tv Bloomberg Markets European Open Bloomberg May 5, 2017 2:30am-4:01am EDT
guy: good morning. welcome. this is the european open. your first trade of the day coming very shortly. what are we watching? crude crushed. $45 for thelow first time since opec cuts back in november. is u.s. shale being too aggressive for its own good? calm before the french election. markets incredibly sanguine ahead of sunday's vote. we're live in paris. and a gop victory.
repeal and replace bill passes the u.s. house. what does this mean for president trump's ability to turn policy into legislation? let's talk about what's happening in the markets now. this is the move you are seeing at the moment. european equities opening soft this morning. london looks like it's going to outperform just a little bit. we will circle back in just a moment. probably a bigger focus is oil right now and the rest of the commodity complex. let's turn our attention there and take a quick look at the gmm. seeing dollar-canadian dollar down. it is a commodities story. so the risk is up aversion trade is on. the australian dollar is under pressure. in some ways, you would expect this to be more under pressure. we're going to talk t about that with mark cudmore.
let's show you the column that really highlights it all. there are a bunch of contracts that you can use for iron ore. this is one of them. this is the deli at contract. it is down at the moment. entire energy the complex, trading softer. is not just iron ore and copper. agriculture on the move as well. there's a bunch of factors moving the commodities market around aggressively at the moment. what does this mean for inflation, policy, equities? we're going to talk about that. let's get the bloomberg first word news. here's juliette saly. juliette: in the u.s. house, republicans have mustered just enough votes to pass their health care bill. the vote sends the american health care act to the senate. that salvages what at times appeared to be a doomed mission
to repeal and replace obamacare under intense pressure from president donald trump. it stands little chance of being passed in its current form by the senate. they are spooked that it could cause millions to lose health insurance. >> i think it will get even better. this is a repeal and a replace of obamacare. make no mistake about it. see whatblic will now they gave their name two. they put their name next to you paying more for less. we will make sure the public is aware of that. in the u.k., early results in local elections suggest theresa may's conservative party is on course for a sweeping victory. according to the bbc, across the 20 english and welsh counties
that have fully declared results, the tories had a net gain of 138 seats and labour lost 121. you can't failed to win any failed to win any seats. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. guy: thank you very much indeed. i want to take you to the numbers just hitting the tape as we speak. 211 million euros. the estimate, 162. we're going to talk to the boss of this business. of cash and itt is thinking about how to diversify. it is thinking about diversifying into storage, which sounds logical, but maybe harder to achieve. nevertheless, the storage element of the renewables complex is becoming interesting.
we are what elon musk is talking about. the french election almost upon us. today, the last full day of campaigning. francine lacqua is in paris. about what welk can expect today and, what constitutes a surprise in this election? what could constitute a surprise? what would constitute a surprise is voter turnout. let's break it down for the french. we haven't gone to vote as we used to. we understand for the first time in 60 years there may be a lower turnout in the second round than there was in the first round. this hasn't happened since 1969. last time a front national person went to the second round, marine le pen's father, there was a 10 percentage point surge of people that decided to go and vote. that will be something that will be analyzed by all the media in
france. for the markets, a surprise would be a voter turnout of less than 60%. that has never happened in the history of france. that would seriously skew the polls that are giving a clear victory to emmanuel macron. guy: fascinating stuff. francine is going to spend a lot of time dealing with the granularity of the french election on sunday. bloomberg tv and radio bringing you special coverage of the french presidential runoff. francine is going to be back throughout the program, throughout the weekend. she's got a busy weekend coming up. some great coverage coming up, may 7, sunday, we are doing all the angles on the french election and what it means for europe and the world. the first u.s. jobs report comes before that. showecond quarter should the economy moving past seasonal
quirks. investors are focusing on the sudden drop in crude and iron ore prices. joining us now with some insight, mark cudmore. mark, there are some individual factors relating to individual commodities and why they are moving, but what does this mean for the inflationary story that we've been focused on since november? it is massive. what the market is going to look at next is how soon might that june hike that was only implicitly confirmed on wednesday as likely, houston might the markets start pricing in the probability of that hike? what we're seeing is the impact of oil year on year as inflation is turning negative. we are seeing massive pressures from the commodity complex. it is industrial metals, oil, agricultural commodities.
they are providing a disinflationary impulse. it is grabbing the attention of the whole market. we are not worried about the u.s. jobs report. the whole market is focusing on the fact that both iron ore and oil seem to be in freefall. guy: explain something to me. why are yields higher? mark: great question. it is one of the big battles we've been having. at the moment, yields or bonds aren't trading off the inflation outcome. the treasury yield moved slightly higher after the more hawkish fed on wednesday. you are starting to see them come off a little bit. he will think, maybe that hawkishness was preemptive. you are seeing chinese yields because of the regulations squeezing liquidity. you're seeing that more on the front end. these impacts are starting to spillover into other markets.
bonds aren't trading the inflation team. they are trading deleveraging. guy: and the implications for the equity market. people have been talking about the fact that the equity market is in need of a catalyst, that it needs a clear sense of direction. there is something that is going to do that. mark: could this be it? u.s. -- could this be it? mark: u.s. equities seem to be stuck. equities seem to be kind of stuck at the moment. maybe it is the catalyst to finally bring them lower. i think the first impact will be on emerging-market equities. emerging-market equities will feel the impact of the commodities slowdown first. if macron wins on sunday, that will be a boost for european assets and equities. people are torn about how to play the divergence.
u.s. growth is ok. the fed might hike because they are looking through the growth. growth is ok. we've got the health care bill passed. they are kind of confused. friday, giveninto how commodities have traded today, there's going to be a downward pressure on equities. you might see it first in the european session. the u.s. session is going to be under pressure. at least until the jobs report. guy: i think people are paying attention to that. the fed does seem to be telling the market that it is looking through this kind of stuff. we still don't have a particularly aggressive number. we don't have underlying inflation coming through. is that what yellen, a labor market economist, is watching? or is she watching numbers that come out of the payrolls that suggest we got full employment,
and that is something we should be paying attention to? mark: i think at the moment, they are less data dependent than they have been in a long while. i think the fed got scarred from their previous example when they failed to hike when they could of got away with it. now they are focused on, if the markets let me hike, i want to hike. i want to like before the end of the cycle. at the moment, the jobs report, which is less relevant, it would need to surprise to change the game. probably more surprised to the downside would be the biggest shock. at the moment, what they're looking for is, is that it are roughly ok? the slowo problem with growth story in the u.s. can i get away with a hike? at the moment, they are saying yes. really, we are watching financial markets more than data unless it really shocks. guy: we're still waiting to see
what mr. trump can deliver or not. mark cudmore joining us from the mliv team. smart analysis throughout the day. today is one of those days you want to pay attention. it is a good day with the payrolls coming up and this big move. mliv . there is atmi vigo for the big events. coming up on the show, we are back in france to get an investors take. plus, we talk health care and what that means for trump's plan to turn his agenda into legislation. we are 17 minutes away from the market open. this is bloomberg. ♪
guy: 14 minutes to the cash open. let's get your bloomberg business flash. here's juliette saly. juliette: apple is selling bonds after announcing a new round of stock buybacks and a 10.5% dividend increase. the iphone maker may sell $7 billion of debt. it is the tech giant's third trip to the bond market this year after in february selling $10 billion in the u.s. and $1 billion in taiwan. monte paschi has said its capital strength slumped due to its third consecutive quarterly loss. the common equity tier one ratio fell to 6.5%, well below the
minimum capital level set by the ecb. the italian lender seeking a rescue posted a net loss of 169.2 million euros through march. that is your bloomberg business flash. guy: thank you very much indeed. 14 minutes to the market open. the french election is almost upon us. after a scathing exchange wednesday night on a tv debate, emmanuel macron leads marine le pen by 20 points. rockets have rallied. could we see more of the same on sunday? let's go back out to paris and rejoin francine lacqua. francine: thank you so much. we are joined by maxime alimi. you are right. if you look at the markets, and we do need to talk about what markets could do if macron wins, what stocks could move, we did also see a repricing on that sunday evening when it comes to
europe and some of the spreads between the french and german yields. thank you for joining us. if macron wins on sunday like everyone says he will because the polls have such a wide cap, what will be the market reaction monday morning? maxime: i think it will be positive. i would say the bulk of the reaction has already happened. i think markets have made the bet that if the polls were right the first round, there's a strong case they will be right again in the second round. we could get another positive reaction but probably a smaller one. francine: will the market be sophisticated enough to rally 64%,if macron wins by 63%, 65%, which could imply he has a stronger hold on parliament? maxime: honestly i'm not sure. i think the market cares about the outcome. there will be a case to look at the turnout numbers because i think the turnout will be a
gauge of how much it was a vote for him as opposed to a vote against her. if he makes around 60% to 65%, i think it is roughly what the market is expecting. we have a great story on the bloomberg terminal and our website which goes through the sectors and the plan of privatization that macron has laid out. where do you see the economy strengthening in france and what impact would that have on the cac 40? maxime: i think if macron wins, two cases. the first one is banks and financials. first because there is still a strong risk premium related to the political risk not only in france, but also in italy, so i would say that if we get a clear on the french election, there should be a reduction in that risk premium, but there should
also be a rise in interest rates. francine: the ecb? maxime: the markets will first half interest rates go higher, moreyou will have the ecb comfortable unwinding qe. maybe not just right after the election, but over the coming months. francine: give me a sense of what you like in the macron program. is it reform? costs?abor is it just simply tax cuts? maxime: i think the key is labor markets. labor markets has been the key area for fence -- for france to improve. it has been one of the areas where the market is systematically concerned. it is hampering growth and sustainability. it would be feasible to deliver on that. that would be potentially some strong reaction from the
markets. he was in charge of labor reform when he was economy minister. maxime: he tried to move ahead and he was blocked by the rest of government and parliament. the hope is that he's going to have a stronger hand. as a support of macron because of what he wants to do with the economy, or if he wins by 63%, is it just a refusal of marine le pen and what she stands for on the far right in france? maxime: i guess it is both. the jury is still out. what makes me hopeful is the fact that the french republicans are very much in favor of such reforms. --ould say that even though if there is a coalition with the right hand side of parliament,
there will be some kind of agreement along those lines. that makes me hopeful that we will see such reforms coming through. guy: thank you for joining --francine: thank you for joining us today. plenty more coverage throughout the day. guy: fantastic. paris, even when it is gloomy, looks good. as francine said, plenty more coverage coming up throughout the day. bloomberg tv and radio bringing you special coverage of the french presidential election. we've got some great guests and lots of fantastic analysis from paris. we are minutes away from the market open. up next, crude crumbles. which oil equities should be on your radar? which commodity equities should be on your radar? there's a flip side to all this. we have stocks to watch. this is bloomberg. the market open eight minutes away. ♪
five minutes to the market open. let's talk about the stocks we need to be focusing on. it is probably one of the only stories today, the oil market. oil has been absolutely whacked overnight. as a result of which, we're going to likely see some ripple effect into the oil stocks, which haven't been posting that bad numbers. you can see the performance of some of these stocks.
if oil is tracking lower again, what does that mean for stocks geared, which are more to the oil price? will be interesting to see how that works its way through. there's a silver lining for somebody out there. this morning, that is willie walsh. willie walsh runs iag, which includes british airways. q1 not normally that good, but this time around they have come through. they've seen a very solid q1. it has beaten expectations. you can add in the extra kicker of the fact that we are prices coming down. big words like iag heavily hedge, but does make life easier at the margin, though in some ways it probably mix it easier at the margin for companies that don't hedge. the other thing i want to mention is, there are nine stocks going ex-dividend today.
guy: you're watching the open. at one minute away. commodities in particular, what is happening with oil. for the five dollars per barrel. that will revert -- brittle into a couple of different areas. what impact will it have on the -- equities? they will be opening softer this morning. not maybe massively but watch as the day progresses. moment, down by a bound .3%. london looks flat which is pretty interesting. .3%.ax down by
the ripple in the equity market is a fairly straight line. probably wavy if it is a ripple. mindnly thing to bear in -- there is a flip side. in a the airline sector couple of minutes. let's see the market open. we think it would be a softer open. you can see that across europe. as you can see the ftse is opening softer. i don't expect it to drop significantly. there is different mark -- the french market going down. that is going to be part and possible -- parcel of that factor. that is enough for me. manus over to you. at 338rosneft's numbers
billion. that is about what the market expected. oil is a core part of our concern. the commodity routes, 80 wants or a route, that is the debate in the markets. correlation -- is it the canary in the goal line? mine?l mine -- coal iag opening at the bottom of your screen. the business doubt about it. ,he feds will be important changing the dial. the conversation in terms of the timing and the distance in qb and thing and potential rate hikes in europe. that conversation has changed. we talked about oil. that is the drop you see in oil. it down by 11% over the past five trading days. what you are seeing with that is it is not really nipping at the
heels of the equity market us far -- thus far. you can see the correlation has actually been dissipating. relative to the equity market. we are back into negative territory. this is what you want to join together. economic surprises are dropping. this is a bloomberg commodity index dropping as well. is there a syncopation we should be more concerned about? your guests can answer that. shanghai closed for the week. if you can see, dropping by 1.5% at the close of trade in shanghai. should we be worried? you just got a question a number
of different things. along with the commodity discussion. those are the issue at play. we keep an eye on that number in terms of consumer spending. then he wants to get ready. he wants to blow out on the italy german spread. i'm off to digital radio. sure it will be a great show. thank you very much indeed. rosneft and of the line looks like it is ahead of expectations. line lookssh flow like it has come up quite nicely. was 1.4 itquarter it is now 1.4 billion. maybe that tells you a little about what is happening. think this is interesting stuff. let's work our way through what is happening here. what you have got is market software this morning.
let's ignore what else we have got. what you have got is stocks coming off. bp is down, shell is trading lower. i think there is -- it is goldman says morning on berkeley. fairly negative which is why the stock went down by 1.79%. that is where the negative story comes through. side andk to the other see what is going on there. well bid this morning. the back of its north, we talked to its boston early shortly. we also got iag so this is international. up by 4.11%. the numbers look really solid it looks like it is a
yourn of the long haul, then have the extra kicker on the fact that we'll is coming down. speaking of which oil below for five bucks per barrel for the first time. they don't call is a cartel anymore. market element as she joins us down the line. what is going on? >> we've been up all night. market hassue is the been losing faith in the rebalancing, the opec cuts. lots of reasons for it and we discussed this last time as well. there is a religion is going on. cuts are not going to be felt. the last couple of days the move has been accentuated by a huge amount of hedging that creates a
lot of negative gamma. the kind of momentum traders, that is reinforcing the downward momentum. other than the direction in the market that opec cuts are not working. guy: i have the charts. a danger the u.s. oil is shooting itself in the foot? >> they tend to rise quicker than many others. i will be cautious about that as well. weekly numbers tend to over inflate the monthly numbers. of course they are coming in stronger because of the growth in the basin. those estimates are actually estimates themselves rather than the actual numbers. we are expecting really strong growth this year.
we think the market does rebalance as long as opec continues election cuts which we do think is going to happen. another reason why they were sold off yesterday. analysts claimed to have the strategy change. we do not believe that at all. guy: what is opec do at the next meeting? >> i don't think they have many options and i think my biggest fear is you and if they do extend the cut prices might selloff because of the fact that theet is going to be -- first six months it has not worked why should it work in the next six? this time around demand is picking up season ugly -- seasonably. opec cannot cut exports as much as productions. next six months should be a clear run.
>> what does the shape of the curve tell you right now? curve-19 portion of the has come up a little bit. what are you getting? can you hear me? i think we may have lost her sound. thank you very much. she has had a busy night. joining us from energy aspects. what you make of the move? >> we always knew the inflationary impact was going to come down because of the base effect. we're playing to two themes. this is killing the final part of the inflation story initiated during the election of trump.
china is not going to provide the goods in terms of growth in either credit nor fiscal policy because of the congress that comes up in september-november. substitute -- we have a pretty negative outlook. >> whited yields go higher? why do 10-year-old -- 10 year yields went up. market is confused and does not know how to read this it seems. with the rest of the market. in terms of fixed income it is repositioning. we came for a massive short of -- shortage and come to a neutral base. and made every
data point you just discussed this morning that was transitory. the fed is not the best judge in history so i think we will be very much where on one side you believes the fed will deliver even more than they are targeting. the like me who said for 30 years i've been doing this job. the price of money and how much money you put in the economy. everything else is to that effect. camps on each of their fence right now. guy: you are very much of the one more and done? >> think of the economy. you put less money and. you have to have a lower growth, lower capital which means lower inflation, lower commodity prices. guy: let me highlight this chart.
it is the metals record -- relationships with equities. is this a catalyst we have been waiting for? the story has been reflation. it is difficult this morning to say they are still going to be a reflation trade. >> opening interest rates to a record 2.2 7 million contracts thursday. a are catching up with where they should have been. make sure you tune into the bloomberg radio we savings. a new show is called the cable. the definitive guide to the market action completeness traffic updates every 15 minutes with world news headlines as well. weekdays at 5:00 p.m. london is already a. -- digital radio.
the cap rough down by one point 1%. -- there's a flip side to it. the airline stocks are coming out. when he rotating at the from good -- pharmaceutical stocks. >> pearson up 16.7% at the moment. this really rallying on the fact it is keeping the 2017 view but plans to further cut costs. cost cutting and announcing further initiatives to simplify the company. this is one of the biggest gainers on the stoxx 600 as well as being a significant mid cap gainer. easyjet, some passenger numbers for april came in unexpected. we are seeing gains for easyjet. of 2.5%.
on the downside i'm looking at jcdecaux. down 5.3%, falling the most since november. first quarter adjusted organic growth down 1%. revenueuarter adjusted growth as slightly positive. reporte first u.s. jobs shows the economy moving past earlier seasonal quirks. around 190,000 after the 98 we got last time. a little shy of the 190. cio at sack so bank. does this number matter? >> no. >> great. let's move on. is there going to be any evidence that wage gross is cracks it will be a continuation of the trend.
the potential risk is that they will start to create inflation. how can you have it in an economy that is growing? >> what is interesting is you take the number and you get to a figure that puts you the way you would expect full employment to be. they should be doing nothing for a long time because inflation -- because of activity being very low. low.oductivity being very what they want to achieve is get to a level, a comfortable level of interest rates from which they can navigate to the downside. guy: an extra session -- >> the move in march is the initiation of the recession and
the follow-up in june will -- when it did that's start and let's have fun with politics, how does that play in the political narrative? >> nine months from two months ago. model which i think is very simplistic, we get very good at expiring what goes on in the global economy. the end of this year will be the most likely scenario for a recession. that will play directly into the oneerm election that runs year ahead of that. a very interesting narrative. there will be some people in the u.s. that will argue it will be good for trump to get a recession because that will create the mandate he needs to change. other people argue that will be seen as a slap in his face in terms of a minimum of 4% growth.
♪ guy: 21 minutes into the section, let's take a look or money is moving in this morning. the index points once again, if you dividends out there today. in the see the effect oil stocks this morning. bp come all wrote that, shall down. coming up for a better day yesterday. , the downside move is. just few months ago the education company, i think that probably is enough of the markets to take the stock of sharply. anticipation negative, 12%. we are going to talk to the boss soon and the airlines as well.
both on the numbers and the fact that oil prices are lower. here's juliette. apple is selling bonds again after announcing a new round of buybacks and a 10.5 dividend increase for shareholders. -- is the maker may to bond the third trip markets after selling 10 billion in the u.s. and one billion in taiwan. china is making its bolus attempt yet to break the stranglehold that boeing has on the market to beat commercial airliners. after years of delays the first jet made its maiden flight today. follows its development of a smaller regional jets, the ai j 21 it depends on western suppliers including ge and honeywell. that is your business flash.
guy: in the united kingdom early results in local elections suggest theresa may's conservative party is on course .or a sweeping victory ukip lost all 41 seats. that supports the prime minister's bid for a large majority in it next month's national poll. bloomberg news reporter still with us. what does this point us to a terms of the general election? >> we are expecting theresa may's party to do well on june 8 but so far on course for one of the best results in years. you have got to be careful. local elections are not general elections. turnout is a lower and they are going to be very careful not to present this as a sweeping victory. offar they wanted a lot
seed. labor has losses. ukip look like they lost all of their seats to the tories. guy: was this a general election? that will be a brexit election. >> is all about brexit at this stage. local issues. however, the move to the tories is definitely about brexit. labor losses are more likely to be a vote of no-confidence in jeremy corbyn's leadership. if theresa may were to receive a substantial majority it would be 100 plus seats. does that make you more positive than you already are? >> i'm very positive as it is.
one of the most undervalued currencies. for the same reason we are having this conversation, u.k., brexit and sterling to imperfection. what we are seeing on the ground is may has the momentum. she has the ability to navigate. she will come into the talk with a stronger mandate. within eu voices who want to see a good deal that falls to the side where everybody gains something. the u.k. will have to pay up because you are part of europe. we will find a middle ground. it would not be as good as some people hope but it certainly will not be as bad as people are pricing right now. >> not very well. there are a lot of seats to be counted but it seems to be a disappointing day. guy: interesting stuff.
u.s. shell being too aggressive for their own good. calm before the election markets. we're live in paris with the latest ahead of that story. g.o.p victory. the obamacare repeal and replace bill passes the u.s. house. what does this mean with trump's ability to turn policys into legislation? this is the european open. i'm guy johnson. we're here in london 30 minutes into the equity trathe trading day. we are softer across the board this morning.
london not doing too badly. airline stocks are doing reasonably well on the back of a, numbers, being oil prices. the oil story is the story right now. this as we work our way towards the weekend or a late friday, payroll and what's happening in france. eople seem to be a macron win. however, we have seen the euro rise nearly 2%. we did see that after the first round. could we see a similar move sunday? there are a bunch of charts that we're going to show you here. this is one i want to show you now. let's move on and show you to right chart. that is brexit. this is overnight. and that's the average. there is the first round. we're into the second round now. it doesn't look like we're going to see the same kind of reaction. the other chart that i just want to show you as well is this one.
this is european stock and as you can see, that is volatility rising a little bit. since then, it has gone down, down, down, down, down. have the markets been too complacent? >> not all the. the markets will be focusing on the parliamentary elections that come out in june. now it is whether macron can use the momentum into the parliamentary election. maybe the surprise here will be that macron does much better in both the presidential election and certainly in the apartmentry election. guy: a little joke about -- the the biggest maker of wind turbine profits rose.
look at that. vesta's bounce in share price. let's talk to a man in copenhagen. the company's c.e.o.. good morning to you. congratulations on the numbers. just give us a sense briefly of what lies line them and what tells us what happens next for your business. >> thank you very much. good morning to you as well. i think it is all in numbers. the first quarter, so satisfied with the results. well executed according to our plans. guy: you have a lot of cash on the balance sheet. what are you going to do with it? >> we have it is important in this industry to have a strong balance sheet. as we have also shown before, we have buy backs.
we did in q 1. we will evaluate if we feel that we have any excess cash so we're not ruling out or promising any buybacks. guy: what about starting to diversify this business? you talked about this in the past. i would like to get an update on your thinking. is storage right direction for vestas to go down? >> i think in general, all kinds of technology that actually enable us to integrates even more into the electricity system is interesting for us. that's the storage, the connections. that's different kind of storage. be hydrostorage.
for us, it is not getting into the storage technologies. for us it is to focus on all wind turbines and make sure that the are designed -- into electricity grid system. guy: how do you do that? how do you engineer that? how does that actually work in terms of your business and your business model? is it an m&a story? is it organic? the still set here is complicated. >> yeah, to a large extent it is our own skillset. our core business. we have remained core business. we have for example technology to operations. with some of the leading battery manufactures as you mentioned.
you ultimately design the system for something with wind turbines. that's the way to go. guy: you are on top. that's a great division to be in. the tendency for companies like you is to try and stay on top. how do you achieve that? do you feel threatened? there is even a consolidation story going on behind you. what is the objective here in terms of your positioning? >> it is as you say. the geographical range, we are the most diverse wind turbine when it comes to geography. it is about scale. it is about scale in r & d and
the service business. it is about scale in -- volumes. it is about technology and service leadership. we need to continue to build on and leverage our -- guy: congratulations on the numbers. congratulations on the share price performance today trading higher. one of the better performing stocks in europe this morning. the c.e.o. of vestas wind systems joining us from denmark. now let's talk about what you can see on your bloomberg. if you're a bloomberg customer, you can watch the show watching the tv go function. we're kind of pushing this one and rolling it out. that is kind over the landing place. watch the schedule down here. you can kind of go into that. you can go back and figure out some of the -- if you want to watch an old video, you can do it by that function. you click into the interactive
tv, you get this, which is a, what's happening on tv, b, nice and useful over here is the featured functions. data checks. breaking headlines. you have who you are talking to. the bios of some of our guests. it is there. on the screen for you. data checks. some of the fantastic charts. if you want to use some of the charts, you simply click into them and you can access them there. we have long-term charts. click the blue boxes here. there is another blue box here. ask a guest a question and use the function and we come back and ask the guest in this case. we'll be back very, very shortly. we'll carry on the conversation. we need to get to france. this is bloomberg.
guy: 40 minutes past the hour. this is the european hour. we need to talk about some stock stories. nejra, over to you. >> one of the standout movers today. up almost 14% now. now further cost cuts also a strategic review of its troubled u.s. education publishing business. the c.e.o. is likely to be under a lot of pressure at the annual
shareholderer meeting after the profit warning in january that and the cutbacks that send sent the stocks plunging. it has risen the most since january 2016 and hit its high since january this year. looking at i.a.g., record first quarter earnings up almost 10 pkt. aided by cost cuts. this even as revenue was held back by a later easter and some sterling weakness. air france and lufthansa reported strong starts to 2017. a.i.g. raising the most since october last year, the highest since january of last year. i brought up e, oil. demonstrating what's happening in the oil spice. oil and gas companies some of the worst performers on the stoxx 600. w.t.i. and brent crude punished
today. it has dropped below $5 a barrel for the first time since opec agreed to cut output in november, guy? guy: thank you. let's talk about the bloomberg news updates. >> thank you. in the u.s., house republicans have mustered just enough votes to pass their healthcare bill. the 217-213 votes send the bill to the senate. that salvages what at times seemed to be a doomed mission to repeal and replace obamacare by president trump but it stands little chance to be passed in its current form by republicans in the senate. it would cause millions to lose health insurance. >> it has been a catastrophe. it is this is a great plan. i think it will get even better. make no mistake. this is a repeal and replacement of obamacare. make no mistake about it.
>> the public will now see what they gave their name to. they put their name next to paying more for less. and we'll make sure that the public is aware of that. >> in france, national front leaders are beginning to ack imagine the that marine le pen may be headed to defeat in the election. she failed to land the blow she needs to take on macron in the television debate. scoring 40% in the runup would be an enormous victory. powered by more than 26 on that journalists and narlses in 120 countries. guy? guy: let's get back to steve. let's pick up the last point that julia was mentioning.
wa what would be a surprise in the french election? what would it signal? 46% for le pen is one option. macron scoring big is another one. he does well but there is this option that he does incredibly well. what does that signal or what does that tell us about the direction of france? >> first of all he is far more european supported than holland was. he was also the minister that the reforms that were done during holland's presidency. he will find france is -- trying o align its interests. merkel will look as macron as somebody she can have a conversation with. he came in wanting to upset the austerity. he ended up doing austerity himself. it is a different story which is pretty typical of my political persuasion and politician. i think we'll find a far more
interesting european agenda going forward and maybe we can get over this brexit, i think europe is in for a huge potential fall for improving and getting down to doing the things we have been talking about, union and i think europe will have a positive momentum out of this. guy: more europe. is that a good thing? >> more europe but a redefined europe. we have a politician who clearly understands that as you were implying too much europe is an issue but redefining europe and getting more focus, what is good for europe is needed. otherwise, the alternative is that the anti-immigration voices, the inability to have europe stay together as one unit, but we are at all times under the pressure over the immigration.
i think the deal we struck in europe is not strong enough to survive long-term. we need to find europe. not necessarily more europe but a better europe in terms over the able to navigate. guy: france what is a problem that needs to be dealt with. that was one of the major jobs. >> that's the labor market reform. we have to have a stronger labor market reform. what is interesting is that the french unions is lagging behind -- so in denmark we have what is perceived to be the best labor market. today we have the metals union, it has been the most progressive union. they are more progressive than the employees union because they have changed the focus and this is what needs to happen in france from keeping jobs to creating jobs in an environment of channels from ahl automation and robots. what they have done, they have actually been able to manage the 5.5% productivity gain and on
top of that, they maintain the jobs. not trying to maintain the jobs but by creating new jobs. france's unions are up for an awakening. they will be fighting back of course. i think the labor market reform is the one focus we need to look at over the next four years france. guy: the u.k. union -- sa similar thing, i should have said his or her prime minister. we're still going to carry on the conversation. france a big focus. make sure you tune into bloomberg radio and bloomberg tv over the weekend because we have some great coverage coming up. something else we want to mention on bloomberg radio as well, my colleague john ferro is putting it together in united states. it is a transatlantic show and the title really encapsulates that. "the cable". it is a wrapup of what has been going on throughout the day. that is a great little wrapup for our u.k. audience. drive time on radio.
one of my favorite subjects. an aircraft maker has carried out the maiden flight of its new aircraft. turk, us now, greg shanghai bureau chief. what kind of a statement of intercept is this? >> well, we just saw a piece of aviation history. i'm here at the international airport. they just completed the first test flight. this is the first concrete step in a very ambitious plan by china to build a passenger jet that can rival something like airbus ng 737 or the a-30320. this is the narrow body passenger jet market is the biggest market in the world and
or china, it could be a very lucrative market considering their surge in tourism and their need for planes. boeing has estimated china is going to need 6800 planes by 2025. 75% of them are going to be in this segment, this narrow body passenger jet segment. guy: greg, up-thank you very much 3678 greg turk, bloomberg news shanghai bureau chief joining us after watching that maiden flight of the aircraft. still with us, steve. steve, this is an interesting example of china throwing a lot of money at something. wanting to get into a space that s high valued.
this is a value-added business. there are a lot of challenges that this is a industry faces once i up in the air. don't want to be down here. we want to be up here. >> they want independence from all things that they are now buying from the west. that's why we see them in m&a activity, they are the biggest spender in m&a activity in particular in technology and environment and those big data, intelligence. they want to be on the forefront of technology. in the past they were happy with having first generation derivatives of the western world. now they want to be in the forefront. when they have a technology build-up, they want to build on that. in a game like super computers, they have number one, two and three. in some fields, very complicated, actually today china leads the u.s. relative to the other way around which is
generally our perception of technology. shenzhen has become the silicon valley. china is clearly emerging step by step as a single player in the technology field as well. guy: you're just back from china. what did you learn? what was the surprise? >> the surprise was that everything is on a standstill. the congress is always -- but this is worse than that. this is clearly something else. that every business person you talk to is saying come talk to me early next year. no imports from china or new deals. china continues to work on the reform side. i'm very optimistic about the reformability of xi and what he is going to use the conference for in october, to build his platforms and reforms. i think he will emphasize
technology, productivity. when you have an economy of 1.2 billion people, you need productivity. you cannot continue to be an exporter to the rest of the world. you need to invest in productivity which comes courtesy of high education and innovation levels. guy: thank you very much for sharing some so much of your time here on bloomberg on bloomberg television and radio. talking to bloomberg tv and radio, we'll bring you special coverage of the french election. the runup sunday, the second round. if you think about it, it should be an unexciting subject, macron is going to win. you think about the challenge he faces. what kind of prime minister is he going to be if he is successful? so many questions to be answered. so much analysis about where france and europe goes with mr.
macron's moment as the french front runner says he's chosen a potential prime minister. the nationalist may be headed for defeat. shell shock. the beauty i falls below $45 a barrel for the first time since opec agreed to cut output. are u.s. producers being too aggressive? theresa may's conservatives win big in regional elections. that suggests what will happen in the polls on