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tv   Bloomberg Markets European Open  Bloomberg  May 1, 2019 2:30am-4:01am EDT

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anna: welcome to "bloomberg markets: the european open." we are live from the city of london. i am anna edwards. the cash rate is less than 30 minutes away. up like a rocket. president trump urges federal thes to cut to servo charge economy. economists expect a hold at the meeting. capital -- apple shares bounce
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in late trading as it announces plans to return $75 billion to shareholders. no supply fears here come oil retreats after a surprise jump in u.s. stockpiles with an attempt to oust nicolas maduro in venezuela failing. no mac miller today because it is mayday. demonstrations expected to see that during today's business day. as we move on to the pictures in the market, the ftse 100, futures expected to go higher at the start of trade. we haven't got the rest of europe playing. we've got the u.s. session to look ahead to. futures for you and nasdaq futures, crucial because of what we heard from apple. with what they have to say about sales to come in the next quarter that really seems to ignite excitement. you can't look at the nasdaq just today without yesterday.
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we saw a devastating day for the nasdaq, the worst in more than five years for u.s. tech heavy index. worth putting those together. that is the u.s. session, some hours away. the ftse 100 futures suggest more upside at the start of trade and this is what we've got on the gmm. we are depleted because markets in asia are closed, but we had the australian market trading and that was showing signs of life. risk on move coming through from the equity market session in australia. in new zealand, the dollar is down by .4%. the labor market data out of new zealand, disappointing. adding to another reason for global central banks to turn more dovish because new zealand is a central bank that asks people questions. better data out of south korea. the won is going higher. wti crude, down 1%.
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brent crude, down .7%. he put this in the headlines because it is interesting to see the market focus on the stockpile that and not the supply concerns around venezuela. that has been something in the past that would have been part of the conversation. lots to say about the fed and we will talk more about the fed through the program. press conference of jay powell strength today u.s. economy, inflation, and trump. he will be asked about a pressure from president trump to cut rates. that is part of the conversation and trade, some new flow. let's get a first word update with olivia hows in london. said theresident trump economy would soar like a rocket if the fed cuts rates i a full point, double the reduction his advisor is calling for. this comes as more senators expressed doubts about the president's trophy the fed -- pick the fed board. stephen moore's chances are looking uncertain.
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apple shares are rallying on signs iphone demand has stabilized. reports quarterly sales that beat analyst estimates and reported services revenue grew 16%. apple shares have surged more than 40% from a 20 month low in -- 21-month low in january. that was after lackluster iphone sales cut the forecast. ken griffin says raising tax on the wealthy is not the answer. he said socialism is a failure and a generation of students is disillusioned. government subsidies for student loans create profound economic distortions. >> i really think fixing education -- education is broken in america -- has got to be a key area of focus and reform for our country. we have to equalize the opportunity for all americans to have a chance to have a fulfilling life and a fulfilling career. guaido's gamble has
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apparently flopped. he called on the armed forces to back his attempt to oust nicolas maduro, but the military command stayed loyal to the president. the u.s. support seems to have little effect. nicolasended with maduro firmly in support. eric schmidt is stepping down from the alphabet board in june. one of the largest shareholders in the parent company. the departure leaves the tech giant without an advocate. firm, overseeing skyrocketing revenue growth. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. anna: thank you very much. olivia hows in london. let's look at the markets in a quiet session. advancingy futures, after apple's upbeat forecast.
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lower than average volume for global stocks due to holiday closures in much of asia and continental europe. the new zealand dollar sank after hiring fell. some markets to talk to mark cudmore about. our markets editor. quiet it hashow been in your session. yes trillion market, one of the few open in the asian session but you see in australia what we see in nasdaq futures. some optimism around the apple numbers. how prevalent is the apple story in the market psyche, that they see the nasdaq taking such a hammering on wall street? mark: it has been completely dead in asian market participation and chatter. australian was the only market open until we started moving west around the globe. really nothing going on in our time zone. some are slightly distracted before this morning. i think the alphabet story is -- apple story is important, and it
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does reverse some of the negativity we got from the alphabet earnings the day before after the close. there is a positive shift and the price action yesterday in the s&p was positive because we dippedo today but -- into today but futures persisted higher. the tech earnings, generally one of the positive stories from the earnings season, were disappointing without for that and finished on a flourish with an awful -- apple. that is a boost for equities going forward. i remain nervous about the setup, particularly in the fed meeting this week where they are skewed for a negative surprise for equities. but the price action is very negative at the moments. anna: let me ask you our markets live question of the day because it is plenty to talk about from the fed perspective. the question this morning is, are fed rate batets at odds with
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the job market? the treasury market seems to be pricing in a rate cut despite the trend in the jobs data. and you speak to economists, they don't seem convinced about a rate cut as markets would have us believe. mark: there were a couple of issues at play. first of all, the connection between the jobs market and rate are from inflation and we are not seeing that this year. the phillips curve, the connection between the two, seems broken. at is one issue. the other is the rates market is not as expecting rate cuts as implied because the interest on reserves is not the feeling it is supposed to be from the fed. the effective funds rate is trading higher than the ioer because the fed is reducing its
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balance sheet and there is a lack of excess reserves in the system. that means fed funds futures are providing a slightly confusing message about the probability of they seem tole imply there is almost a 70% chance of a rate cut in the months ahead. in fact, if you look at the ioer metrics, it would suggest 50%. that is a probability from one stance. i'm not sure whether the fed is really going to cut rates as much as was priced into the market. emphasize they are patient. patient doesn't mean cutting rates. it means being on hold and waiting to see signs come through. i think we see no moves from the fed anytime soon and equities have been boosted by the dovishness or perceived business in the fed may be disappointed. anna: the new zealand dollar has been moving. i mention it because of the central banking vibe.
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this is on the jobs front, disappointing data. it doesn't seem to be changing tack on the dovishness from central banks. this is another data point that underlines the need for that, i suppose. true we are seeing that perceived dovishness and those dovish comments from central banks. it will be interesting how quickly they moved to action. probably a stronger example in new zealand is the australian central bank, which people expect two rate cuts this year but they are emphasizing patients and the market has overreacted to the fact that these central banks, whether the fed or new zealand or bank of canada, bank of australia, wherever it is, the fact central banks have moved from a hiking policy to one of being on pause and wanting to watch the data come through, traders have overreacted to assume just because we came to the end of the hiking cycle, we have to
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move to a cutting cycle. i'm not sure that is the correct assumption. we might stay at a stationary level for some time before we see where the next leg in rates will be. anna: prolonged, patient pause. mark cudmore, markets live managing editor with the latest on the fed and fairly quiet session in asia. looks to be a quiet session in europe. the london market will be open. you can join the debate on today's question of the date. at -- our fed rate bets odds with the job market? what do you think? reach out to the team. ib+tv go. apple reports better-than-expected sales of its flagship device after a bruising holiday period. we will look at what else is exciting investors about the iphone maker next. bloomberg radio is live on your mobile device or dab digital in
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the london area. nice day developing over london this morning. 7:41 in the u.k. capital. this is bloomberg. ♪
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anna: welcome back to the european market open. 16 minutes till the start of the cash equities trading in london -- much of the rest of europe will be closed today.
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ftse futures pointing upward .5%. s&p futures point up, nasdaq futures point higher and lead us to focus on apple, very much the reason for that. the day after we saw a great deal of negativity on the nasdaq. the nasdaq had the worst day in more than five years but let's talk about tech. iphone sales bounce back after a bruising holiday period. iphone -- apple beat estimates and has forecast higher second-quarter sales than expected while raising its dividend and increasing its buyback graham by $75 billion. joining us now, nate lanxton. you in theset to earnings? betterthan-expected or estimates, and looking ahead and more positivity in the next quarter. nate: beat analyst and wall street expectations and as you
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said, the key thing is iphone sales do seem to be recovering and a big part of what seems to be driving that is apple's trade in program. it is offering more money for old devices so customers who may 10s, theynew high-end can get more money for bringing in their old phone, giving them a discount on the new one and that seems to be working. apple is doing that in enough region to seem to make a difference. are deciding, they they would rather increase the number of people who use apple's iphones or keep using them and try to maintain their user base and sacrificing margin in that? nate: that is the inevitable sacrifice to something like this but apple is positioning from inng a hardware company terms of revenue to being hardware and services. its services reported 16% year-over-year increase from last year.
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that has been driven in large part because it has a huge base of devices to sell things like apple music into. that is one reason it can justify taking a hit on hardware margin and it is worth noting that is ahead of launching a videogame subscription service later in the year. it has got into video streaming services, we had oprah on stage and jennifer aniston on stage not long ago talking about how excited they are about apple's new streaming services. that is still to come. there are good reasons to be excited it is not all doom and gloom. necessarily ever more sick -- obsessed with people who bought the apple hardware -- hardware. we have been led on a merry dance by the technology earnings season. we were all occupied about the negativity around google and 24 hours later, we have apple. we have other earnings reports. qualcomm is a company we will be looking out for. nate: i hate to be the guy that
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keeps banging the apple drum, but apple dropped all its litigation with qualcomm over key components in the iphone. apple is going to be a major customer of qualcomm. that is very unlikely not to at least get a reference and a mention. certainly we saw yesterday after the close that a lot of u.s. european and, asian traded stocks have been positively affected by apple's earnings. of than we see in terms actual numbers, i think the outlook and business sentiment will be relatively positive. anna: apple everywhere. technology editor. let's get the business flash with olivia hows in london. hasia: greenlight capital surged 19%, rebounding from its worst year on record in 2018. 6% laste fund is up
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year. losses and withdrawals caused assets to shrink 16%. this prompted fewer, more concentrated bets. already over subscribed as the company needs investors ahead of ipo. currently focused on the lower end of the price range. the company is seeking to range -- raise as much as $9 billion next week, the biggest listing of the year so far. warren buffett has added the latest twist in a takeover battle for anadarko. berkshire hathaway will invest $10 million into occidental to fund its bid. anadarko's board is deciding whether to accept occidental's unsolicited offer. they had agreed to a lower offer from chevron. investors to be more selective on hiring. it is seeking to cut cost from a challenging first quarter. limburg has learned the bank
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only hires one back-office employee when five are leaving. plans to cutale staff in paris and eliminate the position of global head of trading. this as the french try to implement cuts to its struggling bank. bloomberg has learned almost 200 jobs will go. society general plans to cut half of its jobs at general headquarters. that is your bloomberg business flash. in london.a hows we are minutes from the start of trading in london. much of europe will be closed. next, stocks we are watching at the open including in the u.k., sainsbury's. the supermarket is taking a $16 million hit on its failed deal with asda. we will learn more about that next. this is bloomberg. ♪
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anna: welcome back to "bloomberg markets: the european open." minutes till the start of the trading day. let's get your stocks to watch. we are looking at sainsbury's, covering next, and pearson and publishing. >> we finally have some of the numbers on the fallout from the sainsbury's asda deal. shares may go higher from what
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we saw today. that is because the full-year earnings came in ahead of estimates. they might be able to go at this in retail earnings, 11% growth and net debt looks better. next,paul, the story at the online side of things is where the growth is. here ofu often retail is blaming the weather but next says the hot weather over the easter weekend boosted performance, particularly in retail stores. sales during the first quarter are ahead of internal forecasts at plus four and half perceived -- 4.5%. next has been a strong performer ins year, shares up 44% 2019, the second-best performer in the ftse 100 index and possibly other strength to come today. anna: we will keep an eye on those and pearson, some m&a talk. arehe rivals in the u.s.
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possibly teaming up in a merger according to the wall struck -- wall street journal. if it happens, he would be the second biggest company in the world for things like university textbooks and higher education. rivaln could move off the news in the united states. anna: thanks for joining us. if you want the latest stock stories, first go is the function to use. othertell you more about companies that could be on the move today as a real salt of upgrades and downgrades -- of upgrades. a 1.9% decrease from the previous close. 10 holds,has 14 buys, and two sell calls. forecast around its balance sheet was cut to 13.5% from 14%. on at theks to focus
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moment. keep an eye on tobacco names. phillip morris got approval for a product in the united states. coming up, the european market open such as it is. ftse 100 and u.k. market will be open. this is bloomberg. ♪
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anna: one minutes ago until the start of the cash trading equities day. let's see how the markets are positioned. a number of the european markets will be closed today. london is open. the euro fairly flat. it is fed day so a lot to say about the dollar and interest policy. oil prices weaker. 71.47 is where we trade on brent. higher on the venezuelan violence and the intent to take power there. that is not lingered in the psyche in terms of fears about supply, instead u.s. stockpiles. going lower now. the australian market in
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positive territory, reflecting the technology story that has dominated the last 24 hours. futures.s set to boost and boost the nasdaq futures 7/10 ofget there, up by 1%. this wednesday morning, european equity markets. the london markets are all open, but many of the european continental markets because of the mayday holiday. the usual protests, in addition to the yellow vests in france. that is part of the background. this is what we've got for the open of the european equity market. presenting it a little different because we only have the london market in play. this gives a bigger picture of what is going on. we have a danish market open so i should make that clear, up by 3/10 of 1%.
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a positive one. the australian market is in positive territory, but we are really thin on the ground in terms of trading activity because of all these holidays, whether in japan, china. the new zealand dollar has been on the move, down 4/10 of 1% because of some data out. the ones that are open are moving to the outside, as we had expected, even if they don't have a great deal of technology on them. at least psychologically. the apple story causing markets to rebound, re-think the day after we saw negativity around the google news. that is where we are on the markets from a european perspective. let's take a look at where the individual stocks are trading this morning. this is a picture for you. singly up by 3%. very interesting story. the numbers out from the business earlier on. they beat estimates, but the focus is the disappointment
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around what happened with asda. trying to tie up those two retailers. we knew that some time ago that was the story. the market responding quite positively to the numbers out at sainsbury. up 1.2% on the back of their numbers. seeten message -- i can british-american is in there. british american tobacco up. for the ruling yesterday philip morris that could see some upside for imperial grants and bta. persimmon inde, the sector. not sure if that is related to what we are seeing at sainsbury but that stock is weaker. pearson is down by 1% on a date we are talking about mcgraw-hill and the potential for merger plans, being reported by other
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media outlets. that is a list of where we are at the start of trading day. along with u.s. futures, fed policymakers may decide later today that inflation reinforces the message of caution on interest rate moves. looking ahead to what is going on with the federal reserve right out, we're joined by the head of global aggregate fixed income. >> good morning. anna: good to have you with us. let me get your big picture thoughts at the moment. 25% versus christmas eve. it is may 1. may go awayve this feel? myles: that is the temptation but if you look at the bond market, you have at asset prices going up. analysts have a pretty good principal component analysis. what is interesting is the key
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driver of all of these are central bank policy. if you think central banks are give, youemind, to expect gradually these as a prices will depreciate in value. i don't think this is the time to sell in may and go away. it is focusing on quality risk assets. that means investment grade credit. anna: with that in mind, with the central bank conversation in mind, let me show you the chart which is markets pricing in a rate cut. do you think that makes sense? that goes along with equity markets. does it make sense? myles: i think this is where you need to focus on the most likely outcome. do we think the fed is likely to be cutting rates this year? the markets pricing a small cut, probably not. if you look at the distribution of risk, it is more likely we will get a rate cut than a rate cut. that is what the market is
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really pricing. it is pricing risk assets. s some safe assets. the only say bassett is the u.s. bond market. the european bond market, there is not room for much rate cuts. for us, it is less about what the market is taking a big bet. it is about a portfolio along with risk assets, long investment grade credit. the place where duration makes more sense as the u.s. anna: this picture, expectation uprising in for the markets, is that a true picture? i was talking to a couple of colleagues, the transmission problem the fed has at the moment. above the ioe. you can explain some of this, because of the way the fed is reducing its balance sheet. complicating the transition mechanism. re: in danger of making too much of this idea? myles: i think the market is
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missing out. we are at the end of the fed hike cycle and trying to figure out if it is an easing cycle or not. i think probably the next move is we are on hold for some time. the market is smelling it. until we get confirmation that global growth is ok and inflation is actually stabilizing rather than reversing, i think the market will remain pricing in probability of the starting of an easing cycle. the market is trying to feel where we are in terms of the rate cycle because the fed is signaling we are done with the cycle. anna: does that conflict with what we are seeing in the jobs market? myles: absolutely. anna: the jobs market is so strong. myles: the key thing is it comes to what the fed will be focusing on this evening. the fact that inflation, the core inflation measure, the pr ice consumption deflator has been falling.
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it has been drifting downwards when they are meant to be achieving a 2% target and drifting towards 2.5%. the key challenges they have full employment. the growth outlook at looks ok, it is not fantastic. it is slowing somewhat as the tax cuts fade. inflation, which should be at to 2% and north is coming off of it. i think they will remain patient until the data has more clarity about why the inflation pressures are going. anna: with the mandate and pc doing one thing and the jobs market doing another, it does feel like prolonged patients is what guests talk about. what about pressure from the white house? president trump talking about wanting a rocket in u.s. growth. a one percentage point cut. do you think that is likely to happen? myles: no. i think the fed are -- powell has become accustomed to this. the political pressure will not
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be driving the fed. anna: some people point out that maybe it is counterproductive. myles: probably not either. we are sort of used to these calls and radical, strong statements from the white house. i'm not sure it will have a reaction. anna: it did not seem to move markets much. myles bradshaw stays with us. next, the stocks on the move so far this morning. the u.k. market taking a 60 million hit on his failed to deal. we will bring you more on that in a moment. this is bloomberg. ♪
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anna: welcome back to the european open. some pictures from moscow. labor day marches, labor day manyes taking place across places in europe. activities, demonstrations. these pictures coming live from russia this morning. it is a week of important data releases and signs point to an economy that is not as weak as many as feared. a breakdown of the latest numbers. >> we did get those gdp numbers yesterday which beat expectations. tthe european econom gained momentum at the start of the year. what is really interesting here, as the cost decision of growth.
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you look at the italian economy, the blue line, snapped out of recession. that had been a real concern. in spain, better than expected performance. you can see despite that political uncertainty. we areer in germany, still waiting to get gdp numbers. this is the biggest economy, clearly really matters. we did get inflation data. if you look at the two lines. one tracks euro area inflation, the other is german inflation which overshot the 2% target. they move along in tandem. that means perhaps we will get an upside surprise for the euro area. inflation numbers, this will remove the pressure on mario draghi ahead of the june ecb meeting. anna: thanks very much, maria, with the latest on the growth numbers out of europe. myles bradshaw is still with us.
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maria taking a through the details in terms of the growth story. italy, a rebound there. france, some resilience. france, a surge coming through. is this taking you by surprise? myles: not really. our expectation was growth would stabilize and recover into the end of this year. 1/10 more than expected the french gdp numbers, and it is a welcome sign that european growth is stabilizing because that is important for banks. it is important for global inflation. we need to see more evidence of that. in the business surveys. ultimately, european consumption and domestic demand service data seems ok. the slowdown has been led by manufacturing and trade, with china looking better in the u.s. looking better, you expect that to improve. that remains the case that the impulse for european growth is external. to get domestic growth doing more, you need to see fiscal
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policy in the ecb becoming more proactive. anna: two things to talk about. on the fiscal front, the second day in a row we have a guest say they expect to see more fiscal stimulus in europe. where is that going to come from?germany has the most headroom but reluctant to spend. myles: you are seeing it in small little areas. in france, macron announcing tax cuts. italy having fiscal slippage. a new government in spain that will probably be a minority government with a strong left-wing bias. the elephant in the room is germany. i think germany will be at the back of the queue, i think the pressure for fiscal stimulus is becoming as living standards is not improving. you are seeing the rise of populism. it will not be a u.s. style tax cut, my expectation. it will be incremental. it is not going to suddenly deliver an extra percentage point. anna: what about infrastructure spend in europe?
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it seems like a lot of people talk about the need for it. when do we see some things substantial on that front? often politically. myles: from a macro perspective, it tends to be a lot more drawn out in terms of the immediate it on growth. i don't expect a big infrastructure spend. et would not -- will be mor about multiyear numbers bundled up together. anna: you mentioned the ecb. not to overdo it from what we saw yesterday, but the fact it was not as dreadful, does that take some pressure off of the ecb? myles: i think it does. their expectation has been that growth is hit by a number of factors, new emissions standards in germany. growth will improve. this strengthens their base -- best case scenario. like the fed, the bigger issue really is inflation.
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i say the bigger issue. we have had obviously the recent numbers of inflation are a bit better. core inflation in europe will probably be averaging 1% but the real issue was look at long-term inflation expectations in europe, how they are coming down. without the strong growth, how are you going to make progress on raising inflation in europe? the u.s. has had many years of strong growth. that is probably something that is going to take quite a bit of time for the ecb two digest and decide what to do. anna: thank you, myles bradshaw stays with us. let's get the individual stock moves. >> sainsbury to the upside. even though they took the 46 million pound hit on the failed acquisition. rory's to the upside. they reduce their forecast for systemic buffers. this is following the release from the u.k. regulation
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authority requirement division. they are mulling the idea of buybacks and dividends. just eat to the downside, down 3%. they were downgraded by jpmorgan in a note this morning. jpmorgan citing u.k. weakness. jpmorgan was saying they deliver. anna: thank you very much with your movers. bp exclusive. bob dudley tells bloomberg where he sees oil prices heading. don't miss that interview. oil prices down by 1.2% on wti. this is bloomberg. ♪
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anna: welcome back. 20 minutes into your trading session. the trading session in europe without a lot of continental europe but the 5100 is open, the dennis market as well. up by 3/10 of 1%. of the biggest gainer, up by 5.6%. u.s. futures pointing higher, generally the case with the
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nasdaq behind the back of those strong apple forecast. at the latest on the oil price. the ceo of bp tells bloomberg the crude market will be tight in 2019. in an interview from the milken shared hisbob dudley thoughts on where he thinks prices are headed. bob: you cannot always get it right. we try to do it on the fundamentals long-term rather than short-term reactions. we think fundamentally, the markets are tight this year. you look at what is unfolding, the venezuela defying economic gravity and reports of more violence in libya yesterday -- these things approach the fundamentals. look at the production growth, it is still bottlenecked. that one on there forever. >> what is your biggest worry about oil prices through the rest of 2019? bob: for us, we planned the company on $55 a barrel. very narrow for bp.
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if i worry about it longer-term, not short-term, a spike or a drop. that is not good for the world. right now, i think we will be in $75 forrway of $60 to 2019. >> talk to me about the integration of the bp assets. what are you learning, especially the u.s. shale market? bob: bhp is a great company. we only took over operations since the first of march. we are really early into it. it will happen very fast. we like the assets a lot. we are part of the checkerboard ding. whyold historical reasons leases are shaped like a checkerboard. down the road, there will be some consolidation to make that more efficient. we have a great team that has been working on natural gas in the u.s. now they can turn themselves to
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crude oil. >> is that consolidation come sooner rather than later? is that something we see this year, next year? bob: good question. i think there is no need to rush it. it is one of those things, you look at that big piece of geography out there, not just for us. >> you think it will be competitive if you try to figure out who is going to get the upper hand? the i think -- you can have industrial logic of companies rationalizing. seeing valueple in that. what we did with bhp, right next to where we are. it is really nice extra business for bp. you will see us divesting some of the assets we had to make sure we returned to shareholders. >> you anticipated my next question, not surprisingly. those divestments, how is that
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going? is at the pace you want? bob: no rush. we have had data rooms open this year for a number of months now. i'm very surprised at the number of companies kicking the tires and looking at the assets and data. i think it bodes well for whenever we decide. anna: that was the bp ceo bob dudley speaking exclusively to bloomberg. myles bradshaw still with us. we talked about earlier inflation. that is how the oil price factors in. barrel for 2019. he says he plans around $55. myles: i think the oil price has been on the upside this year. do we see it reversing? probably not. is there a risk it moves higher? it is about the supply bottlenecks, libya, venezuela. the persian gulf.
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i think that continues to support the oil price. our own expectation is oil prices remain around these levels. not looking for a big reversal. anna: let me ask you about other things you like. we talked a little bit about the eurozone growth story. this might be eurozone or other, but tell me about that. myles: a lot of things are. our own view is that the global economy will grow sustainably. we are not heading into recession. typically that leads you to risk assets. valuations are repriced. january was a great month for risk assets. the question is what is going to drive us from here? it comes down to technical demand, i think. in europe, there is such a low level of yield, you are seeing a lot of investors, european and japanese, moving into higher-yielding, higher-quality assets. it is liquid. it is very high quality.
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we don't expect the european elections to trigger a big wave of political repulsion, a change in the politics of europe. expect the ecb to be very supportive in terms of monetary policy and signaling low rates. that supported bond portfolio in high-quality carry. anna: that yield does not take you into high-yield? myles: it is more a case of which officers better risk reward. in high-yield, you have more macro risks. it is more of a idiosyncratic market. that reflects that valuations have moved a lot. we are no longer as cheap as we were. therefore, you need to be cautious. you want to be in boats better bit further out to sea. anna: thank you very much. myles bradshaw. myles will be joining me on bloomberg radio daybreak europe live on london digital to carry
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on the conversation at the top of the next hour. next, the fed calling for a cut. president trump pushing for drastic action from the fed to boost the u.s. economy. this is bloomberg. ♪
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anna: president trump urges the federal reserve cut interest rates by a full percentage point. economists expect a hold at today's meeting. shares of apple bounce in late trading as it announces plans to return $75 billion. and back to basics, sainsbury about to invest after a failed attempt to buy the rival. shares gain as profits beat estimates. atcome to bloomberg, i am the european headquarters in london. let's have a look at where we are.
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we mentioned sainsbury up by 5%. one of the companies helping the ftse 100 move higher. after we saway apple numbers causing something of a reassessment of the tech sector. -- making people feel a little more risk on. here, which is why we run the mov function to get you the biggest gainers and losers. elsewhere, we can see lloyds banking group is up. the london stock exchange also had numbers out of this morning. let's have a look at the other side of the mov function to see what is losing ground. a fairly bearish note from j.p. morgan preferring delivery hero. micro focus weaker a day after its dividends. we have a move lower in this publisher, no .7%.
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-- now .7%. we see energy businesses like bp and rio tinto, bhp also in the , and shall moving lower as a result of weaker oil prices. let's get your business flash. house is warning the u.s. is ready to walk if no deal is reached soon. mick mulvaney says the negotiations want to go on forever. this is a shift -- want to go on forever, this is a shift following a visit in washington. juan guaido's effort to take care of as well has flopped. the military compound stayed loyal to the president. the u.s. has reiterated support but seems to have little effect.
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the day ended with maduro still firmly in control. robert mueller has its best frustration with how william barr characterized his findings, saying he did not contact -- did not capture the nature of his work. this disagreement ratchets up tensions as the attorney general prepares to testify later today. ascendedew emperor has to the chrysanthemum throne, a low ceremony. regalia.ted the royal a more extravagant ceremony is set for october of involving visits from heads of state around the world. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna? anna: thank you. olivia hows with your first word update. president trump is pressuring the fed ahead of a policy meeting today. he called for the central bank
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to enact cuts and resume a bond purchases, praising china for adding what he called a great stimulus. he called for a steep one point cut in rates, saying it would help them to take off like a rocket. but is there potential for the fed to send even more dovish -- sound even more dovish? >> well, there is a flaw in the fence dovish town -- fed's dovish tone. the rates are great at maintaining asset bubbles and we see that, stocks at an all-time high. time about the most recent gdp numbers beat expectations. so that cause them to be hawkish? that is unlikely. economists see the fed concerned with core inflation. coming in at 1.6%, missing the target.
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that is something trump has tweeted about quite frequently. the fed has been expressing opinions on this as well. as if low inflation would be enough, the fed says the answer has to be yes. they also see markets happening by the end of the year, but what about this meeting? opinions says that this event is likely to be a no -dramaof that, -- a no event, a nonevent. wanting to avoid the drama from earlier this year. matt: thank you -- anna: thank you. our guest from wells fargo joins us. thank you for passing through. we wait to hear from them today, i'm drawn to the cycle of one of your recent research pieces
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where you say the economy is not falling apart. how strong is the u.s. economy? >> we have got this 3.2% gdp growth rate overstating the underlying strength. if you cut through that and look at where the economy is, it is pretty broadly balanced. consumer spending continues to rise at a moderate rate. investment spending is not strong but remains positive. on the government side, we still have fiscal stimulus. growth,omy, in terms of remains broadly balanced and there is no need for the fed it to become a great -- to be cutting rates. anna: let me bring you this chart, as they chart suggesting limited inflation growth. the fed's preferred measure of inflation looking weak. so if you were looking for reasons to take action, the weakness in the inflation is
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something they will have to talk about. jay: oh, sure. if you are looking for an excuse to cut rates, it is certainly in the pce. but we will see where that goes. we are seeing modest signs of wage inflation in the united states's and that feed through and does that feed through to the pce? if the court deflator remains low, maybe you get a rate cut at that point. anna: give me your stateside experience. oftenleague matt miller says the core number cuts out anything anybody ever uses. in the u.s., does it feel inflation is low? factors,e of other does it feel like prices are on the rise? jay: it does not feel like prices are on the rise.
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if you look at the core, it still captures 82% of what americans by. -- buy. what people notice is things they can see on an everyday basis. gasoline and food. when those are moving lower, it does feel like inflation is not there. but underlying that, there are some modest signs of inflation. has beenething that getting attention is the transmission problem the fed has been having. we make a lot of the fact that the fed has been pricing in, maybe there is something technical going on behind the scenes. fed does not have quite the same way of controlling the market. what are your thoughts on whether he needs to change the way it does its business to make policy flow more smoothly? jay: it will be interesting to er, is they cut the io
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about where they wanted to be. i would not expect that, but i would not fall out of my chair. i know there is a big study in terms of this transmission, tactical things, but strategical views. do we change our inflation targets? average, rather than a 2% thing. discussions going on, i would not expect a clear answer today, but later this year maybe. anna: we have heard a lot from the president, his very nicely timed tweets calling for a one percentage point cut in interest rates. talking about what china is doing and how he wants to see cuts. have you think the fed deals with this kind of political
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how do you think the fed deals with this kind of political pressure? jay: i think they let it roll off their backs. presidents have put pressure on the fed before, this is just a little more explicit. president trump may be setting up an excuse at some point. if something happens and we are in a recession or weak growth, he can point at the fed and say this is their fault. anna: especially in an election year. jay: absolutely. anna: they let it wash over them. what would happen to the u.s. economy if we did see cuts in the interest rate? how soon could that actually happen? jay: it would probably be the end of the year, frankly. i believe they are on hold right now. get one in september,
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maybe by december, that is not our call. we think the fed is on hold for the for seeable future. at i acknowledge that if there is weakness, it is the inflation number. it continues to undershoot as we go forward. when you have got inflation as seemingly weak presidents and the jobs market as strong, you have got an argument for either side. jay: right. and looking at the core measure, what they really focus on, it is below 2%, but it's not 1% or something like that. anna: we remember those days. jay, thank you so much. we have had numbers out of sainsbury today, gaining after reporting a profit boost. the supermarket is focusing on its own stores, bowing improvements after the collapse of a 7.3 billion pound bid.
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we spoke to our colleague about -- we spoke to sainsbury about the sales deal. >> we were disappointed. the main premise was we could invest in price and we have committed to invest one billion in prices across the business. we will continue to invest in the core business. we need to work with suppliers to reduce prices where necessary , we need to look at the offer to continue to do that. anus: do you think you can still committed to a number in terms of price cuts to the market? -- clearly, we had to lay that out very clearly for cma. we will invest in price cuts for customers in the coming year. as mentioned, that is an area we are very focused on.
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clearly, with less scale, that becomes a -- becomes more challenging. that said, we have large-scale already. we could have done more for customers faster, it would just take longer now. manus: i am going to read you a peace from the short capital report, bear with me. availability of untied, all of this is irksome. availability, on the a littlenitidy, irksome. what do you have to say about that? the formatchanged for all of the colleagues in our stores this is so that they can be more flexible. to bring more
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flexible the so we can raised salaries, now paying market-leading rates for colleagues in store your in making those changes, we certainly saw some disruption to service. disruption to availability and to service. we measure these things every minute of every day and we get customer feedback directly through our app. and what we are seeing is that has improved consistently since that period. anna: that was the sainsbury cfo speaking to manus cranny. up next, we bring you stock movers, including this medical equipment maker, slumping after its second-quarter growth margin declined. this is bloomberg. ♪
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anna: welcome back, 47 minutes into the trading day. many markets are closed due to the mayday holiday. we see strength coming through in the ftse. offer earlier highs, perhaps, but up by .3%. excitement through apple filtering through psychologically, even without a deal of tech heavy listings. close, so weare put in some futures come in
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suggesting strength coming through on the nasdaq. let's get your individual stocks or is -- stories. annmarie: let's keep an eye on that apple excitement. here in the u.k., up more than 6%, part of the apple supply chain and certainly liking that strong report. a bullish forecast, dividends, buybacks, everyone liking that. ambu in denmark falling throughout the morning. this is as they have reported a decline in growth margins and free cash flow. and the london stock exchange had earnings out, saying the first quarter updates were in line and the right parts are growing strongly. anna: thanks so much. ken griffin, the billionaire of citadel says that raising taxes is not the problem. he says the problem is america's
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education system, speaking to bloomberg in california. >> if we look at the alternative to capitalism, it is socialism. we know the track record of that. it is a failed history across cuba, across the ussr, now in venezuela, where you literally have chaos in the street as people who have been economically subjugated for years are struggling with starvation. they are not talking about career opportunities, they are talking about the basic needs of had what put food on the table. i really think that fixing education, because education is broken, has got to be a key area of focus and reform. we have got to equalize the opportunity for all americans to have a chance for a fulfilling life and career. but our system economic freedom gives us just that.
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the freedom to choose our careers, to buy the goods and services we want to buy, to live where we want to live. i would never want to walk away from those basic freedoms that define who we are as a country. that the state of education in the country is a byproduct of capitalism inasmuch , in a free market, the highest quality goods and services tend to go to those who can pay the most. they would point to the recent college admissions scandal as evidence of that. that the kids getting into the best colleges have the parents who could pay people to fraudulently earned them a question. -- burned them admission -- ea rned them admission. >> you pick the right words, fraudulently, it is fraud. we believe that when somebody gets ahead by cheating some of
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the else, they have committed a wrongdoing. very choice we use shows you how much we all believe in the appropriateness and necessity that people should be allowed on their merit. is the zipre problem code you are born in dictates to much of your opportunity for education in our country. >> lack of social mobility. >> the lack of social mobility that goes with going to a broken school. absolutely. this is what we need to fix. this has nothing to do with capitalism or socialism. it has to do with the commitment of our body politic to ensure that our school leadership and teaching communities aligned with the interest of our students. that is what we need to do. i live in chicago. i am in a city that has all the
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challenges of an inner-city that faces financial and economic hardship. and the plight of crime. that theu make sure young men and women in that area have a longer school year, a longer school day, the supplementary education that, takes place in sco. that will help the talented young people get ahead. griffin, ais ken fascinating conversation speaking exclusively to erik schatzker. the conversation was u.s. based, a lot of thought-provoking ideas for europe as well. up next, battle of the charts. terminal users can interact with the charts. this is bloomberg. ♪
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anna: this is "bloomberg markets: european open." time for battle of the charts, dani burger and maria tadeo. dani: we are in the middle of a turbulent earnings season, but it has created a great environment for stocks.
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correlation in u.s. and european indices has fallen, so this is one month correlation. the u.s. is at its lowest since 2017, in europe, the lowest , giving investors opportunity to go in. anna: interesting. maria? >> i am looking at venezuela. this was a state oil company many see as a proxy for country risk. and rallied at the start of the year but has now dropped. investors do not know how to read the situation. interesting is not just the price action, but the older as of the bonds -- but as are the owners of the bonds. anna: i am going to go with chart, seems strangely traditional, almost old-fashioned in this market. thank you for playing, you can
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find all the charts on your bloomberg. that is it for the european open. is up next.e" this is moscow. ♪ so with xfinity mobile
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drastic action from the fed to boost the economy. shiny apple, the tech giants forecasts -- giant's forecasts push shares. the white house warns it is prepared to walk away from the negotiating table with china, ramping up pressure to get an agreement. ♪ welcome to "bloomberg: surveillance." these are your markets,


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