tv Bloomberg Markets European Close Bloomberg May 25, 2017 11:00am-12:01pm EDT
bloomberg markets. mark: here are the top stories we are covering at bloomberg around the world. president trump takes the opportunity get his first nato meeting to slam member countries were not paying their fair share at the same time, the white house says it will investigate intelligence leaks that revealed sensitive information about the manchester bombing. the oil minister says members are on agreement to cut costs through march. why are investors not satisfied with the deal? we are continuing to follow all the highlights from treasury secretary mnuchin's testimony on reiterating the
call for a bipartisan tax bill that boosts jobs for american workers. vonnie: president trump's visit to nato headquarters is underway this hour. in a ceremonyis -- he just made a short speech. president trump did not shy away from the topic of burden sharing in the alliance. trump: these grave security concerns are the same reason i have been very, very direct with secretary sultan berg and members of the alliance in saying nato members must finally contribute their fair share and meet their financial obligations. nationsf the 28 member are still not paying what they should be paying and what they
are supposed to be paying for their defense. later this hour, nato leaders will meet for dinner to address number of dressing issues. for more on what is on the agenda, let's get to our chief washington correspondent for bloomberg news who is traveling with the president and is now in brussels. there have been nato attendees for a long time. how will they react to the president's continued assertion that countries are not sharing the burden of nato costs? kevin: i thought the clip you 'sst played, theresa may expression was expressionless. i think that's how many leaders feel about president trump making the push for nato allies to pay their fair share. remarks at an event
sure to draw controversy during a memorial unfolding that was supposed to be apolitical. the president heading into nato with the mission to get nato allies to pay their fair share and draw a new coalition as it looks to combat terrorism. it comes after the first heart of his international trips vowed to unite the region in defeating islamic extremism. discuss.much to the prime minister has confronted president trump on the leaks in this ongoing investigation into the manchester bombing incident on monday night. trump has referred to that. he said the leak will it should be prosecuted. thate hearing from the bbc manchester police have stopped sharing information with the united states. how damaging is this when it comes to relations between the two countries? i think that remains to
be seen. it is worth noting that president trump just moments ago put out a public statement saying the leaker should be prosecuted, but also calling for the department of justice, led by attorney general jeff sessions, to investigate the matter and draw up a report from the leaks -- on the leaks coming from these -- coming from the intelligence community. i spoke with an official earlier today who said the storyline will only highlight the notion that this president has highlighted for quite some time now that these leaks undermine security efforts. intelligence officials earlier this week and last week testified before the house and senate, saying these leaks did as much. clearly this is an evolving issue but worth noting that president trump is staying on script, not speaking off-the-cuff. this is the most scripted i've seen donald trump ever be as he heads into europe. vonnie: except for the one
comment that appeared to be off script about the new headquarters. he basically pulled himself back from asking it. he moves on to the g7 after this. how important is it to develop relations with the leaders of europe before moving to the g7? kevin: perhaps another unscripted moment came when he took -- when he shook hands with the french president. quite a grip. as he heads to the g7 summit, you will see a pivot toward economic issues. we saw a little bit of this with saudi arabia as the president announced details of that trip. there's no question that back home, he is facing criticism on a host of issues, including these investigations and on his budget. for him to reset the rhetoric of his campaign and
make a good first impression in europe. but quite candidly, just from my reporting on the ground in belgium, the response he's getting in europe is night and day with the response he got in saudi arabia and israel, which were much more accepting. kevin cirilli reporting from brussels. thank you. mark: let's go back to the markets. about 30 minutes left in the thursday session. we have been lower. small gains and losses throughout the week, about a percent below the 21 month high reached on may 10. as we talk of records in the united states, a big piece of data in the u.k. the economy slowing more sharply than initially estimated. shoppers flagging, trade dragging on growth. growth in services -- a big
heart of the economy here, revised down. exports fell 1.6%. knocked off. consumer spending weaker and the slowdown could be they first the brexit is keeping economy accelerating. shorttraders that editions have fallen to a one-year low. the pound is falling against the dollar on the back of that report, but short positions have followed to a one year low. does that mean the currency wellhead much higher question mark some analysts say no sterling rally since theresa may called the snap election. anticipated losses in the currency falling to roughly
33,000 the week ending may 16, the lowest since the brexit vote last year. bear in mind, this is important, below the red line, anything below zero is short territory. but we are headed toward zero. that is significant as is what happened today in vienna -- opec extending production cuts by nine months. on november 30, opec con founded skeptics by agreeing to the first production cut in years. a great chart here. the blue line is production cuts. we've seen breakthroughs move around since then. we have been as low since then 38 and today, we moved to 5356. we are above the level we moved into in november when opec implemented that first
production cut. some disappointment that they did not go deeper or a little longer. 90 minutes into the trading day. what is it looking like there? julie: the oil story not hurting u.s. stocks. away fromnes still there, about 25 points away. we have six sessions of gains for the major averages in the u.s., the longest streak we have seen since february. some of it has to do what is -- with what is going on in consumer discretionary stocks. with the uptick in stock prices, we have an uptick in volatility. take a look at the bloomberg. this is the vix going all the way back to the early 90's. you see that dipped we have had in volatility with the vix back below the 10 year. stocks, a six day down streak end at index. i mentioned what is going on with consumer discretionary and mentioned the movers.
tech andm, being a consumer discretionary crossover is within the consumer discretionary index. as is netflix. more traditional types of consumer discretionary doing well. best bucking the downtrend we have seen in retail, showing and unexpected rise in its comparable sales. it credits some of the game to sales of the nintendo switch. company reporting its first quarterly profit in two years, even as cop sales at sears name stake -- namesake stores fell. finally, let's take a look at oil. you heard the cuts were not extended longer. and theoff a little bit
dollar up just a tad. it is the third update, the only of day we have seen since may 10 and gains are modest, to be sure. vonnie: julie hyman, thank you for all of that. let's check in on the first word news with courtney donohoe. courtney: in the u.k., another sign brexit is hitting the economy. gdp was revised downward .1%. household spending added the least to the economy's is 2014. that's blamed on more inflation and slow wage growth. rish exports fell 1.6%. a sign the u.s. labor market is solid. -- british exports fell 1.6%. at its lowest level since 1973. in montana, the republican candidate for congress in this week's special election has been
charged with assaulting a reporter. witnesses told police that he grabbed a reporter by the neck and slammed into the ground. polls close today in the election which is partly seen as a referendum on the trump presidency. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i'm courtney donohoe. this is bloomberg. we have breaking news on gm. let's get straight back to julie hyman for more on that. crossingese headlines that there has been a lawsuit filed against general motors regarding using what is alleged test defeat mission devices. this suit being filed by those gm lease more than 705 duramax diesel trucks. it claims the automaker installed multiple devices into models of these trucks from 2011 through 2016.
this complaint has a lot of references to volkswagen as well. gm being accused of putting defeat devices in its trucks to beat admissions tests. this would be the sixth carmaker accused of diesel cheating since 2016. we will be reaching out to the company for comment but we are seeing a stock reaction. remember, fiat chrysler was sued earlier in the week by the justice department also regarding diesel omissions. we will continue to update you emissions.diesel we will continue to update you on the story. mark: opec announcing more cuts to clear the global oil glut. we are live in vienna next. this is bloomberg. ♪
vonnie: live from bloomberg world headquarters in new york, i'm vonnie quinn. mark: live from london, i'm mark barton. counting down to the european close, roughly 15 minutes left. oil falling on the news from opec. manus cranny is in vienna where we have been all day. as we have heard from delegates and heard from kuwait -- is it confirmed we have this nine-month extension? : i have it on good authority from a variety of sources that we are at the point where when they hit this podium in the next couple of minutes that they will confirm a nine-month extension at 1.24 opec.
what does in different look like? -- indifference look like. our senior correspondent over there is saying in 20 years of covering opec, he's never seen as muted a reaction when you saying we will take this market by the scruff of the neck and try to give it a shake. he made the point that it is about cooperation. using,guage kuwaitis are talking about a monitoring committee, when you start to use language like that, read this. we're going to look at the data, we are going to look at the data on a continual basis, and if we think it's a little bit of an offering, we might be prepared to do, but the market is rather sanguine about it. i will give you a rubberstamp in
about 10 minutes. you spoke to the nigerian oil minister earlier. you asked about the floor. is there a view that $50 could be the floor for oil? seems like that's where they want to keep the price of oil. of course, libya along with nigeria, along with a ran, -- along with iran, nigeria is nowhere close to that production. they are not ready to do that. it is impressive when you get a minister who is willing to roll the dice and say i think we can 50 bucks -- i of think the market is struggling .ecause the conviction is this oil producers, you may see others come in. what might shake the market a little bit is if non-opec members in that chamber upstairs
give a little bit of a reshape in the rhetoric. that might shape the market. you have done a fantastic job. stay in there. manus cranny in vienna. officialiting for that announcement. heard fromid he has good sources and it's going to be officially very soon, a nine-month extension. vonnie: absolute competing forces today between the nato summit, the opec to munich a treasurycome out and secretary steve mnuchin still testifying in front of the senate finance committee. he's now touching upon tax cuts, telling the committee he will personally garrett -- you won't personally aaron t rich won't get a tax cut. ofs talking about the goal 2% gdp growth. he says that going to help. he says we are looking at many ways to broaden the tax base.
mark: just getting breaking news out of vienna. the iranian minister says opec and non-opec have agreed to a nine-month extension. we have heard from various officials -- it's not official official yet. as soon as it is actually official, we will bring it to you on bloomberg television. the market has moved ahead of the expected news. economylk about the showing signs of strain ahead of the snap election in june. sending sterling lower. the brexit slowdown has finally
arrived. is it fair to say that now? slowdownis is a induced by the exchange rate, squeezing real income growth, leaving less money to spare for consumers to spend. net exports are a major factor, coming in much worse than forecast. is this a harbinger of things to come now that britain has turn isolationist? -- turned isolationist? jamie: the thing to member is the numbers bounce all over the place. there's a bit of stuff to do, some accounting to do with gold, so don't worry about that. mark: it's not the only thing that bounces around with these gdp figures. jamie: it's quite difficult to see what is moving around inside. we know brexit is going to have a long-term effect on exports and trade. we don't know what the impact is going to be in the short-term.
didn't one the only member number say we have a sweet spot for a couple of years? it should be a sweet spot. agree -- the currency is low and the tariffs are likely to be put in place are not here yet. you put the in a fit of depreciation, but not the cost. vonnie: what happens in election season? does it have any impact, given that we are going to have a similar makeup after the election? : i'm terribly sorry to disappoint, but it won't make any difference for gdp growth in the u.k. it's likely people just carry on their normal life and consumption will continue as before. activitysumer spending
adding the least to the economy since 2014. inflation up and wages are not keeping pace. is that the key dynamic? jamie: what is worth imagining now is what happens in paris. we have consumer slowdowns and it's just movement in the exchange rates driving that. imagine another movement in the exchange rate which would be quite likely and then you have tariffs on top of it. you are looking at a much bigger squeeze on the consumer then. brexit turns ugly, what we've got now is a poor taste of what's to come. mark: subdued for the rest of the year? is that a fair guide for what we can expect for the rest of 2017? i've got a fresh forecast . we are looking at .3 gdp growth for each quarter.
that should see the year on year about 1.5%. to last year was 1.8%. we see a further slowdown in 2018 to 1.3%. easy job for mark carney, even with inflation a target? jamie: nobody is going to be too worried. mark: have a look at what is happening -- literally four minutes away from the and of the thursday session. what a day it has been. we have 30 minutes left. this is bloomberg. ♪
as record highs. little movement for the benchmark this week. interesting story in the u.k., talking to jamie about it, the .conomy slowing more than .2% .he earlier estimate was .75 there are a number of things that stand out, trade, knocking 1.4%. that is record try on consumer spending, household adding the least since 2014. this is the evidence the brexit vote is hitting the economy, the squeeze on households. this is a fascinating chart. this is the german 10-year yield going back to may last year. you can see the trend from .15 to .50.
economists and analysts suggest and tell us this yield will hit 73 basis points for the end of the year. thewe were unable to break 15 basis point level. first was the dutch election, the french election, trump-comey. .63%, .73% is the projection for the end of the year. one analyst said you really are waiting for the june ecb meeting as the next capital -- catalyst, and given trump's nato speech, i thought it was important i bring up this chart. this shows you what countries are spending on defense as a percentage of gdp. this is what he was getting at. he said i need you all to start spending more. the u.s., 3.3%, so they are doing it. 1.1% of 1.9%, germany
gdp. pretty direct in his message. showe: and i love that you that chart. we could dig in deeper to get the nuances of who is paying what and why, and what is contributing. let's check u.s. markets, under 10, now just back above it. the dollar index, used to show happiness, that being the word the herman brothers used today. i thought we would look at the mexican peso, it is strengthening 18.42, as the oil agreement gets done. the focus is away from mexico for a moment. thelook at this, 6.84% on offshore yuan. you have to wonder if moody's call did not have more of an effect that we had said. you can see there is risk on in
europe, australian dollar, currencies are lower after the agreement because of oil, wti .own 2%, 2.2% brent is three dollars higher. we look at the securities through the show. let's go to abigail doolittle. session lows,s in down 2%, the worst day in three weeks. this after opec did extend cuts for nine months. you can see cells that are priced in with oil, mainly between $45 and $55. one segmentuding -- in the energy complex getting hit, thriller. we have them down 3%. the energy sector is getting hits. the only sector in the s&p 500.
he said the sector is washed out, expecting a rebound in the months ahead. let's see if that happens. it now we could explain why oil is rebounding. this is 7831. in blue we have opec daily production the last two years, white is u.s. a drilling activity. last summer after the price of oil started to recover, the drillers came on hard, adding rigs. then the price cut last year, oil production from opec coming down so the supply cuts are being offset by what is happening in the u.s. with production, keeping oil range bound and explaining why energy stocks are lower now. turning over to retailers, we have staples trading higher, up 4% after they will rebuff cerberus, their bid was too low, but sycamore is in the running. , after the3%
earnings where they were looking for $.51, earnings $1.95 billion. the reason for the gains in gamestop, look at best buy, 18% up. they beat earnings estimates 49%. behind that, the nintendo new game console, so that could be why investors are positive on gamestop ahead of their report. vonnie: thank you for that. i want to mention that paul ryan is holding a conference, speaking right now. he is being -- saying physical altercations -- with what happened to the reporter in montana, spoke to the candidate in montana, closely watched sectional in montana, one of three that people are watching carefully.
ryan said there was no call, and the gop candidate should apologize. this is all ryan at a news conference -- paul ryan at a news conference. mark: brexit negotiations will start less than a month earlier. we spoke to the german deputy finance minister after he thinks the british don't appreciate the complexity of what will happen. >> it will be very complex. it is a month of negotiations, the most complex but have ever taken place between states. relation.e the there are many bigger and small issues when it comes to the things made in the u.k. and brought here or other factories to be built in.
now in the one european union, it is not a problem, but the u.k. is out. they need a special sign that they are matching thenow in then regulation. we need to organize it from one day to the other. airways european airbus is, and this is just a small detail. there are not hundreds of thousands of details that need to be dealt with. reporter: how serious a worry is that in germany? give us how important that is. germany is industrial. they stretch over europe into the u.k.. is this something you are hearing about? jens: great britain is one of the most important trade partners. there is much midterm companies here in the u.k. britain is the second-biggest car market for german cars
within europe outside of germany. it is important we have a good relationship economic wise, cultural, politically after brexit, and for that we need to agree on what comes after. reporter: it makes it easier to go on. talk in theot of about who will be going to frankfurt, or will they be going to paris or whatever, and i think it will be interesting to see how it on. do you get the impression in the industry when you talk in your peer group about europe that there is a desire to create a second financial harbour in europe, one that is domiciled in the e.u. to compete with -- jens: i would think we do have a second, and that is frankfurt already in the european union.
you have many big banks and financial institutions. and the german government, those who decide to leave, some entities to goyou have many bigd financial institutions. to continental europe to be within the eurozone , it is my opinion they go to frankfurt are he and we will have to see that. it is my understanding london will remain a very important financial harbour for companies of europe. reporter: dominant or important? jens: we will see how it develops. i am a member of the german government. we want frankfurt to be, play an important role in financial operations and in the future, but i would say there is enough room for two or three in europe. london will of course remain important, very important
financial harbour. reporter: banking brings balance sheet exposure. the financial crisis has taught many people around europe they are not the finances they want on their doorstep. jens: it is what regulation is for, and we have done a lot, implemented a lot in the past years to avoid what has happened in 2008 and 2009, the financial crisis. administration, the u.k. government, we actually promote that we should not have erased -- we should keep the higher spenders we implemented after the crisis. overlook and regulate something, if you can do it in a better way, but you should not have erased the bottom. reporter: do you get the impression the new french
government along with whatever german government we end up with sees deepening the european union, sees fixing? i don't know the right terminology, but the fall of the eurozone as a priority? do they see eye-to-eye? jens: of course. with elections in france, the french people have chosen reason and hope inside of nationalism. look up on it. we need to solve problems in the european union when it comes to migration, to secure the border, talk about defense, what happens with russia, ukraine, the middle east. we should be able to do something as a european union and not wait for the u.s.. that was guy johnson speaking to the deputy german finance minister earlier today. vonnie: and paul ryan is holding
his news conference as well. he says there will be no revote on the house will passed by the house, there was speculation that going to the senate, the house would need to revote following the cbo scoring from yesterday. ryan was encouraged by the cbo analysis of the house bill. the cbo report shows it would lower premiums. thinks the issue will get resolved. look at oil,to because it has fallen below 15 dollars a barrel -- $50 a barrel with the opec cutting production cuts, although they mentioned they would push it as high as $51. we come down, some investors are disappointed they did not put production cuts out further.
one of those, the scoring of the acha. he said he is encouraged by the cbo analysis on the health of the bill. they show the bill will lower premiums. he rejected the idea there'd be another vote in the house. he also talked about the debt ceiling and that it is being resolved. shares of gm are down 2.5%. they are accused of putting deceit devices in their trucks to cheat emissions tests. that is the sixth to try this now. we have a reporter. this is turning into a conspiracy of grand nature. how do six automakers independently arrived at these to cheat diesel emissions, and why? there is anyink real connection other than they
make cars that consume diesel. this term is going after them on the belief they are all cheating . the rules are hard, the fuel is inherently dirty. they must have cheated. six automakers accused of this. the only one the regulators have followed up on post volkswagen was chrysler. they notified them in january that they had unauthorized software. there has been progress on that one. they noted a suit against gm on smaller cars. part of that was run out, but part of it is proceeding. volkswagen when broke, it was shocking, the idea a carmaker would cheat. they gave volkswagen every benefit of the doubt. now it is looking like more and more carmakers are doing this.
it is a troubling thing. reporter: it is. deliberatedid have -- they confess. they had deliberate software to recognize when it was being tested and bypass the emissions. we have not seen that. even see chrysler didn't clear any of these. if it is any unauthorized software, regulators can see it, it is there and not supposed to be. the preponderance of the claims and lawsuits, having to throw them out, the be problematic. it makes it less appealing to be in the diesel business going forward under any circumstances. mark: problematic and costly. it has been costly for vw, and that has not run its course. do we dare even try to put a figure how, when this is over, how costly this could be for the auto industry? reporter: altogether, it is a
little soon on that. $2t chrysler or maybe billion is what is estimated on the fines that if it is fully prosecuted, could go higher than that. estimated $24.5 billion, that is the latest total. assuming the chapters all the things still hanging out. they have a few cases left. they have not had any major cause, we will see how they went through the legal system. mark: the credibility of clean diesel technologies certainly has been damaged, jamie, beyond redemption or not? very challenging, and there will have to be a breakthrough to make diesel competitive again and produce it in a clean way. we find the thing about vw was
they seem to have the performance that was so unbelievably better than anyone else, and it turned out it was better because they could not be believed. the others seem to have had systems in place whether they did some things wrong, there will be plenty of fact-finding to explore. but the brand of diesel and clean diesel against electric or hybrid cars or just making more fuel efficient gasoline cars is an elusive proposition. mark: thanks for joining us, bringing us up to speed on the gm issues. very vw like. end of thee to the show, battle of the charts. it is coming up. manchester united taking home the trophy after the big euro open league. we are awaiting confirmation on the agreement of opec production cuts.
♪ vonnie: it is the time you have been waiting for, battle of the charts, where we take the most telling charts and what they mean for investors here you can access these on the bloomberg by running the functions at the bottom of the screen. , kicking things off is emma chandra's. >> my chart may look like a piece of art. 8881, andact g #btv it is a garage to oil. --an homage to oil. the yellow lines are u.s.
production, the white lines are opec countries, and the others are different. january that it changed. u.s. ramped up production, and you look at the net change since november last month, it was smaller than it was in january. opec wants to continue those cuts, but they should be wary. they may try to court them as losingducers keep figures. #btv 8881. vonnie: extraordinarily visually appealing. i see why you like it you to art. losing figures. mark has something timely. mark: it is an understatement to say it has been a difficult week for the city of manchester, but last night there was a lot of solids in the football final.
it was united, manchester united emerged, winning 2-0. this chart goes back a year. what we have seen both yesterday in u.s. trading and today, roughly a 5% lead in manchester united share price. this matters on the financial side because what happens when you win the europe league? you get the champions league. chester united because they came in sixth in the premier league go straight into the champions league. this gives them an automatic task. -- $40ngly, 40 or billion or $50 billion from tv , and it could be more lucrative with what happens in the beginning of the season. they were losing matches, things not looking well, then it picks up, they got the domestic trophy and culminates in a successful of the new first
coach. it has been a week of tragedy, but it ended on a high for supporters of manchester united football. vonnie: there were some big gains. thank you mark, and you found something else for manchester. beautiful presentation. emma, thank you for the opec chart. just bring it back another day. as oil prices fall, we get insight on opec and strategy extending production cuts and -- german petri partners that is 5:30 london time. and the opec press conference this is bloomberg. ♪ .
vonnie: from bloomberg world headquarters, here are the top stories around the world we are following. withstocks at new records the s&p 500 and nasdaq hitting all-time highs. sincengest streak now february. opec edits allies are extending oil production cuts for nine more months, after the landmark agreement failed to curb oil supply. the benchmarks, brent crude down 3% on the session. we will get reaction from tom petri, chairman of petri partners. by donald trump to nato members, shaming alliance members for there's -- to pay their share to --