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tv   Bloomberg Markets Americas  Bloomberg  May 29, 2018 1:00pm-3:30pm EDT

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service weapons and shop them and a bystander dead. it is an attack that prosecutors fear could be terror related. the attacker was released on a killed leave was with -- by police. using multiple repeat offender who has been incarcerated since 2003. the u.s. and north korea talk about the historic summit. kim jong-un has sent a copy for presummit talks. president trump praised the move, calling the trip a solid response to my letter. the white house now says the president will be with japan's prime minister in washington on june 7. in maryland, residents and toiness owners making plans rebuild after devastating flash floods. one person remains missing after sunday's torrential rain. it is the second time in less than two years all caps city has been hit by a major flooding. flooding killed two people there
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in july 2016. students out of texas high school went back to class today, returning for the first time since the shooting that killed 10 people. the santa fe independent school district said additional law enforcement officers will be at the school to provide security as they wrap up the school year. authorities have charged a student with capital murder in the may 18 attack. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm kailey leinz. this is bloomberg. vonnie: it is 1:00 p.m. in new york, 6:00 p.m. in london, and 1:00 a.m. in hong kong. i'm vonnie quinn. shery: and i'm shery ahn. welcome to "bloomberg markets." vonnie: from bloomberg world headquarters, here are the top
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stories. crisis in italy per u.s. stocks sinking, joe owing -- joining a selloff. concerns of political roles may destabilize europe. moving closer to a meeting, the north korean summit appears to be act on. the top leader in north korean officials are on their way to the u.s. to work out details. fx, traders up saying the behavior still persists in the fx market. that and lots more. we are half day into the trading day. abigail doolittle is here to give us a rundown. abigail: we are in a selloff. looking at the dow and s&p, dow more than 1% right now, on pace for the worst day since april 24. at the lowest it was down 1.9%. down one point
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6%. at that point, both index on pace for the worst day since april 6. we do have sellers in control. you'll notice that the tech heavy nasdaq not down as much, outperforming the two major averages. it has something to do with sector composition. we will take a look at that in a moment. today, tech heavy nasdaq in a bit of a reprieve because of technology overweighting. the s&p 500 in today's selloff has done damage on a monthly basis. last week, the s&p on a monthly had been up nearly 3% on the month on pace at that point for the best month of may since may 2 thousand nine, when the s&p 500 had the boomerang recovery out of the bottom, up more than 5%. now we are looking at a gain of best monthce for the overall since january of this year, when we had a rally for stocks.
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interesting to see the dent that the selloff is putting into the s&p 500 on a monthly basis. sector composition, let's look at a banking index to see the culprit behind the selloff for the major averages. kb bank index. this is a one-week view over the last week, down 4%. much of a drop coming today and reflecting the risk off and the political woes in italy and fears that it will leak into the financial institutions of europe , considering we had bank selloffs in u.s. and abroad, perhaps fears reminiscent of the andis back in 2010, 2011, 2012. today we are seeing that. another piece is that we have a part of safety in the 10 year. it is down almost one quarter of 1%, an extraordinary move. today is the biggest move down, 10 basis points, since the
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february selloff. this tell us what kind of -- tells us what kind of risk off there is. investor seeking safe havens. margin is notst as attractive when rates come in. just to show what is happening in europe versus the u.s., we hop into the bloomberg and you can view this chart using gtd -- gttv/ and why is a european equivalent. over the last year, european has traded more narrow than the u.s. , telling us there was less fear of default. we now have the european index, x,e cdf, popping -- cd popping above. it highlights the political uncertainty in europe and in the u.s.. much forank you so that. sticking with the political crisis in italy, jolted
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investors in the u.s., george soros thinks market reaction to italy is a sign of a bigger storm. >> >> and existential crisis is no longer a figure of speech, but the harsh reality. europe needs to do something to reinvent itself. from: joining us minneapolis is mariann montagne, portfolio management at gradient investment. thank you for joining us. gtb, --giewers on the tv, you can see that it spiked during the eurozone crisis. is this a reaction to the comments by george soros, or is there a feeling that there could be a major financial crisis and would you agree? mariann: the impact today is
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electionhere was an and they cannot put together a consortium government that would cooperate with the european union. the european union stands ready to do whatever it takes to support the currency, but the political combination at this point in time is not willing to cooperate. electionsoing to be probably in the fall and they will try to work toward some cooperation. it will take a little pain on the part of the italians. have only been growing their economy by 1.4%. they need to take measures to stimulate their economy. looking at the u.s., we are growing at 3.5% rate for our economy. stronger dollar. they need to get their economy together and get a stronger
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currency there. same situation in spain, actually. cardarelli does not want to spend. it would be wrong for him to step in. as head of the european has said that he would do whatever it takes. we believe that. in the meantime, the spread between the italian 10 year government owns in u.s. 10 year bonds is now just 35 basis points. we see people continuing to move to safer harbors, which would be u.s. dollar denominated government debt and probably continue to put pressure on interest rates here to the downside. i have to offset that with the 10 year government
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putting pressure on the financials. but not all of that is reflected in today's financials prices. morgan stanley came out this morning and said it is the transaction and not their lending business putting pressure on earnings very that is more related to asset -- earnings. that is more related to assets and management baking. it is coming from two sides. slight decline in u.s. interest rates but also transaction busiss at rgan stanley. shery: the fact remains that the 10 year yield is now at 2.8%, several times dipping below the level. so for the 3% yield and higher, does that mean global turmoil going into the future will be the cap to 10 year treasury yields? mariann: that is what i have been saying for some time now.
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that tree percent mark, because -- 3% mark,rentials because of differentials and other, would support a 3% cap on u.s. bonds. lot much less risk than a of places overseas. that would keep the limit at 3%. vonnie: are you making any changes today? mariann: no, i think if someone had money to invest today, i would look at opportunities and probably the regional bankers in the u.s. they are getting pressured on two fronts, which probably had nothing to do with them. they don't hold any italian bonds and they don't have investment banking business of a morgan stanley. companies like pinnacle out of nashville is probably an opportune by and here. in here. -- buy they will continue in a unique
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manner and continue to benefit from a 3%-ish type of rate. it is an area of consolidation in the mid-cap reason oh -- regional banks. vonnie: thank you to mariann montagne. coming up, the north korea summit back on. toicials coming to new york speak about it. this is bloomberg. ♪
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shery: this is "bloomberg markets.". i'm shery ahn. vonnie: and i'm vonnie quinn. is concerned kim jong-un sent one of his aides to the u.s. for talks. former spy chief kim yong chol will become a highest ranking official to visit the u.s.'s 2000. with us to discuss the potential sit-down is bill fairy's, international -- bill faries. is arrivingl tomorrow to speak with mike pompeo. what will both sides want to get across to the other? bill: where 14 days out with the still planned summit in singapore. there are key details to be worked out.
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of theuclearization korean peninsula, what does it mean to both sides? who will participate? will it be just president trump and kim jong-un, or will the beat-up representatives for either china or south korea allowed to take heart in the talks? a lot of key details -- to take part in the talks? a lot of key details to be worked out. these two leaders are very unconventional and do things differently. with two weeks to go, they are trying to iron everything out as quickly as they can. the u.s. gaind from pulling out and canceling the summit earlier? bill: president trump has always been a believer that you should be able to walk away -- you should have confidence in walking away from a deal. when he announced her state last week that the meeting was off, the response from -- when he
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announced last week that the meeting was off, the response from north korea came after that. i don't know if that was a bluffing game, but it does seem to show that the north koreans are interested in seeing if this goes forward. it gives president trump additional leverage going into the meeting. both sides are jockeying for leverage. vonnie: who else will want to be involved? will he want to do this bilaterally? will south korea and japan? bill: iould expect to have some sort of meeting in e talks where it is just president trump and kim jong-un and perhaps 18 with a translator. -- one aid with a translator. if it is foreign ministers and top aides, they will work close to the meeting room and there will be side discussions about
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both south korea's role in china's role in carrying out agreements. do not forget that japanese prime minister shinzo abe will be in washington just five days before the meeting in singapore or you will get his thoughts and with the president before that. shery: do we know what the u.s. administration's stances on the foreign minister's remarks? bill: president trump told reporters late last week that a phased approach "if it happens very quickly, could be possible." he seems open to the idea that everyone will have to fight over about what is a quick response. whenll think in general you talk to analysts and people who have negotiated with the north koreans, there is not a consensus belief that north korea will give up all of their weapons. it all comes down to -- what is the definition of denuclearization?
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it a question of where some nukes and facilities are destroyed and does ultimately north korea retain any ability to keep or to manufacture nuclear weapons? that will be the hard part of the negotiation. vonnie: how will mike pompeo and kim yong chol communicate? it is very different territory than it has in the past. new york city is not north korea. bill: it is not north korea. north korea has a u.n. mission and they do not have an embassy in washington. i suspect it is part of the reason they decided to do it in new york. this all happened very quickly. this diplomacy over the past three months has been happening at warp speed. it is mike pompeo who has had the best connection to the north koreans. he has flown there twice and helped get three american detainees out.
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he does seem to be an effective middleman for president trump and kim jong-un, and i expect him to continue to play the role to the top eight to kim jong-un in new york. , thank youl faries for that. shery: is time for them/." u.s. -- "bloomberg business flash." a takeover of cento. sell assets tol resolve concerns about hurting consumers and farmers. the doj marks the last regulatory hurdle for becoming the biggest seed and chemicals provider. the company says it is competent the deal will close by june 14. ja be holding is adding a restaurant -- jab is adding to a with annt holdings
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error and others. terms of the deal were not disclosed. be purchase price is said to $2 billion, including debt. canada getting into the pipeline business. the government has agreed to buy an all -- a mountain oil pipeline to make sure it gets built. the price is $3.5 billion. the project had been slow down by protests from environmental groups in earnest columbia. that is your business flash update. coming up, 10 million dollars in penalties for banks and a traitor was sent to prison. why are they still touting the guidelines? this is bloomberg. ♪
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vonnie: this is "bloomberg markets.". i'm vonnie quinn. shery: and i'm shery ahn.
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year cents a regulators published fx regulation code. it is designed to improve standards in the over the counter market. some industry executives say the code has not done enough to clean up most dubious practices. with more infirm mission is our fx reporter. you spoke exclusively to vanguard and what did he say? is notaid the market going far enough to curb some potentially dubious practices. he is talking about last look which is the ability to renege deal.urse -- vonnie: the code of conduct has been drawn out everybody to adhere to the code of conduct or other penalties question mark is enforceable? it is voluntary.
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it is a guide of do's and don'ts and it is suggested to the industry that this is the best practice. it does not have legally enforceable power. tory: what about incentives help them straighten up their act? trader you mentioned the going to jail. one of the sources says that nobody wants to go to prison during that is one of the key deterrence. the head of excess -- fx trading formally has been sentenced to two years in prison. on top of that, banks have paid $10 billion in fines. there is a big u.s. antitrust settlement, one of the biggest ever, waiting to be dispersed to clients in the fx industry. we are talking about big figures on top of the personal toll from mr. johnson. finishednce they are and we have lehman brothers
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settling of their derivatives battle soon, once the settlements are out of the way, do you go back to life as normal, particularly with things like dodd-frank? concern.hat is the a lot of people say there should be the cost for doing business. pay the fees and settlements and get rid of it. some people are saying there is a lot of work to be done. they are trying to raise awareness to these practices that could be to miss behavior. he is saying we're not -- miss behavior. the foreign exchange market used to be a bonds market, where it is based on the honor of yourself and your customer. since the rigging scandals have taken place, there is a lot of distrust in the market. a lot of people are looking over their shoulder and wondering if
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their banker is taking care of them and if people are being honest. that level of dishonesty has per many -- permeated the industry. vonnie: i would imagine the fines are deterrence. obviously, if you want a job and keep it, there are fewer and fewer in fx trading anyway. lananh: exactly. thank you for -- vonnie: thank you for a great story. the u.s.t's look at market here we are getting close to session lows. dow falling more than 400 points. s&p at 1.3 percent. nine out of 11 major s&p groups are lower. financials are lagging most at 2.8%. live from new york, this is bloomberg. ♪ what's a gig of data?
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well, it's a whole day's worth of love songs. 300 minutes of baby videos. or, it's a million chat messages. a gig goes a long way. that's why xfinity mobile lets you pay for data one gig at a time. and with millions of wifi hotspots included, you'll pay less for data. it's a new kind of network designed to save you money. click, call or visit a store today. julie: let's get "first word news." the u.s. ambassador to the conference on disarmament walks serioushe session after
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problems with the presidency. a short time later it was said the u.s. would not turn a blind stance oregime that everything the conference was created to prevent. >> our appearance does not support credibility in the role of president. he represents the opposite and we cannot sit back and allow serious -- serious presidency to presidency toa's remain uncontested. >> hosted conference is the most important disarmament negotiation. will show the body for a four-week period. a partial recount was counted in the may 12 general election following allegations of irregularity and fraud. lawmakers demanding a manual recount of 10% of the vote and a
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full recount is more than one quarter find the irregular or fraudulent. there have been complaints of regulation irregularities where electronic voting was used for the first time. the trump administration says targeting of the roving the rohynga continues. fine -- has has been found to continuing. presentation of a cabinet. the associated press says there will be further talks tomorrow. coda rally was exposed to be's announcingosed to be the cabinet today. he arrived earlier but left without making any remarks. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries.
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i'm kailey leinz. this is bloomberg. shery: live from bloomberg world headquarters in new york, i'm shery ahn. amanda: and live in toronto, i'm amanda lang. markets." "bloomberg here are the top stories we are following. crisis in italy. u.s. stocks sinking today and joining a global equity selloff on concerns that it easily -- woes willlinical hurt. a pipeline is being bought for $3.5 billion. a green light for terrace. the white house saying tariffs
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on chinese goods are coming as early as mid-june. l's get a quick check of the major averages. u.s. stocks near session lows with the dow losing more than 450 points. s&p 500 is lower by 1.4%. financials lead to decline. 10 year yield hovering at 2.8%. energy sector is one that is losing ground. 2%.s falling within it is the longest run of losses since february. saudi arabia and russia talking about increased production later in the year. you could see it rise the most in three years. where record u.s. crude production. is just a touch below $75 a barrel. an eye onam keeping the markets. the spread on italian treasury
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versus germany jumping and european banks are really feeling it. interestingly, these are not just italian banks. tickle that a cross-section of the individual names and some of the biggest banks in europe are trading lower and have been. one reason for that is the interconnectedness of the whole region and it has become contagious. you see banks all over at the zone feeling it today. shery: let's stick with italy. we continue to see tensions escalate with another election expected as early as september. let's bring in our bloomberg editorial. as developments come in, we are now hearing we could see a snap election in italy as early as july. >> hello, everyone. have were expecting to news on the new government in , we have a designated
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prime minister who left the palace without any announcement. actually go into a very soft election in july. there is a meeting tomorrow morning in italy, so we might have more news. amanda: it seems as though the concerns really are regarding the outcome of the election and some of the populist far right parties getting more entrenched control and threatening the whole zone. is that an overreaction even that there is an election? absolutely. polls are showing the leading party is gaining consensus.
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at the same time, the five-star movement is slightly less supported in the polls. the news and the real reason for concern would be an alliance between the two and then running together in the next election, which could give them a coalition the greatest majority in the parliament. been: as we have mentioning, the markets have been spooked. what will this mean for investors? chiara: markets are reacting to the uncertainty. it is very unclear what the policies are, especially if they make a coalition. are seeingders everything and it has been opposite over the weeks. while they both thought they would not push immediately, it
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is very unclear where the eu would be. i just want to mention to viewers that we are looking at live protests from the streets of rome. is it right to be concerned about the banks, italy and elsewhere? is this market reaction appropriate? chiara: absolutely, the banks of the most vulnerable part. brunt of abe the crisis. that would be on the financial markets. we know that the crisis a couple of years ago in italy was particularly well managed by the current government. so the concern of a change in policy would definitely spook banking and other sectors. amanda: thank you so much for that.
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still ahead, canada gets a pipeline. the $3.5 billion investment comes with controversy. more on that,. --next. this is bloomberg. ♪
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shery: this is "bloomberg markets." i'm shery ahn in new york. amanda: and i'm amanda lang in toronto. buyda has agreed to pipeline for $3.5 billion. our reporter is here with us. we knew there was a deadline. they said if it wasn't resolved, they were pulling out. are we shocked that the government is nationalizing it and buying it from a publicly traded company? josh: for now, they are
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nationalizing. this is farther than they wanted to go in the first place. they started saying they will backstop for political losses. now it is looking like they need to go all in to do this. they hope to essentially flip it, like a very expensive condo i'm aware they can get it to a third-party before they have to release it and become a pipeline one way or another. we will see the federal government hold onto it because there is a lot of uncertainty. for those outside canada, explain what is pipeline is so important. this has a lot of warnings in candy from business communities that competitiveness is dropping. they said there is no certainty and there are legal challenges. the province is essentially making up new powers on the fly to try to stop it.
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trying to flex his federal muscle. he feels like he has to buy this to do that. that sends the message to some that to get a pipeline built in canada, one approved and ready, the federal government needs to nationalize it to get through. it will be seen as a warning sign that compared -- canada's competitiveness is failing. amanda: the asian market is hungry for the oil we have. what is your bet that this does get built? the original pipeline was built by the government in the 1950's. will they be a look to get shovels in the ground? a market as we might think, but the court challenges to watch are the ones that relate to the indigenous rights. that has more juice in the courts than the province saying we assert some sort of jurisdiction here. it is going to be tougher for the bc government to propose a
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pipeline owned by the people of canada. it optically looks works to them. i am not -- worse to them. i am not a betting man. amanda: great to have you with us. for more on this story on the transmountain pipeline, the here. chair of in is let's start with reaction to the nationalizing of an asset. >> nationalizing is a strong word. breaking the deadlock between political opposition and a private company trying to build something and this was probably the only feasible way. the biggest risk for a private company is delay. what dish should do is cut down on the delayed by asserting the federal jurisdiction into provincial trade. that is the reason it has to be done. governments are involved in infrastructure no matter where you are, so this is not all that
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different. in canada, it has happened in number of times in pipelines, but also in the other industries in the 1970's. concerns isof the that we have seen foreign investment in canada dry out, and it is seen as a difficult place to get projects done. doesn't this underscore that for private businesses it might be in a possible place to get something built? infrastructure, when you look at the west coast of the united states and infrastructure in general in the u.s.. it is a difficult sector to get anything done. sometimes canada is its own worst enemy. i agree with that. but this is an attempt to say that it has to be built and it is in the national interest for it to be built and let's get on with it. that is the positive we have to take out of it. typically, in an infrastructure program, your one government involved.
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but here you have the bc and the feds. what will just happened will probably spilled -- build it up expertly be negotiated. shery: this is going to be like a major project negotiation pay what does the government need to do to get it right? leo: i would suggest that the minister sign a smart civil servant. a guy that understands what is at stake and run to put together a management team, probably from people who have black and blue from past projects. the biggest problem you run into now is cost overrun. the only way to avoid that is by having a very motivated and focused and very accountable management team to run the corporation that they will set up to do this. theda: we talk a lot about discount that alberta energy
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companies deal with because it is costly to get oil to the u.s. market. are there other options this country should look to get oil south? leo: i think canada has relied too much on the market. as was pointed out earlier, canada or the u.s. has become the u.s. -- biggest competitor from being the most lucrative client. we have to find ways of getting oil out. this is an obvious way because without it, any growth in oil sectors. . will stop. in the end, the social benefit of this pipeline building should dominate safety and other things people bring up are also valid concerns. they should be dealt with, but it should not start the project. shery: it was not said how the government could convince
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british columbia to allow this to be built. we don't know anything about the environmentalists. has anything essentially changed in getting this done? leo: what has changed is the government has done what it should have done earlier -- there are certain responsibilities and federal .olicy and that has to dominate they have asserted that and made it much more difficult to attack this project now that the federal government is behind it. it has been approved, but every time it seems to be ago, someone comes up with another reason to stop it. some reasons should be discussed. safety and environmental -- potential environmental damage are legitimate things to worry about. they can be dealt with. the industry has done a fairly good job in the past 10 years. nohas gone from essentially
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spills of any kind in unloading and loading oil from vancouver. . think this is a positive we should not look at it as a negative. we should look at it as we are willing to try to figure out how to get more value out of an oil isource that without an exit going to be trading at a severe discount. amanda: great to have your thoughts on this. he is the energy's chairman. a programming note. head of economics, stephanie flanders kumal interview canadian prime minister justin trudeau. that is 2:30 p.m. new york time for our debrief in toronto. shery: it is time for "bloomberg business flash." stanley $2.4 trillion wealth management unit is tapping blackrock technology.
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risk management system will help clients shift all of their assets to the bank. like rocks technology sews -- shows client risk appetite and reveals risks they may not be awar of. looking at an expanded class-action lawsuit for discriminating against older candidates here the communications workers of america alleges the algorithm routed ads to younger workers. the union also alleges that facebook used a filtering tool to find its own employees. kkr has agreed to buy software, information technology provider. the terms of the deal were not released. the firm's took the company private for $6.9 billion.
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that is your business flash update. oming up, secretary steven mnuchin says they will target chinese goods. how they are responding. this is bloomberg. ♪
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amanda: this is "bloomberg markets." i'm amanda lang in toronto. shery: and i'm shery ahn in new york. the white house going ahead with plans to target chinese goods announcing a final list of affected products will be released on june 15, and go into effect shortly thereafter. beijing is responding to the u.s.'s $50 billion threat. michael mckee is here with the latest. the congress -- commerce ministry came out with the statement could what did they say? michael: they are disappointed
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and surprised here they thought they had an agreement with the administration that wilbur ross would come to beijing and put a list together that china could buy two lower trade deficit. in the statement, they said no the united measures states takes, china has the confidence, ability, and experience to safeguard the interest of the chinese people and the core interest of the company. chart.ring up a we have until june 15 and if we want to lower the trade deficit, take a look at this rate this is what you would need to do. by 547 boeing 747's. hefty increase. increase soybean sales by 13 times. not sure we have that much left in the country or they could buy 2.5 billion dollars of our shale oil. none of that is likely to happen. it will be interesting to be -- ae what happens when we get
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list. you have to say that june 15 is three days after the north korea summit that the president apparently has put back on. the chinese are supposed to be helping with that. maybe if the chinese do something good, it will all go away. amanda: one aspect of the story we would continue to watch is trade finances are not as bad as the president thinks. the chinese are huge buyers of u.s. treasury here has that ever been a potential bargaining point as they have the discussions? michael: not among officials. it has been a theme in the markets when the chinese stop buying and will they sell off links to punish the united states? baby outhrowing the with the bathwater because their holdings would decline in value. they are not likely to do that. could they buy your treasuries? they could, but the yuan is ahead to the dollar and the need
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to buy treasuries to keep it in the trading band. it does not seem like a viable option for them. in the case of serious disagreement, all cards are on the table. it does not look like that is something that will happen at any point. shery: the chinese ambassador to the united states -- when i asked him if that was on the table, he said every option was on the table. that sort of went away. another angle we have to talk about is nafta. negotiations continue and this is ahead of the tariffs. are we running out of time? michael: we don't know what is going on. we don't know if the administration will pursue the tariffs. there are a lot of negotiations. the trade ministers from the u.s., canada, and mexico will be in paris. they will meet their. the u.s. trade administer and the commerce secretary will be in paris meeting with the eu trade commissioner.
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what deals with a strike and will this be put off? we don't know. nafta negotiations and steel tariffs were connected at -- in that talks were underway. talks with the u.s. trade representative were said to be positive. we will have to wait and see. amanda: mike mckee, thank you for that. shery: abc has canceled roseann's show. this comes after roseanne barr made a racial slur about a member of the obama administration on twitter. that is the latest. this is bloomberg. ♪
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>> it is 2:00 p.m. in new york. i am julia chatterley. julie: i'm julie hyman in for scarlet fu.
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welcome to "bloomberg markets." ♪ julia: we are live in bloomberg world headquarters in new york over the next hour and here are the top stories we are covering on the bloomberg and around the world. the escalating political crisis in it -- in italy includes risk off moods -- moves and flight safety worldwide. as stocks ares rising on the output and rush away on the market. business, transforming the global narcotics trade, a new era of drug can think -- kingpins. here forat coming up now, let's get a check with abigail doolittle. pressure is your word. abigail: you're right about that.
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500, nearinghe s&p below, the dow down 1.9%. its worst day since early april and we are approaching the levels again and the risk of julia was talking, not affecting the nasdaq quite as much. we will look at that in a moment but first, let's look at the picture of risk off. we have a 10 year yield down 12 basis points. its biggest flight since february 5. that was during the macro risk off in february. stocks might not be down as much. the dow more than a thousand points. from a bond perspective, investors are seeking those bonds. the biggest rate since february 5. yen trading given higher against the dollar. bitcoin, it is hard to categorize that as a risk or a growth at it.
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but we have it higher y. some investors past seeing that as an alternative. overall a riskve off picture. oil as well confirming it. down 8% over the last days, it's worst stretch since february in the last macro risk off. last week, talk of an opec a egg like.part of oil still holding those losses as the dollar is trading higher. 500.e a look at the s&p oil may be lower but energy is actually not one of worst actors, down on financials down 3.1%. that affects the pressure of it is thought that the net margin would be less attractive, and rising yields are good for the financials so
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when they fall back, yields good for some of the sectors such as utilities, those look far more attractive. the money managers . hit by morgan are stanley at the deutsche bank conference today saying transactional revenue for the wealth management unit has been slow since march cleared it appears be weighing on the entire sector. most, shares are down the worst performers. let's get the first word news with kelly. metric for beijing, moving ahead on $50 billion of chinese imports.
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the white house says a finalist will be released by the 15th. the hunt for flight 370 failed to find the wreckage. the officer said he ends the search with a heavy heart. says the death toll is much longer than the government said. at least 4400 five people died in that disaster. the government says there were 64 deaths. a lot of basicnd utilities had a significant impact. and abc is pulling the plug on the rosanne rebuild. the president of the entertainment made that announcement after rosanne made
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a racial slur on twitter about a member of the obama administration. she later apologized for what she called a bad joke about the former obama advisor. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. >> shares were already trading lower. political upheaval in italy spurred gyrations across global assets today your in gridlock with another election as early as september. the two-year yield in italy surging the most in -- the most in years. kevin costello is bloomberg passes western european economy editor. latest.through the
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we were expecting a list of cabinet members but left without any results and announced another meeting for tomorrow. any progress expected? >> that is true. it was taking place. formation of a new government, we really do not know what happened. later told an italian news .gency exactly where things stand, no one really knows. >> we're paying now of a -- an election being called for july 29. what is the risk ultimately of the populist parties that have tried to form the coalition actually only gained support if we can see the election of that point? brand-new public opinion poll that said one of
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the two populist parties would be quite substantially in the election. it is anti-immigrant and will be pretty far right. that could shake things up in italy if it makes such gains. great to get your input. thank yoso much. let's get some context. joining us now is the senior portfolio manager, great to have you with us. age of alert. >> all over again. the euro zone has yet to solve the fundamental problem, different nationstates with different local politics in one current see and fragmented legends. every now and again, there is a not so subtle reminder of the unstable choice in, which is why we have been saying first -- for some time, we have been very focused on hard m&a and less downside events like this. it is certainly risk off. it could definitely get worse. here, i dogo from
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not use this to denigrate, it looks like they will gain support. the end game,n the ecb cutting off italy from the program. you think the ecb steps in as it did with greece in a more dramatic fashion? out, let'same this hope it does not end with italy leaving. it will have to take pressure from brussels as well as frankfurt in the ecb to rein them in. how would it take place? it would be in conditionality around further purchases which would lead to a more violent reaction. one would hope you end up with a government that even though it looks fragmented, it is duly elected by the underlying that tries to get populist measures input -- in place but steps back from the
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brink of using the euro as a weapon. >> the ecb cushioned the blow of the yearsolicies over as well. it is incredible what market sources can do to soft and some of the tones that come out of that government. the problem -- it is a spanish situation and the italian situation, in terms of what we are in volatility and european stocks and currency volatility, i have a chart to show it and it has barely left. >> exactly. we are a long way from where we were when it was pushing to leave the euro. when you think about the broader picture, you do not want to be over in terms of risk. markets have become very focused on trade and the fed. it is a systemic risk driver.
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you want to stay ratively cautio and pick up any cheap spots you can, perhaps in banks. get carried away. and there are long bonds short a time debt, it might be time to take those risks offs. >> that is what we're seeing today. >> you look at the path of treasuries. extreme levels up until recently. now you have an excuse for everyone to buy treasuries. most market disciplines have been surprised by how much the back end has moved. in an environment where you once again are questioning the integrity of the european union -- european union, it would not be surprised. >> stick with us.
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>> we have got headlines. venezuela of torture, a whole number of details are coming across the bloomberg here accusing the venezuelan government of crimes against immunity. this organization contained 35 different members including the likes of the united states and canada coming forth to recuse the venice million government of crimes against humanity. more than 12,000 cases of detention. they are expected to make whole bunch ofa issues. the question is what can the panel do with this information perhaps to press some form of justice against the venezuelan government? we will continue to keep you abreast of any headlines as they come. this is bloomberg. ♪
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>> lectures is the question. the white house announcing there will be a list of tariffs on specific products covered under $50 billion worth of chinese imports by june the 15th. manager, thisital is just an ongoing point of uncertainty just to add to the mix. >> in the short-term, italy and the european union, driver volatility. in the medium-term, it seems every time there is a mini resolution to trade entrance, markets breathe a sigh of relief and everything is good and back the way they're doing things. that is missing the point. bipartisan consensus in the u.s. to address trade imbalances. economist, you'll argue
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they are not good or someone will lose. obviously, the most important partnership is us and china. that is where the vitriol is the hottest for justifiable reasons. we see it as a long and simmering issue that will inject volatility and occasionally, there will be headlines with qualcomm and broadcom not long ago. direct.very whenever there is a merger or acquisition, price in political risk at an appropriate level, which has been underpriced since the trump election. warner, so make to atou are applying least slow things down.
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seeing to be positive fines but frequently, you do not get that. swings have really subsided because the market does not leave them anymore. because all this back-and-forth doesn't appear to be. >> that is part of the point i was trying to make. it will be years before it is actionable. if you are asking what will lead to the next leg up in markets, it will have to be much stronger earnings in the back of economic growth. at risk, one thing it affects is confidence and capital investment. to performing a regulatory relief. we're not being lovers of equity risk. we think you are well served to have a beta. it looks like the pain from
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duration is perhaps over. so it is not all bad. in the meanwhile, there are plenty of things you can do to make 10% without taking these directional risks. >> back to the investment case and what you're looking at, you tie a political angle and the of a shift in the political spectrum for the democrats in the midterm as well. >> yes. it is our long-term risk markets. a politicalo means statement. if you look at enthusiasm around the u.s. economy,, and markets based on progrowth regulatory relief and tax reform, you think mathematically, when the recession can be in the u.s., it is really a bear case where you focus on the back half of 20, that is a lead to work of an inventory.
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similar to the recession. and then what could lead to that? it is a sea change of politics were markets rollback regulatory relief and a rollback of tax reform. the first sign of the possibility as if democrats take the house in november. we could see market start to fret about that in late 19, which means the early 2020 late 19 their markets scenario is not so pie in the sky. there is a lot that has to occur but that is a realistic scenario that could lead to a mild recession without having a geopolitical risk show up or oil collapse and trade at -$20 per barrel were interest rates going to 5%. >> markets could price that sooner if we see the midterms. do not necessarily see that play out in the danger and confidence and companies in particular like
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spending. the markets would price up the forehand. >> the first thing that has to happen, not a political statement, the democrats have to take the house. from there, you say, what is the probability of taking it in 20. i do not think they have to lead from, you have a democrat house, to a recession. there will be time. but you are right, it would inevitably go up as the problem really becomes more likely. us in late 19 markets, but still early 20 as soon as we have a risk -- and, long before the next presidential election. it would only reinforce the possibility. some of that on deregulation and we will pick up on the issue. manager troy is staying with us. up next, he'll be sharing his
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highest conviction calls. from new york, this is bloomberg. ♪ bloomberg. ♪
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julia: this ties to one of your most conviction calls. of under appreciation benefits of community banks. >> yes. we have been billing the thesis work right sometime. of, or we tend to think of, the recent will. the with cream and teri on top he started outre with low dollar prices and increasing interest rates from the dead. postelection, must more -- much
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in a much more muscular fashion. you had rates is celebrating and you finally see long growth this year. one thing we never considered nine months ago was the potential for bipartisan legislative reform. it would go even further. what we like from an economic standpoint is it does the appropriate think, and -- , so it isthe bank good for the economy and for small business. for us, it free up capital to return shareholders. a lot of returns with be taken out early. enterprise value for banks should go up. you put it all together and it should lead to two years of reasonable return. the returns would have been good anyway but this helps boost 100 -- a couple hundred basis points. >> to questions. i want to take a look at this
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chart to frame them. so we have already seen substantial pop in the banks. year,re up in the last double the return of s&p. we have seen the deals curve flat. in theory, it should be negative for the margin. atwhat point do you bump up this being priced in and the negative effect? >> it is a great point. part has to do with tax reform and regulatory reform. you have seen the long growth pick up. long growth was already better running seven versus 4, 7 for small banks versus four. the most important point for our thesis is we are focused on junior debt securities, $62 price. what we need to happen is rates need to go up at a steady measure, not have a recession,
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and let the benefits of regulatory relief and tax reform and bipartisan legislation flow-through. for an equity investor, you need to see a continuation of this year's good trend. furthermore, we talked about recession before. it will happen sooner or later. the debate is when and what degree and what will cause it to we are comforted by the fact that securities we own, unless banks started -- like they were in 2006 and 2007 off the reservation, the fundamental downside is much more mild than it would be if you are investing in the these mix as we have seen from the price action. comfortable with the standards? >> yes. there has been a slight deterioration in commercial real estate lending. you look through the banks and you have consumer risks mainly through housing, or print loans,
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and commercial real estate. those are the bid -- the big factors. haveink this is where you had the most stretching. for the most part, most of this lending has been done by the private lending entities. a lot of it has been filled by private equity groups. they are in bracing lending. banks are being very conservative. that would change over time. the question is six months to five years. we think it is somewhere in between. >> all right. thank you so much. good to see you. coming up in the next hour, wise canada buying the oil pipe ein? we will talk to justin trudeau, kendrys prime and easter. this is bloomberg. ♪
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>> streaming live on twitter and
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live from new york, this is -- this isark -- did boomer markets and i am abigail doolittle. >> last week we looked at the signs of a globe -- global risk off environment and that is where we are going again. see that the down the us the 500 down sharply on pace for the worst days since april. down 15 basis points p are the biggest for the 10 year yield since early february when we had the macro risk off selloff for stocks. we are seeing bonds really reacting more for the events all concerned by the yen rallying against the dollar. uncertaintycritical in europe around italy and the euro, down today, adding to the monthly decline. monthly decline of the euro against the dollar using the gtb function. this represents the monthly decline for the euro against the dollar right now the worst
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month's 2015. . pretty big slide while it appears the euro is climbing back toward the top of this mirror dollar 50, suggests on all1 see a drop-down of the political uncertainty is happening in europe. to talk about this, i would like to ring in michael. thank you for this. you have a great chart that supports the idea that we might see more weakness at various currencies against the dollar. click yes. this is speculative against the euro in the futures. a over see a nice run the past 18 months or so which has begun to unwind. when you have speculative positions in the euro, the currency tends to move lower. years,as the past five it was about the 80th percentile
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last week, down from of almost 100 percentile a couple of weeks ago, about one month ago. still a lot of speculative loans out. i would expect them to be unwinding. >> we have it bridging the level of support, so technically it may suggest we the a slide lower which would support the other chart. connect the fact that we are seeing the risk off live for stocks. >> ok. you see this has been the past 24 hours of the s&p 500 futures in today's. basically, the s&p 500 futures in white and blue and the euro in white. as you can see, they are mimicking each other on the way the -- on the way down. are starting to hedge more and dealer more defensive. >> is the trade to continue to sell the s&p 500 contracts?
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>> i think it is. the situation we're looking at, the situation with italy has really escalated in the past few days. when you think about the different market movements and you talk about the 10 year yield spread before, the last time the s&p 500 and the 10 year yield in early april, the s&p 500 was around 2600. >> disconnect between stocks and bonds right now is interesting. let's i would expect more de-risking in the next few weeks as you digest what is going on with italy and this is nowhere close to being resolved. >> i'm guessing you will do all of this in the front month contract. a great look at liquidity here. i see look at june contract here and you consider the open interest, which is over here at almost 3 million. more than 1ce for million and a half contracts today. the average was about one million contracts.
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dayxposure traded every here at hundred billion dollars of the open interest out there. if you are hedging a portfolio and looking to do risk, you can buy them back quickly and inexpensively. >> what is your downside? >> the s&p 500 pretty soon. exactly and again, the situation is very fluid. we are talking about most of the year spending interest rate week, the even last fed saying we are expecting to stop probably early next year. now a whole new player in the mix is italy. people have to start de-risking. euro, bonds and the michael rourke jumps straight in. thank you. back to you. >> great conversation. let's get the update with kaylee. >> president trump goes to
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tennessee today to raise money and rally support in an important senate race and is hoping to boost the chances of a republican representative running for an open seat because of the retirement of senator bob corker. republicans hold an advantage in the senate. in belgium, a knife wielding man stabbed two female police officers. -- the attacks that prosecutors fear could be terror related. today lead on monday here police describe him as a multiple repeat offender incarcerated in 2003. israel calling on governments around the world allegedly from the strip. mortars 50 rough it today. the israeli military says three soldiers were wounded. abc is pulling the plug on its
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hit reboot of rosanne following the racist tweet about former obama advisor. called inwas consistent with our values and we decided to cancel her show. onlyy'ceo tweeted there is one thing to do here in that was the right thing. she apologized for the tweet, saying she made a bad joke. the revival the spring was an unexpected major hit. global news 24 hours a day on air and on tick tock on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. up, oil down for the fifth straight session. will the saudi's rethink the -- plants for production? this is bloomberg. ♪
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>> saudi arabia and russia said opec and partners may boost supply after cuts. citigroup global head of commodities research spoke to bloomberg earlier today. saudi arabiam is
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and kuwait and those three countries and russia. >> thes talk about the suit us., >> 55, 57, 70. a big difference between russia and saudi arabia when it comes to the dollar price of oil. the ruble tends to depreciate and while there is a strong correlation between the ruble they likeesent oil, the price to be higher because
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they get more revenue and a higher price. they get more revenue at a lower price. >> interesting to >> many of the countries curtailing have to. i assume you're talking about venezuela. what about iran and iraq? you did not mention them here as i did not. -- mention them. >> i did not here for good reason. we expect them to go down more. sanctions really hurt and even with the lifting of sanctions, not entrap -- not attracting a lot of investment. the marketffered to are not attractive and that will decline one way or another and the russian is why how much. they just had elections and those are having a prolonged time before we see a government in place. they can do things to move the needle up in terms of production with the relations to come in a scum but they'll not do anything in the next couple of days. >> that was ed morse speaking earlier.
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bloomberg's abigail doolittle. select: the financial sector spider, you can see the etf is down 3.8%, it's worse day since february in a reaction from the global risk off we are seeing and a source of pain for u.s. banks is not so much directly italy, but the haven created off of political uncertainty. take a look at the five-day chart of the 10 year yield. not so long ago, the 10 year yield had been at the .3% level. it is now at 2.7%. today alone, down 16-evan team basis points, it biggest slide if you can believe at this point since the brexit back in june 2016 when we had that level of risk off. that is the writ -- the message on yields are giving us.
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and the bid for bonds, it is the same. that is way on the bank and turned it is falling yields not good for the net interest margins of the banks and mortgage family and goldman's bank of america all sharply lower. morgan stanley down the most also on pace or its worst day since the brexit. something to do with comments that the wealth management head gave saying trend -- revenue has been slow since march. it is not too surprising considering volatilities mean assets are worth less and the retails definitely retail investors now with as much and we have shares of trading lower. down 6% matching declines for in sympathy with the comments for morgan stanley's left management head but also at that conference, they talked about a more challenging environment is. they typically get a seasonality bump in the second quarter.
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they have not seen that. it has not come through. the volatility we have seen this year affecting -- from a mac perspective, the company is in good shape and almost 100% of their profit through buybacks and dividends and, i did not know this, they are the third-largest etf divider in the country behind vanguard and black rock. that really
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happened as well. so it seems like there could be implications for the industry. >> you are right. morgan stanley talk about weakness. so yes, absolutely. some technicals i do not have charts to pull up now but some technicals look like there could be more selling action ahead. >> a challenge today. abc's they kit, the reboot of rosanne, get a big hadafter rosanne controversial tweet spirit we will discuss her from new york, this is bloomberg. ♪
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>> this is bloomberg arc its i am julia chatterley with julie hyman. one of the world's's most deadly narcotics is so strong that it -- it has been studied as a chemical weapon. giving rise to a new era of drug kingpin's.
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story. to her about her take a listen. type of drug lord, he is in his 40's, a distributor according to authorities, a city of 11 million in china. what authorities charged him with was running to fact or it -- factories capable of drugsing sentinel type and other synthetic drugs by the time. they're also saying it in a vast around the world. they have connect them to over 100 in the u.s. in over one -- in over 20 countries. >> and this is u.s. drug enforcement. i want to make it clear. the way he came to light is fascinating. i want you to the scene on how analogs have been a huge game
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changer. >> precisely. two things about fentanyl have changed game for drug traffickers. the equivalent of seven poppies will will you and that makes it easy to ship here drug traffickers can literally -- literally put hundreds of thousands in envelopes and send them to the u.s. or around the world via the u.s. service or fedex. the second thing is profitability, it is incredibly per -- profitable. the case built actually went undercover and bought one kilogram of fentanyl from china for about $4000. if they were to take that and turn it into tablet form and sell it in the street in the u.s., they could have made up to $30 million. it is incredibly profitable
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kumal a more than harry win or crystal meth or cocaine or any other drug you could sell. >> we have seen an acceleration of people dying from using this in the united states because they cannot gain from those taken. regulated not a product. it is hard to tell what you are taking and it is hard to know whether your take it at all. it is being cut -- into heroin and cocaine and xanax. users often do not know they are using it at all and if so, they did not know which types or what they are taking. it is incredibly deadly and that is a big change from 2014 just killing 5000 per year in 2014. we have seen incredible jumps. theas really overtaken black market for drugs and has really accelerated t opioid epidemic and the deaths resulting from it. >> you are saying this has an manufactured in factories in
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china and being shipped to the united states. briefly, how did the united this and toind of what extent are they working together to break the drug rings? >> it was a traffic stop. synthetic marijuana but not sentinel at all. what they did was work their way up the chain. this woman they pulled over in mississippi, they found her supplier in connecticut, in connecticut, ultimately it is and shall being. first theyt know at were peddling more than synthetic weed and bath salts. these synthetic drugs are very dangerous but nothing compared to fentanyl. once they broke in and found that he was selling analogs
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around the world, they indicted him. sayproblem here is they china is cooperating to an extent but the issue here is the on gel being, chinese authorities say he was not taking any chinese laws by sending all of the synthetic drugs to the u.s. and that gets to the difference between the drug laws in china and the u.s. and why it make it so hard for authorities here to curb the supply because china simply will not arrest or extradite him because in their eyes, they did not break any laws. -- speaking there. the dow jones industrial average falling just shy. over 2%. off almost 500 points in the session broader risk off. the financials and the industrials and materials but
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it's still very much ties to the quality of treasuries. >> most definitely. j.p. morgan chase in the dow. walt disney and a channel that owns abc pulling the plug on -- on its hit reboot of rosanne following her racist tweet about a former obama advisor. the disney ceo said there is only one thing to do and that was the right thing. theing us from princeton is bloomberg intelligence director of north american research paul sweeney. this was a hit for abc. what is the financial impact, if any here? >> it has been a tough day for the walt disney company peers star wars underperforming and now the issue with rosanne. it was one of the highest-rated shows on the abc network in the past season. it was featured at the up from -- talking about the upcoming abc season. featuredwas vessel and
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prominently. it is a loss of the abc network itself. diversifiede company and will not have a material effect. >> perhaps an overreaction amid a broader risk off tone. >> they have been under a lot of pressure for a variety of reasons including cord cutting and disney has clearly been a part of that. they have been bidding for some for 21st century fox and there is that overhang as well hear a lot of noise around that disney story these days. >> the stocks are down 7% years to date. the pressure is on him in a number of different ways, suggesting he hang around for little while. what is job number one for him at this point? >> job number one is to get a fox done for 21st century with those assets. a $52 billion transaction, he has got to get that done and he has competition coming from
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compaq -- comcast. he has got to be careful about over bidding. >> paul sweeney, thank you for joining us. the dow industrial average falling some 2% in the session so far. rutter risk off sentiment. .he dollar stronger as well it is a broad risk off session today. coming up, canada's prime minister justin trudeau speaking to bloomberg. what he says is the big pipeline -- what he says the high point purchase will look like. ♪
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>> 2:00 p.m. in new york and 8:00 p.m. in london. >> welcome to bloomberg markets. ♪ >> we are alive and bloomberg ward headquarters in new york over the next hour. having their worst day and more than a month, the escalating political crisis in italy rocking global assets and triggering a risk off mood. mange to itst a chains, and trudeau talks coming joins us live from toronto. the close hour from
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of trading, let's get a check in the markets with abigail doolittle. >> we would see even more of a selloff in the last hour, but right now, we are you have a selloff, the dow and s&p 500, both down to more than 1.5%. the worst day for those two averages since april 6. off onless, lots of risk the political uncertainty surrounding italy and the bid that we will be getting to in a moment. if we happen to the bloomberg, let's take a look at what is happening sector wise. you see all 11 sectors are lower. some of the rate sensitive sectors were higher, but now they are all lower, on bottom, thencial down 3.8% and source of pain not just a seeking havens.
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intraday look at the charts of the 10 year yield because this is an extraordinary move, down 16 basis points near ws, represented and green, and it tells us that bonds are rallying in reaction to the uncertainty in europe. we do have a selloff or stocks, but it is not matching the degree of buying for bonds. this is the best day for bonds since the brexit selloff in june 2016. we could see more stocks selling ahead. as for some of the individual sliders within the financial sector, we are looking at big banks such as jpmorgan, down 4.8%. morgan stanley underperforming at a conference today. that is a negative, more than 40% of their business in that appears to be weighing on some of the other money managers and even american express, down 3.8%. a big slide for financials
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and that is the worst sector on the s&p 500. we can see the relationship between the 10 year yield and the financials by hopping back into the bloomberg. do have a spot here where the banks got ahead of yields. more recently, we have had the banks sliding as yields have doe banks got ahead of yields. climbs, but if they continue to slide, it will suggest the selling action for the banks could worsen. take a look at the intraday charts against the dollar against the yen. it is rallying against the , that isut for the yen its best day since may of last year. we have confirmation of the risk off, but it is interesting to note that while it is big, it is not matching the buying we are seeing and bonds. >> good comparison, a global flight to safety right now.
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let's get a first word news update. maryland residents and business owners are making plans to rebuild after devastating flash floods caused major damage. they have found the body of the only person that remains missing after sunday's torrential rains. it is the second time that ellicott city has been hit by major flooding. flash flooding -- chargeduthorities have more than 20 officials in the first stage of investigations into a $79 million corruption scandal that has pressured the president to hunker down on corrupting activities. saudi women are gearing up for june 24 when the kingdom will allow them to drive. today's announcement puts rumors to rest the authorities were reconsidering the move. the royal family decided to lift
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the ban on female drivers in september of last year. it will affect women of all nationalities in saudi arabia. the world health organization says it is cautiously optimistic to curb the spread of ebola in the congo. the u.n. health agency says more than 400 people have been injected with an extra mental ebola vaccine. -- an experimental ebola vaccine. global news, 24 hours a day powered by more than 2,700 journalists and analysts in more than 120 countries. i am kailey leinz, th is blooerg. >> abigail doolittle gave us some of the headlines on u.s. stocks, let's take a little more -- digg a little more deeply into what is going on. joining us now is bloomberg top line editor romaine bostick.
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it is really interesting that it only once again am a european country, potentially and crisis is the trigger when on the face of it, the does not seem to be obvious contagion at this stage. >> no, but you do have a market that is on edge. this is really about the euro and any potential weakness that we could see should this sort of ifulist dream play out, but it does spread to spain and we get some unraveling of the euro, that is the fear. that is the fear, the knee-jerk fear in the market today. >> talk about the reaction we have seen between sovereign , translatingtaly more broadly to european banks and obviously the financials in the rallying in treasury prices that we see in united states. it is an extreme reaction, but you can connect the dots.
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killed got absolutely today and then you look today, the s&p at the xlf, down about the .8, 3.6% or so, and you think about that some of it is the contagion fear, some of it is what they might hold, but there is an underlying macro issue that goes beyond italy. that jpmorgan, they are about to have r worst day since the close of the brexit vote. -- looks a pile out of this for now, reassess for now. the silver lining is that a lot of this appears to be related very much to europe itself. once the reaction is over, you may see more rotation into u.s. assets. >> we have talked about the significant drop we have seen and treasury yields, we have the
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chart here for the five year yield falling as much and a single session. we have been asking this question of the short positioning, particularly in the five-year and 10 year. latere point, if the entry into those trains got washed out, you are going to get a dramatic reaction, we got the start of that today just a washout of positioning and that creating the rally in treasuries and what we have seen in yields. >> absolutely. when we had the vix fallout, it was a similar issue. was notrlying issue that severe in terms of the longer term issues, but there was a trade, a very large tray that was built up and then had to be revalued and unwound. you see a little bit of that today for what you are seeing in treasuries. that is the more breathtaking story. just last week, i was talking about we had a 13 basis point and a week in either that was one of the biggest moves that we have seen since march, and in just 16 to 17 basis points in
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the 10 year and you are seeing similar moves in the two-year and five year as well. this are seeing all of volatility come back to stocks across asset. we take a look at the bloomberg, i have a char on the moving averages in the s&p 500. we have been in a range, and now the s&p has fallen more dramatically below the 100 day moving average. the momentum, the sort of sideways drift that we have appears to be gone. >> that is going to be the concern. we came in at the 2700 level, we broke up. 100 day moving average. that was basically the closing low that we saw in early may, so if you are looking at the technicals, those are the levels you have to be concerned about righte did not hold that below 2700 and if we do get down to the 50 day and break it, and be it does say something more about where this market is going
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to hit. -- somebody called it quitaly. referendumo have a change to the constitution before they can have a referendum on leaving the eurozone because it really not simple when you're talking about perspective -- pro specto -- rospective. a lot of people saying the ecb is buying the rollover bonds and of italianr debt, but you to hold your nose and get involved here because this hold opportunity. meetingow they have a in two weeks, so be interesting to see what they telegraph. >> a lot can happen in two weeks. thank you so much for that. to our deals report, we start -- ajab taking a jim , on any stake
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acquisition spree to build a food and beverage empire buried at hammond, great to have you with us. -- beverage empire. ed hammond, great to have you with us. talk us through what this means geographically. >> you are right. they have been on a binge, they have an enormous coffee business, they have caribou, narrow and they did the -- they did panera last year, whichw they have pret takes them internationally, almost the u.k. is almost nce, but pret prese also takes them into the sandwich market. bloomberg reported about a year ago that they discussed acquiring pret. >> panera is the sandwich market, too. >> now you are in the u.k.
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sandwich market. >> it is slightly different offering. >> more urban, usually their locations. >> we can happen to my terminal and you can see this great map pretshows where that stores are. all of the green is starbucks so you have a tremendous amount of u.s. they can grow into. >> this reminds me of the yum model in a way where you have the some rela -- this umbrella company owning a bunch of properties. it did not work out well for yum . what is the endgame? >> this is a very fast growing business. -- i spoke to some people there this morning and they said there is a slowness and inception. they said this is all about coffee.
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they say that is not it at all. differenta slightly beliefs to a lot of people in the food industry. they say you look at these non-sexy assets, coffee, doughnuts. >> those are very sexy. these are things that are resistant to different trends that will be here to stay. people like these foods. everyone is going at the health and wellness, and people are going to continue consuming. buy these assets to flip them out to two years later. >> super, super fast. basically, i think once the u.s. bruise something, they are still done. they have to divest from a few assets. >> awesome. from sandwiches to
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seas. here's a picture from the s&p 500 euro and vix. very slightly off the lows must session with the s&p down one and a half percent. the 10 year yield, 16 basis points. from new york, this is bloomberg. ♪
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♪ this is bloomberg markets, i'm julia chatterley. >> and i am julie hyman. if we take a look at what is that going on with the dow, we are seeing the selloff continuing care. the dow is down 1.9% at the moment. hovering around the lows of the session. let's get to the bloomberg
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business flash, look at some of the biggest business stories. acebook is facing class-action lawsuit for discriminating against older jobseekers. ds to youngerore a workers. companies such as amazon, talks media, and t-mobile were among them. billionaire investor george soros is warning of another global financial crisis with europe facing an existential threat. --xit discord, it italy's italy's turmoil is putting pressure on europe's solidarity. >> it is the harsh reality. europe needs to do something drastic to escape it.
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it needs to reinvent itself. was speaking that the european council on foreign relations in paris. that is your business flash update. >> it is on, it is off, and now, who knows. the canceled summit set on jen -- june 12 appears to be back on. president trump confirms that kim jong-un has sent his right hand man to united states for talks. we are joined now by kevin cirilli, bloomberg chief white house correspondent from the white house. kevin, great to have you with us. performer now in terms of a buildup to a meeting if it is going to go ahead on june 12? kevin: between me and you, i have my ticket to singapore because it looks like all systems are ago. president is set to me to with north korean leader kim jong-un
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on june 12. earlier this morning, the president tweeted out that he has put together a great team for the talks and noticing that the vice-chairman of north korea is heading now to new york and feels this is a solid response put forth. then we got a statement later this afternoon from white house press secretary sarah sanders. primeted that japan minister shinzo abe is going to be meeting with president trump next week on june 7, days before june 12. all of this would signal in addition to advance team going over to scope out, that this summit is really beginning to calm. i want a flag something that happened saturday night because we do follow politics on memorial day weekend, that was president trump saying he was little bit concerned about chinese president and his response and perhaps playing a role in some of the back-and-forth tension that we saw that caused this delay or at
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least the pullout of this meeting. do wethis point, what know about what each side might have to give up to get a deal? what the terms of north koreans have to give up, it is their nuclear weapons program. democrats and republicans would agree that in order for that to happen, the u.s. would have to get some type of investment into north korea along with china. that is where the zte deal get some what interesting. they are going to have to play ball in terms of giving up their weapons programs. democrats have been adamant in their criticism against this administration saying this north korean summit had to be pulled out of because the white house did not have their act together. republicans are saying, this is a good thing because it actually suggests that president trump wants a long-term denuclearization deal and not something in the short-term. mid-30's,n is in his
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this is someone who could potentially be the leader of north korea for decades to, and a short-term deal is not in anyone's best interest. >> kevin, thank you for the insight. kevin cirilli, thank you. let's give you a quick look at the markets, we have the s&p 500 down 1.6%, equity markets selling pressure, the financials very much tied to what we are seeing in the rates market. ofre is a pull back double-digit points in the five, similar story -- 2.77. 3% of feels like a long way away. and the fight for equality in the yen and the swiss right now. europeals and precipitated the selling pressure we have seen in the united states and the overall global freight quality. from new york, this is bloomberg. ♪
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♪ options time for insight and i am joined by kevin kelly of benchmark investments. i know you like everybody else watching the financials today. what is the option trading looking like on financials today? is actuallycials flat giving the fact that they sold off on a percentage basis. markets,n the options people aren't going out and hedging themselves, so is pretty interesting because one of the realts is where the hedging and trading is going on is an small caps, which is been very productive segment of the markets. if you think about it hitting all-time highs, you are seeing the russell 2000 volatility is lower than s&p 500 volatility, but in the iwm which is the etf
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that tracks the russell 2000, you are seeing 2.5 and a half times amount. that is what really took me by surprise. >> that is interesting because that as a part of the market has been working and running. we have got to get to your trade, this is a company that i have not heard of. it is called gds. it is a datacenter provider in china that trades here in the united states. what drew your attention to this company? >> it is up over 40% in the last month alone. this is a company that is an 80 traded on the nasdaq and they provide data centers. one of the big sft that is happening over there is that you intencent chasing alibaba the cloud computing space and that is really shifting a lot of the spending dollars. the third party provider
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that is being utilized by those companies to provide their cloud services and same with microsoft. it microsoft wants to get traction, they have to go through a company like gds. think about how apple had to go over and build up their own data center. you can go out into september even though it is run up so much, you would sell the september 30 put, and buy the 45. this is when the stock was up a little bit earlier towards the open but this is a great way to play that trend going forward. we have to leave it there, thank you so much, kevin kelly with us. coming up, trudeau talks. canada's prime minister joins us next live from toronto. this is bloomberg. ♪ retail.
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leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.
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>> i'm kailey leinz, let's get to "first word news" this afternoon. by -- the attack today prosecutors fear could be terror related. police described him as a multiple repeat offender who has been incarcerated since 2003. italy could be headed for snap elections as early as july. the country prime minister delegate left a meeting with sergio today without an agreement on a cabinet team. find common to ground. dissolve parliament within 60 to 70 days. students at a texas high school went back to class


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