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tv   Bloomberg Markets Americas  Bloomberg  May 30, 2018 10:00am-11:00am EDT

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vonnie: here are the top stories we are covering from the bloomberg and around the world. stock indices stabilizing globally with the u.s. market rebounding strongly out of the gate. worries overy italy are subsiding at least for now. we are going to talk italy and investing with david herro, cio of paris associates. some of his top holdings -- italian banks, german carmakers, glencore. trade tensions rising again around the world and in the trump white house. china is hitting back at president trump's tariff plan. trump advisors navarro and mnuchin clash. all that and more in the next two rows, but we are 30 minutes into the trading session already for some julie hyman is here after yesterday's selloff. julie: concerns about italy are
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subsiding, for now -- that is the key caveat. a lot of this has to do with the banks, which sold off sharply yesterday. the bank index was down nearly 4% yesterday, not just on concerns about italy's exposure, but what was happening in the treasury market, which we will get to in a moment. all three averages up in the neighborhood of half a percent. the large-cap tech was holding up better and many of those rising on the day. let's look at the regional banks on the rise today. we have a lot of commentary on banks specifically in the wake of yesterday. jeffries is saying that u.s. banks' exposure to italy and european revenue contributions are modest and manageable, creating opportunities to buy dips for patient investors. that seems to be the sentiment of a lot of analysts today. david george said there would be fires of bank weakness and
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specifically upgrading citizens financial to outperform after the selloff because of its improving operating leverage discount.turn and discount. regions financial and comerica, park a couple of the other regional banks on the rise. take a look at the treasury market. yesterday we saw the plunge and yields of about 15 basis points. today we are reversing to some degree that movement. that also accounts for the move up in banks. finally, we have retail earnings movers worth mentioning as well. 2 down.ok at 2 up and dick's sporting goods coming out with measures that beat estimates. movado, the watchmaker, appears to be doing well. she goes come on the flipside, not doing well. those shares down 22%. dsw, the numbers look good on the face of it. however, subsequent and assess the gross margin was burnt
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number -- whisper number was off estimates. caroline? caroline: julie, thank you very much. is it slight calm after yesterday's storm? stocks coming off of those highs. 90 minutes until the close of trade and we're pretty much flat on the stoxx 600. this is a breakdown of how the currencies are looking for energy of more than a percentage point. on the downside other banks. we had some easing of concerns in italy. they got the debt sale away. didn't sell as much as expected. they had the 10 year debt at a discount. nonetheless, they got it away. germany came in with strong data. sweden looking very strong in terms of its gdp numbers. ,ut still sums concerns particularly to do with the french economy. i want to focus on what is happening in terms of stocks. financials one of the key
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laggards today. one particular bank in particular, rbs. this price is it -- the surprise exit of the cfo, and we are seeing it have its annual shareholder meeting, and the cfo is leaving on the sidelines of the meeting, saying, look, probably not going to see the share sale of the government happening anytime soon. he would be surprised if it happened quickly. that occurring as they hold 70%, the government still. vivendi is off 3.7%. why? the company is seeing threats to its dominance with french soccer rights. down we come in terms of the yield. italy, spain, portugal, we are seeing a sigh of relief and the debt markets. we're coming off of our lows in terms of yields in italy. caroline, some breaking news on bank of canada.
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holding rates study for the third straight decision, as expected, but dropping reference to being cautious on rates. this is extending gains for the canadian dollar. .29,s backed just above 1 in theeeing 1.30 session. it was expected by many economists. canada's central bank leaving interest rates on hold for its decision and citing some strength in the u.s. economy is being a help. meantime, italian yields and stocks stabilizing after a better-than-expected bond auction. the country's old 61 $5 billion at the lastt, but option perhaps unsurprisingly. politics taking center stage as populists ramp-up support ahead of another possible election.
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herro. us is david his oakmark international fund has about 57% allocated to europe and 20% in the u.k. thanks for joining us from chicago today. we saw some price disruption in the last few days, but did we see any value destruction, or have you added to positions and thinking some of the italian banks, perhaps? david: quite clearly prices have moved in a different direction in value and that provides opportunity. europe in particular over the last decade, we have bounced from problems to issues the crises. it provides an opportunity for those who are long-term value seekers to make money. devalue does not at all move in the same direction as price. when this happens can you can position yourself appropriately. moree this more out of --
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of an opportunistic time to take advantage of mr. market's emotion. the changes in value aren't at all near similar to the changes in price. vonnie: david, give us some idea of where you are taking those opportunities. is it in italy? is it specifically in financials and italy, where you already had positions? david: i think when you look at european financials, this is ground zero of price destruction . by the way, especially in u.s. dollar terms, we had a very weak euro as well. but with this price distraction, which has not corresponded to value destruction. take italian banks. we believe it is an extremely high quality financial institution. a strong capital position. it is extremely well-managed. costs continue to lower.
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they are dealing with the bad debt they had on their portfolio. form the operational perspective , they turn things around in the last four or five years. this yield trades in single-digit price-to-earnings multiples, and it is probably off close to 20% in the last week as a result of these issues . the issues that the market is a default hurt on italian debt and perhaps italy leaving the eurozone or the euro which we think is an extremely low probability. david, i'm looking at how the euro has performed. as you mentioned before, when you are taking these sorts of takingn assets, you are on exposure, and given that we are currently trading in the euro below the 200-day moving average, we are in oversold
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territory at the moment what do you think this is the risk you should have? are you heading out when it comes to the euro? david: we think the euro is fundamentally undervalued today. as a result, when you buy european stocks, you are buying them with -- you are buying an undervalued currency. at some point you are going to experience double positive. when the sharepoint and the euro comes back to you are going to feel a pretty good tailwind. these things don't happen overnight, and who knows when the currencies will move back more reflective of reality. but the fact that you are buying cheap stocks with chief currency this is a value investor's dream come true to be able to buy good quality businesses at low prices that are denominated in a weekly price currency.
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price currency fo. headache for the italian who has the ecb at the moment, mario draghi having to push back normalization of rights -- how does that impact european banks going forward when we are unlikely to see the rates going higher? david: normalization is a positive for european banks, and the fact that this disturbance might postpone that is a negative. however, i think there are former positives than a negative scum starting with the valuation of these financial institutions come and when you consider the capital positions of these banks , far better than they were 5, 6, 7, 8 years ago. cleanup hashe happened already, especially for the blue-chip majors -- bnp paribas. these are good quality banks
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that are sound financially from the capital perspective. and i do have some lending growth. you have a lot of positives can starting with the valuation, but the fundamentals and the fundamental earnings power of these businesses has improved. i think despite the fact that normalization may as a result of the political instability be a little bit further out, you have other positives that make up for it and still give you a very strong value proposition. vonnie: we definitely want to get your german carmakers and some of your other holdings in a moment, but i do have a final question. you obviously are a value investor that invests in these stocks on the fundamentals of these countries. nonetheless, if something major macro-wise were cap and italy got in trouble european union where the ecb decided to stop backstopping italy come with that change of mine on the
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fundamentals of these italian companies? david: when macro becomes important is what it impacts our to generateility cash for its owners overtime. macrof we can see some event that disturbs the company's ability to generate cash for its owners, then we have to reprice the asset. that mostthing is is of these macro disturbances have little if any impact on a company's ability to generate cash through time. maybe it might impact it for a quarter or two, but you have to face on thesiness present value of all future cash flow streams, not just a couple of weeks or couple of quarters. mr. market tends to be very impatient. investors could make money by being more patient and thinking more long-term. but yes, you do have to connect. do these macro events impact the company's abilities are money?
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usually, thankfully, they don't. of harrisvid herro associates and the oakmark fund specifically. let's get "first word" news. >> president trump is going after his own attorney general again. in a series of tweets, he said someoned he had picked other than jeff sessions. the president has frequently expressed unhappiness that sessions recused himself from the russian investigation. china and the u.s. are going in a different directions on campus. the day after president comes that he would move forward on tariffs on chinese products, china said it would reduce duties on a wide range of consumer goods. those could help the countries reach consensus this weekend. france's president emmanuel macron says he hopes the u.s. and europe can work out there fight on terror. forum inat the oecd paris. president macron: i'm always
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very hopeful. some things depend on me, some others don't. i do my best on what i can do. defend -- always [indiscernible] in paris, u.s. commerce secretary wilbur ross call to the world trade organization outdated and said the amount of time it takes to resolve disputes is a joke. he says the deputy minds that is that anything at exporter chooses to do is find. -- fine. 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. this is bloomberg. caroline? caroline: thank you very much indeed. we will have more of david herro next. we are keeping a close eye and european stocks. france underperforming at the economic data came in worse than expected. nevertheless, there was a rebound happening in italy. this is bloomberg. ♪
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vonnie: live from new york, i'm vonnie quinn. caroline: and from london, i am caroline hyde. this is "bloomberg markets." now david herro, harris associates chief investment officer of international equities. 57% allocation in europe, with top holdings in german carmakers, italian banks, and glencore. david, test knitting of the companies you are focused on. car companiesinto in particular. it has been a rocky ride in in the unitedfs states. where you said, how do you see bmw and a daimler and whether
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they are committees doubling down on? david: there has been push and pull on the carmakers. at first and foremost, you look at how they are valued. almost ridiculously low valuations. soldusinesses that are growing earnings and cash flow streams with extremely healthy balance sheets. onpite the tariff threats those committees, keep in mind that bmw and mercedes in a huge presence in the united states and manufacturing footprint. it is unknown how they will be tariffed, if at all. on the other funny talking one of the biggest markets, china, has recently cut tariffs from 25 to 15%. when you added to the fact that the euro has weakened quite substantially, these companies have major positives that i think people are completely ignoring. the euro has gone from 125 to 1.15 in a short time peirod. --
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period. this is very positive for the german carmakers. caroline: david, you are about to head off to china. where do you see the opportunities? is this going to be the driver of growth when you look at particular areas of exports? we hear talk from "the wall street journal" that china is looking to bring together allies to take on the united states, particularly on tariffs. david: i think china is still a very important part of the global economy. it is the second largest economy, or third, depending on if you consider ppp, and it is a large exporter. % astill is growing 5, 6, 7 year. has potential to grow those mid- single digit. it is an important contributor to global growth. the corporate governance issues, it is difficult to find a chinese family. on the one han -- find chinese
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companies. on the one hand it is important to understand what is happening in china given the role that china place in the global economy. hand, because the involvement of government in general industries, it is difficult to find companies that from a value investor perspective meet our criteria. ing inhave a sharehold baidu and the tencent. he think both of those tec companies are extremely, extremely start businesses, selling at -- a businesses, selling at reasonable valuations . you get them at a significant discount. we think there are some opportunities in china, but really, when one has to do is their eyes on what is happening in china given its role. everything that is written rarely is very accurate. i think the world is trying to
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work harmoniously. there are tensions and pressures. vonnie: i have to get your thoughts on glencore. selling not a lot, but i wonder if your conviction is going down a little bit with glencore with all the scandals surrounding it. david: no, we don't think there is a lot of scandal surrounding it. there is a lot of issues surrounding in particular what is happening in africa and their partners and the government, etc., etc. congo, of course, is not an easy place to do business. a lot of these places -- even indonesia, a lot of these places are difficult to do business for the national resource companies. having said that, it is still a major position. -- the company's share price is extremely volatile. you will see us trimming and adding depending on the volatility of the share price. we believe that the position in copper is very strong.
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good long-term position. of course the trading arm continues to go strength to strength. we see glencore as having a lot of upside, and its operations continued to do quite well, especially as we see a firming and actual resource prices full stop however, because it is so volatile, you see value investors like us, and the price goes lower, we trim a little bit. it is still a key position for us. vonnie: david herro, thank you for that. david herro, harris associates. this is bloomberg. ♪
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vonnie: it is time for our muni moment. here is taylor riggs. taylor: joining me is nisha patel, portfolio manager at eaton vance. we have been talking a lot about
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green bonds. sometimes the market seems like it is a marketing gimmick come up there is a real investment thesis. walk me through why you like green bonds now. nisha: green bonds are issued to fund various projects that have a material impact on society. for example, you want to system could issue a deal to replace pipes with 100% recycled material types that should last 100 years. or it could use a utility system moving towards renewable energy and they are funding a project to build wind turbines. eaton vance is joined with one of our subsidiaries to create a framework to not only provide a negative screen and avoid sectors and issuers that have a negative impact, but to seek out the ones that have the positive material impact. taylor: talk to me quickly about friday. it is our june 1 reinvestment coupon season, but you have a lot of demand coming in. do we expect this season to outperform because of the demand coming in?
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nisha: yes from starting june 1 and even july and august we are expecting heavy reinvestment in the market, to where the amount of investment coming in versus the amount of supply should be outweighed $70 billion to $80 billion. we think this will help muni performance. we expect flows to go into the short and intermediate part of the curve. that is where investors can pick up the most amount of yield. if you look at the 30-year deal to come investors pick about 80% of the yield. taylor: wonderful. i was nisha patel, portfolio manager -- that was nisha patel at eaton vance. vonnie: that was our muni moment with taylor riggs. this is bloomberg. ♪
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vonnie: you are watching "bloomberg markets." i am vonnie quinn. ,aroline: i am caroline hyde
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live from european headquarters in london. this is "bloomberg markets." let's check "first word" news. here is taylor riggs with more from new york. taylor: secretary of state mike pompeo will discuss summit preparations the next two days with a top aide to kim jong-un. in former spy chief will be new york for the discussions. he is the highest-ranking north korean official to visit the u.s. since 2000. a south korean newspaper says he may meet with president trump after the pompeo meeting. in belgium, federal magistrate calls the three killings terrorist murder. the magistrate says the attacker shouted "allahu akbar" before killing two policewomen and a bystander. he was serving a prison sentence but was unauthorized leave at the time of the attack. former trump advisor steve bannon calls angela merkel's migration policy incompetent. he says that germany exposed other european countries to
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an influx of migrants and that the nationalist party that villa pfizer is on the right track. -- that vilified her is on the right track. temperatures hover above 111 degrees fahrenheit. officials have said of cooling stations to provide relief to commuters full to many in the muslim-majority country are observing ramadan, which requires fast so sunrise to sunset. 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'm kailey leinz. this is bloomberg. caroline: thank you so much. more investorsto and protesters are gearing up for amazon's annual meeting. bloomberg will be there. we go outside the event. spencer we are anticipating the on bit of protest. what is on the agenda for amazon today? >> not a whole lot on the
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agenda. there are shareholder proposals that will likely be rejected. one is to encourage more diversity on the board. another is a shareholder proposal to break up the role of founding ceo and chairman jeff bezos. there is a group that would like to see a new chairman put in place. the board has recommended voting against those. otherwise you just procedural matters are on board elections and that sort of thing. caroline: i mean, this is where we could see the protests kick in. there might be a banner in the sky calling for jeff bezos to not have quite so much control. given the sheer performance, it is hard to vindicate that they need an independent chair. spencer: well, that is exactly it. the reasons against this proposal, they simply point to the performance of amazon and that they need this kind of -- they need jeff bezos committed to this vision that he has proved the test of time with that vision, and they don't want
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anything to peel away from that. caroline: very different from the governance structures we have here in europe, where you tend to see the separation of chair and ceo. talk to us about the reaction in particular where you stand, seattle. this could be quite hefty upon amazon. potentially they could threaten to invest a little bit in the city. yeah, amazon has become a polarizing symbol in seattle. of thet of tech some rising property values from the influx of wealth and talent, but also the downside, people getting left behind. skyrocketing housing costs, roads clogged with traffic for those a lot of downside as well. there was a proposed tax where now i believe it is $275 a head to raise money to fund profitable housing initiatives and homeless initiatives. amazon has spoken against that and even threatened to cool some
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of its growth here and spread it to other sites around the country, including the second headquarters location it is still searching for an expected to announce sometime later this year. caroline: all eyes on hq2. soper in seattle, you will keep us abreast of what is happening at the shareholder meeting. vonnie: it is time for our stock of the hour. shares of the designer and retailer, the worst performer in the s&p 500 right now. it is after quarterly results. abigail doolittle is with us to explain. abigail: it is pretty interesting -- they beat revenue numbers and same-store sales. granular,et more investors are unhappy about a few factors. granular, investors are unhappy about a few factors. first, fiscal year 2019 outlook is a little bit light. second non-adjusted operating margins for the fourth quarter still reported. that came in weaker than expected. third, the jimmy to revenue disappointed. 2017-2018, this
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was a transition year. there were expectations that this quarter would be stronger than and the 2019 guidance would be solid. for this together with their largely good retailers they put up strong quarters. the fact that we don't have shares affected by michael kors weakness suggests it is more of a michael kors-specific issue. does that mean micro course will have to undergo more strategic review or is this a timing thing? abigail: abigail: they have had a turnaround in asia, but they need to reduce inventories and focus on full priced sales. it will be a continued transitional year. they are also doing more with their accessories. apparently they are trying to grow that to $1 billion. they just announced they are going to have this fine jewelry line. when you separate all of this from the stock this could be an attractive moment for some
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investors. if you happen to the bloomberg and take a look at this chart of michael course of the last year, and viewers can use the tgv function -- the stock is down today. it tells you how surprised investors are going to the 200-day moving average. if it does not hold, it suggests we could go towards 40, which suggests the turnaround has more to go, but valuations are attractive and there is not a high short interest year. there's not a big bearish story here. they need to turn around the ship. vonnie: interest coming way down. abigail doolittle, thank you for that stock of the hour. caroline: let's check out what is coming up later in the hour. china and the u.s. are battling it out again after president trump pushes ahead with plans iteris. market jitters are using after pass a test.s
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that is ahead. this is bloomberg. ♪
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caroline: live from london, i'm caroline hyde. vonnie: in new york, i'm vonnie quinn. this is "bloomberg markets." now to long short equity from where returns to say the least have been challenged. gavin walt disney head of americas of america's alternative investment strategy team at aberdeen standard investment. bloombergited to have
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hedge funds and investing reporter for the conversation. >> thanks for having me come thanks for joining -- we wrote a story a couple months ago about the branding of hedge funds. your unit hasn't always been called the alternative investment strategies unit. be called hedge fund solutions. could he talk about the name change? darren: we are invested in diversifying and strategies for 20 years and it has become increasingly challenging to categorize hedge funds. first, individual hedge fund strategies, avid equity, hedge funds to private quie credit. it is difficult and the lines between different strategies are blurring. we as a hedge fund team invest in reinsurance strategies, alternative credit, strategies that are certainly diversifying relative to stocks and bonds. i would not call them hedge
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funds. the other piece that is interesting regarding how we run our best is institutional investors are a little bit more thoughtful now about how they structure hedge fund allocations in the context of a broader portfolio. institutional investors are matching their exposure. thehe extent that you have direction along equity exposure, if it has growth exposure, if that has equity data to it, those are in the equity portfolio. if you have the fixed income portfolio, it might have more interest-rate risks. it has a carry oriented profile. interesting that you mention about the institutional investors becoming a little bit smarter in the way they get hedge funds. canadian hedge funds seem to be ahead of the curve. doing a lot of stuff in the house that they used to allocate to the external manager like
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direct credit. what does that mean to you about how institutional investors are finding out the -- defining alpha? darren: engineering output is really, really hard. those canadian groups out there have the skies and scale and resources to build the teams, have the infrastructure come to .ctually engineer alpha it is not easy. what we observed is that there are other financial institutions that are not actually trying to extract alpha from market. what they are trying to do is identify and extract an alternative risk premium. it is kind of confusing or nebulous piece of the hedge fund returns that fit in between pure alpha and in between traditional or pure data. when we are seeing the institutions do is try to get the same types of returns that they had been generating in the
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past but doing a little bit more cheaply. those are the alternative risk premiums they are trying to extract. can waveet me ask you had a lot of changes recently in the last couple of years. as the bull market to blame for people saying we will no longer be public with short positions? that used to work can use to maybe give a bit of a drop as soon as it announced. it does not work so well anymore. we have a great story today about goldman sachs coming up with an asset that teaches shareholders and boards how to react better to an aggressor. is this changing long-short equity? darren: shorting is an entirely different animal. it is a different type of investor to be successful long-term in shorting stocks. trying to find businesses that will underperform in the market is challenging. the point you made about shorting being so challenging
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the last bunch of years, it is not just the market has gone out. markethe qe-infused means there has been a search for yields from cyclical stocks lower quality, highly levered, these are the stocks that have underperformed. market means there has been a search for yields from cyclicalthose ae fund managers like to short. it has been a challenging shorting environment. we at the desk tend to be drawn into managers that do a good job shorting. it is really not easy to do. there are a lot of hedge fund managers that you are really good job on the long set of the portfolio, but finding the guys doing a good job shorting -- vonnie: are there fewer -- give us a number. darren: it is hard to say how many hedge funds are out there. .4,000 is the listed number i think the biggest subset is in the long-short equity segment. most of those managers are more
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long-biased can spend a little less time on the short side of the portfolio. managersrket-neutral and fundamental equity market it managers, spend more time looking shorts. katia: it sounds like you are saying that to you come along-short equity is not really dead, although some people will argue against of that. what about in credit? a lot of regular, vanilla credit hedge funds have struggled in the last few years. darren: that is exactly right. our general view on credit is -orientedpread strategies are not particularly interesting. what is more interesting to us is anything that could be categorized as off-the-run credit. those situations are more process-oriented. they take longer to work out. they are much more complex. it is a specialized skill involved. anything else i could be characterized as specialty-financed -- structured credit, abs more generally --
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those are much more interesting. you get paid to returns relative to the risk you are taking -- you get paid commensurate returns relative to the risk you are taking. expensiveparticularly for them to go to spain in these strategies, which is why these opportunities exist. katia: what are other strategies you like? darren: discretionary macro-oriented strategies. it has been a challenge the last few years. the environment is characterized by global, coordinated central bank easing are challenging for these discretionary managers. these managers rely on fundamental research to uncover fundamental drivers of economy one vs. economy two. to the extent that central banks are leading the same way, volatility is low, volatility is artificially suppressed, it is a challenging environment. katia: the macro managers had a pretty good start to the year,
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but year to date already doing so spectacularly despite all the volatility in the market. why is that? do you see that turning around? darren: we are finally observing that central banks are doing different things. there is no more coordination, there's divergence of central-bank policy. in the absolute simplest form, hedge funds are looking to generate returns by trading fx orequity indices or credit local interest rates. they rely on interest-rate differentials between different economies to make some of these debts. to the extent the u.s. is tightening and maybe japan is using, there are differences among central banks which allow them to generate returns. katia: and so hopefully they will start turning around -- darren: hopefully they will start turning it around. macro -- there are not that many strategies which can do well and can generate a positive expected return when equities are selling
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off and rates are going higher and commodities are going crazy or geopolitical issues. those types of things micromanagers tend to thrive on. they are not explicitly long volatility, but over longer periods of time the profiles look like they are volatile. we cannot predict the markets. i don't pick anybody can clearly predict the markets. it is afforded to have a balance in the papers portfolio with exposure to these strategies. as long as you are aware what role they play in the broader portfolio, they are powerful in the portfolio context. vonnie: thank you to you both. darren will head of alternative investment strategies at aberdeen asset management. katia covers hedge funds and investment firms and bloomberg. caroline: fascinating conversation. still ahead, no traded truce in china.
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we will take a look at the latest state of play just ahead. keeping a close eye and currencies for you. our performers v-- outperformers vs. the u.s. dollar. rates kept on hold, but there is less cautious talk as we see the hiking cycle's begin. swedish krona also outperforming. meanwhile, still selling pressure on asian currencies. this is bloomberg. ♪ ♪
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caroline: flight by from london, i am caroline hyde. vonnie: in new york, i'm vonnie quinn. this is "bloomberg markets." china is urging the u.s. to come back to the negotiating table after president trump said he would go ahead with a crackdown on trade. the trump administration plans to impose tariffs on $50 billion of chinese goods by june.
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beijing is warning that no matter what steps the u.s. takes it will defend its economy. we are joined by a bloomberg trade reporter live in washington. what is the latest? given how fast these things have been moving, anything could happen in the last few minutes. >> that's right. we have seen a lot of back-and-forth in the trump administration on the china front in the last few days will 10 days ago we saw secretary steve mnuchin say the trade war is on hold, we are not imposing tariffs. yesterday the white house said actually, we will go forward with it. today we saw the white house trade adviser peter navarro say, actually, secretary mnuchin's comments were an unfortunate soundbite. we are in a trade dispute on china and are ready for everything. the chinese will respond in kind, we are prepared to do the same thing. caroline: coming from a china spokesman saying that every flip in international relations the country'ss
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credibility -- this is u.s. credibility at stake. it looks like china could be rallying its own supporters to take on the u.s. trade spat. jenny: that's right and we have seen reports of the last couple and they arelly, intensifying now that we are seeing the china talk advancing from that the trump administration is not on the same page. this is criticism we are hearing from businesses criticism we are hearing from capitol hill, both sides of the aisle. you don't look credible if you are trying to take each other out. we know that u.s. trade representative robert litan heiser and peter navarro have always been in favor of tariffs. they're looking for structural changes with china. they are not looking for some kind of deal with the chinese by more u.s. agriculture or energy products. they say that is not sufficient. this is playing itself out in the media. the chinese can watch the news and see that that is happening. vonnie: do the chinese have any leverage on north korea, jenny?
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we heard the canadian prime minister, justin trudeau, saying we are military allies, this is strange what is going on in terms of trade talks. chemchina also use that argument -- can china also use that argument? jenny: we are getting to the point where all of this is just a big puzzle and everything is a piece of it. north korea, are the talks on or off? we have the zte puzzle piece that was a big steppingstone, and is the commerce secretary actually going to china or not? are we going to get the chinese to the table to discuss the trade deal? all of these pieces we will see in the next few days have it will play itself out. is the commerce secretary actually going to china, and what he will achieve their. vonnie: we will continue to stay tuned. our thanks to jenny leonard on trade there. caroline: time for the bloomberg "business flash
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away trading restrictions finally paying off. the federal reserve board meets today to start pulling back the volcker rule, designed to keep banks from suffering outsize losses. renewings says it is ceo spoke at an investor conference. he says mcdonald's still needs to boost customer count in the u.s. the company will invest in new u.s. story models this year. and a surprise to pressure at the royal bank of scotland. the cfo has unexpectedly resigned to pursue another opportunity. according to people with knowledge of the matter, he was seen as a potential replacement for the ceo ross mcewan. and that is your "business flash." coming up in the european close, 35 minutes until the end of
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trading for the we are seeing a fate in the rally, but nonetheless, ftse holds onto a .4% gain. germany'swell after job data came in better than expected. we saw the first quarter gdp figures coming in weaker than anticipated. close eye on italian stocks as they continue to rally. we're seeing a bounce after the storm that was yesterday. banks-- italian higher. keep an eye on italian bonds, too. mark barton up next. this is bloomberg. ♪
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mark: 11:00 a.m. in new york and 11:00 p.m. in hong kong. 30 minutes left in the trading day in europe. from our european headquarters, i am mark barton. vonnie: from new york, i am vonnie quinn.
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this is the european close on bloomberg markets. mark: here are the top stories we are covering from the bloomberg appeared the euro charge- italy, who is in of the italian government? trade tensions heat up as china slams president trump's this is an to go ahead with -- this is .nto go ahead with tariffs have a look at what is happening to european markets today. a different day than yesterday. 1.9%.aly ftse up almost recovering from the 2% plus losses yesterday. currencies rising against the dollar.

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