tv Bloomberg Markets Americas Bloomberg May 16, 2017 10:00am-11:01am EDT
vonnie: here are the top stories we are covering from around the world. it wasnt trump says right to disclose intelligence to russia. the latest controversy that sent washington buzzing. hands thedisclosures u.s. dollar to its lowest since the day of the president's election. is all the drama surrounding the trump white house finally rippling the markets? while many banks are making plans to move workers out of london, a canadian giant is planning to move in. we will speak to the head of pfp . a lot to get to in the next few hours. we are 30 minutes into the trading day. a lot of positivity in the market.
julie: enough positivity for the s&p and nasdaq to put the met records again. -- to put them at records again. the doubt not quite making it there, but we see a bit of an uplift in the u.s. markets. all of the news around retail desk home depot is rising to a record after it's comparable sales rose by 5.5%. its earnings per share beat estimates for the 12th straight quarter. down 3.7% after that company's outlook trailed estimates. dick's sporting-goods plunging 10%. out with an outlook for the year that is worse than anticipated. a ripple effect across retail as well on the negative side.
dick's the suppliers for like nike and under armour trending lower. we saw movement in the u.s. dollar. the bloomberg dollar index at the lowest since the election. it is down for the fifth straight session. we've got a chart of u.s. dollar long. these are the long positions in the u.s. dollar. now seeing them at the lowest since last august. the latest investor survey found 23% of the folks they surveyed say the u.s. dollar is overvalued. that figure was 21% in april. mark: records in london and frankfurt today. the stoxx 600 when just below that 20 month high.
-- went just below that 20 month high. ere we getting pricey on th european stocks? members of the stoxx 600 trading at their highest valuations in the year relative to those on sci country index. equity funds seeing record inflows into europe today amid relief over the outcome of the french presidential election. equitiesan chase says will continue to pick up materially over the medium-term. this could drive a significant re-rating of the region. two mobile number phone carriers vodafone. shares of hypersensitive. -- carrier is vodafone.
shares are up today. whilee a forecast releasing fourth-quarter results which were in line with analyst estimates. upwardon continuing movement -- the blue line from 2013. weak sterling, higher inflation. core inflation at 2.4%. post-brexit it is pushing up import prices. seemank of england doesn't in a hurry to tighten policy. vonnie: one more thing going on -- more controversy were president trump who is already under pressure over the firing of fbi director james comey.
the president revealed highly classified information to russia's foreign minister and investor last week. another obstacle to the republican agenda. mitch mcconnell spoke exclusively with kevin cirilli about the reported disclosure. what the senate majority leader said about this report and the white house response to it? kevin: a white house is pushing back against this report but there's no question that republicans on capitol hill are speaking out against the report. it comes at a time when the senate majority leader mitch mcconnell would like to focus on publishing the legislative priorities that republicans campaigned upon. most notably health care and tax policy. about how this bevy of negative press coming out of the white house impacts his ability to do his job. sen. mcconnell: i think we could
do with a little less drama from the white house. on a lot of things. so we can focus on our agenda. which is the regulation, tax reform -- deregulation, tax reform and repealing and replacing obamacare. kevin: i asked about the timeline for health care reform. he said it would be difficult to accomplish any type of cohesiveness. he put together a parking republican member working group but acquitted that to the battle in the house. -- he put together a 13 republican member working group. mark: what did he say about the comey saga and who might replace a mess fbi director? kevin: the short list grows shorter. ative trey gowdye bowing out of the race. he doesn't want to replace james
comey. i asked the senate majority leader who he would recommend. sen. mcconnell: i recommended merrick garland. he has a deep background in criminal law. he was a prosecutor in the oklahoma city bombing days. it would make it clear that president trump will continue the tradition at the fbi of having an apolitical professional. kevin: judge garland is someone republicans block that is now -- blocked that was president obama's picked for the supreme court. kevin cirilli, thank you. great interview. for more, let's bring in marty schenker. theve to ask you, does
commander in chief make a decision would you give that information to the investor and foreign minister that would outweigh -- marty: if you believe the washington post account and the subsequent commentary that has come out of it, it sounds more plausible that he -- it was an inadvertent boasting and he didn't really understand what was classified and what wasn't. i don't know that you can make any claim to understanding why he did it come except that he knew it in his head that he decided to say it. vonnie: we don't know why the russians are reacting this way. another russian media operative is reacting on facebook. we don't know whether russia is flaunting this -- what advances it might get russia. marty: if you are the russian intelligence community and you've got critical information
that you knew how to use, you wouldn't exactly advertise it. it sort of makes sense for them to downplay what was said at that meeting. to donaldthis do trump's agenda and his ability to govern? he's off on a trip to europe. this will put a cloud over that. mark: i feel like a broken record. we ask this question after every some a scandal. -- semi scandal. there seems to be some sort of tsonga every few days. ofs it shipped -- some sort saga every few days. marty: he's intent on sticking to the agenda he has as a leader of the republicans in the senate. tax reform and obamacare repeal and replace.
i'm not sure it sets back that agenda. it makes it more difficult for republicans to work with the white house on establishing priorities and policy. need to watchy for is republican support for this president. nothing is going to happen until there are republicans who decide they can no longer support this president. mark: republican senator bob corker said the white house has to do something soon to bring itself under control and in order. to use his words, how does the white house get to grips with what's happening right now? marty: they are bringing out general mcmaster, who is a highly respected person in his white house. his denial of the washington post story was really a nondenial denial. the things he denied were not really what the washington post
story said. a briefing today and mcmaster is still on the agenda to be at that briefing with sean spicer. let's see if he adds more nuanced to his comments. vonnie: a variety of reactions. saying information wasn't of any use. senator john mccain didn't denounce the president. he was careful to suggest the president didn't do anything wrong potentially. marty: i'm not sure how carefully john mccain read the story. interesting -- he's never been shy about criticizing this president. it's not clear to me what john mccain's agenda is on this particular thing. true,st story, if it is does have the potential of putting lives at risk and jeopardizing a critically
important intelligence source. vonnie: the president tweeted this morning that perhaps he had done it for humanitarian reasons. about turkey you -- president erdogan will be visiting the white house. what will be the conversation? marty: it is a grave concern about donald trump's decision to arm the kurds rightly. -- directly. president are to one has had a campaign for years to bring them under control. this president erdogan. they are supposed to issue a joint communique. it will be fascinating to see what's in it. this has the potential to really be a disaster in terms of our allies with the turkish government.
vonnie: we will have it live on bloomberg tv. marty schenker, thank you for that. stay tuned for that joint statement from president trump and turkish president erdogan from the white house. when :00 p.m. new york time -- 1:00 p.m. new york time. mark: senator mitch mcconnell wants less drama from the white house. this is bloomberg. ♪
"bloomberg markets this is "bloomberg markets." the dollar continues to consolidate. traders assess the latest from controversy. joining us from the cme to discuss them achieve market strategist at -- to discuss, the chief market strategist at ii trader. >> this is shaking out the short seller late to the party. the option expiration is tomorrow for the june contract. there's a tremendous amount of openness at the $50 strike for calls and put. -- input. think of all the plays that were in the money over can a half ago. they are giving back a ton of money and then there's a lot of interest on the call side that needs to go worthless, too. this market will stay between 49
and 50 as we head into the opec meeting. buy the rumor and sell the fact next week. that will be the story that will drive the market lower. vonnie: as we get more and more research ahead of the opec meeting that suggests production cuts will continue and saudi's will be quite happy to have those cuts continue what is the price drop? >> we don't want to see the price sail ahead of this opec meeting. i think this could be bearish in the long-term because they are locking in this for nine more months and not deepening the cuts at all. if the markets started selling off the head of the opec meeting, they could deepen the cuts. on extending these cuts looks to lock this in come in theory. if they only cut 1.2 million barrels per day, the u.s. can
overtake that production cut towards august. vonnie: i want to switch to the euro. we saw the euro top 110 and stay there. the trump happenings and this idea that maybe britain is headed for a harder exit. >> ultimately, right here, the euro is recovering with the french elections in the rearview mirror. eurozone has had good data. the u.s. data is not -- is far from robust. weaker cpa on friday got the ball rolling. criticism around the white house has put some pressure on the dollar. ultimately, this is a story that is a relief from the french election and poor data in the u.s. on top of that, the fed priced in 100% of a fed hike two weeks ago.
we are down near 70% now. that relief is starting to price and where the dollar index is trading. the a long-term bear on dollar. i'm not selling down here. looking for a recovery in the dollar index as we get closer to the june fed meeting. that will be a good selling opportunity at that point. vonnie: that is today's futures and focus. mark: time for the bloomberg business flash. home depot managing to escape the problems that have plagued other american retailers. for square profits beating estimates -- first quarter profits beating estimates. that keepskeeping benefiting from rising home prices. mark fields is taking steps to shore up a sagging stock price
and boost profits. he plans to cut 10% of the global workforce. it's unclear if any factory workers will lose their jobs. fort has more than 200,000 employees. in europe, cartels fell the most last month in four years -- car sales fell the most last month in four years. k.nging 20% in the u a new vehicle excise tax took effect on april 1. that's the latest bloomberg business flash. still ahead, the war in etf's spreading the commodities. will lower costs be enough to attract investors? this is bloomberg. ♪
mark: this is "bloomberg markets ." etfie: time now for our segment -- it is smart beta tuesday. maloney --with mike you released a fresh look at commodity etf's. how they perform versus one another. generally over the past few years, commodities as a basket have not been terribly well. what are the different ways to track it? mike: the first way to start is the index -- the basic index is the goldman sachs commodity index. the equity beta put on commodities. they claim that doesn't work so well for commodities. the performance has been poor -- the gsp tracks it.
then there's the bloomberg commodity index. that has the benefit of being second. gsci did wronghe and did it better and it broke up each sector two thirds. every year, it rebalances. it has had a better performance. if any index can be that come it would be smart beta. -- beat that, it would be smart beta. julie: that is incrementally a little smarter beta. there are a couple of others that up the ante and try to be even smarter beta. dbc, deutsche bank optimal yield index, it would be smart beta. historically come the last five years come it's about the same --formance as
havenci tracks the summer dynamic index. it thinksommodities are going up and optimizes the role. julie: we have a chart on the bloomberg looking at these various etf's. none of them have done great because we've seen an underperformance the last few years. there is a divergence between them, particularly after the first leg down. is it because of their construction that some of them tend to outperform? mike: the smartest performance crude oil collapsed.
the trend i'm seeing going forward, a lot of the new commodity etf's are focused on costs. that's the total etf tracking commodities, maybe 6 billion. want basic muddies big when it goes up -- i was impressed with the etf securities index. it attracts the bloomberg commodity index at 29 basis points. vonnie: great stuff. thank you. still ahead, we are talking big banks moving out of london, potentially. this is bloomberg. ♪
trump said het had an absolute right to disclose information to russian diplomat's. the president responded to a washington post report that he revealed highly classified information about an islamic state plot. the president says he shared the information with the russians for humanitarian reasons. that they would step up their fight against islamic state. turkey's president meets today with president trump. this friction between the two decideds since the u.s. to arm kurdish fighters that turkey considers terrorists. president erdogan is likely to renew turkey's request -- they're blinged for last year's failed coup. rebels and government officials are meeting separately with a united nations envoy.
the talks have been overshadowed by u.s. actions, but the syrian government built a crematorium in one of their most famous prisons. macron putsmanuel -- behind the time their bid for the olympics. the ioc will decide whether paris or los angeles will host the games. 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. year after the brexit vote among many financial services firms are moving their people out of london. one for moving in the canadian pension fund investments. announcing its european hub will now be in london. joining us is the pfp chief
executive mark andre bourbonnais . -- chief executive, andre bourbonnais. you are moving in, making it official. why? , ite: as an investor market is important for us to be at the center of decision-making. a number of banks are moving stuff away. believe --f p at p pfp believe the center will remain in london. it's important for us to be at the center. brexit toare using move step away that they would have moved anyway because london is in the cheapest place to operate a middle office. in terms of the decision for investment to my do believe london will remain the middle. giving aresa may is
speech at a factory as the campaign continues. what is the plan in money spent? how much are you planning to spend in the european region in the next five years? andre: it will all be dependent investing.will be around $4 investing billion -- 4,000,000,000-5,000,000,000 -- 4 billion-5 billion pounds. vonnie: how do you plan on satisfying european regulators if you are based in london? andre: the beauty of our business is that it is nonregulated. in terms of the location, we haven't really picked it in function of the regulation.
we could easily put ourselves on the continent. it's important for us to remain at the heart of the action, which will remain here in london. vonnie: you may even be able to pick up some talent, right? people who want to stay living in london but don't have a job anymore because their banks are hiring in dublin or frankfurt or the netherlands? andre: that is one possibility. most often whether it will be difficult to recruit talent following brexit. in my mind, the u.k. is already a lot of movement from countries where they have control the weather it is canada or the u.s. , countries in asia and the middle east. make itthink they will more difficult for a french national or german national to work here in london. mark: what opportunities do you see in the private debt market? andre: the asset class has grown
the fastest. we were a bit behind our peers. we started activity in the fall of 2015. we opened an office in new york. the decision was very strategic because it helped us build very quickly, which we would not have been able to do in montreal. now, we have extended into london. the market where there is more a and more uncertainty will create a fortune piece for us in the private debt market. as you expand and private debt when you are trimming your european real estate portfolio of it. is it a bit frothy? andre: all markets are pretty frothy right now. we've been in a number of options on the private equity
side and infrastructure side. someone was willing to pay significantly more than us. it's a bit of the same thing in real estate. pretty much everywhere around the world where we have real estate assets. we are pruning our portfolio everywhere. we still look for the best opportunities. in student housing for people will continue to get educated in the u.k. you think it's a great area for us. -- we think it's a great area for us. $150 billionave worth of pension money. u.s. pension fund managers been -- what is the number for you right now, your rate of return is some since? andre: our mandate is given to us by the canadian government.
historically, what has been what to maintain the countries and level of our beneficiaries to the same level is 4.1% real. we are still in this process right now for next year. historically, it's been around 4.1% real. what the you think that number is right now that's what do you think the number is right now? andre: around three. it certainly is going to be lower than the 4.1. mark: we talked real estate and private debt. stocks in london, record highs. stocks in germany, record highs. what asset classes are you
partial towards now and less so? andre: the market is high. i'm not sure we are in red territory. there's a little room to move forward, both in the u.s. and with in europe, especially more stability in europe right now after the dutch and french election. we will see what germany and italy are going to do. there's still more to go. same thing in the u.s. a number of pretty strong. mark: how do you invest around trump given news like today? andre: we are long-term investors. we invest through cycles and through various presidents. convictionlly, it's in our asset allocation. grilli, we are 60% in public markets and 40% -- the premium
for real assets is still there. illiquid assetat category more towards the 50% mark. we are not really taking one specific area. we look forward long-term. of pfpndre bourbonnais investments. prime minister may is campaigning -- you can watch it on the bloomberg at tv . vonnie: three weeks to go before the snap elections. coming up, senate majority calls forre bourbonnai mitch ml less drama from the trump white house. this is bloomberg. ♪
vonnie: live from new york, i'm vonnie quinn. mark: in london, i'm mark barton. this is "bloomberg markets." fund elliotte management coming out with the man's for change. that's the man's for change -- thdemands for change. executivef acknowledging mistakes when it comes to buying u.s. shale assets. >> we knowledge the acquisition that took us into this business -- we paid too high a price. it was too quick. we have learned that.
mark: bhp considering whether to selloff more of those u.s. assets. have stolenmed to and unreleased this new movie. bob iger disclosing the threat and a town hall meeting with abc staff members. he said the company won't pay. disney is not commenting publicly. that is the bloomberg business flash. time for your bloomberg quick takes. they did today showing april housing starts came in lower-than-expected. -- data today. homeownership is a big part of the american self-image. because of that committee was government provides a lot of support. this includes federal income tax
reductions for mortgage interest and property taxes. u.s. also employs programs to keep interest rates low by reducing the risks that mortgage lenders take on. -- in 2016,ituation u.s. homeownership raised to 63.5%. the tight credit market is preventing many renters from taking advantage of the recovery. before becoming u.s. treasury secretary, steve mnuchin said was a priority for donald trump to and control of -- end control of fannie mae and freddie mac. last week, president trump said he would offer a tax reform package that would keep the federal tax break for interest paid on mortgages but would eliminate the deduction for local taxes, including property taxes.
the homeownership rate in the u.s. is neither hide nor low by national standards. doesn'teownership appear to be a sign of economic health. theng a home limits worker's ability to move. riskythe crash showed how buying a home can become of the housing industry consumer advocates say homeownership can put families on a path to financial stability by forcing savings and providing a place to retire and allowing for appreciation. it also makes for more involve citizens and lower crime. stockmarket investments have historically build thater way to way. says heesident trump
had "the absolute right" to share terrorism intelligence with russian officials in the white house meeting last week. one agrees. that's not everyone agrees. kevin cirilli spoke to senate majority leader mitch mcconnell and asked for his take on this latest controversy. sen. mcconnell: i read the washington post story and general mcmaster's response, which tends to refute the story, rebut the story. i think we could do with a little less drama from the white house on a lot of things so that we can focus on our agenda. , tax is deregulation reform and repealing and replacing obamacare. kevin: a lot of the tension right now on who the president will select to replace james comey. have you spoken with the president about this? who would you recommend? sen. mcconnell: i recommended
merrick garland. may surprise people, but he has a deep background in criminal law. he was a prosecutor neil on the city bombing case. -- in the oklahoma city bombing case. it would continue the tradition anhaving an political -- apolitical professional. it would be good to have democratic support. if he picks someone with a deep background in law enforcement who has no history of political --olvement, a genuine expert garland is an example of that. it will serve him well and serve the country well and lead to a more bipartisan approach. kevin: i want to mention this tweet last week. president trump tweeting about "james comey better hope there are no tapes of our conversation or go ."
should that committee have access to those tapes if they do exist? sen. mcconnell: senator byrne and senator warren are handling the intelligence committee investigation. in the meantime, for the rest of us, we need to concentrate on what comes next. we need to have a great choice for fbi director. i suspect the present will do that and move on. that's i expect the president will do that and move on. kevin: what is the timeline on health care reform? somebody republicans across the country elected republican controlled congress to do health care. sen. mcconnell: the bill finally passed the house. it won't be any easier in the senate. three days a week, we are in intense discussions with all the 52 members of the senate. my goal is to get to at least 50
votes to repeal and replace obamacare. the private health insurance market is collapsing. insurers are pulling out of markets. we don't have forever to address this. kevin: so many people, there's nothing more personal than health insurance. can you guarantee that whatever reform package is passed that no one will lose coverage? sen. mcconnell: what we know is what we have now is a disaster. the exchange's our collapsing and the status quo is unacceptable. collapsing.nges are kevin: you said this has to be revenue neutral. the president is proposing a massive tax-cut. is there tension on the visions and what is the timeline? you confident we could have conference of tax reform by the end of the year? sen. mcconnell: it has to be
revenue neutral. we have a $23 trillion debt. i don't want to put a strict timeline on it. the last time tax reform was done took several years. we certainly want to try to complete it this congress and make america more competitive. we didn't have one europe the percent growth during all of obama. -- one year of 3% growth during all of obama. , h.r. mcmaster will hold a press briefing. we will bring that to you live here on bloomberg television. vonnie: still have, turbulent times for easyjet -- brexit is taking a toll on the discount airline. hear what the ceo told bloomberg. ♪
mark: this is "bloomberg markets ." vonnie: easyjet shares falling by the most since january after reporting a larger than expected first-half loss. more than twice what it was last year. guy johnson spoke to easyjet ceo and ask her about the impact of brexit. >> the referendum affect in britain has disproportionately affected easyjet because we are and run denominated euro denominated. , thenk the uncertainty political uncertainty about britain negotiating with the eu 27 ways more heavily on easyjet because we are a british airline and run a european airline.
that is definitely a factor in the underlying share price. we are focused on our margins and cost program. analysts would have been pleased with the cost performance over the last half. we beat expectations. we will continue to focus on cost. and we will continue to do what we really do well. you cannot be driven by the share price. you had to be driven by what is right for the airline and depth of that will be a strong share price. with brexit and the negotiations coming up, that is going to be a bumpy road. the shares have been volatile. particularly for sterling denominated stocks. we are one of the few ftse companies that are sterling denominated. most of them are global companies.
guy: can i ask you to very quick questions -- two very quick questions? are you looking to convert the options you happen to firm orders? have a lot of -- 320's onn order. it started in 2004, the deal. 2014, rather. we have converted. we've taken 30 of that and we've 321's.ed i them into we will do what we think is best with those options over the next and years. -- the next 10 years. it's a very flexible deal. it allows us to defer options.
we have a lot of flex ability to go up and set of down on the airbus order. -- flexibility to go up instead of down on the airbus order. mark: we are continuing to follow the trump disclosure story today. eastern, h.r.1:30 mcmaster will hold a press briefing. we will bring that to you live here on bloomberg television. coming up with european close. that's coming up, the european close. earlierwas at a record the close is next. this is bloomberg. ♪
bloomberg markets. ♪ mark: it was the top stories we are covering. president trump dealing with a new firestorm of criticism over classified information being disclosed to the russians. the president says he has a right to do so. reaction from moscow and washington. in markets, the euro is gathering momentum after the trump disclosure. we will speak to jpmorgan's michael bell to find out if there is still value in european equities. british prime minister theresa may is stacking her team with eurosceptic candidates. does this mean a hard brexit is definitely on the cards?