tv Bloomberg Markets Americas Bloomberg May 29, 2018 10:00am-11:00am EDT
vonnie: we are all over the come over italy's political future and potential sovereign debt crisis. trump-kim summit. we have breaking economic data in the united states with julie hyman. julie: consumer confidence coming in line with estimates. numbersumer confidence -- excuse me, now i am seeing that it rose. prior was because the number revised. it was indeed indeed an increasr the consumer confidence index. we have had more unevenness in the more recent consumer
confidence readings. interesting that this latest one showingd increased -- increased month over month and in line with estimates. this is amidst the backup we have been talking about with italy in what looks like a political crisis, and certainly seen reaction in the bond market there. here in the united states and economic data has generally held up relatively well. drop in oil prices as of late that many strategists are seeing is a potential boon to consumers. you have stocks trading lower cutoff where they were in premarket trading. nasdaq is holding up the best of the three major averages. you look at technical levels and momentum, a look at the bloomberg careful summary of the s&p 500 with the 100- and 200-date averages. the recent losses we have seen now causing a loss in momentum that is enough to trigger us going below that level or at least hovering right at it, depending on where we finish up today.
some of the banks are the worst performers in today's session, or the biggest drag, certainly, because the waiting in the s&p 500. jpmorgan come citigroup, and bank of america three examples of that. we have this situation heating up in italy. we have folks buying in the united states, looking for what they perceive as safety in the treasury markets. that is sending yields lower. the yield on the 10-year briefly touching below 2.8% today. here is the chart going back several weeks. of course, all the talk at one point was 3%. we were about that level for a good week of sessions, a little more. now the momentum has been very weckly to the downside as see the rotation back into the treasury market. caroline, what are you seeing? caroline: julie, it is a search for safety. crisis on the agenda in europe. i want to show you a picture of
gmm, show you a picture of the contagion. portugal is having its worst day since january 2017. greece is selling off from austria is selling off, spain is selling off, all because of italy. a good the italian two-year yield, just look at the italian two-year deal -- look at the italian two-year deal. everyone is looking to new elections new political turmoil, and more movement potentially towards those nonestablishment parties. what will that mean for the remaining of italy in the euro? this is why the cost of protecting italian debt is spiraling up 92 basis points, but spanish debt in the eye of the storm also up a third of a percentage point. let's look at what is happening on the foreign exchange. i want just which it on.
-- i want to switch it on. imap.ou to the a little ray of green. every other industry group in the red. we have seen about a quarter of market value erased. they continue to be the key selloff today. industrials down as well. how is this affecting the fx market? we are trading below this on the euro. this is the busy chart that shows you how technically oversold we are in the euro vs. the dollar. trading on the relative strength index well below 30. technical indicators are saying it is time for a rebound.
many of those commentating on the route say we could go below the $1.15 we are currently have. the next psychological level is $1.08. the havens, i'm ending on the havens in europe. euro down versus the yen. gold is currently trading by one quarter percent. the money have been flowing into gold. we are seeing the yields currently -- stein day for u.k. that. we are currently seeing five basis points in terms of coming down on the u.k. 10-year, money flowing into u.k. get full -- - debt. the italian two-year deal is where i'm focused on gmm. overall, significant move in terms of what has been happening in terms of the italian yield. worst day on record for italian deals thomas received a
political tensions escalate. is seeking another election. george soros spoke about italy and issued a warning to the rest of the eu. an existential crisis is no longer a figure of speech, but a harsh reality. europe needs to do something drastic to escape it. and it's to reinvent itself. -- it needs to reinvent itself. caroline: joining us from rome --h what is kevin costello with more is kevin costello. talk about whether we are in the midst of an existential crisis. we talked to the ceo of one of the key banks in italy, saying no this is not a debt crisis once again. kevin: so far it isn't a debt crisis. there is turmoil in the market, but a lot of people are trying
to calm things down. they had of unicredit was on bloomberg tv today and he said the markets are being driven by fear, not by fundamentals. if calling words that some people are trying to issue. on the other hand, investors are zynga at markets are being driven by political uncertainty. vonnie: if the markets are being driven by political uncertainty, what are they saying? i they saying they want fresh elections soon? do they want to be rid of cargo color to rally -- carlo cardarelli who should technically be well able to handle this? four are they saying something else? kevin: they want stability. they see these elections as happily the populist parties may gain support. there's the issue of the a china president. for decades he was seen as the figure of stability, and soda who makes -- somebody who makes
things run on an even keel. he will be challenged by street demonstrations. that kind of thing is making investors worried. caroline: talking about and investors staying worried, i brought up at shot i was trying to -- brought up a chart i was time to reference earlier. kevin, what are you talking to about looking at the moves in italian asset classes and whether this will continue to erode? is the turmoil here to stay, or will we see the selloff that further? kevin: i think we will see a lot more turmoil in the coming weeks. a lot of people don't know what is going to happen, and the whole idea of having to national elections in such a short time in italy is going to keep people nervous, and that will affect the markets quite a bit. costelloe, great to have your opinion, live from italy for us. vonnie: joining us with more on
geopolitical risk to markets is jpmorgan asset-management portfolio manager who received over $124 billion in assets under management. you content in with a lot of turmoil in the euro. greece.ain and and there's the threat of contagion. do you do nothing as a portfolio manager? anne: i was thinking of what to say this one. i was out of town for the weekend and unplugged until monday morning when i started reading again commend this will sound boring, but no, nothing. ask a lot of questions -- this sounds clever in hindsight, but a month ago, over a month ago, we decided that the 10-year at the present was interesting again -- not necessarily because we thought it was a great deal, as a point of ballast in your portfolio, it represented a great diversified
equity risks. .e started buying durations today we walked into the office and watch all of this unfolding, and rather than trying to top-tick or bottom-tick, you want to think about building in production before the fire starts. production before the fire starts. trying to catch the falling knife now is bad trading. i think this is the usual fast reaction. you get more information about what might happen with a new round of elections can which will be months and months away at the earliest. we need to take a deep breath. vonnie: that said, is there a point where it might take over in the summer -- might tip over in thewe need to take a deep br. summer? areous metrics like vgp's showing stress, although on the
10-year for italy. anne: i lived in italy in the 1990's when the lira was going out of the old and the european monetary union. this is nothing. i think it is too soon to tell. when we think about how we want to trade in these markets commit is a question of we do have an information advantage -- it is way too soon to say we have an information advantage -- or when are we hearing defendants from how the market is pricing risk to what we can observe empirically from public opinion poll data? when those things start diverging, we as an investment team can make money on that trip, but right now what we do is what we did in january, which is to say that risk is normalizing and we are entering what i would call a normal period of volatility what the market gets scary information and reacts negatively can which is -- to meet this is kind of
normal trading. we should be responding in a portfolio making sure we are -- i used this phrase last time we were here -- do we have diversified positions in the portfolio that will hold the returns when something violent happens like we are seeing this morning? other diversification "u.s. debt -- what other diversification do you see aside from u.s. that? "u.s.anne: we have been focusin u.s. debt because for us as he was investment team is easy for us to execute. i would agree that currencies that are not necessarily going to be caught in contagion from non-currencies -- could potentially benefit. at the euro,king
for example can we are seeing it trade below the 200-8 moving average. do you think the euro will go lower versus the u.s. dollar? anne: one of our biggest themes this dollar strength, and to the extent that will persist, you can look at a whole bunch of things in the u.s. economy that says we will continue to see the fed hiking and continue to see a reason for the dollar to strengthen on its own irrespective of tension happening somewhere else. the dynamics get even more acute and europe comes even more pressure for geopolitical reasons, we think that can continue. vonnie: we saw consumer confidence a little bit better than last month, although it should be said that expectations were lower. how concerned are you about the fundamentals of the u.s. economy? anne: we think we are moving into the late cycle, but we are not all the way there yet. when we look to the indices about midcycle and late cycle, we do think that we are closer
to the end of the expansion, but it has been going on for so long that we don't yet see a catalyst that tells us it is over. we think we could stay here for another 12, 18 months in this late stage with no acute warning signs flashing. is the rate of expansion diminishing? yes. the accelerator is being pulled back a little bit, but we are still present on -- pressing on the gas, not as much as we were committed you think of the economy as a car. it is slowing but still accelerating. vonnie: anne lester, thank you for being here this morning. word"check in on "first news. here's taylor riggs. taylor: president trump is setting hawkish messages to beijing days before trade talks told him is moving ahead with sections on $50 billion of chinese imports. the white house says the final list of the imports will be
released by june 15. both of the u.s. and north korea are signaling the summit is still on. kim jong-un has sent one of his aides to the u.s. for presummit talks. he is one of north korea's former spy chiefs. president trump tweeted that it is "a solid response to my letter." in belgium prosecutors fear that an attack that left 4 dead may be terror related. police say a man stabbed to police. , stole their weapons, and shot them and a bystander. the attacker was killed by police. canada is getting into the pipeline business. the government has agreed to buy the tina martin trance mountain thepipeline and controversial pipeline extension to make sure it gets built. the price is $3.5 billion. the product has been slowed down by protest from environmental groups and the province of british colombia. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700
journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. caroline? caroline: thank you very much indeed. coming up, we continue to follow the markets in europe. check out what is happening in italian stocks. lowest august 2017. currently off by 1.6%. banks hold less lower. check out the 10-year as well. 22 basis points. 2.9. we have not seen these levels in years. we are going back to the debt crisis. is it all idiosyncratic risk? this is bloomberg. ♪ ♪
live from london, i am caroline high. vonnie: and from new york, i am vonnie quinn. this is "bloomberg markets." time for the biggest business stories in the news right now. jad holdings adding to its electronic portfolio that includes an error bread. -- panera bread. the terms are not disclosed. according to a person familiar with the matter, the price is about $2 million, including that . kkr has agreed to buy dmc software, and i.t. management provider. it is owned by a group led by bain and golden gate capital. they took the country private five years ago for 6.9 million dollars. shipba is making a deal to packages around the globe. the company's leading an
investor group that is taking a 10% stake in chinese delivery express.to that price, about $1.4 billion. that is your bloomberg "business flash." we are watching the markets, caroline. caroline: keeping a close eye on the bond market. we have seen so much commentary today saying this is the biggest market and apps are widening because this is thin volume. nonetheless, very few bids out. atening from italian 10-year 22 basis points. we have not seen these heights since reminiscent of the debt crisis. germany, moved to safety yields out of the german 10-year. is this contagion? this is what is being debated. societe generale saying they are concerned about this move. "is out of sync wit -- panic mode is out of sync with fundamentals. this is bloomberg. ♪ . ♪
caroline: this is "bloomberg markets." from new york, i am vonnie quinn. general data protection regulation is in full effect. the deal with personal data of eu citizens -- tech giants like facebook and google to restaurants and hotels. joining us to discuss how the implementation is going so far, the ceo of a marketing and advertising company from new yog us from los angeles. having u.s. companies managed to comply in the last few days? >> i think they are certainly trying. i don't love companies know what it means to comply yet. i don't know if copies know what it means to comply yet. you are seeing that with the news, the lawsuits, the turmoil. i think most companies are aware and they are definitely trying to comply as well as they can.
vonnie: what will be the upshot? companies lose customers? are they keeping the information on file anyway? i'm getting e-mails saying, do you want to update your preferences, but they don't give me the option of unsubscribing. mark: i don't think companies are going to lose customers. r is so broad that it basically affects every company in every consumer that touches the eu. consumers are overwhelmed that are during these notices. is to bebehind gdpr able to shop for privacy. thisevery website throwing so much legal jargon and you come i don't know if consumers know what to think of it. everyone should just sit tight and see how things fall out. i don't see any loss of customers in the near term. vonnie: when you are saying is that in spite of gdpr, nothing
will change in terms of what information companies have an how they profit from it? mark: if you are a legitimate friend of some type, legitimate website that consumers like to use, i don't see those consumers -- i would say that i think most consumers are aware of what mission is applying and how it is being used. i don't think it is going to be a huge revelation and consumers will go running. i think the brands are going to farewell, and i think it's -- the brands are going to fair welcome i think consumers are smarter than they are given credit for. vonnie: texting mark douglas, ceo of steelhouse. thanks to mark douglas, ceo of steelhouse. caroline: still ahead watching the markets. currently trading below the 200-day moving average. we are continues selling pressure on the euro. in technically
oversold territory when you look at the relative strength index. euro versus the fountain of by .1%. -- euro versus the fountain of by a 10th of a percent. interestingly seeing the brazilian rbyial up versus the japanese yen. currently seeing the stoxx 600 off my ascent -- five percentage point. -- via percentage points. risk off as we see concerned in italy.new election will it be as soon as september, and will it be a greater vote for the antiestablishment parties? could they exit from the eurozone? this is bloomberg. ♪
great reporter and i urge you to follow him. live from european headquarters in london, i'm caroline high. vonnie: live from bloomberg world headquarters in new york, i am vonnie quinn. we have to check in on first word news so let's check with taylor riggs. soros seesrge another financial crisis brewing. he warned that the european union faces an imminent threat. the reason for that is what he called the destruction of the alliance between the eu and the u.s. president trump goes to tennessee today to raise money and rally support in a crucial senate race. he is hoping to boost the chances of republican representative marsha blackburn. she is running for a seat that is open because the retirement of senator bob corker. prices in 20 u.s. cities rose more than forecast in march
, according to the case shiller report. are being driven by rising demand and lack of inventory. cities posting the biggest increases were seattle, las vegas, and san francisco. sciencethe epa's advisers say the agency is ignoring its own research to relax." research requirements. they want to review the epa justification for several planned rollbacks. those are big element in the trumpet administration's campaign to ease environmental regulations. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am taylor riggs. this is bloomberg. now hope for is the once canceled summit between the u.s. and north korea. president trump has confirmed that kim jong-un has sent an aide to the u.s. for talks. the former spy chief will become the highest writing official
from north korea -- highest ranking official from north korea to visit the united states since 2000. we are by commensal really, chief washington -- kevin, chief washington correspondent. this apparent right hand man will be in new york tomorrow. meanwhile, we have a u.s. delegation in singapore meeting a north korean delegation. what is the strategy? kevin: it appears that all systems are go ahead of the june 12 summit in singapore with president trump and north korea's kim jong-un. this after the president backed out of it last week. earlier this morning, president trump, "we have put a great team together for our talks with north korea. meetings are taking place." the vice-chairman heading to new york. "solid response to my letter thank you." on saturday night, trump told reporters that he was concerned with regards to xi jinping hoping the u.s. and tried to
perhaps influence the summit. it appears the talks are back on, the president disparaging and advanced to the head of the summit in -- dispatching an advance team ahead of the summit in singapore. vonnie: what is the strategy on the part of the u.s. here? is there a strategy? kevin: strategies to get kim jong-un to the point of inhoring to denuclearize exchange for foreign investment. that would have to come from the united states as well as china. that is where bilateral talks with china actually get more interesting. earlier this morning, the president and nancy up to fit -- to $50nt announcing up billion worth of an increase on terrorists. let's look at what they would do. imports contain "industrially significant technology" would be impacted by this. final step specifics is going to be announced by june 15.
the restrictions could be announced by june 30. that is what is happening with the u.s.-china bilateral trade talks. meanwhile, canada and after negotiations are also heating up -- candida and nafta negotiations are also eating a. christopher eer line is meeting tomorrow in washington. ahead of what could be at monument of, historic summit on june 12 in singapore. caroline: this seems a game of almighty chess with many different countries involved. talk to us about north korea in the u.s. what seems to be the key question is the timing, the speed at which implementation would happen to denuclearize. the u.s. wants them to go quickly to morris north korea a little more patient. kevin: some of the concerns i hear from both sides of the aisle and washington, d.c., is that the president's decision to withdraw from the iran deal
might send a signal to the north koreans that the u.s. would not acknowledge some type of deal. on the flip side of that, the president adamantly pushing back against that criticism, saying that the deal was never good to begin with and iran did not make good on its part to do utilize to begin with. 2-d nuclear ice to begin with -- to the nuclear ice to begin with. democrats say the in administration does not have a coherent strategy heading into it. praising there administration, suggesting it was a positive step to threaten to pull out of the summit because it showed the commitment to a long-term denuclearization deal as opposed to something in the short-term. you have to remember that kim jong-un is really only in his mid-30's. he is going to be someone who could be the leader of north korea for decades to come. cirilli breaking it all down for us and
he spoke exclusively with bloomberg at the global solutions summit in berlin. >> i know that the italian pro-european.y it is the country was at the founding of the european union, and they are always forcing development of progress, so i think we could be optimistic about new governments, something the more not change pro-european approach of the italians. >> will this impede on progress in europe? macron wants to get this project ahead. is this possible to get real substance together? support president macron, the idea that we need progress and urgently in the european union and worked very
hard to get the progress, and i think there is still the chance with what is coming from the last meeting in brussels, where they found a way to decide upon the next steps for the union which is important for the european future. it may be a scene -- a sign for the progress. on wants to build something like the rescue fund. is there leeway to do this? would you support it? mr. scholz: now is the time where we all forget our dissenting on the correct solutions. i think it is necessary that we do it together. i mounted a stick about the outcome. caroline: german finance minister all of scholz in an exclusive interview with
bloomberg earlier today. -- flickr what is happening to credit default swaps in -- but that what is happening to credit default swaps in italy. david powell of the brick economics joins us now. we have are certain extent in the markets. what do you make of it? >> is more reflective of the reality on the ground in italy. yesterday we know that the theian president asked former imf official for the caretaker government in italy and could not some of the possibility that populist parties abandoning the fiscal in the markets have really reacted to that.
there are basically two possibilities. one is that the populist succeeds in coming to power after the new election, maybe earlier. plansave huge spending wreaking havoc on public finances. the other possibility is that there is a long period of political turmoil. he is able to survive for a little bit and nothing gets resolved, and that is negative for the italian economy can which never really recovered from the crisis completely. this is another blow to the economy that never really healed. caroline: tennis would be -- peak would be seeming speculation that the antiestablishment parties would have the plan b of exiting the euro entirely. i'm looking at a chart where you
are seeing the euro falling below the 200-day moving average. is that realistic concern, is that what is driving and markets to sell off? david: right now it is not the core scenario. however, it is not something that can be completely ruled out. the populist parties have distanced themselves from earlier suggestions that they should leave the euro -- caroline: they didn't campaign on that. david: but there are eurosceptics willing to put forth a finance minister who was very eurosceptic in the past. that remains a possibility. furthermore, the spending plans were inconsistent with remaining within the euro area. a hard line deliver saying that you can i do this or the financial markets are unaccepting of those plans. bond yields skyrocketing -- they
might decide to leave on their own. vonnie: the key question is whether italy can and should and will defend more or whether it will retrench. theyis the likelihood that will spend a little more while keeping europeans happy and doing something for both of the major parties? david: he does not seem like a person who will spend more, being a person who is for spending cuts. yet the nickname of mr. scissors -- he had the nickname of mr. scissors. it is not what he represents. the real concerned is the longer-term. it does not look like he will be in power.
vonnie: does this give ammunition to the populists, the technocrats and elites have come back. david: i would say so. you see that in the call the populist parties to demonstrate, calling upon their members to participate in public protests. essentially they are saying we do populists have the highest number of seats in the president is overturned the outcome. --y could certainly ignore ignoring the will of the people. that is the reason why we are going to have to head to the polls. caroline: david, there was another powerful attire at the head of the european central bank. how does this make life more difficult for mario draghi? davidbank. : the ecb already had a
difficult task. forget the underlying inflation -- let's not forget the underlying inflation, and growth is slowing in the euro area. those are challenges they had already before any of this happened. financialy face crisis in the third economy, which could bring a slowdown in economic activity, that is another challenge they have to face. this is unlikely to derail the quantitativeo end easing this year, its agent is not making the job any easier. caroline: great to have your former guidance on this. vonnie: the italian two-year deal that 2.418%, 60 basis points between it and the 10-year. this is the worst performer into stoxx 600. abigail doolittle tells us why.
abigail: shares are really plunging on the profit warning -- the electronic retail or at car from patellar saying that earnings are going to slump by 20% this year. we need to go back to last august -- let's hop in the bloomberg and take a look at the long-term chart. we see last year that the shares absolutely plunged, and that is on another profit warning where the company basically said they .ere being hit by macro factors now we see a resurgence of this job innew ceo is on the eight weeks. part of the plan is to close 92 stores out of roughly a little more than 1000 worldwide. most of them are in the u.k. vonnie: who is investing in this?
point i havehis lost a lot of shareholders. they don't have a court investor base because of the lack of trust. a lot of new information came out on the conference call today that points to more accounting issues. interestingly, it does seem likely that this is not about fraud. the management team can clean the situation up, perhaps there -- weind value investors have been to the bloomberg and take another look at the chart, there was a big climb higher as the company -- the stock found a new investor base. it remains to be seen whether the new management team can turn the ship. vonnie: abigail doolittle, thank you for that. let's look at the huge trade given what is happening in italy and spain -- no-confidence vote
in spain this friday. have a look at the italy-german spread. 269 basis points is the spread right now. if you look at some other examples of what is going on in the markets we have the 10-year yield in italy. 7%.1 that italy-german spread has got to be terrifying mario draghi. the euro is trading at 115.69. this is bloomberg. ♪
."is is "bloomberg markets saudi and russian plans to boost oil output are driving continued bearishness in the market. let's look at how u.s. crude headed for the fifth day of loss. we are joined by the bloomberg oil strategist. we are seeing brent in green because yesterday was the big selloff. wti crude selling off because yesterday it was the closed market. where do we sit in terms of russia and saudi arabia and more output? goldman sachs seems to be saying it is not as bearish as you might think. >> i think it does matter. i the demand is at least because if they don't do this, then the markets will get even tighter in the second half of the year. we have 2 things that are happening. when is the continued decline in a venezuelan output. venezuela's output now is down almost as much as saudi arabia's
and cuts came into force. it was scheduled to cut one third of what it is cut now. the unanticipated declines in venezuela are huge, and the expectation is that they will continue. oilill lose more venezuelan over the next six months, in all likelihood. the second big thing is the u.s. pulling out of the iran nuclear confession sections on iran. nobody quite knows how much of an impact could be had -- that could have. the range of estimates is anywhere from a couple hundred thousand barrels a day from which is relatively minor, to as much as a million barrels a day by the end of the year. the huge range of additional losses that we could suffer over the next six months. more output from countries like saudi arabia and russia is just to offset that, if nothing else. vonnie: where does the freefall
end? -- we: yeah, i think it's have certainly had a reaction to this announcement. i think the big uncertainty is how much oil are they going to put back into the markets, how are they going to carry the rest of opec along with them, because this is an announcement that has novak.de by alexander it does not yet include the rest of opec. after to bring them on board. there is a meeting, we understand, in kuwait this coming saturday with most of the to bring producers them on board. i think at the moment the market is -- has reacted to this easing of some of the fears of kindness. but i don't think we are out of
this sort of fundamentally tighter outlook for the second half of the year. i don't think we're looking at a collapse. caroline: julian lee come just as we see brent stabilize. coming up on the european" we are following stocks less than 35 minutes until definitive of trading. of trading. end keep a close eye on what is happening to italian stocks. newabout the potential elections in september and more movement with the antiestablishment party. this is bloomberg. mark martin up next.
close on bloomberg markets. mark: here other top stories we are covering and around the world. the italian bond quake triggers a flight to safety worldwide. european shares lower. the euro getting its weakest against the dollar since july. then we would hear from our exclusive interview with the credit chief executive and where he says the selloff in bankshares isn't justified and president trump says north korean leader kim jong-il and is sending one of his top aides to new york for talks on salvaging next month's summit. we will have the very latest. have a look at what's happening to european equities, currencies, bonds today. these of the columns to look at.