tv Bloomberg Markets Americas Bloomberg April 21, 2017 10:00am-11:01am EDT
vonnie: we'd take you from new york to london and cover stories from washington, d.c. and paris. first, breaking economic data. here is abigail doolittle. abigail: for the month of march, we are looking at a beat in existing home sales. month over month basis, this represents 4.4% growth relative to the month of february, where we saw a decline at 3.7%. perhaps, this is a reflection of what we saw that pending home sales is a beat because of warmer weather. but it will be interesting to see whether the strength for existing home sales proves to be a blip. not a lot of reaction to existing home sales from the majors.
basically flat on the dow. very small declines here. after yesterday's big rally, of course. idea of these small declines in the growth year equity asset class, let's look at the 10 year yield. bonds rallying all of it. this is a two day chart. shows the 10 year yield higher yesterday. today, we have the 10 year yield trading lower by about one basis point, telling us haven bonds are rallying. us far as what is behind market action, lots of movers from the industrial space. --. put up a very big beat 24 percent. seems like a small number four a day company. stock is down -- one point of concern is cash flow. honeywell up 2.5%. r --look at schlumberge
down. they put up a mixed quarter, but it was international weakness that investors are paying attention to. the bloomberg, looking at the s&p 500 for the week. this is g #btv 6133. before the election, the s&p 500 declined two times in a row, and then we had the big rally. since the last today decline, -- have a decline, we now little bit of a rally. a bit of a bullish stretch for stocks in the u.s. mark: on the subject of frenchns ahead of the first round the election sunday, stocks could restock in a narrow range. about one half of 1%. on tracks of hundred week drop.ond
-melenchon, we could have decline. 1-2, it a macron-fillon could spur a rally. we are on track for a weekly decline, though a small one after rising for three weeks. we are up to 70 basis points. the high was in 70. the four-year high. 79 basis points. we have come down to about 69. that is the biggie. watch up for that on monday. we will see how the markets react after round one. the euro is steady after the police officer was shot on the shantou you they -- on the shantou user -- the cham ps-elysee. it is a four-way race, though speculators have been adding to bets the euro will week --
weaken. macron has 24%. le pen, tony 4.5%. on 20. le pen would lose the runoff contest. fillon would lose to macron and melenchon. the -- trading highest relative to the stoxx 600 since october 2015. nervousness ahead of the french election and ahead of the beginning of the bank earnings season next week. are these valuations justified? we will know more when the earnings season for banks kicks off. vonnie: the deadly attack yesterday in paris has called -- campaigning for the first
round in france. left candidate jean-luc melenchon said he would not cede to panic and continues with his plans today. bloomberg's caroline connan talks to us from paris. the big question is what kind of impact will this terror attack have on the vote and the outcome of the first round of the presidential elections sunday. i want to bring in my guest, and advisor for jean-luc melenchon. we are going to show this conversation on tv, and after that, we will go to our facebook page f,
facebook.com/bloombergpolitics. raquel, how is this impacting the vote? quel: we knew that france was in danger. we all lived with the attacks in our own personal lives. then, to beg, since dignified and carry on. that is what we did during this election. this election was about trying to come together as a nation. withast that we did jean-luc melenchon was around that idea that we needed to stand together and build new rules, new political roles. we had the opportunity to talk about this on bloomberg before, but what we are proposing is the have apeople constitutional assembly to build a new constitution. this brings us together in a
peaceful manner. there is lots of hatred among french people. there is intra-community hatred. we need to bring peace in an organized, legal fashion. that is what we are doing with jean-luc melenchon. caroline: the argument that the far right candidate marine le centrist francois fillon could benefit from this attack. do you think that the chances of melenchon increases after last night? raquel: i do not think so. i think marine le pen brings more anxiety to our already special -- stressful situation. the solution she brings are about putting more list -- putting more people on the list of people we hate. thes about separating immigrants and muslims. that is not addressed in the fact that the authors of violence are french. raised in thisnd
country. it is not by closing our borders that you will solve that issue. it is a very national issue. forink the time has come something more reassuring. that is what jean-luc melenchon's good card is. he is 65 years old. he is not building a career anymore. is just trying to be wise about the situation. very complete program on security issues, international, defense, military. he is very good on those issues. think heuilding -- i is building trust around him so that people can carry on, including after the attacks. obviouslyso you're accusing marine le pen of trying to restore borders -- raquel: the first thing she said when she heard about the attack was we have to close the borders. but the only thing that will do is not let them go.
caroline: but some people may be, especially from abroad, maybe confuse that jean-luc melenchon's plans are in relation to the e.u. raquel:. that is a whole other issue caroline: isn't his plan leading to some kind of "frexit"? not that.e idea is for now, french presidents have not been good with negotiating, especially with the german chancellor. francois hollande was elected on the premise that he word renegotiate -- he would treaty, which he did not even mention the first time he traveled. melenchon, you would have a president who would put this on the table. we need to harmonize practice. we cannot be competing amongst
terribler in such a fashion. it would be a first that you would have a president so keen in renegotiating the conditions in which we live as members of the european union. negotiation,f that if true, is we need to be to notogically prepared strike a deal. if you're going to strike a deal, whatever happens, you are not in a good position to negotiate. really quickly, he also wants to increase the number of tax brackets we have in france. --to 90% to 90 for
95% of the richer be taxed. it would be useless, because he will also foment a system like the americans have, the tax cut for an account tax appliance account that involves you paying taxes wherever you are in the world. so even if they leave, we will get their taxes anyway, so they may as well stay in this lovely city, where it is nice to live -- when there are no terror attacks. , thanke: raquel garrido you, advisor to jean-luc melenchon who has been gaining momentum. just two days to go before the first round of the french presidential election. vonnie: caroline connan, thank you for bringing us that interview. coming up sunday, special coverage of the first round of the french pellets and joe -- of the french presidential election. davidrancine lacqua,
gura, and our bloomberg news reporters for campaign event and rallies across france. we will have the latest market reaction from london and new york. let's check in on the bloomberg's word news. errors emma chandra -- here's e mma chandra. emma: in germany, a bizarre story after bomb attacks on a bus carrying a soccer team. police arrested a suspect who said he hoped to profit from a slump in the dortmund share price. one player was wounded in the attack. hammond.k., philip signals the conservative party will drop a pledge not to raise taxes. hammond says that promise has constrained the government from managing the economy sensibly. he says he believes in a low tax economy, but the government needs flexibility.
orderhington, trump will a review of any significant tax relations imposed last year. the white house says the president wants to reduce regulatory tax burdens that add complexity. meanwhile, the white house budget director says trump plans to propose spending $200 billion in taxpayer money on an infrastructure building program. leverage private financing, taking the whole program to $1 trillion. the program would not be ready until fall. 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: thanks a lot. the euro is rising for the second week ahead of the first round of france's presidential
from new york, i am vonnie quinn. mark: live from london, i am mark barton. this is "bloomberg markets." time for futures. the euro heading for its second week of gains. investors awaiting the first round of french presidential elections. e,ining us from the sm scott bauer. resilients remarkably and calm, given the potential outcomes on sunday. if we get an extreme outcome, is melenchon and -- if melenchon and le pen are winners in the
first round, what kind of selloff will we see? scott: i do not think it will be that deep of a selloff, but there will be pressure. the euro has been extremely resilient. it has been short covering ahead of the elections. if you compare the amount of shorts where they are today to where they were just after the aboutlection, it is only 10% right now of what it was back in november. gonehorts have really almost to the outside. there has been so much short covering ahead of the elections. are you may be suggesting there is an element of their -- there could be an element of complacency in the markets or not? scott: there absolutely is. i think there is too much complacency in the market now. you never know what will happen. we have seen it with brexit, with the u.s. elections.
if there is some sort of big seet was le pen, you may quite a selloff. but for right now, like you said, the euro has been extremely resilient going into these elections. mark: oil has not been resilient. .t is down for the first week goldman sachs says the sell this week in the oil markets -- it is nothing to do with fundamental evidence. it could be purely down to technicals. breaking through the 50 and 100 day average. would you agree with that? scott: i am not one to his agree with the likes of goldman sachs, but i really would here. you look at the news coming out. achnically, that 50 area is huge moving average, but all of the news coming out with the increase in u.s. production, and more importantly, what i believe is with the upcoming opec discussions and whether they will actually adhere to the
production cuts or not, i think that is very suspect. there is a lot more downside room to oil than there is upside, because i truly believe some of these opec countries are going to start increasing, ramping up production, which will just put further pressure. i would not be surprised to see 47 or 46 on oil as the next stock downside. cme marketsbauer, trading advantage with our futures focused. time for the latest bloomberg business flash. sales of previously owned homes rose in the fastest pace in a decade. contracts and closings increased more than 4% to an annual rate of $5.7 million. the median sales price was up 6.8%. it came in at $236,000. general electric posted
first-quarter warnings that beat estimates. revenue has been forecast of as well. ge is looking to regain momentum after growth constraints. plus, ge has agreed to cut costs more after talks with an activist investor. in the united kingdom, retail sales had their first the klein in seven years. sales were down 1.4% in the first quarter from the previous three months. that suggests consumer spending is slowing as inflation picks up. and that is related bloomberg business flash. mark: still ahead, we turn back to france. volatility picking up. we will discuss how etf's are playing the french horserace. this is bloomberg. ♪
." i am mark barton in london. vonnie: in new york, i am vonnie quinn. time for etf friday. here's abigail doolittle. abigail: with the upcoming french election and the brexit reality, etf's in europe are not as easy as it used to be. here is eric balchunas. let's set the stage by looking at a chart in the bloomberg. g#bi 733. how to investors play this in etf's? eric: let's talk about what kind of investor. mom and pop would use european ones, but with volatility, there is opportunity. the past couple of years, you bought the eurozone etf's, played the central bank trade, and made a lot of money. then brexit happened. now it is different. if you look at the return and risk dispersion among countries,
it is getting wider and wider. single country etf's shine here. i called the geopolitical sports book for institutions. exposure too get local shares unless you have a broker. so you get local exposure, it is a little more volatile, but more money is made. for the french election, people are putting more money into the french etf's. we saw flows of $57 million out thursday and 57 million in yesterday. little bit. you can see the volatility creeping about the end of that chart. watch this etf. this is the one you see a lot of people using to express opinions around the french election, should it go to a runoff especially. what about other elections in europe and what etf's can be used there? other country etf's? european union breakup
odds are at 18% right now. let's say there is a frexit. possibilities that could happen. you could see germany -- let's say that starts to happen. single country etf's will probably be used to do that as opposed to playing the holy you but a retail -- playing the whole e.u. those are the single country tickers to play bu breakups. let's switch gears. etf etf's.about eric: a new etf launched yesterday. it is the etf industry etf and it is an etf tracking the growth of the etf industry. it has exposure to the whole ecosystem. we are talking blackrock, but you also have exchanges, service providers. it. will tier
they will look as less the most revenue and put those at the top. but this is almost like too meta. this is changing the financial industry. other industry teams that have come along, like cybersecurity, have done pretty well. this is the equivalent on that front. we will see if it gets assets. abigail: interesting. i know some of the etf etf's generated interest about a tops of etf's. vonnie: thank you for that. interview with valdis dombrovskis. this is bloomberg. ♪
on the globalg economy and the future of banking. bloombergs francine lacqua is there. pleased to bevery joined by valdis dombrovskis, thank you for joining us. i find the moon quite strange and washington, d.c. better thane expected, and then you walk around the core doors and people tell you they are concerned about the trump administration, they are concerned about french elections, they are concerned about geopolitics. what is the main concern you see? com. dombrovskis: first of all, in economic forecast, we also fallingworld economy is despite those risks. to grow by 1.8% growth this year and next.
economic slowdown in china was not quite as dramatic as feared. inre are number of reports the world economy, and there are number of risks. in europe, we are facing tensions and conflicts in our neighborhood. east orll be the middle there iseighborhoods, a number of geopolitical factors which still need to be dealt with. francine: for growth to take hold, where unemployment goes down and jobs are created, ceos need to feel comfortable about the future. they are not a look at these small forecasts, they say i want to spend $100 million here, want to do this. what will it take for us to have exact confidence about their future? com. dombrovskis: we actually
see investment recovering in the u.s. for a couple of years. we also see investment picking up in europe. unemployment is also clearly going down. we have levels of unemployment since the crisis. clearlytendency is downward. figurescroeconomic materializing in job creation. francine: you pay particular attention to financial stability. do you worry about italy and france, and what would happen to markets --n case the elections don't go with what the markets want? com. dombrovskis: this is something we need to do. populist certain movements in some european countries, we see similar tendencies in the u.s. and we are seeing important answers to thingssue, is to make
more inclusive. this year, when we are defining economic priorities in the atopean union, we're looking policies to make things more increases -- inclusive. francine: we need to radically re-informed the european union and therefore, the commission? com. dombrovskis: there are a number of things which we can and must deliver right now. --hin this exertional framework. ,e are shifting money away better targeting of social systems, exactly towards parts of society. the skilled agenda, which was launched recently to match skills deliver market demand. initiative, the eu financial support to make sure that the young people in
jobs or education or training. thingse are a number of that we can do and we are doing right now. francine: talking about have now things, if we against marine le pen, is there anything the commission can do come monday morning or monday afternoon to try to reassure the markets? com. dombrovskis: first, we cannot comment party politics in a member state. in the a choice which is hand of fresh waters. it's for them to decide, but it's clear, isolation is not the answer. they can't deal with global , when you totter cooperate. wouldne: the commission never talk about individual country elections, but what if there were something on the markets that was extremely anxious? would you look at the?
we followovskis: market developments and are following this very closely after the british referendum. the turbulences were quite contained. markets were resilient, even to major folks like spreads that. -- like brexit. francine: what happens with brexit is there is no deal? of all,brovskis: first we have not even started negotiations. we started negotiations aiming to have a deal, because any case, the u.k. will remain eu's neighbor, and we are interested in close cooperation. we are entering negotiations in the spirit to reach agreements. francine: there's a lot of noise in london from certain factions, especially within the tory government which say no deal is better than a bad deal.
what does that mean from a european perspective? com. dombrovskis: what we are hearing from u.k. government and enteringay, is conversations will reach an agreement. both sides need to work very seriously along with. there are number of very competent issues to be resolved. let's go into those negotiations in the spirit of cooperation. francine: i know squat -- contemplated -- i know it is obligated, it is one issue you would like to fix, if you think that agreement is reached on financial services or the rights of eu nationals living in the u.k. and vice versa, that would give the eurozone hope that it will actually be a friendly agreements and from a negotiation. com. dombrovskis: from the eu side, we help set the first eums for discussion, citizens and u.k. and vice
versa. where we want to provide as much clarity to the citizens that is less disruption as possible. it's a u.k. duty, which it has pursuant as eu member states so what we expect that u.k. is respecting the financial arrangements it has been entering. items a specific concerning the irish border between north island and republic of ireland, which is maybe a specific issue. we think it is very important to find a tailor-made solution because on one hand, if the uk's leaving the eu, internal market also custom units fall across the border. border can be destabilizing.
these the items you're putting on the table. , the vicethank you president of the european commission joining us. we are talking to a couple of finance ministers from nordic countries, so we will talk politics and also inflation. mark: we look forward to it. ,reat chat from francine lacqua she has a whole host of interviews from the imf today, including the secretary-general and the finance ministers of the netherlands and norway. what a flight of guests we have today. here's a much honor with more. emma: president trump believes the attack in paris will have a big effect on the presidential election. the president tweeted that the people of france would not take
much more of this, hours after a gunman killed a police officer on the shelves at his day. police gilbert gunman. islamic state has claimed responsibility. the far right presidential candidate marine le pen called for islamic residents to be detained or expelled. another candidate says he would ask for 10,000 more police. in the u.k., prime minister theresa may says holy election now would give the country -- holding the election now would od ofthe country a peri security. election,nize in this what i would be doing is asking people to put their trust in me as prime minister. so that i can get the best possible deal for britain. also said the election is about leadership stability and strengthening the uk's hand at the brexit negotiating table. in caracas, another day of massive protests against nicolas
maduro. hundreds of thousands stood out to protest against his policies and consolidate his power to shatter the economy. three people were killed in the protest. the white house and republican's in congress are at odds of whether to try for another vote to repeal obamacare. it white house aides as the restoration expects the house to vote soon, but the house of public and aides said that wasn't a bill. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am emma chandra, this is bloomberg. vonnie: still to come, a big interview today at 2:30 p.m. eastern or 7:30 p.m. london time with the u.s. director of the office of management and budget. the omb's mick mulvaney. we will bring you that interview live in just a few hours. this is bloomberg. ♪
vonnie: live from new york, i'm vonnie quinn. mark: in london, on mark barton. this is "bloomberg markets." a time for the bloomberg business flash, the biggest business stories in the news right now. pharmaceutical dealmaking has fallen off sharply, almost three years of booming activity, acquisitions were down 13% in the first quarter from a year earlier, and there were 35% fewer than two years ago. part of the reason is president trump, he attacked drugmakers and honest to force down prices. a russian billionaire wants to sell 49% of the pro basketball team he owns. he hasn't been able to find a
buyer, the nets had the worst record in the national massive all association this year. he also has been looking to download some of his russian assets. reckitt benckiser failed to deliver in the u.k. failed to deliver quarterly sales growth in the first time in its history. the airway pressure brandon held down growth. he warned that headwinds would persist through the first half of the year. that is the latest bloomberg business flash. theie: time now for bloomberg quick take, where we provide context and background on issues of interest. nations love exports, and the jobs and revenue the go with them. the u.s. was desperate for more of them during the great depression, when it created a national bank to finance loans for exports. the export import bank, small government advocate shut down
the bank in 2013, saying it distorted the free markets. later in 2015, negotiators from both chambers of congress revived the bank's lending authority through september of 2019. though the lending has been tethered since then. here's the situation. the commerce secretary has said there could be justification for keeping the xm bank going. he appears to have convinced president. president trump said mid april he supported keeping the bank, a reversal from his previous years on the campaign trail. the president will have to convince some congressional republicans, including house speaker paul ryan. here's the background, despite the name, the xm bank doesn't offer important assistance, it provides loan guarantees to help foreign companies by u.s. goods .- bu u.s. goodsy for decades, the bank was reauthorized without much
debate. barack obama had criticized it campaign. 2008 even though he had a change of heart following that. the u.s. chamber of commerce ours use -- argues jobs might loss to be -- might be lost to competitors. opponents say xm loans could be vulnerable during a downturn, leaving customers stuck with the bill. there's also been pointed to corruption at xm, after a former employee pleaded guilty to attempting brides. read more about the export import bank on the bloomberg. france is currently getting most of the euro zone's attention with its living election. italy's banks remain in rough shape. spoker, "surveillance," with the head of the peterson the bank ofd america chief european economist about whether italy would be the next big risk factor. badks i think the banks are
in the not so terrible economic way, and the inability of the italian government to deal with small bank bailouts is terrible. it's a touch point going into the german elections, the italians are being let off from the veil and of their savers. meanwhile, the politics dominate italy. there,e no strong party and no reasonable alternative. unless someone makes a huge comeback. and based on what he was saying about macron and merkel or scholz being an issue for europe, they may organize around the problem. tom: this is so important. this is landmark work. nice 98, wrote a tried it -- a classic treatise on japanese economic growth.
it shows the chronic nature of these challenges. in the u.s., we are on a four-year cycle and maybe phrases on a five-year cycle. we are talking about the same issues in europe that adam posen was talking about in japan 19 years ago. are we going to be doing that in europe in 19 years? >> we don't have the time that japan had at the time. we don't have the time or the same level of little ingenuity. tom: because of the debt buildup. higher, it'sebt is because of the arrangements. policy, ae voluntary country is not trying to cut deals with people from the north and the south. this is what the ecb has been doing, and quite well. think you first need to turn the narrative around in europe. if you are in a southern european country, in five or 10
years, europe has been seen as disciplinarian, a force for spending and in populist reforms. if you cannot turn this around and tell people it is also positive, also something that can help you along, i think you are going to get more moments like this, when we are waiting for the possibility of this moment. we talking about growth in japan. i think the ecb has potential growth in italy. debt at 150% the , and your of gdp growth is a zero on an ongoing basis, you have a problem. , you need to know that there is something in europe that is ready to help and be able to fairly
easily. the ecb has been doing a job for several years. he did he to create something that provides some visibility. and that would turn the narrative. mark: adam posen, president of the peterson institute for national economics and bank of america merrill lynch chief european economist. vonnie: deutsche bank gets hit with the fed's first major fine for failing to ensure traders are abiding by the rules. this is bloomberg. ♪
oversight of its traders. joining us with details on what deutsche bank did wrong is michael moore. define.wo-pronged -- pronged fine. one element is allowing currency traders to chat with their counterparts in other banks. that is something we've seen in other banks, in terms of the rigging scandals in fx. forlso have a smaller fine little or specific thing, which was not setting up the right properties to make sure the traders were not going beyond customer demand and putting in proprietary trades. vonnie: how to the infractions get spotted? was there a spot check? the deutsche bank know this was coming? michael: the fed has been talking to deutsche bank, they've been in dialogues with
the banks making sure they have these processes in place. in the fed found that in deutsche bank's case, they weren't adequate. you also have some other regulators looking at this as well. vonnie: how does that happen? if you were in dialogue with someone and you need to improve whyor we will fine you, didn't they follow those requirements to the letter of the law? a good question, the multimillion dollar question at this point. deutsche bank have some issues in the u.s. in the past, dealing with the federal reserve on stress testing, dealing with other regulators. this has been an issue for them in terms of making sure they are compliant on all fronts. this does go back a couple of years, perhaps they turned that around. the remains a question for deutsche bank of when do the
fines stop dribbling out? it's $14.7 billion, we always seem near the end, but not quite. he is desperate to move on from this. michael: yes. he talked about last year being the peak restructuring here and getting things in the rearview mirror. they still have got russia to figure out. there are a number of things still left on its plate. whenever you think it's done, there is something else. done,if we thought it was the earnings season in european banks gets underway, deutsche bank will be among those were warning -- among those reporting. what is the key themes we are watching out for next week? michael: one of the big trends is whether the european banks have continued to lose share to u.s. banks in the trading business. that was the story of the second half of last year. did i continue in the first
quarter, or are we starting to see any kind of come back from the europeans? ad in credit suisse will be big story. what they decide to do on their capital question. mark: he faces people like you and me, the big news erected a week or two ago. he has a variety of answers on the whistleblowing front. jonathan: michael moore --mark: michael moore. is next, 30 close or 40 minutes to the end of the friday session. the french residential election come around one on friday. i will leave you with the currency board. the closes next. this is bloomberg. ♪
"bloomberg markets." ♪ mark: we are going to take you from new york to london, plus, covering stories out of paris and washington. here are the top stories we're following on the bloomberg and from around the world. french election campaigning grinds to an early heart following the attack. -- an early halt following the attack. how are the elections faring with memories of brexit and the trump election still fresh? and: and bracing -- vonnie: bracing for the possibility of a marine le pen advance. we hear from pure moscovici. shouldsident trump