tv Bloomberg Markets Americas Bloomberg May 1, 2018 10:00am-11:00am EDT
welcome to "bloomberg markets." vonnie: another day of big guests. from the milken conference in beverly hills, we will be hearing from commerce secretary wilbur ross. northstar executive chairman tom barrett. ceo arianne huffington. and los angeles clippers owner steve ballmer. first we have to get back to breaking economic data. julie hyman is your. julie: manufacturing index inling to a nine-month low april. fromfrom the 59.3 rating march year. it looks like the measure of production was down to 57.2, the lowest level since november 2016. rose fors-paid gauge
the sixth consecutive month to the highest since april 2011. it looks like inflation is one of the things that is weighing on this manufacturing number here. by the way can we got construction spending month over month. that is the much number. -- march number. here of worse than estimated numbers on the manufacturing front. if you look at the major averages today, they were already trading lower, mostly to do with earnings come although that number not great on the economic front. also looking a cruel can we have been watching it closely on the developments in iran. it is falling today as we await a decision on the iran deal, which is set to come in a couple weeks time. digging a little deeper here, as we look at predictions for what the market is going, one of the gauges we watch us from the conference board. this is the gauge of those being
surveyed who are expected higher stock prices 12 months from now. you see it has been turning particularly higher in 2017. in 2018 it has been going sharply lower. that is the number to continue to watch as a measure of consumer sentiment. looking at the groups on the move, we looked at oil. and if you stocks are the biggest decliners in the s&p 500. materials and consumer staples have been pretty consistently week. in those groups it doesn't appear to be earnings weighing on them. it appears to be the energy prices. seenin general we have weakness in consumer staples as of late. look atarnings, let's some of the big tech names. apple is the big report of the day. it is coming out after the close of trading after the shares have been declining going into the report. a lot of pessimism over the
iphone x, that it looks like it was not a success for the company. there are a lot of questions over whether apple will declare another cash return to shareholders. corvo is one of apple's suppliers. pictures were upgraded at barclays this morning. -- the shares were upgraded at barclays this morning. investors will look to the second half of the year. a company that, handles traffic over the web, that is coming out with earnings and raised its forecast. those shares are trading higher. caroline come over to you. 90 minutest's about to the close of trading in europe, julie. it has been a quiet day in most countries. they are celebrating mayday. only the u.k. island and denmark are open. it is flat on the stoxx 600. this is what i show you. completely flat on the overall index, but food for thought when it comes to individual movers.
numbers coming in strong on international growth looking good. another retailer here in the united kingdom up 3%. why? up 3%. why? it looks like data showing that sales are increasing, and notably, this is a better bet going forward. they raised their overall price target. others were off by 2.5%. white has this been falling why has this been falling --why has this been falling? it is followed from the deal we talked about yesterday. also on the downside, not just u.k. retailers, but we are also looking at the effect overall of, well, the pound command u.k. pmi data in particular. u.k. pmi is the lowest growth we have seen in 17 muscles of this weighing to the concerns is 17
months. -- in a 17 months. this waiting to concerns. we are seeing concerns once again amplified after manufacturing growth was weaker than expected. what does this do? it affects the overall pound as well. i'm looking at how pound is on shaky ground. where the lowest since all the way back in january when it comes to the british pound. hence continue on how the u.k. government is going to iron out considerations on any trading agreement they come to with the eu. customs issues being that about right u.k. leaders. it is lower because we're not baking in any sort of rate rise come may. function. at the wirp this is where you see your imply probability for overall interest rates.
look at this, high probability, but coming all the way down to 17%. we were seeing this in the heady heights of almost 80 or 90% earlier this month. clearly not much action expected from the doe, funny. -- the boe, vonnie. vonnie: amazing how things change. -- apple concerns over is coming out with earnings today. concerns over the iphone x are weighing on analysts. we are at 167.04. just like to point out that the stock is up 1% right now, down about 1.3% so far this year. muchn milunovich, how downside to do you anticipate from the earnings?j there are people saying just 2% growth, and that is not good, but seems ok to me.
--steven: well, march growth is fine. the company has not missed its revenue guidance for about 15 years. the question is the june quarter. the street is about 41 million units of iphone. some as low as 35 million. it is a question of the outlook. image every supplier to apple has -- pretty much every supplier cap was projected june earnings will be week. vonnie: some of the questions investors will be asking -- clearly the u.s. is not going to do it. steven: that's right, vonnie . nost analysts expected a uptick in china. it seems like it is time for an upgrade. apple did see some growth last quarter in china. we are expecting units to be relatively flat. we are thinking china will not
see a lot of growth. you will see an elongation in the upgrade cycle, much like other parts of the world. it is not that the apple brand is not aspirational, it is that the market is not really growing. the other major player at the-each outcome like samsung in be u.s. and so they will not share shifts. it is not the growth we would have expected six month ago. vonnie: would there be solvation in bringing in a lower-cost phone? the x cost $150 more to make than the 8. is that what apple should do going forward? steven: not so sure. there is this narrative that the iss overpriced, but the x setting up foundation for the next decade, as apple is talking about. we think apple is having success moving people to higher price points. we have double the percentage of apple buyers spending more on the phone. if you don't like the x, there is alternatives. there is talk in december of a
new lcd-based product which would help apple in the midrange. the high end is doing well, low end is doing well, the midrange is probably week. i'm not sure apple needs to cut prices dramatically, but that price point could help. caroline: talk to us about buybacks. what effect of the having to? -- today? steven: the company has $125 billion of excess cash. expected to be pumped up to 20, 30%, perhaps more. if the committee does that they can buy back for the next four years. the question is the amount of the buyback, probably the middle $100 billion or so, and what time frame. some people think two or three years. i think it will be three to five years. the company will be using a lot of dry powder here which should support the stock over time. caroline: we've talked about the iphones themselves from which makes two thirds of the overall revenue of the business.
the other key issue is going to be the services. this is the real area of growth. how much are you expecting out of the service side of the business, and how big is it as a portion of revenue, not carry quite so much about the iphone sales levels. steven: we are now at the point where the combination of services and other non-iphone revenue and the buyback cap people less focused on the iphone numbers. services is about 13% of revenue. we expect it will grow over 20%. we recently did some work with ubs showing that although there is a lot of people who don't use apple services come once they begin to, they grow the number of transactions by 20% annually. that supports upper teens revenue growth for the services for the next few years, and a partial offset if iphone numbers are weak. vonnie: yesterday we had the big announcement of t-mobile and sprint trying to merge, and one of the reasons behind it was the overhaul -- there was a lot of
savings and upside for the company from the tax overhaul. at least that is what they are saying. what about apple? are we hearing anything about investment plans or how the tax overhaul has changed apple's ability to invest? well, that tax rate is coming down substantially for apple. that along with the buyback will give them strong earnings growth even though the operating income is not going to grow much this cycle. do i expect apple to become much more acquisitive? not really. apple is picky and eight 10 to be buying more semiconductor -- they tended to be buying more semiconductor technology. if they go to a new market -- say automotive or health care -- apple buys resources. they do not want priorities or processes. they want resources they don't have. i don't see them anything doing this them doing anything large right now --i don't see them doing anything large right now. vonnie: stephen, thank you for
your time today. much appreciated. the earnings after the bell today. steven milunovich, analyst at ubs. let's check in on "first work" is. here is taylor riggs. taylor: the european union does not like president trump's decision to temporarily delay steel and aluminum business. the eu across the uncertainty that for business and says the bloc should be granted a permanent exemption. the un's nuclear agency says it coordinatedn had nuclear weapons program in place before 2003 but found no credible indications of such work after 2009. the issued their assessment a day after israel he prime minister benjamin netanyahu made his own presentation. netanyahu said there is a half ton of seized documents proving iran has lied about its nuclear tension. president trump is striking back. "the new york times" reports
that special counsel robert mueller wants to ask the president questions involving russian meddling in the election and his actions in response to the probe. president trump called the report disgraceful leaks about our phony crime that never existed. -- a phony crime that never existed. global news 24 hours a day and on twitter powered by 2700 journalists and analysts in 120 countries. i am taylor riggs. this is bloomberg. vonnie: insurance giant metlife is a titan in the investment committee. it has $580 billion in its portfolio. the company is hoping that a recent acquisition can grow its business even more. let's send it out to beverly hills, where at chapters the milken institute -- erik schatzker is at the milken institute to continue the conversation. good morning from beverly hills. i'm here with stephen gula, the chief investment officer at metlife.
good morning. steven: good morning. n.ik: good to be at milke steven: bit to be here, great environment. erik: for the place for us to begin is with the yield. what insurance companies, metlife has had to invest in investment grade bonds and brutally low yields for most of the past decade. steven: i'm glad you understand our situation. erik: now yields are rising and that might be appealing longer-term innocence that you can buy bonds for the holiday or in they bonds for the -- sense that you can buy bonds for the higher yields. care?re -- do you not really, and i will say why. as interest rates rise committee on wildlife games will start melting away, essentially. it really comes out to our they credit problems are just
interest-rate-related? the credit quality of our book is very high. erik: and you don't trade. steven: and we don't trade. we call ourselves buy and manage basically. erik: how much of your credit bug is fixed-rate exposure and how much of it is floating? steven: it is fixed rate but we have floating for a few reasons. one is shorter liabilities. businesses are floating-rate liabilities as well. we have floating-rate exposure but most of it is fixed-right. erik: there are people peddling a solution to the low yield problem, and they are called private credit managers. they include the largest alternative asset managers. blackstone has ambitions to attract $100 billion in capital from insurance companies managing private credit on their behalf.
does that mean blackstone is going to be competing with what you do? steven: i think they do in intended to compete and there are plenty of people who compete in the business when you look at the large asset managers, particularly those with a focus asset management business. i would say this, though -- when we started metlife investment management, our focus was on investment-grade private assets. for now we compete in different realms, although we will see if they move into the investment grade. when you look at what we do with private assets -- private place in corporate debt, private infrastructure debt -- it is nearly all investment grade. erik: that said, they want to take some of the credit products originating lower down in the capital structure and package it in a way that it can appeal to insurance companies. might thatossibly -- possibly make metlife our client? steven: well, we are always open to different all the new unity's
-- different opportunities. when it comes to credit products, we can do most of what we want to do ourselves. erik: what about infrastructure? do you originate it all in-house? steven: we do. what we do in infrastructure, most of it is on a private place basis. but we originate it all ourselves. last year we originated almost $4 billion of new infrastructure debt investments on top of another a billion dollars or so of corporate private placement that. erik: what is if you like 2018 -- what does it feel like 2018 is going to be like? steven: more opportunity, and we're looking for the united states to open up opportunities here a little more. when you look at what we do, the majority of what we do has been outside the united states. erik: what would you like to invest in here? steven: airports are great opportunity. , in the 50states united states, there are zero
private airports. everything is publicly owned. those are great opportunities for us. i know that the house has reauthorized a bill that would allow for airports to be privatized. erik: almost a year ago we were talking about a deal you did for, told logan circle there was previously part of focus investment management. now it is part of metlife. people don't like that insurance companies as necessarily great consolidators. how is that going? steven: it is going very well, in fact. it has been very successful for us. wei said at the time, discussed this is the opportunity to jumpstart the business. we are also pursuing other insurers on a more comprehensive -- erik: are you going to be more of a consolidator? steven: consolidator -- i'm not sure i would use that term. we would still acquire.
i figure opportunities still to acquire other asset managers. you call it consolidation. i look at it as building out our capabilities. when you look at what we're doing on the acquisition side, what i really like about the opportunities that are contiguous to what we are doing today. erik: you have $175 billion in outside capital? where would you like that -- steven: ultimately if you take a longer term 3-5-your perspective, we want that to be half a trillion dollars. that is where it needs to be in the context of metlife and a very competitive asset management. erik: he needed deals to get there. steven: we do, we do. we will continue to grow organically, and over time we think there will be acquisition opportunities that will allow us to keep growing. erik: steve, thank you very much. milken institute global conference -- that is stephen goulart,teven
vonnie: this is "bloomberg markets." i am vonnie quinn in new york. caroline: the london, i'm caroline hyde. thousands of developers are at the facebook annual developer conference in san jose, california. safety is at the top of the agenda after the cambridge analytica controversy. bloomberg reporter sarah frier
is at the conference. first of all, this is usually a celebratory affair. what is the five like now, -- consideringt the changes because the data breach? sarah: there is actuallysarah: a lot of tension between facebook and developers because the company had to take drastic steps in response to cambridge analytica revelations and shut off a lot of the main ways developers get their data. today they're going to come out and say you still should work with us, there is a lot of opportunities. look at our messenger platform, for example. headsets.r vr there are other ways to work with facebook we are building on and we can still grow this relationship. it will be interesting to see how that goes. caroline: looking to grow the relationship, so products aplenty. talk about one of the key acquisitions in recent years.
it looks as though the backlash continues. this is a company very focused on privacy, and yet it looks as though there has been tussle between one of the cofounders and facebook and he is looking for the exit. sarah: actually, both of the cofounders. just recently, just yesterday, the ceo announced he was going to leave the company, months after the other cofounder said he would leave, and actually used the #deletefacebook. the whatsapp founders always believed they should not be any collection of data for advertising, that there should be a way to talk to people completely privately. for facebook to spend $22 , theyn on this chat app eventually need to start turning it into a business model. those conversations have been ongoing for years and finally came to a head. vonnie: did he have any ideas
how to monetize it? i know he was very ethically and morally strict, but he did sell it for $22 billion. sarah: so we can look at what facebook has done with its messenger products, their chat app very tied to the social networks, and think about that being applied to whatsapp as soon as the founders allow it, or maybe after they leave. that is people talking with businesses, having conversations with businesses where the businesses are able to sell products from display their new items, have a chat wit ha bot. those messages between people and businesses, you need to be able to track those things, you need to be able to continue to make sure that the businesses get a return on their investment. very difficult with an encryption. vonnie: the other thing is that according to "the washington post," he will also leave the board.
good mark zuckerberg filleted at his will -- could mark zuckerberg fill it at his will? sarah: he could come for the company has just added a new board member. we may not see a board edition at this time, but we know that he said he would not stand for reelection. caroline: we know you will be all over this story. thank you very much indeed, sarah frier. later today can facebook ceo mark zuckerberg delivers the keynote speech at the developers conference in san jose. catch that went by on bloomberg at 1:00 p.m. new york time, 6:00 in london. this is bloomberg. ♪
let's check in with "first word" news now. taylor riggs has more in new york. julie: president -- taylor: president trump is making a temporary retreat from hardline trade policies. the white house said he would delay steel and aluminum tariffs on the eu, mexico, and canada until june 1 while he tries to work out deals with them. the administration says agreements in principal have been rich with australia and brazil. tensionsr sign that are easing on the korean peninsula, south korea has begun dismantling loudspeakers used to broadcast propaganda into the north. tensions are easing on the korean it was one of the steps the leaders of the two countries agreed on that last week's historic summit. egypt's second richest man made a long-term bet on north korea a decade ago. country's first telecom operator. now talks of peace on the korean
peninsula have been contemplating the payoff. >> i have been waiting for this moment for 10 yearsit was one oe leaders of the. it doesn't get exchange very easily. i put in a lot of money, i built a hotel there waiting for the moment when there is peace so i can reap some of my investments. taylor: he says he slipped half of his fortune into gold. manufacturing in the u.k. slowed more than expected in april to a 17-month low. that as to signs of the -- that the british economies for quarter performance could resist. it raises the commission that bank of england interest rate hike is unlikely. england interest rate hike is unlikely. global news 24 hours a day on air and on tech talk on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. vonnie: taylor, thanks. the commodity futures trading commission wants the market to sort out its own problems.
the chairman spoke to erik schatzker at the milken conference about the wedding to investors last week. >i would -- warning to investors last week. >> i would say the primary intent was to let the marketplace go. they look at such events like this very carefully. but a full examination of what events like this and others, the impact could be on market integrity in the overall continued viability of the markets. erik: do you see market integrity at risk? christopher: what i would say is that we want the marketplace to know that is our concern, as it always is, and we are watching it carefully. erik: the statement could be interpreted as a threat. is that a fair way to interpret it? christopher: the statement was deliberate. it represented efforts to consider whether changes need to be made in the documentation. our purpose was to let the entire marketplace know we have a careful eye on this, and we
will consider whether further steps need to be made, whether in the policymaking arena or others. erik: is the best possible outcome for the market participants to resolve this themselves in a way that eases the cftc's concerns? >> i believe in markets and i believe that markets often -- the best evolution is through market participant action. erik: so if the parties responsible for raising this issue were to, let's say, wind down the trade, prevent the manufacturing default from happening, take off the table the question as to whether they need to rule on the credit that khamenei miss ability of bonds into the option -- if that were eliminated, you would be happier? >> let me take it broadly, erik, and there is an opportunity for them to clarify
the right -- the appropriate way for such defaults to be done. it is time to take another look at the documentation. erik: the statement specifically refers to actions the cftc may take. what are those? >> we have a range of actions in our toolbox. i don't want to handicap what they are. we will look at that down the road. erik: is one of the tools forcibly stopping this -- >> why don't we not go there now and see how this develops? erik: one last question for you cdf, as iand understand it, of the jurisdiction of the securities and exchange commission. why is the cftc stepping into this situation? >> credit indices are jurisdictions, and indices are made up of single-name products.
we also coordinate with the fcc -- s.e.c.. we may see something we bring to their attention as appropriate. erik: have you had conversation starkly -- when i say you come i mean the commission more broadly -- with any participants? >> i really don't want to discuss a particular matter. erik: another issue with the cftc has taken a leadership role is the regulation of cryptocurrencies, specifically allowing the visions and trading of bitcoin futures, since late last year. is the cftc giving serious consideration to futures are derivatives based on coins other than that going? itbaidu asked that because just -- i'm glad you asked that because it gives me an opportunity to clarify. different than other regulars on the role -- as a result, we had 12,000 new product self-certified in the last 18 years. a very active pathway, one of the reasons why our markets are the most innovative in the
world. we saw the last year that self-certification of two cash-settled bitcoin futures products by chicago merc and the cboe. those are unique, but no surprise to know there are others out there that have approached us with the possibility for self-certifying other products. we take each one of them one at a time with a careful analysis on their own merits. for: would it be healthy the cryptocurrency market to have more derivative products available? >> that is a market determination. we don't sit there is a regulator and say we need a few more, we need a few less. erik: mr. chairman, you may have seen jesse powell, the ceo of one of the larger currency exchanges from recently likened regulatory efforts to currency market and inflation to mind control. what do you think of that? i've is the first heard that might control -- not something i have any skill set
in. i will have to ask the agency was there of us are practicing that. i'm not aware of it going on right now. is thehe alternative wild west -- that is what he seems to be advocating. >> i don't know about that. i spent 30 years in the private sector. i chose to take on this job. i believe smart relation is good for the marketplace. chris: cftc chairman giancarlo with our own erik schatzker from milken. caroline: plenty more where that comes from. coming up from we get a handle on the markets with paul hamill. he will be live from the milken institute global conference. this is bloomberg. ♪
caroline: live from london, i'm caroline hyde. vonnie: in new york, i am vonnie quinn. this is "bloomberg markets." caroline: the milking institute global conference is in full swing in beverly hills, california. let's go to erik schatzker standing by with a key voice in multi-asset investment management. erik: thank you so much. i'm here with paul hamill, the head of fixed income at citadel securities from one of the largest firms in treasuries and swaps. paul: morning, erik. erik: how focused are your
clients on what others say it is the key threshold of 3% yields? paul: very focused. rates are part of our fixed-income business. it is a very important psychological number. most of what usually is what it -- most important is what it reflects. continued momentum, continued confidence in this momentum story. but the thing to watch is how gradual inflation will come through. we have seen some recent numbers that suggest it is very gradual, a smooth entry point. of course, the 2% number has been out there for a while. people are calling for the $2.75 to $2.85 ratio. this change at all as the 10-year purchased the 3% marker -- approaches the 3% marker? paul: we have seen a pickup in
volume in the first quarter of this year. rates investors get excited when there is a dispersed set of views on where we go. no one thinks we will stay necessarily at this rate. looking for us to go higher, some looking for us to go lower. we've seen very active trading. for the market up -- volume for the market up 30% the first quarter. a lot of people talk about the good volatility. i think that is part of what we are seeing. erik: regulators are trained to bring more transparency and the market through real-time reporting. this of course is a response to what happened way back in october 2014, which almost feels like agent history right now. what is your experience with it so far? the discussions have been out there for some time. it is surprising to people that the latest market in the world does not have a transparency regime.
there is positive contagion in the market. investors now understand the benefit of the transparency regime. we have had it in corporate bonds for a number of years. it was little downside to the -- there is little downside to the customers having more information. markets inf the swap which you are active is credit default swaps, specifically credit default swaps indices. credit default swaps are increasingly in focus as the result of a trade in dispute with blackstone on the one hand and hedge fund on the altar. responded.s from your perspective as a market maker and credit default swaps indices, what is important about the dispute? paul: i think what is important is it continues to highlight -- a little bit of background, we have seen the cftc take ownership for modernizing the interest rate swap and the index market after the crisis. the sec took ownership.
it is two very different outcomes. you can see how strong and robust and competitive the interest rate swap market is now as a result of the regulations. we simply have not seen any activity on the sec side i think this will drive focus in the product and it is a great time to reevaluate the benefits that could be brought to the market off that kind of transparency and a clearer from her for clearing and execution so investors can see the product in a more healthy way. erik: if this trade is successful, paul -- in other words, it occurs the failure to pay interest on the circle engineered default a credit event, the option clears and wants are delivered into it -- what impact might that have on the market? paul: anything that undermines the potential robustness and safety of the product is going to be generally negative to investors.
i think, again, this will drive a lot of focus. i don't know we will get to that outcome. we have seen them talk about to begin right. i'm confident the market will get the right outcome here. cftc let's talk about the for a couple more moments. chris giancarlo, the chairman, has published a white paper. i spoke to him yesterday. he talked about the need to modernize the swaps market. he calls it swaps 2.0. to fix some of the errors were imperfections -- or imperfections in dodd-frank. how does city know look at the situation? paul: we welcome the opportunity to look at the framework. dodd-frank is now eight years old. now that we have some experience, investors have some experience -- but we cannot forget that the u.s. leads the world in terms of strength, robustness, and competitiveness
of its interest rate swap market. it is the model for the limitation -- erik: are you saying to the cftc become for what you do here because of the potential for unintended consequences? -- be careful what you do here because of the potential for unintended consequences? paul: introducing better capital requirements is a fabulous to see them focus on. with one of the strongest and most resilient trading regimes -- the clear and tangible benefits it has brought to investors is indisputable, and it is very important that we don't miss the opportunity to lock those gains in. erik: the outline five areas in this white paper in which he wants to make changes. where do you have concerns? paul: the trading and execution pieces when we have to be careful to get right. where we started after we implemented dodd-frank, it was time for the market to adapt, but we cannot forget that the
market has moved on and we've seen an incredible amount of industry-led solutions can with see investors invest heavily in the new framework. the idea of taking that away, there is very limited appetite. you have seen investors thrive, the big u.s. banks are thriving under that regime. there are plenty of air as we can focus on while maintaining the very competitive and innovative side of the market on the execution side. erik: citadel security's is one of the biggest market makers and treasuries. you don't have the market in sovereigns. paul: remember, in the fixed income market we're entering a world dominated by large thanks for 30 years. -- large sovereigns. banks for 30 years. we continue to invest in technology, growth. we hired 20 to build out a treasury business in europe. there's the natural affinity with the euro swap. and bunds, very liquid european
sovereigns next year. erik: at some point guilds as well? paul: we always have to ask yourselves as we enter the market can we have an edge over the other players? not saying we cannot have edge, but it is an area we continue to evaluate. erik: i want to thank you for spending time with bloomberg. great seeing you. paul hamill, head of fixed income at sit it from one of the largest market makers in the rates business. caroline: another fantastic interview by bloombergs erik schatzker. let's get a quick check on asset class. i'm talking technical indicators. the relative strength indicator -- you will see that the euro is trading below its 200-day moving average. -- $1.92. ,n the bottom line of the graph spot 1047.
looking at it oversold nature. looking at king dollar, the rope hitting the lowest -- the euro it hitting the lowest since january. vonnie: quite the psychological level there, caroline. bc says the rest of the financial consequences of the deepwater horizon incident are behind the company. how are shareholders responding? we will discuss. this is bloomberg. ♪
have reached the peak of quarterly payments. debt rose. net you will start to see that come down from especially given where prices are today. bring in kelly, who is covering this particular stock as the european well reporter. shares are at an eight-year high, but will prices -- oil prices are lower than they were. what is giving this buoyancy at the moment? you're seeing right now is the result of a lot of hard work they put into place to survive the downturn lowering breakeven cost from the mouth of the oil price needs to be for the profit -- product to be profitable. it has been pretty good for them. caroline: i'm looking at analyst recommendations on the bloomberg. you have the bp stock open.
s on the start. some analysts are saying that on the eight-year high, should we see these valuations on bp? kelly: i think it is a good question to raise. if you look down the futures curve for oil, it will not stay at this high a level. it could drop down later on. it would be bad for bp. and then there's the issue of his hangover of the spill. they still have about 300 claims left that they have to settle those might be the biggest and most complex claims. caroline: and then of course there are the toledo -- vonnie: and of course there are the geopolitical concerns. all of that could impact bp going for, but investors seem content to ignore those for now. kelly: they do have a lot of exposure to russia for sure with their stake in ross next.
but they have weathered a lot of sanctions up to this point. bob dudley, the ceo, has worked with russia for quite a bit. he knows what he is doing. they don't see any impacts right now. vonnie: what else came out of the call from analysts or anybody else that might have attracted attention? kelly: i think the other thing analysts really to about when i was whether the hard work they did in terms of lower costs translated into higher cash. that catches is for the companies used to pay back the investors who have stuck with the company for almost a decade of crises. that includes higher dividends, possibly. they may be talking about that. this is where we see the comparison with shell come in. the shell share price got hammered because they're not giving cash back at this rate. kelly: it's been surprising
because shell has a little more wiggle room on its balance sheet to do something like this. they've taken the more cautious approach. overbought bg, spending $50 billion. they don't feel like their debt has come down enough, so they want to wait before they start to buy back program. caroline: if there is cash to spend it -- we saw yesterday that was m&a in the air when it came to oil refiners -- is there any expectation for m&a when it comes to oil explorers? kelly: there could always be m&a. there was a big portfolio of php assets in the permian right now. shell has said that would make it with them. at the same time, investors want them to maintain this capital discipline that they have put into place the past two years. you have to be careful if you are one of these oil majors if you think about spending a lot of money. caroline: brilliant reporting for us, the european oil reporter. coming up, ahead on the european
close we are following stocks less than 35 minutes until the end of trading. currently seeing the likes of the stoxx 600 pretty much flat. remember, most of europe is shut today for mayday celebrations. 1.2%.und of by you're currently against the pound. we are below the 200-day moving average. lowest for the dollar since january. vonnie: overall yields just up higher. italy trading a little bit lower. this is bloomberg. ♪
european close on bloomberg markets. ♪ mark: here are the top stories we are covering from the bloomberg and around the world. stallk. has a new plan to the irish border dilemma. theresa may tries to get brexit talks back on tracks. . any deadlock be broken? averted for now. president trump delays new tariffs in the eu says it won't negotiate under threat from the u.s. and our big lineup from , tom parikh joins us. parikh -- tom barrack joins us.