar. the economy is strengthening boomhat, not a roaring anywhere, but enough to justify cutting back on the long-term stimulus from the monetary policy end. so, they are going to do that. now, they're not going to do anything precipitous. central bankers don't do that. central bankers are very cautious people, and they will move slowly in the direction of raising rates and reducing their balance sheets. mark: but does the market reaction -- you saw the euro rise 1.4% -- biggest jump in a year, the movement to bond yields this week -- does the market reaction highlight the different -- the difficulty in communicating this transition? oh, obviously, it is
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very hard, because central bankers, as i said, are cautious. they want to communicate as much as possible, but markets regularly overreact, and there is not much they can do about it. draghi's remarks were rolled back a little bit, but i think markets just don't understand that nothing big or sudden is going to come out of a central bank, but the situation does justify less stimulus as far as we can tell, and that is all they are saying. , on that notevlin on central banks, you have worked in administrations in all sorts of capacities under various administrations on both sides, and you have been at the federal reserve. you also said the financial crisis could have been prevented. if there is a change to someone like kevin ward jr. -- a regime
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that begins in the taylor rule, and so forth, next year, do we get a big change in the way monetary policy is driven here in the states? dr. rivlin: i doubt it because driving by the taylor rule is easy to say, but it still is a question of which taylor rule you are talking about, and how do you know what to do next. i think anyway you look at it, whatever they say about rules, our central bank at least, will be driven by what is actually happening in the economy, and how they can move cautiously to excess in either direction. now, i am one who thinks inflation is not going to be one of their problems for a very long time, but there are other reasons for getting interest rates back up slowly and
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carefully, and they will examine how to do that, no matter what they say the rule is. vonnie: and then, finally, another one of your expertise areas -- dr. rivlin, can i please him sound from commerce secretary steve mnuchin on the debt ceiling. mnuchin: i hope congress acts before they leave, but we do have contingency plans if they don't, so that the markets shouldn't be concerned, but i figured be for the benefit of everyone the sooner they do this the better. vonnie: you say we need more revenue, and how to begin more revenue and stave off the debt ceiling being missed? dr. rivlin: the debt ceiling shouldn't be there. the debt ceiling is a ridiculous used forhat is political purposes as a, kind of, gaming device. once the congress has acted on revenues and spending, they have
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to pay their bills. and at the moment, we are not having a balanced budget, so they cannot default on the debt, and the debt ceiling should be raised to reflect that fact as soon as possible, but it will serve again, probably, as a political tool for some members of congress to get things -- policy to move in a direction they think is desirable. i hope they don't. i hope they just do what the secretary of the treasury wants and raise the debt ceiling. vonnie: dr. rivlin, we will have longer with you on another time. thank you. alice rivlin, senior fellow at the brookings institution. let's check in on the first word news. here is emma chandra. emma: in chicago, federal agents have joined with local police to stem the flow of illegal guns into the city. earlier today, president trump
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tweeted the crime and killings in chicago have reached epidemic proportions, so he was sending in federal help. the crime targets illegal firearms and repeat gun offenders. in a u.k. consumer confidence hasn't been this bad since the brexit vote. inflation and political uncertainty are keeping britain's from making big purchases. they were less confident about the economy and personal finances. germany has joined other european nations in legalizing gay marriage. angela merkel unexpectedly dropped her party's traditional rejection. she said members of her christian democratic block could vote their conscience. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am, chandra. this is bloomberg. mark? mark: thanks a lot. trying to close out the month on a winning streak, crude still down more than 6% this week, on
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pace for its worst month since august. this is bloomberg. ♪
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mark: live from london, i am mark bought -- mark barton. vonnie: and from new york, i am vonnie quinn. this is bloomberg markets. futures in focus -- oil having a rough end to the month of june. joining us from the cme is brian battle of performance trust capital partners. brian, the question is does this reversal, this gain in prizes stay the course given that we have plenty of supply and we are already through the worst of the driving season? so, what happens?
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brian battle: we have had some short-term interruptions with the storms in the gulf and maintenance in alaska, so you are short-term it is happening, but in may we were at $50 a barrel. there was an opec meeting, and since in, saudi leadership has changed. the global demand situation is getting figured out. the saudi's need money, but they want to hold opec together. the fracking boom is going like crazy, but losing steam because it is run by low interest rates, cheap capital. iran, most important part, is coming back into the global marketplace, and a french company has agreed to help them exploit and modernize their field. long-term i don't think oil prices will hold for long because there is not enough demand for the r-rated amount of supply coming onto the market -- demand for the huge amount of supply coming onto the market. wille: it looks like iran
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be sanctioned more, and the second part of your argument, recounts are going up. why should those arguments hold? counts aren -- rig going up. if rates go up, marginal rates will lose profitability and shut. a lot of the commercials are in the fracking industry. after margin they will lose people if the cost of doing business goes higher. we are at an intermediate point. 52 dollars in may. it fell apart after the opec meeting. it seems like 50 might be the top end of the range and we have just had a selloff the last couple of days. it has not been a very long period of time and, too, it is the end of quarter and midway through the year. vonnie: we have been in a range for so long, and all of a sudden a 20 basis point move. what about that?
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that is a central bank policy -- the u.s. driven by the federal reserve saying we will raise rates, then they mentioned the portfolio that shall not be named. and has happened recently why rates are up is because the ecb has said you know what, maybe that is right -- we will raise rates. i heard secretary rivlin saying central bankers are very careful. they are very careful and very forward saying we think we -- rates have to go up. this is driven by policy reversal. they have seen low rates have done their job, so they are trying to get some of that territory back. i think are going to try to make rates go higher. we have a new conundrum. they are trying to raise rates, and the long end keeps rallying to we'll see if the bond market can exert its will against central bank policy. vonnie: our thanks to brian battle of performance trust capital partners with day -- today's teachers and focus. -- futures in focus.
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, an: coming upmark: opportunity to cash in -- we look at the chinese etf play. here is a chart from bloomberg, showing the yuan on pace for its biggest quarterly gain since 2008. this is bloomberg. ♪
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mark: this is bloomberg markets. i am mark barton in london. vonnie: and in new york, i am vonnie quinn. it is time for our etf friday segment with julie hyman. china is having a good year in more ways than one, but investors have been apprehensive. here to discuss his latest research report, eric balchunas, senior etf analyst and bloomberg intelligence back with us in the studio. big news with china with the announcement that it was going to include china a shares. how does this play into the etf world? eric balchunas: there are a lot
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of china's etf's -- i call it alphabet. it is really -- arguably is complicated as the vix area. if you want to get ahead of the msci news -- that means they will include a shares in the margin index, and all totally over five years, 17% of the index will be a shares. how do you buy the stock people benchmark to this index are going to have to buy? we have calculated $4 million to overllion of buy orders the next five years for 222 stocks. the etf and host a more -- it holds the most has an 82% weighting. kba is another stock people like. it tracks the msci index. people have been putting more money into kba. i think those are the two people
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should look to if they purely want to get ahead. if you don't want to go straight -shares, that one was this -- specifically designed to look at the future of emerging markets. julie: that is really interesting. when it comes to performance, just like here in the u.s. until focus in it is tech china that has been doing the best. how does one play that? eric: tech is largely missing with the big ones because these tech companies do not want to stay domicile in china. kweb is the one everyone is going into -- only internet stocks and it transfers across classes, whatever it is. it will hold them. alibaba, 10%. it even owns this red-hot dating app that is up in china.
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it will go into upstart tech china companies as well. that is probably the one to play. julie: quickly, you have looked at some of these next-generation china etf's. what does that mean? eric: there is an organization that tracks the five-your plan, basically buying the sectors. ownedve the state enterprise fund. there is a smart data china on its way, and then cn is everything in one shot. highly under waited. -- highly underrated. julie: eric balchunas. thank you. vonnie: still ahead, we look at the biggest movers across assets. ♪
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vonnie: live rum bloomberg world headquarters in new york and london, i'm vonnie quinn. mark: let's check in with emma
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chandra. president donald trump and south korea's new leader meeting at the white house right now. the president says they accomplished a lot on trade and also discussed north korea. south korea's moon once to coordinate closely on dealing with the north korean threat. president trump will make a statement at 11:15 eastern time here. now partially is in place. the government's restrictions go further than the u.s. supreme court allowed, the new restrictions from six predominantly muslim countries are the -- with the exception to those with a family relationship in the u.s.. , the u.k. and the u.s. will open negotiations on a trade agreement.
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president trump has told prime minister theresa may that the will keep trading with the u.k. on the same terms as now. also a technology corruption and -- sharply criticizing opposition groups. he says the african national congress needs to cleanse itself of the negative tendencies. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm emma chandra, this is bloomberg. mark: just getting a break ing news on barclays, setting up with barclays there is ans investigation of a whistleblower. to interviewing
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the chief operating officer. the meeting will start this summer, i will go over the events leading up to the controversy. and the fca have declined to comment, the bank didn't make any of the individuals facing interviewing available to bloomberg news . we look at the author of this story down a little later. barclays down .1% today. i just moved my chart, my mistake. but get back to the markets, the first half of 2017 comes to a close. joining us now, richard jones, strategist or bloomberg markets live and so the according the cost of -- and sofia horta e costa u.
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,his is the country world index it has been normalized at 100 year to the other two lines are the commodity index, down about 7% and the bond index, which richard can refer to, little change, but stocks are winners in the first half. : it is the best first half of the year since 2003 and if we are ending today -- the u.s. doesn't do anything crazy, which i don't see why it should, it is the fifth quarter of gains for global equities for the first time since 2007. so, all going well for global stocks. the rally, and now it has shifted to financial stocks. mark: if you missed out on the
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stock rally, if you were shooed you would have put money on long euro. the euro is the second to best performing asset class, best quarters since 2010. richard: it has been a bit of a perfect storm. interest rates have moved in aber of the euro, we have had tenure german yields rising about 10 basis points. the interest rate differentials have been in the euro's favor. bitre getting a little about performance and area of growth versus the u.s., but one of the big things is a lot of the political risk that we had in the first half of the year in europe has really can't out probably a lot better than some investors were thinking. as a result, the political risk hasn't been that big of an issue
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for the euro. i think the combination of those things has seen the currency do very well indeed. vonnie: what currencies are the losers. date forpe in year to the major currencies, you will see that none of them are down. by .67%,r is only up but the peso is up, the south african, the euro, -- the interesting thing is the dollar is a very little changed. you have winners and lowers theirs, -- losers of there, but if you look at the u.k. closely, it has been a volatile and choppy, but the sterling index has moved very little. that is the same as gilt yield's, we haven't seen much movement net in the first six
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month of the year. ahead, there is political uncertainty, economic data that started the year positively, but has now started to deteriorate. it could be that the pound becomes interesting in the next six months. vonnie: yes. so bfoia, how good you have to e to time these things? who would have thought it, right? marketit is a very hard to call that greek market because of the lack of liquidity. we remember when it was a shot just two years ago, it was the best -- quarter. it really outperformed the rest can fall aso it much as it rises, so it is difficult to time. now strategist that i talked to,
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they are funny and hard to see what is next for global equities, not just for the u.s., but also europe. the rally has kind of stalled now. it may have done its course in the first half of the year. strategists predict flat markets for the rest of the year. we will what the markets have to bring. if you bought tech in the first half, you did very well. mark: i have to ask you, sofia, look at this chart g# btv 4243, i'm sorry to throw this on you. dune has been a terrible month for european stocks, what is it with june? sofia: it's a seasonal things that are hard to explain, but if you have done well in the first half of the year, it is only
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normal that you sell those gains, take some profits. also in the summer you tend to have less liquidity in the system. it does make sense to take the profits. vonnie was asking about timing, you should definitely sell in june. richard -- centro in portugal, or not? richard: i think we will look back and say that was noisy, but it didn't change things at the bank of england. we have had a reiteration of what was said before, but it hasn't shifted yet. mark: thank you both. vonnie? coming up, what the latest data out of china says about the second largest economy.
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we take a look at north korea's nuclear program and how other countries are trying to curtail that program. this is bloomberg. ♪
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vonnie: live from new york, i'm vonnie quinn. mark: and i'm mark barton. this is "bloomberg markets," right in time for the business news flash. looking at the biggest stories in the news right now. raisepron may need to more money after a smaller than expected ipo. it has cash and credit for only a year. blue apron connected $300 million in its public offering, currently trading below the ipo price.
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cipro is running into trouble project inggest years. it says it has fallen behind in its app store. the company has been falling behind in sales of fitness trackers and is pinning its hopes on the smart watch. that is the latest business flash, vonnie. vonnie: timeout or bloomberg quick take. north korea in focus as the trump administration just slashed sanctions on a chinese bank for doing business with north korea. north korea has an appalling humans rights record, a couple of killing characteristics, a nuclear weapons program and in unpredictable young leader.
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whether north korea is capable of an effective nuclear site is questionable, but the testing of missiles is challenging. north korea continues to defy the world over weapons test. after meeting chinese president to work witheed the chinese and finding diplomatic solutions. in response to a missile test in february, china -- or its neighbor while also pushing for talks to resume. north korea has a record of escalating and lowering tensions to create economic benefits. north korea has been on this putting since its creation in 1948. commented onas america's reckless moves toward a war.
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north korea is accused of human rights violations unfairly to in the modern world. critics say china, north korea's a guest trade partner, could do more to make sanctions effective . a preemptive military strike might succeed in taking out the known nuclear and missile sites/ other options include tightening sanctions or waiting for the downfall of the kim dynasty. analysts warned that a collapsing structure may be more dangerous than the current situation. quickn learn more about takes on an eye quick on the bloomberg. some there's also conflicting data about the state of the world's second-biggest economy, joining us now is tom
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orlik. the data is conflicting, so what does it tell us about the world's second-biggest economy right now? we are just getting the earliest signs of what happened to china in june. on one hand we have the official purchasing managers index, pointing at a little bit of a rebound. we also have a flash reading from korea's exports, which tend to move closely with china's. on the other hand, we have a new series of satellite manufacturing index based on satellite images of chinese industrial parks, that suggests the factoring sector could have returned to contraction in june. on the we have that bloomberg in the library number 618. how much do we believe of this? always the key
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question with a chinese economic data, isn't it? there has always been suspicion about the official numbers. at the same time, these are with the new theories satellite pictures. we can tell a story about stronger than expected demand in china, exports are doing better than it did, infrastructure spending remains a strong, but for me, the dominant trend comes from real estate, which is trending down, and credit where there is less new lending. i would be surprised at a rebound at this stage. solve the yuan trading at levels we haven't seen since i'm not quite sure, even that is stronger than we've seen. tom: i think the key thing for ensure yuan to
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stability. --the past moves interruptm going to you, because i want to mention that the president is meeting with president men there -- president moon and we are seeing pictures. go ahead. people's bank has a challenge in yuan stability. they were able to follow a little bit of the way and insured yuan stability, this the pbcn the fed moved, wasn't able to follow them up. it could have meant yuan deflation, what we have seen the pboc do is make guerrilla
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intervention in the market engineering yuan strength as a way of ensuring currencies does -- currency stability. vonnie: thank you so much. mark: much more including news executives chief -- his conduct is under a microscope regarding a whistleblower case. from london, this is bloomberg. ♪
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mark: following news this hour that the european financial authority is setting up meetings with barclays in an investigation to unmask a whistleblower, this a call at -- this according to three people familiar with the situation. the next phase that
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is being done by u.k. authorities and regulators and to the ceo of a barclays, he tried to unmask a whistleblower in contravention with the company policy. now other people involved with the process are being contacted so they can be interviewed in the coming months, to get a better idea of what's happening. mark: who are they speaking to and does it matter? >> they have a selection of people from the board, they are talking to some of his confidence, chief of staff in coo, and a few other people. they will decide if he is a fit and proper person to run the company. mark: what does this tell us about how far long we are in the investigative process? it surprising that it has
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taken this long to schedule the interviews. barclays once this done as soon as possible. it could drag into the autumn or even later this year. mark: for now they are standing by him? >> yes. with only a the agm minor revolt from shareholders. but you just want to get on with persuading people barclays is a good investment. mark: yes, look at the shares. they are lower. what sort of questions will they be asked, the key interviewees? >> they will be asked what role they played in it, obviously, it wasn't just one person. barclays has tightened its seizures for anonymous letters that come in outside of the official channels.
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they will try to construct a timeline, just how bad it jes when he tries to unmask it, whether there is something more to it, but i don't know if they've made their mind up get. one of'm sure it will be the most read shortly as most of steve's articles tend to be. well done to you both. vonnie: now to one of the most frequently read articles, stefania spezzati cowrote the story and she joins us now. i want to ask you if this is a trend, a couple of names or well-known names making the move and that is what is bringing the spotlight to this. stefania: we have seen a flow of traders making their way back to banks after it and experience in
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trend because we see many people doing this. we are expecting more to come because of the prospect of -- in the u.s. that would probably be helpful for the banks. we would say that it is a trend. to lose or down regulations, what about the performance and a structure of the hedge fund industry itself? yes, of course, many people are deciding to come back to banks because they prefer stable cash flow and taking less risk. so, cash flow is due as well to poor performance. mark: it is different than 2008, isn't it? stefania: definitely. we saw the last quarter of 2015, we see more -- the ban starting.
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the current data shows the industry is not great at the moment. vonnie: is this happening in london or throughout europe? you would imagine that brexit would interfere with the moves now. stefania: not only europe, it is more broad. we have an example as well in the u.s. this is the prospect of the -- from the u.s. administration. mark: are we going to see more, or not? stefania: we expect to see more as we have more clarity. mark: and the hedge fund industry, what can it do? to stop the flood if it does happen? stefania: start making money again, but it is not easy to them. the ability to make cash is very low, everybody is struggling. mark: the traditional two and
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20% model, you are undercutting your ability -- stefania: yes. it is hard for people who want to join hedge funds these days. they have to make sure they make money, so the hedge fund -- have been losing money. mark: thank you so much for joining us, sofia spezzati joining us, most read story on the bloomberg today. we are following stocks, we are about 35 minutes from the end of the friday session. this is bloomberg. ♪
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mark: it is 11 a.m. in new york, 30 minutes from the european close. vonnie: from new york i am
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vonnie quinn. this is the "bloomberg markets: " on the close bloomberg. top stories we are covering from the bloomberg and around the world, just 30 minutes to go until the end of trading in europe. stocks are rebounding in the u.s. following a tech heavy nasdaq. will we expect goodbyes in the second half of the year? what is next for global bonds? are we starting to see beginnings of the long-awaited bond selloff? president trump is meeting with south korean president moon at this hour, key subjects are trade and north korea. have a look at my

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