tv Street Signs CNBC June 6, 2016 4:00am-5:01am EDT
very people who urge this country to imbed itself in the euro, which has turned out to be an absolute catastrophe. china checking into europe's leisure sector. they look to china to foil the plan to raise the stake in the intel group as they snag up 70% of intermilan. and a drug developed with johnson & johnson appears to be a breakthrough in treating aggressive forms of cancer. good morning, everybody, welcome. >> favorite day of the day. >> optimistic. really? the whole week ahead of you? >> we are halfway through the year almost, right? june is already here. >> did you watch tennis over the
weekend? >> i didn't. i like playing. >> you like playing but don't like watching it. >> i don't like watching sports. >> you enjoyed it? >> i did. let's take a look at the markets. >> the european is flat right now. the stoxx 600 is flat after the jobs number came out on friday. i was expecting a flat close in the u.s., actually, i thought we would see a higher than average number. but the fed came out to say we won't have a hike in june. and we also have the worries in terms of the eu referendum on the 23rd of june. so that is also leading to a lot of uncertainty about how to position ourselves. all the european investors, the bigger ones trading in positive territory, just got the danish market trading slightly off.
>> friday's jobs report indicates a 6% chance of a hike next week down from 21% just a few days ago. nick yeltsin is joining us, good morning, happy monday. you didn't expect the feds to hike the number until september anyway, but what does this mean for the markets? >> it was a weak number. it's still way below consensus. the unemployment rate fell but that had to do with the labor force instead of the number of jobs. wage growth is running 2.5% there. the atlanta fed wage trackers are up about 3%. the few things we are showing in the labor market is still tight anything, but it was a weak
number undoubtedly. nothing else has seen anywhere near the kind of deterioration. should we be taking this with a pinch of salt? plus, it will be difficult to do the jobs as we have seen. >> we do think we'll have a rate hike in september and another in december. we'll see it gradually tighten towards the end of the year. >> and we saw revisions downward to the previous number, so that won't bode well in terms of the turnaround to be happening. >> the back momentum was weaker as well. the u.s. pushed up savings ratios quite high in the first quarter. we are up .75%. so the consumers have spare ammo to spend and increase consumption to drive the u.s. economy. so we have a reasonably robust second half of the year. >> and you really think they still would hike in the fall despite the fact we are looking
at a u.s. presidential election? >> we saw in september last year, you remember, the chinese slowdown and that delayed yellin and the fed. there's always the external shock or risk. i think they will be able to go in september. i think it is unlikely that june or july now, but they can go in september and again in december is our expectation. >> so we've got to some degree probably june off the table now, but we've still got brexit, punished elections, the fact that we saw the move in the dollar overnight puts more pressure on the ecb, the bank of japan as well to react, so how do you position yourself in european equities over the summer? >> well, june has this high event risk. maybe the june 15th fed meeting is now less of a concern. and you have the 23rd, the uk referendum, and then three days later the spanish general elections are marked too, so there's enough political risk around europe. we would argue the evaluations are attractive in europe. we think the downgrades we have
seen are very aggressive to earnings. these are the biggest downgrades in seven years and that has run its course and probably is too optimistic. >> and the sectors to play? >> more cyclical. some of the financials and also like capital goods and a little bit of tech, those are parts of the market that would be more positioned towards that, and more cautiously on the defensive. >> sorry, this is the european versus the u.s. >> european, exactly. >> you are past the u.s. cycles. you said 7% outperform in u.s. equities, so to what extent can we compare this in the u.s. given to the interest rates in europe given the timings of the cycles so different this time. >> they are. it is a big shock, you're down a minus .4 in europe. banks are having a negative impact on the profits from that, so clearly once you are past zero, the boost to interest
rates is actually probably lagging. as you said, the u.s. is in a different cycle than we have seen previously. >> when you say cyclicals, you take out the insurance policy from that. >> yeah. >> why do you like the banks? >> maybe because of evaluation, to be honest. the earnings estimates have been smashed and taken down very aggressi aggressively. we are seeing loan growth accelerate, so that is a positive thing. there are things improving through. >> how about also when looking a the division between, you know, north and south in europe, are we going to continue to see a big divergence there? >> well, yeah, the periphery has the cheap evaluation. if you look at spain and italy, that's where earnings can bounce back. you're down between 40% and 60% from the peak if you look at where earnings growth is, so that is the opportunity. more in southern europe than northern europe definitely. >> we'll take you back to the u.s. and the fact that many people say, look, it will be a
shallow increase, whenever they start to get more rate hikes in, would the fact they are going to hike less amplify the impact of each 25 basis point hike? if you go back to what they did in december, the effective tight anything we got there was, 150 basis points? >> exactly. i think they will do less. it's a shallower cycle. maybe 250 basis points, not 400 or 500 basis points. that means each interest rate has more potency than otherwise, definitely. >> we have just been waiting for ecb's vice president to speak. he's just made a couple comments here saying we need to avoid reforming regulation on banks, increasing the incentive for risky leverage buildup outside the sector. nick, what do you think of that? >> there is definitely risky leverage building up in some places in the economy. that's partly because of the effects of zero rates. i think they want to get the corporate bond market operating
more than -- that is something they have focused on. and they have the purchase plan that start this is week on wednesday. so it will be interesting to see how they manage to get credit into the system for the corporate bond market, aside from just going through the banks, which is being difficult. >> it's had a dramatic impact on spreads whether it is the high-yield market or the investment growth market. and where are we now as far as their concern? we have pretty much fair value, how much more benefit can there be and can we see it through to the economy in terms of corporates borrowing cheaper? >> well, yes, they can go further because this program we think will get up to perhaps $12 billion a month when they finally get it going toward the end of the year building momentum, that will help economies and be cheaper. it's it's the smes that could h
some of that. >> nick nelson from ubs, great to talk to you. sterling is under pressure as the whole brexit campaign is making ground. coming up, boris johnson tells us why he's not that worried. >> this value will be determined according to the strength of the uk economy. and i have every reason to think that the uk economy would prosper mightily outside the european union which is currently democratically and economically, i believe, holding us back.
jin jiang's stake in the economy from 29% to trigger a public offering. china's fosun group is in advanced talks to take a 15% stake in the company des alpes. they specialize in ski resorts and parks. back in march the minister said cbc would retake stake in the economy. and china's suning is looking to buy 68.55% stake in intermilan's club. how is it going there? >> reporter: yes, there's talk
of the indonesian tycoon buying this up. it has not been a strong couple of years for the football team, so it is perceived as a positive outcome in the sense that this could help because of the financial strength of the group to strengthen overall inter milan club. the surprise news is the family exiting in terms of control, or in terms of participation in inter club. the sunni group will be buying up 500 million euros of inter. and 29.5% of that is his stake, he's been in the group since 1995. this is the first time there is a switch in majority stakeholdings. so sunni is a listed company in china and in its future, because of the financial stability of the group, it's perceived as
possibly doing better this year in the championship. but inter started in first pl e place. overall, this could be good news and not the only group bought up by a chinese group because there are talks of milan potentially being sold to a group of chinese investors. so the italian football clubs may be speaking chinese very soon. back to you for now. >> excellent. that would be interesting. claudia, thank you very much from class cnbc. now fitch is saying it expects growth to slow. they warn companies that need to take bolder operations in order to boost the model. karen is joining us live from the event, are we anticipating proper slowdowns seen in growth? >> there is a challenge to the
industry and they are addressing that over the three-day conference. there are a couple strategically timed reports out, fitch is one of them, but also the one talking about the profits industry set to fall by a third over the next three years unless costs aggressively are stripped out of the strichindustry. joining me is the ceo of asset management, nice to see you again. >> thank you. >> this story about the costs being stripped out of the industry, do you think too much has been done to protect the status quo instead of restructuring? >> well, i think there has been a trend in recent years that the winners take all. so it's really taking a large part of the flow. and i think we probably will continue to see that we need to have scale in order to be competitive and that it is also a strategy you can say that we have been pursuing, that we want to be very efficient in what we
do and have cost control. >> is it just the active managers under pressure to tackle costs or across the industry to the passive side? >> you have seen a lot of prized pressure in the passive providers. but it is definitely, you can say, an issue for the active management that the passive are competing in certain ranges, especially the normal products, and then i think asset managers have a good chance to keep high margins on the products where you actually really add value that are more unique and different to replicate on the passive side. >> i think the message has hit home, we have relocated funds from monaco via berlin. the message is a somber one because times are challenging. >> that is a true statement, but it is also the way that the industry now thinks of itself. that you have to be proven in what you do and you have to make
sure that you add it to the soft side. >> we saw 38,000 jobshat change? >> overall, we are very careful on our growth perspectives here. we don't think we'll come back to high levels of growth in general. so we believe interest rates will remain fairly low and not come back to the 3% to 4% we have seen before. so whether the fed will hike, you know, once or twice this year, you know, it's not so important for us. i think still u.s. treasury is actually, when you look it a globally, it has generous carry compared to the european government bonds which are base you cannily zero or below. >> which leaves us in this environment to number the funds across europe that has faced outflows. there are very defensive plays,
but you have the inflows. what are you doing differently to lure investors? >> our range is quite defensive and well suited for the low yield environment. so we have seen a lot of inflows in return products, the outcome-oriented products and the credit products that generate this carry. so i think we've had a well-suited product range for the environment that we're in. and then we also have success on the distribution side. >> good to say i love to talk to you and enjoy our conversations, but i can't help saying, christian is turning up on the portfolio because you have been more of an investor than an activist. tell us about the governors mandate that you have. >> i don't think i would call us an activist, but it is true that we are -- we are taking the issue seriously and we want to deliver returns with responsibility as we say. and that means that we as an active manager feel responsibility to engage with
the companies we invest in and have a good dialogue with the management and also can hopefully share our experience from this with other companies and make the company stronger and also in the dimension we discuss with other companies. >> this one has shocked a lot of investors. they said no more purchasing on volkswagen until the issues clear up, how did this slip through? >> we are also asking ourselves that question, but it is very difficult. you get the extreme situations. volkswagen is a case where we seldom end up. usually we have a lot of engagements, a lot of dialogues with them. and successfully we stop it because we reach our goal.
suddenly you have volkswagen which is an extreme case, a big surprise to everyone regulating on the street. but then you have to take action. >> how comfortable are you coming up on the june 22nd shareholder meeting from company. and we -- we believe that it's common sense in how they have to make this clean up and demonstrate to the public and their client base to everyone around the world this is something they are taking care of. that's what we hope for. >> thank you for taking the questions. christian from asset management, the ceo here, joining us live in berlin. plenty more conversations coming your way over the course of the couple ways here as we talk about technology, the rise of
the robot, how comfortable you are with a robot managing your investments and you may not know about it. lock chain technology and firewalls around the portfolios as well as better returns from your portfolio. julia and louisa, back to you. >> thank you, we look forward to. i wonder if she has the same robot managing her finances as you do. >> as long as it is not pepper. let's get a look at the european markets. tilted to the topside, as you can see, as we move into the red from the french markets. the outperformer here, the ftse is high by .70%. anglo american is up 7%. we saw the dollar index losing
1.6% last week and particularly the back end of the week we had the shocker of the payroll numbers. >> nobody saw that one coming. >> that was a blow, wasn't it? >> definitely. >> back to the tennis. back to the tennis, novak djokovic defeating andy murray to become the first man in 1969 to hold all four major titles. oops, just lie down as you do, right? >> relief. >> holding all the titles simultaneously, the serbian star lost the first set and cruised over the next three. he's 29 years old and now owns 12 grand slam championships? >> yeah. >> some are saying he will overtake federer. >> he played great yesterday. you can say that. andy murray, oh, andy.
let's move on. legendary muhammad ali died on saturday after a battle with parkinson's. he is known for his political stances as his dominance in the ring. bruce hall takes a look at his life. >> i'm so mean i make medicine sick. >> reporter: muhammad ali had a flare for words surpassed by his amazes performances in the boxing ring. in 1944 in louisville, kentucky, he won a gold medal in the 1960 olympics. turning pro, his controversial style turned him into a national figure. but his dramatic heavyweight champion listing in 1964 was not a great surprise. >> one of the great upsets in the heavyweight history. >> reporter: he shocked the world by joining islam and changing his name to muhammad
ali. he did this to avoid being sent to vietnam. >> my intention is to box to win a clean fight, but in war the intention is to kill, kill, kill and continue killing innocent people. >> reporter: he was stripped of his title and did not fight again until after the supreme court overturned his case. ali's comeback included a series of worldwide events, the champion joe frazier and george foreman, making ali the first to win the heavyweight crown three times. but his greatness came outside the ring showing courage and character during his long battle with parkinson's. lighting the torch in the 1996 olympics, that renewed muhammad ali to the greatest athlete of all time. bruce hall, nbc news. >> once the most dynamic figure in sports.
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welcome to "street signs." i'm julia chutney. >> i'm louisa bojesen. >> attention is now turning to fed chairman janet yellen as she rules out a rate hike in june. americans would never subjugate themselves to the eu. boris yeltsen takes on jamie dimon. >> they are the very people who urge this country to imbed itself in the euro, which has turned out to be an absolute catastrophe. >> china checking into europe's leisure sector. apple looks to hna to full jin
jiang's plan in the hotel group. and shares getting a shot in the arm after a drug at johnson & johnson appears to be making a breakthrough in fighting aggressive forms of cancer. so are european markets closing on a softer note on friday, they are still digesting the payroll data at that point. the u.s. closing flat. and this morning we have a flattish more positive start for many markets. >> you can see the miners focusing off the back of the weaker dollar. but here's what is going on with u.s. markets relatively unchanged at the end of the market on friday. a real bounce off the lows on friday. at one point the dow was lower by 149 points. so just digesting that
significantly weaker payroll number to give you a sense of what we were seeing before then. we are hearing the fed members talk about the prospect of rate hikes this summer. so, at the same time, now some fed rate hike off the table, the markets are going, what does this say about the u.s. economy? this is a performance in the u.s. economy that you mentioned, the ftse 100 with the dollar index last week down 1.6% primarily in part to what we saw friday giving a lift to the miners. but we also have the gainers today. the tentative start, it is monday, relatively unchanged for now. louisa? well, the vote to leave camp has inched ahead in the latest poll. the new gov figures show 45% would vote for a brexit versus 41% to vote to remain. almost three quarters of the people surveyed said they didn't trust the prime minister, david
cameron. when looking at sterling, we are off over 2% so far this year on the session itself. a little bit of weakness in the pound against the dollar, but analysts, a lot of them are forecasting sharp declines in the event of the actual brexit. >> and boris johnson is one of the most profitable campaigners announced about a concern in the value of the pound should his side win the eu referendum. >> i think the pound's value will be set according to the strength of the british economy. plenty of people said that we had to stay in the erm in 1992 because it would be a catastrophic hike in interest rates of collapse in the value of the pound. yes, true, the pound did go down but interest rates also fell on the pound and then rose agai >> in the short-term, a 10% fall perhaps? >> i see the pounds value determined according to the strength of the uk economy. and i have every reason to think
the uk economy will prosper mightily outside the european union, which is currently democratically and economically, i believe, holding us back. >> now mr. johnson also took on jpmorgan's jamie dimon after the banking boss said on friday quitting the eu could mean fewer jobs in the uk. >> jamie dimon and jpmorgan are the very people i recall in the bank campaign who urged this country to imbed itself in the euro, which has turned out to be an absolute catastrophe. yes, it is true that some financial services and institutions have over the last 20 years benefited phenom family from the eu setup. but it is also true that they have modest earnings in this country have not seen their wages rise in realtime. as a result, they have seen the wages fall as as a result of the signature policies of the eu.
one is the euro and the other is migration across the territories. >> in the united states, there are quite often, i don't know because of the delightful blonde hair or your charisma or populist data, but quite often comparisons with donald trump between yourself and him, what do you make of comparisons like that? >> well, i don't know the gentleman you refer to at all. i heard what he had to say about muslims and not wanting to allow muslims into america. i thought that was an extraordinary thing for a candidate for the president of the yilgunited states to say. america is built on the idea of welcoming people respective of their race, religion, color or whatever. and i think that is a fine thing about americans so i was disappointed to hear that. >> he'll be here the weekend after the vote, would you take a meeting with him? >> let's -- we are concentrating here on taking back control of this country's economy, about
democracy. since you bring up america, i think one thing that is -- it's fascinating listening to american politicians on this subject. no american politician in their -- i think americans are gene uni genuinely amazed at the loss of the control of the system. they would never dream of subjugating their own democracy to the type of system that we have in the eu. >> did obama come too far to come over here to imply -- >> we love hearing from all the international, angela merkel, let them speak. it is interesting to hear their point of view, but in the end this is a decision for the british people. >> we have a policy analyst and director of communications as open europe, do you think they are happy to hear the international economy weighing in to say you should stay? >> obviously, this is the economic weakness in their
campaign and therefore have had to rely on this. that shows you how high the stakes are. >> the eu is democratically and economically now holding britain back. wilfred was asking him how much could the pound drop potentially around the referendum before it starts to really matter? i mean, is there a level where after it drops a certain amount the bank of england would have to step in? >> i do think the value of the pound matters and i do think people will take notice of that, especially in the last weeks to the referendum. as i said, on the economic argument, we have really lost -- they have to resolve to the democracy argument, and they have a very powerful argument in their arsenal because they are
saying, all of you guys, all you international banking authorities, you are wrong about the euro. you were wrong then and are wrong now. it is us the people versus the elite. and that is getting traction among the public. >> i want to take you back to the immigration issue. because the more they talk about immigration the more they do in the polls. it is a winning strategy at this moment for them. but if i look at the point plan that boris and the team came up with, there are a few things missing. the need for lower skilled individuals to supply the uk, because if i look at your comments, your are neutral looking at both sides, you think that even if we brexit, the country needs to maintain a high level of immigration. obviously the skillset is important, but what is the deal here? >> well, i think one of the problems is domestically politicians have always talked
about bringing down immigration is one election away. that is for the public far too high because politicians have been honest about the kind of migration levels this economy needs. secondly, on their points based system, the problem is that there is no country outside the eu that has access to the single market that doesn have to accept free movement of people. that is all going to be in good thing that we have this points based system and will bring immigration down to the tens of thousands, which is a promise cameron made, probably one of the biggest political errors in his career. and now you have dprksgov sayin will honor that. so the numbers on immigration, they will have a hard time explaining that to the public, i think. >> the problem is it might be too late depending on which side you're on here. who has been the worst scam mongerer on this debate? >> both sides have been awful. one side is boris saying the eu
is like hitler, making that comparison. and on the other side you have them saying if there's a brexit there will be a world war iii and a global crisis. i think that the public are fed up with both sides. and you hear them saying all the time, we want facts, we don't want scare mongering. but the problem in this debate is it is not clearly black or white. >> are people lying? >> yes, absolutely. one lie, for example, that turkey is on the cusp of joining the eu. which is absolutely ridiculous. they have to fulfill 35 chapters before they are even considered for a session and then each member state has a veto. there's no prospect of 88 million turks flooding to the uk, but that's the central claim. >> did cameron lie? >> absolutely. he had a public debate last week on tv. and when the world war iii point came up because he incinerated that world war iii could break out on the continent.
and the live studio audience laughed it a him. people have lost flust politicians on both sides. but boris is more trusted than cameron on this debate. >> thank you so much for being here. speaking of politicians with contentious claims, senior republicans are distancing themselves from presidential candidate donald trump after he accused the mexican judge of harboring a biased against him in lawsuits involve iing agains him for trump university. tracie potts is joining us live now from washington with the details. tracie, good morning. >> reporter: good morning. now we are hearing from top republicans like mitch mcconnell, the top senate republican here on capitol hill, former speaker newt gingrich, bob corker, who has been talked about as a possible running mate, all this week condemning
trump for saying the judge could not be fair in the trump university case because his parents are mexican. the judge himself was born and raise in indiana. trump has now taken it a step further, asked this weekend if a muslim judge would be unfair against him, he said, yeah, probably so because trump, obvious course, has talked about banning muslims like he's talked about building a wall with mexico. but he's getting pushback from people within his own party. trump now the presumptive nominee and of course the democrats going at it in california and five other states to determine who will face trump in the fall. >> tracie, i want to ask you a question about what we have seen in the polls for support for hillary clinton because she does seem to have gained ground since the foreign policy speech. i read a lot of things over the weekend that said the problem is donald trump makes the news whereas hillary clinton seems to react to it. do you think we're going into a stage now where hillary clinton
tries to push the agenda, dominate the agenda rather than just be reactive? >> reporter: well, she does seem to be taking some new directions in terms of what she wants to point out about donald trump. that his foreign policy, for example, is dangerous to the country. she tried to do that last week with that speech. and now we're hearing that trump may do some sort of rebuttal speech. initially we heard as early as today, but now his campaign says it won't be today but he wants to go back to rebut her point to point. he has publicly reversed himself for things, like japan having nuclear weapons, he did say that could be a possibility to depend themselves. and now says that the things that the media has quoted him and hillary clinton quoting him on that are not telling the whole story. so we'll have to wait to see how he lays it out in the foreign policy speech.
we just don't know when that will happen. the mind boggles. one lady trying to set the agenda to another, louisa. >> we have loads more coming up on "street signs." the focus is moving to janet yellin's philadelphia speech to take place later today. will the fed chair push back the next rate hike? again, find us on twitter, e-mail, we're here. we'll see you after the break.
storm bonnie brought strong winds over memorial day weekend. and france has started a massive cleanup operation following severe flooding that caused the river to burst its banks. now damage from the flooding that left four people dead is estimated to be worth up to a billion euros. now we've had some comments from the chinese finance minister in just the last few moments saying that china will continue to further enhance weaker policy coordination and continue to have imprudent monetary policy. he's talking about currency, given the focus from the prospect of depreciation in the chinese yuan. and the fiscal policies will support the supply side reforms and economic growth. concerns that given the stimulus on the other side reforms here are going to lag. he's also said that an increase in central government spending to help laid off workers in 100
billion yuan if needed. secretary jack lew says china's excess capacity will have a corrosive impact on growth. they warn that excess capacity was causing distortions in global markets. but lew added that has eased currency tensions between the two largest economies. actually, he did also mention this morning they will continue to cut steel capacity. so music to the ears of other steel producers and what speed they can do it. this comes as the eighth chinese economic dialogue kicks off in beijing. they will discuss ways to promote growth and improve financial stability. >> reporter: chinese president ji jinping called for the u.s.
to set aside their differences. the relations have come under strain for a variety of reasons, like territorial disputes over the south china sea. the president addressed the concerns saying he hopes both sides avoid a miscalculation of judgment on the strategic level. his statement follows remarks over the weekend by the u.s. defense secretary ash carter speaking in singapore. he was concerned that china was building a wall of isolation. and china shot back depending china's actions. >> translator: we do not make trouble but we have no fear of troub trouble. china will not bear the consequences nor will it allow any infringement on sovereignty and security interest or stay indifferent to some countries creating chaos in the south
china sea. >> reporter: on the economic front, u.s. treasury secretary jack lew indicate what had the americans would bring to the table when speaking to university students over the weekend. he said that excess capacity could be crossive to china's growth as well as to global markets. >> excess capacity is not just a domestic issue in china. the question of excess capacity is one that really has an enormous effect on global markets for things like steel and aluminum. and we're seeing distortions in global markets because of excess capacity. so china's capacity to address that is central to china's economy, the global economy and to the u.s. china relationship. >> to counter some of the distortions, the u.s. slapped tariffs on chinese steel. beijing said the ruling is unfair and argues that the supply glut in the global markets is, in fact, a global
problem. the chinese president also addressed this issue saying that china would continue to push ahead with supply side reforms. the dialogue continues into tuesday. eunice yun, cnbc, shanghai. >> for all the latest developments on the u.s.-china strategic and economic dialogue, go to cnbc.com. now we have the european central bank meeting, i was there at the back end of last week, and i spoke to the us a trian central bank governor nowotny who said this phase of acute deflation risk is over. he downplayed the forecast horizon. they have 1.3% inflation forecast for 2017 and said, look at the difference between that and the difference between their target. just below 2% is not that big, so that fits with the theme and message he gave me on friday. so let's take a look at the stocks to watch in monday's trade stateside.
a number of pharmaceutical companies have breakthrough research in treating aggressive forms of cancer. one is being co-developed by johnson and johnson dramatically improved the effects of patients suffering from bone cancer. and genmab has made developments for small cell lung cancer. we have some of the big ceos from pharma here. don't forget to watch for those later today. and shares in whole foods could rebound 20% over the next year according to a report by barron's. the financial newspaper says cost cuts and the launch of smaller stores should contribute to the turnaround but warns it could take multiple portions before they return to growth. shares in whole foods are about 5% over the last three months.
and starwood has agreed to build two hotels in saudi arabia to make the capital riyadh more attainab attainable. they were taken over by marriott. our colleagues in the u.s. have a busy day and will speak to the ceo of marriott international at 4:50 cet fellowed by the president of hilton worldwide at 5:20 cet. and richard solomon will be at 8:15 cet. janet yellin prepares to take the stage in philadelphia later today. friday's jobs report means the fed fund futures are indicating a 6% chance of a hike next week
down from 21% just a few days ago. let me give you a look at how the foreign exchange markets are performing. and we have the dollar index off just over 1.5% last week. they have a majority of that taking place on friday after that payroll's number. i can give you a quick look at how euro dollar is performing to give you a sense of how the dollar is moving. the euro/dollar coming any moment. a touch off today, 1.1354. we are joined by the managing director and head of global ethics strategy at yuni credit research. i'm sorry if i got your name wrong, i'm not great with greek names. what do you make of the payroll numbers, does that take the june/july rate hike off the markets? and what do you expect from janet yellin today?
>> first of all, very disappointing jobs report. definitely it takes the rate hike off the table. there's still some meaningful probability for a july rate hike but that will hinge significantly to the next jobs report as well to any potential revisions we're going to get. as far as yellin is concerned, i think she's not going to be overly dubbish and she'll strike a cautious tone. after all, these guys are still in very much unchartered territory as far as the relations and employment is concerned. so if they look at the market right now, which is about a 25% rate hike for july and a 65% for just one hike until the end of the year, probably they would like to inject some two-way volatility into the market. but they have not said that. >> every time we get a bit of volatility in the markets they say they, don't they?
i want to ask about the position from the fed coming into this last week. and then we have had so many of them kind of positioning and saying, look, the economy can take a fed rate hike, but they have positioned quite aggressively into this jobs number. if i look more broadly at the labor market interaction, it's okay. so what is the risk actually that this is just a one-off and take it with a grain of salt? >> it would be a one-off, that's our main scenario. the only thing that worries me a bit is that one, this witness in the headline was also corroborated from the very sectors and industry, so it was quite widespread. secondly, we also have revisions over the past couple of months. so it raised some alarm bells in that respect. so -- but i think, these guys are going to have at least one jobs report to assess. >> the dollar index lost 1.6% last week. you were cautious on dollar strength, do you expect to see
more dollar weakness here and how best to play it? >> that's our case for the past six to nine months. i'm going to disentangle completely what the fed does between now and then with the year and for the dollar. and the reason for that is whether the guys hike by one or two times, it's not going to really provide any support for the dollar. the dollar has a pricesd that enormously and is high right now. >> i want to talk to you about the swiss as well with interesting movements going on politically. swiss voters turned down the proposal to introduce a guaranteed basic income for everyone living in the country. swiss citizens also turned down a measure to control state companies into nonprofit organizations. if passed the public initiative, it would have prevented swisscom from making a profit and limiting the salaries of their top executives. i'm showing you the performance
of the shares, we are down 2.6% over the last six months, but they are higher today, a bit of relief going on. what do you think of switzerland? we have seen the anti-capitalist proposals limiting shareholder pays and turning major corporations into not-for-profits. but is this really the safehaven currency? >> no, it's not. first of all, let me say something, they have probably caught the tension over the last year or so, but switzerland has a large referendum. so there's no surprise in that respect. as far as the swiss franc is concerned, the swiss franc h struggled from risk off since second quarter of last year. what we have been seeing is that given quite sizably and meaningfully interest rates, the swiss residents, swiss investors
keep sending money abroad and are not seeing money back. so the swiss franc has been broken. >> what should you be buying or selling here? >> dollar downside, no question about it. >> perfect. great to chat with you. that's it for today's show. i'm julia chutney. "worldwide exchange" is up next. we'll be back next week.
good morning, the fed in focus. janet yellin will speak out this morning and the feds are hanging on to every word. and boris johnson lashes out on jamie dimon and many others. and the golden state warriors trounce the cleveland cavs in game two of the nba finals. if you went to bed early, we'll bring you the highlights on this monday, june 6, 2016. "worldwide exchange" begins right now. ♪